India’s crude oil import bill jumped over 20
per cent to $56.25 billion in the first seven months (April-October 2017) of
the current financial year and is likely to rise up to $90 billion by March
2018 – a 29 per cent increase over last fiscal. The swelling oil bill could
further impact the already widening trade deficit and push up inflation.
“International crude oil prices in the first six months averaged above $50 per
barrel leading to the country’s gross import bill rising to $43 billion.
Keeping in mind geo-political events and the current trends, if we anticipate
crude oil prices to be in the range of $60 per barrel, the country’s oil import
bill may reach around $85-90 billon for the full financial year 2017-2018,” K
Ravichandran, Senior Vice President at research and ratings agency ICRA said.
. Higher crude price, coupled with a more than a quarter jump in volumes from a
year ago pushed petroleum import bill to $9.2 billion in October.
Any further increase in oil bill will add pressure on the country’s trade
deficit which widened to $14 billion for the month of October, an increase of
26 per cent as compared to the corresponding month a year ago, primarily on the
back of a 28 per cent increase in oil import bill. Crude oil and products were
responsible for 25 per cent of the country’s total import bill of $37 billion
in the month of October.
“Major commodity groups of import showing high growth in October 2017 over the
corresponding month of last year are Petroleum, Crude & products (27.89 per
cent), Electronic goods (7.04 per cent), Machinery, electrical &
non-electrical (17.43 per cent), Coal, Coke & Briquettes (66.28 per cent)
and Organic & Inorganic Chemicals (30.49 per cent),” the commerce ministry
said in a statement.
Headline Consumer Price Index (CPI) edged up to 3.6 per cent year-on-year in
October as compared to September’s CPI of 3.3 per cent on the back of increase
in food and fuel prices. “This was higher than our and consensus expectations.
The surprise was largely due to a higher than expected increase in food
(vegetable) and fuel prices. On a seasonally adjusted sequential basis, the
overall consumer price index expanded at 0.6% in October from 0.1% in
September,” financial services firm Morgan Stanley said in a report.
The report added headline inflation is expected to further rise driven by
rising food and oil prices and in the near-term upside risks to inflation could
arise due to further rise in global oil prices, whereas the recently announced
cut in Goods and Service Tax rates for most mass consumption items could
provide some respite.
Also, the government’s recent decision to cut excise duty on petrol and diesel
is likely to increase the pressure on the government’s fiscal maths. Excise
duty on petrol and diesel was cut by Rs 2 per liter last month. The reduction
in excise duty is expected to translate into tax revenue loss of Rs 13,000
crore in the current fiscal and an annual loss of Rs 26,000 crore.