Prime Minister Narendra Modi has an oil problem. And it’s set to worsen with Saudi Arabia rooting for the commodity to push through the $80 barrier.
Modi’s government made the most of cheap oil by substituting any fall in prices with taxes that kept retail fuel rates unchanged for consumers and boosted the federal revenue. Now, pressure is mounting to forego some of that windfall as pump prices of gasoline and diesel hit records, likely marring the ruling party’s prospects at the national ballot in 2019.
“There is a strong case for the central government to take another excise duty cut, and ask state governments to reduce value added tax,” Anil Sharma and Ravi Adukia, analysts at Nomura Financial Advisory and Securities India Pvt. wrote in a note Tuesday. Read More