Chambers lukewarm about oil price hike

Leading industry associations said the hike in the prices of petrol and diesel was inevitable, but it would adversely impact the economy by fuelling inflation.

There was no choice left for the government since any direct or indirect subsidy from the Budget or oil companies would only result in inefficiencies in the use of scarce resources and distort the market, the chambers said.

FICCI President YK Modi wanted the government to reduce the high rate of taxes in the oil sector. "There is no way to justify such high incidence of indirect taxes on oil products when the global oil prices has gone up to above the $50 mark per barrel," he said.

Assocham President MK Sanghi said that the hike in petrol, diesel and LPG prices might have inflationary impact and also impact the prices of essential commodities as it will have cascading effect.

"The government has provided the required respite for the downstream oil companies, which were the victims of the deferred price hike," he said. He demanded that the oil prices should be reviewed fortnightly to avoid placement of burden on the consumers at one go."

Phdcci also sees a huge impact on inflation with most raw material prices going up. It has called for early passage of the Petroleum and Natural Gas Regulatory Board Bill to reduce regulatory uncertainty and provide a level-playing field between the current incumbents and the new entrants.