India Will Surge In Economic Growth But Oil Poses Risk

India's $2 trillion economy will keep on surging by increased by increased government spending. Indian economy surpassed France recently to become world's sixth largest economy. The economy is expected to grow at 7.4% in the fiscal year that will end in March 2019. The only risk that the economy will have to deal with is the rising oil prices. China's economy, world's second largest is expected to grow at 6.6%, according to Reuters poll.

But diesel and petrol prices have risen record high during the past couple of months that has added heavily to the India's import bill. This is happening at a time when the Rupee has hit a record low in the world market. These two catalysts could be a major reason behind a downfall of these forecasts.

40 economists were questioned about the Indian economy and 61% of them quoted the oil prices reason to be the biggest threat to Indian economy. This can cause an interest rate hike by RBI. For every 10 dollar rise in oil prices, India's growth will fall by 30-40 basis points, said Shashank Mendiratta, economist at ANZ.

Indian economy suffered a slowdown after demonetisation and a sudden implementation of GST. The economy recovered from a growth of 5.6% to 7% in the recent quarters. Indian inflation could also see a hike, according to polls.

By: Neha Maheshwari

Content: https://economictimes.indiatimes.com/news/economy/indicators/india-to-hold-top-spot-for-economic-growth-but-oil-poses-risk/articleshow/65163149.cms