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Informist, Friday, Oct. 4, 2024

 

--Govt source: We have tools to control fuel prices if crude is too high 
--Govt source: Cleared concept paper on green taxonomy late Thursday 
--Govt source: Need to keep building resilience to combat exogenous issues 
--Govt source: Geopolitical issues bound to spill into India 

 

NEW DELHI – The government is focussed on making the economy more resilient in order to combat the cascading effect of geopolitical conflicts, a senior finance ministry official said Friday. "The uncertainty on the global front is unlikely to come down, so we need to keep building resilience."

 

There are at least two ongoing wars--Russia-Ukraine and Israel-Iran--that pose significant risks to global, as well as the Indian economy, which is still recovering from high inflation and supply chain disruptions caused by the onset of the Russia-Ukraine war in 2022. Any further escalations in these conflicts could take the economy back to square one.

 

"The point to be seen is how to manage? Is there resilience in our economy? Yes, we have built resilience to manage the issues and have to continue," the official said, adding that the fiscal consolidation undertaken by the government indicates the economy's resilience.

 

The government has outperformed its fiscal deficit targets in recent years. In 2023-24 (Apr-Mar), the government reduced its fiscal deficit to 5.6% of GDP against the initial estimate of 5.8%. In its July Budget for the current year, the government lowered the deficit target to 4.9% from 5.1% estimated in the Interim Budget in February.

 

A major risk for the economy is high crude oil prices due to geopolitical conflicts, the official said. The government can't do anything about high oil prices, but can employ tools to protect people from the high fuel prices, the official added. Crude oil prices have been in the range of $70-77 per barrel in the last one month.

 

However, the official did not mention what level of crude oil price may influence the government to cut duty on fuel. The government had last cut duty on fuel in 2022 in the aftermath of the Russia-Ukraine war when crude oil prices breached the $90-per-barrel level. 

 

The official also said they cleared a concept paper on green taxonomy late Thursday. In July, Finance Minister Nirmala Sitharaman had announced that the government would develop a taxonomy for climate finance to enhance the availability of capital for climate adaptation and mitigation.  End

 

US$1 = INR 83.96

 

Reported by Priyasmita Dutta

Written by Krity Ambey

Edited by Namrata Rao

 

 

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