Petroleum Price Volatility on Macroeconomic Indicators in India

Devasia M. D; N. Karunakaran

doi:10.21844/smsjei.v7i02.6439

Devasia M. D Associate Professor, Department of Economics, Nirmalagiri College, Kuthuparamba, Kannur, Kerala, India
N. Karunakaran Principal, People Institute of Management Studies (PIMS), Munnad-Post, Chengala (Via), Kasaragod, Kerala, India

DOI: https://doi.org/10.21844/smsjei.v7i02.6439

Keywords: GDP; Inflation; Volatility; Excise Duty; NIPA; CPI; WPI

Abstract

The selling price of petrol and diesel in the domestic market is determined by the volatility of crude oil price
in the international market and taxes and excise duty imposed on it. India is heavily dependent on foreign
countries to meet its growing petrol-diesel demand. Consequently, net trade balance reflected in the BOP is
always adverse, which in turn adversely affects all the macroeconomic indicators and thereby, the poor
performance of the entire economy. So attempts should be made and petroleum price fluctuations in India
must be controlled to reduce the current inflation and to maintain a balanced growth rate in the economy.