Not right time to deregulate diesel prices: Finance secretary

Finance secretary Ashok Chawla said in New Delhi that the government felt it was not the right time to deregulate diesel prices, as inflation continued to remain high.

"I don't think it will be a wise or prudent thing to do (deregulate price of diesel) at a time when inflation is running so high," he said.

In June the government had gone for deregulation of the prices of petrol but did not take a decision on diesel which is in use in various industries and most notably the transport sector.

The price of petrol rose Rs3.50 a litre, and the government also raise the price of diesel by Rs2 but did not link it to market price. Regarding cooking fuel, LPG cylinders became dearer by Rs35 a cylinder and kerosene by Rs3 a litre.

Regarding inflation Chawla said it was likely to fall to around 6 per cent within the next few months from its current level of 8.5 per cent. He added, "it's not the case that because you have high growth rate you must have high inflation."

For calculation of inflation from August, the government had come out with a new index, which had revealed that the rate of price rise had fallen by 1.3 percentage points to a 7-month low of 8.5 per cent during the month.

However, according to the data on the old inflation series which was released along with the new series, the rate of price rise had dipped marginally from 10 per cent in July to 9.5 per cent in August.

He added that the Indian economy was likely grow 8.5 per cent this fiscal and the rate could be somewhat higher next fiscal.