Economic Survey 2023: CEA Nageswaran says FY24 GDP growth forecast hinges on oil staying below $100/barrel

The Economic Survey for 2022-23 is Nageswaran's first as the Chief Economic Adviser (Illustration: Moneycontrol)

The Economic Survey's GDP growth forecast of 6.5 percent for 2023-24 hinges on global crude oil prices staying below $100 per barrel, Chief Economic Adviser (CEA) V Anantha Nageswaran said on January 31.

Addressing the media following the tabling of the Economic Survey for 2022-23 in Parliament, Nageswaran pointed towards the crude oil price assumed by the Reserve Bank of India (RBI) in its forecasts.

"It is difficult for us to give a prediction for the oil price. RBI takes a number that is below $100 per barrel. And we can live with that number and be able to achieve the growth rates that we have projected in the Survey," Nageswaran said.

"The uncertainties with respect to the oil market are tremendous. As long as they stay at a number that is less than $100 per barrel, I think the real GDP growth projections will remain undisturbed," the CEA added.

In its September 2022 Monetary Policy Report, the RBI had said that its inflation and growth forecasts assumed an average price of $100 per barrel for India's crude oil basket in the second half of 2022-23.

Economic Survey 2023: FY24 baseline GDP growth seen at 6.5%

The RBI report had further said that if the price of India's crude oil basket falls by 10 percent relative to the assumption, inflation could ease by around 30 basis points and growth could receive a boost of 20 basis points.

Indeed, crude oil prices have reduced appreciably since September.

In October, the average price of India's crude oil basket was $91.7 per barrel, which then fell to $78.1 per barrel in December, according to data from the government's Petroleum Planning & Analysis Cell.

However, in January, prices edged up to take the average for the current month to $80.88 per barrel.

On the whole, the average price of India's crude oil basket has been $84.6 per barrel from October 2022-January 2023, which is 15 percent below what the RBI had assumed.