New Delhi: The government finally acknowledges that rising oil prices and depreciating rupee would severely dent the government resources, putting further pressure on deteriorating deficit position and creating hurdles in the path a faster economic recovery.
As per latest estimates by the oil ministry’s Petroleum Planning and Analysis Cell (PPAC), country’s oil import bill may balloon to $125 billion in FY19, a growth of 42 per cent over $88 billion paid for oil in FY18.
This will make oil import bill for FY19 the highest in the five years of the Narendra Modi government and very close to high import bill during UPA-II when the crude oil prices had breached all records to touch close to $140 a barrel mark.
The Centre has so far maintained that though rising oil prices was a concern, it still remained manageable without upsetting the macro economic fundamentals of the economy. But sources now say murmurs have already started in the corridors of power that oil situation should be taken seriously as inaction could mean sharp cuts in populist government’s expenditure ahead of 2019 general elections.
“The $125 billion import bill for the current financial year is high but it is still not the right estimate. Oil import bill could increase further as high crude price will rise further during the rest of the five months of the year, especially after the US sanctions on Iran becomes a reality. Further, pressure on the rupee could also dent estimates,” said an oil sector analyst asking not to be named as he was still making his calculations on oil imports.
PPAC estimate has also taken average price of the Indian basket crude oil for September 2018 at $77.88 a barrel and average exchange rate for September at Rs 72.22 to a dollar to arrive at its import estimates. The benchmark Brent oil price is already higher at $79 a barrel and is expected to start rising again in November when the US sanctions on Iran comes into effect.
Analysts also expect the rupee to depreciate further, completely changing the oil mathematics for FY19.
If crude price rises by $1 per barrel, the net import bill will increase by Rs 6,158 crore. And if exchange rate increases by Re 1 to a dollar, the net import bill rises by Rs 6,639 crore. This PPAC estimate, is based for period between October 2018 and March 2019.
Its not just higher import bill, but rising crude could also put additional burden of subsidy contribution on state-run upstream companies – ONGC and OIL, and also gas transportation company GAIL. Upstream contribution has been suspended since FY17 giving enough room to these companies to improve profits. Already, oil marketing have been asked to absorb RS 1 increase in retail price of petrol and diesel, an exercise that could severely dent their profits.
While the recent spike in oil prices has alarmed the government, it is worth noting that fall in crude prices has resulted in big savings for the country in FY16 and FY17. India’s import bill nearly halved to $64 billion in FY16 even though the country imported higher 202.1 million tonnes of crude oil in that financial year. This compared with import of 189.4 million tonnes of crude oil for $112.7 billion in FY15.
In FY17, the import bill, however, rose marginally top over $70 billion. The lower import bill came on average crude price of around $46.17 a barrel in FY16. In FY17, the average crude price increased marginally to just over $47.56 a barrel. The Indian basket of crude oil averaged $56.43 a barrel in FY18.
After collapsing in mid-2014 due to a supply glut, crude prices remained low for three years. In fact, it touched $30 a barrel early in 2016. But in the last few months it has gained sharply.
Sanctions on Iran could result in some supply disruptions. This could just be the beginning of further bad news for India. Iran is pumping nearly 4 million barrels a day of oil since the 2015 nuclear deal with six world powers that lifted crippling sanctions on the country.
A major disruption in Iran could send crude prices sharply higher just as the oil market is emerging from a prolonged period of oversupply. Iran was India’s second biggest supplier of crude oil after Saudi Arabia till 2010-11 but western sanctions over its suspected nuclear programme relegated it to the 7th spot in the subsequent years.
In FY17, Iran again became third largest oil supplier to India with its supplies jumping to 27.2 million tonnes.
CBDT refutes social media rumours on ITR filing, says no change in IT return forms
New Delhi: The Central Board of Direct Taxes (CBDT) has refuted rumours in social media regarding difficulties in filing return of income by taxpayers, stating that no change has been made in income-tax return (ITR) forms.
“No changes have been made in any of the Income-tax Return (ITR) forms including ITR-2 and ITR-3 since the notification made on April 1 2019, i.e. on the 1st day of the Assessment Year 2019-20,” CBDT said.
