Oil at record high, rupee at record low ..Jaitley says all is well, colleague Gadkari says India facing economic crisis

Mumbai, Oct 4: Rising crude prices, Rupee at new low, bloodbath in stock market. Gold prices at new high. However, finance minister Arun Jaitley said that Indian economy is on a firm ground and it is only global events that are affecting India. But, his cabinet colleague Nitin Gadkari admitted that India is facing  "economic crisis" due to rising crude oil prices.Ahead of a likely hike in key lending rates by the Reserve Bank of India (RBI), along with a weak rupee and high crude oil prices, plunged equity indices deep in the red on Thursday. The S&P BSE Sensex tanked by over 800 points, while the NSE Nifty50 lost over 300 points. The rupee lost 24 paise to hit a fresh record low of 73.58 against the US dollar. This after it hit a record low of 73.77 during trade.  Rising crude prices have deepened concerns about the current account deficit and capital outflows. Gold prices rallied by Rs 70 to Rs 32,100 per 10 gram at the bullion market Thursday on the back of sustained buying by local jewellers amid firm global cues.Meanwhile, after announcing cut in excise duty on petrol and diesel, finance minsiter Arun Jaitley saidJaitley also said that the revenue impact of the decision would amount to around Rs 10,500 crore for the rest of the fiscal, which amounts to "only 0.05 per cent of the fiscal deficit". The Minister expressed confidence about meeting the fiscal deficit target despite the excise duty cut, saying increased revenue collections would absorb the impact of the cuts. "The government's aim is to give relief to the consumer by increasing their purchasing power without impacting the fiscal deficit," he said.Jaitley said the decision to give relief to consumers was necessitated by the uncertainty regarding the international oil prices and was made possible by better-than-expected revenue collections. "The government's capacity to provide relief is only when domestic factors are strong," he said.It is only the international factors, primarily rising prices of crude and domestic policy and other measures like the interest rate hike by the US, which have affected India, Jaitley said adding domestic indicators were strong and stable. Except the Current Account Deficit (CAD), which is directly linked to oil prices, all other data are encouraging, he said. He said inflation too is under control.On the other hand, Union minister Nitin Gadkari said the country is facing lot of "economic crisis" due to crude oil imports and need to reduce imports and increase exports. India is the third largest importer of crude oil and rising international oil prices are inflating domestic transport fuel costs in a strong demand environment. Brent, the benchmark for more than half the world's oil, is trading at a four-year high of over USD 84 per barrel."It is time for the country to find out import substitute products and we have great potential for the use of ethanol, methanol, CNG and electric transportation system as solutions, Gadkari said. While blaming OPEC countries for the current increase in oil prices, he said, "One day they will find there is no market for crude oil."The minister added that the government had taken a decision to increase production of ethanol, which is important for the country. "As this is the time for India to find solutions for import substitutes, the chemical industry must work towards finding the solutions to curb imports of crude oil at rising prices," he said.News24 Bureau with Agencies