Concerned over soaring oil and commodity prices resulting in high inflation, India today asked the G-20 member countries to evolve a mechanism for stabilising the volatile price movement.
“The best way to cool soaring prices is to boost output with better technology, more competition among more producers and better information,” India’s Finance Minister, Mr Pranab Mukherjee, said at a meeting of G20 finance ministers and central bank governors on commodities and energy.
He said the volatility emanates from the developed countries as prices quoted by them act as a benchmark. This becomes a concern for emerging markets, like India, which is a major commodity importer.
“...Excessive volatility suppresses price signals that equilibrate demand and supply in the real economy and are consequently very destabilising. The G20 needs to urgently develop a consensus on dealing with this threat to strong and sustainable growth,” he said.
India imports about 80 per cent of its crude oil requirements and is grappling with a near double-digit inflation.
With regard to fossil fuel subsidies, Mr Pranab Mukherjee said while India was strongly committed to phasing these out, “we believe there is no one-size-fits-all model to implement fossil fuel subsidy reforms.” He, however, asserted that there were “no subsidies” on petrol in India any more, while diesel prices have been continuously increased from time-to-time.
“However, we need to ensure sustainable energy security for the poor. Even as we remain committed to reduce inefficient fossil fuel subsidies, the use of fuels such as LPG and kerosene for domestic uses cannot be easily phased out in the near future,” he said.