Re Devaluation To Hike Value Of Oil Imports By Rs 2000 Crore
Sharp devaluation in the rupee vis-a-vis the dollar would increase the value of oil imports by over Rs 2,000 crore during the current financial year, senior government officials revealed.
This is in sharp contrast to the savings of an estimated $ 1billion in 1997-98 on account of low international prices and lower than projected demand growth, officials said on condition of anonymity.
Beginning around 35, the rupee dipped to 40 a dollar till the RBI intervened last month, following which the dollar is hovering around the Rs 39 mark.
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While oil imports are slated to come down from a projected level of $10.1 billion to around $9 billion, in rupee terms nearly half of the savings would be eroded due to exchange rate fluctuations, oil analysts said.
As per the oil economy budget for the current fiscal, oil imports were estimated to cost about Rs 37,000 crore, taking the dollar value at Rs 36 per unit, sources said.
For an average crude oil import price of $20.63 a barrel, Indias crude import bill for about 34 million tonnes worked out to over $5.1 billion, industry sources claimed.
Overall, India shelled out Rs 31,670 crore for its oil imports in 1996-97 which worked out to $8.87 billion, meaning an average value of Rs 35.7 to the greenback.
To take advantage of subdued international oil prices and reduce the impact of erosion of rupee, the government is maximising import of crude and is cutting down on value added petroleum product imports.
This would also help domestic refineries to operate at optimal capacity, sources said.
Besides crude, diesel is the most important segment of imports accounting for over 35 per cent of total import bill.
Against import of 13.42 million tonnes in 1996-97, India planned to import 17.38 million tonnes of diesel valued at about $3.6 billion. However, the changed oil import strategy is likely to cut the imports of petroleum products by about one-and- a-half million tonnes from the initially estimated 24.8 million tonnes.