Oil Prices Continue to Bleed, Relief for Modi Government?

The oil prices continue to struggle, call it an over production by Saudi Arabia or OPEC’s recent prediction or Trump’s weird administrative policies (sanction to Iran for increasing oil prices) or economic slowdown or Russia’s intervention in Saudi Arabia oil based deals or a broad sell off in the global market, the oil prices are declining at a rapid rate. So, is there any relief round the corner? Well, let’s have a look.

Steps taken by Modi Government to control oil prices?

Duty Cut: In order to curb the political damage and lure the voters for 2019 election, the Modi government has asked the state oil companies to trim their margin by a rupee per litre and this has triggered  fear among the private players in the fuel retailing business.

Focus on alternative fuels– the government is laying emphasis on using biofuels as an alternative energy resource and as a substitute for the petroleum based products and has suggested oil producing countries to keep oil prices in control.

Meeting oil suppliers– The honorable PM Narendra Modi has urged the oil suppliers to review the payment terms in order to give temporary relief to the rupee, which has fallen down drastically in the recent months, thus amplifying the impact of oil prices on the consumers.

BP has got a license- BP has further got a license to operate petrol pumps in the country but it is yet to open a filling station which would be in association with Reliance Industries

Meeting with foreign ministers– In order to initiate the control over oil prices, the government of India has initiated discussions with the foreign ministers of Saudi Arabia to reduce the impact of rising oil demand and to encourage investment in India (for petro chemical business).

Government sell off– The government is planning to sell as many as 149 small and marginal oil and gas fields of ONGC to private players and foreign companies. In this way, the state owned firms will focus on the large fields only. This is done to increase efficiency.

So, is there any relief around the corner?

There are a couple of factors that the government is watching in order to curb the oil prices, but India’s fiscal deficit and CAD is on a rise. As per Bloomberg the country is expected to pay Rs 8.8 lakh crore against the crude import, which is sad news. But amid this, there is a good news is pouring in the FII come back to the Indian markets that mean with stringent measures and tough policies, definitely, the government will be able to control inflation.

महंगाई को Bye-Bye: The Modi Govt has once again shown its resolve in fighting inflation and keeping food prices affordable, with Retail Inflation coming down to a 13-month low at 3.31% while Index of Industrial Production grows at 4.5% in September. https://t.co/6fFTJ2xpSo pic.twitter.com/BqCJvq7nb4

— NarendraModi App (@NamoApp) November 13, 2018