NEW DELHI, AUG 9 (AP): A top Indian government panel has recommended raising domestic fuel prices over the next 15 to 18 months to bring them more in line with international oil prices, a government official who has seen the group's unpublished report said Saturday. The official, who spoke on condition of anonymity because the report is still under discussion, said the government is now weighing the panel's recommendation and it is "50-50 likely to happen."
The cost of fuel and fertilizer subsidies in India is estimated at about 2.5 percent of its gross domestic product. Government officials have not hesitated to say that such levels are unsustainable over the long term, but have stopped short of announcing a remedy ahead of national elections, which must be held by May 2009.
On one side, the government is being pushed by economists who say India, which imports most of its oil, cannot afford to shelter domestic consumers from the high international price of oil. On the other, it is being pulled by fears of alienating voters, who are already struggling with 12 percent-plus inflation, and disrupting a fragile political alliance between the governing Congress party and its allies in the run-up to elections.
In July, millions of truck drivers went on strike across India to protest rising fuel prices and road tolls. Many argue that by keeping prices artificially low, government subsidies across Asia have fueled excessive demand and put upward pressure on world oil prices.
Indian govt mulls fuel price hike
FE Team | Published: August 10, 2008 00:00:00 | Updated: February 01, 2018 00:00:00
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