However, this situation could get reversed if the decline in domestic crude production witnessed in the early months of the current fiscal year persists.
The resulting shortfall would have to be made up through imports. Meanwhile, RBI intervened in the foreign exchange markets on Wednesday and purchased $200 million, which have gone towards boosting the foreign exchange reserves (currently at $18 billion). Senior RBI officials conceded that the Gulf war had created a psychological impact among dealers in the market. If the war persists the rupee could come under pressure, the official added.
The data provided by commerce ministry indicates that in the first four months ended July, the country had imported 42 per cent of the annual oil imports worth Rs 25,211 crore.
Assuming that the trend persisted in August, then the oil companies would have stretched this further to over 50 per cent. This is in contrast to the trend in 1995-96, when the oil companies preferred to effect the imports in the latter half of the year.
Finance ministry officials when contacted confirmed that there had been a bunching of oil imports. But it is also a fact that there has been an increase in demand. We are still assessing the likely impact, especially the outlook with respect to domestic production, they said.
The ministry is awaiting an assessment from the petroleum ministry on the demand outlook for the year.
The ministry had initially projected a comfortable outlook in terms of prices expecting a downturn in the latter half of the year.
Ministry officials said the domestic production of crude was not up to expectations and this would entail higher imports. In the first two months ended May, domestic crude output at the level of 5.2 million tonnes declined by 7.7 per cent as compared to a rise of 33 per cent in the same period in 1995-96.
Total crude oil production in 1995-96 was at 34.52 million tonnes. It was 1.3 per cent higher than the previous peak production of 34.09 million tonnes in 1989-90.
The shortfall in domestic production would entail higher imports. In the current scenario this could imply a higher than projected trade deficit.
The finance ministry has projected a trade deficit of $5 billion and a current account deficit of 2 per cent.
