The finance ministry today said that persistent high crude oil prices for a long time may come in the way of 8% GDP growth in FY23, even as it maintained the country may prove resilient amid the gradually unfolding economic fallout of the ongoing Ukraine crisis. The ministry is hopeful of the resilience in the Indian economy on the back of the government’s thrust on infrastructure and the improved corporate profitability. It also pointed out that the government is exploring all possible options to procure crude at affordable prices.

In the monthly economic review for March released short while back, finance ministry said, “The geo-political tension triggered by the conflict between Russia and Ukraine since February 24, 2022 has not ceased. The economic fallout of the crisis is only gradually unfolding.

“It may be accentuating some of the trends already underway such as global food shortages. The dated Brent Crude oil price, which forms the bulk of Indian crude oil basket has hovered around $105-106 per barrel since April 1, after having risen above $135 in the first/second week of March from around $95 just before the crisis,” it said.

“Affordability is desired as even the present level of international crude price, should it persist for a long time, may come in the way of India achieving a real economic growth rate north of 8% in FY23. Be that as it may, India’s economy, having swiftly recovered in 2021-22, after the pandemic induced contraction, may prove resilient owing to government’s thrust on capital expenditure and improved corporate sector’s financial health,” the monthly economic review added.

The report pointed out that in the spirit of Atmanirbhar Bharat, that places national economic and security interests above any other consideration, central government is exploring all viable options, including import diversification, to procure crude at an affordable price.

“Geopolitical conflicts and their consequent impact on food, fertiliser and crude oil prices cast a cloud on the growth outlook globally. India may feel its impact although the magnitude will, of course, depend on how long the dislocations in energy and food markets persist in the financial year and how resilient India’s economy is to mitigate the impact. Transient shocks may not have a big effect on real growth and inflation,” it added.

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