Global energy price rise will hurt India's economy, says IMF Chief

International Monetary Fund (IMF) Managing Director Kristalina Georgieva has said India has been very good at managing its finances but the spike in global energy prices will have a negative impact on the country's economy. 

Speaking during a media roundtable on Thursday on the Russian invasion of Ukraine and its global impact, Georgieva said, “Clearly the most significant channel of impact on the Indian economy is energy prices.”  

She explained that since India fulfills majority of its energy requirements through imports, the rise in prices is going to affect the economy. “India has been very good in managing its finances," she added.

Georgieva stressed that there are some fiscal spaces to be able to respond to the challenge while adding that countries should focus on protecting their vulnerable populations from rising prices.  

“Our advice to our members is first and foremost make sure that you protect the most vulnerable populations from the shot up of prices, not only energy but also foot food prices for countries where this is going to be a significant factor," the IMF boss said.

The same point was also illustrated by IMF’s First Deputy Managing Director Gita Gopinath during the media roundtable. Gopinath observed that the war has impacted economies globally, including that of India.  

She further explained that the war has had an impact on the purchasing power of Indian households since the country relies largely on energy imports and the prices are going up.  

“If you’re looking at headline inflation numbers, inflation in India is close to around 6 per cent, which is the upper end of the inflation band for the Reserve Bank of India," Gopinath noted.

(With PTI inputs) 

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