India’s Crude Oil Import Bill Likely To Go Up By About $ 26 Billion In 2018-19 With Re Declining

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New Delhi: With the declining value of Rs, India’s crude oil import bill is likely to jump by about $ 26 billion in 2018-19. Rupee dropping to a record low has made buying of oil from overseas costlier.

Besides, the rupee hitting a record low of 70.32 to a US dollar in the opening deal today will also lead to a hike in the retail selling price of petrol, diesel and cooking gas (LPG).

India, which imports over 80 per cent of its oil needs, spent $ 87.7 billion (Rs 5.65 lakh crore) on importing 220.43 million tonne (MT) of crude oil in 2017-18. For 2018-19, the imports are pegged at almost 227 MT.

“We at the beginning of the financial year estimated that crude oil import bill will be around $ 108 billion (Rs 7.02 lakh crore) at an average crude oil price of $ 65 per barrel and exchange rate of Rs 65 per dollar,” an official said.

But the exchange rate has been at an average of Rs 67.6 till August 14. If the rupee is to stay around 70 per dollar for the rest of the ongoing fiscal, the oil import bill will be $ 114 billion, he said. The rupee has been among the worst performing currencies in Asia, witnessing 8.6% slump this year.

Fanned by a higher oil import bill, India’s trade deficit, or the gap between exports and imports, in July widened to $ 18 billion, the most in more than five years.

Trade shortfall puts pressure on the current account deficit (CAD), a key vulnerability for the economy. Rupee depreciation will result in higher earnings for exporters as well as domestic oil producers like Oil and Natural Gas Corp (ONGC) who bill refiners in US dollar terms.

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