30.6.10

Diesel to be freed of govt control

Indicating a new-found determination to stay the course on politically sensitive reform measures, Prime Minister Manmohan Singh not only defended the recent decontrol of petrol prices but also said diesel rates would also be freed of government control. In comments while returning from the G20 summit in Toronto, the PM seemed to be in an assertive mood despite the Opposition calling a bandh to protest fuel price hikes. “The fact that petrol prices have been set free, the same is going to be done to diesel prices,” he said. The PM’s view that fuel price decontrol constitutes “much-needed reforms” signals UPA-2’s more upfront approach to reforms, a preparedness to bite the bullet apparently based on an assessment that the Opposition may not be able to extract much mileage. The government’s defence is based on NDA itself having initiated moves to decontrol fuel prices. Apart from pointing to the Vajpayee government having decided to do away with administered prices, the Opposition’s lack of success in the past in raising “price rise” as a political issue might have helped the ruling coalition in firming up a less apologetic stance. As senior officials have indicated, the oil companies’ finances really left government with no options but to remove crutches. Though the PM was careful in not providing any hint about when diesel prices will be decontrolled, his resolve that the subsidy regime cannot be supportedpoints to a need to control fiscal deficit. The usual argument that kerosene and LPG have been spared is absent as their cost has gone up too, the first time in eight years though they still recieve large subsidies.

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