Being the fastest growing economy, India’s crude oil consumption, as well as demand has been constantly rising. Today, it is one of the largest importers of the crude oil next to US and China. Considering the degree of crude oil fluctuations in the global oil market, growing crude oil import in India isn’t a good sign for emerging economy in the long run.
Ongoing crude oil demand of India
As I mentioned earlier that India is the third largest oil importer next to US and China.
Currently, Crude oil demand of India constitutes around 10 percent of global oil import with more than 100 billion dollars in the form of foreign currency.
Compare to import, at the domestic level, it produces around 15 percent of all consumption. Poor domestic resources is one of the major reason for growing crude oil import in India.
Consumption pattern of crude oil in India
According to a study conducted by an organization, Indian transport sector consumption constitutes 70% and 99% of diesel and petrol respectively.
Diesel and petrol consumption
In terms of diesel consumption, trucks and private cars constitutes almost 45 percent out of total diesel consumption.
On the other hand, two wheelers and private cars consume almost 97 percent of the total consumption of petrol.
As for your information, country consumes around 4 millions of barrels crude oil daily and around 3500 crores litres in a year. As a matter of statistics, one barrel is equal to 159 litres of oil.
At the domestic level, only 14 to 15 percent of oil is produced. Presently, crude oil import in India is more than 80 percent of total consumption.
Doubts over ethanol blend target
In any case, as per the available capacity of ethanol production, country cannot achieve blend target with available resources.
According to the government data, India’s ethanol production is around 300 crores litres. Even though they think of 10 percent, it needs all the production. Then what about the other industries demands?
Government of India has decided to blend 10 percent of ethanol by 2022 and 20 percent deadline would be 2030. So far, the current status is hovering around two to three percent. It looks like that India’s crude oil dependency is not going to die easily.
Is there any viable alternatives?
So far, country has adopted three-pronged strategy.
- First, I have already discussed about the ethanol blend target.
- Second, exploration at the domestic level. In this regard, there are chances of technology to create better hope.
- On the basis of geological evidences, there is hardly any chance of big endowment or discoveries.
- Third, focus on renewable sources of energy. This is effective but time taking process.
For better long lasting solution, they have to think at the both ends – consumption, as well as production.
No means could prove adequate for indiscriminate consumption. By neglecting consumption pattern, the aim of sustainable energy security seems too vague.
Question over the raw material for ethanol production
Since the last decade, drought is common phenomenon in the areas where sugarcane crop is widely cultivated. Maharashtra is one of the badly affected states in the country.
At the same time, the India has been placed at 103rd in the Global Hunger Index. It means that question of food security is need to be solved as quickly as possible.
Crude oil import Impact on rupee dollars exchange rate
The most concerning thing for India’s point of view is the fluctuations in the rupee dollars exchange rate.
Whenever there is rise in the oil prices, the equation of fiscal deficit goes against the expectations. And, it is understandable that oil market is the most volatile commodity.
Need for workable solutions for growing crude oil import
Before to move forward, one must consider the consumption pattern. This is truly an eye opener for the policy makers.
As per our earlier discussion, there are only two wheelers and private cars are consuming more than 95 percent of available petrol.
It points out at the failed transportation system of country. In this argument, there is no scope for counter view.
In the most developed nations, major focus is given for robust public transportation. They know that the public transport system is the only solution for number of interwoven problems.
Surprisingly, in the country like India, the duty of transportation is left on the shoulders of citizens by the democratically elected government. This is the reason why in India only two wheelers consume around 63 percent of petrol.
First of all, judicious use is so important. Otherwise, crude oil import in India might intensify further in the near future.