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  3. Higher oil prices to risk India’s growth trajectory: Dharmendra Pradhan

Higher oil prices to risk India’s growth trajectory: Dharmendra Pradhan

06 Dec 2016 Evaluate

With the Organisation of the Petroleum Exporting Countries' (OPEC) agreeing to curb production to no more than 32.5 million barrels a day beginning January 1, it is going to hurt countries like India, which is largely dependent on imported crude. In view of this Oil Minister Dharmendra Pradhan has said that OPEC cutting production for the first time since 2008 leading to a surge in oil prices will risk the India’s growth trajectory and had pitched for striking a balance between interests of producers and consumers.

Pradhan said that India is already the third largest energy consumer in the world behind the US and China. At 4.3 million barrels per day, although India has less than 5 percent share in the world consumption, countries annual consumption growth is far more significant. At 300,000 barrels per day growth, India’s contribution was about 30 percent of global growth in demand last year. He added in the modern world, access to energy should be a fundamental right of each human being. This is particularly true for India with a rapidly growing economy and huge aspirational population.

India has used the slump in oil prices since 2014-15 to not just cut petrol and diesel rates to cool inflation but also as an opportunity to shore up revenues by raising duties. The country's basket of crude oil imports had averaged $105.52 per barrel in 2013-14 which dipped to $84.16 in the following year, and to $46.17 a barrel in 2015-16. This fiscal, it has averaged $44.81 per barrel so far.

In India, hydrocarbon is likely to remain an important source of energy while the share of renewables will rise. Recently, after the OPEC countries pledged to reduce their production by 1.2 million barrels a day, non-OPEC countries also agreed to a production cut to the tune of 0.6 million barrel per day, that led to sharp spike in international crude prices.


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