Impact of commodity market on the indian economy

It would have been fruitful if those organizations could have asked the governments to give them better products, like options, rather than de-listing their commodity. Impact on stocks: A lot of Indian companies depend on healthy crude oil prices.

High commodity prices cut domestic purchasing power while low commodity prices add to it. The second chart here shows the index of the price that India pays for its commodity imports, including oil.

Impact of increasing oil prices on indian economy essay

Saudi Arabia and Russia have unanimously talked about pulling that back in. Hence the supply situation. CAD essentially indicates how much India owes the world in foreign currency. This is a near month low for the rupee, and only 0. Read more 3,, India imports 3 million barrels of crude oil per day. An increase in the price of crude oil means that would increase the cost of producing goods. The latter also has a trade structure dominated by commodity imports and manufactured goods exports. On the other hand, oil exploration companies in the country could benefit from a rise in oil prices. This is the key for the country's growth and to allocate the scarce land and water resources to the crops, which are in demand, and reduce the dependency on imports and also reduces the burden on the government to subsidise the commodity, which is produced in excess than what is required through minimum support price mechanism. The export of jewellery is based on imports of pearls, precious and semi-precious stones. The Chinese economy has started to slow down and there are some signs of that on the power side. A rise in fiscal deficit could negatively affect the economy as well as markets. Stocks are starting to rise. They have used data on 45 commodities—including gold—to create indexes of import prices, export prices and terms of trade.

This is what distinguishes India from China. Coal demand has gone down because the industrial production houses are not operating at the rates at which they were operating a few months back.

impact of rising oil prices on indian economy

This will breed new set of traders or investors to take the benefit of commodities and significantly contribute to the liquidity and efficiency of the market. In contrast, options make hedging very efficient as well as cost effective with less capital and lower risk.

Indian economic stability is often hostage to what happens under the hot Arabian sands or in the air-conditioned rooms where the global oil cartel meets. Sobarrel per day cut in December may not be sufficient to tighten the market.

impact of crude oil prices on indian economy ppt
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The gaping hole in India’s macro balance sheet