The government expects a maximum impact of $50 billion on the oil import bill due to rising oil prices, according to Economic Affairs Secretary Subhash Chandra Garg.
“The Indian basket has gone up and if prices go up then this will naturally have an impact on the oil import bill,” Mr. Garg told reporters on Friday. “Last year’s oil import bill was $110 billion. We estimate a maximum additional impact of $25-50 billion under various scenarios of price levels. The current account deficit will also be impacted.”
He, however, did not disclose whether the Centre had decided on an oil price level above which it would cut excise duties to ease the burden on consumers.
“The situation you see should make it clear what the position is,” Mr. Garg said, alluding to the fact that excise duties have not been reduced despite oil prices touching $80 a barrel.
The Secretary also said it was not true that the government’s revenue increases when oil prices rise, since the excise duty on fuel is a set amount per litre and not a percentage of the price.
‘Economy doing fine’
Mr. Garg also sought to allay concerns about the state of the economy saying the fiscal deficit programme was working smoothly, economic growth was sound and inflation was within the comfort range.
“The situation on oil prices and changes in the U.S. with interest rates going up have altered incentives for foreign portfolio investors,” he said. “So, we have seen outflows in the equity and bond markets. But these are not alarming, and the situation is not like it was in 2013.”
Foreign investors pulled out more than ₹15,500 crore from the Indian capital market in April, the highest outflow in 16 months.
On the Centre’s policy on cryptocurrencies, Mr. Garg said the committee he was heading was close to finalising its report and attributed delays to the constantly evolving nature of the sector.
