Chart of the day: Can India curtail oil import bill?

Riken Mehta & Shaheen Mansuri
Moneycontrol.com

In the last eight years, the country's crude import jumped 78% while petroleum products exports went up a 230% from FY05 to FY12 as per the statistics provided by PPAC. Reliance Industries ( RIL ) has been the biggest contributor to it.

Experts attribute this kind of growth to the Jamnagar refinery owned by RIL which is considered the largest in the world with an installed capacity of 668,000 barrels per day.

Even though the gap between exports and imports is still big, rising exports in last eight years helped reduce in the space considerably. From the above analysis, it can be infered that oil is not the only cause for the rupee to fall. Also in the current scenario, Reliance Industries is allowed to export only certain petroleum products. The government should direct the Oil Ministry to take some serious measures to boost petroleum products export thereby curtailing the net oil import bill in the long run.

Year	FY05	FY06	FY07	FY08	FY09	FY10	FY11	FY12 (P)
Net Import (in USD Mn)	22,607	33,845	39,549	55,560	63,151	56,078	68,808	90,765

Chart of the day: Why RBI is not fighting the slide in the rupee

Riken Mehta
Moneycontrol.com

One of the reasons for the rupee sliding sharply against the dollar is the Reserve Bank of India’s reluctance to support the rupee by selling dollars, like it usually does during periods of volatility. And there is good reason, why the RBI is avoiding what could well turn out to be a losing battle. As can be seen from the chart, India’s import cover--the number of months of imports that can be paid for by a country's forex reserves - is at a 12-year low. The import bill has soared in the last few years, but forex reserves have not kept pace.

The import cover is calculated by taking the absolute annual import figure and then divide it by 12 months to get the average monthly import. Divide forex reserves at the end of the same period (Financial year end in this case) by average monthly import to get the import cover ratio.

For FY12, the import cover ratio is 7.2 months. It means that India has forex reserves to cover only the next 7 months of FY13, assuming the imports remain the same at USD 40.7 billion.

For chart, Click on the attachment