Smart Move of Modi Government by Not Lowering Fuel Prices
It is believed that because of crash in crude oil prices, India cannot be in a better position than it is today. The crash in crude oil prices has helped the Indian economy. On the other hand, other countries like Russia, Taiwan and Brazil are facing recession while China’s growth is at a 25-year low. Economists believe that the crude oil prices, which are at 12-year lows in dollar terms, have helped our economy to reach a better position than our peers.
Benefits of the crude oil crash to India stood at Rs 2 lakh crore in fiscal 2015. Government made use of this amount for predominantly reducing the fiscal deficit. The fiscal deficit has not gone south of 4.5% since 2014. Because of the fall in fiscal deficit the inflation levels also reduced to single digits, hovering near 6%. Reserve Bank of India plans to bring this down to under 5%. Reserve Bank of India also got help from crude oil crash in building $350 billion worth of reserves, usually used to stem a rupee fall during turbulent times.
During the Federal Reserve’s interest rate hike and China’s Yuan devaluation, the value of emerging currencies, including that of Russia, China, Brazil, Argentina and South Africa plunged over 3-5%.