ET NowIn a chat with ET Now, Mythili Bhusnurmath, Consulting Editor, ET NOW, shares her views on the impact of lower oil prices on India. Excerpts:
ET Now: The first point that is certainly grabbing a lot of attention is the fact that crude is down 20% from the recent peak as it is entering a bear market. How do you see the overall macro situation improving for us?
Mythili Bhusnurmath: For India, falling crude prices, particularly if it is temporary and does not signify another round of recession in the world economy, is very good news because lower crude prices affect us. In terms of the current account deficit, it becomes much more manageable because the oil import bill comes down. It helps us tackle inflation. Inflation effect of lower crude prices would be hugely positive.
At the same time because oil subsidy has also come down, it also impacts fiscal deficit positively. So it is really a win-win on three fronts provided, as I said, the fall is temporary and it does not signify larger troubles in the global economy.
As of now, we need to use this opportunity to deregulate the entire oil sector, move away from subsidies as and when oil prices increase. This is really a rare window of opportunity that is open for us and the government needs to move fast to deregulate the entire oil sector.
ET Now: The first point that is certainly grabbing a lot of attention is the fact that crude is down 20% from the recent peak as it is entering a bear market. How do you see the overall macro situation improving for us?
Mythili Bhusnurmath: For India, falling crude prices, particularly if it is temporary and does not signify another round of recession in the world economy, is very good news because lower crude prices affect us. In terms of the current account deficit, it becomes much more manageable because the oil import bill comes down. It helps us tackle inflation. Inflation effect of lower crude prices would be hugely positive.
At the same time because oil subsidy has also come down, it also impacts fiscal deficit positively. So it is really a win-win on three fronts provided, as I said, the fall is temporary and it does not signify larger troubles in the global economy.
As of now, we need to use this opportunity to deregulate the entire oil sector, move away from subsidies as and when oil prices increase. This is really a rare window of opportunity that is open for us and the government needs to move fast to deregulate the entire oil sector.
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