Know how low oil prices affect Indian economy

Zee Media Bureau

Oil prices fell for a seventh straight session on Monday, coming close to 11-year lows, on growing fears that the global oil glut would worsen in the months to come in a pricing war between leading OPEC and non-OPEC producers.

Brent crude fell by 3.4 percent to below USD 36.70 a barrel for the first time since December 2008 and US West Texas Intermediate (WTI) sank 2.5 percent below USD 34.70 a barrel.

Brent traded less than 50 cents above the lows last seen during the 2008 financial crisis of USD 36.20 a barrel. If Brent falls below that level, that will be its lowest since mid-2004, when talk of a commodity super-cycle was only beginning. WTI's financial crisis low was USD 32.40 in December 2008.

Know how low oil prices will create favourable environment for the Indian economy: 

`-Low oil prices will enable the government to rationalise subsidies.

-It will enable the government to absorb the loss that our own oil companies are facing because of future purchases. 

-It will keep inflation under control. 

-It will help the Reserve Bank to ease up the rates further.

-It will enable the government to increase the cess around fuel which will be diverted for infrastructure creation.

Also Watch: