India's Economic Growth Under Threat from Rising Oil Prices and Inflation

India's economic growth is expected to face increasing pressure in the coming months due to rising crude oil prices and inflation, according to BNP Paribas. The brokerage said that higher oil prices and commodity inflation will remain a 'material challenge' for India in the near term.

The Reserve Bank of India now has less room to keep interest rates unchanged as Brent crude has risen above USD 100 a barrel. This could put additional pressure on domestic monetary policy, the report added.

India's macro indicators have remained resilient, supported by strong credit growth, auto sales, and large food-grain holdings. However, several high-frequency indicators have started showing signs of moderation.