Prime Minister Manmohan Singh today ruled out any possibilities for the roll back of hiked fuel prices in the budget. He was talking to journalists on his way back from Saudi Arabia and he clarified that continuing with populist policies would hurt the country in the long term, while disputing the argument from a journalist that the hike in petrol prices would have a cascading effect.

“Any increase in prices does hurt some people. We have to take a long-term view. We cannot save people from inflation if we follow populist fiscal policies all along. Sooner or later, these populist policies, if persisted with for a long time, will lead to erosion of the investment climate, our capacity to create new jobs, and of our ability to invest in our flagship programs for the poor people. So, we have to balance these factors”. He replied to a question by a reporter.

Singh also did not agree to the argument that the price hike would add to the already-high inflation. “The increase in the fuel prices, the direct effect on the wholesale price index will be no more than 0.4%. There will be some escalation but my hope is now that the rabi crop is coming into the market, prices which have caused a great degree of concern—of wheat, sugar, oilseeds, pulses—will see some moderation and that the economy has the capacity to absorb this hike in oil prices without setting in motion an inflationary spiral.”

Finance minister Pranab Mukherjee had indicated on Sunday that he is ready to discuss the issue of hike in duty on automobile fuels with allies protesting against the move on the wake of protests from Congress allies Mamata Banerjee and the DMK against the hike. Now with the clarification from Singh that there will not be any roll back of the hiked prices, it is clear that the government is not going to give in easily to pressure from its allies.