Forecasting less turmoil for the Indian economy in 2024 due to high crude oil prices, experts anticipate a steady range between $85 to $92 per barrel, steering clear of major fluctuations. Across much of Asia, except China and Japan, a notable reduction in inflation has been observed, primarily influenced by lower oil prices and ongoing adjustments in global goods supply and demand dynamics.

Recent data from the Petroleum Planning and Analysis Cell (PPAC), under the Ministry of Petroleum and Natural Gas (MoPNG), disclosed that India's import of crude oil and petroleum products during April-September in the current fiscal year increased marginally by 2.2% to 139 million tonnes compared to 136 million tonnes in the same period of the preceding financial year. Remarkably, despite the slight rise in quantity, the Gross Petroleum Imports fell by 28% to $74 billion during April-September 2023. The average price of India's crude basket hovered around $83 per barrel this year.

Morgan Stanley's commodity research team foresees oil prices remaining relatively stable at around $85 per barrel in 2024, with continuous downward pressure on core goods due to decreased producer prices. The bank suggests that flexible inflation targeting, a rising share of exports in global exports, and a reduced oil dependency are shaping a favorable current account deficit (CAD) outlook for India.

While oil impacts India's current account, inflation, interest rates, currency, and growth, the nation seems less affected by oil price fluctuations compared to the past. However, any surge in oil prices above $110 per barrel could pose challenges to the macroeconomic environment, impacting the CAD by $12 billion for every $10 increase in crude prices.

Goldman Sachs, on the other hand, predicts a rise in oil prices to $92 per barrel in 2024 compared to $83 per barrel in 2023. This, coupled with a slight growth slowdown in India's export partners, might elevate the current account deficit to 1.9% of GDP ($75 billion) in 2024 from 1.3% of GDP ($45 billion) in 2023.

Government measures are anticipated to curb food inflation in an election year, with core inflation projected to decline to 4.5% year-on-year in 2024. Indian policymakers, over the past two years, navigated various commodity supply shocks through monetary tightening, fiscal adjustments, and prudent management of foreign exchange reserves.

Focusing on fiscal consolidation in 2023-24, the government redirected expenditure towards capital expenditure by reducing subsidies. The nation's services sector continues to thrive, propelled by robust services exports and remittance inflows, providing a buffer to the current account deficit. Heading into 2024, a continuation of these trends is anticipated.

With 87% of its oil demand reliant on imports, India's total petroleum imports, including crude oil and petroleum products, amounted to $184 billion in the last fiscal year (2022-23), constituting 25% of the country's gross imports in value terms.