India: Oil bill eroding growth

NEW DELHI, Nov. 27 (UPI) -- India has said it is being robbed of 1 percent gross domestic product growth as oil-producing countries increase oil prices to record levels.

Finance Minister P. Chidambaram while addressing the India Economic Forum in New Delhi accused oil-producing countries of exploiting consumer countries such as India.

"Great injustice is being done to developing countries as a result of the volatility in oil prices," he said.

He said he did not accept the argument that soaring prices were due to demand-supply constraints as otherwise prices would not have fallen from $78 to $55 a barrel recently.

India could have easily achieved 9 to 9.5 percent growth, but for the high prices, he said.

He said as finance minister he has to preempt a large chunk of revenues in the budget to support oil companies in the form of bonds.

Chidambaram expressed hope that better sense would prevail among the oil producers.

"If this happened, it would be possible for developing countries like India and China, which require huge oil imports, to sustain high economic growth," he said.

Chidambaram suggested the creation of an oil price band within which the market could be allowed to operate.

"This would curb speculation, providing a comfort level to developing countries," he said.