Sanjay Malhotra Says Prolonged Crude Oil Surge Could Push Up Inflation In India
Sanjay Malhotra has cautioned that India could witness an increase in petrol and diesel prices if tensions in West Asia continue to drive global crude oil rates higher, raising concerns over inflation and economic stability.
Speaking at an international conference in Switzerland, the RBI Governor said the ongoing geopolitical conflict and rising energy costs are creating fresh challenges for India’s inflation management framework and may eventually require policy intervention.
RBI Signals ‘Wait And Watch’ Approach On Inflation
Malhotra said the Reserve Bank is closely monitoring developments in the international oil market while maintaining flexibility in responding to economic shocks.
“We are being more and more data dependent. The RBI is being flexible in its approach and is ready to look through the shock if it is transitory, but if it is entrenched, we need to take action,” he said during the event hosted by the Swiss National Bank and the International Monetary Fund.
The remarks come ahead of the RBI’s next Monetary Policy Committee meeting scheduled for June 5, where key interest rates will be reviewed.
Rising Crude Prices Could Impact Retail Fuel Rates
According to the RBI Governor, a prolonged rise in crude oil prices may eventually force revisions in retail petrol and diesel prices, which would increase transportation expenses and add pressure on inflation.
India imports nearly 88 percent of its crude oil requirements, making domestic fuel pricing highly sensitive to fluctuations in the international market.
Global crude oil prices have reportedly crossed the $100 per barrel mark amid the continuing conflict in West Asia.
Oil Companies Facing Heavy Financial Pressure
Hardeep Singh Puri recently stated that public sector oil marketing companies are facing mounting financial losses because fuel prices have not been increased despite rising import costs.
According to the Petroleum Ministry, state-run oil firms are reportedly suffering losses of nearly ₹1,000 crore per day as they continue to absorb higher crude prices without passing the burden directly to consumers.
Officials also indicated that under-recoveries linked to fuel and LPG sales have reached significant levels in recent months.
India Maintains Adequate Fuel And LPG Stocks
Despite concerns over prices, the government has assured that fuel availability remains stable across the country.
Puri stated that India currently has crude oil reserves sufficient for around 76 days of demand and that LPG production has been significantly increased to maintain uninterrupted supply.
