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As global oil prices fell $1 a barrel on Friday, Finance Minister Arun Jaitley expressed the hope that moderation will stay and the rates stabilise to help importing countries such as India. “I hope that the moderation is here to stay so that the unfavourable concentration of wealth in the hands of producer countries changes in the future," Jaitley said at Urja Sangam conference in New Delhi.
Oil jumped around five per cent on Thursday, its biggest daily gain in a month, after air strikes in Yemen by Saudi Arabia and its Gulf Arab allies sparked fears that escalation of the west Asia battle could disrupt world crude supplies, according to Reuters.
Still then, prices were quite lower than $70 a barrel assumed in the Budget for 2015-16.
He also said the government is trying to create a conducive environment, both in terms of taxation and ease of doing business, as investments won't come just by opening doors.
He said the government is undertaking some of the most significant taxation reforms. He said in the second part of the Budget Session, starting April 20, the government intends to go ahead with the Constitutional Amendment Bill on the GST.
“I already said with regards to taxation, direct or indirect, the regime of enacting retrospectively or taking people by surprise is now over. Our effort is to make direct taxation system not only non-adversarial but also globally compatible,” he added.
On oil prices, Jaitley said volatility of crude prices adds to unstability in the economy and also transfer significant wealth to producer nations from the consuming countries.
"I am sure the last word on the economy of the oil has not been spoken yet. There are assessments, there are speculations, there are words of wisdom. We are passing through very fluid times and I would always hope that this fluidity settles down and the moderation comes to stay," the Minister said.
He said drop in oil prices in recent times has helped the economy counter inflation and also reversed the regime of higher interest rates.
"But, there are challenges ahead of us as oil companies have been impacted by inventory losses," he said.
After falling for the seventh consecutive session-- by 654.25 points on Thursday-- the Sensex on Friday settled at 27,458.64, up by a mere 1 point, in a highly volatile trade.
Yemen has border with key west Asian oil producers Saudi Arabia and Oman. Concerns were there that escalation of the crisis could disrupt oil shipments passing through the Bab el-Mandeb Strait, located between Yemen and Djibouti. As much as 3.8 million barrels of oil are transported from this route every day.
