Kumar, a member of the Reserve Bank of India’s rate-setting panel, said if
global oil stays near $70/bbl, India’s growth this year could exceed 7%, above
the RBI’s current forecast. He said easing Middle East tensions and progress in
US–Iran talks have reduced Strait of Hormuz supply concerns and the inflation
and growth risks they posed, and could prompt the RBI to revise its projection
within a single policy meeting. This contrasts with about three weeks ago when
the RBI cut its annual growth forecast to 6.6% citing Middle East uncertainty.
India imports roughly 90% of its oil and is highly sensitive to energy-price
swings. The RBI will publish updated forecasts at its next monetary policy
review on Aug. 5; Kumar said the bank may lower its current fiscal-year
inflation forecast of 5.1% toward the 4% target.
