Justifying the Statement – India Is Facing an “Economic Crisis” Due To Its Huge Oil Imports
The Transport Minister, Nitin Gadkari has stated that our country is facing an “economic crisis” due to its huge oil imports on Thursday. This was stated ahead of a meeting of key ministers to discuss the falling rupee and the nation’s widening trade deficit.
Our country is the world’s third-biggest oil importer that depends on overseas markets to meet 80 percent of its oil needs.
As per records, the partially convertible rupee has lost about 13 percent against the dollar since the beginning of the year, adding to the nation’s oil import bill at a time when crude is hovering at around $85 a barrel. The crude oil price is currently staying around $55 to a barrel and below. Even if it stabilizes somewhere around $60 to $65 per barrel in an average year, the entire cost structure in the economy would start coming down. Here, on one side the input cost which governs the commodity business.
Generally, it should benefit the entire economic environment as a whole. If one has to select the theme for investment, one would remain comfortable with the kind of an infrastructure asset ownership business.
The economists have reported that it is expected that the price of petrol and diesel might get down sharply after global crude oil prices tumbled nearly $7 a barrel in nine days. Last week, it was seen that the price of petrol and diesel were cheaper by 6 paise and 12 paise a liter, respectively. The cut is expected to get deeper. The petrol and diesel were available for Rs 76.78 and Rs 68.35 per liter in Delhi, respectively. In Mumbai, petrol was Rs 84.22 and diesel Rs 72.56.
The domestic rates of petrol and Diesel are decided by state oil firms based on international fuel prices, the exchange rate, and taxes. The state oil firms have the authorities to pass on all hikes and reductions daily to consumers but have lately begun to wait for signals from the government to do so. This is the reason, why local prices do not always mimic international trends.