Crudely Speaking: Why the Modi Govt Is Responsible for Indian Oil Prices |
New Delhi: As oil prices shoot up sharply in the global market, early today, “oil prices rose 18% in just 18 minutes”. Indian prices of oil, LPG and LNG will be affected. LPG cylinder prices went up by Rs 60 over the weekend already.
Vivek Y. Kelkar, researcher and analyst working at the intersection of geo-economics and sustainability, said, “With nearly 90% import dependence, every $10 per barrel rise increases the annual import bill by about $13-14 billion, widening the current account deficit, pressuring the rupee and adding to inflation.”
India imports 90% of its crude needs. The rupee is at an all-time low. The current account deficit is widening. Nomura, ADB and Moody’s Ratings have pointed to India (with extensive oil needs) being potentially among the worst affected in the world if the West Asia war and crisis was to be long-drawn.
But can it all be laid at the door of ‘global reasons’?
Here is why the answer is a resounding no.
1. Strategic petroleum reserves mismanaged?
The Hindustan Times reported on March 7 that India allocated Rs 5,876 crore for this financial year to fill and expand its strategic petroleum reserves (SPR), but is expected to spend only Rs 1,039 crore of it.” Strategic petroleum reserves are kept for precisely these eventualities. India has budgeted only “Rs.200 crore for next year – leaving emergency stockpiles partially empty and expansion plans stalled, budget documents show.” Business Standard reports that Mangalore SPR is less than 50% full. Padur SPR, the largest, is just 82% full (capacity of 18.3 million barrels).
2. Ceding energy choices
The Modi government has consistently ceded energy choices, making them subservient to the US’s whims and adjusting to its priorities rather than its people’s needs and welfare. China and a few other large countries have continued to buy Iranian oil and Russian oil at cheaper prices, not allowing themselves to be subjected to the US’s strategic map. India’s story of subjugating itself to the US’s plans began before Trump’s........