India's crude oil import bill is set to surpass the last fiscal year's $62.2 billion by the end of November itself. Going by the trend, the oil import bill will reach its three-year-high by end of FY 2021-22, according to a Business Standard report.

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This comes in the wake of raw fuel crossing the price of $70 per barrel in October. The report added that the crude oil India bought in October averaged at $82.11 per barrel, the highest price for the month in five years.

Besides the cost, the consumption of oil has also increased this year. Last year, the country's oil consumption plummeted due to COVID-induced lockdowns.

Between April and October, India imported 118.5 million tonne (mt) of crude oil, costing the exchequer $61.1 billion. In contrast, the country had imported 104.6 mt of crude oil for $26.9 billion during the corresponding period last year. Iraq was India's top supplier of crude oil till September, according to data from the Directorate General of Commercial Intelligence and Statistics.

Yet another factor contributing to the high oil import amount is the weakening of the Indian rupee against the US dollar. The rupee is weaker than the last three fiscal years, averaging Rs 74.05 against a dollar till October.

Experts predict that crude oil prices are expected to remain high for the rest of FY22. The price of oil directly impacts India's finances as the country imports close to 85 percent of its domestic oil needs. A further rise in oil prices will make it difficult for the government to achieve its fiscal deficit target of 6.8 percent (of the GDP) for FY22.

According to a Reuters report, India has an existing crude storage capacity of 5.3 million tonnes -- 1.33 mt in Visakhapatnam, 1.5 mt in Mangaluru, and 2.5 mt in Padur.

(Edited by : Anshul)

First Published:Nov 25, 2021 12:45 PM IST