Daijiworld Media Network - New Delhi
New Delhi, Mar 9: Finance minister Nirmala Sitharaman on Monday said the recent increase in global crude oil prices is not expected to have a major impact on inflation in India at present, noting that the country’s inflation level is currently near the lower bound of the target range.
Responding to a question in the Lok Sabha, Sitharaman said the price of crude oil imported by India had been steadily declining over the past year until geopolitical tensions escalated in West Asia on February 28, 2026.
She pointed out that the price of the Indian basket of crude oil rose from $69.01 per barrel at the end of February to $80.16 per barrel by March 2. Despite this rise, she stated that the current inflation situation in India remains stable, and therefore the immediate impact of higher oil prices on inflation is not expected to be substantial.
Global oil prices began climbing after military strikes by the United States and Israel on Iran on February 28, which triggered retaliatory drone and missile attacks by Iran on American bases in the Middle East, intensifying regional tensions.
The finance minister referred to the Reserve Bank of India’s Monetary Policy Report released in October 2025, which estimated that if crude oil prices increase by 10 percent above the baseline assumption and are fully passed on to domestic consumers, inflation could rise by about 30 basis points.
Sitharaman also explained that the medium-term impact of global crude oil price fluctuations on India’s inflation would depend on several factors. These include exchange rate movements, global supply and demand conditions, the transmission of monetary policy, the overall inflation environment and the extent to which higher oil prices are passed on indirectly through other goods and services.
She highlighted that retail inflation measured by the Consumer Price Index has shown a steady decline in recent years. The average inflation rate fell from 5.4 percent in 2023–24 to 4.6 percent in 2024–25, and further to 1.8 percent during April–January of 2025–26.
According to the minister, headline inflation in January 2026 stood at 2.75 percent, which is close to the lower limit of the RBI’s inflation tolerance band of 2 percent to 4 percent.
As part of efforts to manage inflation, the Monetary Policy Committee of the RBI has cumulatively reduced the policy interest rate by 125 basis points since February 2025, she said.
The government has also implemented several measures to control price rise and protect consumers. These steps include strengthening buffer stocks of essential food items, releasing grains into the open market when required, facilitating imports during shortages and restricting exports of certain commodities when necessary.
In addition, the government has introduced fiscal measures aimed at increasing disposable income for households. Sitharaman said individuals with annual incomes up to Rs 12 lac, and up to Rs 12.75 lac for salaried taxpayers, have been exempted from income tax. She added that reductions in Goods and Services Tax rates on various goods and services have also been implemented to make them more affordable for consumers.