Rising crude oil price is a matter of concern for the government and policymakers. India imports nearly 70% of its crude requirements. In the event crude oil prices remain high and India does not hike the fuel price, in this scenario, government will increase its oil subsidy and oil subsidy could derail the fiscal consolidation. This could mean a cut in expenditure or higher borrowing to meet the subsidy expenses. Higher borrowing would push up interest rates and it will eventually undermine economic growth.
The rising prices present a threat to the economic growth, fiscal consolidation and financial health of the oil marketing companies. Oil producing companies will benefit from the higher prices.
India is mulling over the deregulation of fuel prices or pre-defined mechanism for subsidy sharing with PSUs. it is an extremely political issue.
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greatly said... i hope like in a ad.. in future cycle's would be the costliest vehicle.. particularly now with the great UNDERWATER OIL SPILL issue in concern.
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