New Delhi: Prime Minister Manmohan Singh said on Friday a Rs.17 per litre hike in diesel price was needed to cover the losses and that the government only partially passed on the burden to the common people.

"We raised the price of diesel by just Rs.5 per litre instead of the Rs.17 that was needed to cut all losses on diesel," the PM said in an address to the nation.

The Prime Minister pointed out that much of diesel is used by big cars and sports utility vehicles (SUVs) owned by the rich and by factories and businesses.

"Should the government run large fiscal deficits to subsidise them," he asked.

Manmohan Singh said despite the recent increase in diesel and cooking gas prices, these were lower  in India than neighbouring countries like Pakistan, Sri Lanka, Bangladesh and Nepal.

"The total subsidy on petroleum products will still be Rs.160 thousand crore. This is more than what we spend on health and education together. We held back from raising prices further because I hoped that oil prices would decline," he said.

(Agencies)

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