Indian Government is Comfortable with Oil at $60, Says Jayant Sinha

Indian Minister of State for Finance Jayant Sinha has said that the government would be comfortable if crude oil prices stayed below $60 a barrel, but if prices go beyond that range, then it would be definitely a matter of concern.

“If oil prices stay in the range that most forecasters are expecting them to be, which is $40-60, we will be fine. If it goes beyond that range, then it becomes a question,” Sinha told Press Trust of India.

Crude oil prices have already cross $50 per barrel mark, and currently Brent and West Texas Intermediate are trading above the mark.

According to Business Standard, many policy makers had earlier believed that Indian government’s comfort level on oil prices was around $55, and if prices go beyond that range, the government might be forced to review its petroleum subsidy and bigger spending projections.

India’s crude oil import bills were just $63.96 billion in 2015-16, compared to $112.7 billion in 2014-15 and $143 billion in 2013-14. For financial year 2016-17, crude oil import bill is estimated to remain around $66 billion, at an average import price of $48 per barrel. Narendra Modi’s government had also planned the 2016-17 Union Budget keeping in mind an average crude oil price of $50. However, steep fall in crude prices in the past two years has allowed Finance Minister Arun Jaitley to meet the fiscal deficit target of 3.9% of the GDP in 2015-16.

“If crude prices creep above $55, our calculations may have to be relooked,” an official told Business Standard.

“Some savings are expected from direct benefit transfers in kerosene, but beyond $55, even those may be offset,” the person said.

India imports nearly 80% of its oil needs, and a hike of one dollar in crude prices means the country has to spend $1.36 billion more on oil in a single year.

Indian Oil Corporation (IOC) website says the excise duty is currently Rs 21.48 per litre on petrol and Rs 17.33 per litre on diesel.

Since March this year, diesel prices have been increased by Rs 9.79 per litre and petrol prices by Rs 8.99 a litre. It is also the first time since October 2015 that International crude oil prices have climbed to $50 per barrel.