“It is reiterated that there are no changes in the notified ITR forms; only the utility has been updated to facilitate the taxpayers. Therefore, the assertion that numerous changes have been made in ITR-2 and ITR-3 on July 11, 2019, does not give a correct picture,” it added.
There were reports in social media that the taxpayers were facing difficulties in filing return of income in ITR-2 & ITR-3 due to large scale changes in the ITR form on July 11.
CBDT stated that the software utility for e-filing of all the ITR forms were released long back. The utility for e-filing ITR-2 and ITR-3 was released on May 2 and on May 10 respectively.
However, the software utility update is a dynamic process and is continuously taken up as per the feedback received from the users/filers to ease their experience in electronic filing of returns, it added.
CBDT further clarified that the updating of utility does not hamper filing of return as the taxpayers are allowed to file using the utility which is available at that point of time.
“For example, more than 85 lakh taxpayers have filed returns in ITR-1 till date by using the said utility, which has also undergone update later. Therefore, the impression that the taxpayers are not able to file return due to changes in ITR form is also not correct as more than 1.38 crore taxpayers have already filed their returns by using the utility released till date. Even though the utility is being updated regularly to provide ease to taxpayers, the returns filed by using the previous version of utility will continue to be valid,” it said.
Lagarde resigns as IMF chief, starting race for her successor
Washington: International Monetary Fund chief Christine Lagarde submitted her resignation from the global crisis lender, citing more clarity about her nomination to lead the European Central Bank as European legislators approved a new top bureaucrat.
Lagarde said in a statement her resignation was effective Sept 12, firing the starting gun for the IMF’s search for her successor, which is likely to be another European.
“With greater clarity now on the process for my nomination as ECB President and the time it will take, I have made this decision in the best interest of the Fund,” Lagarde said in a statement.
She said her resignation would expedite the selection for the next head of the IMF.
IMF succession is expected to be a major topic of discussion among G7 finance ministers and central bank governors meeting on Wednesday and Thursday in Chantilly, France, near Paris amid concerns that slowing global growth and trade conflicts will pressure vulnerable economies.
Lagarde’s resignation, first reported by Reuters, came two weeks after her nomination on July 2 for the ECB’s top job. She did not immediately quit the IMF because of uncertainty over whether the new European Parliament would support her and other new EU leadership positions, sources told Reuters.
Her nomination was part of a package of top officials agreed by EU governments that included German Defence Minister Ursula von der Leyen as European Commission president, who drew Green party opposition.
Later on Tuesday, von der Leyen was approved by the European Parliament in a 383-327 vote.
The European parliament will hold a nonbinding vote on Lagarde’s appointment, which is expected to be finalized by EU leaders at a regular summit on Oct 17-18.
Centre to launch portal to help Jet Airways staff find jobs, in touch with SpiceJet and IndiGo
Mumbai: The government may not have extended support to now-defunct Jet Airways, but it has promised to facilitate employment to job-less airline staff.
The Civil Aviation Ministry is in touch with other private airlines such as SpiceJet and IndiGo to assist Jet staff get meaningful employment.
Civil Aviation Minister Hardeep Singh Puri said that a website would be launched listing staff of Jet Airways and help find employment in other private entities.
“We are also producing a website which is ready. I wish I had the capacity of telling you that the website is up. Every employee would be listed there and the prospects for their re-employment or employment will be facilitated by the government,” Puri said while replying to Members in the Rajya Sabha on the Airports Economic Regulatory Authority of India (Amendment) Bill, 2019.
The Minister, however, said that government cannot assume responsibility for a business failure conducted by a private party.
Referring to Jet Airways, Puri said he was sensitive to (business) failure and willing to see what can be done within the governmental system to cushion that failure.
“But to suggest that a private sector entity goes belly up and the government has to take the responsibility I don`t think that is correct,” the Minister said.
Run out of cash, Jet Airways had suspended its entire operations on April 17. Subsequently, the government re-allocated its slots and foreign traffic rights to rival carriers. Lenders to the airline led by State Bank of India (SBI) have initiated bankruptcy proceedings against it after all attempts to rope in a buyer failed.
Before the airline suspended its operation, it had nearly 20,000 staff on its rolls. Several hundreds of them are learnt to have joined other carriers.
Replying to Members on the Airports Economic Regulatory Authority of India (Amendment) Bill, 2019, he also countered a comment that airfares had gone up.
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