In this video, OneIndia's Pankaj Mishra interviews Ravi Srivastava, Former Chief Manager at HPCL, to discuss the geopolitical significance of global oil prices. The conversation dives into India’s diplomatic strategies with Russia to stabilize oil imports amidst international crises and how these efforts impact inflation. Srivastava provides insights into the oil sector, fuel subsidies, and the Modi government's focus on maintaining price stability while balancing economic challenges.
#OilPrices #IndiaRussiaRelations #FuelSubsidies #GlobalEnergyCrisis, #PM Modi
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#OilPrices #IndiaRussiaRelations #FuelSubsidies #GlobalEnergyCrisis, #PM Modi
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00:00Hello and welcome to this yet another brand new episode on One India, where we discuss
00:05how the possible steps and the futuristic measures taken by the Narendra Modi government
00:12is shaping the days to come, the years to come. One crucial aspect is that of the Russia-Ukraine
00:20war and how Russia very recently and now Italy has said that it's India which can play the
00:28piece next role and it's Prime Minister Modi who speaks freely with all the three of them,
00:34Russia, Ukraine and the United States. One key aspect as I mentioned is oil which India has been
00:40a recipient from the Russian side and Uriya obviously again a recipient from both Ukraine
00:48and Russia. How has India managed this and what is the price that India is paying for it? To
00:52discuss that further we are joined by Ravi Srivastava, former chief manager of HPCL,
00:58also known as Hindustan Petroleum Corporation Limited. Ravi sir, thank you so much for
01:02taking time out on a Sunday morning for us. Thank you, Pankaj ji. You have rightly said
01:13the oil and Uriya where majority of the subsidies were going from the pocket of the government.
01:20The fact remains is since 2001 when the APM, administered price mechanism, was added to the
01:26fuel price, the subsidies have drastically come down. At present, the subsidy is only to some
01:36extent on LPG and to some extent on kerosene. As far as diesel and the petrol prices are concerned,
01:43they are totally deregulated and the government has got no say. It says so that they've got no say
01:51but the fact is instead of administered price mechanism, now it has become MDPM,
01:57they call it market determined price mechanism, I call it minister determined price mechanism.
02:03So it is decided, everything is decided in the Shastri Bhavan only that who will charge what
02:09price etc. etc. The prices were deregulated officially but the fact is that the prices are
02:18still determined by the government only and the objective is that the private players
02:24should not exploit the consumer and the prices remain under check. We have got a private player
02:31there. Earlier there was SR, now Reliance is still there into existence who are a private player
02:38selling it. Nehara Energy is there, SR converted to Nehara Energy, so they are also in the market.
02:44So these are certain things I was talking about excise duty. The excise duty, a huge amount of
02:51excise duty is recovered by the government which was, first while government was taking some
02:579 rupees a litre on petrol, now this government recovers 32 rupees a litre on petrol and a huge
03:04duty on diesel as well, which makes the price, the pump price very high. We all pay approximately,
03:13most of the cities the petrol is 100 rupees plus and the diesel also is some 90 rupees plus
03:19everywhere barring your Delhi where you get slightly cheaper fuel. So the fact is that this
03:26money was recovered and the government said that they are going to utilize this money for
03:31infrastructure development, the government schemes, all those things they have happened.
03:36But as rightly mentioned, there has not been much of the job creation which is India's
03:44biggest problem, I would say as of now, where the graduates, post graduates applying for the post
03:50of a sweeper and all that. Now let us come down to the international scenario. You may recall
03:56India's, when Shri Modi took over, India's dependence on foreign crude oil was approximately
04:0482 percent and we were producing our own by OIL and ONGC, approximately 18 percent
04:13of the crude was produced by us. As far as LPG is concerned, it was a 50-50 and we were importing
04:20lot of LPG since then and we are selling it here. Now as far as the dependence is concerned,
04:28the worst part is that today we are dependent to the extent of 88 percent on the foreign
04:36and a huge amount of foreign exchange goes out for buying the crude oil from foreign countries.
04:43The silver lining is that I would say that the came to the advantage of India,
04:50the Russia-Canadian war, Russia is supplying lot of crude oil to India and that is relatively
04:57cheaper if India buys from US, Venezuela or Middle East. So that comes relatively at a lower price
05:06and therefore, we were able to save some of the foreign currency as well.
