Current account deficit under threat if oil surge continues: Das

MUMBAI: India’s current account and fiscal deficit could take a hit if oil prices continue to rise after an attack on Saudi Arabian oil facilities over the weekend, the central bank chief said on Monday.

“We should allow a few more days to see how the situation plays out before taking a final view...depending on how long it persists it will have some impact on the current account deficit and further perhaps on the fiscal deficit if it lasts longer,” governor Shaktikanta Das told CNBCTV18 .

Das said it was important to see whether alternative sources of supply come up and how soon the installations take to resume operation.

A jump in oil prices is a negative for emerging markets such as India, which is the world’s thirdbiggest importer of oil.

The country’s current account deficit in the March quarter narrowed on the back of the merchandise trade deficit contraction but a surge in crude prices could balloon the deficit and wreck havoc with the currency.

Das said the monetary policy committee would continue to focus on growth with inflation expected to stay within the medium term target.

Asia’s third largest economy expanded just 5% year on year in the June quarter, its weakest pace since 2013, far below the median forecast of 5.7%.

“The numbers definitely look much worse. The number of 5% is a surprise. We are analysing why exactly it has happened,” Das told CNBC TV18.

“Growth now is a matter of highest priority, especially with inflation remaining within 4%,” he added.