Rising global oil prices may push up India's import bill by up to USD 50 billion, impacting current account deficit, but would have little affect on growth, Economic Affairs Secretary Subhash Chandra Garg said today even as he remained non-committal on cutting excise duty to the ease the burden on consumers.
The government is watching the situation developing from oil prices hitting USD 80 a barrel -- the highest since November 2014, and adequate steps will be taken, he told reporters here without elaborating.
Asked if the government would cut excise duty on petrol and diesel, he said he has nothing to say on that front. "Just watch."
The BJP-led government had raised excise duty nine times -- totalling Rs 11.77 per litre on petrol and Rs 13.47 on diesel -- between November 2014 and January 2016 to shore up finances as global oil prices fell, but then cut the tax just once in October last year by Rs 2 a litre.
Garg parried questions on whether the government was considering a cut in excise duty, which makes up for a fourth of retail selling price.
Asked at what levels of oil prices would the government decide to tweak taxes, he said, "it would be difficult to give a figure".
Petrol prices have risen by about a rupee per litre since Monday when state-owned fuel retailers resumed daily revision in retail prices after a 19-day pre-Karnataka poll hiatus. Diesel prices have gone up by Rs 1.15 a litre during this period.
Petrol now costs Rs 75.61 per litre in Delhi, the highest in almost five years, and diesel rate is at an all time high of Rs 67.08.
Garg said the price of basket of crude oil which India buys has gone up in last few weeks. "Any increase in oil prices definitely has a lot of impact on our economy," he said.
India is more than 80 per cent dependent on imports to meet its oil needs.
"If the prices go up obviously this (import bill) will have impact but under different scenarios we see the impact ranging from roughly about USD 25 billion to maximum USD 50 billion," he said. "Basically it is the oil which impacts the CAD, so the impact on oil might influence the CAD."
India's net oil import bill in 2017-18 was USD 70 billion.
Garg however said there will be no great impact on the fiscal deficit.
"The growth parameters are also very sound, macro economic parameters also continue to be very sound, the inflation is within the range. So on the macro-economic front the economy continues to do well and we have no downward revision on growth or upward revision on fiscal deficit. So none of those things are worrying," he said. "We have continued with our program on borrowings without interruptions."
Stating that there is "no great relation between oil price and (GDP) growth", he said the government expects a very strong growth in economy.
The spurt in oil prices would not impact subsidies as the government provides very little subsidy on kerosene and that on cooking gas (LPG) is not related to crude prices, Garg said.
On trade deficit, he said it would be more or less equal to the oil impact.
Last fiscal the trade deficit had widened to reach USD 160 billion level from USD 40-50 billion in the previous year, he added.
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