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The dramatic fall in global crude prices is a big boost for India as it can bring down the country's annual oil import bill by about $50 billion, RBI Deputy Governor Urjit Patel has said.
"The dramatic fall in oil prices is a boon for us. It saves, on an annualised basis, around $50 billion, roughly, one-third of our annual gross oil imports of about $160 billion," RBI Deputy Governor Urjit Patel said.
He was speaking at the Business Standard-Welingkar Institute best B-school project awards function here last night.
Conceding that there could be leakages and other set-offs in this number, he said "but our external situation undoubtedly improved with the fall in oil prices, which along with the hard earned macroeconomic stability, provides an important backdrop for optimal decisions by all stakeholders. We have to preserve this.
"This welcome development enhances our disposable income which will increase consumer demand for other goods and services, reduce input cost of our businesses which will increase margins and help enthuse investment demand. This will also aid Government finances by reducing the energy subsidy burden in the Budget," Patel said.
Addressing the students, the RBI Deputy Governor said the youth epitomise a tribe of budding professionals who are not risk-averse and have "fire in the belly" to take a leapfrog into the future.
"I am deeply envious of you students. You have the dreams, desire and the capability to create new business models and modern enterprises, which we critically need at this juncture."
Meanwhile, addressing exporters in Gandhinagar today, another RBI Deputy Governor H R Khan echoed his senior colleague on the positive impact of the lower oil prices on the economy.
The fall in crude prices, which have dropped more than 58% since June, is a positive for inflation, Khan added.
Crude oil was dealt another blow Tuesday when key OPEC member the UAE said the group could not stop world prices plunging and called for a cut in US shale oil output.
Brent crude for February delivery fell $45.50 a barrel -- around its lowest point since April 2009. On Monday, it had plunged more than five percent to end below $50.