05:12Here the issue is Modi ji went to Ukraine, Modi ji went to US also and he has been bargaining
05:19with those countries to accept the payment of crude oil in rupee terms, which those countries
05:26have unfortunately not agreed to. So still the settlement is in ruble or in dollar with the
05:33country, Russia, which is supplying the crude to us. Now as far as India's position is concerned,
05:42the government has been making a good effort to shift from motor fuel, petrofuels to the alternate
05:49sources of energy, may it be thermal, may it be atomic, may it be windmill, may it be solar,
05:55they are making a big effort in that direction and which has yielded result also. So India's
06:03dependence upon the petrofuels has been almost, I would not call it stagnant, but it is going at a
06:12very low pace. I mean, the rise is very limited and sometimes you will find the petrol diesel sales
06:18are even lower than the previous year in some cases, sometimes it goes up, these are all seasonal
06:23factors and the rising production of the automobiles is also a contributor to this
06:30aspect of motor fuel consumption going up. Otherwise, you will find that the electric
06:36vehicles are being given a lot of incentives and a lot of electric vehicles are also being
06:42sold in the country. The buses which were a big consumer are being changed to the electric and
06:50many, you would recall even that a lot of diesel locomotives which were consuming a fairly good
06:56amount of diesel, now those are running on electric. Problem with the government on this
07:03part is, despite the crude oil prices lowering down, it has now come down to below $70 a barrel
07:11now, you have seen yesterday, day before. The government is still continuing to cover a huge
07:17amount of excise duty on motor fuels, which is just not right thing to do, because the consumption
07:26of the diesel contributes a lot to the overall economic prosperity of the nation. You take it
07:34logistics, you take it motor fuels, you take it gen sets, where all diesel is consumed, the high
07:42prices are a detriment. And there has been a very strong voices coming out from the opposition
07:50to bring down the prices of motor fuel, like petrol and the diesel. And then in the last few
07:55days of the week, I have heard that the government is giving a now serious thought to it to bring
08:00down the prices of motor fuels, petrol and the diesel. So if that happens, I think it will be
08:06positive for the industry and the people at large. Yeah. Right. Mr. Srivastava, also talking about
08:15how Prime Minister Modi's diplomacy has helped in order to bring economy or at least keep the
08:22economy on track, as far as the procurement of oil from Russia was concerned. In your opinion,
08:28do you think that this is a victory for Modi's diplomacy? And in times of war, when everything
08:35is going sky high, Prime Minister Modi has managed to at least give those subsidies on
08:42oil or other products and keep the prices under check, no matter it is becoming costly in the
08:48global market? Pankaj ji, I would definitely put a good word as far as Mr. Modi's diplomacy is
08:55concerned. He has been talking to USSR, he has been visiting over there, he has been having a
09:01direct interaction with them. And as far as the foreign minister is concerned, he has also been
09:06talking to them. So I think the government has done a reasonably good job, as far as the import
09:13of crude oil from Russia is concerned. And I think during this situation, if this continues,
09:22India will be definitely benefited. The best part would have been had they accepted the
09:27payment of the crude oil in the rupee terms instead of ruble or dollar. I think that would
09:33have been a real big benefit for India. But this is all, Pankaj ji, with diplomacy is such a thing
09:43that you make the good relations with one person, the other person naturally gets annoyed.
09:50Your dependence on Russia is not seen very favorably, as far as the American bloc is
09:57concerned, or the Middle East is concerned. So these things have got their own price.
10:02But what Mr. Modi has done, has done in the interest of his nation, his country, to get a
10:08cheaper crude oil and benefit the citizens at large. Now, my only request is that these prices,
10:18the retail prices, which are the big deterrent for the people must be brought down, so that
10:24the inflation also gets controlled. Because this diesel transportation for logistics, for
10:32gensets, for the tractors, all these things contribute to the rising inflation as well.
10:38So this should be brought under control.
10:42Definitely. Mr. Srivastava, we have seen that many smaller economies or mid-sized economies
10:48have been hit hard as far as their dependence on the Russian and the Ukrainian supply was
10:54concerned. The global supply chain was also hit because of this war. India has been
11:01putting the money in a way which was meant for other welfare activities, social welfare
11:08activities, developmental work, to this side of oil procurement. Although there are subsidies,
11:16definitely the prices have been kept under check even after the war started. Do you think that
11:24we can cut the Modi government some slack if it is found wanting, say if a bridge is not completed,
11:32say if there has been a lack of developmental work? Do you think that the monetary aspect
11:39stops you from doing these works? It happens sometimes. Because artificially,
11:45if you try to control the prices by bringing down the excise duty or by controlling those
11:51taxes, it's not a good thing to stabilize the economy. Right now, India's economy is on a very
12:00sound footing. You can say your foreign reserve is rising, you are the fifth biggest economy in
12:07the world. But of course, your per capita is on 129th on the world map. But then these are the
12:16things which ultimately bring prosperity to the people of the nation. So the government must see
12:23to it that their balance is exercised. It does not happen that the by bringing down the prices,
12:30the economy goes out of hand or prices of the other commodities shoot up or the infrastructure
12:37development, lot of infrastructure development has taken place in last 10 years, lot of highways
12:42have been built up, lot of bridges and structures and institutions, the work has been done.
12:50So for that, if the money is needed, some people must sacrifice some of their
12:58what you call comforts. So I think they are in the right direction, they are working it.
13:05But yes, I would definitely as a oil person, I will definitely appeal to the government
13:11that the retail prices should be checked so that you know, people life becomes comfortable.
13:19That's the need of the hour. One final question, Mr. Srivastava, before I let you go,
13:24it's a bigger scenario here. You spoke about inflation. Do you think that inflation is
13:30directly linked to the oil price hikes and how the Modi government has had to prioritize fuel
13:37subsidies? Do you think that was something that remains to be checked?
13:42As far as subsidies are concerned, this government has done a reasonably good job.
13:46I would say from the very beginning, since they came into power, I think they have done a good
13:52job and they have brought down the subsidies to a very great extent. Subsidies are inevitable.
13:58Subsidies have to be there, because you cannot leave the consumer to the brutal market forces.
14:06Somewhere you have to chip in some amount of relief in the form of subsidies so that it
14:14stays, you know, the social fabric of the nation is also not damaged. I recall that this
14:24kerosene used to sell at a very low price by purposefully giving a lot of subsidies on it,
14:33which have now been taken off to a great extent and the prices are stabilized. As far as LPG also,
14:39you have seen that the prices have now, the market prices of selling cylinder for 800 rupees or so,
14:47I think it has brought down some kind of a relief. So the government should exercise the balance so
14:53that, you know, the things do not go out of hand and the private players are not able to
14:59exploit the consumers by raising the prices. Right. Mr. Ravish Rao, thank you so much for
15:06speaking to us, for enlightening us and also telling us how this whole system for the fuel
15:13procurement, the price and the energy sector functioning, how it happens. Thank you so much
15:19for speaking to us. Thank you very much. Thank you, Pankaj. Thank you.