Economy & Policy◆ Mixed
Government is absorbing the oil shock: Who ultimately pays the bill?
Indian markets moved higher.
· Business Today Mkts
India’s public sector is absorbing an estimated 1.7% of GDP to cushion the impact of elevated crude oil prices, but rising import costs are increasing the pressure on government finances. With India’s crude oil import bill surging 46% in September, how long can the government shield consumers from higher fuel prices without risking fiscal stability?
The analysis
This is an Input cost / crude event. India imports most of its crude, so input costs pass through to margins downstream and to the rupee. Producers and consumers of the same input move in opposite directions.