Petrol and diesel prices in India could become more expensive if the ongoing conflict in West Asia continues. RBI Governor Sanjay Malhotra said that while the government is currently bearing the burden of rising oil prices, consumers may be affected in the future.
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The ongoing conflict in West Asia is now impacting India’s economy. Reserve Bank of India (RBI) Governor Sanjay Malhotra has stated that if the tensions continue for a long time, petrol and diesel prices in the country could rise. Currently, the government and state-owned oil companies are bearing the burden of rising crude oil prices, but this situation will not be easy to sustain for long.
At an international conference in Switzerland, Malhotra stated that the government has currently reduced excise duty and state-owned oil companies are incurring losses and are not passing the entire burden on to consumers. However, if the war and tensions drag on, the price increases could reach the common man.
PM Modi Appeals for Savings
Meanwhile, Prime Minister Narendra Modi has also appealed to people to conserve fuel and reduce unnecessary expenditure. He has specifically advised reducing the use of petrol and diesel and postponing the purchase of gold to preserve the country’s foreign exchange reserves. The government has also more than doubled the import duty on gold. It is believed that further steps may be taken in the coming days to reduce the demand for imported goods.
Inflation Pressure Growing
Retail inflation in India rose to 3.48 percent in April, compared to 3.40 percent in March. Although this figure was lower than expected, experts say that if crude oil prices continue to rise, inflation pressure may increase further.
Tensions in West Asia are also impacting supply chains. Problems with freight and oil supply are increasing, which could impact the Indian market in the coming months.
RBI will monitor the situation
The RBI has projected India’s growth rate for the current fiscal year to be 6.9 percent and inflation to average 4.6 percent. However, many economists believe that if the war continues for a long time, economic growth could slow. The RBI kept the repo rate stable at 5.25 percent in April. Governor Malhotra said that the central bank is now making decisions based on the economic data coming in at each meeting. He clarified that if the impact of inflation persists for a long time, the RBI will not hesitate to take necessary steps.
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