Thread by @ikkmurugan

Fuel Prices: Forgotten Legacy

Let’s see how India has progressed in Oil consumption, Production & Refining capacity

Consumption in Barrels per day
🛢2009 : 32.9 Lakh
🛢2013 : 37.8 Lakh
🛢2019 : 52.7 Lakh

15% growth during UPA2 against 39% growth During NDA1+1.

Oil Production in Barrels per day

🛢2009 : 8.4 Lakh
🛢2013 : 9.3 Lakh
🛢2019 : 8.3 Lakh

Refining Throughput in Barrels per day

🛢2009 : 36.4 Lakh
🛢2013 : 44.6 Lakh
🛢2019 : 51.9 Lakh

In 2019 Oil production levels have decreased below 2009 levels due Depletion of reserves.

While the consumption has increased more than twice the quantity in 10 years, the indigenous production has reduced after reaching its peak in 2011.

This has compelled India to import more than 80% of its oil needs in 2019. Where as the imports was less than 75% in 2013.

While Production & Consumption is a primary component to derive the pricing of a commodity, in Crude oil the exchange prices play a vital role & this is often forgotten or neglected (purposefully).

Below is the crude oil prices from 1984 to 2019.

India’s Crude Imports (in the exchange prices of that respective year)

2009-10 : ₹4,19,659 Crores
2013-14 : ₹9,92,787 Crores
2019-20 : ₹9,86,275 Crores

2012-13 : ₹8,94,746 Crores and the petrol price was ₹78.57 and it dropped to ₹71.13 despite increase in imports.

This was the outcome of protests taken up by BJP during this period and congress dipped the price as the election was approaching.

Compare 2012 and 2019 price, there was an increase of just ₹2 in a period of 7 years.

Note; Fuel prices referred is Mumbai’s retail price.

It is not after BJP took over that the Oil prices started dipping; in 2011 the oil prices took a dip.

Instead of reducing the fuel prices, the congress government increased the prices till 2013-14.

The reason behind not dipping the price is coz the economist PM & the great FM wanted to use this opportunity to extract as much money possible from the public to pay back interests to Oil manufacturing companies.

You might now understand the protests by BJP back then.

India Crude imports at Constant Prices

2012-13: ₹7,84,652 Crores
2018-19: ₹7,83,183 Crores

2012: Highest Petrol price was ₹77.88
2018: Lowest Petrol price was ₹73.57

BJP protested against such legacies of Congress.

Congress’s legacy is not just NPA. Piled up External debt repayments brushed under the carpet is evident in the principal repayments ever since BJP took over.

Our external debt degrew by 2.7% in the year 2017.

Between 2014 & 2017, the current government repaid more than $90 Billion (Approx ₹5.4 Lakh Crores) in principal repayments.

It does not end here. Oil Bonds - UPA had petrol subsidy till 2010 and diesel subsidy till 2014.

The Subsidy repayments to OMC was restructured at an interest. The previous government paid a little and left the current Govt to pay those interest and principal payments.

The current Govt has paid more than ₹70,000 Crores in interest and ₹3500 Crores in principal.

Oil bonds principal repayment dues to Oil Manufacturing companies

2021 : ₹10,000 Crores
2023: ₹26,150 Crores
2024: ₹35,306 Crores

I see it is difficult for congress to appreciate BJP for clearing their legacies, but they can atleast keep mum. Not sure if DMK knows these.

The present excise duty hike is to cover the revenue deficit so as to ensure that the flow of expenditure is not interrupted to critical welfare programmes.

Taking Tamil Nadu as an example.

Grants Issued by Centre

UPA 2 : ₹35,261 Crores

NDA 1 : ₹95,734 Crores

For a common man it is difficult to come to terms with this hike, but it is important to understand that if loans have to repaid & with no cuts in welfare schemes, it is important for the government to generate that money.

You have to search where you’ve lost it.

In 2010 under DMK regime, the TN state government VAT on fuel was 30%.

When fuel price was ₹68, The VAT component in that was ₹13.40; ADMK reduced the VAT to 27% after DMK was voted out of power.

DMK men, Why are you shedding crocodile tears now?