INTRODUCTION In India oil is considered essential due to its varied and excessive use in the form of gasoline, kerosene, LPG and diesel, polyethylene, etc. Its importance can be gauged by the fact that the soaring prices of some of the refined crude oil sources such as petrol and diesel can have a cascading impact on the lives of ordinary men with low per capita income and limited resources, which to a large extent they depend on it to earn a living by direct and indirect means in order to satisfy all their needs. Crude oil and its conversion into various forms help the economy slow and accelerate its pace and animate different lives in various forms. Oil prices in India must also be viewed from the perspective of government interference or free-market prices. Initially, government interference was via the Administered Price Mechanism (APM), which was later brought down by the New Exploration and licensing policy, taking into account the growing urgent needs of the industry such as investment and profitability, which had previously been affected by the APM where the government adjusted the price of the products which was not compatible and proportional to the market prices but was lower than what was the trading price of the crude related products in the market, which in turn affected the finances and on the profitability of oil management companies. As a result, the revenues needed for exploration-related activities were blocked as the companies were unable to generate venture capital. RELATIONSHIP BETWEEN OIL PRICES AND INFLATION Oil and inflation are interlinked as oil is has a major input in the economy. The direct relationship between oil and inflation helps to push the consumer price index (CPI). There appears to be a greater link between oil and the producer Price Index (PPI), which measures the price of goods in the wholesale market. The correlation between Producer Price Index (PPI) and oil has been much stronger than Consumer Price Index. In short, increases in the price of oil are generally believed to increase inflation and reduce economic growth. In terms of inflation, oil prices directly affect the prices of goods made from petroleum products. Oil prices indirectly affect costs such as transportation, production, and heating. The increase in these costs can in turn affect the prices of a variety of goods and services, as producers can pass on the costs of production to consumers. The extent to which the rise in the price of oil leads to an increase in consumer price depends on the importance of oil for the production of a particular type of good or service. Increases in the price of oil can also stifle economic growth through their effect on the supply and demand for goods other than oil. Increases in oil prices can depress the supply of other goods because they increase the costs of production. In economic terminology, high oil prices can shift the supply curve of the goods and services for which oil is an input upwards. NEED TO CONTROL INFLATION When the quantity of money exceeds a certain threshold, the increase in the purchasing power of the consumer class can lead to a shortage of goods and services. This is because capitalism, which thrives on the idea that infinite resources can be used to satisfy the needs of a growing population, is slightly flawed. This is what generates the need for measures such as the repo rate, the CRR, and the Reverse Repo Rate. They help limit cash flow and keep inflation in check. These measures help bring a certain balance to the whole economic framework in which the world laboriously functions. The central bank uses certain methods to function disorderly and maintain a level of equilibrium in the Indian economy. This is because controlling inflation is a very critical step in the direction of conceiving a system that is achieving financial equilibrium. CONCLUSION To conclude, it can therefore be said that crude oil and its various forms are one of the main sources of economic growth of any country, and countries that have such reserves can greatly reduce their import account for such oil if demand is less than the supply of it in that country. In India, due to the crisis in these reserves, 70% of total imports are related to crude oil. As we know, the demand for crude oil is inelastic because even with the increase in prices there is no proportional decrease in demand. There may be an increase in demand in such circumstances under certain conditions. So, in the end, it cannot be said that the use of crude oil is expected to decrease or vanish in the near future as it is a commodity that acts as the engine and backbone of all economies. Even if we see the development of alternative sources of energy, investment in it remains high in some countries, which may not allow, considering their financial constraints, to switch to sources such as renewables, etc.