In its monthly economic review for May, the ministry, however, cautioned against external challenges that could potentially impact India’s growth trajectory, calling for close and continuous monitoring. The “outlook for India is one of cautious optimism,” it said.
Global oil prices have retreated after a spike during the brief Iran-Israel war. However, while supply remains adequate at present, insurance costs and the “perceived risk of potential closure of choke points might cause the landed price to rise,” the ministry said.
“Therein lies the risk to India. For now, the risk has receded. But it is too soon to sound the ‘all clear’ for the rest of the year,” it said.
A persistent rise in global oil prices could have threatened India’s growth and fiscal outlook in the current fiscal.
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Balancing Act
“Thankfully, there is a ceasefire, and oil prices have retreated sharply,” the report said. “But then, we have to get used to doing the balancing act or the high-wire act for some time to come,” it added, while noting that India is on a better footing than many others.Global Brent crude oil prices had spiked 12% to $78.5 per barrel in the early hours of June 13 following the Israeli strike on Iran. On Friday, Brent futures were up 0.6% to $68.15 a barrel at 1328 GMT, but they were still poised for the sharpest weekly slide in about two years, as the conflict cooled off.India is looking to build on its economic health through critical agriculture, manufacturing, resources and technology missions, and deregulation initiatives aimed at boosting productivity, the review said.
These could be “nervous but exciting times” for the Indian economy, it said. Geopolitical shifts may present India with opportunities that appeared remote earlier. But it’s “up to us to be flexible enough to ride the tide”.
The review flagged that global growth continues to experience headwinds, with persistent trade frictions, heightened policy uncertainty, and ongoing geopolitical conflicts weighing on the broader economic outlook.
