Falling oil prices have been a major windfall for India: Just weeks ago it faced failing to meet fiscal deficit targets, but can now expect a budget that not only hits its targets, but also provides extra cash to support reform.
The coming budget for fiscal 2015/16 (April-March), which will be unveiled on Feb. 28, is widely seen as a test of Prime Minister Narendra Modi‘s ability to lead economic reform.
Fortunately for Modi, the economic climate has handed him a chance to pass that test with flying colours: Budget planners are optimistic that he will set Asia’s third-largest economy on a path for growth of 7 percent to 8 percent over the next two years.
“The situation is far better now than in December,” said one finance ministry official, who spoke to Reuters despite a ban on contact with the media in the secrecy-shrouded run-up to the presentation of the annual budget. “The budget will deliver on Modi’s promise of better days for the economy.”
The halving of global oil prices since mid-2014 has allowed the Modi government to raise diesel and petrol fuel taxes and cut diesel prices by 25-30 percent – a windfall gain for households as well as businesses, and dampening inflationary pressures in the economy.
via Falling oil prices pull India’s budget out of the fire | Reuters.
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