New Delhi : Rising global oil prices will not pose a serious risk to the economy if they remain within the range of $ 55-65 a barrel, said chief economic adviser Arvind Subramanian.
“As long as it is in that range it should not be a serious risk to our macroeconomy,” he said. After remaining fairly stable for much of the last two years, international prices of crude oil have started to trend up, reports PTI.
Subramanian said if it starts going above USD 55, production will come on stream to keep crude oil prices under check. “The economic forces are quite strong to keep oil prices within our comfort zone and I think up to USD 65 per barrel we should be comfortable.” Price of basket of crude oil that India buys has increased from USD 39.9 last April to USD 52.7 in December. It is estimated that oil prices could rise by as much as one-sixth over the 2016-17 level, which could have dampening impact on the growth.
On deployment of forex reserves, Subramanian said when you reserve it is going to create money. Noting that Budget had been very “responsible” given the circumstances, he said the Budget 2017-18 remarkably favourable to macroeconomic stability and lower inflation.The Budget has been favourable for creating environment of macro-economic stability by reining in fiscal deficit and
prudent public expenditure, he said. India’s debt-to-GDP ratio to naturally decline for some time, he added.