2.3.10

Economy should absorb fuel price hike: PM

PM Manmohan Singh’s statement that there would be no rollback of fuel prices confirms that the hike had been thought through, having been influenced by the considerations of inevitability as well as given that no big election, except in Bihar, is scheduled this year. Also, he did not agree that hike would add to the already-high inflation. “The increase in fuel prices, the direct effect on the wholesale price index will be no more than 0.4%. There will be some escalation but my hope is now that the rabi crop is coming into the market, prices of wheat, sugar, oilseeds, pulses that have caused a great degree of concern will see some moderation and that the economy has the capacity to absorb this hike in oil prices without setting in motion an inflationary spiral.’’ Singh’s response tests the resolve of Mamata Banerjee as well as the DMK to escalate matters if their views are not heeded.

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