Source: The post India’s dependence on external oil suppliers has been created, based on the article “Ensuring energy security: India must explore both domestic reform and foreign outreach” published in “Business standard” on 8th February 2024.
UPSC Syllabus Topic: GS paper3- Infrastructure-Energy
News: The article explains that the International Energy Agency (IEA) predicts a rise in global oil demand by 2030. India will be the main driver of this demand. India’s dependence on external oil suppliers
What are The Major Findings of The International Energy Agency (IEA)?
The IEA projects global crude oil demand to grow up to the year 2030. India is projected to be the largest driver of this demand growth.
India’s oil consumption is expected to increase by almost 1.2 million barrels a day from 2023 to 2030.
This increase accounts for about one-third of the total global crude oil demand growth.
The total global increase in crude oil demand is expected to be about 3.2 million barrels a day over this period.
By 2030, India’s oil consumption is projected to reach 6.6 million barrels per day.
What are The Concerns for India’s Dependence on External Oil Suppliers?
Economic and Security Vulnerability: India’s reliance on external oil suppliers poses a significant risk to its economy and security. Fluctuations in global oil prices can severely affect India’s external accounts and fiscal situation.
Inflation and Slowed Growth: High oil prices can drive up inflation, slow economic growth, and lead to political unrest.
Geopolitical Tensions Affecting Supply Chains: Fossil fuel supply chains are vulnerable to geopolitical tensions, particularly in West Asia.
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What Should be Done?
Increase Domestic Oil Exploration: India should focus on discovering and exploiting domestic oil resources to reduce dependence on external suppliers.
Encourage Private Investment: The government should incentivize private sector investment in oil exploration within the country.
Expand Overseas Operations: Indian oil companies should be encouraged to operate in foreign countries to secure additional oil supply.
Support Renewable Energy: Accelerating the installation of solar and wind power capacity will help diversify India’s energy sources and reduce oil dependency.
Address Policy Issues: Policy efforts should prioritize moderating investor risk and maximizing long-term benefits over short-term revenue generation.
Financial and Diplomatic Support: India should provide financial and diplomatic support to secure its crude oil supply chain, both domestically and abroad.
Question for practice:
Examine the projected trends in global oil demand and India’s role as a driver of this demand growth, as outlined in the International Energy Agency’s findings.
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