NEW DELHI: India’s economic growth could slow down by 2% and inflation will jump to as high as 15% if the gulf war prolongs.
Destruction of oil wells in west Asia could see a sudden spurt in prices with disastrous implications for the country the Tata energy research institute (TERI) has warned.
TERI blamed the government for its short sightedness in not being adequately prepared like other countries to face the resultant energy crisis form the three successive oil shocks in 1973 1979 and 1990.
The Gulf war was makes existing oil market problem more acute. While the initial euphoria of the success of multinational forces resulted in an unprecedented decrease in oil prices a prolonged conflict is likely to drive these prices sharply upwards TERI said in a background paper on the gulf war and India’s energy problem released to the press Jan 24th by its director Dr R K Pachauni.
Dr Pachauri briefed reporters about the implications of gulf war for India’s energy scenario and impact on the economy.
Destruction of oil wells in the gulf region would make matters worse. It would not be inconceivable to see oil prices go as high as 55 to 60 US dollars a barrel in a sudden spurt. The implications for India of such a sharp increase could be disastrous Dr Pachouri said.
Given the fact that India has stocks lasting about 45 days and supplies in the pipeline might give a little more borrowed time purchase in the oil market at a stage when prices may be in excess of 35 to 40 US dollars per barrel would be unsustainable he said.
The government would then have to resort to rationing and physical limitation of supplies of petroleum products for a number of end uses he said.
It is critical therefore from India’s view point to see cessation of hostilities in the gulf as early as possible he said adding however an outcome which perhaps appears beyond anyone’s control at present. The paper said coupled with a burgeoning budget deficit and dwindling foreign exchange reserves growth in the Indian economy could drop by about 1.5 to 2% in the coming year and the inflation could raise to 15% in coming months.
Energy conservation and reduction in the use of oil products is therefore the critical need of the hour the paper said.
The current crisis the paper said only reflected the government’s failure in not having adopted clear long term energy strategy as was done by several other countries and societies in the wake of the first and second oil price shocks short and medium term measures can help the nation tide over the current crisis but it is only through rational formulation of a long term energy strategy and its implementation that India’s energy problems could be tackled successfully the paper said.
BHOPAL: A senior Congress (I) leader Vasant Sathe said a national government was the historical need of the hour as it alone could exercise the hard options needed to take the country out of its present severe economic mess
Addressing a meet the press programme in this capital city of Madhya Pradesh state Sathe said the nation’s economic situation was so bad that it was imperative for all political parties to come together just as they would work unitedly in the face of an external threat.
The present federal government cannot choose hard options as it does not have the required support he said adding Chandra Shekhar may have a clear vision and sincerity of purpose but even with the best of intentions he cannot hope to achieve much.
Minority Chandra Shekhar government is surviving with the support of Rajiv Gandhi’s Congress-I.
Article extracted from this publication >> February 1, 1991
