Govt favours long-term solution on fuel prices -Prashant K Nanda and Utpal Bhaskar

-Livemint.com

The issue of frequent hikes in fuel prices is a matter of debate and concern, law and justice minister Ravi Shankar Prasad said after a Union cabinet meeting

New Delhi: The National Democratic Alliance (NDA) government on Wednesday signalled its intent to stay the course on fuel pricing reforms and said that it was working toward a “long-term solution”.

This comes against the backdrop of an international crude oil price rally, with fuel prices reaching a record high in India, spurring a demand for an excise duty cut on petrol and diesel ahead of 2019 general elections.

The issue of frequent hikes in fuel prices is a matter of debate and concern, law and justice minister Ravi Shankar Prasad said after a Union cabinet meeting.

“The government is keen that instead of having an ad hoc measure, it may be desirable to have a long-term view which addresses not only the volatility but also takes care of the unnecessary ambiguity arising out of frequent ups and downs. That process is underway,” Prasad said.

Petrol prices were deregulated in June 2010 by the Congress-led United Progressive Alliance (UPA) government. The Prime Minister Narendra Modi-led National Democratic Alliance (NDA) government decontrolled diesel prices in October 2014.

“As far as fuel prices are concerned, including the excise duty and other taxes on it, they are very clearly used for country’s development in the form of more national highways, more AIIMS, more digital infrastructure. They are used to take energy to villages. Therefore, tax on fuel is directly linked to development. Having said that, there is a compelling need for a long-term solution,” said Prasad, who is also the minister for electronics and information technology.

With the dynamic fuel pricing introduced in June last year, the NDA government has maintained that it has no role in pricing.

The government is very involved in finding a long-term solution, Prasad said, and added that complete freedom in pricing on many occasions has also resulted in petrol and diesel price reduction.

The spike in oil prices is due to a combination of factors such as President Donald Trump pulling the US out of the 2015 nuclear accord with Iran, Opec and Russia cutting supplies, falling production in Venezuela and geopolitical tensions.

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