New Delhi: With the softening of crude prices in the international market, it is estimated that the government may save up to Rs 60,000 crore on crude imports this fiscal as compared to last year.
As per estimates every USD 1 per barrel drop in crude prices results in an annual savings of around Rs 13,000 crore on India's import bill.
The economic survey of 2024 has estimated the average crude price at USD 84 per barrel this fiscal. However crude prices have softened and is now trending in a range of USD 70 to USD 75 per barrel.
Experts believe if prices stabilise in this range, India will make substantial savings on crude imports in the remaining part of this fiscal.
"The Indian government has set a target near USD 85, and the current economic packages are close to USD 70/72, indicating substantial gains. Crude oil price expectations for 2025 are sluggish, with predictions of prices remaining below USD 80, which could benefit the Indian economy if sustained until March 2025" said Ajay Kedia, Director, Kedia Advisory in an exclusive conversation with ANI.
A significant portion of India's foreign exchange reserves are used for buying crude. With a reduction in the import bill, the Indian Rupee may experience appreciation against other major currencies.
Currently, the Indian Rupee is stable at 83.60 against USD, while many other currencies of the developed world have seen considerable depreciation.
"India's economy stands to benefit significantly from crude oil prices dropping to USD 75 per barrel, offering potential savings of USD 15-18 billion annually on the import bill, reducing inflation, and creating fiscal space for critical investments." added Kedia
Additionally, as per RBI data India's foreign exchange reserves have reached an all-time high of approximately USD 689 billion, providing a solid foundation for economic stability.
The strong reserves, coupled with lower crude oil prices, will give the government a leeway to spend more on infra and other social welfare works as well as reduce its borrowings.
But, despite a positive outlook, the government is cautious about passing the benefit to consumers. Concerns over a potential global recession and RBI's decision on rate cut has kept the decision on retail price cut of petrol and diesel pending.
Amid all these oil companies are making good profits on sale of petrol and diesel.
Overall, the situation remains favourable for the Indian economy. Strong equity markets, a resilient Rupee, and robust foreign reserves indicate positive momentum, even as global oil prices decline.
—ANI