A plunge of nearly half in oil prices could help Indian Finance Minister Arun Jaitley reap a fiscal windfall of at least $12 billion when he presents his 2015/16 budget in February, two government sources told Reuters.
The savings would come in the form of reduced fuel subsidy costs and higher petrol and diesel levies, the sources said. In addition, finance ministry officials have proposed restoring a crude oil import duty that was scrapped in 2011.
As a result, the government would claw back most of the money that India saves on oil imports. That would help Jaitley hit borrowing targets but dilute any boost to consumption in Asia’s third-largest economy.