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Oil is combustible...for India’s fiscal deficit - Views on News from Equitymaster
 
 
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  • Dec 14, 1999

    Oil is combustible...for India’s fiscal deficit

    India’s oil import bill during the current fiscal FY2000 is likely to be 93% higher (at $12.525 billion) than that in the previous year i.e.$6.482 billion. The deficit in the oil pool account is expected to be Rs. 50 billion.

    Besides, the energy information administration of the US government has forecast an average price of $20 per barrel over the next year. This not only precludes any hope of oil prices declining but portends a grim scenario for the country’s fiscal position.

    During the last three year’s between 1995 to 1998 oil prices declined to as low as $13 per barrel from levels of $25 per barrel. This provided a much-needed cushion for India’s fiscal position and forex reserves.

    India’s premier oil exploration company Oil and Natural Gas Corporation (ONGC) produced around 30 million tonnes of oil last year which works out to 45% of India’s refining needs. The consumption of petroleum products is however much higher at around 85 million tonnes in FY99. With India’s refining capacity set to increase by another 60 million tonnes over the next 18 months, the crude oil import bill would further increase.

    ONGC would however benefit by getting better realisations for its output. At present the company gets 75% of the international prices for their crude supplies. With exploration infrastructure already in place, increase in international oil prices, benefits ONGC as much as its hurts India.

     

     

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    S&P BSE OIL & GAS


    Aug 18, 2017 (Close)

    S&P BSE OIL & GAS 5-YR ANALYSIS

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