Freeing fuel price to help taming inflation

New Delhi, Feb 5 (PTI) The Planning Commission of India
on Friday said that decontrolling fuel prices would not flare
up inflation rather it will soften generalised rise in prices.
"It (decontrolling fuel price) will not flare up the
inflation. I just think that it is not sustainable to have
prices those are not line with the world prices," Planning
Commission Deputy Chairman Montek Singh Ahulwalia told
reporters here.
"By keeping the price of petroleum down you are actually
bearing a subsidy that causes a generalised rise in price ...
if you get rid of the subsidy there will be rise in petroleum
prices but it will soften the generalised rise in prices,"
Ahluwalia said.
"It (freeing fuel price) is there in the integrated
energy policy, we had said that any policy that does not link
petroleum and diesel price to evolving trend in world price is
absolutely unsustainable. So I agree with the recommendation
of the (Kirit Parikh )committee," he said.
Earlier on Wednesday, an expert group, headed by former
Planning Commission member Kirit Parikh, suggested freeing of
fuel prices.
At present, the government does not allow state-run fuel
retailers to fix petrol, diesel, kerosene and LPG prices in
line with international cost, resulting in huge revenue losses
for the companies and subsidy burden on the government. PTI