Ex-RBI Governor Raghuram Rajan Suggests 'Windfall Tax' On Indian Oil Refiners To Shield Smes From Trump Tariffs

(MENAFN- Live Mint) Former Reserve Bank of India (RBI) Governor recently took to LinkedIn, suggesting a measure to mitigate the economic fallout from recent additional US tariffs on Indian goods, prompted by imports of Russian oil.

Rajan proposed that the Indian government should consider imposing a windfall tax on oil refiners who are profiting from discounted crude oil. He argued that the funds collected could be redirected to support India's small and medium enterprises (SME), particularly textiles and apparel, which are now facing the brunt of the hefty tariffs imposed by the US.

A windfall tax ensures that those who benefit from Russian oil also contribute to offsetting the costs it imposes on others, Rajan suggested.

A windfall tax is levied by a government against industries when economic conditions allow these industries to experience unexpected and above-average profits.

The Trump administration imposed a 50% tariff on Indian goods, which took effect on Wednesday, August 26. The measure was taken after Donald Trump sought to punish India for buying Russian crude oil and weapons.

“I spoke with Rajdeep Sardesai of India Today on the Trump tariffs hitting India. Given that there is now a cost to buying Russian oil falling on our small and medium exporters (for example, in apparel and textiles), why not impose a windfall profit tax on our refiners proportional to the Russian oil they buy, and transfer it to our small and medium exporters? That will ensure those in India who benefit from Russian oil also pay for it instead of letting others pay,” he wrote in his LinkedIn post on Friday, August 29.

(This is a developing story. Check back for updates.)

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