Kaushik Basu pitches for decontrol of diesel prices

NEW DELHI: Chief Economic Advisor Kaushik Basu has pitched for decontrol of diesel prices partially and "intelligently".

"Partial decontrol has to be done very intelligently ... so what I am hopeful for is that we will do our professional partial decontrol which is going to shelter the consumers partly but also allow a float to take place from now on," he told a private news television channel.

However, he said that the move would take some time. "It is not going to happen in next couple of weeks but this is also like FDI, something which I feel is entirely possible for the next couple of months," Basu added.

He further said that decontrol does not mean that "just raise it and once again freeze".

In India, oil marketing companies are free to determine petrol prices, but diesel, LPG and kerosene are sold at discounted prices.

On oil subsidies, Basu said there was a movement on reducing subsidy, but said that full deregulation of diesel was not possible under present circumstances.

"Diesel subsidy, let me tell you, a full decontrol - I do not think that is on the cards right now. I also feel that it will lead to a kind of reaction which we will not be able to handle," he added.

He also appeared optimist that government will speed up reforms and is likely to allow FDI in multi-brand retail.

"This is (allowing FDI In multi-brand retail) actually more than just a small change. It can improve the condition for our farmers, increase India's exports," he said.

Basu said that the next six months are crucial for the government.

"There is a six-month window and yes it is true that if we do not manage to do enough...the economy after that will register that," he added.

On Goods and Services Tax (GST), he said that it would take more than six months to implement this reform measure.

"...it (GST) needs constitutional amendment and it will be foolish to day that it will be happen in six months," Basu said.

The proposed GST would subsume most indirect taxes like excise duty and service tax at the central level and VAT on the state front, besides local levies.