Pranab says can’t insulate economy entirely from rising fuel rates

Pranab says can’t insulate economy entirely from rising fuel rates

Bhubaneswar: Finance minister Pranab Mukherjee on Sunday said it is not possible to completely insulate the economy from rising fuel prices, even as he exuded confidence that the steps taken by the government will cool down inflation.

“... There is no way we can completely insulate ourselves from the adverse impact of the rising fuel prices, particularly diesel prices. It has its impact on the economy," he told reporters.

Describing the price situation as a matter of grave concern, Mukherjee said, “I hope the measures we have taken, both on supply and demand sides and also by allowing import of essential food items, which are in short supply, with zero duty, will improve the situation."

Food inflation shot up to a one-year high of 18.32% in the week ended 25 December, driven mainly by rising prices of vegetables, especially onions, fruits and milk products.

The government recently put on hold a decision to raise diesel prices in view of high inflation, despite pressure from state-run oil marketing companies, which are facing the brunt of rising crude oil prices in the international market.

State-run oil firms currently sell diesel at a loss of Rs6.99 per litre and have been demanding an increase in retail prices to narrow their losses.

Pointing out that fluctuation in prices of some food items was taking place every week, Mukherjee said he had written to all state chief ministers, advising them to use the powers vested in them under the Essential Commodities Act to prevent hoarding.

Mukherjee also asked the states to improve the public distribution system (PDS) to ensure that subsidized food grains and other items are provided to weaker sections of society, mainly BPL families, to reduce the impact of sky-high prices to some extent.

“If the PDS is improved and through them we can deliver these items which we are providing at subsidized rate, these sections would be relieved of the adverse impact of high prices to some extent," he said.