The Planning Commission on Saturday sought to play down fears that the hike in excise duty on petroleum products would lead to a surge in inflation.
"The excise hike (on petroleum products) was the right thing to do. I don't think the hike will stroke inflation," the Planning Commission Deputy Chairman Montek Singh Ahluwalia said in an interview to private TV channel CNBC-TV18.
Ahluwalia said, "The government cannot continue to subsidise petroleum products and Budget 2010-11 is judiciously balanced."
Besides restoring five per cent customs duty on crude oil, the Budget proposals also hiked customs duty on petrol and diesel to 7.5 per cent from 2.5 per cent respectively. In addition, the excise duty on non-branded petrol and diesel was also raised by Re one a litre to Rs 14.35 and Rs 4.60 per litre respectively.
On Finance Minister Pranab Mukherjee's promise to rollout the Goods and Services Tax (GST) by April 2011, Ahluwalia said he was hopeful that the Minister would get the states on board.
The Indian economy grew 6 per cent in the third quarter of this fiscal against 7.9 per cent in the previous quarter. However, Ahluwalia said the number has not come as a surprise.
"Despite global factors being uncertain, I am confident that India's fourth quarter GDP growth will be close to 8 per cent," he said.
Agriculture output in the third quarter fell to (-) 2.8 per cent from (-)1.4 per cent year-on-year due to drought in several parts of the country.
He also said agriculture growth could reverse to a positive 6-7 per cent next year. "High agricultural growth in 2010-11 can add up to 1 per cent of GDP," he said.
