The Indian government is poised to save up to ₹60,000 crore on crude oil imports this fiscal year, thanks to falling global crude prices, experts say. The recent decline in international oil prices provides an opportunity for India to significantly cut its import bill compared to last year.
Analysts estimate that for every $1 drop in crude oil prices per barrel, India saves around ₹13,000 crore annually. The 2024 Economic Survey projected an average crude price of $84 per barrel; however, current prices are now between $70 and $75 per barrel. If these prices remain stable, India can expect considerable savings on crude imports for the rest of the fiscal year.
Ajay Kedia, Director at Kedia Advisory, stated, “The Indian government has set a target near $85, but current economic packages are close to $70-72, indicating substantial benefits. Crude oil price expectations for 2025 seem weak, with forecasts suggesting prices will stay below $80. This could be advantageous for the Indian economy if it holds until March 2025.”
India’s foreign exchange reserves, which heavily fund crude purchases, may also benefit from this situation. A lower import bill could help strengthen the Indian Rupee, currently stable at 83.60 against the USD, while many developed currencies have seen significant depreciation.
Experts believe that crude oil prices at $75 per barrel could lead to annual savings of $15-18 billion on imports. This decrease would help reduce inflation and create financial room for investment in critical sectors. Furthermore, the Reserve Bank of India (RBI) has reported that the country’s foreign exchange reserves have reached a record high of approximately $689 billion, which enhances economic stability. These strong reserves, coupled with lower crude prices, give the government more flexibility to invest in infrastructure and social welfare programs while potentially reducing borrowing needs.
Despite this promising outlook, the government has been cautious about passing these savings on to consumers. Concerns about a possible global recession and the RBI’s position on interest rate cuts have delayed decisions on lowering petrol and diesel retail prices.
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