High oil price to push subsidy bill: RBI

Concerned over the rising crude oil prices in the international market, the Reserve Bank of India (RBI) said that the government's subsidy bill for petroleum products and fertilizers might put fiscal consolidation plans under strain by breaching Government projection for FY12.

RBI in its report on macroeconomic and monetary developments, said, "Fertiliser and oil subsidies are likely to exceed budgetary provisions and generate pressures on fiscal situation in case there is a delay in adjusting the domestic prices to rise in international prices."

In June 2010, the Indian Government took a revolutionary initiative to deregulate the petrol prices and allowed the oil companies to fix rates on the basis of market forces but it kept the diesel and LPG rates under its power.

Read more about: rbi, inr, goi, oil and gas
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