NEW DELHI: The softening of global crude oil (Brent) price that is now trading at $88 per barrel will have a favourable effect for the economy, Finance Secretary Arvind Mayaram said here on Wednesday, but cautioned that there was no need to be overly optimistic.
Also with the Wholesale Price Index (WPI) and Consumer Price Index declining favourably and petrol prices being slashed by Rs 1 on Tuesday and the possibility of decontrol of diesel prices after state election in Haryana and Maharashtra are expected to give a further fillip to the economy.
“We have to see going forward how the oil prices augur. Winter demand and geo political situations is there. We should not be overly optimistic at this time,” the finance secretary told reporters.
“The declining oil prices in international market,” Mayaram said “was in our interest”.
The subdued oil prices are expected to have a favourable impact on the petroleum subsidy bill of the government which in turn will help bridging the fiscal deficit.
Benchmark Brent crude has fallen to almost four-year low after the International Energy Agency said oil demand will expand this year at the slowest pace since 2009.
The drop in rates will result in the profit on sale of diesel, expanding from `1.90 a litre calculated based on the average rate prevailing in the second half of September.
Oil marketing companies have effected cut in prices while government is likely to reduce price of diesel by about `2.50 a litre after the model code of conduct is lifted on September 19.