Montek Singh Ahluwalia defends UPA Govt., justifies fuel price hike

New Delhi, Sep 14 (ANI): Planning Commission Deputy Chairman Montek Singh Ahluwalia on Friday supported the recent diesel price hike even as the Congress-led UPA Government came under heavy fire from allies and opponents alike for raising the fuel prices.

Montek Ahluwalia said that the Planning Commission has also been stressing on the need to de-regularize diesel and petrol and bring the latter at par with world prices.

"The Planning Commission has consistently held the view that we must move towards greater alignment between petroleum prices and world prices. Anything else is actually going to condemn the country to a lower growth rate. So, I am very glad that the government has taken this decision. It is still by the way not a complete de-regulation," said Ahluwalia.

"The Planning Commission's view has been that both petrol and diesel should be de- regulated. I think they have taken a good step," he added.

Ahluwalia said that general-purpose fuel should not be subsidized.

"General purpose fuel should not be subsidized. Targeted subsidy for those who need it is justified, that is why yesterday the government has said that up to six cylinders of LPG will be available at the present price. They have not changed the kerosene price," said Ahluwalia.

"Diesel is a general-purpose input into all economic activities and quite frankly to say that we should not have raised the diesel price amounts to saying one of the two things, either that the budget will bear the deficit burden in which case the plan would have been cut or it is saying let us starve the petroleum sector companies, that will be a disaster," he added.

Ahluwalia stressed that in the current economic environment, the need of the hour is to boost growth momentum.

"The growth situation at the moment is disappointingly low. So the most important thing is to get the momentum of growth back and the plan lays out that the short term priority should be revival of the growth momentum," he said.

Ahluwalia also attributed inflation to macro-imbalances.

"Inflation is really the consequence of macro-imbalances. If you are pushing for too much investment and you are not having the savings to support it, you are going to generate sectoral imbalances that would lead to inflation. You could also be triggered into inflation if there is a global pressure on particular prices," said Ahluwalia.

The decision to revise the price of diesel and LPG will reduce the under-recovery of companies by about 20,300 crore rupees. The under-recovery for 2012-13 will be about 1,67,000 crore rupees. (ANI)