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PM confident of above 8 pc growth New Delhi, June 2 While speaking at the Assocham annual general meeting today, the Prime Minister said: “Many developing countries have been forced to impose control on commodity exports and increase subsidy on imports due to rise in food prices”. At the CII annual general meeting held in April, the Prime Minister had raised concern about the poor international response to the global food and fuel crisis. “The situation cannot continue forever,” he said. “We need wider political consensus at home to adopt more rational economic policies. The government can insulate poor people up to a point but the need of the hour is economic pricing of oil so as to sustain growth”. He pointed out that his government had not raised kerosene prices for the past four years while diesel and LPG prices were only marginally revised, and petrol prices remained lower than world oil prices. “We cannot allow the oil subsidy bill to rise any further, nor do we have the margin to fully insulate the consumer from the impact of world commodity and oil price inflation”, he said, indicating that a hike in petrol and diesel prices was on the anvil. Seeking industry support for taming the price rise, Dr Singh said: “I do not wish to see a return to an era of blind controls. At the same time, we have to have the fiscal means to protect the poor from adverse impact of inflation”. “The unrelenting rise in crude oil prices threatens to disrupt the development process in oil importing developing countries,” he said. “India has maintained an economic growth of 9 per cent and above for the past three years and we are confident that the Indian economy would continue to grow at 8 per cent and above despite global slowdown”, he added. Referring to the middle-path of economic reforms adopted by the country, he said the Indian route to globalisation had been more stable and avoided many pitfalls that other developing countries got into. “It bears a testimony to the wisdom of the slow and steady wins the race,” he said.
Petrol likely to be dearer by Rs 4 New Delhi, June 2 According to sources, the note is being prepared for a hike of Rs 5 per litre, so that there is a scope of reducing Re 1 in the face of opposition by coalition partners. The consensus on diesel is still not there because of the inflationary effect, but indications are that it may be in the range of Rs 1-2 per litre, say sources. The increase of Rs 50 per LPG cylinder is also being looked at and here, too, there is a scope for a partial rollback, says sources. According
to the sources, the decision is likely by Wednesday or Thursday, as all deliberations have been made between various ministries and political leadership. Though earlier there was a proposal to hike petrol and diesel prices by Rs 2-3 per litre, but a lot of hectic consensus-building activity has led to a bigger increase in petrol prices than diesel. The view in the government is that a hike in petrol will not be opposed by the Left parties, who are threatening a nationwide strike on the issue. The rollback provision is more for LPG cylinders as that will placate the Left parties and help the government meet the objective of raising domestic oil prices, say sources. According to the sources, dismantling administered price mechanism (APM) has been a failure, and instead the way to deal with such a volatile situation is by letting the oil companies raise prices every 15 days, as was done earlier during the NDA regime. There is, however, no proposal to cut the excise or customs duty to cushion the impact of global prices. The finance minister is also opposed to increasing the oil prices on the consumer end, and is not ready to forgo revenue from this sector in the coming year, when expenses are going to be more than incomes. Already, a slowdown in industrial growth is a sign of worry for the finance minister. The oil companies had demanded a hike of Rs 10 per litre in case of petrol, Rs 5 per litre for diesel and Rs 50 per cylinder for LPG, along with cut in customs duty on crude oil and slashing excise duty on petrol and diesel. Since yesterday the losses of oil companies have swelled. On LPG, it is now Rs 353 per cylinder from Rs 305.90 earlier. The three oil marketing companies, who, till last week were losing Rs 16.34 a litre on petrol, are now incurring a loss of Rs 21.43 on sale of every litre. Similarly, the losses on diesel have widened to Rs 31.58 per litre from Rs 23.47 while on kerosene the losses have jumped to Rs 35.98 from Rs 28.72 per litre.
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