Oil price hits India - Industrial growth slowest in a year
Babu Ghanta
Nov. 13, 2007

Indian economy finally reacted to oil price. That is very significant because the major impact of the oil price is still not there on the economy. The central Government at the insistence of the communists and other allies have let the Indian Government owned oil companies bleed and keep the price oil artificially down.

India’s industrial production growth dipped to an 11-month low of 6.4 per cent this September, 48% below the September 2006 figure.

This is the first sign of slowdown in the Indian economy. The stock market (Sensex) is fueled by the incoming American and European money. The market has decoupled itself from the economy. It is now a derivative of Dow Jones Industrial Average.

The Government is still afraid to announce an oil price hike. They want the crude price to settle. Some analysts believe if Indian Rupee and oil in India is fairly valued, Inidan economy will register a negative growth.

crude oil production manifested the worst performance with a negative growth of 0.7% against 9.4% growth in the year-ago period. That is very significant. India in essence is producing less oil as oil price is going up. That can have a severe consequence on the economic growth.

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