Amid sluggish demand due to the Coronavirus induced national lockdown, India has reasons to cheer as well. Driven by sluggish demand and lower crude oil prices, the country's oil import bill has fallen to just $5.4 billion in the April-May period of the current financial year compared to $19.3 billion.

Lower crude oil prices and a huge drop in demand in the first two months of 2020-21 due to the lockdown are the two main reasons for pulling down its oil import bill.

India imported 31 million tonne (MT) in these two months against 39 MT in the corresponding period last year.

Crude oil prices which had fallen to a level of sub $20 a barrel in March, increased to over $30 a barrel in May. But even at this level the price was significantly lower than an average of $70 a barrel in the same month last year.

At present, crude oil price is hovering around $40 a barrel.

At a time when the country is battling an imminent economic slowdown, the drop in the oil import bill will be a big booster.

A lower crude oil price coupled with lower demand will lead to savings of the import bill. Earlier estimates indicated that India could gain about Rs 30,000-40,000 crore for the full year from the drop in oil prices.

The total savings will translate into lower current account deficit — the difference in inflow and outflow of dollars, easing of inflation and containing the fiscal deficit at a time when each policy measure could have far reaching implications on the economy.

Between 2018 and 2019, average crude oil prices increased from $56.43 a barrel to $69 per barrel. In 2018, global oil prices had breached the $70 per barrel level, raising concerns for the government.

India, typically, imports more than 80 per cent of its total oil needs. A drop in crude prices by a dollar per barrel helps in reducing India’s import bill by roughly Rs 10,700 crore on an annualized basis.

The USA is the world’s biggest consumer of oil, followed by China, Japan and India. The 10 biggest oil consuming countries account for more than 58% of the total global crude consumption per day..