The situation during the course of past 12-16 months has been quite burdensome for the Indian economy. The Assocham paper highlights that for the past five years, the petroleum imports have been equivalent to almost 40 per cent of the total exports made by the India in the past six years. For the year, 2011-12, the figure is at an astonishing high of 51.2 per cent.
The paper on “Austerity in oil Consumption in India” suggested that austerity in oil consumption will address a plethora of problems faced by the country such as a rising trade deficit, a bulging fuel subsidy bill and other macro imbalances.
“Widening fiscal deficit and increasing of the current account deficit are among the main problems faced by the national economy as these two issues have had their impact on some of the recent ratings outlook downgrades done by the global agencies like Standard and Poor’s and the oil austerity will surely help,” said Dhoot.
Looking from the imports angle and the impact on the trade deficit, crude oil along with gold imports accounted for 44.4 per cent of India’s total imports in 2011-12. The report says that such high level of imports exert paramount pressure on India’s external payments.
The share of these two imports, crude oil and gold has been increasing constantly for the last five years. These, together, accounted for 38.8 per cent of the country’s total import bill in 2007-08, which shot up to over 44 per cent in the previous financial year.
Crude alone was responsible for over 31 per cent of the country’s imports, while gold imports accounted for 12.6 per cent. The crude oil imports have not increased only because of price increase in the last several years. In quantitative terms also, these imports have shown a rising trend.
“The quantity of petroleum imports has increased from 82 million tonnes in 2002-03 to 164 million tonnes in 2010-11. Simultaneously, the average price of crude oil has also been rising over the years barring 2009-10,” said the ASSOCHAM paper.
As a result, the import bill of the country in rupee terms on account of oil imports has risen by over 500 per cent between 2002-03 and 2010-11. These imports have also been a big drain on India’s foreign exchange reserves. In 2002-03, petroleum imports in proportion to the country’s foreign exchange reserves were 23.18 per cent. The ratio went up to 34.80 per cent in 2010-11, the paper disclosed.
The industry body termed it as a worrying aspect, since it implies that a major share of the country’s foreign exchange earnings are spent on import of a single commodity.
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