Govt to take 'corrective' steps to deal with oil prices: FM

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Finance Minister Pranab Mukherjee on Sunday said the government will take 'corrective decision' in consultation with all stakeholders to deal with the impact of rising crude oil prices on public finances and subsidy bill.

"The important question is can a country afford to import 100-120 million tonnes of crude if the prices (don't come) down to a reasonable level. That very question is looming large, staring at our face and we shall have to collectively address this issues," he said replying to queries related to fiscal deficit and fuel subsidy by industry leaders here.

Crude oil prices have been rising due to geo-political reasons, including the Iran situation. The prices had touched a high of USD 125 a barrel earlier this month.

"There are various suggestions, we are working on it. We shall have to address these issues ...I would like to involve all the stakeholders, bring them on broad to take the corrective decision," he added.

The government has refrained from increasing prices of diesel, kerosene and cooking gas despite global crude oil prices witnessing a sharp rise.

Petrol prices were de-regulated in 2010 but the government is yet to take a decision on freeing diesel prices.

High subsidies are putting pressure on the country's fiscal deficit, which is likely to touch 5.9 per cent of the GDP this fiscal and 5.1 per cent in 2012-13.

The government targets to bring down the subsidy bill to below 2 per cent of GDP in the next fiscal and 1.75 per cent in the subsequent years. Government has made a provision of Rs 40,000 crore towards fuel subsidy.

Crude prices are increasing despite no increase in demand amid global economic situation, Mukherjee said adding 'substantial quantum of speculative investment' is taking place in international oil prices...This aspect has to be addressed'.

The Finance Minister, who presented the Union Budget fro 2012-13 on Friday, further said it is not necessary that all government decisions are reflected in the budget.

"There are certain sectors, which we shall have to address... budgetary exercise is not the only excercise... other administrative and outside Budget decisions are to be taken... bringing the political parties, state governments on board and that cannot be only through Budgetary exercise," he said.

He also ensured the industry that the fiscal deficit target 5.1 per cent of GDP pegged for the next fiscal is achievable.

"With additional resource mobilisation, and expenditure control, it would be possible to bring down fiscal deficit to 5.1 per cent," he added.