Revisiting the impact of higher oil prices

High global oil prices have in the past contributed to worryingly-large current account deficits in India but prices would have to rise much higher than they have recently for that to return as a risk. Domestically, we doubt the government would cut excise duties on retail fuel over the next few months as it has done during previous surges in oil prices. So the hit from higher oil prices would most likely fall on consumers.