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Crude oil import bill is likely to jump by about USD 26 billion
Why in the news ?
- As per the official statement, India's crude oil import bill is likely to jump by about USD 26 billion in 2018-19 as rupee dropping to a record low has made buying of oil from overseas costlier.
Details
- India, which imports more than 80% of its oil needs, spent $87.7 billion (Rs.5.65 lakh crore) on importing 220.43 million tonnes (MT) of crude oil in 2017-18.
- For 2018-.19, the imports are pegged at almost 227 MT.
- Besides, the rupee hitting a record low of 70.32 to a US dollar in the opening deal today will also lead to a hike in the retail selling price of petrol, diesel and cooking gas (LPG).
- If the rupee is to stay around 70 per dollar for the rest of the ongoing fiscal, the oil import bill will be USD 114 billion.
- The rupee has been among the worst performing currencies in Asia, witnessing 8.6 per cent slump this year.
- Fanned by a higher oil import bill, India's trade deficit, or the gap between exports and imports, in July widened to USD 18 billion, the most in more than five years.
- Trade shortfall puts pressure on the current account deficit (CAD), a key vulnerability for the economy.
- Rupee depreciation will result in higher earnings for exporters as well as domestic oil producers like Oil and Natural Gas Corp (ONGC) who bill refiners in US dollar terms.
- But this would result in rise in petrol and diesel prices, with full impact likely to be visible later this month.
Source
The Hindu.