RBI calls for immediate hike in prices of petro products

Posted By: Religare
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RBI calls for immediate hike in petrol prices
Concerned over the growing pressure on government's fiscal deficit due to rising crude oil prices in the international market, the Reserve Bank of India (RBI) in its Monetary Policy Statement release for 2011-12, has called for an increase in retail prices of petroleum product immediately.

RBI Governor D. Subbarao, quoted, "The critical assumption that petroleum and fertiliser subsidies would be capped is bound to be seriously tested at prevailing crude oil prices. Even though an adjustment of domestic retail prices may add to the inflation rate in the short run, the RBI believes that this needs to be done as soon as possible."

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.

At a juncture, when crude oil stays elevated over $110 a barrel in international markets, the Government is compelled to increase retail prices of crude products to ease some pressure on government's fiscal deficit, despite concerns of rising inflationary pressure and moderation of economic growth.

Read more about: rbi, oil and gas, investment
Story first published: Wednesday, May 4, 2011, 12:30 [IST]
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