India oil bill — the money it pays to overseas countries to import crude oil — crossed the $10 billion mark for the first time in April this year, numbers released by the government a few minutes ago have revealed.
In April, India imported crude oil worth $10.2 billion, up from $6.9 billion just four months back. This is the first time India has forked out so much for oil, primarily to countries like Iran, since September 2008. September 2008 also marks the beginning of the global recession that brought growth to a screeching halt.
India depends on imported oil for around 70% of its needs. It would have been dependent on it for 80% or more, but for the starting of crude production from the Mangala block in Rajasthan by Cairn India.
The effective price for crude for India had risen to around $118 per barrel in April, before declining in May. Oil companies have raised the price of petrol 11 times in the last 11 months due to the relentless rise in global crude prices — the reason behind the spike in India’s oil bill.
Fortunately for India, the rise in oil bill has been more than made up by a strong growth in its exports. In September 2008, for example, India’s exports were less than $16 billion, while its imports (including oil) was more than $31 billion. As a result, India had to dip into its reserves to pay its imports, instead of relying on non-goods earnings (such as remittances and BPO) to pay for the imports.
This time too, overall imports have risen to $32.8 billion in April, but instead of $16 billion of goods export, India managed to earn $23.8 billion from its goods export. As a result, the trade deficit (short fall) is only $10 billion while it was more than $15 billion in September 2008.