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Rising oil prices a bonanza for the government!

Dec 20, 1999

According to newspaper reports, the customs revenue of the government are likely to be higher by Rs 50 bn as compared to the budgeted amount due to the sharp jump in oil prices. This is likely to help alleviate, albeit marginally, the fiscal deficit concerns of the central government.The Central Government had budgeted for a deficit of 4% of GDP (new accounting method) for the year FY00. However, due to various factors like slower than anticipated economic growth (leading to lower tax mobilisations), war at Kargil, delay in disinvestment process and burgeoning revenue expenditure, the government is going to exceed the fiscal deficit target (Rs 1,050 bn).

In light of this, the rise in customs collection on account of higher oil prices is likely to bring relief to the government's coffers. Although, the amount is marginal as compared to the deficit, it will atleast partially alleviate the situation.

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