India’s crude import bill may decline by a massive $17 billion or 17% year-on-year in FY21 if the Indian basket price remains subdued around the current level of $50/barrel through the next fiscal, in what could give a big relief to the country’s current account.
The price of the Indian crude oil basket, which stood at $64 per barrel in January, dropped to $55 in February. Brent crude oil prices rose on Monday, reversing a drop to multi-year lows last week, as hopes of a deeper cut in output by Opec and central bank stimulus countered worries about damage to demand from the spread of coronavirus.
According to an FE analysis, the imports may fall to $84 billion in FY21, against $101 billion this fiscal, if the price of domestic crude basket averages $50 per barrel. Similarly, the fall in imports may be to the tune of $25 billion in FY21 to $76 billion, if the price crashes to $45 per barrel. In case, prices again inch up and touch $55 a barrel, the import bill may drop by just $8 billion next year.