Though the government has decontrolled petrol and diesel prices, it still subsidises cooking gas and kerosene for public distribution system. Higher oil prices also have an indirect impact via higher production and transportation costs and could exert upward pressure on food inflation. US president Donald Trump has now promised to turn to the European Union and Japan for trade deals, which could open new frontiers for trade tensions. Rising trade tensions at a time India’s exports have fallen for fifth consecutive months could act as a negative shock to India’s GDP and tax collections. If the WTO rules are altered significantly, against India’s wishes, it could further erode India’s already weak trade competitiveness and merchandise exports.

Source: Mint January 24, 2020 04:07 UTC