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Essay / Petro Oil Case Study - 2152
Pricing of Petro products in India: Taxation (taxes) and social protection (subsidies) – Equity, efficiency and revenue considerations (May 2014)Manish Baghla, PhD student , TERI UniversityEconomic Effects of Oil Prices in IndiaThe importance of oil to the modern world is unique in its nature and its scope is far-reaching. It is a singularly autonomous variable in the global economy and is used for transport, heating and production, among other things. In India, petroleum products are used in agriculture, sugar mills, electricity production, mines and quarries, transport (road, maritime, rail). ), Manufacturing industries (civil, steel, metallurgical, textiles and fiber, cement, ceramics and glass, chemicals, aluminum, electronics, fertilizers, other consumer and industrial goods). The end use of various petroleum products in India is listed in Table 1. A sharp rise in oil prices can pose difficult economic challenges for oil-importing economies, as it can simultaneously slow down economic growth while fueling inflation . In net oil-importing countries, high and volatile oil prices impact many segments of the economy. As prices rise and fall, the cost of production also changes, which has far-reaching effects on the economy, fiscal and trade balances, businesses, and household living standards. Since the consumption of petroleum products constitutes a significant part of the economy, the availability and prices of petroleum therefore affect the production capacity, growth rate and level of inflation. Fluctuations in oil prices can therefore have important macroeconomic implications depending on the composition of the oil sector in the economy. Oil price volatility affects economies at both the macro and micro level. For an economy dependent on oil imports, the main direct macro-level effects last for about years. The government must therefore recover administrative resources. Another section of this paper discusses the past oil pricing systems and the measures implemented by the Indian government to reform the market in the Indian oil sector. Next, the Indian government and regulatory institutional structure with reference to the current pricing of petroleum products in relation to petroleum will be discussed. In this paper, the focus will be on oil pricing systems since 1998, when India began reforming the Indian oil sector, which coincided with a sharp increase in global value. price. In conclusion, suggestions will be made to develop the Indian petroleum market with future directions in pricing policy and taxation of petroleum products. Macroeconomic Impact of Oil Prices in India In an oil import economy, the impact of rising oil prices is ultimately borne by households, as explained. below through the table.