Wants diesel price raised

The Prime Minister’s Economic Advisory Council has suggested a compromise formula to break the deadlock on allowing majority foreign direct investment in multi-brand retail.

The Council has mooted allowing FDI in multi-brand retail up to 49 per cent “for channelling transfer of capital and technology.” States receptive to the idea may implement this, the Council added.

The Cabinet’s decision to allow 51 per cent FDI had floundered on political opposition. The Council feels that lowering the FDI level will bring more people on board. It also talked about liberalising FDI norms in aviation and faster decision-making on infrastructure projects.

For fiscal consolidation, the Council suggested capping the number of subsidised LPG cylinders per consumer, besides increasing the price of diesel.

Presenting the Economic Outlook for 2012-13, the Council Chairman, C. Rangarajan, said: “The economy is estimated to grow by 6.7 per cent in 2012-13.

“However, this is a slight underestimate. The growth rate could be higher than projected.”

This is higher than that projected by various brokerages and rating agencies, which see sub-6 per cent growth.

Even the Reserve bank of India lowered the growth projection to 6.5 per cent from 7.3 per cent.

Positive on two sectors

The Council’s optimism lies mainly in mining and manufacturing. Rangarajan believes both will do well. If the monsoon improves, agricultural growth would be better.

Suggesting a four-point agenda to accelerate growth, the Council advised that “priority consideration may be given to a suitable increase in the price of diesel… and a cap on the level of consumption of subsidised domestic LPG close to what is currently being consumed by poorer households, that is, 4 cylinders.”

Shishir.Sinha@thehindu.co.in

(This article was published on August 17, 2012)
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