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Concerned over the developments in Iraq, India today said volatility in petroleum prices is putting pressure on its finances at a time when emerging economies are passing through a phase of tepid economic activity.
"Recent developments in Iraq have created huge uncertainties with an overhang on the global economy. The volatility in petroleum prices have put pressure on the fisc in countries like India," Finance secretary Arvind Mayaram said at a G20 Deputies Meeting in Melbourne.
The Indian government earlier said fuel supplies in the country will not be impacted by the conflict in Iraq, which is the nation's second largest crude oil supplier.
Against 18.7 million tonnes of crude oil imports planned by Indian Oil Corp and Hindustan Petroleum Corp in 2014, 50 per cent of the contracted quantity has already been lifted.
India bought 25.1 million tonnes of crude oil from Iraq in 2013-14 fiscal. These imports included those by PSU and private refiners like Reliance Industries. An equal amount is planned to be imported in current year.
Mayaram said the global context is increasingly challenging and becoming less supportive for emerging economies growth prospects.
"Emerging markets are going through a phase of tepid economic activity, with some of the major emerging economies seeing significant negative output gaps," he added.
The reasons for the slowdown, Mayaram said, have been partly structural and exacerbated by external environment especially increased volatility with unwinding of unconventional monetary policies.
The senior Indian official further said that recent normalisation of unconventional monetary policy in the US has been largely smooth, albeit low volatility in the markets should not lead to complacency.
