Global recession may help cool prices in India

Slower growth in the advanced economies may help reduce crude oil and other commodity prices, in turn helping reduce the fiscal burden on India, senior government officials have told Business Today Television.

"It is not a nice feeling, but it will reduce the government's costs substantially. A recession in the West could lower commodity and oil prices. India's imports of fertiliser and crude oil would become less costly if global economies struggle on the growth front," one of the senior official told BT TV.

"In a way, we are critically linked to the global economy, but also a bit insulated. How can anybody curb inflation? We need to wait for the right moment, and the situation will stabilise," the official added.

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Meanwhile, petroleum minister Hardeep Singh Puri today said that India would be stepping up its production of crude oil to target meeting 25 per cent of demand by 2030. Currently, India consumes five million barrels of petroleum daily and imports close to 85 per cent of its total crude requirements.

India's latest consumer price index inflation numbers for September surged to 7.4 per cent, as per official data released this week. Higher inflation was led by food items. Food inflation surged to a 22-month high of 8.6 per cent, while core inflation rose to a 4-month high of 6.3 per cent.

This is the ninth consecutive month where the inflation print has remained above the upper band of 6 per cent and the second successive quarter where the average is higher than 7 per cent.

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Irregular rainfall is said to be the primary reason behind higher inflation in vegetables and fruits. While inflation in cereals has also inched up, the steps taken by the government and a reasonably healthy Kharif output are expected to address the concerns behind the further hike in prices. 

The Reserve Bank of India (RBI), in its last monetary policy committee meeting on September 30, 2022, increased the policy repo rate by 50 basis points to 5.9 per cent. While announcing the monetary policy, Governor Shaktikanta Das said the MPC believes that continued high inflation necessitates further calibrated withdrawal of monetary accommodation to restrain the broadening of price pressures, anchor inflation expectations, and contain the second-round effects.

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