Unwillingness to align fuel prices a threat to growth: Montek

Unwillingness to align fuel prices a threat to growth: Montek New Delhi: 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 Thursday.

India subsidises diesel and cooking fuel and also mandates rates for coal and natural gas that are lower than market price.

"I don't think it is shortages. It is our unwillingness to align prices (with market rates)", 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 percent more expensive," he told PTI in an interview.

"We have not aligned petroleum prices. Diesel prices are low. Kerosene prices are much lower. The price of natural gas is one third. Your domestic price (of gas) is USD 4.2 per million British thermal unit but imported gas is USD 13 per mmBtu."

Even after two small dozes 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.

Ahluwalia admitted that at USD 13 per mmBtu price, the demand for natural gas is very low.

"We have to adjust prices (of energy). It is not easy in one go. That is why I think that what government has done on diesel prices is very important and correct thing. 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 dozes of up to 50 paisa per litre every month till the losses are wiped out.

PTI