Global crude oil prices have started cooling off, which is good news for India, whose imports of crude oil topped $129 during the first 11 months of FY13. Over the last six to seven weeks, India’s cost of imported crude oil has fallen over 10%, which along with subsidy reduction measures taken earlier could mean a lower bill for selling fuel below cost in FY14 compared to a year ago.
India’s cost of imports which were over 6,200 per barrel in February 2013
has since eased substantially to
5,600 or close to those levels in
early April. This was mainly due to a fall in global crude oil prices, while the rupee remained weak. Globally, oil prices are sliding because of a seasonal weakness in demand, a weak economic outlook for 2013 and improving production outlook of non-OPEC countries.
For an import-dependent economy like India, the benefits are substantial. Starting April, the subsidy on diesel fell to 6.52 per litre – the lowest in atleast 18 months. The bill for selling fuels below cost by India’s state-owned oil companies are projected to top 162,000 crore in FY13 with 60% of that on account of low pricing of diesel. Therefore, cutting losses on this key fuel hints at the prospect of a lower fiscal burden down the line. It will also help marginally ease the current account defi cit.
India’s cost of imports which were over 6,200 per barrel in February 2013
has since eased substantially to
5,600 or close to those levels in
early April. This was mainly due to a fall in global crude oil prices, while the rupee remained weak. Globally, oil prices are sliding because of a seasonal weakness in demand, a weak economic outlook for 2013 and improving production outlook of non-OPEC countries.
For an import-dependent economy like India, the benefits are substantial. Starting April, the subsidy on diesel fell to 6.52 per litre – the lowest in atleast 18 months. The bill for selling fuels below cost by India’s state-owned oil companies are projected to top 162,000 crore in FY13 with 60% of that on account of low pricing of diesel. Therefore, cutting losses on this key fuel hints at the prospect of a lower fiscal burden down the line. It will also help marginally ease the current account defi cit.
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