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Hike in crude oil prices and its impact on India

  Apr 06, 2022

Hike in crude oil prices and its impact on India

Q What is the context  ?

A The Russia-Ukraine conflict will impact India’s economy through several channels. The first order impact, emanates from the negative terms of trade shock from higher commodity prices, particularly oil.

Q Why crude oil price is increasing?

A Limited Supply:

Rising Demand:

Geopolitical reasons

Q How it will impact India?

Q Why high growth impact on fiscal space leads to a greater hit to demand and growth?

Q What can be way forward ?

A 1] Let the rupee reach the new equilibrium

2] Pragmatic fiscal policies

3) Reduce the dependence

A persistent adverse supply shock is complicated and challenging to respond to, and the new equilibrium will inevitably need some combination of a weaker rupee, higher rates, and judicious fiscal management.

 Q What is a fiscal multiplier?

A

Q What is Marginal Propensity to Consume?

A