India's Energy Security: How India's Crude-Oil Diversification Save It's Economy And The Economy Of Its Neighbours By Extending Low-Interest Loans?
India is not a crude oil and natural gas-producing nation. India must purchase these products from other countries, Because the distance between Middle Eastern nations and India is relatively short; therefore, India is heavily dependent on those nations for its energy security.
However, India has been able to navigate through the most formidable energy crisis the world has seen since the 1973 oil crisis. But, India failed to secure its energy security during the Gulf War, which caused oil prices to skyrocket, forcing the country to seek temporary assistance from the International Monetary Fund because India's Forex reserve touched its nadir.
Since then, India has implemented a four-pronged energy security strategy based on diversifying supplies, expanding exploration and production footprints, alternative energy sources, and energy transactions through a gas-based, green hydrogen-based economy.
India is verging towards exporting 25% of its energy to the world by 2040 and will also achieve 20% ethanol blending in petrol by 2025. Before that goal, in order to survive in this volatile world, India must import Russian oil to save its economy.
The reason behind India's purchase of Russian oil:
India is a developing nation, not a developed nation; therefore, energy is one of the most principal ingredients for India's economic growth. India requires cheap energy to propel its economy to new heights, which is why, in the midst of Europe's conflict, India approached Russia for cheap discounted crude.
Following the Ukraine crisis, per barrel crude reached an all-time high of $145 and is still on the higher side after taking a slide.
As a result, India could not afford such expensive crude at the time because its population's per capita income is only $2,256, whereas the average per capita income in Europe and North America is around $45,000.
At that time, Russia offered India a steep discount of 25-30% and India had no other choice but to accept it.
Prior to the Ukraine conflict, India's oil imports from Russia were less than 1% of India's total crude import bill, and India did not import Russian oil because the grade and quality of Russian oil differed significantly from that of other OPEC countries.
However, India has excellent oil refineries, which made Russian crude transportable to India, and India is constantly importing crude with its own energy security in mind, despite enormous pressure from western nations. Western countries attempted to isolate India from Russian oil, but the Indian government prioritized the Indian people over all other interests.
Last year spent $119 billion to import energy from the nations and it was 15% higher than the last year. Crude oil bills soar 76% to $90.3 billion last year.
High energy prices are a major global concern, especially for a country like India, which is aiming for the highest growth rate in this volatile timeframe.
How India saved other economies?
The import of Russian oil by India has saved the Indian economy from imminent collapse and internal chaos.
Almost all of India's neighbors are experiencing economic and political crises. Sri Lanka has already declared bankruptcy and defaulted, whereas Pakistan is on the verge of total economic collapse. Bangladesh has received IMF assistance in the form of a 4.5 billion dollar extended fund. Nepal is also seeking additional funds from the IMF.
India has played a critical role in rescuing the economies of Sri Lanka, Bangladesh, and Nepal. Who will save India if they are on the losing side? Who will protect the people of those countries? When no one was looking, India stepped in to assist these nations.
If India had to buy crude at market prices, its foreign exchange reserves would have been depleted in the first year of the conflict, forcing India to approach the world economic bodies.
These bodies are incapable of protecting small countries like Srilanka, Gambia, Pakistan, and Nepal, how can they possibly save a massive country like India?
By importing cheap Russian oil, India saves its reserves and its own economy, and this is how India became efficient and capable of saving the economies of small countries.
India is not only helping its neighbor, but India is also extending its helping hand to its extended neighbors in Africa, Asia, and Latin America.