Billion The Previous Year

India had switched to a daily price revision in June 2017 from a revision every two weeks, as the government allowed retailers to set prices.But the government faced protests last October when retailers raised prices by up to 10 rupees a litre after the crude oil price went above USD 80 a barrel, forcing it to cut fuel taxes.Global prices rose to their highest level in 2019 on Thursday, days after the United States announced all Iran sanction waivers would end by May, pressuring importers including India to stop buying Tehran’s oil.Higher oil prices will mean Asia’s third largest economy is likely to see growth of less than 7 per cent rate this fiscal year, economists said.

Growth slowed to 6.6 per cent in the October-December quarter, the slowest in five quarters.Rating agency CARE has warned that a 10 percent rise in global oil prices could increase demand for dollars, putting pressure on the rupee and widening the current account deficit.India’s oil import bill rose by nearly one-third in the fiscal year ending March 31 to USD 140.5 billion, against USD 108 billion the previous year.“The increase in international oil prices is a credit negative for the Indian economy,” ICRA, the Indian arm of the Fitch rating agency, said in a note.“Every USD 10 per bbl increase in crude oil prices increases the fiscal deficit by about 0.1 per cent of GDP.”Any big price rise would also build a case for the central bank to keep rates steady, or even raise them.

The Reserve Bank of India’s Monetary Policy Committee, which cut the benchmark policy repo rate by 25 basis points this month, warned that rising oil and food prices could push up inflation.Policymakers are worried that a sustained increase in the oil price in the range of USD 70-75 per barrel or higher can move the rupee down by 3-4 per cent on an annual basis.The rupee has depreciated by conical twin screw barrel 1.24 per cent against the dollar since a year high in mid-March.end-ofTags: fuel price, oil import, crude oil, economy, gdp growth.