Oil slump to help the economy: Official

New Delhi: The negative impact of the coronavirus outbreak on the economy will be balanced to a very large extent by the decline in global oil prices, a senior government official said on Tuesday.

The official further said he expects the economy to go on an upward trajectory in 2020-21, adding that a degree of fiscal stimulus may also be warranted to boost growth. "We had expected that the economy had bottomed out in the third quarter of fiscal 2019-20 and the last quarter of current fiscal will see an improvement, followed by further improvement in the fiscal 2020-21. However, there is no denying the fact that the Covid-19's impact on the global economy will be significant. This is bound to affect Indian economic prospect as well," he said.

On the other hand, a very bright silver lining has been provided by the collapse of oil prices, he added. "It is well known that a decline in global oil prices has a significant upward impact on economic growth in India. "Therefore, in my estimate the negative impact of the coronavirus will be balanced to a very large extent by positive impact of the decline in global oil prices," the official said. And hence, there will be likely decline in overall cost within the economy, he noted.

Benchmark crude oil prices have halved since January to around $30 per barrel.