Prime Minister Narendra Modi was lucky that oil prices were low when he took over in 2014, so he could tackle the economy that was left on a shaky wicket by the Manmohan Singh government. Now, three years later, oil prices are hovering around $60/barrel, and there are fears it could impact the government’s finances. That doesn’t seem very likely, though the economy is still recovering slowly from the reckless demonetisation and the hurried rollout of the GST. The government doesn’t seem too worried, it feels the structural reforms it has started will soften the impact of high crude prices.
It may be recalled that oil had, towards the close of the last century, touched $120 and even $140 per barrel, yet the Indian economy did quite well. What is required is judicious management of oil resources and immediate stoppage of its wasteful use. The government desperately needs to develop an efficient public transport system to ensure there are fewer cars on the roads. Inland water transport is another area that can take the load off trucks, which guzzle diesel. Natural gas resources, of which there is no dearth, need to be developed.
It’s a pity that even 70 years after Independ-ence, India still depends on oil imports for 80 per cent of its energy needs. Nothing seems to change, despite the valiant efforts of the petroleum ministry and ONGC. India has a huge coastline and must strive harder to explore oilfields, both onshore and offshore. Efforts were made to try make India more self-reliant in oil years ago, they seem to have been half-hearted and met with little success.
The Narendra Modi government, that lays so much stress on “Make-in-India”, should push more aggressively for making India less dependent on imported crude. It’s also open to the oil speculation lobby globally. It’s a game played between oil producing nations like Russia and Saudi Arabia. OPEC countries control crude prices by increasing or decreasing production. It’s imperative India follow the example of the US, which increased its domestic production hugely through the development of its shale resources. It didn’t want to be dependent on Middle East oil because of political reasons, and it has succeeded tremendously. India too has shale deposits but one doesn’t hear about any efforts made to recover these. Even if it’s expensive, it’s still better in the long run if India cuts its dependency on imports and saves foreign exchange. India seems to lack the fire and will to be self-sufficient. It really needs to shake off its lethargy on this count. There’s a view that imports are lucrative and involve a lot of kickbacks. Whether this is true or not, it certainly should be looked into.