New Delhi: India is yet to decide a date for the next meeting of a ministerial panel set up to look into freeing up fuel prices, a top oil ministry official said on Monday.
The decision to free up fuel prices is seen as a tough test of the government’s appetite for reforms in the face of high prices. It could help already-bleeding state-run oil firms and bolster India’s fiscal health because fuel accounts for a quarter of its estimated subsidy bill of $25.6 billion.
“I don’t think they (oil companies) can survive without increase in prices,” petroleum secretary S Sundareshan told reporters.
The finances of public sector oil marketing firms would be hammered if fuel prices are not raised. Projected losses for the firms are estimated at $24.4 billion this year, based on an average crude price of $85 a barrel.
A ministerial panel had on 7 June deferred a decision to ease government control over fuel pricing because of political pressure over high prices.
In an indication that a decision on the key reform move could see at least a short-term delay, top government adviser C Rangarajan told Reuters on the weekend that a hike in domestic fuel prices was likely once headline inflation softened.
Prime Minister Manmohan Singh has said inflation could moderate to 5-6%, in line with the Reserve Bank of India’s comfort zone, by December.
India’s wholesale price index accelerated an annual 10.16% in May, driven by higher food and fuel prices, official data released on Monday showed.