11 hrs ago
Sitharaman Sees Strong Indian Growth Despite Global Headwinds
India’s economy grew quickly in the three months ending in June.
It expanded by 7.8% compared with the same period a year earlier.
Finance Minister Nirmala Sitharaman believes this strong growth can continue.
She said investment increased and people’s spending improved.
However, India faces challenges from conflicts and higher oil prices around the world.
India buys about 90% of the crude oil it uses from other countries.
The United States is considering penalties for countries that buy Russian energy.
Sitharaman said India must obtain oil wherever it can to protect its people and economy.
Experts warn that expensive oil could raise prices and increase India’s import costs.
India’s economy grew 7.8% year-on-year in the June quarter, exceeding expectations.
Finance Minister Nirmala Sitharaman said growth could maintain a comparable pace through the year.
She attributed the June-quarter performance to stronger investment and improving private consumption.
India plans to source energy from various suppliers, including Russia, despite proposed US tariffs.
Higher crude prices could increase India’s import bill, inflation and current-account pressures.
- Who
- Union Finance Minister Nirmala Sitharaman, the Indian government, the United States and countries supplying oil to India.
- What
- Sitharaman expressed confidence that India’s strong economic growth will continue while defending the country’s need to source oil from multiple suppliers, including Russia.
- Where
- At an event hosted by The Hindu Business Line newspaper; the energy and trade effects concern India and global markets.
- When
- The comments were made on Tuesday, following economic data for the three months through June; the US House passed the tariff-related bill the previous week.
- Why
- India is seeking to sustain growth and protect energy security as conflict in West Asia, high crude prices and proposed US penalties on Russian-energy buyers create risks.
Growth and energy-security case
External-risk and cost concerns
Economic outlook
Growth and energy-security case
Nirmala Sitharaman said the 7.8% June-quarter performance showed the way and expressed confidence that growth would continue at a comparable pace despite external challenges.
External-risk and cost concerns
External headwinds, including the West Asia conflict, high energy prices and potential US trade penalties, could make it harder for India to sustain growth.
Russian oil purchases
Growth and energy-security case
The government says it must source energy from wherever suitable to prevent shortages, account for refinery requirements and protect the interests of India’s 1.4 billion people.
External-risk and cost concerns
The proposed US law could impose punitive tariffs on countries buying Russian energy, while continuing to rely on such supplies may affect India-US ties and the global oil market.
Impact of higher crude prices
Growth and energy-security case
India is considered relatively well placed to cope with global shocks, and diversified sourcing may help address supply constraints.
External-risk and cost concerns
Higher oil prices could raise India’s import bill, increase inflation and put pressure on the current-account balance.
Key facts
- June-quarter growth
- 7.8% year-on-year, higher than expected
- Growth drivers
- Investment increased and private-consumption growth improved
- India’s crude imports
- About 90% of crude oil is imported; more than one-third of imports comes from Russia
- US tariff proposal
- A bill passed by the US House would empower the president to impose tariffs of up to 100% on countries buying Russian energy
- Oil-price impact
- Bank of Baroda estimates that each persistent $1 increase in crude prices can add about ₹18,000 crore to India’s annual import bill
- Potential risks
- Elevated oil prices may raise inflation and pressure the current-account balance
- Government position
- India says it will take necessary steps to safeguard energy security and economic interests
Quotes
Nirmala Sitharaman
India’s Union finance minister
“I think the Q1 (FY27) growth showed the way, and I am very confident we will continue at that pace this year despite all the odds...I am confident that the budget, as presented on 1 February, will take us through this year with a comparable sort of growth as we saw in the first quarter”
livemint.com
“So we need to be practical to see to the requirements of our citizens. It poses a severe challenge, no doubt. But we will have to keep India's interest on top”
livemint.com
Sources
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