As global crude prices soar by 70%, an expert notes India's retail fuel prices have only risen 5%. The main concern is the fiscal deficit, which could lead to inflation. Scaling up renewable energy is key to reducing oil import dependency.
With global crude oil prices rising from around USD 65-70 per barrel to over USD 110, an increase of nearly 70 per cent, concerns are growing globally over the impact on inflation, fuel prices and government finances. Against this backdrop, ANI spoke to Anish De, Global Head of Energy & Natural Resources at KPMG, on how India is managing the sharp rise in crude prices and its impact on consumers and the economy.
"There have been increases, but very small increases in comparison with the need. Retail prices of petrol and diesel have gone up by about 5 per cent, and that is a big difference," Anish told ANI.
Economic Impact and Fiscal Concerns
On the economic impact, he noted that while diesel prices may cause some effect, the immediate concern is the fiscal deficit, which could trigger inflation if not addressed. "The problem is that input prices have gone up by about 70 per cent due to global trends. While we can control the sale prices of petrol and diesel, other industrial fuels are less tightly regulated."
He also highlighted that ongoing geopolitical tensions, including the war in the Gulf region for the past 12 weeks, have contributed to increased crude and fertilizer costs.
Policy Measures and Price Control
Regarding policy measures, Anish emphasised the importance of balancing price control and fiscal prudence. "Price transmission is essential to signal demand reduction and ensure consumers and industries are protected," he said.
The Push for Renewable Energy
On renewable energy, he stated, "Renewable energy has a big advantage because it does not have the import price volatility like crude. Last year alone, India added more than 50 gigawatts of renewable capacity."
Role of Biofuels
He also highlighted the role of biofuels, particularly ethanol for petrol, while noting that biodiesel substitution for diesel requires further development. "Increasing renewable energy production rapidly will reduce the crude import bill and enhance energy security," he added.
Role of Artificial Intelligence
He also addressed the role of Artificial Intelligence in the sector. "AI can improve productivity, optimize renewable energy production, enhance fuel efficiency, and forecast consumption trends. However, effective price signaling remains crucial before AI can have a major impact on managing energy demand and anticipating oil shocks," Anish De stated.
Long-Term Outlook
He concluded by stating that while India remains heavily dependent on imported oil and gas, scaling up renewable energy over the next decade could gradually reduce this dependence, mitigating the impact of global oil price shocks. (ANI)
(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)