India's Resilience During the West Asia Oil Crisis
Historically, India has been vulnerable to increases in oil prices, which have caused macroeconomic instability. Despite high dependence on oil imports, the recent crisis in the Strait of Hormuz demonstrated India's resilience in managing its energy needs.
India's Oil Import Dependency
- India is the world’s third-largest oil importer, importing nearly 90% of its crude oil.
- The country relies heavily on the Gulf for oil, gas, and fertilizers.
Energy Crisis Management
- During the crisis, India's crude basket prices surpassed $120 per barrel.
- Petrol prices in India rose by only 7.5%, compared to higher increases in other countries, such as 45% in the U.S. and almost 90% in Myanmar.
- Diesel prices surged only 8% in India, while the UAE saw an 85% increase.
Domestic LPG Pricing
- Despite importing 60% of its LPG, domestic cylinder prices in India remained affordable at ₹942, much lower than in several other countries.
- State-run Oil Marketing Companies (OMCs) bore ₹74,781 crore in losses to keep prices stable.
Factors Contributing to Resilience
- Strategic Relationships: Long-term engagements with Iran and Gulf partners maintained open communication channels.
- Diversification of Energy Suppliers: Partnerships with Russia, the U.S., Africa, and Latin America increased flexibility.
- Energy Planning: Initiatives like higher ethanol blending, renewable energy growth, and larger reserves enhanced resilience.
- Whole-of-Government Approach: Enhanced coordination among government entities ensured a national response.
The crisis highlighted the importance of strategic foresight and institutional coordination. India's ability to manage the situation is seen as a crucial step towards achieving 'Viksit Bharat'.
