Falling crude oil prices to benefit India improve the Fiscal Deficit

The slash in the crude oil prices to a four-year low is a positive sign of move for India as the country depends on imports for more than 75% of its consumption. Therefore, it is expected to improve the current and fiscal account deficit and thereby an improvement in the macroeconomic factors which will improve the overall economic condition in the country.

The total net imports are about a billion barrels every year. So, cut in the crude oil prices will reduce the import bill and thereby improving the current and fiscal conditions prevailing in the economy.

Cooling in the oil prices will also help bring down the costs of selling LPG and kerosene, thereby lowering the share in the under recoveries and resulting in low fiscal deficit.

According to the survey the oil under recoveries are likely to decline in the Financial Year 2015 compared to the previous fiscal and further more decline due to the decrease in the crude oil prices.

This decrease will reduce the working capital requirements of the oil companies and thus reducing their dependence on subsidy payout from the government.

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eMinds Legal is a Corporate Law Firm based in Gurgaon, India specializing in Corporate Legal, Corporate Secretarial and Compliance. The Firm comprises of a team of Corporate Lawyers and Company Secretaries with in-depth subject matter knowledge and participative industry experience of over 15 years.

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