Click to play videoNew Delhi: There is no "magic bullet" with the Government to tame inflation and consumers will have to pay more if crude oil prices surge further, Planning Commission Deputy Chairperson Montek Singh Ahluwalia has said.
"There is a case for insulating the poor; a much weaker case for insulating the general consumer (and) very little case for insulating the rich. So the fact, is, yes, if oil prices keep on rising the government will have to do something," he told Karan Thapar on CNN-IBN’s show Devil’s Advocate.
"So the fact is: Yes, if oil prices keep on rising, the government will have to do something," said Ahluwalia
"I think I have no hesitation in saying that there is no magic bullet with the government—that if import prices increase, we cannot insulate the domestic consumer indefinitely."
The government raised the prices of petrol and diesel by Rs 5 and Rs 3 per litre on June 5 to help state-owned oil marketing companies offset part of their under-recoveries.
As a move to discourage fuel-guzzling private vehicles, the government on Friday slapped additional specific excise duty of Rs 15,000 per unit on large cars, multi-utility vehicles and sports utility vehicles with engines between 1500 cc and 1999 cc capacity.
For cars and vehicles with engines capacity of 2000 cc and above, the duty was raised by Rs 20,000 a piece.
Admitting that the "sea" of Indian economy "has become a little choppy", Ahluwalia insisted it has not lost direction. "I think the ship is steering pretty much in the direction it should," he said.
Ahluwalia said the Planning Commission has consistently maintained that consumers must pay and subsidies should be limited and targeted.
"In my view, the Planning Commission is consistent on this, we must bring the country round to a recognition that domestic consumers must pay, except those that need subsidy, and those subsidies should be limited and targeted," he said.
Asked whether there was a consensus in the Cabinet on this thinking, Ahluwalia said: "The Cabinet's decision is to share the burden. That's a recognition that consumers have to bear some burden".
Expressing confidence that inflation would come down in the next three months, he called for patience. "You always have to ask for patience when you are dealing with big problems because big problems are not solved instantaneously.
In a few months time, certainly by September-October, we will be in a much better position on inflation front," he said.
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