A paper detailing the roadmap for decontrol of diesel prices is in the works and is likely to be ready by next week, Dr Kaushik Basu, Chief Economic Advisor to the Finance Ministry, has said.
This paper is being prepared by the inter-ministerial group on inflation headed by Dr Basu.
This group was set up by the Prime Minister, Dr Manmohan Singh, in January last year to look into the inflation situation and recommend remedial steps.
Despite serious efforts, policymakers have not been able to rein in inflation, which has hovered above 7 per cent over the last year.
Dr Basu hinted that the paper would advocate partial de-control of diesel prices and not recommend completely putting it on the market price just now.
“We feel we should go towards virtually full decontrol. We can’t do it in one go. So you go for a partial float. You do want to shelter customers as much as possible. But you have to tell people to learn to live with some upward and downward movement in prices,” Dr Basu said on the sidelines of an event here.
Dr Basu also said he had discussed the diesel price de-control issue with the Finance Minister, Mr Pranab Mukherjee, but only briefly.
The proposed paper will comment on both cooking fuels as well as diesel. It would, however, focus to a greater detail on diesel, he said.
The Government currently regulates prices of diesel and cooking fuels. It forks out huge sums to the oil marketing companies to compensate them for selling diesel and cooking fuels at regulated prices, below the market price.