India’s reliance on imported crude rises to 88.3% in April-June

July 21, 2023
Posted by: OptimizeIAS Team
Category: DPN Topics

India’s reliance on imported crude rises to 88.3% in April-June

Subject: Economy

Section: External Sector

In News: India’s reliance on imported crude inched up to 88.3 per cent in April-June from 86.5 per cent a year ago.

Key Points:

While the government wants to reduce India’s high dependency on imported crude oil, this has been difficult because of:
- sluggish domestic oil output, and
- continually growing domestic demand
India’s reliance on imported crude inched up to 88.3 per cent in April-June from 86.5 per cent a year ago.
This is the result of rise in the consumption of fuels and other petroleum products with domestic oil production declining slightly, as per data released by the Petroleum Planning & Analysis Cell (PPAC) of the oil ministry.
Government in 2015 had set a target to reduce reliance on oil imports to 67 per cent by 2022 from 77 per cent in 2013-14, but the dependence has only grown.
Heavy reliance on imported crude oil makes the Indian economy vulnerable to global oil price volatility, apart from having a bearing on the country’s foreign trade deficit, foreign exchange reserves, rupee’s exchange rate, and inflation.
At 60.1 million tonnes, the volume of India’s oil imports in April-June was a tad lower than 60.7 million tonnes in the year-ago period. India produced 30.49 million tonne of crude petroleum in 2020–21.
However, reliance on imported crude still rose as the country’s petroleum product exports declined to 14.7 million tonnes from 16.6 million tonnes in the year-ago quarter.
The computation of import dependency is based on the domestic consumption of petroleum products and excludes petroleum product exports as those volumes do not represent India’s demand.

Petroleum Planning & Analysis Cell (PPAC)

Subsequent to the dismantling of the Administered Pricing Mechanism (APM) in the petroleum sector, Oil Coordination Committee (OCC) was abolished and a new cell called Petroleum Planning & Analysis Cell (PPAC), attached to the Ministry of Petroleum and Natural Gas, was created effective 1st April 2002.
PPAC maintains data bank on oil and gas sector and analyses the trends in the domestic and international oil and gas sector and domestic prices.
IPPAC has played a significant role in switchover to de-regulated market, management of PMUY (Ujjawala), DBTL, PM Garib Kalyan Yojna, LPG Subsidy and Gas Pricing apart of managing enormous data on Oil & Gas sector.
In the past, it has assisted the Ministry in discharging several other important functions including administration of subsidy on PDS kerosene and freight subsidy for far-flung areas etc.
Objectives:
- To ensure effective administration of the subsidy schemes notified by the Government.
- To monitor and analyse trends in prices of crude oil, petroleum products and natural gas and their impact on the oil companies and consumers, and prepare appropriate technical inputs for policy making.
- To monitor developments in the domestic market and analyse options for policy changes in pricing, transportation distribution of petroleum products.