The price of crude oil in the world market was once as high as $120 per barrel. Now it has come down to around $100. Although it is thought that India will get a big profit due to the low price, it is not so in reality. The reason is that the value of the Indian rupee has fallen against the dollar. Therefore, even though the price of crude oil has come down, the cost of buying it in rupees in India is still high.
For example, when the price of crude oil was $120, India spent about ₹79,000 to buy a ton of oil. But now, even though the price of crude oil is $100, the cost of buying a ton of oil is up to ₹1,10,000 due to the low value of the rupee. In the last few years, the value of the rupee has fallen by about 20% against the dollar. Therefore, even though the price of oil has come down, India still has high import costs.
If the price of crude oil is high, its impact is visible in many places. The prices of fuels like petrol, diesel, LPG, aviation fuel are also likely to rise. Similarly, the cost of producing fertilizer and petrochemical products will also increase. Therefore, changes in crude oil prices and the value of the rupee can directly impact the Indian economy.
