Saudi Revolt: Why Oil crash may be bad news for India?

New Delhi (10th Mar, 2020): Crash in Oil prices as Saudia Arabia initiates price war amid Royal family tensions, causes India to despair.

According to reports of Baaghi TV, the economic boost associated with decline in crude oil prices globally, may not be a very appealing prospect for India amidst KSA’s war against Oil prices. Reportedly, Brent oil drops down by almost thirty percent making it approximately $36 per barrel on Monday making it an almost $14 loss to the state earnings.

India curbs rights of minorities: Mishal Malik

India may suffer major loss to its import bill and current account deficit is the prices continue to decline. While, this may significantly benefit the Reserve Bank of India (RBI), as per reports, the loss would be far greater in comparison.

[bs-quote quote=”There is unlikely to be a net positive effect on the fisc from the oil prices fall, if this sustains. There are several offsetting factors involved.” style=”style-8″ align=”center” color=”#dd0000″ author_name=”A. Prasanna” author_job=”Economist at ICICI Securities Primary Dealership Ltd.”][/bs-quote]

According to Prasanna, an India-based economist, net positive is unlikely for the government as there are “several offsetting factors”. Reportedly, the Indian government has estimated a subsidy of ₹38,568 crore for Fiscal Year 2020 (FY20) and approximately ₹40,915 crore for FY21. While the government can always increase the excise duty on petroleum, the economist has argued that it may mean additional revenue which may not be suitable to government agendas.

India does not need Muslims: Hindu Extremist Leader

Moreover, in the likely case that the Indian government decides to impose taxes on fuel, would mean greater trouble than benefit for the state. Since the “state-owned oil producers are bound to get hit” by the global price fall which would lead to lower dividends and depressed earnings for India caused by delayed and/or subdued demand.

Coronavirus: Indian PM refuses to celebrate Holi

In addition to this, the earnings of Indian expats may also be significantly impacted by the fall in petroleum prices due to the predominantly oil-based economies such as the Middle Eastern countries being a primary target of the fall in Crude Oil prices, respectively. According to reports, it is these oil-based economies that account for almost more than half of Indian remittances.

Massacre of Indian Muslims, lockdown in IOK denounced

The Organization of the Petroleum Exporting Countries [OPEC] may even make production cuts to contain the fall of prices which may greatly impact the economic growth, as per reports.