Rangarajan said decontrol of diesel prices was necessary to contain fiscal deficit.
New Delhi: The government should take early action on decontrol of diesel prices and move ahead with its proposal to allow foreign investment in multi-brand retail, said Prime Minister's key economic adviser C Rangarajan.
Admitting that the days of 'big-bang' reforms are over, Rangarajan, who is Chairman of the Prime Minister's Economic Advisory Council (PMEAC) said that allowing foreign indirect investment (FDI) into retail and civil aviation can be done through executive orders outside Parliament.
"I do hope actions in terms of changing prices of petroleum products, more particularly diesel, will come through as early as possible. That is extremely important," he said at a conference on India's economic policy here.
Rangarajan said decontrol of diesel prices was necessary to contain fiscal deficit, which had ballooned to 5.76 percent in 2011-12 fisal.
Although government has taken an in-principle decision to decontrol diesel prices, it has not been able to implement it fearing adverse reaction. Decontrol would give freedom to state-owned oil companies to fix the price of diesel, which currently is decided by the government. The government has, however, decontrolled the prices of petrol.
Rangarajan said political consensus has to be built up "slowly" for increasing foreign investment in insurance and pension sector.
"I do not think that it is necessary or there is a case for big-bang reform. So, I would say that we really need to look at FDI and possibly FDI in retail, in civil aviation can be done without going to Parliament. It can be done by executive decisions," he said.
The government has failed to raise FDI cap in insurance and pension sector to 49 percent, from 26 percent and open the multi-brand retail segment to foreign players because of opposition from its coalition partners.