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Ratings agency Ind-Ra has said further surge in global commodity prices will have serious implications for India's economy which is still struggling to come out of the Covid-19 impact. It stated a higher retail inflation not accompanied by a commensurate increase in wage growth will adversely impact the consumption demand and in turn investment revival in the economy. 

It mentioned though a spike in global agricultural commodity prices could benefit India, it may not move the needle favourably because India, despite the world's biggest exporter of Basmati rice, exported just $6.59 billion worth of cereals and imported vegetable oil and pulses worth $9.66 billion and $1.44 billion, respectively, in FY20. On the other hand, India's import bill on oil, coal and nonferrous metals was $129.86 billion, $22.45 billion and $13.14 billion, respectively.

According to the agency, a faster-than-expected recovery in demand, the stimulus measures announced by the US, the roll out of Covid-19 vaccine and ultra-low interest rates are fuelling the surge in commodity prices. Consequently, energy commodity prices over the past six months have increased by 55.4 per cent, the increase in non-energy commodity prices is 19.3 per cent. Among the major non-energy subgroups, agricultural commodities rose by 16 per cent, fertilisers 30.2 per cent and metals and minerals by 25.1 per cent.