Hyderabad: India will save around Rs 3 lakh crore a year if the price of Brent Crude stablises at the current level of $30 per barrel. This situation is hugely beneficial for a country like India which has been facing the challenge of widening fiscal and current account deficits and dwindling revenue collections due to a slowdown in the economy.
The price of Brent Crude crashed 30% today to $31 a barrel, the biggest fall in a day since the gulf war of 1991.
The extremely sharp decline is attributed to a number of factors including a price war between the two major oil producing blocs – Saudi Arabia led OPEC on the one hand and Russia on the other hand.
The oil prices were already softening due to outbreak of Novel Corona Virus in China that has severely impacted the economic activity in the world’s second largest economy.
“One dollar increase or decrease in the price of crude oil entails an additional expenditure or saving of Rs 10,700 crore a year for India,” said SC Tripathi, former petroleum and natural gas secretary.
Read more: India to gain as Saudi Arabia, Russia crossing swords in global oil market
India is a net importer of energy and it imports 82-84% of its crude and natural gas requirement from abroad.
According to the latest official data given by the Petroleum Planning and Analysis Cell (PPAC), under the Ministry of Petroleum and Natural Gas, the country imported petroleum products worth Rs 7.23 lakh crore ($102 billion) in FY 2019-20.
At Rs 6.17 lakh crore ($88 billion), crude oil imports alone account for 86% of the total petroleum import bill of the country, followed by LPG (Rs 40,505 crore) and High Speed Diesel (Rs. 10,036 crore).
However, due to a combination of several factors, including a global supply glut, price war between oil exporting nations and the economic slowdown caused by outbreak of Covid-19 Novel Coronavirus in China, the situation has unexpectedly turned to advantage of oil importing countries like India.
“Earlier the average price of crude for the year worked out to be $60 a barrel, now it has fallen to $30 per barrel, if it remains at this level then India will save Rs 3 lakh crore a year on its crude import bill,” SC Tripathi told ETV Bharat.
(Article by Senior Journalist Krishnanand Tripathi)
