Even if oil prices move a little higher, they will not be negative for India but “exceedingly high” rates create problems for the country, Finance Minister Arun Jaitley said today.
“Certainly, the oil prices at the current level, even a little higher, create helpful environment as far as India is concerned. If they are exceedingly high, then it creates problem for us. I am conscious of that,” he said at an event here.
Oil prices rose 5 per cent on Wednesday, their biggest advance in three weeks, after the US government reported a surprise draw in domestic crude stockpiles versus market expectations for a new record high.
US crude contract settled up USD 1.86 at USD 37.75 a barrel.
On GDP growth, Jaitley said, global conditions are not supporting India’s growth at the moment but once it turn favourable it will push up further.
“I am conscious of the limitations that we are operating in, global headwinds are certainly not very supportive, most economies are facing their own challenges, the essential silver lining for India in this unpredictable environment is that we are not so integrally integrated with the Chinese manufacturing, the low oil price regime is the key silver-lining,” he said.
Jaitley said macro economic indicators are at reasonable level and interest rates are moving in the right direction. Besides, he added that the central government has enhanced its spending to maintain strength in the economy and hence international investors are finding India to be a good destination for bringing in FDI.
“All these factors taken together coupled with increased infrastructure spending, the possibility seems likely that we will be to maintain the 7 per cent plus growth rate that we have maintained in the last two years,” he said.
India’s response to global uncertainties would depend on good monsoon, public spending on rural areas which will help improve growth, he said.
The private sector is a little slow and it is stretched, but a fast growing economy is going to be high up on the agenda, he added.