New Delhi: Finance minister Pranab Mukherjee on Friday said Indian economy is resilient enough to deal with the rising crude oil prices that surged to 30-month high.
“Yes, oil prices are going up but Indian economy has the resilience to deal with the situation when it becomes extremely aggressive,” Mukherjee said here.
“In past we have done it. Let us see how we will be doing it”, Mukherjee said adding the government’s response has to be formalized.
On Thursday, oil prices surged to 30-month high fuelled by political crisis in the Middle-East.
Brent rose to $119 per barrel, while crude prices were hovering around $100 per barrel.
Meanwhile, the Economic Survey 2010-11 also pointed out that the spiralling crisis in the Middle-East and rising global commodity prices could increase inflationary pressures at home.
“The inflationary pressures on the domestic front are likely to be exacerbated by the higher levels of global commodity prices,” said the Survey tabled by Mukherjee said.
The spike in global rates has meant that the gap between domestic retail fuel price and their cost of production has widened, necessitating action - either by way of price increase or hike in government subsidy.
It is estimated that diesel is currently being sold at a loss of Rs9.23 per litre while every 14.2 kg cylinder of domestic LPG is under priced by Rs356.07. Kerosene through PDS is sold at a loss of Rs21.60 per litre.
The government had in that fiscal (2008-09) provided a record Rs71,292 crore in fuel subsidy out of the Rs103,292 crore total revenue state-owned oil firms lost on selling fuel below cost.
During that year, the crude oil prices had touched $147 per barrel.
This year, the state firms are projected to lose Rs75,507 crore in revenues and the government has so far sanctioned Rs21,000 crore fuel subsidy for the first nine months.
State-owned Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp have raised petrol price, which had been deregulated, by Rs10.44 a litre in eight installments this fiscal.
A further hike of Rs2.50 a litre is needed to level them with global rates.
Diesel, LPG and kerosene prices continue to be under tight government control.