Hike fuel price in phased manner: Assocham

RBI Governor Subbarao said the failure to increase retail prices would increase the government's fiscal deficit.

Ahead of the EGoM meeting on the Petroleum Ministry’s proposal to revise petrol and diesel prices,Assocham today asked the government to effect the same in a phased manner to lessen the burden on consumers.

The government should not increase fuel prices in direct proportion to the rise in global crude oil prices,the chamber said. On Friday,Brent crude for June delivery was hovering at around USD 111 a barrel and Nymex crude at around USD 101 per barrel.

A meeting of the Empowered Group of Ministers (EgoM) chaired by Finance Minister Pranab Mukherjee is scheduled for May 11 to consider the demand for a revision in diesel and petrol prices.

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The chamber highlighted the importance of saving in diesel consumption by improvement of roads and removal of other bottlenecks.

Making a case for the price hike,Assocham said,”Three decades of administered prices of oil products have lulled public opinion into believing that they are entitled to be secured from repeated oil shocks.”

The RBI has also called for a revision in petrol and diesel prices,even if it adds to inflationary pressure and moderates economic growth.

RBI Governor D Subbarao said the failure to increase retail prices would increase the government’s fiscal deficit.

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