Geopolitical tensions could trigger crude oil supply concerns in the winter, says Finance Ministry

Geopolitical tensions could trigger crude oil supply concerns in the winter, says Finance Ministry


India’s finance ministry today flagged concerns of fresh trouble with supplies during the winters as global tensions linger.

“The geopolitical environment remains tense and fraught. This could trigger fresh supply concerns in the winter for critical commodities such as crude oil and natural gas,” the report said.

However, the report was positive about India’s growth outlook going forward, pointing to healthy balance sheets as a cause for optimism.

“India’s growth outlook for 2022-23, though lower than projections made before the outbreak of the conflict in Europe which resulted in sharply higher price for crude oil and other essential commodities, is still comfortably high and confirms the recovery of animal spirits and economic growth from the pandemic-induced contraction in 2021-22,” it added.

The report also made a mention of India’s economic growth projection, which is the highest among major economies.

“Despite global headwinds, the IMF forecasts India’s economy to grow at a robust rate of 7.4 per cent in 2022-23,” the economic review for July added.

The Finance Ministry report also made a mention of domestic inflationary pressures, saying that the stress has moderated.

“Headline retail inflation eased to 6.7 per cent in July 2022 on the back of a decline in food inflation to 6.8 per cent, which to an extent has followed a decline in global food prices,”

“Private sector and banking sector balance sheets are healthy and there is appetite to borrow and lend respectively. Therefore, barring further adverse shocks to commodity prices and, thus India’s terms of trade, economic growth will consolidate and retain its momentum into 2023-24,” it said.

As and when the Indian private sector embarks on the long-awaited capital expenditure cycle building on the government’s capital expenditure of recent years, India’s potential an estimated economic growth performance in the rest of the decade will inevitably be revise higher.

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