Finance Minister Pranab Mukherjee today said inflation and current account deficit might become causes for concern, if oil prices kept rising.
The political crisis in Egypt has been a concern for oil buyers like India, which imports about two-thirds of its crude oil requirements.
At present, India’s current account deficit is close to 3.5 per cent of its GDP.
“Given the rise in oil prices, we don’t know to what extent we can control the consumption of petroleum products. Thus, the import bill is increasing. At this point, inflation is manageable, but going forward we do not know how things will pan out, and both current account deficit and inflation may become causes for concern,” Mukherjee told reporters after inaugurating a State Bank of India (SBI) branch here.
World oil prices have spiked to almost $100 a barrel on fears that transport through the Suez Canal could be disturbed.
India’s wholesale price index-based inflation climbed to 17.05 per cent for the week ended January 22, from the previous week’s 15.57 per cent.
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“Inflationary pressure is there. Though exports have gone up, imports have gone up faster. In imports, non-oil imports have increased. That means, capital goods and raw material imports have increased, which will expand production and the manufacturing sector. At the same time, the import bill and trade balance are also increasing,” he said.
On January 15, oil firms raised petrol prices by Rs 2.50 a litre. The finance minister added, with the Reserve Bank of India likely to give guidelines for new bank licences soon, new banks were expected to come up.
Meanwhile, SBI today inaugurated its 5,000th rural branch here.
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