How the hike in petrol prices correlate to Modi Govt.’s Policies?

The main reason for the increasing dependency on the international market for petroleum is the treasonous policies of the Modi government. 


Not being able to defend and justify the rise in the petrol prices, Narendra Modi led government is resorting to holding Congress responsible for everything and is indulging in whataboutery. The government is taking refuge under several lies. 

The Prime Minister has spoken about this burning issue for the first time. A few days ago, on the historical day of petrol prices crossing one hundred rupees, he was in Tamil Nadu inaugurating petroleum policies. Modi reportedly said,  “though I do not want to criticise anyone, I must note that, had we given importance to producing oil in our country in the past, the middle class wouldn’t have been burdened like this today.” This is the regular whataboutery that the PM has been indulging in whenever his government has got no explanation for its mishaps. 

There are two meanings for what the Prime Minister said. One is, the main reason for the increasing price of fuel is the fact that we are not equipped to produce oil within the country. We are dependent on the import of oil, i.e the increasing prices of petroleum in the international market is affecting the prices here in the country. However since the regulatory power of the prices is within the power of the Government of India, one cannot hold the Modi government responsible for the increasing prices. The second is to blame the previous governments for our incapacity to produce our own oil and thus blaming the previous governments for the increasing prices. 

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Modi’s claim that his government is working towards promoting and increasing oil production within the country is far from the truth. These two possible meanings of Modi’s claim are not only lies but are ruthless tactics of politicising the problems of common people. It is cruel. 

Modi’s tax has increased more than the petrol price 

The first lie of the above two lies has been widely debated. The reason for the increase in the prices of petrol in India is not the increasing prices of petroleum products in the international market. The fact is that the price of petroleum in the international market has fallen from sixty dollars for a barrel (one hundred and sixty litres) to fifty-four dollars. Out of the hundred rupees being spent by the consumer on petrol and diesel, the actual cost of the fuel is just rupees thirty; Rupees thirty-two is the central government tax and rupees twenty-nine is the state government tax. Even in 2013 when the price for a barrel of petroleum was rupees seventy-five in the international market, the price of petrol and diesel had not crossed rupees seventy-five; and the reason for this is that the central government’s tax back then was less than rupees ten. 

Thus the reason for the “burden on the middle class” of paying more price for fuel is the heavy taxation by the central government and not the prices in the international market and importing. With this, we know that Modi is in competition with the most infamous liars in history. 

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However, what is not being discussed and debated is yet another lie that Narendra Modi is blatantly espousing.  

Why has the import of fuel increased during the Modi government?

According to a report published in January 2021 by Petroleum Pricing and Analysis Cell – PPAC, the Modi government was importing 85 per cent of petroleum in the year 2019-2020. Just like its predecessors the Modi government along with importing 61 per cent from Iraq, Saudi Arabia, Iran; 15 per cent from South Africa; 10 per cent from Latin America, it has started to import 10 per cent from America at a very huge price. The PPAC which is attached to the Ministry of Petroleum and Natural Gas, Government of India, in its report also shows that, in 2013, i.e during the UPA government, India imported only 78.3 per cent of petroleum. 

As this data of the Modi government itself explains, there is an increase in the importing of petroleum by 6.7 per cent compared to what it was during the previous governments. The current government is also purchasing petroleum at very high prices from other countries. 

However, it wouldn’t be surprising without “charismatic” Prime Minister has a tailored reply for this increase. He might argue that, since the country is developing consistently, the necessity of fuel has increased more than ever. Since we are ill-equipped to produce our own oil because of the failures of the Congress government over years, the government is being forced to import more petroleum. But, isn’t this what the current BJP government led by him is accusing the congress governments of doing in the past? Isn’t his government dressing down the previous government for not working towards making the country self-sufficient and giving importance to importing?  

Isn’t the Modi government in power for the last six years? What has this government done towards making the country petroleum self-sufficient? The question to be asked even before asking this is, how much has this government invested in the already existing policies started by the previous UPA governments to achieve self-sufficiency of petroleum? 

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Destruction of the government petroleum companies and auctioning of Indian petroleum in the international market 

The central government’s official economic policy advising body, NITI Ayog along with the International Energy Agency (IEA), 2020, published an in-depth research report regarding the petroleum policies of India.   

According to this report, there is an approximate deposit of 47.8 billion tons of petroleum in 26 oil fields in the country. Out of this 4.4 billion, tons of oil petroleum deposits have been definitely recognised. This can contribute to the fulfilment of the fuel needs of India for fourteen years. 96 per cent of these deposits are in Rajasthan, Gujarat and Assam ocean and landlocked oil fields.  The large public sector companies Oil and Natural Gas Company- ONGC and Oil India Limited- OIL which are under the control of the central government, in 2012 were producing 38 million tons of petroleum from these recognised fields.     

The quantity of this production dropped to 32.6 million tons in 2015 during this very Modi government. The “Atma Nirbhar” (self-sufficient) Modi government further reduced the production to 32 million tons. Production of oil in the country during the Modi government dropped by 21 per cent, compared to during the previous governments. In a similar fashion, the production of gas also dropped from 48 billion cubic meters in 2012 to 32 billion cubic metres. This shows that the dependency on other countries has increased by 33 per cent during the current Modi government. 

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Is this a Pakistani conspiracy or treason committed by the Modi government? 

Generally, in order to increase the production of petroleum, the petroleum companies invest one part of their profits in the exploration of petroleum deposits, as soon as it is found out that the recognised petroleum deposits are drying up. Up until the last decade, this was done by the public sector enterprises. However, including the previous UPA government, every government ever since 1991 privatised petroleum ore identification and production. The public sector companies that were incurring profits started being sidelined. 

Isn’t the Modi government the most patriotic government that the country has ever seen? Why didn’t this patriotic government invest in the exploration and production of petroleum by the very Indian public sector companies? Wasn’t this a way towards becoming, “Atma Nirbhar”? 

The Modi government has infamously invested far less in these public sector companies compared to the previous three to four governments. For example, the government invested 1.29 trillion in 2017-18 for deposit exploration and production. In the following year i.e. 2018-2019, the government invested just ninety thousand crores. This is a 36 per cent reduction in investment. It is because of this reduction in the investment, ONGC that produced 19.6 million metric tonnes of petroleum in 2018-2019 could produce only 19.2 million metric tonnes in 2019-2020. Production of petroleum by OIL, another public sector company, fell from 3.3 million metric tonnes in 2018-19 to 3.1 million metric tonnes in 2019-20. 

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Is international auctioning of swadeshi oil being “Atma Nirbhar”? 

The Modi government is privatising exploration of petroleum deposits, production and marketing. For example, 61 per cent of the deposits auctioned last year were handed over to private companies. Vedanta, British Petroleum (BP) and Reliance own major shares. The investment in petroleum and gas in the current budget has been abysmal. Every public sector company is being privatised. 

With the sole intention of attracting more national and international private companies, the government has brought into force a policy called Hydro-carbon Exploration Licensing Policy- HELP. According to this policy, private companies have an upper and direct hand in acquiring the best deposits. These companies are not compelled to share their profits with the government. They need not share their produce. The companies are granted complete Marketing and pricing freedom. 

The main reason for the increasing dependency on the international market for petroleum is the treasonous policies of the Modi government. 

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First published in Varata Bharati. Translated by Yogesh S.


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June 2024


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