What is the impact of higher crude oil prices on the budget? It shows the increase in government revenues and government expenditure (or oil subsidy) for every $10 a barrel rise in oil prices. But then, higher crude oil prices also bring in higher revenues for the government. “Indeed, these offset ~90% of the impact of higher subsidies leaving the budget largely agnostic to changes in oil prices unlike in the past,” pointed out Jefferies in a report in December. Oil subsidies are definitely under pressure and the government is likely to budget higher oil subsidies for FY19, said Kapur.

Source: Mint January 31, 2018 02:03 UTC