Further, ministry officials recommend restoring the old 5 percent crude oil import duty in full. This would require Modi's approval, and if implemented could raise up to $4 billion more, lifting total potential fiscal gains to over $16 billion.
"A proposal to impose import duty on crude oil is under consideration," said another finance ministry source. "The final decision could be announced in the budget." Both sources requested anonymity, because they were not authorized to speak to the press on the record.
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Jaitley is struggling to hit his fiscal deficit target of 4.1 percent of gross domestic product this fiscal year. He wants to cut it to 3.6 percent in 2015/16, and 3 percent in 2016/17.
Fiscal constraints leave little over for the wider economy, with consumers still cautious about their prospects and concerned that recent falls in inflation will be only temporary.
Although the price of diesel, used by truckers and farmers, has fallen by 6 percent in the past five months, drivers in India are now paying more to fill up than in the United States.
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"The boost to household consumption is likely to be small," said Shilan Shah, India Economist at Capital Economics in London. "The government has been able to take advantage of the windfall."
By Shah's reckoning, the oil windfall could help cut the budget deficit by 0.5 percent of GDP, as well as narrowing the current account gap and easing price pressures.
"This could lead to the RBI beginning to cut interest rates early next year, which on its own should have impact on economic growth," said Shah.