While drop in global oil prices, as analysts expected, would benefit India, weakening of other commodities’ prices such as aluminium and copper may have “some impact” on the industry and economy, minister of state for finance Jayant Sinha told HT.
“If oil prices ease, India naturally would benefit as the import bill would ease and the current account deficit (CAD) would be in check. But at the same time prices of other commodities such as aluminium could also drop and that may affect Indian businesses and exports,” Sinha said. “However it is too early to say anything at this point, we need to see how this plays out in the coming months, we would keep an eye on the developments.”
Earlier this month, the Asian Development Bank (ADB) lowered China’s growth estimates to 7% for the current year as compared to its earlier projection of 7.2%. It also lowered its growth projection for 2016 to 6.8% from 7% estimated in March. China has been the driver of growth globally for the last few years.
China, the largest consumer of copper, accounts for 40% of the global consumption. Besides, the uncertainty in the Chinese stock markets is also likely to have an impact on the financial markets here.
While the Greek economic crisis had little impact on India, analysts said that the contagious effect of the Chinese economic slowdown could be felt in the country.
“When a giant economy such as China’s slows down, the impact is bound to be felt across (the globe) including India, which was not the case when there was turbulence in Greece,” said an analyst.