Evaluation Methods
The fluctuation in oil places has a direct impact on the economy of oil importing nations given that they highly rely on the imported crude oil to run most of their industries. To be specific, the change in oil prices directly affects the economic environment of India in more than many ways. Timilsina asserts that the techniques for evaluating the macroeconomic environment include examination of current account balance, evaluation of the fiscal deficit and oil subsidy, analysis of the rupee exchange rate and inflation rate analysis (2015).
Variables to be evaluated
India imports an estimate of 80 percent of its energy resources. It is imperative to determine the relationship between oil prices and the economy of oil importing nation before outlining the variables used in this research. The decrease in global crude price will affect India's economic indicators in positive ways.
According to Walker et al, reduction inflation results from the reduction in oil prices which further leads to a decrease in the current account deficit (2015). The reduction inflation rate will result in a fall in commodity prices which will encourage consumer spending. Also, a cut in inflation will result in a reduction in interest rates which will improve the availability of credit for corporate and infrastructural investment (Ghosh, 2009). As a consequence, this research will evaluate the following variables so as to determine the overall impact of oil prices on the macroeconomic environment of India: increase in business confidence, inflation rate, , increase in business investment, exports as a result of decrease in energy cost and reduction in production cost, increase in oil consumption and domestic spending (White & McBurney, 2013).
Period to assess the impacts
References
Ghosh, S. (2009). Import demand for crude oil and economic growth: evidence from India.
Energy Policy, vol. 37, no. 2, pp.699-702.
Timilsina, G. R. (2015). Oil prices and the global economy: A general equilibrium
analysis. Energy Economics, no. vol. 49, pp. 669-675.
Walker, S. et al (2015). Recession, retrenchment, revolution? Impact of low crude prices on oil
powers. The Guardian. Available from
http://www.theguardian.com/business/2015/dec/30/oil-iran-saudi-arabia-russia-
venezuela-nigeria-libya [Accessed 5 April 2016]
White, T. L., & McBurney, D. (2013). Research methods. Belmont, CA: Wadsworth, Cengage
Learning.
