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Quick Edit | Difficult decisions

Quick Edit | Difficult decisions
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First Published: Wed, Mar 02 2011. 10 36 PM IST
Updated: Wed, Mar 02 2011. 10 36 PM IST
Chief economic adviser Kaushik Basu has said the government may be forced to either raise fuel prices or increase the oil subsidy if crude prices continue to rise.
He said either decision would be difficult. The issue is not about the basics: prices paid by consumers have to go up if crude prices continue to rise. There is no way to evade this. The question is about the why and when of such decisions.
Postponing a decision that needs to be taken will not yield political benefits, now or later. If anything, the further it is postponed, the more severe its political effects will be.
Almost for a year now, leaders have been saying that inflation will slow. It has not. If anything, a year earlier, a careful mix between raising fuel prices and the right monetary and fiscal policy measures would have been much easier. With very high oil prices, an optimum blend may elude policymakers.
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First Published: Wed, Mar 02 2011. 10 36 PM IST
More Topics: Quick Edit | Fuel prices | Kaushik Basu | Oil | Subsidy |