'Diesel price rise should help avert credit downgrade'

New Delhi: An increase in diesel prices in India should avert a credit rating downgrade for the country, C Rangarajan, chairman of the Prime Minister's Economic Advisory Council, said on Thursday.

India raised the price of heavily subsidised diesel on Thursday, in a politically risky move to rein in the fiscal deficit and fight the threat of being the first in the BRICS group of emerging economies to be downgraded to junk.

A cabinet committee agreed to raise diesel prices by 12 per cent, or 5 rupees per litre, and restricted sales of subsidised LPG cylinders to six per consumer annually, the government said in a statement.