Consumers can expect a reduction in petrol and diesel prices on August 1 when oil marketing companies review rates, thanks to falling global prices.
International crude oil prices declined to their lowest in about four months on Monday.
“The drop in global oil prices would have positive bearing on India’s economy as the import bill would come down... the current account deficit would also remain in check,” minister of state for finance Jayant Sinha told HT.
On July 16, oil marketing companies, led by Indian Oil Corp Ltd, reduced the retail prices of petrol and diesel each by `2 per litre.
India imports nearly 80% of its energy needs, on which it gives a subsidy. While budgeting its subsidy outgo, the government had factored in a global price of $70 a barrel and an exchange rate of `63 to a US dollar. While the Indian import crude basket is currently hovering around $54 a barrel, the rupee-dollar rate is at `64.17.
In Budget 2015, finance minister Arun Jaitley had earmarked `30,000 crore for subsidies towards petroleum products.
According to data by the Controller General of Accounts, till May 31, just over `8 crore out of the budgeted subsidy for 2015-16 has actually been disbursed.
Carsten Fritsch, senior oil market analyst at Commerzbank, said over phone from Frankfurt that the oversupply in the global market is currently hovering around 1.5-2 million barrels per day.