Amid crude oil price touching 7-month high, Finance Minister Arun Jaitley has expressed its concern that India can handle the current level but higher rates will impact the economy and lead to inflationary pressure. He added that ‘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’.
Jaitley further said that 'India being a net buyer has benefited from the regime in last over a year. India, which depends on imports to meet 80 per cent of its oil needs, will have to spend Rs 9,126 crore more for every dollar per barrel increase in crude oil prices while also seeing surge in inflation. 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.
Besides, Jaitley said that 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.