Despite the fall in the rupee’s value vis a-vis to the US dollar, India still stands to benefit from falling global crude oil prices.

Experts say the fall in crude oil has been sharper than the depreciation in the rupee.

“The country as a whole will still save on its import bill due to the drop in the global crude oil prices. Due to rupee depreciation, the savings might come down, but the benefit still holds,” Deep N Mukherjee, Senior Director – Corporates, India Ratings & Research (Ind-Ra) told BusinessLine .

While the rupee fell by 82 paise to close at 66.64 against the dollar, Brent crude oil prices fell below $45 a barrel for the first time since March 2009 and at 7.43 p.m IST was trading at $43.41 a barrel.

The Indian basket, the average price of different varieties of crude oil sourced by Indian refiners, stood at $45.21 a barrel on August 21.

In rupee terms, Indian refiners bought crude oil at ₹2,976 a barrel, as per the rupee-dollar exchange rate of 65.83 on August 21.

In comparison, last year, when the rupee was stronger at 60.77 against the dollar, the higher global crude price meant the Indian refiners sourced crude oil at ₹6,075.18 a barrel.

Further, the average price of the Indian basket in the current financial year is at $55.50 a barrel, which is still about $15 lower than $70 a barrel used by the Finance Ministry for the estimated subsidy outgo in 2015-16.

Between April-July in 2015-16 fiscal, India has imported 66.34 million tonnes for ₹1,75,235 crore.

In the same period last year, India had imported 62.24 million tonnes at ₹2,84,156 crore.

Given the current trend, even if the rupee settles at around 68-70 to the US dollar, the benefit of lower crude oil prices will not be negated.

However, it is a different story for the consumers. Stock market analysts suggest that the combined impact of both is largely neutral for both upstream companies, such as ONGC, Oil India as well as downstream companies, such as IndianOil, HPCL and BPCL.

“For the marketing companies there might be a small inventory loss, but the combined effect of the rupee depreciation will mean that they might not cut petrol and diesel prices,” an analyst said on condition of anonymity.

The analyst added that for natural gas consumers, it will be a negative impact.

“City gas distribution companies, such as Indraprastha Gas Ltd, Gujarat Gas and others will be impacted as they do depend on LNG imports, which will be costlier due to the weaker rupee. GAIL, too, will have a negative impact,” the analyst said.

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