Rising crude oil prices have posed a huge challenge before India's policymakers as the International Monetary Fund (IMF), in its latest projection, cut the country's growth rate to 7.4% for 2019 — marginally lower than what was predicted earlier this year. The IMF says that India's economy indicated a rebound from transitory shocks, but the ongoing trade protectionism and rising crude oil prices are putting pressure on it.
"India's growth is expected to increase to 7.3 percent in 2018 and 7.4 percent in 2019 (slightly lower than in the April 2018 World Economic Outlook for 2019, given the recent increase in oil prices and the tightening of global financial conditions), up from 6.7 percent in 2017," the IMF points out in its world economic outlook released on Tuesday morning.
Indian Petroleum Minister Dharmendra Pradhan on Monday said that he had spoken to Saudi Oil Minister Khalid A. Al-Falih and "reminded him of the June commitment of OPEC to increase production by 1 million barrels per day" to help cool prices. "Maybe OPEC is not following the June decision," Pradhan said.
The issue of rising crude prices was also discussed between Indian Prime Minister Narendra Modi and the visiting Russian President Vladimir Putin during the bilateral annual summit last week.
"Russian President Putin assured Modi that if needed, Russia will increase the oil production to check the soaring oil prices," a highly placed Indian government official said.
India's medium-term growth prospects remain strong at 7.75%, benefiting from ongoing structural reforms, but have been marked down by just under 0.5% relative to the April 2018 WEO, the IMF added.