India is one of the world’s largest net importers of oil, but the sharp fall in global oil prices is unlikely toboost the economy by as much as might be expected. Retail prices haven’t fallen by much as thegovernment is hiking fuel taxes. The government itself will be reluctant to raise spending as it attempts tomeet its fiscal target. But one key way that falling oil prices could benefit the economy is by keepinginflationary pressures subdued, which would provide more scope for monetary loosening next year.
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