"Recent developments in Iraq have created huge uncertainties with an overhang on the global economy. The volatility in petroleum prices have put pressure on the fisc in countries like India," Finance secretary Arvind Mayaram said at a G20 Deputies Meeting in Melbourne.
The Indian government earlier said fuel supplies in the country will not be impacted by the conflict in Iraq, which is the nation's second largest crude oil supplier.
Against 18.7 million tonnes of crude oil imports planned by Indian Oil Corp and Hindustan Petroleum Corp in 2014, 50 per cent of the contracted quantity has already been lifted.
India bought 25.1 million tonnes of crude oil from Iraq in 2013-14 fiscal. These imports included those by PSU and private refiners like Reliance Industries. An equal amount is planned to be imported in current year.
Mayaram said the global context is increasingly challenging and becoming less supportive for emerging economies growth prospects.
"Emerging markets are going through a phase of tepid economic activity, with some of the major emerging economies seeing significant negative output gaps," he added.
The reasons for the slowdown, Mayaram said, have been partly structural and exacerbated by external environment especially increased volatility with unwinding of unconventional monetary policies.
The senior Indian official further said that recent normalisation of unconventional monetary policy in the US has been largely smooth, albeit low volatility in the markets should not lead to complacency.
Backstop measure should continue to be reinforced and unwinding should be pursued with close coordination among the member Central Banks minimising negative spillovers, as committed by G20 Leaders, Mayaram said.
The mere announcement of withdrawal of monetary stimulus by the US Federal Reserve last year has played havoc in the global capital and currency markets, including India. However, the volatility was severely reduced as the US started a calibrated withdrawal of stimulus package, popularly known as Quantitative Easing or QE.
In February this year, the G20 Ministers and the governments agreed to develop ambitious but realistic policies with the aim to lift collective GDP by at least 2 per cent above the trajectory implied by current policy.
The G20 Framework Working Group has been coordinating efforts and following the progress in this regard and recently received and carried out peer review of members draft comprehensive growth strategies.
The strategies outline the policy actions that members intend to take to meet their collective ambition. The Framework Working Group had conducted a peer review of these preliminary comprehensive growth strategies in June at Goa, India.
Mayaram said as per the assessment, policy actions, excluding on infrastructure and trade, are expected to provide only an additional 0.8 per cent growth rather than the targeted 2 per cent.
"It is in investment including in infrastructure that we need to put our heads together to come up with new and additional policy actions to unlock our growth potential.
"However, clearly the support that must be provided by the MDBs (multilateral development banks) and the developed countries in intermediation of global capital flows into emerging markets has also been very weak," Mayaram added.