Amid concerns over the rising fossil fuels subsidy burden on the government, Economic Affairs Secretary Arvind Mayaram has stated that India cannot afford fuel subsidy in the long run. Mayaram added that no country can sustain subsidy in perpetuity for anything and country’s growth business model will fail in future if it includes huge subsidy burden. Recently, the government has increased the LPG subsidy quota of cheaper cooking gas cylinders to 12 per household from 9 in a year that would raise the government's subsidy burden by around Rs 5,000 crore.
Currently, India is fourth largest consumer of energy, however, there are a large number of Indians having no access to energy. India is likely to become world's third largest energy consumer by 2020 and adequate energy supply at affordable price is critical for economic growth. At present, India imports around 80 percent of its oil needs and 25 percent of natural gas domestic demand. On domestic production front, India is currently world's seventh largest energy producer accounting for around 2.5 percent of world's total annual energy production. While, there is a need to increase its energy supply by 3 to 4 times over the next two decades to meet the growing country’s demand.
Presently, only 0.93 million sq km area in India is held under exploration and production in 19 basins as compared to total estimated sedimentary area of 3.14 million sq km, comprising 26 sedimentary basins. Meanwhile, Oil Ministry has formulated a roadmap for cutting India's dependence on imports to meet its energy needs. The Ministry wants domestic crude oil demand to be cut to 50 percent by 2020 and by 25 percent in 2025 through intensive exploration and exploitation of untapped reserves.
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