Sur­plus cur­rent ac­count seen sans oil im­port: Re­port

The Political and Business Daily - - FRONT PAGE -

THE cur­rent ac­count of the coun­try would have turned sur­plus of 4.6 per cent of the GDP in FY14 with­out en­ergy im­ports, says a re­port.

"In FY14, the net en­ergy im­ports of the coun­try were 6.3 per cent of GDP. With­out en­ergy im­ports, it would have run a cur­rent ac­count sur­plus of 4.6 per cent of GDP (in­stead of the 1.7 per cent deficit)," Gold­man Sachs said in a re­port.

The cur­rent ac­count deficit nar­rowed to 1.7 per cent of GDP, or $32.4 bil­lion, in FY14 from a record high of 4.7 per cent or $87.8 bil­lion in FY13.

The re­port fore­casts the rise in coun­try's net en­ergy im­ports to $230 bil­lion by FY23 from $120 bil­lion in FY14, as the on­go­ing Iraqi cri­sis has jacked crude prices by over 6 per cent al­ready.

"From 2017 on­wards, we ex­pect the coun­try to en­ter a more en­ergy-in­ten­sive phase of growth, driven by greater in­dus­tri­al­i­sa­tion, elec­tri­fi­ca­tion and ur­ban­i­sa­tion; and we think its de­mand for en­ergy will in­crease more rapidly than in the pre­vi­ous decade," the re­port said. The re­port, how­ever, said that even with a large en­ergy elas­tic­ity of de­mand, en­ergy im­ports as a share of GDP may have peaked al­ready.

"Our projections show the share of en­ergy im­ports de­clin­ing very grad­u­ally to 4.9 per cent of GDP from 6.3 per cent of GDP cur­rently. This is de­spite our en­ergy de­mand

projections be­ing higher than other agencies," it said.

The re­port fur­ther said the pri­mary driver of drop in en­ergy im­ports could be on ac­count Oil com­prises 80 per cent of en­ergy im­ports and stag­nant oil prices have a large im­pact on the en­ergy bill.

The re­port said the coun­try's do­mes­tic sup­ply of en­ergy can in­crease only grad­u­ally, keep­ing in view en­vi­ron­men­tal con­straints and the avail­abil­ity of nat­u­ral re­sources.

The coun­try's proven oil and gas re­serves are small.

In oil, it has only 0.3 per cent of global re­serves com­pared to a con­sump­tion share of 4.2 per cent while in gas, it has 0.7 per cent of re­serves com­pared to a con­sump­tion share of 1.6 per cent. The re­port said that since the world is switch­ing to gas, the coun­try also needs to make that shift.

"Our es­ti­mates show that if In­dia were to in­crease its share of gas from 9 per cent cur­rently to 16 per cent by FY23, it could save $8 bil­lion an­nu­ally by FY23," the re­port said.

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