Mumbai: Falling crude is a sign of endangered OPEC partnership in conflict. With Saudi and Russia the former, the highest exporter of crude followed by the latter, blowing production levels thinning the transactions in petrodollars amidst a heightened price war.
A scenario akin to crude oil prices are experiencing a downturn with Brent Crude oil prices at US$ 33/- and on NYMEX is around US$ 30/- scheduled for a further downward pitch .An ideal situation not only to garner fiscal strength but at the same time ideal time to cut down on inflation if numbers are taken seriously to matter the same.
This price war induced downturn calls for an acute reduction in the domestic crude prices by the oil companies who are now deregulated to commensurate with reduction in International price scenario, said Vijay G. Kalantri, President, All India Association of Industries (AIAI)
The New India needs to reform its crude oil policy as it has reformed in many other sectors bringing in the much- needed price elasticity between international and domestic prices. There needs to be an immediate reflection of International crude prices on the domestic prices. A rigid policy emerging from tight regulation of the crude oil import sector which has set enormous perils in the balance sheets of the Indian oil companies, are largely in a phase of divestment. The non-sensitivity of prices is a serious precursor culminating to a dent in pockets of the transporters increasing logistics cost and further adding to rise in commodity prices.
AIAI further says the prices have remained highly inelastic in spite of the deregulation with the oil companies imposing elasticity of price only when there is upward hike there is absolutely no quick respite whenever there is an evident reduction in oil price. Thus, there is no doubt oil prices in tune with international oil prices will lead to healthy fiscal numbers along with an inflation target transparent in its accord.
AIAI strongly feels that reduction in prices of Diesel, Petrol and Gas not only will boost funds in hands of consumer which shall boost consumer products and growth. But at the same time will bring down expenses in all the allied sectors connected with the oil economy most important reduction in transport cost.
There is need for the Government to monitor in interest of the consumer and to contain inflation. Although when the prices are deregulated, there is need for various oil companies to also fall in line with proper implementation of prevailing prices either way and not one-way traffic, Kalantri, further added.