Blessing or Curse? The Impact of Global Crude Oil Prices on India's Industry
- Fall in global crude prices has resulted into a fall in value of crude imports. As crude import is the single biggest contributor to total imports, this has also resulted into significant reduction in total imports. During April–August 2015–16, crude imports and total imports declined by 41.4 per cent and 11.5 per cent, respectively over the corresponding period of 2014–15 in US$ terms. Import reduction may contribute to reduction in trade deficit and current account deficit which has a positive effect on the overall Indian economy.
- Decline in petroleum product prices emanating from decline in crude price has also impacted the export of petroleum products, which declined by 47.7 per cent in terms of US$ during April–August 2015–16 vis-a-vis the corresponding period of 2014–15. However, the value of petroleum product exports is far less than that of crude imports; hence, the overall impact is contribution to reduction in trade deficit.
- Decline in crude prices and therefore petroleum product prices also means corresponding reduction in prices of some of the raw materials for the petrochemical industry. Hence, it can be a factor in improving the profitability of that industry.