Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan today pitched for a "substantial" increase in prices of diesel and cooking gas, saying failure to take strong steps would derail the fiscal consolidation process.
"A decision will have to be taken in terms of raising the petroleum prices...Otherwise, it will not be possible to maintain the deficit at 4.6% of the GDP (for this fiscal)...Some substantial increase will be required if the subsidies ought to remain at the budgeted levels," PMEAC Chairman C Rangarajan told PTI.
The Empowered Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee is likely to take a decision on raising prices of petroleum products next week.
Although the crude prices in the international market soared to over $100 a barrel, the Government had refrained from taking a call in view of the assembly elections in four states and a Union Territory.
"Since we have shielded consumer prices from the international crude prices, the best course of action will be to allow retail prices of petroleum products to reflect what is happening in the international market," the PMEAC Chairman said.
On the pending decision to free diesel prices, Rangarajan said: "At one time I felt that if inflation comes down to 7% it can be done. But since it is taking time for the inflation rate to come down, perhaps an earlier decision may be required. We cannot also wait because the oil marketing companies (OMCs) are incurring huge losses...It may happen sooner than later."