Finance minister Nirmala Sitharaman on Saturday described the RBI’s surprise move to raise its key interest rate by 40 basis points on Wednesday as somewhat of a ‘synchronised action’ with other central banks.
“In a way, it was a synchronised action. Australia did it, and the US did it that night. So I see a greater understanding among central banks nowadays. And obviously, when they meet at the World Bank, there’s a lot exchanged. But the understanding of how to handle recovery from the pandemic is not fully unique or typical for only India. It’s a global issue,” said finance minister Nirmala Sitharaman.
The FM said the sanctions against Russia were “constraining India” as traditional buyers from Russia were shifting to source part of the Indian basket of crude, 80-85% of which is from the Middle East. This shift was likely to put more pressure on the Indian crude basket price.
“The sanctions have resulted in people rushing to alternative sources where countries like India are there for decades. Now suddenly it will be crowded with more people who want to buy the same thing. So supply and price factors will now have its ramification on us,” she said.
The FM made it clear that India will continue to buy crude oil from wherever it is available cheaply.
“In matters related to our oil consumption and from buying it from the source which gives us a concessional rate, we’ve asserted our right in doing that,” said Sitharaman. “We’ve been explaining that we will certainly purchase it, so it is something which has not been said for the first time. We’ll go ahead with what is good for the country. We need cheap fuel. If it is available, why won’t we want to buy it?,” the FM said.
Sitharaman said even before the war, there was an increase in prices of fertilisers. The government had to seek extra spending approval during the supplementary demands because of the way crude oil was playing up and the rise in commodity prices due to supply disruptions.