Crude Price Impact on Indian Economy:
Higher crude price will have a negative impact on the fiscal and current account deficits of the economy. Increase in these deficits will lead to higher inflation and also impact monetary policy, consumption, and investment behaviour in the economy. A 10% increase in oil price will increase the trade deficit by $7B approx, that is, trade deficit widens by 560bps. Higher crude prices adversely affect tyre manufacturers, footwear, lubricants, paints, and airline companies.