'High crude prices causing tremendous problems for economy'

Finance Minister Pranab Mukherjee on Sunday said the increasing oil prices in the world crude market and the resultant rise in the quantum of government subsidy was causing immense problems for the Indian economy.

A day after meeting his Iranian counterpart, Mukherjee also pointed out that India's import of oil from the sanction-hit country, has reduced substantially, in the backdrop of US's objections that India had failed to reduce its purchases from Tehran.

"Of course, high price of oil has caused immense problem to Indian economy. When I presented the budget last year I assumed that the average price would be USD 90-95 per barrel. But actually we have to pay the average price of USD 100-115 per barrel," he said.

"So naturally, I have to absorb it and the quantum of subsidy has increased substantially," Mukherjee told reporters here.

The Finance Minister was addressing a press conference at the end of his Washington visit to attend the annual Spring meeting of the International Monetary Fund (IMF) and the World Bank.

Mukherjee met his Iranian counterpart Shamseddin Hosseini yesterday on the sidelines of the IMF and World Bank meetings but details of the meeting were not immediately available.

With the US raising its pitch over India's continuing oil imports from Iran despite economic sanctions against the country over its nuclear programme, the Finance Minister pointed out that the quantity of import from Tehran had gone down.

"So far Iran is concerned, we are buying (oil from) Iran. About 14 million tonnes of crude are being... though in terms of percentage it has been reduced substantially, because currently our import is roughly about 160-170 million tonnes. When our import was about 100 million tonnes then Iran used to contribute 20-21 million tonnes," Mukherjee said.