Russia-Ukraine crisis: Rising crude oil prices put growth prospects at risk

The Indian economy may be heading towards an oil shock in FY23 with Brent crude crossing $113 per barrel on Wednesday, the highest in nearly eight years, due to disruptions in supply amid escalating Russia-Ukraine tensions.

The latest Economic Survey for FY22 projected economic growth at 8-8.5 per cent assuming crude oil prices at $70-$75 per barrel. The Economic Survey FY18 had estimated that every $10 per barrel increase in the price of oil reduces economic growth by 0.2-0.3 percentage point, increases wholesale inflation by about 1.7 percentage points, and widens current account deficit by about $9-10 billion.

Abheek Barua, chief economist