Goldman sees opportunity for India to cut fuel tax on high oil – Times of India

According to Goldman Sachs Group Inc., if global oil prices rise further, India may need to cut fuel taxes further to ease inflationary pressures, a move that will boost the country’s revenues. Will reduce the collection a bit.
“If you have high oil prices, it can have a direct impact on higher pump prices,” said Shantanu Sengupta, senior Indian economist at Goldman, in an interview with Bloomberg Television’s Hasalinda Amin and Rishad Salamat. “If oil touches $105 a barrel by the end of the year, the government may consider further reduction in excise duty.”
Brent crude is hovering around $90 a barrel amid tensions between Russia and Ukraine. A group of Wall Street banks, including Goldman, have predicted that oil will hit $100 a barrel this year with a firming global market.
India reduced taxes on retail fuels in November to provide relief to consumers from record prices of petrol and diesel.
Sengupta said further reduction in taxes could lead to a slight dip in excise receipts in the next fiscal, which begins on April 1, but overall a strong recovery in government revenue is expected.
“On the inflation front, oil prices will clearly be hurt,” he said, adding that he expects the Reserve Bank of India to hike policy rates thrice this calendar year by a total of 75 basis points.