This PPT all about how Indian Economy affected due to crude oil Price. This ppt presented in Viva Institute Of management Studies Virar college

1. Impact Of Crude Oil Price
On Indian Economy
Presented By
• Nilesh Patil – 23
• Manali Gaonkar - 7
• Priti Raut - 29
• Abhijit Patil-21

2. What Crude Oil
• Crude oil is a naturally-occurring substance found
in certain rock formations in the earth.
• It is a dark, sticky liquid classified as a
hydrocarbon. This means, it is a compound
containing mainly carbon and hydrogen.
• Crude oil is highly flammable and can be burned
to create energy.
• Petroleum= Petra (Rock) + Oleum (Oil) (Latin)

3. Crude Oil Production
India
Kuwait Thousand Barrels Daily
UAE
Mexico
Canada
China
Iran
US
Saudi…
Russia
0 2000 4000 6000 8000 10000 12000
Source: BP Statistical Review of World Energy 2011

4. Crude Oil Consumption
Russia
Thousand Barrels Daily
India
Japan
China
US
0 5000 10000 15000 20000 25000
Source: BP Statistical Review of World Energy 2011

5. Source: BP Statistical Review of World Energy 2011

6. India’s Oil Import
11%
34%
18%
5%
10%
22%
Iran Saudi Arabia Other
Western Hemisphere Africa Other Middle East
Source: Global Trade Atlas

7. Energy Consumption In India
7%
24%
1%
42%
24%
Oil
2%
Nuclear
Combustible Renewables and Waste
Other Renewables
Coal
Source: The International Energy Agency

8. Consumption of Major Petroleum
Products
9%
8%
40%
36%
7%
LPG Kerosene
Diesel Petrol
All other products
Source: Ministry of Petroleum Basic Statics

10. Crude Oil Price
Source:- Energy Information Administration and Bureau of Labor Statistics 2012

11. Factor affecting crude oil price
• World oil demand
• World oil supply
• Weather conditions
• Government policy
• Political Conditions
• Futures Market

12. Subsidy
• India’s subsidy bill zoomed to Rs 2.16 trillion or
2.5% of GDP .
• It was due to two reason:
 High Crude Oil prices
 Fertilizer subsidies, primarily on account of
imported non-urea fertilizers.
• Last year budget government pegged curde oil
price of brent at $90. This year they kept the
same at $115.
• Next year government has reduced the budgeted
amount for oil subsidy to Rs43580 crore.

13. Crude Oil Subsidy
78% jump
Chart Title
80000
60000
40000
20000
0
Crude Oil Subsidy
Rs in Cr
2010-11 2011-12
Source: Budget document

14. Impact of increase in oil prices on
growth and inflation levels in India
GDP=Private Consumption + Gross Investment + Govt Spending + ( Export – Import).
International Increase in Extent of fall in Extent of fall in Extent of
oil international manufacturing GDP growth increase in WPI
prices per
oil prices (%) sector (%) (%)
barrel ($)
(%)
50 38.9 2.1 0.4 1.5
60 66.7 9.7 1.9 3.6
70 94.2 16.9 3.4 5.7
80 122.2 24.5 4.9 7.9
140 126.1 29.7 7.3 7.2
Source:- Extractive Industries for Development Report

15. Inflation
• Crude oil price move up or down, inflation
follows in the same direction.
• Crude oil price increases, it’s directly
affects the rate inflation. When the prices
went to high of more than $100/barrel in
2008, the inflation also went up to
12.27% which was highest for India in
previous two decade.

16. Effects on Transportation
13%
7%
14%
61%
5%
Transport Non-Energy Other sector Electricity and Heating Industry
Source:- Report of the Working Group on Petroleum & Natural Gas Sector for the XI
plan (2007-2012)

17. • The transport sector is clearly dominant in
petroleum product consumption.
• Transport sector consumes 60% of total
petroleum products.
• Road transport accounts for an even
higher percentage of energy consumption.

18. Steps taken by the govt. and
RBI
 What Govt. did ?
1. Provided huge amount of subsidies to oil
companies to keep them solvent.
2. This increased domestic prices of diesel and
petrol.
3. Start looking for alternate energy options to
prevent future oil shocks.
 What RBI did?
Increase in CRR, Repo rates.
(i.e. used monetary tools to calm down the heat)

19. Conclusion
To summarize the study
When Oil prices Moves UP :
1.Inflation increases
2.Govt. spending on subsidy increases
3.Foreign currency reserves reduce
4.Our export becomes weaker
5.GDP is affected negatively
6.Share market crumbles
7.Investment decreases

20. Thank You