Savings on oil will help in funding social security schemes: FM Arun Jaitley

NEW DELHI: Global oil prices slumping to six year low and the accompanying fall in commodity prices will help India save money on import bill that can be used to fund social security schemes as well as for infrastructure building, Finance Minister Arun Jaitley said today.

"The shake up in oil prices... is a redistribution of wealth, from amongst the oil producing nations to oil consuming countries.

"And therefore oil consuming countries benefit today from this new redistribution, (the) result (of which) is oil prices falling to half," he said at a book release function here.

With oil prices falling to record low of $40 a barrel, a significant fall in commodity prices has also happened.

"India fortunately is neither an exporter of oil nor an exporter of commodities, if at all we import some of them. Therefore, reduced prices help us to save a lot of money and use that money for social security, for infrastructure and redistributing wealth within the country," he said.

India, which imports close to 80 per cent of its oil needs, spent about $124 billion in 2014-15 on shipping oil.

Jaitley said, in his opinion, that was no adversity between the impression that a more liberalised economy and a more integrated economy would adversely impact on distributive justice.

"In fact, higher growth is the best response to poverty. If you just concentrate on poverty alleviation without concentrating on growth, you then get into the business of distributing poverty rather than generating wealth," he said.

Recalling history, Jaitley said 1971 was a "disastrous policy making event for India because instead of concentrating on higher productivity we concentrated only on redistribution."

"The result of which we got into the political business of distributing poverty rather than generating wealth," he said, adding that 2015 is not 1971.

"And therefore, today, it is essential for distributing justice that the societies necessarily must create wealth. What is the best answer to poverty alleviation, you have to increase productivity you have to increase growth and then those additional resources that the state has, have to be used both by the poverty alleviation schemes so that they benefit the weaker sections," he said.

Jaitley said from 1991, when economic liberalisation began under the then Finance Minister Manmohan Singh, India "started becoming a better place to live in."

"Towards the later part of last decade that we again started concentrating on redistribution... The result was for almost two years we went back from almost 8-9 per cent growth rate back to sub-5 per cent growth rate," he said.