West Bengal Finance Minister Amit Mitra Raised Concern over Indian Strategic Petroleum Reserves

Questioning the Centre over the strengthening of Indian strategic oil reserves, West Bengal Finance Minister Amit Mitra argued that fuel price stabilization fund could be useful to counter soaring petroleum prices.

"In July 2014, the crude oil price was $104 per barrel which fell by February 2016 to $33.01. India has a strategic reserve with the Indian Strategic Petroleum Reserves Ltd. Why did the Centre not further strengthen the reserves when the crude oil prices fell?" Amit Mitra asked.

He said that the US has the strategic petroleum reserve structure, with a reserve of about 727 million barrels, started in the 1970s during the oil crisis.

Mitra said he suspected India's strategic reserve might not be enough to cater for a longer period.

"We could also have a possible fuel price stabilization fund. This can be created when the oil prices are low," he said at the Annual General Meeting of the Bengal Chamber of Commerce.

Expressing concern over increasing fuel prices and tumbling value of rupee against the US dollar, Mitra said that it is impacting the current account adversely and the Indian economy is hitting 'certain dangerous levels'.

Mitra's comments came a day after Chief Minister Mamata Banerjee announced that her government will decrease tax on petrol and diesel by Re 1 per liter. Rajasthan and Andhra Pradesh, too, have cut taxes on fuel.

Talking about the depreciation of the rupee, Mitra said that it led to increased import costs and inflationary pressure on the economy.

"We have seen that when there is inflationary pressure, the Reserve Bank of India raises the benchmark interest rate (repo rate)," he said.