Every $10 per barrel rise in crude oil price increases India’s inflation by this much


Every $10 per barrel rise in crude oil price increases India’s inflation by this much

Prime Minister Narendra Modi’s call to producers for responsible pricing of crude oil this week is not without its merits. Crude oil, which fueled the growth of industrial revolution 2.0, is still one of the crucial factor in determining India’s growth. Crude oil makes up for around 25 percent of India’s total imports in a year, which fulfils 80 percent of the country’s energy requirements.

A $10 per barrel rise in crude oil prices would increase inflation by roughly 49 basis points, or it would increase the fiscal deficit by 43 bps (as a percentage of GDP) if the government decides to absorb the entire crude oil price shock rather than passing it to the end users, a recent study by the Reserve Bank of India said. Read More

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