Page 31 - DECO201_MACRO_ECONOMICS_ENGLISH

Macro Economics

Notes

Case Study This Can Raise the National Income

ndia, with 16 per cent of the world population and just 0.5 per cent of known crude oil
and 0.6 per cent of natural gas reserves, is quite unfavourably placed as far as
Ihydrocarbon resources are concerned. Meeting the growing energy demand of a fast
developing India remains a challenge and will remain so in the near future as well.
Self sufficiency in crude oil, the most convenient fuel, has always been a dream and desire
of every nation as it proved itself as the foundations of prosperity. As far as achieving self
sufficiency in energy supply for India is concerned, it has two dimensions. First, finding
and producing new reserves of hydrocarbons (oil and gas), as well as maintaining
production levels from the existing fields; second, developing non-conventional and
alternate sources of energy in a sustainable and cost effective manner for reducing the
demand pressure on oil.
First tasks first. There is no other option than to intensify technology driven exploratory
efforts for locating new oil and gas reserves, wherever it is located. New plays will
require huge capital investment and an innovative set of technical solutions. In this regard,
the nation will have to be self sufficient in technology also; not only for the oil industry
but for the entire energy sector. The existing fields also require technology and capital
interventions to maintain production levels. For all these endeavours, financial strength
of the oil and gas companies will play a crucial role and the government will have to
support these companies with enabling regulations.
As far as the second task is concerned, there is a need to optimise production from various
available sources like conventional gas, unconventional gas (CBM, UCG, shale gas and
gas hydrate), coal, nuclear, hydro, etc. Natural gas production will go up in the near future
and so will the demand.

It is good for the nation, but the issue here is attractive pricing so that sufficient investment
can be made in the future to locate and develop new gas assets. Unconventional gas
sources have tremendous potential. However, technology is an issue for environmentally
sustainable and cost effective production. Similarly, coal, nuclear, and hydro also have
huge potential for supplementing the energy needs of the country and we need to harness
these sources with green solutions.
Besides these, renewal energy sources require focussed attention. Intensive R&D is required
to make renewal sources cost effective and consumer friendly. In totality, I perceive, a
linear linkage of all energy sources is a must for which we need to establish a synergy in
efforts and collective and collaborative intellectual pursuits. Thirdly, another significant
dimension of self sufficiency in energy is effective demand management.
Increasing the efficiency of transportation, residential, commercial, and industrial uses is
a must. We need to improve both supply-side and demand-side energy efficiencies to
improve India's energy intensity comparable to the international levels.
Self sufficiency in oil means an additional 105 million metric tonnes of crude oil production
capacity i.e., more than three times the present production level. It translates to saving
241,539 crore worth of imports i.e., 45 per cent of the balance of trade for the country
( 538,568 crore). This single miracle may help in increasing the net national product
(at factor cost and current price) by almost 13 per cent to more than 4,800,000 crore.
Question:
Do you think that national income can be raised and managed?
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