India Weighs Fiscal Deficit Hike to 4.8% Amid Rising Iran War-Driven Fuel Costs: Reports

India is preparing for a wider-than-expected budget deficit this year, Bloomberg News reported on Friday, citing an official familiar with the matter, as the war in Iran raises fuel subsidy costs and pressures government finances.

Reuters could not immediately verify the report and has sought comment from India's finance ministry.

The country, the world's third-largest oil importer and consumer, is willing to let the budget gap widen by as much as 50 basis points to 4.8% of GDP compared with the 4.3% target for this fiscal year that started on April 1, according to the report.

Higher crude prices and supply disruptions after the closure ​of the Strait of Hormuz have hit India, prompting state retailers to raise petrol and diesel prices by ⁠about 8%. The government has also cut subsidies on cooking gas cylinders for households.

India ⁠ships in about 90% of its oil and is one of the countries most-exposed ​to prolonged Iran war-related disruptions to global energy supplies.

The government's fertiliser subsidy is likely to jump 20% in the fiscal year, a government official had said earlier.

Authorities are keeping their options open for now and plan to reassess the fiscal outlook later this year, when there is more clarity on non-tax revenues and subsidy needs, Bloomberg News reported.

The government is also evaluating possible spending cuts across ministries to contain the deficit, the report said.

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