ibnlive » India

Nov 13, 2011 at 08:11am IST

PM firm on fuel hike, says subsidies unsustainable

On Board Air India One: Prime Minister Manmohan Singh returned from Maldives on Saturday night where he attended the SAARC Summit and held a bilateral meeting with his Pakistani counterpart Yousuf Raza Gilani.

The Prime Minister stood firm on the issue of the petrol hike, saying subsidies are already unsustainable.

"One reason why inflation has become a problem, and this is concerning everybody, is the rise in prices of fuel products. And there 75 per cent of our total requirements of petroleum products are imported. If the prices go up, we have to either raise domestic prices or absorb the increase in asking the oil marketing companiers to subsidise other elements of the petroleum sector. Or the budget will give additional subsidies," singh said.

"Already the budget subsidies amount to Rs 1,32,000 crores. And quite frankly, that is an unsustainable burden. And therefore, I would like all our countrymen to recognise that when international prices are rising and we have no control over international prices, beyond a point further subsidies can only aggravate a budgetary problem," He added.

Singh said that if the budgetary problem is aggravated then inflation will rise again causing more trouble for the country.

Dr Manmohan Singh, who in the past has said that high inflation is a logical fallout of growth, on Saturday clarified on board Air India One that food inflation is a big worry for his government.

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