Oil is a huge issue in India.
It accounts for around 90% of the countrys gross domestic product.
And the country’s population is growing faster than the economy, and is increasingly exposed to volatile and expensive energy prices.
Oil is also the largest single export market in the world.
But for many, the impact of rising prices is not just on the domestic producers.
India’s petroleum sector is now facing a significant slowdown, and the impact on its consumers is already becoming apparent.
The oil-rich country’s crude output has fallen by more than 30% in the past three years, to just 7.7 million barrels per day (bpd) in the second quarter of 2017.
Even before the downturn, India’s crude exports had declined by over 70% in five years.
It is also increasingly difficult for Indian producers to meet their financial commitments.
In the first quarter of 2019, the Indian Oil Corporation (IOC) reported that it had not received any funds from the government for production in the first half of 2019 due to the sharp decline in oil prices.
In fact, the country had received only around $2 billion in funding from the OPEC last year, a record low amount.
For its part, the government has been cutting back on subsidies for oil-dependent consumers.
In 2016, the central government had to borrow over $1 billion to finance its promised gas price increase, which had an effect on the price of gas.
In 2018, the average subsidy price for a family of four rose from Rs 2,400 to Rs 4,300, with the poorest households paying over $500 per month.
As a result, India now has one of the highest gas prices in the global market.
According to the Energy Information Administration of India, the price in the country rose from $1.15 per million British thermal units (MMBtu) in January 2018 to $1,099.50 per MMBtu in December 2017.
This is a staggering increase of more than 80% in a single year.
The government has also taken a number of measures to ensure that its consumers don’t suffer further price hikes.
“It is time for the government to reverse its decision to subsidise gas prices and return the subsidy to consumers, which has a direct impact on the poor and those living in rural areas,” said Rupam Ghosh, head of the Institute of Oil, Natural Gas and Petroleum (ING), a Delhi-based think-tank.
According to ING, the cost of gas has risen by over 300% in India since the early 1990s, with a rise of 2,300% in fuel cost.
Given the country has to import fuel at a significant cost, it is unlikely that the government will be able to raise the subsidy on petrol as much as it did before the oil price crisis.
While the government is trying to revive the economy with its oil subsidies, it will also need to find a way to address the impact that cheap and stagnant oil prices have on the Indian middle class.
One way to tackle the problem is to reduce the tax rates on oil-intensive industries like construction, construction and mining.
Currently, there are two tax rates for oil companies.
These rates range from zero to 28%, with the lowest rate being 15%.
The tax rate for industrial firms, on the other hand, is set at 25%.
According a report by the Tax Department of the State Bank of India in June 2017, the tax structure of the oil industry is among the worst in the developed world.
According the report, the current rate of tax paid by oil companies in India is equivalent to 17.3% of their gross revenues.
This means that an average oil company generates around $1 million per year in taxes, with an average tax rate of 27%.
For those earning a wage, the lowest tax rate in India has been around 20%, with a tax rate above 28% in some sectors.
But, even in industries that do not pay taxes, the overall tax rate is quite high.
Moreover, a significant number of the companies that are profitable in India are still in the private sector.
According a 2016 report by India’s Institute of Chartered Accountants (ICSAN), almost a third of the total value of Indian companies is held by just five companies, all of which are based in the oil and gas sector.
These five companies make up 70% of India’s oil and natural gas sector, which accounts for about 85% of total companies.