The various advantages which India can accrue of due to falling crude prices can be seen under the following heads –
1. Economic –
(i) Reduced import bill may lead to lower fiscal deficit and hence the government should attempt to achieve its obligations (3% of GDP) under the FRBM Act
(ii) Accelerate the completion of critical infrastructural projects since the energy costs for completing the project will be significantly lower
(i) Reduced import bill may lead to lower fiscal deficit and hence the government should attempt to achieve its obligations (3% of GDP) under the FRBM Act
(ii) Accelerate the completion of critical infrastructural projects since the energy costs for completing the project will be significantly lower
2. Strategic –
(i) Expedite the building up of Strategic Oil Reserves
(ii) Enter into futures-prices contracts with Oil exporting countries for long durations
(i) Expedite the building up of Strategic Oil Reserves
(ii) Enter into futures-prices contracts with Oil exporting countries for long durations
3. Social –
(i) Deregulate the prices of kerosene and gas to revoke the entrenched subsidy culture
(ii) Use the low gas prices to enhance low-cost fertilizer production which could immensely benefit farmers
(i) Deregulate the prices of kerosene and gas to revoke the entrenched subsidy culture
(ii) Use the low gas prices to enhance low-cost fertilizer production which could immensely benefit farmers
4. Environmental –
(i) Low crude prices will ease pressure on coal plants and can be used to modernize coal-plants to ensure minimum environmental safeguards
(ii) Impose the ‘Special fuel upgradation Cess’ on petrol and diesel to upgrade India’s oil refineries to Bharat Stage 4 and 5 as recommended by Saumitra Chaudhri Committee
(i) Low crude prices will ease pressure on coal plants and can be used to modernize coal-plants to ensure minimum environmental safeguards
(ii) Impose the ‘Special fuel upgradation Cess’ on petrol and diesel to upgrade India’s oil refineries to Bharat Stage 4 and 5 as recommended by Saumitra Chaudhri Committee
5. Policy-making –
(i) The Integrated Energy Policy 2006 should be restructured to allow considerations of using Strategic Oil reserves during high-crude price phase
(ii) Expedite domestic oil exploration and non-crude energy development to prevent shocks from political trouble in West Asia
(i) The Integrated Energy Policy 2006 should be restructured to allow considerations of using Strategic Oil reserves during high-crude price phase
(ii) Expedite domestic oil exploration and non-crude energy development to prevent shocks from political trouble in West Asia
These measures could allow the government to fully utilize the benefits of low-crude price phase to allow Indian economy to enter into higher growth trajectories.
