If there is one ray of light from the mayhem in the markets, it’s the falling price of crude oil. Brent crude prices fell below $100 per barrel briefly during intraday trade on Tuesday.
For an oil-addicted country such as India, this gives the government a breather in managing its oil finances.
Then, maybe not.
Most assumptions behind the growth figures assume oil prices to be in the $100-110 range for 2011-12. This math was about to go wrong and with under-recoveries out of hand, the government very reluctantly, raised fuel prices.
The danger now is that there will be calls to “roll back” these increases. Such a step would be inadvisable and should be resisted.
If anything, this is the time to make good the still high losses of oil marketing companies. If there is something to be rolled back, it is the reduction in excise duty on oil.