India plans oil import from Iran to cut import bill, CAD

The oil ministry has worked out a plan to save $22 billion in the oil import bill from Iran thus helping reduce the current account deficit (CAD), petroleum minister M Veerappa Moily has said. 

"Oil (imports) is one of the components responsible for CAD. The prime minister has told us to save $25 billion in the import bill. As of today, we have pieced together a plan to save $22 billion in import bill," Moily said. 

He said the savings would be around one percent of the GDP. 

Moily was talking to reporters Tuesday at an event to present a cheque for Rs.5 lakh to the widow of Arjuna awardee sportsman late Makhan Singh. 

Senior oil ministry sources told IANS that the plan includes renewing imports from sanctions-hit Iran, which India pays in rupees thereby saving foreign exchange and reducing the CAD. 

Officials calculate that importing, for instance, 10 million tonnes oil from Iran means saving $10 billion in foreign exchange outgo. During the last fiscal, India imported 13.1 million tonnes of oil from Iran, down from 18.11 million tonnes of 2011-12. 

After not buying any oil from Iran in first four months of the current fiscal, imports were resumed this month with state-run Mangalore Refinery and Petrochemicals getting the first tanker-load. 

In view of the current volatility of the rupee against the dollar, India is discussing with Iraq the possibility of trade in local currencies, which would help insulate India's oil imports from Iraq also.

Source:Times of India

India cannot afford to grow at less than 8%: P Chidambaram, FM

     
          Blaming the political logjam in the Parliament for stalling economic decisions, Finance Minister P Chidambaram on Tuesday said that India cannot afford to grow at less than 8%. "There is no political consensus on how to mitigate economic woes," he said.

Chidambaram said that there are no signs of global crisis ending and the Indian economy is challenged by global factors. "India needs more reforms and less economic restrictions," he said while addressing the Lok Sabha. "India needs a more open economy to seed growth," he added.

"The polity needs to agree on a basic direction of policy making," he emphasised. "Political parties should agree on a common economic programme," he said.

Seeking to assure the house, Chidambaram said that the economy has sufficient reserves and the external debt is manageble. He, however admitted the need to shore up the reserves. :We will fully and safely finance FY14 CAD, it will contained at $70 billion or less," he added.

Chidambaram's comments come after BJP leader Yashwant Sinha said, "Rupee is tanking but government, Chidambaram keep saying All Izzz Well."

Earlier in the day, Sinha said that the government sowed the seeds for the current crisis, back in 2008-09. "In a move that was aimed to win elections, the government hiked consumption expenditure, as opposed to the recommended investment expenditure," Sinha hit out.

Sinha explained that a high fiscal deficit leads to higher inflation, which in turn impacts investments. When the fiscal deficit continues to be high, it is natural for it to spill into current account deficit, he added.

Stating that the rupee has fallen despite Reserve Bank of India's (RBI) efforts, Sinha said that it is the responsibility of the government and central bank to curb the volatility in the currency. "Such rapid volatility does not bode well for the economy," he said. "Foreign investors shying away from India's growth story," he added.

source: http://economictimes.indiatimes.com/news/economy/indicators/India-cannot-afford-to-grow-at-less-than-8-P-Chidambaram-FM/articleshow/22097263.cms