India is keeping a tab on Brexit, Middle East, oil prices: Jayant Sinha
On the sidelines of Rajasva Gyan Sangam, Minister of State for Finance Jayant Sinha said that the government is keeping a watch on various global factors such as Brexit, turmoil in the Middle East and spike in oil prices.
Government is keeping a watch on the global risk factors to the economy including Brexit, turmoil in the Middle East and spike in oil prices in the international market, Minister of State for Finance Jayant Sinha said on Thursday.
"There are a number of risk factors that we routinely consider. We discussed, for example, what will happen with oil prices and turmoil in the Middle East. We discussed Brexit as well, along with the risk factors that India has," he said on the sidelines of the Rajasva Gyan Sangam.
On June 23, UK will vote on whether to remain in the 28-nation European Union or to leave. Britain's exit from the EU, or Brexit, is being debated globally as it could have implications for the international financial market and exchange rates. India has significant trade with UK as well as EU. It also receives large investments from the Europe.
On the possible outcome of the UK vote, Sinha said: "It (opinion polls) is showing that it will be a close call." Another concern, he said, is the turmoil in the Middle East and its implications on the crude oil prices. As a net importer, India has significantly benefited from the recent low oil prices, which have now started inching up. The crude oil price has hit 11-month high of US $50 per barrel. Sinha had earlier said that government's fiscal maths and inflation calculations would not be impacted if the oil prices stay below the US $60 mark.
India, which depends on imports to meet 80% of its oil needs, will have to spend Rs 9,126 crore (US $1.36 billion) more every year for increase of each dollar per barrel in crude oil. Besides, the rising crude oil trajectory impacts inflation and growth. "If oil prices stay in the range that most forecasters are expecting them to be, which is in the US $40-60 dollar range, then I think we will be fine. If it goes beyond that range, then it becomes a question," Sinha had said earlier.
India spent US $63.96 billion on crude oil import in 2015-16, about half of US $112.7 billion outgo in the previous fiscal and US $143 billion in 2013-14. For the current fiscal, the import bill has been pegged at US $66 billion at an average import price of US $48 per barrel.