Indian crude breaches $60 a barrel; are excise cuts coming?

November 22
09:25 2017

The impact of higher oil prices is already seen in the balance sheets of Indian corporates with raw material costs going up.

The impact on government finances makes excise cut on fuels a difficult choice in view of the current year’s target of keeping the fiscal deficit at 3.2 per cent, especially at a time of uncertainty in tax collections following the implementation of the Goods and Services Tax.

Moreover, a recent recapitalisation plan announced for state-run banks would also strain government finances. In a stimulus package aimed to boost flagging economic growth, create jobs and increase credit flow, the union cabinet last month approved a Rs 2.11 lakh crore recapitalisation plan for public sector banks and massive road infrastructure investment of nearly Rs 7 lakh crore over five years.

Of the support to banks, Rs 1.35 lakh crore will be raised through recapitalisation bonds and the remaining through budgetary support and market borrowings.


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