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Falling crude prices positive for India
Oct 13, 2014

Falling crude prices have a lot of ramifications for a country like ours. And most of them good. Thus, with Brent crude down to US$ 90 or so levels, and the global supply demand dynamics moving towards oversupply, many positives are in the offing for our economy. Lower losses on selling fuel below cost for our oil marketing companies and a reduction of inflationary pressures are two of the most immediate. But if crude prices continue to remain at lower levels, India's current account deficit too is expected to see a huge improvement. We present today a chart showing projections of the current account deficit (CAD) for India based on various levels of average Brent crude oil prices for the current financial year and the next. As can be seen, our current account position is highly sensitive to the level of oil prices. Thus, prices falling further from here on are likely to give a much needed boost to the economy.

Data Source: Livemint

This Chart Of The Day was published in The 5 Minute WrapUp - Is mis-selling of Mutual Funds about to end?

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