New Delhi: With the latest slump in oil prices and lowering of interest rates globally, Uday Kotak, the CEO of Kotak Mahindra Bank has suggested amidst a turbulent phase for the global economy, these positives can be utilised to boost growth of the India economy.
In a tweet on Sunday the billionaire banker said that with falling oil prices India is likely to save $30 billion per annum.
"Amidst turbulence and the virus, some good news - oil at $45/ barrel. Recent $20 drop saves India $30 billion per annum. Also global interest rates have collapsed making money cheap. Let's leverage these for policy to boost growth," Kotak tweeted.
Brent crude oil futures are currently trading around $45 per barrel. Crude oil prices have slumped in the past few days as no consensus was reached on an output deal between the Organization of the Petroleum Exporting Countries and its allies, led by Russia.
The potential collapse of the group led by Saudi Arabia and Russia is the latest blow to a market that was already dragged down by fears over the economic damage from the spread of the coronavirus. With no consensus on further output cuts, the cartel's supply reductions of 2.1 million barrels per day (bpd) will not continue beyond March and they will be free to supply at will.
India is the third largest importer of crude oil and a reduction in its prices reduces India's import bill significantly. Further, policy interest rates have been reduced by central banks of several countries including the US Federal Reserve, due concerns of a severe impact of the coronavirus epidemic on the global economy.
There are expectations that the RBI too may take a similar step if needed. Lower interest rates increase liquidity and eventually helps demand growth which is a major driver for the economy.