Economy strong, govt will take care of rising crude prices: FM

New Delhi, Feb 2 (PTI) Asserting that economic
fundamentals are strong, Indian Finance Minister Pranab
Mukherjee on Wednesday said the government will "take care" of
the impact of rising global crude oil prices, which are
hovering around two-year high due to crisis in Egypt and other
Arab countries.
Attributing the recent slide in stock market to continued
selling by foreign institutional investors, he said that the
economy during 2010-11 would record a growth of 8.5 per cent,
up from 8 per cent a year ago.
Mukherjee's remarks come at a time when crude oil prices
have soared a 28-month high of USD 102 a barrel following
deepening of political crisis in Egypt and fears of the
problem striking Yemen.
"Unfortunately, developments in the Middle East and its
impact on the Arab world is causing uncertainty about (oil)
production (and) about (its) availability. We are watching the
situation (closely)," he said, adding the government will
"take care" of the impact of high prices on the domestic
industry.
Unrest in Egypt fueled Brent crude price to an intra-day
high of USD 102.08 per barrel yesterday, its highest level
since late September 2008 after the Lehman Brothers bankruptcy
sent financial markets into a tailspin.
Pointing that India had managed the situation when crude
oil price had touched a record high of USD 147 per barrel in
July 2008, Mukherjee said his ministry was in constant touch
with the Oil Ministry on the unfolding situation.
The spike in global rates has meant that the gap between
domestic retail fuel price and their cost of production has
widened, necessitating action -- either by way of price
increase or hike in government subsidy.
Raising prices of auto fuel, however, may not be an easy
option at a time when the government is struggling to calm
down inflation which rose to 8.43 per cent in December, 2010,
from 7.48 a month ago.
Giving higher subsidy to the oil marketing companies, on
the other hand, would amount to sacrificing fiscal prudence.
Noting that "the stock market has its own mind and it
take cues from developments all around," Mukherjee said the
volatility in the capital markets was on account of "continued
selling by FIIs".
The benchmark index Sensex of the Bombay Stock Exchange
had lost 5.90 per cent in the past five trading sessions with
investors resorting to hectic selling in wake of Egypt crisis
and high inflation etc.
The markets, however, recovered today gaining 68 points
to close at 18,090.62 points.