Hiking fuel prices is unpleasant "but the bullet had to be bitten”
Geetanjali Minhas | June 29, 2010
Justifying the hike in oil prices Finance Minister Pranab Mukherjee has said it was an all important step to meet under-recoveries of oil marketing companies (OMC).
Interacting with the media in Mumbai on Monday, Mukherjee said, “The enhancement of prices of essential commodities is always unpleasant but the bullet had to be bitten.”
He said that though the prices of petrol will be market-determined, a gap of 1.49 percent still existed on prices of the diesel and in spite of this hike, the subsidy on LPG would be Rs 227 and the subsidy on kerosene nearly Rs 14.80.
Answering a question on the effects of inflationary pressure due to increase in fuel prices, Mukherjee admitted there would be cascading effect of inflationary pressures on all products, as the cost of transport will also increase.
Mukherjee added that according to the chief economic advisor, the direct impact of inflation would be above 0.9 percent. “However, the overall inflationary pressure would moderate by mid-July, particularly the food inflation and inflation for primary articles. Inflation would reduce to a moderate level by the year-end,” he said.
Referring to the G20 summit, the finance minister said that nations with market compulsions would go for immediate fiscal consolidation. For the rest of the countries, the withdrawal of the stimulus package would be nation-specific.
With regards to the possible interest rate hike corresponding to the inflationary buildup of economy, Mukherjee said that interest rate reviews are left to the Reserve Bank of India which determines the monetary policy.
Speaking on the sidelines at the event, State Bank of India chairman Om Prakash Bhatt said, “The base rate will be 8 percent or less” and added that all loans will be priced similar except that the linkage will shift from the PLR to the base rate and as and when they are due for renewal that time they will shift over to the base rate.
Bhatt admitted that now it will be expensive for some borrowers to borrow and added that so far the banks have borrowed Rs 70,000 crores from the RBI. “Beginning June first week, almost overnight, there has been a dramatic shift from surplus liquidity to deficit,” he said.
Later in the evening, speaking at the CNBC Consumer Awards Function Mukherjee highlighted that economic recovery had taken firm roots with growth in 2009-10 at 7.2 percent as per advance estimates of the CSO (now placed at 7.4 percent). “The medium term fiscal policy statement envisages a reduction in the level of fiscal deficits of the centre to 4.8 percent of GDP in 2011-12 and 4.1 percent of GDP in 2012-13,” he said.
Crediting economic recovery to the efforts of economic agents and the affirming success of the governments initiatives like NREGA and Sarva Shiksha Abhiyan, amongst others, Mukherjee expressed confidence that the medium term outlook for the economy is bright.
With Lockdown 4 ending Sunday, the home ministry has issued new guidelines to fight COVID-19 and for phased re-opening of areas outside the Containment Zones. The guidelines, issued based on extensive consultations held with states and UTs, will be effective from June 1 till June 30. The first phase of reo
When the whole world is fighting COVID-19, food and nutrition security has become a major issue. The pandemic has aggravated the existing food crisis in India, especially in rural and tribal regions. There has been less availability of fresh foods in most parts of the country, and the tribal community has
India is determined to “set an example” for the rest of the word in the post-pandemic economic revival, prime minister Narendra Modi has said, underling the need to become self-reliant. “There is also a widespread debate on how the economies of various countries, including
Close to 48 lakh migrant labourers have been able to reach home from the cities they were working in, as the Indian Railways have run a total of 3,543 “Sharmik Special” trains from May 1. Following the home ministry order regarding the movement by special trains of migrant worker
Before the novel coronavirus hit it, Mumbai about 10-12 lakh labourers from elsewhere had made it their home. The figure for the state of Maharashtra was another 18-20 lakh. As the pandemic spread and the Maximum City emerged as the worst-hit place in India, all economic activities came to an end, and with
For the rest of the world, it is not easy to understand China when it comes to politics or economics. Under pressure from the international community, it has accepted to open the country for a “comprehensive” probe into the origin of the deadly coronavirus. But it is not clear whether the Asian