India urged to link oil prices to market

NEW DELHI, Jan 5 (AsiaPulse) - The Indian Prime Minister's economic advisory panel on Monday suggested that the government take hard decisions like linking prices of petroleum products to global rates in 2012-13 as there will be no political compulsions after Assembly polls in five states are over on March 3. "I think during the course of next year there may not be any major electoral compulsions. I think most of the elections will be over by that time," Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan said in an interview to CNBC-TV18.

"Some hard decisions with respect to petroleum subsidies will have to be taken...," he said when asked whether the government can work its way back on to the fiscal consolidation path.

He said the government faced difficulty in reducing subsidies on petroleum products and raising prices of diesel amid high inflation.

"When inflation was running at a level in excess of 9 per cent for most of the year, it was difficult to adjust the petroleum subsidies, reduce the petroleum subsidies and raise the diesel prices, for example. But I think that difficulty will not be there next year," Rangarajan said.

Punjab, Uttarakhand, Uttar Pradesh, Goa and Manipur go to polls between January 30 and March 3.

The PMEAC chief hoped inf