PM's advisory body faults government for ‘losing time’ despite stability

The Prime Minister's Economic Advisory Council (PMEAC) said on Tuesday that it was in favour of decontrolling diesel prices, saying retail prices of petroleum products must reflect international crude prices.

The C Rangarajan-headed PMEAC also blamed the government for having ''lost time'' in expediting reforms and improving governance despite the combined momentum of stability after the May 2009 general election and the successful navigation through the global crisis.

Presenting the Economic Outlook for 2011-12, Rangarajan said overconfidence in both government and business, disinclination to roll back fiscal and monetary stimuli quickly, corruption-related controversies in the last one year and loss of focus on policy initiatives had marred the country's return to the path of high rate of asset creation and economic growth.

''Some of the momentum has gone out of the economy. It is true many economies are still embroiled in hard conditions, but that is not good enough reason why we have not been able so far to do better than we have,'' the report said reflecting on the past two years.

''It is absolutely imperative that active measures to improve the investment climate be taken,'' it said.

On freeing diesel prices, Rangarajan told reporters in Chennai on the sidelines of an Overseas Bank function, "I think it should happen. Because retail prices of petroleum products in India must reflect international crude oil prices. Therefore, at some convenient point we should really start the process of deregulation of diesel prices also."