Chennai, Nov 1 (IANS): Tamil Nadu Chief Minister J. Jayalalithaa Friday slammed the centre for following wrong oil pricing and economic policies, and demanded the immediate withdrawal of the latest hike in diesel prices.

In a statement issued here, Jayalalithaa said linking petroleum prices to the dollar is one of the reasons for inflation.

She said the centre is not taking steps to increase domestic oil production, and encourages speculative trading in foreign exchange and import of non-essential items; it has also been allowing the private sector to borrow in dollars, and has been taking other measures that weaken the rupee against the dollar.

Jayalalithaa said that despite the limited avenues available for the state government to control prices, her government had taken several steps like subsidised canteen/vegetables and other such measures to mitigate the hardships people face because of inflation.

She said the centre, with its sky-high powers and revenue, is not behaving responsibly; she said the latest hike in diesel prices was another example of such irresponsibility.

Jayalalithaa said the centre should roll back its Diwali gift to people in the form of the hike in diesel prices by 50 paise per litre.