The ministry of finance has raised concerns over the soaring commodity prices due to the Ukraine war which has aggravated the risk of the twin challenges of high inflation and slow growth for the country.
Quoting the Monthly Economic Review released by the ministry of finance on April 7, Mint reported that soaring global commodity prices and disruptions in supplies due to the Russia-Ukraine conflict pose a twin challenge to the Indian economy—growth may slow down while inflation could remain elevated.
The magnitude of the impact of the higher commodity prices would depend on how long high prices persist, said the report.
The ministry, as per the Mint report, further added that the government was exploring all options, including import diversification, to procure crude oil at an affordable price. But in case high international crude prices persisted for long, it could hamper India’s prospects of achieving an over-8 percent economic growth rate in 2022-23. Notably, the Economic Survey had projected the economy to grow between 8 and 8.5 percent in the financial year 2022-23.
The ministry said that domestic economic momentum seen in the massive government capital expenditure, rise in indirect tax collections and import of capital goods offer comfort, so that the impact on the Indian economy may turn out to be “tolerable", as per the Mint report.
As per media reports, Russia has offered India oil at a discount of as much as $35 per barrel on prices before the war and New Delhi has taken up the offer.
To ensure the security of crude supplies and to mitigate the risk of dependence on oil imports from a single region, India has been focusing on diversifying its petroleum basket across West Asia, Africa, North and South America, Mint reported.