India’s crude oil import bill zoomed 40% in the last financial year, due to the rising crude oil prices, numbers revealed.
According to government data, India imported crude worth Rs 3.58 lakh crore in the first ten months of the last financial year, 2011-12. The number excludes the crude oil imported for processing and re-export.
Last year’s full-year oil import bill is likely to come in around Rs 4.35 to 4.48 lakh crore, up about 38-42% compared to 2010-11.
Part of the reason for the 40% rise in the oil import cost has to do with the nearly 10% fall in the value of the Rupee, the Indian currency.
The other, and major, reason has to do with the fact that crude prices have averaged about $115 last year, compared to about $90 for the previous year.
The price-rise and the resulting impact on the Indian economy has been particularly strong in the last few months.
For example, the gross imports (including crude imported for re-export) of petroleum and products rose from $12.2 billion in November last year to $15 billion in February and $16 billion in March, according to India’s cumulative trade data for the period.
Trade numbers indicated that total ‘gross’ imports (including crude imported for processing and re-export) rose 47% in dollar terms to $156 billion (Rs 7.7 lakh crore) during the last financial year.
India’s oil imports, as a proportion of its total imports, has remained at around 30-32% for the last five years — indicating that as the oil price goes, so does India’s imports of other goods (or the prices of other goods that India imports.)
However, due to India’s increasing imports and the prices of those imported commodities, the country’s finances have been battered out of shape. It missed its full-year goods-trade deficit target of $120 billion by more than 50%, registering a net deficit of $185 billion against a target of $120 billion.
What is interesting is that the increase in India’s oil import bill has come despite almost no growth in actual imports, as measured in volumes (see comparison chart above.)
Total crude oil imported into India rose just about 2% in the first ten months, implying that for the full-year, the number will be about 124.6 million tonnes compared with 121.9 million tonnes a year ago.
This is not to imply that the consumption of petroleum products, such as gasoline and diesel, in the world’s second fastest growing major economy rose only 2%.
In fact, according to petrol and diesel sales numbers, consumption growth is likely to have been around 7-8%, but the ramp up at Cairn India’s Rajasthan field helped meet most of the extra demand. The field was producing at 6.6 million tonnes a year as of January, about 18% of India’s total production and about 5.3% of India’s total consumption.