Amid protests from political parties over the hike in petrol prices, the government said the product was deregulated and the revision in the fuel rate was done by the oil marketing companies (OMCs).
It, however, admitted that the hike would have “some impact” on overall inflation.
“It was for the petroleum companies to decide at what point of time they will do so. When we deregulate it, then we have to leave it to the judgement of the OMCs,” Finance Minister Pranab Mukherjee told reporters here.
Later in a statement, he said the “international scenario on commodity prices does not appear good at present.... We will continue to monitor the situation and take necessary measures to address the inflationary pressures on the economy”.
On the impact of the hike in petrol prices on inflation, he said, “There will be some impact on overall inflation due to the adjustment in the petrol prices effected by the oil marketing companies in the coming months.”
OMCs on Saturday decided on the steepest ever hike of Rs 5 a litre in petrol prices.
Inflation in April stood at 8.66 per cent, as per data released on Monday.
Experts said the hike in petrol prices would impact the headline inflation and the numbers would become evident in the data for May, which will be released next month.
Chief Economic Adviser Kaushik Basu said the petrol pricing was decontrolled. “It’s not something that the government is using as an instrument of fiscal policy management,” he said.
He cited the international situation as a justification for the price revision.
“You have to understand that international commodity prices... The petrol prices are part of the global situation,” Mr. Basu said.
Last month, crude oil had reached the two-and-a-half-year high of over USD 120 a barrel due to the ongoing political unrest in parts of the Middle East and North Africa which led to speculative buying. It is, however, trading at over USD 100 per barrel in global markets now.
Mr. Mukherjee had raised concerns on the issue of high global commodity prices at a recent meeting of the Asian Development Bank in Vietnam.
Meanwhile, the Bharatiya Janata Party blocked traffic in many parts of the national capital to protest against the hike in petrol prices. Other parties, including the Left and the Samajwadi Party, have also condemned the hike.
Keywords: petrol prices