Crude oil's prices to be a burden on Indian Economy

November 22, 2012 13:15
Crude oil's prices to be a burden on Indian Economy

India is now again at that dangerous point where there may be no financial consolidations processes possible with the weakening value of Rupee against the green currency and the steadily rising price of crude oil. Though the tax income from the petroleum department has declined for the Central Government the burden of the subsidy still floats high. The situation currently in the petroleum sector alone is that there is a poor recovery of only Rs 85,586 Cr of which 60% would be borne by the Central groverment in the early six months of this fiscal year though the prices of oil were stable but rupee was weak.

Hopes however were regained after the government took active measures to counter the losses in the department while the rupee has gained large over the USD at 52 while the crude oil prices remained relatively fixed. However, this was ephemeral joy as in the past two months Rupee fell to 55 and lower while the crude oil prices spiked up with the Israel Palestine issues. Moving up to a two month high, the barrels were priced over Rs 6000. Oil Marketing Companies now have a recovery of only Rs 412 Crore per day as opposed to the Rs 551 Cr per day in early September 2012.

Indian Economy might suffer greatly with the under-recoveries increasing and the reduced taxes playing villain eating up the government's income from the department.

(AW- Anil)

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