Govt says no decision yet to hike local oil prices
The government has not decided whether to raise retail oil prices to bring them more into line with global ones.india Updated: May 03, 2006 11:36 IST
The government has not decided whether to raise retail oil prices to bring them more into line with global ones, with political consensus needed for any such move, the finance minister said on Wednesday.
India imports 70 per cent of its crude oil but the ruling coalition has not been able to raise prices so far in 2006 due to pressure from its communist allies. Global oil prices have risen about 22 per cent this year.
"Any decision can only be taken by political consensus," Finance Minister Palaniappan Chidamabaram told reporters on the sidelines of the annual meeting of the Asian Development Bank in the southern Indian city of Hyderabad.
"When oil prices cross $50-60 a barrel, it is no longer an economic issue but a political one."
The minister was quoted by the Press Trust of India as saying the country could not avoid raising petroleum prices for long.
The Reserve Bank of India governor said on Tuesday the central bank was constantly watching oil prices and that policy makers needed to work out whether they thought higher global prices were permanent.
State-run oil firms, unable to recover all their costs, have suffered heavy losses over the past year and the central bank is concerned they may end up contributing to the government's fiscal deficit.
Analysts had expected the government to raise oil prices after state elections end on May 8, but Chidambaram said no such decision had been taken.
"We have to consult our allies. It is for the petroleum minister to meet them," he said. "So far it has not been done."
First Published: May 03, 2006 11:36 IST