The prevailing low global oil prices do not mean much for India facing serious economic downturn due to the impact of the lockdown to contain the spread of the coronavirus, according to a former Indian diplomat. Talmiz Ahmad, who had served as Indian Ambassador to Saudi Arabia, Oman, and the UAE, said obviously low prices are good for the Indian economy, as per a report in the Livemint.
But he said the world economy, including India’s, is looking at a very serious downturn.
“So, even if the prices are low it does not really mean much when the growth rate outlook is extremely feeble,” Ahmad, the former Additional Secretary for International Cooperation in the Ministry of Petroleum and Natural Gas, told Livemint.
“We have a huge informal sector which is completely shattered by the damage caused by the lockdown and that is something we need to look at and the government will have to have massive cash hand-outs; plus, manufacturing is almost at a standstill and then IT sector has been damaged by the fact that the global economy is looking so poor,” he said.
“All of these, they are all linked with each other, so we cannot just pull out oil prices from the rest of the performance of the rest of the economy.
Not only India, the international community as a whole is looking at a bleak future which will not only slide through this year but also will consume a large part of the next year,” Ahmad opined.
International oil prices on Monday plunged to a 17- year low.
Brent crude futures dropped to around USD 23 per barrel the lowest since November 2002, while US crude briefly dipped below USD 20 as coronavirus lockdowns dried up demand while the crude surplus ballooned.