There’re ominous signs on the price front and the government’s fiscal side if crude oil prices remain at the current elevated level triggered by the Russian invasion of Ukraine.
If crude oil price rises to an average of $100 (or $90 per barrel) from the current average of $74 per barrel, inflation is likely to increase by 52-65 bps (32-40 bps), according to a research report from State Bank of India (SBI). Further, the government could face a revenue loss of Rs 95,000 crore to Rs one lakh crore on account of the oil price rise, the SBI report said. “We are, however, hopeful of a significant course correction in oil prices going by trends,” it said.
