Strongly backing the decision to hike diesel price and cap on supply of subsidised LPG, Planning Commission today said, the country needs lot of tough decisions and diesel and petrol prices should be deregulated in phases to cut down deficit.

Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters in New Delhi that Diesel price hike is a tough decision and we need lot of tough decisions to get to 8 per cent growth rate.

Referring the huge subsidises borne by the government on petroleum products and the resulting budget deficit, he said there should be greater alignment of domestic prices with international rates.

Acknowledging opposition to the government's decision, Mr. Ahluwalia said, any effort to raise price always creates problem.

We should not have an impression that not raising diesel prices is a costless option. He said, the real question is whether the government could have afforded not
to raise diesel prices.

The answer is “no”, he said, adding that the options before the government were either the budget bear the burden, plan will take a cut on growth or starve the petroleum sector, which will be a disaster.

The Deputy Chairman said, energy security is very important and we need to economise energy, adding that lack of movement in this regard, could condemn the country to low growth rate.