Mukherjee says India won't cut off oil imports from Iran

Chicago (Illinois, US), Jan.30 (ANI): Finance Minister Pranab Mukherjee has said that India won't cut Iranian oil imports.

Describing India as the world's fourth-largest consumer of oil, Mukherjee told reporters here at the end of his two-day visit to the United States that: "It is not possible for India to take any decision to reduce the imports from Iran drastically, because among the countries which can provide the requirement of the emerging economies, Iran is an important country amongst them."

The United States wants buyers in Asia, Iran's biggest oil market, to cut imports to put further pressure on Tehran to rein in its nuclear ambitions. Washington suspects Iran of trying to make nuclear weapons, but Tehran says its nuclear program is for peaceful means.

India imports 12 percent of its oil from Iran, and therefore, cannot do without oil from that country.

The United States Government has said that it will penalise financial institutions dealing with Iran's central bank. The European Union banned oil imports from Iran earlier this month.

Mukherjee said he expected India to return to its path of high economic growth, despite an expected slowdown to a seven percent pace this year from 8.5 percent last year.

"This year, because of the European debt crisis and the slowing of developed economies, there has been a slowdown" in India's growth, he said. "It will be possible to make it up in a year or two," he said.

He added: "If the eurozone crisis is linked with a credible package particularly contributed by the European economy and the bankers together trying to work out then there will be a sense of confidence. And the prevailing mood of uncertainty will be replaced by a mood of confidence and optimism which will improve the sentiment substantially which is required."

The Reserve Bank of India last week held its policy rate steady and signaled its next move could be a rate cut, after signs that outsized price pressures may be ebbing.

Inflation, as measured by wholesale prices, rose 7.47 percent in December, its slowest pace in two years, and Mukherjee said he expected further declines.

"If this trend continues, I am optimistic (India will see inflation of) 6.5 percent to 7 percent by end of the year," he said.

But a possible move by the U.S Federal Reserve to ease monetary policy further could reverse that outlook, he said.

Fed Chairman Ben Bernanke last week opened the door to a third round of quantitative easing, suggesting that a continued decline in inflation and ongoing economic weakness could justify new bond buying.

The Fed's last round of bond-buying drew loud criticism from emerging economies who said it sparked inflation and hurt their exports.

Mukherjee repeated that criticism on Sunday, saying U.S. quantitative easing creates "inflationary impacts" in emerging economies and boosts uncertainty. (ANI)