Crude prices may decline, says Pranab

'Indian economy capable of facing challenge arising out of US crisis'

The historical downgrade of US credit rating by Standard & Poor’s last week has created a havoc in the stock markets worldwide, but led to a decline in commodity prices, including crude oil. The finance minister, however, said he was not too happy with the downward movement from $107 per barrel to $102 per barrel, as it was still “reasonably high”.

Mukherjee said the decline in commodity prices would help the government tame inflation and cut subsidies.

“I would like to emphasis that some of the investment banks have upgraded India to market weight; that means the basic fundamentals are strong and macro-economic recovery is moving towards positive direction,” he said.

Analysts of Goldman Sachs on Monday expressed hope for a turnaround in India’s macro cycle, which, they expect, along with lower oil prices, lower valuations and progress in policy reforms, would benefit local equities. “Given recent developments in the macro landscape, we are moving India to a market weight (neutral) stance from underweight, which we have held for over a year. We believe enough progress has been made to warrant a relatively more optimistic view,” wrote the analysts of the Goldman Sachs.

Mukherjee said the downgrade of sovereign rating of the US by Standard and Poor’s had created problems for India, but the country could handle any situation arising out of international developments. “The challenge is there, but we have the capabilities of facing it. With the efforts of all concerned, particularly with the cooperation of the RBI, we will be able to face the challenges,” he said.

‘Centre ready to slash petrol prices’
The Centre on Tuesday said if global crude oil prices continue to slip further it was ready to lower petrol prices, DHNS reports. “If the prices globally come down sharply, and in a stable way, naturally the prices of petrol will be adjusted downwards,” Petroleum Minister Jaipal Reddy said.