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PM hints at hike in fuel, power prices

Shishir Sinha New Delhi | Updated on March 12, 2018 Published on December 27, 2012

Prime Minister, Dr. Manmohan Singh along with (from left)Minister of State for Planning, Mr. Rajeev Shukla, Finance Minister, Mr. P. Chidambaram, Defence Minister, Mr. A. K. Antony, Minister for Agriculture, Mr. Sharad Pawar and Home Minister, Mr. Sushilkumar Shinde at the 57th National Development Council meeting . in the capital on 27th Dec, 12.   -  Ramesh Sharma

Plain-speaking: Prime Minister Manmohan Singh and Deputy Chairman of Planning Commission Montek Singh Ahluwalia at the National Development Council meeting in the Capital on Thursday. — Photo: Ramesh Sharma   -  Business Line

Chief Minister of Gujarat, Narendra Modi with Dy. Chairman, Planning Commission, Montek Singh Ahluwalia during the 57th National Development Council Meeting.   -  Ramesh Sharma

Chief Minister of Gujarat, Mr. Narendra Modi and Himachal Pradesh Chief Minister, Mr. Virbhadra Singh greeting each other during the 57th National Development Council Meeting.   -  Ramesh Sharma

Chief Minister of Tamil Nadu, Ms. J. Jayalalitha at the 57th National Development Council meeting.   -  Ramesh Sharma

Chief Minister of Tamil Nadu, Ms. J. Jayalalitha with Minister for Parliamentry Affairs, Mr. Kamal Nath and Agriculture Minister, Mr. Sharad Pawar at the 57th National Development Council meeting.   -  Ramesh Sharma

Chief Minister of Odisha Naveen Patnaik, Delhi CM Sheila Dikshit, Minister of State For Power Jyotiraditya Scindia, Bihar Chief Minister Nitish Kumar, Agriculture Minister Sharad Pawar and Parliamentary Affairs Minister Kamal Nath during the 57th National Development Council Meeting at Vigyan Bhavan.   -  Ramesh Sharma

Chief Minister of Gujarat Narendra Modi with Chief Minister of Uttar Pradesh Akhilesh Yadav at the 57th National Development Council meeting.   -  Ramesh Sharma

Chief Minister of Gujarat Narendra Modi with Chief Minister of Tamil Nadu J. Jayalalitha at the 57th National Development Council meeting.   -  Ramesh Sharma

Rajasthan Chief Minister Ashok Gehlot, Himachal Pradesh Chief Minister Virbhadra Singh and Maharashtra Chief Minister Prithviraj Chavan during the 57th National Development Council Meeting.   -  Ramesh Sharma

Chief Minister of Gujarat Narendra Modi with Defence Minister A. K. Antony, Agriculture Minister Sharad Pawar, Finance Minister P. Chidambaram and Minister for Health and Family Welfare Gulam Nabi Azad at the 57th National Development Council meeting.   -  Ramesh Sharma

Chief Minister of Tamil Nadu J. Jayalalitha with Defence Minister A. K. Antony at the 57th National Development Council meeting.   -  Ramesh Sharma

Chief Minister of Tamil Nadu J. Jayalalitha with Agriculture Minister Sharad Pawar at the 57th National Development Council meeting.   -  Ramesh Sharma

Says subsidies must be cut to put resources to productive use

Prime Minister Manmohan Singh gave a clear indication of hikes in fuel and electricity prices in his speech at the inauguration of the 57th meeting of the National Development Council here on Thursday.

“Coal, petroleum products and natural gas are all priced well below international prices. This also means that electricity is effectively underpriced, especially for some consumers. Immediate adjustment of prices to close the gap is not feasible, I realise this, but some phased price adjustment is necessary.”

According to the Prime Minister, energy experts are unanimous that “we cannot expect to achieve rapid, inclusive and sustainable growth if we are not willing to undertake a phased adjustment in energy prices to bring them in line with world prices.”

“The Central Government and the States must work together to create awareness in the public that we must limit the extent of energy subsidies,” he added. On overall subsidies, the Prime Minister said that some were indispensable parts of any socially just system, but should be well-designed and effectively targeted, and the total volume must be kept within the limit of fiscal sustainability. “The failure to control subsidies within these limits only means that other Plan expenditures have to be cut or the fiscal deficit target exceeded,” he said. Limiting subsidies is one of the efforts to make available resources for more productive use. Explaining this, Singh focussed on generating revenues to finance programmes of inclusiveness.

“If growth slows down, neither the States nor the Centre will have resources needed to implement inclusiveness programmes. We will either be forced to cut these programmes, or be pushed into tolerating a higher fiscal deficit, which will have other negative consequences,” he added.

Overall Growth

Terming the modification of the annual average growth target to 8 per cent from 8.2 per cent in the 12th Plan as “reasonable,” Singh said, “Achieving an average of 8 per cent growth, following less than 6 per cent in the first year, is still an ambitious target.”

This can be well understood from the fact that the economy will need to grow over 9 per cent in last three years of the Plan period to achieve the annual average of 8 per cent.

Planning Commission Deputy Chairman Montek Singh Ahluwalia, in his opening remarks, announced the restructuring of Centrally Sponsored Schemes (CSS). He said that on the basis of the B.K. Chaturvedi Committee’s recommendations, it was proposed to consolidate CSS into a smaller number and also increase the degree of flexibility in the guidelines under which these schemes operate.

“It is also proposed to introduce a special flexi-fund window within each flagship scheme, which will give States freedom to experiment and innovate even beyond the flexible guidelines. We expect to implement the new system with effect from April 1, 2013,” he added.

Meanwhile, later in the evening, the Planning Commission clarified that the PM’s statement does not mean that a price hike will happen in a day or two. This can take place only after building a political consensus, it added.

>shishir.sinha@thehindu.co.in

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Published on December 27, 2012
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