‘Diesel price deregulation will depend on inflation’

The Government has said that a decision to free diesel prices from Government control will depend on the inflation situation.

“We had announced last year that the decision would be taken at an appropriate time to deregulate diesel, the Government hasn’t changed their decision... We have to see how the inflationary pressures go and take a decision,” the Revenue Secretary, Mr Sunil Mitra, told reporters on the sidelines of an Assocham function.

On rising global crude prices, Mr Mitra said the Government would react as the situation unfolds. “It would have been inappropriate for us to take a stand (in the Budget) on how much petroleum is going to cost,” he added.

Crude oil prices in the international market are ruling above $100 a barrel and with the crisis worsening in Libya and other West Asian countries, they may go up further.

Although food inflation declined from 20.2 per cent in February 2010 to 9.3 per cent in January, 2011, it still remains a concern for the Government. Headline inflation in January, at 8.23 per cent, is above the comfort level of around 5-6 per cent.

Mr Mitra said it is impossible to assess the ramifications of the current crisis in West Asia. “... It is impossible to say now where it is going to go, whether it will affect Saudi Arabia or Iraq and other sources from where we get oil. So this is something that we will have to react to as the situation unfolds,” he added.

He said if global crude prices increase, petrol prices will also increase, as it is deregulated.

Answering queries on GST, the Revenue Secretary said that as the Budget is over now, he would talk to the Empowered Committee of State Finance Ministers to take the issue forward.

“We have been more tied up with the Budget, we will now sit down and work on that... We will have to discuss this, have a talk with empowered committee and take a decision,” he added.