Published On: Thu, Mar 3rd, 2016

Oil Price Drop a Windfall for India

Oil price drop is a large gain for India, IMF(International Monetary Fund) has said. The fall in global oil prices will make a room for spending on other services and products and has helped in improving external, fiscal positions and government revenue.Oil Price Drop a Windfall for India

Oil Price Drop is favorable for India

“The collapse in global oil prices is a large windfall gain for India. The windfall has made room for more spending on goods and services, helped improve the external and fiscal positions, and allowed a sharp decline in inflation,” Paul Cashin, Head of the International Monetary Fund (IMF) team for India, said.

Oil price drop will benefit India and IMF has estimated India’s domestic product (GDP) growth from 7.3 per cent to 7.5 per cent in the next year although economic recovery has been uneven.Oil Price Drop a Windfall for India

There is lesser growth in Investment cycle which needs to be strengthened, a downfall in banking system because of bad loans and a weaker global economy related to India’s exports also needs to be strengthened, it said.

IMF (International Monetary Fund) also said that there is a little rise in private investment and it shows only a few signs of revival. To continue a growth momentum is a challenge for India.

An increase in public infrastructure and government enterprises had a positive influence on private investment, it said.

“Nonetheless, project implementation and supply-side challenges have been a drag on corporate investment for several years and they have chipped away at the financial strength of core industrial sectors, so the investment recovery is likely to be sluggish,” Cashin said.

“Weakened bank asset quality and profitability means that banks are also becoming more cautious in their lending, which could interrupt economic growth,” he said.

He appreciated the Reserve Bank of India for taking steps towards more strict recognition and more effective solution to bad loans.

According to IMF, India will have to depend to domestic demand to increase growth and development.