FM calls for correction in oil prices

With the government’s fiscal deficit reaching alarming proportions, Finance Minister P Chidambaram on Wednesday gave a call for correcting price distortions in the oil sector and the Centre’s burgeoning fuel subsidy.

“The current pricing system is not conducive to economic decision making,” he said at the valedictory session of PetroTech-2012.

“With less than adequate passthrough, subsidies of these products (diesel, kerosene and LPG) have burgeoned. The problem is that these are clearly not sustainable and we must devise ways and means of correcting the price distortions", the finance minister said.

Rising oil prices and a depreciating rupee in the past many months has thrown India’s oil import bill out of gear. India imports about 75 per cent of its crude oil requirement. The minister said that this is one of the main reasons for India’s widening current account deficit. 

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