Diesel prices to become market-linked soon; Arvind Mayaram

In a positive development for Oil Marketing Companies, Finance secretary Arvind Mayaram underscored that diesel prices would soon become market-linked, helped by a softening of global crude oil prices, consequent to which government might be able to do away with diesel subsidy. In a sign of relief for the economy, which imports majority of its oil requirements, prices of oil have remained soft despite the geopolitical tensions in Iraq and Syria on account of ramped up shale gas production in the US and stepping up of output by Saudi Arabia.

Bringing the prospect of diesel decontrol within sniffing distance, losses had dipped to an all-time low of Rs 1.33 a litre in first half of August, but edged a bit higher to Rs 1.78 per litre as of August 19. This was after diesel rates were cumulatively risen by Rs 11.24 a litre in 18 instalments since January 2013 when the UPA government had decided on small monthly hikes.

Meanwhile, no changes were made in the case of gold import restriction, which introduced last fiscal to bring down a bloated current deficit, with finance secretary confirming that this would remain in place till the situation becomes ‘comfortable’. He further highlighted that economy could resume importing gold once it would start earning more from its exports.

Additionally, the official reiterated his FY15 gross domestic product (GDP) growth target of 5.8% and exuded confidence of continuance of green shoots of recovery for the economy. The Reserve Bank has projected the GDP growth for 2014-15 fiscal at 5.5% and the Economic Survey had pegged growth between 5.4-5.9%.