| Finance minister P. Chidambaram in New Delhi on Sunday. Picture by Prem Singh
New Delhi, Nov. 26: Union finance minister P. Chidambaram today said the flare-up in global crude prices was a case of speculation and charged oil producers with deflating growth in developing countries. He said India had to settle for at least one basis point less growth in its gross domestic product (GDP) owing to the price turmoil. Chidambaram even proposed a price band for oil in the future.
“The surge in global oil prices is for speculative reasons and certainly not a demand-supply issue. India could certainly have achieved 9-9.5 per cent growth...it has been robbed of at least 1 per cent of growth due to the surge in oil prices,” Chidambaram said at the 22nd India Economic Summit organised by the CII and the World Economic Forum.
Chidambaram said countries such as Russia benefited immensely when crude prices jumped from $45 a barrel to $78.
He proposed a price band for the operation of market forces, arguing this would largely check speculation, while providing comfort to import-dependent countries such as India and China.
“Oil producing countries could suggest the upper band and consuming countries the lower band for the prices,” he said. The minister was unhappy with developed countries for continuously harping on environment in trade negotiations.
He said developed countries were also major offenders and cited the case of the US, which has a high per capita consumption of energy, the most important source of pollution. He said developed countries should resort to energy conservation more vigorously. “Developed countries should also assist countries like India in acquiring technologies such as clean coal and provide uranium for raising nuclear energy production,” he said.
Addressing India Inc at the plenary session of this three-day summit, Chidambaram listed six hurdles before growth: water scarcity, HIV, energy issues, climate changes, issues on globalisation and protectionism, and demographics.
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