The government may not be able to protect consumers from rising global oil prices endlessly. Planning Commission deputy chairman Montek Singh Ahluwalia has warned that India should ready itself for a high oil price regime brought on by a continuous surge in global crude oil prices.
We have to move to a high oil price regime, Mr Ahluwalia said. The statement is significant at a time when many political parties are demanding a roll-back of the recent hike in fuel prices.
Speaking on the sidelines of the diamond jubilee function of the Institute of Chartered Accountants of India (ICAI), Mr Ahluwalia also said that the countrys economic growth could slow down to 8% in the face of high crude prices and spiralling inflation. He, however, said that taking into account the global economic slowdown, even an 8% growth rate was satisfactory.
He said the revenue performance has been good, and no expenditure budget has gone off track. If growth is very good, if revenues are buoyant, it may not be bad, he said referring to the growth rate. As regards fiscal deficit, Mr Ahluwalia said, there is nothing sacrosanct about the number... My personal view is that when we face a shock... some of the shock will be reflected in the budget. He said the prospects for the Indian economy were very stable and it is possible to register a healthy GDP growth in the future without high inflation.
Referring to the rising commodity prices are being fuelled by a 13-year high inflation rate of 11.42%, he said that the inflation rate would be tamed in the next few months. The government has already taken steps to see that price rise is arrested, he said pointing out that what we are seeing in India is not different from what we are seeing elsewhere.