Oil Prices in India
HOT ISSUES FOR MAINS(TOPIC #3)(SecureIas Initiative)
To transfer the benefits of decrease in international oil prices to consumers at nearly real time basis,Dynamic pricing has been adopted by the government- India is heavily dependent on oil and we are world’s 3rd biggest oil consumer
- 3 sin products oil,coal, and liquor are major contributors to coffers of government
- Double whammy =rise in oil prices + fall in rupees
- Solution = ethanol blending (National bio fuel policy) + e-vehicles + however excise duty cut is also proposed(benefit to consumers –> but will raise fiscal deficit –> can lead to major macroeconomic problem ) + focus on efficiencies of Indian refineries(worst efficiencies in world),wastage is as high as 9% + India can use its diplomatic relations to acquire more oil reserves and oil contracts worldwide + oil reserves +
Iraq(1st) + Saudi Arabia(2nd)- Every Re 1 fall in excise duty on oil may make the state poor by Rs 13000 crore
- 30% of center revenue of indirect taxes comes from petroleum products
- Causes = geopolitics(largely out of our hand) + sanctions on Iran and Venezuela can impact + distortion on Saudi-Russian collision
- Challenges = Iran in a turmoil and front with USA + Domestic oil production has stagnated from a longer time.
By: Sugam Bansal