PMEAC for hike in petroleum prices

The Prime Minister's Economic Advisory Council today favoured further increase in petroleum prices in line with the global trend.

Speaking at National Institute of Public Finance and Policy (NIPFP), PMEAC member Govinda Rao also said that inflation will not reach double digits in the remaining part of this fiscal.

"There is a case for further fuel price hike with rise in crude oil prices. If, it is not passed, oil marketing companies will incur losses, which the government will have to pay and finally it will be an additional burden for the tax payer," he said.

Rao added that the hike in petrol prices should be borne by the consumers who are buying the fuel and not the tax payers.

Global crude price is hovering around $80 a barrel.

The Budget had raised excise duty on petroleum by Re 1 a litre, which has increased petrol prices by Rs 2.71 a litre and diesel rates by Rs 2.55 a litre. This has already drawn flak from the Opposition.

Rao also said inflation would not reach double digits in the remaining part of this fiscal, but it would still be above the Reserve Bank's projection of 8.5 per cent.

"It (March end inflation) will be less than 10 per cent... It would not cross 10 per cent," he said

The RBI has projected 8.5 per cent inflation by the fiscal end. However, high food prices and recent hike in fuel prices has already pushed up inflation to 8.56 per cent in January.