India, which depends on imports to meet 80 per cent of its oil needs, will have to spend Rs 9,126 crore (USD 1.36 billion) more for every dollar per barrel increase in crude oil prices while also seeing surge in inflation.

"Obviously higher crude price is not good news for India. But if it remains within a range, as it is at present, it is something that can be handled. If it goes beyond the range, then certainly it creates an adversity," he said.

Petrol prices have been hiked five times since March, totalling Rs 8.99 a litre while diesel rates have been raised by Rs 9.79 per litre as international oil prices climbed to USD 50 per barrel for the first time since October 2015.

Every rupee per litre increase in petrol price leads to 0.02 per cent rise in WPI inflation and by 0.07 per cent for the same amount of increase in diesel rates.
     
Jaitley said external factors that impact economic growth rate, which at 7.6 per cent of 2015-16 has been hailed as the fastest among major economies, are oil and commodity prices.

"India being a net buyer has benefited from the regime in last over a year. And if the prices remain within the current range we have the ability to absorb although if there is any undue increase in prices its impact on both inflation and savings would be noticeable," he said.
     
The government, he said, "will have to deal with the situation if it arises". When oil prices slumped in second half of 2014 and 2015, the government hiked excise duty on petrol and diesel nine times to mop up additional revenues that helped it meet its revenue and fiscal deficit targets. In all, it raised excise duty on petrol by Rs 11.77 a litre and that on diesel by Rs 13.47.
    
Jaitley said the global environment has certainly not been helpful for growth of Indian economy.

 

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