‘India is Comfortable with Oil up to $65/bbl’
Budget assumed oil at $65 in expenditure assumptions, says finance secretary
New Delhi: With the surge in oil prices threatening to upset its fiscal maths, Finance Secretary Ashok Lavasa has said India is comfortable with oil prices of up to $65 per barrel which would be a manageable range for an importing nation.
The Budget for 2017-18 has assumed an oil price of $65 per barrel in making its expenditure assumptions including subsidy payout, he told PTI.
“$65 (per barrel) is what we feel is what we should be able to manage with the current allocation (made in the Budget),” he said.
The international crude oil price of Indian basket currently stands at $54.23 per barrel.
The slump in oil price in 2014 and 2015 was one of the factors that helped Indian economy notch up big gains by cutting its import bill and reining in inflation. India, which depends on imports to meet 80% of its oil needs, will have to spend .₹ 9,126 crore ($1.36 billion) more every year for one dollar/barrel increase in crude oil. Besides, the rising crude oil trajectory impacts inflation and growth.
“The general view of the ex- perts is the oil price will remain within a manageable range and it was also felt that in case there was a spurt beyond a certain level say beyond $65-70 then Shale gas industry will come into the market and that will have a sobering effect.
“So we feel that in the foreseeable future it will remain within the manageable limit and we should be able to deal with that in the allocation that we have made,” he said. Asked if the government can manage the situation if the oil goes up to $65 without cutting excise duty, he said, “That is a call which has to be taken when the situation arises.”