By Anubha Gautam
Terror seized Iraq after ISIS butchered almost 1700 soldiers and tweeted the photos. The terrorist organizations have already captured many cities of Syria and Iraq. This bloodshed and blitzkrieg in Iraq is a danger signal for India for obvious reasons. Soon after the information of mass killings spread people started equating the massacre with problems in oil supply. After Saudi Arabia Iraq is the second largest oil producer of the world. India gets 13 % of its oil imports from Iraq which feeds 23% of India’s energy requirement. India is still heavily dependent on oil imports. India is the fourth largest consumer of oil and petroleum products after the United States, China, and Japan. It is also the fourth largest importer of oil and petroleum products. But there is some relief from finance ministry as they assured the people that there is no ‘substantial reason to worry’. Finance secretary Arvind Mayaram told the reporters, “We are watchful and cautious. We are hopeful that Iraq crisis will blow over. There is no reason to panic as far as India is concerned… I don’t see any immediate reason for panic,” as reported by IBN live. They are expecting the situation to blow over soon. Let’s do an analysis of the gravity of the situation.
A factor of relief for Indians is that the rebels are in north and North West region and the oil export hubs are in south and south west regions. If these things don’t work in our favor than India might have to buy oil from South America , Russia or Kazakhstan which will shoot up the purchase expenses which will eventually fall on the taxpayers. The government of India has started with its oil contingency plan which requires refiners to find alternatives. Raghuram Rajan, Governor, Reserve Bank of India is of the view that India is better prepared to deal with any fallout on the external front due to foreign exchange reserves. South America , UAE and Qatar should be able to compensate for oil supplies in case of contingency (that is if fighting spreads to the south) although as mentioned above the costs might shoot up but the RBI stated that India this year is better prepared to take care of the shot up expenses than the last year. The government has acted swiftly and with consideration of the masses in this matter as the oil minister has had series of meetings with bureaucrats and top executives of oil corporations. Even Essar oil has reported that there is no reason to worry.
The Iraq tragedy has created history but swift actions have been taken from the moment of its discovery. This is the first economic crisis since the arrival of the new PRIME MINISTER of India, M.R. Narendra Modi. The crisis arose quite early in accordance with the days of his swearing in of our new prime minister. This will be his first test to deliver the grand promises he made to India and won the elections. Narendra Modi has tried to mobilize the ministers and avoid this situation as the emerging into the first economic crisis of India in this new term. The Indian rupee managed to see a good phase finally and strengthened its position against dollar. Lets See if we can witness these good days a little longer without any bumps in the economy to destabilize it and cost higher living in India.
Whether this spells the flaring up of prices or it will be combated by the oil ministry is a question still to be answered.
Anubha is a 2nd year student of English Honors in Maitreyi College; DU. She is an enthusiastic writer, debater and feminist. Following the trends of market, economy society observing and analyzing them are one of her favorite occupations. She has been associated with writing and other ancillary fields since her childhood, obsessed with English and writing, she aims to become a successful writer in near future. In her free time she loves to play Sudoku and learn new things.