The recent surge in global crude oil prices to a 28-month high of $102 a barrel is a matter of concern, but the Government is confident of managing the situation, the Finance Minister, Mr Pranab Mukherjee has said.
“Unfortunately due to developments in the Middle East and their impact on the Arab world, there is uncertainty in oil production and availability. We are watching the situation,” Mr Mukherjee told reporters on the sidelines of an event here.
The political unrest in Egypt has led to a spike in global crude oil prices, which touched the $100 a barrel mark earlier this week for the first time since 2008. Global crude oil prices are on the rise on fears that the turmoil in Egypt will disrupt supply flows through the strategic Suez Canal.
“It will be speculative on my part to make any comment right now. But remember, even when crude oil prices reached a high of $147 per barrel... at that time also we had to manage the situation. The Government will take care of this (current) situation also,” Mr Mukherjee said.
Subsidy woes
Any spurt in global crude oil prices would mean that the gap between domestic retail fuel prices and the cost of petroleum product production would widen, requiring an increase in Government subsidy or a hike in prices of petroleum products.
The Finance Ministry had recently agreed to fork out Rs 8,000 crore in cash to public sector oil marketing companies to compensate them for the under-recoveries on sale of petroleum products during the third quarter.
Growth outlook
Meanwhile, Mr Mukherjee said that the economy is likely to grow between 8.5-8.75 per cent this fiscal in line with the growth projections made by the Government.
The Central Statistical Office (CSO) is expected to release on Monday its first estimate on GDP growth in 2010-11. Mr Mukherjee also noted that the economic recovery in the European countries was still fragile.