Listing out oil as the “most important” challenge for India, Finance Minister Arun Jaitley said since most of the country’s oil comes through imports, economy has to be made resilient enough to face this challenge.
“The first and the most important challenge is that we are net buyers of oil. We are oil deficit. Most of our oil comes through imports and therefore the global oil prices which have risen on account of the artificial shortages which have been created, adversely impact us. And therefore we have to face that challenge by making our economy so resilient itself that we have the capacity to bear that challenge itself as far as the oil prices are concerned,” Jaitley said while addressing the 98th annual session of Assocham.
In a meeting with leading global CEOs of oil and gas sector and ministers from Saudi Arabia and the UAE on Monday, Prime Minister Narendra Modi had made a strong case for a partnership between producers and consumers in the oil market as it exists in other markets to help stabilise the global economy which is on the path of recovery. Modi has sought a review of payment terms with major oil producers as part of the NDA government’s strategy to help counter a falling rupee.
Rising crude oil prices have expanded India’s oil import bill, resulting in higher current account deficit and throwing up a range of macroeconomic challenges. An adverse impact on the twin deficits — fiscal and current account deficit — will have a resultant spillover impact on the consumption and investment behaviour in the economy as well as on monetary policy trajectory. India, the world’s third largest oil consumer, imports over 85 per cent of its oil requirements.
Stating that domestic policies of certain countries have spillover effects on India, Jaitley hoped that such effects will not be everlasting and are transient in character. “I believe this spillover effect will not be everlasting and are transient in character and as a fast growing economy we have the capacity to face these challenges … as a fast growing economy, we have the capacity to face these challenges,” he said.
Jaitley also said that for India to be on a path of high growth trajectory, the country needs a strong and decisive leadership at the Centre. “A weak leadership within days of crisis could not have handled IL&FS the way the present government did, and therefore a crisis in the making was handled with swiftness and is just one example of the way this government has been handling. Therefore you need a decisive government …,” he said.
The finance minister further said that there are political challenges in the form of unstable coalition. “What India needs is not individuals with lack of understanding of policies, a lack of understanding of directions or inherently unstable coalition, but India needs a government and leadership which has absolute clarity about the direction so that this unique position what the IMF refers to as a sweet spot in the world, this sweet spot in the world we continue to occupy for the next two decades, if you are able to do that, we can get rid of the curse of poverty and in our lifetime probably see India as a developed country,” he said.