Govt may free diesel prices when inflation eases to 6%

The government could free diesel prices once headline inflation eases to 6%, C Rangarajan, the prime minister's top economic adviser said on Monday.

February 21, 2011 / 16:46 IST

The government could free diesel prices once headline inflation eases to 6%, C Rangarajan, the prime minister's top economic adviser said on Monday.

The government expects headline inflation to ease to 7% by March, from 8.23% in January.

Raising diesel prices is a political hot potato in India as it accounts for a third of the country's fuel demand. Deregulation of petrol prices in June sparked off political protests against the Congress-led coalition government.

Diesel and gasoline have a weighting of 4.67% and 1.09%, respectively, in the wholesale price index (WPI), India's main inflation measure, and raising fuel prices has a knock-on effect as farmers and manufacturers pass costs along.

first published: Feb 21, 2011 04:35 pm

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