Fuel price hike inevitable if oil remains above $100: Rangarajan

Fuel price hike inevitable if oil remains above $100: Rangarajan

Chennai: In the wake of the crisis in Libya, increase in fuel prices would become “inevitable" if crude oil remains above $100 per barrel, Prime Minister’s Economic Advisory Council (PMEAC) chairman C. Rangarajan said on Monday.

“If crude oil prices remain above $100, it will be a cause of concern. It will require some action on our part. Some adjustments in terms of raising the prices of petroleum products will become inevitable," Rangarajan told reporters.

“Concern for India primarily is because of increase in prices of crude oil. We might want to watch for a few more weeks to see what would happen," he said.

Asked about food inflation, he said it would decline from March.

“You see, the impact of the decline in vegetable prices started somewhere in the second week of February. Therefore, even the February numbers may not fully reflect the impact of the decline in vegetable prices. March numbers, I believe will show the result (and) it will come down. One can expect a sharper decline in March," he said.

Asked whether the government was mulling to decontrol the prices of diesel, he said policy changes were required for it.

“I have already explained that some policy action will be required on that," he said.

Rangarajan hinted that the government would not exempt companies in special economic zones (SEZ) from minimum alternative tax (MAT).

“(In the case of MAT) universal application is that all companies should pay a certain minimum tax if they show up some profits. However, if companies in SEZ should be exempted from MAT, is a matter for consideration. The view that has been taken so far is that MAT should be applied to it," he said.