India asks oil producers to rethink policy

India today asked oil producers to rethink their policy, which was imposing "crippling burden" on the developing countries and sought a thorough review and overhaul of financial oversight and regulatory mechanisms.

"Given the growing complexity of ingenious financial engineering and reengineering, hindsight tells us that it would have been wiser for regulators to have erred on the side of caution," Finance Minister P Chidambaram told the 77th Meeting of Development Committee of the World Bank and IMF.

"We now need a thorough review and overhaul of the financial oversight and regulatory mechanisms through the entire global system," he said, adding that the developing world is paying a price for a crisis that was not of its making.

Chidambaram pointed to the "dramatic" rise in the price of crude oil and food, which were adding to the woes of the developing world and warned that the trend will continue unless there are "serious interventions".

"The prices of crude oil that have shot up to the region of $110 per barrel do not reflect either the cost of producing the oil or the risks inherent in the market and in fact, not even the inter-play of demand and supply.

"These runaway prices require oil-producing nations to seriously contemplate the management of production and pricing policy and to reflect on the crippling burdens that expensive oil imposes on poorer nations," Chidambaram said.

"These food prices, which hit the poor hardest, are expected to remain firm in the medium-term unless we make serious interventions. The demand for biofuels will probably increase, and energy and fertiliser prices could be expected to remain high in the medium-term."

He also asked developed countries to cut off subsidies on food crops for bio-fuel production.