High oil prices may lay slippery track for economy

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Feb 29 2008, 00:06 IST

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The brewing energy crisis, following a phenomenal increase in the international crude oil prices, may soon grip India’s economy. The country imports nearly 78% of its total crude oil requirement and with global oil prices touching unprecedented levels of $102 a barrel, it’s time that appropriate strategies be put in place to deal with any unforseen situation.

The impact of high oil prices on the country’s economy is evident. India, which spent $48.389 billion to import its crude oil needs in 2006-07, has already spent $48.02 billion on imports in the first nine months of 2007-08.

Voicing concerns over the high crude oil prices, the Economic Survey 2007-08 has also warned on the constant slippages in India’s power capacity addition programme.

As against the government claims of making concerted efforts to improve power situation, generation in the first nine months of 2007-08 (the first fiscal of 11th Plan period) decelerated from the previous year’s level. Growth in power generation slowed down to 6.6 % in April-December of fiscal 2007-08 compared with 7.5 % in the corresponding period of 2006-07.

Domestic crude oil production needs to be improved. While efforts are on to discover new oil and gas, such as the discovery of oil by Cairn Energy in Rajasthan and Reliance Industries/ONGC in the east coat, the Survey has made another innovative suggestion for reducing India’s dependence on imported crude oil by privatising the old oilfields.

State-run firms Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL) have seen output fall

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