Centre’s monthly review: Current crude price level may affect India’s economic growth rate

The finance ministry's monthly economic review for March warned that the current level of international crude price may hinder India's economic growth rate.

The finance ministry's monthly economic review for March warned that the present level of international crude price may hinder the growth of India’s economy. According to the ministry, if the current level of crude price persists for a long time, it may come in the way of India achieving an economic growth rate north of 8 per cent in the coming financial year.

Further, if the conflict between Russia and Ukraine remains unresolved, there will be a 1 percent negative impact on the world output growth.

As per the Organisation for Economic Co-operation and Development(OECD), the negative impact on global output growth would aggravate the already elevated consumer inflation rate by 2.5 per cent.

The ongoing conflict is also accentuating some of the trends already underway, such as global food shortages.

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Heightened commodity prices along with supply chain disruptions caused by the Russia-Ukraine conflict pose a challenge to global economic activity. This has also caused the international prices of many commodities to rise, with edible oils being amongst the most affected.

Droughts in South America, a major supplier of soybean oil, have affected the soybean crop, causing an increase in the prices of soybean oil, and, in turn, of palm oil.