Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan today said the government will have to urgently take a decision on freeing diesel prices to contain subsidy burden and to keep fiscal deficit at 4.6% of GDP this fiscal.
"I think the need to take corrective action with regard to petroleum prices has become urgent...We need to contain the fiscal deficit at 4.6% of GDP (gross domestic product) during the year for a variety of reasons," Rangarajan told reporters on the sidelines of the 26th Skoch Summit here.
Some action, he said, is called for in the petroleum sector to contain the subsidies at the budgeted level.
On the likely timing of deregulation of diesel prices, Rangarajan said, "I think soon...It will be done".
State-owned Indian Oil, Bharat Petroleum and Hindustan Petroleum are suffering losses on account of sale of diesel at subsidised rates.
Although the government has deregulated petrol, giving freedom to oil marketing companies (OMCs) to fix prices, it has refrained from taking any decision regarding diesel prices in view of high inflation.
International crude oil prices have been soaring due to unrest in West Asia and North Africa region.