PM pitches for phased hike in fuel prices

NEW DELHI (VIRENDER KHAGTA)Prime Minister Manmohan Singh today made a pitch for a phased hike in the prices of energy products such as petroleum, coal, natural gas and electricity in these “difficult” economic times to achieve the target of 8 per cent growth in the 12th Five Year Plan.

“Immediate adjustment of prices to close the gap is not feasible. I realise this, but some phased price adjustment is necessary,” Singh said while addressing the 57th meeting of the National Development Council (NDC) convened to finalise the 12th Plan.

That the government seems to be moving in this direction is clear as the Petroleum Ministry has floated a proposal to hike diesel prices by Rs 10 over a 10-month period and kerosene by Rs 10 over a two-year period.

While the proposal may have been mooted, how much of it may actually go through remains to be seen with several state elections due next year.

“Energy is underpriced in our country. Our coal, petroleum products and natural gas are priced well below the international prices. This also means that electricity is effectively underpriced, especially for some consumers,” the Prime Minister added.

The NDC meeting, the apex policy-making body that comprises Cabinet ministers and state Chief Ministers, was convened to approve the 12th Five Year Plan (2012-17) which seeks to peg the average annual growth rate at 8 per cent, as against 8.2 per cent proposed earlier.

This is the second revision in the growth rate, which had earlier been pegged at 9 per cent.

Drawing attention to the global slowdown, Singh cautioned that “business as usual” policies will not be sufficient to achieve the scaled down growth target of 8 per cent, which he described as “ambitious” in the current scenario.

Failure to contain subsidies would mean either cutting plan expenditure in other sectors or exceeding the fiscal deficit target, he asserted.

Referring to the Goods and Services Tax (GST) regime, Singh said there was a need to increase the tax ratio as a percent of the GDP through combination of tax reforms and better tax administration.

“Early implementation of the GST is critical in this context. I hope we will have the co-operation of the states to introduce the GST as quickly as possible,” he said.

In his closing remarks, Singh said several Chief Ministers have drawn attention to the problem of fuel availability affecting power plants.

The Prime Minister said it was an urgent problem which needed to be tackled. He has asked the Planning Commission to make a quick review of the situation and submit a report within three weeks.

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