How India withstood the crisis in West Asia, Pg7

Key Highlights:

• India, despite being the world's third-largest oil importer, successfully managed energy and economic stability during the recent West Asia crisis.
• Petrol prices in India rose by only 7.5%, significantly lower than in many advanced and emerging economies.
• Domestic LPG cylinder costs remained affordable, with Ujjwala beneficiaries paying ₹642.
• Public sector Oil Marketing Companies (OMCs) absorbed losses of ₹74,781 crore to cushion consumers from price shocks.
• India's resilience stemmed from strategic relationships, diversified energy sources, long-term energy planning, and a whole-of-government approach.

Detailed Insights:

• Historically, India has faced macroeconomic instability from oil price surges, notably during the 1973 oil shock and the 1991 Balance of Payments crisis.
• India imports nearly 90% of its crude oil and is heavily dependent on the Gulf region for oil, gas, and fertilizers.
• The Strait of Hormuz was identified as a critical choke point, raising global anxiety during the crisis.
• India's crude basket price crossed $120 per barrel, and war-risk premiums escalated, indicating high vulnerability.
• Strategic relationships with Iran and Gulf partners ensured open communication channels and continued energy supplies.
• Diversification of India's energy supplier base to countries like Russia, the U.S., Africa, and Latin America provided crucial flexibility.
• Decades of energy planning included higher ethanol blending, expansion of renewable energy, larger Strategic Petroleum Reserves, and stronger refining capacity.
• A whole-of-government approach involved coordination among the Ministries of External Affairs, Petroleum and Natural Gas, Ports, Shipping and Waterways, the Indian Navy, and the National Security Council Secretariat.
• This coordinated response protected household budgets and kept fuel and cooking gas affordable, preventing widespread inflation and shortages.

Key Concepts Involved:

• Balance of Payments (BoP) Crisis: A severe deficit in a country's external transactions, making it difficult to pay for essential imports.
• Strategic Petroleum Reserves: Government-maintained stockpiles of crude oil to mitigate supply disruptions during emergencies.
• Ujjwala Yojana: A flagship scheme by the Indian government to provide LPG connections to women from Below Poverty Line (BPL) households.
• Whole-of-Government Approach: A collaborative strategy where multiple government departments and agencies work together to achieve a common policy goal.