Montek for a cut in energy subsidy

Even as the government deliberates on the recommendations of the Kirit Parikh committee on fuel prices, Planning Commission Deputy Chairman Montek Singh Ahluwalia has said continuing with oil subsidies will be a bad idea for the economy.

“It is an exceptionally bad idea to continue with energy subsidies... which means that energy prices would be lower and never go up again... we are thinking in the direction of reducing subsidies,” Ahluwalia said while releasing ‘Post-Crisis Growth in Developing Countries’, a report by the Commission on Growth and Development.

Ahluwalia’s comments come right after he attended the Cabinet meeting which is expected to have discussed the recommendations of the Parikh panel. The government is likely to take a decision on the issue by next week.

Ahluwalia had earlier backed the Parikh panel report, saying decontrolling fuel prices would not flare up inflation but will help bring it down.

The report discusses in detail the emergence of “a new normal” after the world has been through the economic crisis. Most members of the commission emphasised on the need to recognise that the recovery was still fragile and unlikely to take global economy to the pre-downturn levels.