Rangarajan for cut in diesel subsidy

As the economy slows down and the rupee tumbles again on Syrian concerns, the call for lowering subsidy on transport fuel has got shriller.

The Prime Minister’s Economic Advisory Council Chairman C Rangarajan said the government could look at pruning subsidies in other areas, more importantly on diesel.

 "I think the correction is very much needed. The factor responsible for this is external. The rupee has also depreciated. We need to take action. Necessary adjustment will have to be made," Rangarajan said on the sidelines of an event here. With the US military attack on Syria looming large, the global crude prices are set to move northward.

Brent crude prices have already breached the $110 per barrel mark and is trading close to $114 per barrel.

Economists have called upon the government to increase subsidised fuel prices in order to cut down on its rising expenses, but with elections knocking at the door, it looks quite impossible for the government to take such a drastic step to reduce diesel prices.