Calling the hike in fuel price as necessary to avoid inflationary pressure, Singh said that the decision was taken with a long term perspective.
"Any increase in prices does hurt some people, but we have to take a long-term view," he said in a media report.
Referring to opposition against price rise by the Trinamool Congress and DMK, Singh said that the nation cannot follow populist fiscal policies which will only harm the economy in the long run.
"We cannot save people from inflation if we follow all populist fiscal policies. Sooner or later these populist policies if persisted for a long time to come will lead to the erosion of the investment climate," he said.
He added that the populist fiscal policies would reduce the capacity to generate employment which in turn will have hamper the government's ability to invest in flagship programmes for the poor people.
"So we have to balance these factors. The increase in the fuel prices, the direct effect on the Wholesale Price Index will be no more than 0.40%," he said.
Terming Rabi crops as an answer to price rise in essential commondities, the prime minister said, "my hope now is that with the Rabi crop coming into the market, prices which have caused a great degree of concerns in areas like wheat, sugar, oilseeds and pulses, will see some moderation".
Singh claimed that economy has the ability to absorb the increase in oil prices without trigerring off any inflationary spiral.