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Rising oil prices may hit Budget math
Why is it in the news?
- The prices of crude oil constituting the Indian basket has been increasing since October and is likely to exceed $70 a barrel this month on escalating U.S.-Iran tensions.
More in the news
- Increasing Impact:
(1) Rising oil prices had already led to an increase in the prices of petrol and diesel by about 54 paise a litre and 83 paise a litre respectively since January 1, 2020.
(2) It is currently hovering around $70 per barrel.
- Negative Impact:
(1) Higher crude oil prices is ‘bad news’ for the Indian economy that imports over 85% of its crude oil requirements.
(2) Higher crude oil prices will be bad for our current account deficit and it will further tighten our fiscal situation.
(3) Divestment of oil PSUs will become difficult due to higher crude oil prices.
Source
The Hindu.