Rising oil prices will not impact GDP: Assocham
The chamber said if oil prices rose to $100 per barrel, India's GDP would fall by a maximum of one per cent.india Updated: May 18, 2006 17:55 IST
Industry body Assocham said on Thursday that rising oil prices are unlikely to affect India's GDP growth rate as the economy was no longer susceptible to oil shocks.
"With the changing contours of economic indicators, the relationship between crude oil consumption and the GDP has weakened in recent years and the GDP is being driven by other factors that offset the adverse impact of rising crude oil prices on it," it said in a release.
The economy grew 8.1 per cent in 2005-06, unaffected by higher crude prices, the chamber said. During the oil shock of 1974-75, the Indian economy had witnessed a decline in GDP growth to 1.2 per cent from 4.6 per cent a year ago, and again in 1978-79 to a negative growth of 5.2 per cent from a positive 5.5 per cent in the previous year.
Inflation is also less impacted by oil prices as the prices of petroleum products are regulated by the government, besides efficient agriculture and industry sectors which have countered the cost-push cycle of inflation, it said.
The chamber said if oil prices rose to $100 per barrel, India's GDP would fall by a maximum of one per cent.
India's GDP between 2000-01 and 2005-06, was driven by the services sector, which is less dependent on oil compared to industry and agriculture.
The services sector has a share of 54 per cent in the economy and contributed 65 per cent of GDP growth. The share of industry and agriculture in GDP is 25.8 per cent and 22.2 per cent respectively, it said.