Even though rising crude oil prices may hit India’s import bill by $25 to $50 billion in the running fiscal, the government is confident about successfully weathering the shock. Assuaging macroeconomic fears, Economic Affairs Secretary Subhash Chandra Garg said today that even if oil prices remain elevated, India will witness a healthy growth this running fiscal. The fiscal deficit scenario is not worrying and the government will also completely ensure there is no effect of surging oil prices on oil subsidy bill, he added. Despite this, surging oil prices may push up current account gap, he admitted. On being asked about the government benefiting from rising fuel prices, Garg replied saying that government revenue from excise doesn’t go up with rising fuel prices.
Crude oil prices may rise further in the coming months, following which India’s current account deficit will be around 2.4 per cent in 2018-19, said a recent Goldman Sachs report. According to the global financial services major, the rise in international crude prices poses risks to India’s current account deficit.
Talking about the weakening rupee, Garg told reporters that currency situation in the country is completely normal and there’s nothing to worry about it. Rupee has declined from Rs 65 to Rs 67.5 during 28 March to 15 May this year.
On the impact of rising bond yields, Garg said that country’s GDP would not be revised despite rising yields. “ We expect normal conditions to return to market,” he said. Amid all these developments, the government will continue with its borrowing program.