The union government said India is closely monitoring the global price movement and their impact on the Indian economy amid the Russia-Ukraine war.
In response to questions on impact of the Ukraine crisis on the Indian economy, the ministry of finance told the Parliament on Monday that oil sector Public Sector Undertakings (PSUs) have diversified their petroleum basket and the government too is committed to use the deploy strategic petroleum reserves to contain market volatility. The ministry maintained that the impact on consumption will depend on the duration for which the oil prices remain elevated.
"The geopolitical tension between Russia and Ukraine has led to global supply disruptions resulting in steep increase in global commodity prices including prices of crude oil, gas, edible oils and fertilizers, among others. Government of India is closely monitoring the global price movements and their impact on India’s economy through trade," minister of state for finance Pankaj Chaudhary said in a written reply in Lok Sabha.
"As per second Advance Estimates released by National Statistical Office, India's GDP in 2021-22 is estimated to grow at 8.9 per cent, which will take the country's GDP past the most recent pre-pandemic output of 2019-20, to complete the recovery process," Choudhary pointed out in the response.
Responding to another question on impact of the high oil prices, Chouhdary said, "To ensure security of crude supplies and to mitigate the risk of dependence on crude oil from single region, Oil Public Sector Undertakings (PSUs) have diversified its petroleum basket and are procuring crude from countries located at various geographical locations viz. Middle East, Africa, North America, South America etc."
"In addition, Government is also committed to supporting initiatives for releases from Strategic Petroleum Reserves, for mitigating market volatility and calming the rise in crude oil prices," the reply added.
"There have been wide fluctuations in global crude oil prices in recent months. The average price of Indian basket of crude oil had fallen to a low of $73.30/bbl in December 2021. However, it crossed US$ 100/bbl on February 24, 2022 consequent to the Russia-Ukraine crisis, thereafter peaking to $128.24/bbl on March 9, 2022. It is currently at $117.71/bbl as on March 24, 2022," the finance ministry reply added.
"The impact of high global crude oil prices on domestic consumption is dependent on the duration for which crude oil prices would remain elevated due to the existing geo-political crisis. Government is keeping a close watch on the evolving situation. The Russia Ukraine crisis is unlikely to impact the flow of private investments in the country as foreign direct investments (FDI) to India both from Russia and Ukraine taken together are miniscule," it said.