Mumbai: The Reserve Bank of India has warned again that if the government does not pass on the increase in international oil prices to the domestic market, it will pose a significant risk to the country's fiscal situation.

The RBI said in its mid-term review, Macro-economic and Monetary Developments, released a day before the bank's mid-year policy review, said that the hike in international oil prices and the possibility that they may remain high longer than anticipated, poses significant risk to the fiscal deficit, directly or indirectly, unless appropriately passed on.

In its annual report the RBI had cautioned the Government if domestic oil prices are not allowed to keep pace with the international price, the fiscal burden of the Government could increase and also hurt investors of public sector oil companies.