Government holding back oil pricing reforms on inflation concerns: Parikh
26 August 2011
Economist Kirit S Parikh, heading the panel constituted by prime minister Manmohan Singh for oil pricing reforms, today said the government was reluctant to decontrol diesel prices, fearing its adverse inflationary impact.
According to Parikh, if the government wanted, it could decontrol diesel any day. He added it was afraid of the inflationary impact the move would have.
He said when inflation was running at an all-time high, it felt hiking the diesel prices would not be appropriate.
Earlier, the panel had recommended total decontrol of auto fuel pricing along with the creation of a level playing field for all players in the market, whether state-owned or private.
According to the economist, the unwillingness of the government to adopt the reform was also due to political pressure.
He said while the finance ministry seemed to understand the rationale behind decontrolling, the political opponents had not, which was why the government, owing to political pressure, was reluctant to go for the move.
He also said the government had failed to take any action in spite of feasible suggestion given for the implementation of the panel's recommendations.
He said he had suggested other ways for decontrol where its immediate adverse impact could be avoided.
The government, he added, could reduce taxes and decontrol diesel without raising the prices, which meant the consumer paid the same prices as before. But the government was yet to reply to this, he said.