My Times Today.Last Monday, ahead of Thursday’s crucial meeting in Vienna among world’s major oil producing countries, crude prices stopped sliding and went up for the first time in five months, bolstered chiefly by a temporary truce between US and China and over expectations that the Organisation of the Petroleum Exporting Countries (OPEC) meeting would result in a production cut.
Higher oil prices have a domino effect on Indian economy. It widens both current account and fiscal deficits, slows economic growth, stokes inflation, weakens the rupee and puts less money in the hand of the government. Eventually, it affects consumption and investment.
Analysts say that if Brent (a marker of international crude prices) averages $75 per barrel in 2018, India’s current-account deficit (CAD) would widen to 2.5 percent of GDP from 1.5 percent in 2017.