Oil Price Hike In Two Months, Says Fm

Finance minister P Chidambaram yesterday hinted at a oil price hike in the next two months. He also predicted hard decisions by the government in the sectors of power and infrastructure, besides financial sector reforms.

In an interview with Zee TV, Chidambaram expressed confidence that he would be able to convince the Left Front and the Congress to pass the budget without doing violence to the overall framework. He also called upon industry to accelerate investments when interest rates have never been lower.

The only way this (oil pool account) deficit can be wiped out without us doing anything is for the price of oil to fall by something like $10 a barrel (from the current $17-18 a barrel). Thats not going to happen at all. Therefore, something has to be done, he said in the interview broadcast late last night.

 

The way it (the deficit, estimated at Rs 15,500 crore in 1996-97) has grown in the last 20 years has not been understood by the people. The underlying assumption is that it will be a self-balancing account. Unfortunately, that principle has been lost sight of, the minister added.

Chidambaram revealed that the petroleum ministry was looking into various options and, when it came up with proposals, the government will take a view. (The) Prime Minister has indicated that it is pretty high on his agenda, he stressed.

December, January, February saw a wave of reforms and decisions. March we spent discussing the budget. April, of course, has been a lean month. I think (in) May and June, you will see this government take a number of important decisions, he predicted.

On the budget some parts of which have been opposed by the supporting Left parties and the Congress Chidambaram projected an open frame of mind. I will accept suggestions that will fit in with the overall pattern of the budget, he said. The Communist Party of India (Marxist), for instance, has criticised a budget proposal to tax rates for the high-income class from 40 per cent to 30 per cent.

Industry, the minister said, should simply dust their investment proposals that they had shelved over the years and invest. Credit is available more easily.