Pranab rules out rollback of petrol price hike
Mukherjee had projected a growth rate of 9 per cent in the current fiscal in the Budget 2011-12
Finance Minister Pranab Mukherjee today said inflationary pressures due to high international commodity and oil prices will persist but ruled out rolling back the hike in petrol prices announced by oil marketing companies last Saturday.
Admitting that inflationary pressures weighing on the economy may compromise medium-term growth projection of the economy,Mukherjee said the government will have to closely monitor various sectors of the economy before assessing growth outlook for this fiscal.
Mukherjee had projected a growth rate of 9 per cent in the current fiscal in the Budget 2011-12.
Talking to reporters on the sidelines of a function here,he said there was no question of rolling back the petrol price hike,as the government was already burdened with the subsidy given to oil companies,with Rs 16 per litre on diesel,Rs 26 per litre on kerosene and Rs 320 for every 14 kg of a LPG cylinder.
“Till today,I am giving subsidies…Therefore,there is no question of rollback,because huge subsidies have been provided. Last year,it was close to one lakh crore of rupees,this year I do not know what will be the international price of crude.”
“Everyday,the price of crude oil is increasing. The prices were adjusted last time in June 2006. At that point of time,the average price of Indian crude was USD 89 and now it is at USD 107,” he added.
Last Saturday,oil marketing companies hiked the petrol prices by Rs 5 per litre.
Headline inflation came a tad down to 8.66 per cent in April from 8.98 per cent in the previous month but is still much higher than the comfort level. The weekly food price index dipped to an 18-month low of 7.47 percent for the week ended May 7 from the previous week’s 7.70 per cent.
Speaking on the sidelines of annual general body meeting of Indian Banks Association earlier during the day,he said the country will continue to face inflationary pressures due to the high global commodity and oil prices.
“When there is uncertainty in the global markets,particularly on those products for which we have to depend through imports,naturally it would affect.”
He further said inflationary pressures have no predictability or a certain direction.
Like in 2008,when oil and commodity prices shot up and then declined drastically,commodity prices remain unpredictable today. It is too unpredictable,nobody can comment on how these will behave,he added.
He also said that his government,along with the Reserve Bank,is tyring to achieve higher growth and bring down inflation to acceptable level.
To rein in price rise,the Reserve Bank has increased key policy rates nine times since March 2010. In its annual credit policy on May 3,the central bank increased short-term lending and borrowing rates by an aggressive 50 basis points each.
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