India’s oil import set to swell to highest in five years under Modi regime

New Delhi: As oil prices trace an uphill trajectory, India's oil import bills are set to swell to its highest in the last five years under the current Bharatiya Janata Party (BJP) regime. According to estimates, India's crude oil import bill for 2018-19 could shoot up to US$115 billion or more, marking a 30 percent increase over 2017-18's US$88 billion. The estimates are based on an increase in global crude oil prices from the second half of March, as crude oil reached a new high in 2019.

Crude oil is hovering around US$70 a barrel as the Organisation of the Petroleum Exporting Countries (OPEC) and Russia extended production cuts.

Highest-ever import bill in five years

"The latest estimates suggest we could touch or cross $115 billion in oil imports in FY19. This is the highest level of imports in the five years of the Prime Minister Narendra Modi-led NDA government. The Modi government started with an import bill of $112.74 billion in FY15. This, however, went down in subsequent years as the global oil prices crashed," said an official source.

PPAC contradicts

The petroleum ministry's Petroleum Planning and Analysis Cell (PPAC), however, has a different opinion on this. According to an estimate by PPAC, India's import bill will grow by a mere 27 percent from US$88 billion in 2017-18 to US$112 billion in 2018-19. The estimates are based on the Indian basket of crude oil price at $57.77 a barrel and an exchange rate at Rs 70.73 against the dollar.

However, this estimate has often proven to be erroneous with the price of Indian basket of crude hovering at $70 a barrel. As far as the value of rupee is concerned, there is some relief on that front as rupee has strengthened against the dollar a little in March after running over Rs 70-71 for most of January and February.

An oil import bill of US$115 billion will take the bill closer to FY13 and FY14 levels when crude cost around US$100 a barrel for most of the year.

What does the government say?

The Centre has, however, sought to allay fears, saying that the rise in oil prices are manageable and may not upset the macroeconomic fundamentals of the economy. According to sources in the Finance Ministry, the Centre has met the 3.4 percent fiscal deficit target, which means that the latest changes in oil prices had been accounted for.