India’s reliance on imported crude rises to 88.3% in April-June

India’s reliance on imported crude rises to 88.3% in April-June

Subject: Economy

Section: External Sector

In News: India’s reliance on imported crude inched up to 88.3 per cent in April-June from 86.5 per cent a year ago.

Key Points:

• While the government wants to reduce India’s high dependency on imported crude oil, this has been difficult because of:
  • sluggish domestic oil output, and
  • continually growing domestic demand
• India’s reliance on imported crude inched up to 88.3 per cent in April-June from 86.5 per cent a year ago.
• This is the result of rise in the consumption of fuels and other petroleum products with domestic oil production declining slightly, as per data released by the Petroleum Planning & Analysis Cell (PPAC) of the oil ministry.
• Government in 2015 had set a target to reduce reliance on oil imports to 67 per cent by 2022 from 77 per cent in 2013-14, but the dependence has only grown.
• Heavy reliance on imported crude oil makes the Indian economy vulnerable to global oil price volatility, apart from having a bearing on the country’s foreign trade deficit, foreign exchange reserves, rupee’s exchange rate, and inflation.
• At 60.1 million tonnes, the volume of India’s oil imports in April-June was a tad lower than 60.7 million tonnes in the year-ago period. India produced 30.49 million tonne of crude petroleum in 2020–21.
• However, reliance on imported crude still rose as the country’s petroleum product exports declined to 14.7 million tonnes from 16.6 million tonnes in the year-ago quarter.
• The computation of import dependency is based on the domestic consumption of petroleum products and excludes petroleum product exports as those volumes do not represent India’s demand.