As the debate is on to decontrol fuel prices, the Planning Commission Deputy Chairman Montek Singh Ahluwalia on Thursday said it would be a bad idea to continue with subsidies to keep oil prices subdued.
"It is an exceptionally bad idea to continue with energy subsidies...which means that energy prices would be lower and never go up again," Ahluwalia said, while releasing a report on 'Post-Crisis Growth in Developing Countries', by the Commission on Growth and Development in which he is a member.
"I cannot say we have dealt with that (energy subsidies) but I can say that we are facing that issue very squarely," Montek said adding, "it would be a bad idea to continue with energy subsidies on the assumption that commodities prices will not rebound after crisis," Montek, who contributed to report said.
Recently, Ahluwalia had said decontrolling fuel prices will not flare up inflation, but rather it will soften generalised rise in prices.
"Decontrolling fuel prices will not flare up inflation. I just think it is not sustainable to have prices those are not line with the world prices," he had said.
By keeping the price of petroleum down you are actually bearing a subsidy that causes a generalised rise in price ... if you get rid of the subsidy there will be rise in petroleum prices but it will soften the generalised rise in prices," Ahluwalia had said agreeing with recommendations of the Kirit Parikh committee.
Last week, an expert group headed by former Planning Commission member Kirit Parikh, had suggested freeing of fuel prices.
At present, the government does not allow state-run fuel retailers to fix petrol, diesel, kerosene and LPG prices in line with international cost, resulting in huge revenue losses for the companies and subsidy burden on the government.
The special report brought out by the Commission was sponsored by UK's Department of International Development (DFID), The World Bank Group and Australian Agency for International Development.
