Experts have highlighted that a sustained rise in oil prices may worsen India’s current account deficit, heighten inflationary pressures, and put a strain on budget balances, potentially jeopardising macroeconomic stability.
A sustained increase in crude oil prices could widen the current account deficit and exert pressure on the currency, potentially leading to further FII outflows, said Ashwini Shami, President and Chief Portfolio Manager, OmniScience Capital. However, he added that this should not be interpreted as a deterioration in underlying economic fundamentals; rather, it reflects the impact of evolving geopolitical conditions.