He said the weakening rupee will further add pressure on the import bill, highlighting that there is also a risk of monetary policy turning hawkish, which would in turn have a bearing on growth of private investments.
At a time when Indian economy is on a recovery path, rising oil prices are again posing high risk to India's economic growth trajectory, Shah said.
Unless swift action is taken to address the situation, economic growth will again head towards a speed breaker. Amongst the most immediate actions that can be taken by the government is to bring down the excise duty on fuel, he added.
He said going forward, the Centre should also work with states to bring petrol products under the GST regime.
While cut in excise duty on petrol and diesel may provide temporary relief to consumers, the sustainable solution lies in the automobile fuel coming under Goods and Services Tax, which can happen only after the Centre and states together reduce their dependence on the fuel considerably, Assocham Secretary General D S Rawat said.
He said the rising crude prices coupled with weaker rupee with cascading impact on inflation pose a big challenge for the Indian macro picture and ironically, there is little that can be done in the short term.
In the long run, India needs to rework its energy security and ensure that petrol and diesel do not remain a huge revenue resource. Rather than being a revenue source for the government, the auto fuel should drive the economic growth, Assocham said.
Brent crude oil prices went past the USD 80 per barrel mark last week. Today, brent touched USD 78.87 per barrel, up 0.5 per cent from last close.
The government said on Friday 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).
However, it remained non-committal on cutting excise duty to ease the burden from rising oil prices.
Economic Affairs Secretary Subhash Chandra Garg had said the spurt in oil prices will push up the oil import bill by USD 25 billion to USD 50 billion under different scenarios, adding that India spent USD 72 billion on oil imports last year.
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.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)
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