CEA Subramanian sounds caution on 'alarming' oil prices

Chief Economic Adviser Arvind Subramanian on Monday stressed on the importance of implementing rising oil prices, which are expected to have a detrimental impact on India's inflation, Gross Domestic Product (GDP) and consumption levels.

Addressing a press conference post the presentation of the Economic Survey 2017-18 here, Subramanian said the present oil prices had impacted government finances and held back real economic activity.

"This year, oil prices went up significantly, and affected consumption, government finances and held back real economic activity. If this continues, GDP growth will drop, and inflation will spike in the coming quarters," he said.

Subramanian further claimed that the current story of the India economy is one of 'revival and risks', adding that market trading was symbolic of this.

"Major achievements this year gone are the launch of the Goods and Services Tax (GST), decisive tackling of Twin Balance Sheet (TBS) challenge and validation of achievements and recognition of medium term prospects," he said, adding that important steps are being taken in this direction.

With regards to the outlook for this year, Subramanian said the government is not in need of radical reforms, but must finish all that has been started.

"Policy agenda for the year ahead would be to support agriculture, stabilise GST, complete TBS actions with reforms, privatise Air India and head-off macro economic pressures and possibility of a sudden stall from rising oil prices and sharp correction in stock prices," he noted.