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Updated September 4th, 2018 at 10:01 IST

High Fuel Prices: Top Finance officials to hold critical meeting even as Chidambaram and Congress heap pressure on Modi government in debate over India's Economy

Finance Secretary Hasmukh Adhia is likely to chair an important meeting on Tuesday over the prevailing fuel prices, which are at an all-time high and continue to break new barriers, though hardly in a desirable manner, almost on a daily basis, also influencing a general rise in prices that have affected the common man.

Reported by: Ankit Prasad
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Finance Secretary Hasmukh Adhia is likely to chair an important meeting on Tuesday over the prevailing fuel prices, which are at an all-time high and continue to break new barriers, though hardly in a desirable manner, almost on a daily basis, also influencing a general rise in prices that have affected the common man.

The Finance Secretary's meeting is likely to also involve around a dozen top bureaucrats of India's finance establishment, including Secretary and Joint Secretary-level personnel in departments ranging from Banking to Commerce to Food and Supplies. As per inputs, moves are likely to be discussed to rein in the price rise.

THE BIG INDIAN ECONOMY DEBATE

The meeting comes at a time that four factors have made the state of the Indian economy a hotly-debated topic. These are:

  1. The RBI's annual report revealing that 99.3% of the total value of invalidated Rs 500 and Rs 1000 notes that were in circulation at the time of demonetisation, i.e. Nov 8. 2016, made its way back to the central bank
  2. India's GDP growing at an estimated 8.2% in Q1 2018-19
  3. Fuel prices touching record highs -- Rs 86.65 per litre of Petrol in Mumbai at the time of publishing
  4. Rupee hitting record lows, breaching the Rs 71/dollar barrier for the first time and continuing to free fall

THE NITI AAYOG VC'S STUNNING COUNTER TO CRITICS

While the Niti Aayog Vice Chairman Rajiv Kumar on Monday mounted a spirited argument over the first two points, i.e. Demonetisation and GDP growth rate, claiming that the note ban didn't cause a slowdown in India's economy -- instead attributing that to mechanisms instituted under former RBI Governor Raghuram Rajan to identify NPAs and the ensuing drop in bank credit and private investment -- and challenging former Finance Minister P Chidambaram's assertion that the recent 8.2% growth was due to a low base effect, the government is yet to answer sufficiently over the fuel prices and exchange rate. Rajiv Kumar made mention of fuel prices towards the end of his statement, only offering:

"People ask how government used its oil revenue bonanza. It used it precisely in ramping up the capital expenditure and yet at the same time maintaining fiscal prudence. So it has been because of the government that you've now seen a rise in quarterly growth rate quarter-after-quarter since Q2 2017-18 and now you've come to 8.2 and since it's a momentum that's carrying, I think it'll carry forward and we'll achieve higher growth rates as we go ahead."

CHIDAMBARAM AND CONGRESS FOCUS ON FUEL PRICES

P Chidambaram has been ceaselessly attacking the Centre on fuel prices and has refused to buy the argument that it is the states that must act. Additionally, on the Congress' behalf he's also demanded the immediate inclusion of petrol and diesel under GST, something which Petroleum Minister Dharmendra Pradhan has also been seeking for many months.

 

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Published September 4th, 2018 at 09:48 IST

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