The gains from lower oil prices
The Brent crude price has dropped as much as two-thirds from its high in June 2014 to $37.89 per barrel. For a country that imports a huge portion of its oil requirements, this phenomenon has been a blessing for India.
How much did we gain?
Firstly, the lower oil prices means under-recovery (or losses from selling fuel below cost) for the sector will drop. As chart 1 alongside shows, Morgan Stanley Research expects the government’s oil subsidy burden to be 0.2% of gross domestic product (GDP) in fiscal 2016. While that is the same ratio as in FY15, it has dropped substantially from a high of 1% of GDP in FY13. At the same time, the subsidy burden borne by oil companies is expected to drop sharply.
Read full article: Live Mint
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