What will be the impact of the falling commodity prices on Indian economy?
Commodity prices have cooled down in the past 3-4 months, especially that of crude oil, the uncertainty as regards where the price will head next is over. This will have a positive effect on the Indian economy as 70 per cent of our oil imports last year were at around $80 a barrel. However, in July this year, the prices shot up to average $130 a barrel and this created an uncertainty over where the prices will go and how will the foreign exchange be used. This price fall will help better the trade deficit. Consequently, inflation will also be contained in months to come. Q: If there is demand fall from the US, our major export market, and Europe, will it not affect India’s trade and deficit? A: I am bullish on demand from Middle Eastern countries. They will make up for the demand fall from the US, Europe markets. There was a rising demand from Mideast due to rising oil revenues of luxurious items but now that the bubble has burst there is a greater chance that there will be more demand
