Diesel price hike roll back can dent govt credibility: Montek

"In my view, the government has taken this decision (of diesel price hike) after a lot of consideration. There should not be a diesel price hike roll back at all. If government rolls back diesel price then government's credibility will be zero", Ahluwalia told reporters on sidelines of SKOCH Summit.

The government's decision to raise price of diesel by over Rs 5 per litre last week evoked sharp reaction leading to widespread demand for its roll back.

According to Ahluwalia: "From economic point of view, our diesel prices are lower than our neighbouring nations. If we continue with this (subsidy on diesel), then either our oil companies would be bankrupt or our fiscal deficit will increase so much that we would have to cut plan expenditure on health and education".

Aligning domestic fuel rates with global prices, he said, was also necessary to achieve rapid economic growth and ensure efficient use of energy sources.

He further said it was necessary to cut diesel subsidy as it was not going to the needy people but to those "who are driving cars".

Ahluwalia said India has the largest fiscal deficit among the emerging market economies. "I think it will be disastrous to follow that route. It is unfortunate that in the political space, the issue is not being addressed". (MORE)