labels: Economy - general
Prime minister seeks consensus on oil price as RSP quits UPA-Left council news
02 June 2008

Prime minister, Manmohan SinghPrime minister Manmohan Singh today made a strong case for an immediate hike in fuel prices and called for a wider consensus on rational economic polices, even as a Left coalition partner RSP decided to leave the UPA-Left Coordination Committee protesting against the government's economic policies.

The RSP decision came after a meeting of the party's central committee. RSP, one of the four Left parties, is the first to take such a step. RSP and the Forward Bloc are junior left partners while the CPI(M) and CPI are the major Left allies of the UPA government.

With global crude oil prices rising as high as $135 per barrel, the government cannot let the oil subsidy bill to rise any further, the prime minister said, adding that India's economic growth was coming under threat.
 
Fuel prices in India, the prime minister said, were not reflective of the world trend and that his government was against returning to the era of blind controls.

''We cannot allow the subsidy bill to rise any further. Nor do we have the margin to fully insulate the consumer from the impact of world commodity price and oil price inflation,'' Manmohan Singh said at the annual summit of the Associated Chambers of Commerce and Industry (Assocham).

''Up to a point we can insulate poor sections of our society and we have done that. Our government has not raised the price of kerosene in the past four years. We have only marginally raised LPG and diesel prices. Even petrol prices do not fully reflect world trends,'' he pointed out.

He said the petroleum ministry had even proposed to raise petrol prices by Rs10 a litre, diesel by Rs5 per litre and that of cooking fuel by Rs50 per cylinder to cut the over Rs650-crore daily losses being incurred by the state-run oil marketing companies.

Petroleum minister Murli Deora had indicated that the government won't compromise on the financial health of the PSUs, and "there are some measures that are under discussions."

He said the Indian economy should continue the growth momentum to reap the benefits of globalisation and oil prices cannot come in the way.

The Left partners, however, seem to be in no mood to listen and had categorically said they would oppose any move to hike prices of transport and cooking fuels since the average citizen was already burdened by high inflation.

A number of Asian nations, including  Taiwan, Indonesia and Sri Lanka, have raised domestic fuel prices after a doubling of global crude prices since last year.

Crude oil prices were trading above $127 per barrel in the global markets today. Although crude oil prices have come down from the previous week`s record high above $135 on concerns over demand, US light, sweet crude oil futures were still ruling above $127 a barrel, at $127.21 by 2325 GMT.

With uncertain demand for oil, OPEC has resisted calls to pump more crude, saying that the weak dollar, speculations and other factors - not a shortage of supply - are behind the one-third surge in prices this year.


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Prime minister seeks consensus on oil price as RSP quits UPA-Left council