How has the decline in the price of crude oil in the international market helped the government to reduce fiscal deficit?

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Solution

India imports crude oil to meet the bulk of domestic demand for petrol and diesel. A substantial fall in crude oil prices in the international market has prompted the government to increase excise duty on petrol and diesel without passing the benefit of it to the consumers. It has raised tax revenue of the government. Accordingly, the fiscal deficit has reduced.

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Statement: "The Government will review the present policy of the diesel price in view of further spurt in the international oil prices".

Conclusions:
I. The Government will increase the price of the diesel after the imminent spurt in the international oil prices.
II. The Government will not increase the price of the diesel even after the imminent spurt in the international oil prices.

Statements: "The Government will review the present policy of the diesel price in view of further spurt in the international oil prices". - A spokesman of the Government.

Conclusions:

I. The Government will increase the price of the diesel after the imminent spurt in the international oil prices.

II. The Government will not increase the price of the diesel even after the imminent spurt in the international oil prices.

Q. Consider the following statements about the Medium Term Fiscal Policy Statement:
1. It provides 3-year rolling targets for fiscal indicators in relation to GDP at market prices.
2. The fiscal indicators included under this statement are revenue deficit, fiscal deficit, effective revenue deficit, tax to GDP ratio and outstanding central government liabilities.
Which of the above statements is/are correct?

I: The prices of petrol and diesel in the domestic market have remained unchanged for the past few months.

II: The crude oil prices in the International market have gone up substantially in the last few months.

Q. Statements:
I. The prices of petrol and diesel in the domestic market have remained unchanged for the past few months.
II. The crude oil prices in the international market have gone up substantially in the last few months.

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