Economy’s growth, macroeconomic parameters continue to be sound: Economic Affairs Secy

India's growth trajectory continues to be stable with strong macroeconomic fundamentals, despite a continual rise in global oil prices and hardening bond yields, economic affairs secretary Subhash Chandra Garg said today.

Rising crude oil prices will have USD 25-50 impact on India's imports, widening the current account deficit.

“The fiscal deficit programme has been going on very smoothly and there has been no reason for us to believe that there will be any greater impact. The growth parameters are also very sound, macroeconomic parameters also continue to be very sound, the inflation is within the range,” Garg told reporters here.

He further said on the macroeconomic front, the economy is doing well and the government has no plans to revise growth numbers or widen the fiscal deficit target. “So none of those things are worrying despite whatever changes on the (bond) yield etc have taken place,” he explained.

Crude oil prices has touched USD 80 per barrel, the highest since November 2014, giving rise to risk of higher inflation and petrol diesel prices across nations.

Domestic wholesale and retail inflation in April also inched up as fuel prices firmed up.

Garg said any increase in oil prices will certainly have an impact on the current account deficit ( CAD), with the country's import bill swelling.

“If the prices go up, obviously this will have an impact but under different scenarios, we see the impact ranging from roughly about USD 25 bln to maximum USD 50 bln. Basically it is the oil that impacts the CAD, so the impact on oil might influence the CAD,” he said.

He further explained that an increase in oil prices may not affect growth as a price trend follows a particular cycle.

For instance, there has been very high growth when oil prices was very high.

“We hope and we think even if the process remains elevated, we might and should see a very strong growth in economy,” he said.

Regarding the possibility of an excise duty cut to reduce the burden of higher petrol diesel prices on consumers, Garg said the government is not considering a tax cut at the moment. However, one needs to “watch what is happening”.

If at some level, if that price “level” is reached and the government decides to tweak excise duty, it might have “some impact”. He was however unable to pinpoint at any figures.