Copyright 2016,

Fiscal deficit glide path under threat?

g_105147_petrol_prices_280x210.jpgImage: Shutterstock


The steep fall in oil prices post 2014 was a key reason for the slide in India’s fiscal deficit as the government chose to raise taxes and keep prices at the pump elevated. Now, with oil prices hovering around $75 a barrel, up from $50 a barrel a year ago, it remains to be seen if, in an election year, the government is able to get away with keeping prices at the pump at high levels. A cut in taxes without a cut in government spending could see a return to higher fiscal deficit numbers the likes of which India saw in the early part of this decade.