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Govt hints at fuel price revision

business Updated: Dec 22, 2007 17:55 IST
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The Union government on Saturday hinted at a possible revision of fuel prices, saying it cannot hold on to the current rates indefinitely.

"There is no carpet where you can keep the price shocks for indefinite period without affecting the economy," said External Affairs Minister Pranab Mukherjee, who heads a Group of Ministers on oil pricing.

High doses of subsidy have so far kept the consumer insulated from the surge in global crude prices, which has touched nearly $100 per barrel from $36-40 when the government came to power in 2004, the minister said, after inaugurating a seminar here.

Although crude prices have since risen 150 per cent, the government has passed only a fifth of the surge to consumers.
Prime Minister Manmohan Singh had earlier voiced concern over rising oil and food subsidy bill that is likely to cross Rs 1,00,000 crore during the current financial year.

The Reserve Bank too has cautioned about the possible impact of high global oil prices on the economy. "High and volatile crude oil prices in the international markets pose a major risk to domestic price stability," it had said in its report on 'Trend and Progress in Banking'.

Oil prices are critical to sustaining the growth process and maintenance of price and financial stability, as the country imports about 70 per cent of its crude oil requirements.