New Delhi, August 21
With global crude oil prices hovering around a 14-month low and the Indian basket falling below the $100 a barrel mark on Wednesday, there are strong chances that the subsidy on diesel may be wiped out soon and the bearish outlook on crude oil and energy prices in the near future will boost the economy, lower subsidies, reduce the current account deficit and eventually result in lower retail prices.

On Wednesday, the Indian basket crude oil price fell below the $100 dollar mark to $99.94 a barrel while today it was around $100.32 a barrel.

For the fortnight commencing August 16, the diesel under-recovery had increased to Rs 1.78 a litre.

In a recent research note, Goldman Sachs said assuming oil prices remain around current levels, the monthly cycle of diesel price increases could get over in the next two months and diesel could become market priced.

Speaking at an Assocham event, Finance Secretary Arvind Mayaram said today that falling oil prices would wipe out the cost of diesel subsidies and the government is expected to completely exit subsidy on diesel soon.

Mayaram said, “We have been lucky on oil. We will be able to exit the diesel subsidy. With the rollout of the Direct Benefit Transfer (DBT), the subsidy burden on the government is going to come down significantly”, he said.

The subsidy bill on account of petroleum has been pegged lower at Rs 63,427 crore for the financial year 2015, much lower than Rs 83,998 crore in the previous fiscal, the Finance Secretary added.

Other analysts believe that the benefit to India will extend on other energy sources also. Crisil Research said today that prices of crude oil, thermal coal and liquefied natural gas (LNG) will be under pressure in the long term because of structural shifts such as surge in supplies, move to alternate fuel, and slowing demand. This is a huge blessing for India, since energy imports accounted for 36% of its total imports last fiscal, it said.

According to Crisil, between fiscals 2009 and 2014, India’s energy import bill surged at an average 14% annually to $161 billion. “We now expect this to rise only 1.6% annually to $175 billion by 2019 because prices of the three commodities are forecast to decline. Subdued prices will also help curb oil subsidies,” it said.

The note added that over the next five years, significant supplies of oil are expected from the US, Canada, Brazil and Iraq, about 8% of demand in 2013. Similarly, incremental thermal coal supplies of 1,000 million tonne (17% of global demand in 2013) are expected, primarily from Australia and Indonesia.

The demand growth for oil is expected to be subdued at 0.8-1.0% over 2014 to 2018 (compared with 1.2% in the past five years) because of increasing energy efficiencies in North America and Europe, slower growth in China and a shift towards alternative fuels, it added.

New Delhi, August 21
Following the recent unearthing of irregularities in PSU banks, Finance Minister Arun Jaitley today said the government is taking steps to professionalise the management and help them strengthen their risk-management systems.

“Professionalising the management of the banks, we have taken some decisions in this regard. We expect banks to have better risk management. The Department of Financial Services has been actively working in this regard” Jaitley said at an event organised by Indian Bank here.

Without specifying names of banks, the Finance Minister said “Some recent incidences have been disturbing. I only hope that they are drop in the ocean. We have all learnt the lessons from such incidents, and there will be no repetition of them.”

The Finance Minister, however, expressed hope that an enhanced level of professionalism will further strengthen and improve credibility of the banking system.

Speaking at an Assocham event, Finance secretary Arvind Mayaram said India’s economy is on course to grow by around 5.% in the fiscal year 2015 and expressed confidence that “green shoots” of recovery were taking hold.

Some recent incidences have been disturbing. I only hope that they are drop in the ocean. We have all learnt the lessons from such incidents, and there will be no repetition of them —Arun Jaitley, Finance Minister

Mumbai, August 21
The RBI today said the economy is likely to grow at 5.5% in the current fiscal as it sees pick-up in manufacturing and investment.

“Signs of improvement in mining and manufacturing activity, expected pick-up in investments, improved availability of financial resources to the private sector with lower draft of government on financial savings of the households amid fiscal consolidation, improved external demand and stabilising global commodity prices are expected to support the recovery.

“Accordingly, the economy could grow in the range of 5.5 to 6% this fiscal,” the RBI said in its annual report for 2013-14.

It, however, warned that the downside risks to growth could play out if global recovery slows, geopolitical tensions intensify or monsoon weakens in the rest of the season.

The RBI said its inflation outlook remains unchanged from the baseline inflation trajectory it had indicated at the beginning of the year, when it committed to disinflationary glide path of taking CPI inflation to 8% by January 2015. — PTI

New Delhi, August 21
India’s exports are expected to reach $750 billion by 2018-19 with improvement in the global trade scenario, said the exporters’ body, FIEO.

Federation of Indian Export Organisations (FIEO) said today that global trade is showing improvement and is expected to grow at 4.7% this year and 5.3% in 2015.

“We are optimistic that we would be able to cross $350 billion this fiscal. FIEO projects an export target of $750 billion by 2018-19. This would require an annual growth rate of 19.14% during 2014-19,” FIEO president Rafeeq Ahmed said.

He said India’s traditional markets — the US and Europe — are also posting better economic results. These regions account for about 30% of the country’s exports. Slowdown in these developed markets had severely impacted India’s outbound shipments. The country’s exports in the past three years have been hovering at $300 billion. It was $312.35 billion, $300.4 billion and $307 billion in 2013-14, 2012-13 and 2011-12, respectively.

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