Fiscal deficit under threat if oil surge continues: RBI Governor

By Reuters

  • 16 Sep 2019
Credit: Reuters

India's current account and fiscal deficit might take a hit if oil prices continue to rise after an attack on Saudi Arabian oil facilities over the weekend, the Reserve Bank of India chief said on Monday.

"We should allow a few more days to see how the situation plays out before taking a final view...depending on how long it persists it will have some impact on the current account deficit and further perhaps on the fiscal deficit if it lasts longer," Governor Shaktikanta Das told the CNBC-TV18 news channel.

U.S. officials blamed Iran for the attack, which damaged the world's biggest crude oil processing plant and led to a 19% surge in oil prices. Iran denied blame and said it was ready for "full-fledged war".

A jump in oil prices is a negative for emerging markets such as India, which is the world's third-biggest importer of oil.

The country is already likely to miss its fiscal deficit target for the current financial year, despite receiving an additional dividend from the central bank, five government officials and advisers told Reuters earlier this month, as tax collections have sunk amid a sharp economic slowdown.

Share article on