India's Fiscal Deficit Under Threat from High Oil Prices

The Indian Finance Ministry has warned that high oil prices may strain the country's fiscal deficit and current account balance. Global crude oil prices have surged, reaching $89.74 a barrel for Brent crude and $84.52 a barrel for US West Texas Intermediate (WTI) crude.

The ministry cited rising geopolitical tensions in the Gulf as a major risk to India's economic outlook. It also warned that sustained high crude oil prices could lead to increased import bills, higher inflation, and a wider current account deficit.

In its July economic review, the Finance Ministry noted that India imports most of its crude oil requirements, making it vulnerable to global price fluctuations. The ministry also flagged the possibility of an El Niño transition as another key risk, which could hurt agricultural output and fuel food inflation.