The Telegraph
Sunday , December 16 , 2012
Since 1st March, 1999
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Fresh fuel price hike on agenda

New Delhi, Dec. 15: Prime Minister Manmohan Singh today indicated his government may step up the pace of reforms with a possible increase in energy prices, including that of LPG and diesel, as well as raise train fares.

“Under-pricing of energy, mainly of electricity and petroleum products, had greatly affected resources available for investments in infrastructure and social development,” Singh said at a meet organised by the Federation of Indian Chambers of Commerce and Industry.

Singh’s statement is being read as a signal that fuel prices will be raised. The Prime Minister said, “The subsidies on oil alone are more than what the government spends on health and education put together. We need to address these issues.”

Officials said the Prime Minister’s thrust on raising fuel prices is in keeping with recommendations made by the Vijay Kelkar committee on fiscal consolidation, which had suggested that the government should cut diesel subsidy by half and reduce LPG subsidy by 25 per cent this fiscal.

“As you have seen in these past few weeks, our government has acted to reverse the cycle of negative expectations, and stimulate investment,” Singh said, adding that his government would be working on fresh reform measures. “Railways are working on a Rail Tariff Authority, which will make fare setting a more rational exercise.”

Officials said the Prime Minister had asked an inter-ministerial group to finalise and submit its recommendations on the Rail Tariff Authority before the end of this month and prepare a cabinet note by January 15. The regulator is expected to set fares on a routine basis every year starting next year.

“We will speed up the divestment process, which will also revive our equity markets,” Singh told industry captains. This week, the sale of 10 per cent in state iron ore miner NMDC fetched the government over Rs 5,900 crore.

Singh also underlined his commitment to working with Parliament to bring forth fresh reform measures. “Bills on liberalising FDI limits in banking and insurance are currently before Parliament. Each of these decisions is based on sound economic logic. But they were also based on larger concerns about national security and the need to insulate India from the persistent global economic slowdown,” the Prime Minister said.