It’s not just the rising oil import bill which should worry the government but also the fall in petroleum exports that should be a cause for concern.
The latest government data shows that during the first six months of the financial year, trade deficit in oil already touched $46.6 billion, up 67 per cent from 27.9 billion during the same period in 2017-18. This is mainly because of a drop in petroleum exports.
Interestingly, oil trade accounted for 49 per cent of India’s trade deficit of $94.3 billion during the April-September quarter. According to the latest estimates by the petroleum ministry, India imported $67 billion while it exported $20.4 billion. This is mainly owing to the rise in crude oil prices, weakening of the rupee against the dollar and decrease in export of products from India.
According to the monthly report published by the Petroleum Planning and Analysis Cell on Wednesday, exports of products fell 6.3 per cent to 30.7 million tonnes (MT) during the first six months due to decrease in exports of petrol, naphtha, fuel oil and vacuum gas oil. It was 32.8 MT during the same period last year.
“The decline in exports may be because of a rise in domestic consumption during the period, as none of the players had cut down on their production. This is logical considering the economic growth and increased per capita consumption. The major exporters of petroleum products in the country are private players (mainly Reliance Industries and Nayara Energy), as state-run companies have better access to the domestic market,” said Anshuman Maheshwary, partner at consultants at AT Kearney.
Petroleum product consumption registered a flat growth of 3.6 per cent during April-September 2018 over the same period last year. During the period under review, diesel and petrol exports decreased by 0.6 per cent and 11 per cent, respectively, over the previous year. However, there has been a decrease in product imports, too, for the period under review by 5.5 per cent owing to decrease in import of diesel and petcoke.
Earlier this week, a government data showed that India’s crude oil import bill would increase by $37 billion to $125 billion during the current financial year against $88 billion in 2017-18.
Crude oil imports saw a 5.8 per cent increase during the same period in volume terms to 113 MT, up from 106.8 MT during the same time last year. The government expects a 3.7 per cent increase in crude imports for the entire financial year to 228.6 MT, compared to 220.4 MT in 2017-18. At present, India is 83 per cent dependent on imports for its overall crude oil requirement, of which 78.4 per cent is being imported from West Asia and African nations.
Production of domestic crude oil and condensate fell 3.4 per cent during April-September 2018 as compared to April-September 2017 with Oil India seeing a dip of 0.5 per cent and Oil and Natural Gas Corporation’s figure falling by 5.5 per cent, the monthly report said.