Falling commodity prices, especially of crude oil, have been instrumental in shoring up India’s macro-economic fundamentals over the past few years.
From $110.82 a barrel in January 2014, crude oil prices collapsed just as the Narendra Modi-led NDA government came to power (Chart 1). This was instrumental in keeping a lid on inflation during two drought years, and also helped contain the current account deficit and shore up government revenues.
This decline in international oil prices led to a fiscal windfall, with an astute government raising taxes and not fully passing on the gains from lower prices to consumers. As
