High oil prices behind inflation in India, Monetary Tightening Needed: IMF

The surge in oil prices due to the emerging situation in Europe has pushed up inflation in India, which needs monetary tightening and measures to address structural weaknesses to improve growth potential.

As per the recent estimates, the country’s economy is likely to grow by 8.2 per cent in 2022-23, down 0.8 percentage points. India is particularly dependent on oil and commodity imports therefore the rising inflation is the spillover from the war in Ukraine.

In the short run, the commodity fiscal stance is appropriate, supporting vulnerable households and putting the focus on infrastructure investment. IMF recommended India tighten measures to check structural weaknesses.