Slip sliding away

It might seem harsh on consumers but the government now has very little choice but to increase pump prices of petrol and diesel. Given that crude oil prices are still averaging $110 per barrel, despite dire predictions of a recession in the US and a slowdown in the world’s second largest economy, China, the government cannot afford to foot the bill on its own. Citigroup estimates that, at an average cost for the Indian basket of $105 per barrel, subsidies could cross Rs 68,000 crore. While the government can’t be blamed for soaring crude oil prices, it has done very little to keep prices in check; among its initiatives that will further stoke inflation is the hike in the minimum support prices by 15-38 per cent.

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