New Delhi: There is a lot of movement in the prices of crude oil in the international market. Prices are going up and down rapidly. There were fears that crude would rise due to increasing tension between Iran and Israel. But this did not happen. Israel has decided not to attack Iran’s oil facilities. However, crude prices are also under pressure due to weakness in demand from major economies like China. Jonathan Barratt, CIO of Probis Securities, told the Economic Times in an interview that oil prices are falling due to China and some weak data from there. India will directly benefit from the slowdown in China’s economic growth. Do you understand how?
prices of things will decrease
Actually, China is the world’s largest oil importer. Crude prices may remain under pressure due to lack of demand. This will be of great benefit to oil importing countries like India. Low oil prices have a direct impact on the prices of petrol, diesel and other petroleum products. This may reduce inflation. This simply means relief to the common people. Due to reduction in the prices of petrol and diesel, the prices of most things will reduce.
The slowdown in China’s economy may cause changes in the global supply chain. Companies can transfer their production from China to other countries. India’s large population, young labor force and attractive investment policies can make it an attractive option. This will boost the manufacturing sector in India. New employment opportunities will be created.
increase in foreign investment
Investors from China are looking for new investment opportunities in other countries. India has the advantage of a large market and high rate of growth. It can attract foreign investors. Foreign investment will increase capital inflow into India. This will help in infrastructure development and adoption of new technologies.
‘Make in India’ initiative will get a boost
The slowdown in China’s economy may boost the Indian government’s ‘Make in India’ initiative. The government is giving different incentives to boost domestic production and increase exports. Transfer of production from China can help make this initiative successful.
However, it is important to note that the benefits to India from China’s economic slowdown are also associated with some challenges. The slowdown of China’s economy could lead to a global recession. India’s economy may also be affected by this.
Apart from this, India will have to compete with other countries like Vietnam and Indonesia. They are making as much effort as India to attract investment in the manufacturing sector.