FM, Montek favour hike in petro prices

The FM said in Karaikudi on Sunday that, ‘‘There is no alternative but to hike the prices of petroleum products and people have to share a part of the burden.’’

Meanwhile, Ahluwalia said it would be ‘‘fiscally irresponsible’’ not to align domestic oil prices with global oil prices hovering around $65 a barrel. He said the government had to do it as ‘‘all other countries are doing it.’’

‘‘If we do not adjust fuel prices, then in effect we are running a hidden subsidy. The subsidy is having an extremely damaging effect on oil firms, which could have an adverse impact in the long run,’’ Ahluwalia said.

‘‘Investors around the world and people looking at financial stability will view this as a hidden subsidy,’’ Ahluwalia said at an Amcham conference. ‘‘I do not think that subsidies of that scale can be put directly on the budget without other adverse consequences. It is normal practice of good economic management not to have open-ended subsidies on items where global prices are shooting up,’’ he added.