India's oil bill may dip 40% in FY21 on Covid, low rates

NEW DELHI: At least in the oil sector, the global health emergency caused by coronavirus is coming to India's advantage. While the severe demand squeeze due to the pandemic helped India save on oil imports, low global crude prices could help it further in reducing sharply the import bill.

Declining consistently since April, India's oil imports fell about 29 per cent (YoY) to around 13.44 million tonnes in June, the lowest since October 2011.

In value terms, the June oil imports stood at $4.93 billion (Rs 37,341.70 crore), down 55.29 per cent in the dollar terms from $11.03 billion (Rs 76,586.73 crore) in June 2019. In April, it fell to 16.55 million tonnes, a 16 per cent YoY decline, from 17.28 million tonnes reported earlier. In May, crude oil imports fell 22.6 per cent, the biggest drop since at least 2005, to 14.61 million tonnes against the year-ago month.

If the trend continues, crude oil imports in FY21 may fall to 180 million tonnes, 50 million tonnes lower than 227 million tonnes imported in FY20. At current prices, the value of this 50 million tonnes will be around $20 billion.

Moreover, India may further reduce its oil import bill with crude oil prices remaining low or range-bound around $35-45 a barrel in FY21. Assuming $40 a barrel average crude oil price and the rupee-dollar rate holding closer to current levels, and monthly imports remaining low at 15 million tonnes (average), for FY21, the import bill could slip to 60 per cent of the last year's $60-65 billion. Similar level of import bill was witnessed in FY16 when crude had fallen to $26 a barrel for some time. (IANS)

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