RBI sees need for ‘oil-proofing’ economy amid global shocks

The Reserve Bank of India has in a new report underlined the need to achieve energy security amid the global uncertainties impacting oil supplies and prices.

“The need for oil-proofing the Indian economy – its financial and real sectors, from shocks or adverse geopolitical events cannot be overstated. This also points to the need for a policy for promoting energy security and sustainability…It would also be prudent on the part of regulators to be vigilant of the potential contagion from global crude oil price movements given their wider implications for systemic financial stability,” the report said.

Meanwhile, insiders said that India has already aggressively started looking at ways which could boost energy security by enhancing use of alternative fuels. The country’s domestic demand for fuel has seen a steady jump of 3 per cent, which is higher than the global average of around just 1 per cent. Currently India, which consumes five million barrels of petroleum daily, imports about 85 per cent of its total crude requirements.

Petroleum Minister Hardeep Singh Puri has said that measures are afloat to facilitate switching to gas and hydrogen. The minister said that India was able to navigate through the most formidable energy crisis the world has seen since the 1973 oil crisis due to its four-pronged energy security strategy — diversification of energy supplies, increasing exploration and production footprint, using alternate energy sources, and meeting energy transition through the gas-based economy, green hydrogen and EVs.

The Narendra Modi government has laid the emphasis on increasing production of ethanol from various items such as sugar molasses, sugarcane and other materials which have sugar content. India has already reached the set target of blending 10 per cent ethanol with petrol. The target is to touch 20 per cent blending by 2025. It was only 1.53 per cent in 2013-14.

The increased use of ethanol will boost India’s renewable energy segment while leading to a huge saving of foreign exchange.

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