Iraq crisis: India braces for Rs 20,000 cr hole in budget as oil could rise to $120 per barrel

New Delhi: India’s government sees oil prices going as high as $120 per barrel for three to four months because of fighting in Iraq, potentially driving a hole of at least Rs 20,000 crore ($3.4 billion) in the budget, two government sources told Reuters.

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“If the oil prices remain high even for 3-4 months around $120 a barrel, it could have a significant impact on the fiscal deficit and economic growth,” a senior Finance Ministry official told Reuters on condition of anonymity.

Finance Minister Arun Jaitley presents his maiden budget next month and faces headwinds from a weak economy, a food inflation scare and now the risk that higher oil prices could swell the government’s oil subsidy bill.

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Reuters