New Chief Statistician T C A Anant today said raising fuel prices was a better option than keeping these artificially low and widening the fiscal deficit, even as the Opposition organised a nationwide strike against the government’s decision today.
“On the balance, it would be better to make fuel prices rise than to let Budget deficits grow,” Anant, who recently took over as the secretary of the Ministry of Statistics and Programme Implementation, said in an interview.
Anant also hinted that the government’s move to raise fuel prices should have come sooner, but acknowledged that it was difficult to time these kinds of decisions because of “multiple pressures” in a democracy.
“It is very difficult to time such things, trying to time these things right is next to impossible, particularly in a democracy where you have multiple pressures at any given point of time. It is a right move and it should have been made earlier,” he said.
Explaining his reasoning for supporting the increase, he said if an open-ended fuel subsidy was maintained, huge budget deficits would occur when global petroleum prices rise. “This, too, contributes to generalised inflation,” Anant said.
When asked whether diesel prices should also be deregulated like petrol, he said it is not a question of whether you should give a diesel subsidy or not, the relevant point is whether it should be given in a manner that it has an unbounded effect on the budget deficit.
“Then, what you are doing is, you are converting uncertainty in a single commodity’s price into a generalised uncertainty over your entire price level,” he explained.
Anant said an economy could not have a strict regulated regime for fuel prices, as it would widen the Budget deficit.
