On board the Prime Ministers aircraft, Nov. 12: Prime Minister Manmohan Singh today said rising prices of fuel were a reality Indians needed to deal with as any more subsidies in the oil sector could destabilise the economy.
The comment came days after Mamata Banerjee, his biggest ally at the Centre, warned that her Trinamul Congress would quit the ruling UPA if prices of kerosene, diesel and cooking gas were raised.
Asked what he thought of the Bengal chief ministers threat, Singh said the government provided Rs 1.32 lakh crore as subsidy to mitigate the high international fuel prices and the burden was unsustainable.
Without naming Mamata, Singh said every citizen needed to understand that India imported 75 per cent of its crude, which meant prices were dependent on international pricing, though he conceded that further hikes would be worrisome as it would add to the double-digit food inflation.
Sources close to Singh said his response today was similar to that on Tuesday when he tried to educate Trinamul MPs after they met him to protest the latest increase in petrol prices. A source said Singh had then explained the reasons for the hike and the consequences of subsidising fuel prices further in the way a schoolmaster explains things to his students.
Foodgrain prices are stable. But the prices of vegetables and that of tertiary goods are going up. The demand is growing on a much faster rate on the supply curve…. One reason why inflation has become a problem is due to the prices of fuel products, Singh said on his way back from the Saarc summit in the Maldives.
He also spoke of growth in per capita income. The economy is growing at the rate of 7.5 per cent to 8 per cent per annum. With the economy growth at 8 per cent, the per capita income will grow at 6.5 per cent, Singh said.
The fuel price hike is the second issue Mamata and the Centre have differed on since September, the other being the Teesta water sharing agreement with Bangladesh that the neighbours were to sign during Singhs visit to Dhaka. The agreement had to be aborted after Mamata, who complained that the deal hadnt factored in Bengals interests, pulled out of the September trip.
The issue came up during Singhs meeting with his Bangladesh counterpart Sheikh Hasina on the sidelines of the summit.
Singh, who had earlier sought more time to build consensus, today hinted it was unlikely that the agreement would be signed in the short term. It is too early. We have held preliminary discussions, he said. There is still some distance to be covered.
He said he had mentioned to Hasina that we will work to build a national consensus so that an agreement can become a realistic proposition.
Singh said he had also discussed with Hasina the roadmap for implementing the agreement on boundaries signed in September. As you know, we have reached an agreement but it requires constitutional amendment. We will work to that end, he said.
The two leaders also discussed the possibility of India providing more electricity to Bangladesh. We said within the limits of our capabilities, we will certainly be helpful, Singh said. India has already agreed to provide up to 500MW to Bangladesh.