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The government's windfall from the crude price plunge
Feb 22, 2016


The world may be a worried lot, and crude prices may be plunging as a result. But the Indian government for one is busy making hay while the sun shines.

Even as prices have been falling rapidly, not all of this has been passed on to the Indian consumer. The government has been quick to repeatedly hike excise taxes on petroleum products. And as per reports cited in business daily Mint, the government is likely to garner Rs 2.1 trillion as revenue from the oil sector in FY16. This includes revenue by way of cess, excise and royalties. This is a figure that is almost double that of FY15.

And that's not the only positive.

The government has also had to bear lower subsidy payments due to lower crude prices.

All these factors put together are likely to take the government closer to meeting its fiscal deficit target for the year, despite some other macroeconomic negatives.


Data Source: Motilal Oswal Financial Services,
Livemint

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