New Delhi :  Unfazed by large scale protests over diesel price hike, Prime Minister Manmohan Singh today asserted it was a step in the right direction and expressed the hope that economy would rebound in the second half of the current fiscal.

“The recent increase in diesel prices is an important step in the right direction,” he said while addressing the meeting of the Full Planning Commission which was called to approve the 12th Five Year Plan document.

The Prime Minister also made a case for comprehensive review of energy policy saying it was vital for energy security of the country.

Energy, Singh said, “is a difficult area where policy needs a comprehensive review. We are energy deficient and import dependence is going up. It is vital for our energy security that we increase domestic production and also increase the energy efficiency.

“Rational energy pricing is therefore critical. Our energy prices are out of line with the world prices”, he added.  The government had recently increased the price of diesel by Rs 5 a litre and capped the use of subsidised LPG cylinder to six in a year per family, evoking sharp protests all over the country.

Referring to global economic issues, Prime Minister said, “these short term problems present a challenge, but they should not lead to undue pessimism about our medium term prospects.

“The economy has gained many strengths. Our immediate priority must be to orchestrate a rebound in the second half of the current year. We should then try to accelerate growth to reach around 9 percent by the end of the Plan period,” he added.

The 12th Plan (2012-17) is proposing an annual average growth rate of 8.2 per cent, which is lower than the earlier estimate of the 9 per cent.