Chief Economic Advisor of India Kaushik Basu, who is in favour of partially decontrolling diesel prices, said that a report on deregulation may finally take shape by next week. At an event organised by IMI, he said, "We feel we should go towards virtually full decontrol. We can't do it at one go, you do want to shelter the consumers as much as possible, but you have to tell people to learn to live with some upward and downward movement in prices." He further added, "We comment on all (diesel, kerosene, LPG) but we are going to do it in greater detail for diesel alone."
Basu also said that the report is being prepared by the inter-ministerial group set up by the Prime Minister on inflation. According to him, he had a brief discussion with the Finance Minister Pranab Mukherjee; however, the report will be quite detailed in nature and will go first to Mukherjee. As the Economic Advisor, he feels it is his duty to bring the matter of partial deregulation to government's attention and consider it. He also had a meeting with Petroleum Minister Jaipal Reddy in this regard and they are working together on a detailed report.
Basu stated, "You don't completely put it on the market price just now because it is just going to give a big jolt. So, you go in for partial float that's important.” He added, "So not only you cover the consumer partly, you allow price go up and down from here onward."
Earlier, Society of Indian Automobile Manufacturers (SIAM) said the proposed hike of up to Rs. 2.55 lacs on diesel cars should not be passed without consulting with Department of Heavy Industries first. Senior Director, SIAM, Sugato Sen, said, "Any step to increase tax should be done only after the approval of the nodal ministry, which is the Ministry of Heavy Industries and Public Enterprises in this case."
Previously, Reddy wrote to the Finance Minister, requesting him to levy an additional tax between Rs. 1.70 and 2.55 lacs in order to reduce private consumption of diesel. Sen said, "Petrol vehicles are not selling as such and demand for diesel vehicles are also not as good as it is made out to be. The Department of Heavy Industries (DHI) showed dissent to the proposal of additional tax and hinted that it would contact the Finance Ministry for the same.
