Mumbai, May 3 (PTI) With rising crude oil prices widening the gap between the retail fuel price and their cost of production, the Reserve Bank of India today called for an immediate hike in petrol and diesel prices, even if it adds to inflationary pressure and moderates economic growth.
"The critical assumption that petroleum and fertiliser subsidies would be capped is bound to be seriously tested at prevailing crude oil prices. Even though an adjustment of domestic retail prices may add to the inflation rate in the short run, the RBI believes that this needs to be done as soon as possible," RBI Governor D Subbarao said.
Releasing the Monetary Policy Statement for 2011-12, he added that the failure to increase retail prices would increase the government's fiscal deficit.