Fuel price shield helping India and consumers to tackle West Asia crisis: Gita Gopinath
In an exclusive interview with ANI, Gopinath said the limited increase in retail fuel prices by the Indian government despite the sharp rise in international crude oil prices has effectively acted as a disguised subsidy for households and businesses.
“The government is already supporting the economy to some extent because it has not allowed fuel pump prices to rise as much as expected given how much world oil prices have risen,” he said.
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According to Gopinath, the impact of the increase in global oil prices on domestic fuel prices is much lower in India than in many other countries.
“This itself is like an implicit subsidy to households and companies,” he added.
Responding to the question of what more the government could do to ease the financial burden arising from the West Asian crisis, Gopinath suggested that targeted support would be more effective than broad-based fuel subsidies. He said some increase in fuel prices may need to be passed on to consumers, but support measures should focus on vulnerable segments of society and businesses most affected by high costs.
“What will probably be called for is to allow more of the price rise to pass, but then provide much more targeted support to vulnerable households and businesses, as opposed to broad-based support based on artificially low fuel prices,” he said.
Targeted aid will help provide relief where it is needed most while preventing broader distortions in the economy, Gopinath said.
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“So I think providing more targeted support is a good way to go right now,” he added.
His comments come at a time when India, like many other countries, continues to monitor the economic impact of the West Asian crisis, including higher energy costs and disruptions affecting global supply chains.
Gopinath’s remarks suggest that although the government has already provided support by limiting increases in fuel prices, future policy efforts may need to focus more on targeted aid and structural reforms to help the economy cope with ongoing global challenges.
