Rangarajan pitches for decontrol of diesel prices

Aug 02, 2011 |

chennai

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The Prime Minister's Economic Advisory Council (PMEAC) chairman C. Rangarajan on Tuesday favoured decontrolling of diesel prices, saying retail petroleum prices must reflect the international crude prices.

"I think it should happen. Because retail prices of petroleum products in India must reflect international crude oil prices … Therefore, at some convenient point we should really start the process of deregulation of diesel prices also," he told reporters on the sidelines of a function here.

He said time to time, prices of petroleum products had been increased in large steps, and therefore, "I would advocate deregulation of diesel prices".

Early this week, Finance Minister Pranab Mukherjee admitted the government's proposal to free prices of diesel and cooking gas. "Petrol we have done (decontrolled). Diesel, kerosene and LPG we want to do it. (But) Kerosene we may have to provide some subsidy because people who have no access to electricity, use kerosene for lighting," he had said.

While the prices of petrol are linked to market rates, the government directly and indirectly compensates the oil marketing companies for losses on account of sale of diesel, kerosene and LPG through subsidies and oil bonds.

In June last year, the government decided to deregulate the petrol prices owing to steep increase in international crude oil prices and the oil marketing companies facing severe pressure owing to increasing under recoveries.

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