The government would be forced to deregulate diesel prices if global crude touches $150 to $160 a barrel, Kaushik Basu, chief economic adviser in the ministry of finance said on Thursday.
Brent crude was at $114.82 a barrel on Thursday. Barring a price hike to that extent, he said diesel deregulation was not inevitable.
Basu has repeatedly favoured a hike in diesel prices but the government has kept deregulation on hold due to its impact on inflation and anger of the voters.
While presenting the Budget for 2011-12, Finance Minister Pranab Mukherjee had said that he was aiming to narrow down the fiscal deficit to 4.6% of gross domestic product from 5.1% estimated in the current fiscal.
The government had in June last year agreed in-principle to deregulate diesel prices, as recommended by an expert panel headed by former Planning Commission member Kirit Parikh.
Reserve Bank of India deputy governor Subir Gokarn also said the government would prefer to free diesel prices rather than risk a higher fiscal deficit.
The government will also be looking at the inflation numbers before it considers deregulation of diesel prices.
Brent crude was at $114.82 a barrel on Thursday. Barring a price hike to that extent, he said diesel deregulation was not inevitable.
Basu has repeatedly favoured a hike in diesel prices but the government has kept deregulation on hold due to its impact on inflation and anger of the voters.
While presenting the Budget for 2011-12, Finance Minister Pranab Mukherjee had said that he was aiming to narrow down the fiscal deficit to 4.6% of gross domestic product from 5.1% estimated in the current fiscal.
The government had in June last year agreed in-principle to deregulate diesel prices, as recommended by an expert panel headed by former Planning Commission member Kirit Parikh.
Reserve Bank of India deputy governor Subir Gokarn also said the government would prefer to free diesel prices rather than risk a higher fiscal deficit.
The government will also be looking at the inflation numbers before it considers deregulation of diesel prices.
It is not easy to deregulate, as there are other large Govt. sector consumers - defence & rail, also road transport another large area to be affected, which in turn can raise inflation...!
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