New Delhi: Since May 2014, Oil prices were closely aligned with PM Modi’s fiscal fortunes. Within a few months, crude prices seem to bow down to PM Modi and it fell to below $60. For three years, the price remained at more than half of what it was when Modi took charge as PM.
Lower prices helped PM Modi in curbing the fiscal troubles. But now it seems, Internation prices and situation took a u-turn and oil rose above $65 a barrel for the first time since mid-2015 on Tuesday as an unplanned shutdown of the UK’s biggest North Sea oil pipeline supported a market already tightened by Opec-led production cuts.
India is heavily dependent on imports for a large chunk of the crude oil that it consumes. In 2016-17 alone Modi government had imported around 82.1% of the oil consumed in India.
India is one of the major Opec consumers. 85 per cent and 94 per cent of India’s crude oil and gas imports respectively come from the Opec countries.
The IMF has recently advised the Opec nations to move away from oil as the only source of income, which could mean a further increase in the price of crude oil.
Modinomics need to redefine its finance to manage such surge which has long-term implications on India.
Source & Photo Credit: Economic Times