Oil-producers 'exploit developing world' - Indian finance minister

Nov 26, 2006, 16:36 GMT

New Delhi - India's Finance Minister Palaniappan Chidambaram Sunday accused oil-producing countries of exploiting oil-importing nations, saying the rise in global crude prices which was mainly for speculative purposes had 'robbed' India of at least one per cent economic growth rate.

'India could certainly have achieved 9 to 9.5 per cent growth. It has been robbed of at least one per cent of growth due to surge in oil prices,' he said at the India Economic Summit in New Delhi.

Oil prices had surged to 78 dollars a barrel before stabilizing at 53 dollars, impacting India's growth which is currently pegged at 8 per cent.

Addressing the plenary session titled 'India in a World at Risk' on the opening day of the summit, Chidambaram cited the example of Russia, saying that country's budget was based on oil prices of 45 dollars a barrel but when the crude prices increased to 78 dollars a barrel, the economy had a windfall.

'What is happening is certainly speculative in nature and hope that better sense prevails,' said Chidambaram adding that it was the gravest injustice being meted out to the developing world.

He said if the international community was serious about achieving the Millennium Development Goals to alleviate poverty in the developing countries, the issue had to be seriously debated.

In this connection, the minister advocated a price band for oil prices of between 40 to 50 dollars a barrel - which could be fixed after discussions between the producers and the consumers.

He also criticized the developed countries for raising concerns on environmental issues in the developing world, saying the former were bigger pollutants as they consumed more energy and needed to resort to energy conservation urgently.

Besides rising oil prices, Chidambaram said India faced six major impediments in its growth, which included the scourge of HIV/AIDS and depleting freshwater supplies in the country.

World Economic Forum (WEF) Chairman Klaus Schwab, addressing a press conference earlier Sunday, said a key issue to be deliberated at the summit would be how India could sustain its economic growth while tackling the several social issues it faces.

The South Asian country, which is among the world's fastest growing economies, still has a quarter of its billion-plus population living below the poverty line.

More than 600 top executives and decision-makers from 32 countries are participating in the India Economic Summit which is expected to help in the formulation of India's economic policies and growth agenda.

The meeting is being jointly organized by Geneva-based WEF and the Confederation of Indian Industry (CII).