Government won't set diesel price free

Indian Government has no plans of freeing diesel prices seeing current inflation. Denying all considerations about government's favor of freeing diesel prices, Indian chief economic advisor Kaushik Basu told reporters that inflation is still in "uncomfortable zone" so freeing the diesel price will risk more to this.

Speaking to reporters at a CII event, Basu said, "I am not of the view that diesel price deregulation is inevitable and that is the position taken by petroleum ministry right now. Given the inflationary situation right now, we don't want to do that".

However Basu did not clear the attitude of government regarding this. At one moment he said it will invite risk to inflation, at the other moment he said that he can't assure it won't happen in future. He said it depends on the crude prices and time span for which it remains at $110 per barrel.

For the FY 2011-12, government has reduced subsidy on oil to Rs. 23,640 crore from current Rs.38, 386 crore. Back in June, 2010, government ruled to free the petrol pricing from its control. So the same was expected for the diesel also. But storms in crude oil prices hindered government from doing this.

Basu also gave his opinion on food inflation results released last week. He said reduced inflation is good, but data are not comfortable.