New Delhi, March 22 (IANS) Finance Minister Pranab Mukherjee Tuesday warned of a spike in global fuel prices and domestic inflation as a result of the political uncertainties in the Middle East but said the fallout of the crisis in Japan was too early to assess.

"Growing political uncertainty in the Middle East and Libya has profound implications for the global oil markets and for the fuel-oil costs and inflation in our economy," Mukhherjee told the lower house of parliament during a debate on the Finance Bill.

"The consequences of the tragedy for the Japanese economy and the implications for the global markets are yet to be fully assessed," he said, while initiating the debate on the bill that he tabled last month.

"Even as we plan and prepare for the uncertainties in a globalised world, I want to emphasise that there will always be events that one cannot anticipate or plan for," Mukherjee said referring to the devastating earthquake and tsunami in Japan.

As a result, he said, it was imperative for the government to keep some headroom in policy to address the issues. Accordingly, fiscal consolidation without affecting the growth momentum was one of the guiding principles in the budget.

"We need to do more when the going is good."

Mukherjee said the government had outlined a major legislative agenda for financial sector reforms, and in this regard mentioned bills on banking and pension, as also to amend the Constitution for a uniform goods and services tax.

"I would like to emphasise the importance of staying our course on the tax reforms, the enactment of the direct tax code and the constitutional amendment to facilitate the implementation of goods and services tax from the next fiscal," he said.

"Half-measures in these reforms, by insisting on concessions and exemptions, will only add to the complexity and distortions of the tax regime, which will compromise the intended benefits from these measures."