Oil spike threatens to blow hole in budget: Sources

India's government sees oil prices going as high as $120 per barrel for three to four months because of fighting in Iraq, potentially driving a hole of at least 200 billion rupees ($3.4 billion) in the budget, two government sources told Reuters.

"If the oil prices remain high even for 3-4 months around $120 a barrel, it could have a significant impact on the fiscal deficit and economic growth," a senior Finance Ministry official told Reuters on condition of anonymity.

Finance Minister Arun Jaitley presents his maiden budget next month and faces headwinds from a weak economy, a food inflation scare and now the risk that higher oil prices could swell the government's oil subsidy bill.

EDITORIAL OF THE DAY

  • Dictating retail price of a commodity goes against the grain of free market economy

    The Centre’s suggestion to states to cap prices of pulses and edible oils seems to indicate a bankruptcy of ideas in the government.

FC NEWSLETTER

Stay informed on our latest news!

TODAY'S COLUMNS

Susan Visvanathan

Tracing societies through biographies

Memory is thought to be multilayered and interactive. Small ...

Rajgopal Nidamboor

The real truth about happiness

Happiness is a monumental question with no easy answers. It ...

Dharmendra Khandal

When it rains, this beetle starts rolling dung

On the buffer road of a forest, a small metallic ...