Indian Oil Imports To Cost $26 Billion Extra Year-On-Year As Rupee Falls

Falling rupee value in currency markets will have a major impact on India’s crude oil import bill at the current rate with the import bill estimated to jump by $26 billion year on year, Economic Times has reported. Rupee hit a new low of 70.32 per dollar in opening trade today (17 August). India spent $87.7 billion to import 22 crore tonnes of crude oil in the financial year 2017-18. For 2019, estimated imports are 22.7 crore tonnes.

At the beginning of the year import cost for the year was estimated to be US $108 billion (Rs 7.02 lakh crore) for the current year at an exchange rate of Rs 65 per US dollar. The price of oil per barrel was considered to be $65 for the estimate. But the average exchange rate for the year up to August has been Rs 67.6. With falling rupee value, the import bill is expected to go up to $114 billion for the year, $26 billion higher than last year.

The impact of falling rupee on petrol and diesel prices will be seen in the coming weeks. Rising oil import bill impact India’s trade deficit adversely. The gap between imports and exports had risen to $18 billion in July. Rising fuel prices may also result in higher overall inflation in the Indian economy.