While Indian economy apparently reaped huge benefits from a sharp fall in crude oil prices about three years ago, with the GDP growth topping 8% and defying a global slowdown, the oil price fall actually ended up hurting Indian economy’s competitiveness to a phenomenon called ‘Dutch Disease’, JP Morgan’s chief India economist Sajjid Z Chinoy said.
“In 1961, Holland gets a huge windfall of gas deposits, capital comes flooding in, they spend that windfall, the exchange rate appreciates, and the rest of the Dutch economy becomes uncompetitive,” Sajjid Chinoy said at a recent talk with The Indian Express.
“A little bit of the Dutch disease (a phrase in the economy) has happened to India. Our windfall is from lower oil — we spent it, the exchange rate went up, and that made the underline current account less competitive,” he added. Read More
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