In an interview to Karan Thapar's television programme 'Devil's Advocate' on CNN-IBN, Basu also pitched for increasing prices of diesel, kerosene and cooking gas in line with the trend of global prices.
"Things can happen, but I hope it won't happen", he said, when asked about the possibility of government rolling back petrol price hike in the view of widespread protests.
More importantly, he added, the failure of the government to contain fiscal deficit to 5.1 per cent of the GDP would have adverse implications on inflation.
"There will be a damage, if we make moves where there is risk that we will breach our fiscal deficit target... Which means in the long run (there will be) higher prices in general", he added.
The oil marketing companies (OMCs) on Wednesday increased the price of petrol by over Rs 7.50 per litre in view of rising prices in the international market and falling value of the rupee.
The price rise evoked sharp reaction from various quarters including allies of the ruling UPA, putting pressure on the government to roll back the hike.
On raising prices of other petroleum goods like diesel, kerosene and cooking gas, Basu said, "you can not beyond a point, shelter the population from the global phenomena -- which is increase in oil price".
Although the government has taken an in-principle decision to free diesel prices, it has not been able to implement it fearing political implications. (MORE)
