The official, who did not wish to be identified, said that while the country’s economic fundamentals remained strong, the current volatility in the capital markets and a persistent fall in the rupee value are being caused by external factors.
“It was a one-time measure of letting OMCs take the 1-rupee hit on oil prices. We have no intention of either rolling back deregulation of oil prices or asking oil companies to take such a hit,” he said.
Last week, the Centre cut petrol and diesel prices by Rs 2.50 per litre, a decision that was followed by several BJP-ruled states, giving an overall relief of Rs 5 per litre to the consumer.
The central government reduced the excise duty on petrol and diesel by Rs 1.5 per litre each and asked the OMCs to absorb an additional Re 1 per litre reduction.
Finance Minister Arun Jaitley said the Centre’s decision will result in a revenue loss of Rs 10,500 crore in six months.
Queried on whether state-run upstream explorer companies like the Oil and Natural Gas Corp (ONGC) could be asked to share the increased subsidies on kerosene and cooking gas, the finance ministry official said: “We do not have any intention of asking upstream companies to share the subsidy burden.”
“The Indian stock and rupee markets are being impacted by external factors. Expect global crude oil prices to remain range-bound, below $85 a barrel,” the official said.
“Fundamentals of our economy remain strong. The Indian economy stands to gain following the US-China trade war.”
The rupee plunged to a fresh low on Thursday, as Indian equities joined a global sell-off amid mounting concerns that growth would slow in the face of a trade war between the United States and China.
Concerns that the US Federal Reserve would continue to raise interest rates amid strengthening economy and labour market also sparked fears about capital outflows, hurting the rupee.
The S&P BSE Sensex, which had opened at 34,063.82, soon crashed over 1,000 points on a global sell-off. It settled about 760 points lower at 34,001.15.
The official also ruled out any further hikes in import duty to halt the widening of the current account deficit.
“There will be no further import compression for now. We are keeping an eye on three things — current account deficit, balance of payments and rupee. Oil price is expected to come down,” he said.
Last month, the government hiked customs duty on a range of imported products including air conditioners, household refrigerators, washing machines and radial car tyres in a bid to curb the import of non-essential items. Duties were raised on 19 items whose total value of import in 2017-18 was about Rs 86,000 crore.