India's Oil Import Bill May Soar if Russian Crude Purchases Fall

India's reliance on Russian crude oil may soon become a costly affair. According to economist and former UN advisor Santosh Mehrotra, reducing purchases of Russian crude by 50% could lead to an increase in India's annual oil import bill by USD 5-10 billion.

Mehrotra estimates that this reduction would have a direct impact on inflation, potentially increasing it by around 0.3 percentage point. He also warns that higher oil import costs could put pressure on the rupee and current account deficit (CAD).

The reason for India's dependence on Russian crude is the discounted prices offered by Moscow, which have helped contain the country's oil import costs. However, if this supply is disrupted or reduced, India may have to replace it with more expensive crude from other sources.