Crude oil is one of the biggest imports India does. A mere $1 hike could churn India’s import bill to a mammoth $1.2 billion on exchequer.
Now the question comes, should India hedge oil prices to take benefit when they go above current levels? Similar to stock markets, oil prices are volatile too. Hence, they may go up or significantly fall. India will be at a good position if prices go up in the future.
On the other side, if they fall to a lower level. We will have to pay a hefty amount for oil import. This may have been the prime reason for the country not hedging last time the oil prices fell precipitously.
Crude Oil Prices - Chart
In such a scenario, we need to adopt wait and watch policy and stay away from perpetuating benefit of oil price fall. If the crude oil prices at lower levels, we should celebrate. Else we should find new ways to reduce our dependency on oil by espousing electric vehicles and solar power in India.