The crisis in the global economy following downgrading of US sovereign rating has a silver lining for the Indian economy, grappling with high inflation.
As prices of global commodities, mainly crude oil, have started coming down, the pressure on inflation would ease, Chief Economic Adviser Kaushik Basu said.
"It [falling global crude prices] will have a dampening effect on inflation because we have been worried about international commodity prices," he said.
India imports 75% of its crude oil requirements and the volatility in its prices have been fuelling inflation, which was 9.44% in June. Weakening of crude oil prices will help moderating the price rise.
However, Basu said, "We all have to watch and see, how long that will happen because a part of international commodity prices has to do with the buoyancy of Indian and Chinese economies [as well]. But we might get in terms of a little bit of softening on our inflation front."
Crude prices fell by over 2% in Asia today, following Standard & Poor's downgrading of the US sovereign rating to AA+ from AAA.
In Asian trading, Brent North Sea crude for September delivery sank $2.91, or 2.66%, to $106.46.
The Reserve Bank has been tightening the monetary policy since March 2010 in its bid to check inflation.
