Oil price rise to inflate import bill by up to $50 billion: DEA Secretary

Economic Affairs Secretary Subash Garg

Remaining non-committal on cutting excise duty to ease the burden from rising oil prices, the government said today that the recent spurt in global rates is a matter of concern as it could inflate import bill by as much as USD 50 billion and impact current account deficit (CAD).

Economic Affairs Secretary Subhash Chandra Garg said however that economic growth will not be impacted by the rise in oil prices, which have touched USD 80 per barrel -- highest since November 2014.

The government is watching the situation 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 excise duty front. "Just watch."

The spurt in oil prices will push up the oil import bill by USD 25 billion to USD 50 billion under different scenarios, he said, adding that India spent USD 72 billion on oil imports last year.

This would push up current account gap, but inflation is under control and the fiscal deficit scenario is not worrisome either, he said.

Garg said currency in circulation has come down in the last four days but situation is completely normal now.

He also said that some outflows in the bond and equity markets have been seen but it is not alarming. "We are nowhere near a 2013-like situation," he said.

Outflow of USD 4-5 billion in one and half month is not excessive, he said, adding that the government will continue with its borrowing programme and does not see any reason to react.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel