NEW DELHI: Rising commodity prices have emerged as a huge challenge, but they cannot be solely controlled by government intervention, a top government official told TNIE.
According to the official, critical commodities affected by ongoing conflicts in Russia and Ukraine, fertilizers, gas, and oil stand out as key imports contributing to the prevailing concerns.“At the current level, the fiscal situation is manageable, but beyond this, it will get difficult to meet fiscal targets,” said the official.
He said that it is a complex situation that can’t be solely controlled by governmental interventions. “The recent resurgence of prices, albeit gradual, after a previous decline has sparked apprehension, although they still remain lower compared to the previous year. However, we have accounted sufficiently for such fluctuations in the budget, providing a buffer for the time being,” the official who didn’t wish to be quoted said.
Recently, the Reserve Bank of India in its report had also flagged the high crude oil price (above $90 a barrel) as a potential risk to global financial stability. Meanwhile, this newspaper had recently reported about Russia resuming fertilizer trade with the United States, consequently halting the discounts the country was previously giving to India.
The shift in trade dynamics is likely to put pressure on the government’s expenditure on fertilizer subsidies as Russia is a major exporter. India had previously reaped benefits after the Western countries imposed sanctions on Russia following its invasion of Ukraine. According to the official, the government won’t be able to meet its disinvestment target for the current fiscal but the non-tax revenue in the form of dividends from the public sector undertakings and the Reserve Bank of India (RBI) will offset the deficiency.