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India Poised to Save Over Rs 60,000 Crore on Crude Imports This Fiscal: Experts
Published : Sep 27, 2024, 3:02 pm IST
Updated : Sep 27, 2024, 3:02 pm IST
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India Poised to Save Over Rs 60,000 Crore on Crude Imports This Fiscal: Experts
India Poised to Save Over Rs 60,000 Crore on Crude Imports This Fiscal: Experts

If prices stabilize within this range, India is likely to see substantial savings in the remainder of this fiscal year.

Crude Imports in India: The Indian government is expected to save more than Rs 60,000 crore on crude oil imports in the current fiscal year, thanks to the declining prices of crude oil in the international market. According to experts, the drop in global oil prices could provide a significant economic boost by reducing the country's import bill.

Every USD 1 per barrel decrease in crude oil prices results in an estimated annual savings of approximately Rs 13,000 crore on India’s crude import bill. The 2024 Economic Survey had projected the average crude price at USD 84 per barrel for the fiscal year. However, crude prices have softened and are currently trading in the range of USD 70 to USD 75 per barrel. 

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If prices stabilize within this range, India is likely to see substantial savings in the remainder of this fiscal year. Ajay Kedia, Director at Kedia Advisory, explained in an interview with ANI, "The Indian government had set a target price around USD 85 per barrel, but with current rates hovering near USD 70-72, the country stands to gain significantly. Crude oil prices for 2025 are expected to remain below USD 80, and if this trend continues through March 2025, it will further benefit the Indian economy."

A significant portion of India's foreign exchange reserves is allocated to crude oil purchases. The reduction in the crude import bill could lead to the appreciation of the Indian Rupee against other major currencies. Currently, the Rupee is stable at 83.60 against the US Dollar, while many developed world currencies have depreciated significantly.

Kedia added, "India's economy could save between USD 15 to 18 billion annually on the crude oil import bill if prices stabilize around USD 75 per barrel. This would also help reduce inflation and create fiscal space for essential investments."

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India’s foreign exchange reserves have reached a record high of approximately USD 689 billion, as per the Reserve Bank of India (RBI), providing a strong foundation for economic stability. The combination of lower crude prices and robust foreign reserves will give the government room to increase spending on infrastructure, and social welfare programs, and reduce its borrowings.

Despite this positive outlook, the government remains cautious about passing on the benefits of lower crude prices to consumers. Concerns about a potential global recession and the RBI’s upcoming decision on interest rate cuts have delayed any potential reductions in retail prices of petrol and diesel.

Meanwhile, oil companies continue to benefit from the current pricing, making healthy profits on the sale of petrol and diesel. Overall, the Indian economy is experiencing favorable conditions with strong equity markets, a stable Rupee, and robust foreign reserves, all while global oil prices decline.

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(For more news apart from Crude Imports in India, stay tuned to Rozana Spokesman)

Tags: business

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