'Fuel hike will not cause further inflation'

Planning Commission Deputy Chairman Montek Singh Ahluwalia defends the fuel price hike, saying it would not push up inflation as is being widely feared.

Planning Commission Deputy Chairman Montek Singh Ahluwalia defended the fuel price hike, saying it would not push up inflation as is being widely feared.

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"The Government decision to hike fuel prices is correct. The 8 per cent growth rate will remain intact," Ahluwalia, a key figure in India's economic reforms since the early 1990s, said in New Delhi on Thursday.

"This fuel hike will not aggravate inflation. Inflation (currently 8.1 per cent) will come down in four months," he predicted in his address at the annual function of the National Academy of Agricultural Sciences.

Maintaining that India's growth rate would "remain on track", Ahluwalia said the situation would have been "worse" had the decision not been taken.

"It is irresponsible to say the measure is anti-people."