New Delhi: Prime Minister Manmohan Singh's Economic Advisory Council (EAC) favoured a no rollback on hike in prices of petrol and diesel at a meeting at his residence on Thursday.
The council said at the meeting that the prospects of growth in the current fiscal were bright and GDP growth in 2006-07 could be around 7 to 8 per cent.
The EAC was also of the view that the direct impact of price hike would be 0.4 per cent on the inflation index, while the total impact (direct and cascading) would be nearly one per cent.
EAC Chairman C Rangarajan said the Prime Minister was fully committed to stepping up the growth rate of agriculture and the council looked at both institutional constraints and productivity issues relating to Indian agriculture.
The EAC said the market crash was a result of both global and domestic factors, the latter including the increase in petrol and diesel prices.
He said that initially only Foreign Institutional Investors (FII) were net sellers, while the mutual funds were net buyers.
But, as the panic spread to the retail investors, the mutual funds were also compelled to sell, which led to an all-round selling pressure.
Dr Rangarajan said that the hike in Reverse Repo rate by 25 basis points on Thursday was a clear reflection of the hardening of interest rates, but added that the move was not entirely unexpected from the Central Bank.
Meanwhile, the Prime Minister expressed "deep concern" at the plummeting stock markets.
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