NEW DELHI, AUGUST 31: With the recent softening of global crude oil prices to $110-120 per barrel from the peak price of around $147 a barrel in July this year, India's burgeoning import bill is likely to lessen by $ 17 billion.
According to a study conducted by The Associated Chambers of Trade and Commerce in India, titled `Crude Economics', the oil import bill for the 2007-08 would have touched $ 125 billion if crude oil prices had remained at $ 145 per barrel. However, with the reversal in price movement, country's import bill this year would be restricted to $108 billion, if the average price for next three quarters remains $ 120 per barrel.
In 2007-08, the import bill for crude oil was much lower at $ 67.98 billion.
The study revealed that crude prices have dipped by almost 25 per cent since July this year when they touched an all-time high of $147.27 per barrel on account of correction in demand, easing supply conditions and stronger US dollar.
Considering the government estimates of 5 to 6 per cent rise in crude oil import volumes to around 129 million tonne this year, there would be a corresponding increase of 58 per cent in the crude oil import bill from fiscal 2007-08.
The softening of crude oil prices may come as a huge respite to the current account deficit, which is grew at an alarming rate.
Trade deficit for the first quarter of the fiscal (April-June 2008) widened 42 per cent on account of a 50.2 per cent rise in the oil imports. The oil import bill for Q1 '08 stood at a $25.5 billion as compared to $17 billion for the same period last fiscal.
"The economic forces at play in shrinking demand and improving supply facilities may cool down crude oil prices further which would lead to a narrower than estimated current account deficit. It's a good positive sign for the economy", said Assocham president Sajjan Jindal.
$17 bn The likley cut in India's import bill
129 mn tonneEstimated volume of oil import this fiscal
25pcThe drop in crude prices since july
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