Unwillingness to align fuel prices a threat to growth, says Montek

It is not fuel shortage, but the unwillingness to align energy prices with market rates that poses a threat to country's economy, Planning Commission deputy chairman Montek Singh Ahluwalia said on Thursday.

India subsidises diesel and cooking fuel and also mandates rates for coal and natural gas that are lower than the market price. "I don't think it is shortages. It is our unwillingness to align prices (with market rates)", Mr Ahluwalia said in reply to a question on whether fuel shortage is a serious threat to the economy.

"If you want to import coal, gas or petrol, it is freely available. But the problem is that imported coal is 60 to 70 per cent more expensive," he told PTI in an interview, adding, "We have not aligned petroleum prices. Diesel prices are low. Kerosene prices are much lower.

Even after two small doses of price hikes, diesel is sold at a discount of Rs 10.22 a litre to its imported cost, while kerosene is sold at a loss of Rs 33.18 per litre. Oil firms lose Rs 481 per 14.2-kg LPG cylinder.

"We have to adjust prices (of energy). It is not easy in one go. That is why i think that what the government has done on diesel prices is very important. Let's hope that it gets through," he added.

The government had last month decided to allow oil firms to raise diesel prices in small doses of up to 50 paisa per litre every month till the losses are wiped out.