High oil prices hurting growth, no option for fuel price hike: CEO

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New Delhi, Nov 11 (UNI) A surge in global oil prices poses a risk to India's fast economic growth and the government may have to raise retail fuel prices soon, a survey said.

The survey of 180 chief executive officers (CEOs) by industry body Assocham said the government has ''limited options'' but to pass on the burden of high global fuel price to domestic consumers.

''If the issue is not handled expeditiously, it may create difficult situation for the economy which has so far maintained a pace of nine per cent,'' they said.

Around 82 per cent of the CEOs felt that with increasing crude prices, the customs realisation would have risen and government would not lose from the levels projected in the budget for the financial year 2007-08.

A majority of the corporate heads were against the government resorting to further issue of bonds to oil companies on the ground that it would ultimately impact the fiscal health of the government.

''Ultimately the liability of oil bonds will fall on the taxpayer,'' Assocham President Venugopal Dhoot said.

However, the Government has elbow room to reduce the taxes on import of crude and processing of the fuel, he added.

Most of the CEOs felt that though inflation has been contained at 3.07 per cent, the high energy prices could become a spoil sport to the country's growth story.

Higher energy costs resulting from rising prices of oil will hurt profit margins at small and mid-sized companies that are unable to pass them on to the consumers, CEOs said.

India is yet to raise retail fuel prices this year even though global prices have risen close to 100 dollar a barrel from about 61 dollar at the beginning of the year.

The second major concern of CEOs was the firm rupee as it squeezed profit margins in textiles, handicrafts and leather sectors, and could lead to a loss of 2,00,000 jobs this year, the survey said.

The rupee rose 12.5 per cent against the dollar in 2007 as foreign funds pumped in about 17 billion dollar into country's booming stock market so far this year.

Indian CEOs, however, did not rate large inflows as a downside risk, but said managing them was a challenge for the regulators.

UNI

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