New Delhi: India should learn to live with high energy prices for rapid economic growth, said Planning Commission deputy chairman Montek Singh Ahluwalia after two of the state-owned oil companies hiked petrol rates this week.
“India should get used to high energy prices. India will not be able to grow rapidly if it does not adjust to high energy prices,” he said on the sidelines of a meet organised by Indian Institute of Foreign Trade here.
State-run BPCL and Indian Oil Corp have hiked petrol prices by almost Rs3 per litre.
When asked if high energy prices would impact India’s economic growth, he said “not at all”.
He said that the Planning Commission has been saying the desired economic growth cannot be achieved unless India align its energy prices with international rates.
“If we are not adjusting the prices of petroleum products in our country with global prices it only means we want to subsidise imported petroleum products,” Ahluwalia pointed out.
Ahluwalia favoured subsidising prices of petroleum products through Budget allocation and not by distorting (fuel) prices as such a move would ruin the economy.
Supporting the de-regulation of petrol prices, Ahluwalia said adjustment in petroleum product prices is perfectly right.
On rationalisation of 100% tax on petroleum products, he said it is true that tax on petrol are high but “revenues are also important.”
“If you want reduction in petroleum prices on account of taxes and you compensate that by across the board increase in other excise duties, that may be valid,” he added.
The government had in June this year freed petrol prices, but the state firms, who control 98% of the retail market, continue to informally consult the oil ministry before revising prices.