By April 26, 2018, 5:00 PM EDT Updated on April 26, 2018, 11:41 PM EDT The surge in oil prices couldn’t have come at a worse time for India.Asia’s No. 3 economy faces a wider trade deficit, a worsening of stretched government finances, and slower economic growth if oil prices remain stubborn at the current level. That would challenge policy makers trying to strengthen the economy in time for elections next year.“Higher global crude oil prices are net negative for the Indian economy in almost all aspects,” said Kaushik Das, chief economist at Deutsche Bank AG in Mumbai. He estimates that Brent crude at $75 a barrel could lower his growth estimate for India to about 7.3 percent from 7.5 percent for the year through March 2019.Inflation Risk India’s central bank estimates oil at $78 a barrel would shave off 10 basis points from its 7.4 percent forecast for gross domestic product. Moreover, it expects costly crude could stoke inflation by 30 basis points, underpinning expectations that monetary policy will turn more hawkish.Read more on other factors clouding the economic outlook: scandals, bad debts“At the current juncture, we believe that headline inflation will peak at 6.2 percent in the third… Read full this story
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