>

India: Economy and Energy Production Both Decline

April 2nd, 2013
in econ_news, syndication

Econintersect:  India is caught in the vice of high inflation and slowing growth.  Now an added burden on the struggling sub-continent economy is declining oil and gas production.  Natural gas production in February 2013 was 20% lower than a year ago.  The government had a target of 3.19 billion cubic meters; production came in at 2.88 billion cubic meters (9.7% shortfall).   A similar decline and shortfall for crude oil production was also reported.  India imports about 80% of its crude oil requirements.

Click on picture for full field view of oil well at Rajasthan Block at About Oil.com.

oil-Rajasthan-Block-India

Follow up:

India has been importing significant oil from Iran because of an exemption it has (along with China) from the UN sanctions against the Tehran government.  But there are still problems associated with those sanctions which may curtail Indian importation.  From About Oil.com:

On the imports side, the country could end its crude oil imports from Iran due to Western sanctions that could make it impossible for refineries to obtain insurance, as reported by Reuters. "If cover is not available then all Indian refiners will have to halt imports from Iran or else they will have to take a huge risk", P.P. Upadhya, managing director of Mangalore Refinery & Petrochemical, told Reuters.

The falling domestic energy production is contributing to a record current account deficit for India.  The negative balance of trade has pushed the current account deficit to 6.7% of GDP.  The current account deficit has grown by 60% year-over-year for 4Q 2012, most of that occurring from Q3 to Q4.  This continues to put pressure on the value of the rupee, which has fallen 25% against the U.S. dollar since late 2011.

rupee-dollar-since-1992

The recent decline in real GDP growth for India is shown in the following graph from Trading Economics.  The growth rates are percent annual rates.

India-GDP-Growth-trading-economics

While all this is going on inflation in India remains stubbornly high at 6.84% year-over-year for the latest CPI (Consumer Price Index), February 2013.

Sources:









Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.















Proud contributor to:


Finance Blogs
blog

Econintersect Website Search:

Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2015 Econintersect LLC - all rights reserved