Pranab Mukherjee also says the current level of food inflation at 9.8 per cent is unacceptable.
The government has brought some relief for the domestic household that is already reeling from high inflation shocks and rising fuel costs. The Union finance minister has said it is yet to take a call on raising the prices of diesel, liquefied petroleum gas (LPG) and kerosene.
“We have not taken any decision as yet on LPG, kerosene and diesel price hike,” Pranab Mukherjee said on Saturday.
The news comes amid speculation that the government might raise the LPG, kerosene and diesel prices as well, following the increase in petrol prices by Rs 3.14 a litre last Thursday. The empowered group of ministers, which is headed by the finance minister, was scheduled to meet on Friday, to take a decision on reducing subsidy on domestic LPG cylinder. The meeting, however, was called off at the last moment.
Justifying the hike in petroleum prices, he said the government had no say on the crude prices as it was deregulated. “India requires more than 100 million tonnes of petroleum crude every year, 75 per cent of which is imported. Hence the government has no say on the crude prices.”
Commenting on the opposition's attack of the government decision, the minister said prices during the NDA regime could not be compared with the current prices as the average crude oil prices during 1998-2004 was around $24-36 a barrel, while it was hovering at $113 a barrel now.
“By simple economic logic, we cannot make crude products available at those prices (1998-2004). It was during the NDA regime that the petroleum prices were decontrolled. We are still providing substantial subsidy on petroleum products,” Mukherjee said.
Terming the current level of food inflation at 9.8 per cent as “unacceptable”, the minister said the government took several steps to bring it down further, especially through enhancing supply of essential commodities. “At the beginning of last year, food inflation was at 20.2 per cent. It is at 9.8 per cent now. This figure, however, is equally unacceptable,” Mukherjee said.
He added that the Reserve Bank of India (RBI) had “rightly” increased the key policy rates on the concerns of high inflation and will continue to do so if the situation demands.
“Normally, it (monetary policy) is formulated in consultation with the government. Fiscal policy and monetary policy go hand in hand as for the betterment and healthy performance of the economy. The recent rate hike is because RBI considers, and rightly so, that inflation is to be contained. It is true that for the last 15 months the rates have been adjusted. Inflation at 9.8 per cent is very high and is at an unacceptable level. Therefore, inflation is to be contained and, if RBI considered it necessary to adjust the crucial rates, they did so to achieve that objective,” he added.
