Citi sees India growth at 8%; to help boost oil, gold demand

and electricity generation, while looser regulations should spur increased exports of iron ore into the market. India's economy won't copy China's near-decade of double-digit economic growth that pushed oil prices into the $100-a-barrel range, but will be enough to impact global supply-and-demand balances of several commodities, Morse said.

"While India is no China, the sub-continent's largest economy is becoming the third largest oil consumer and importer of oil, with a tangible impact on oil, coal and iron ore markets, less so on metals," Morse said. "As India's base rises, so too should its global commodities' impacts."

Citi expects 2016 to be the best in four years for commodity investments. The Bloomberg Commodity Index is up 7.4 per cent this year. Oil, zinc, copper and soft commodities will be the best investments in 2017, with Brent crude seen averaging $60 a barrel after ending this year around $50.

India's crude demand has grown by 350,000 barrels a day this year, higher than China, as the country surpassed Japan to be the world's thirdlargest oil buyer. Gasoline demand has risen 14 per cent this year and should continue to increase at double-digit rates as car and motorcycle purchases climb, Morse said.

Coal demand will grow between six per cent and eight per cent a year through 2020 as the country tries to electrify more rural areas.