W
orld oil and gas prices began collapsing shortly
after devout Hindu leader Narendra Modi
swept to power in last May’s general election
to become India’s 15
th
Prime Minister. Brent
crude prices plunged from more than US$110/bbl in June 2014
to a low of US$50 seven months later while LNG crashed from
around US$16 per million BTU to less than US$10 over the same
period.
For India’s deeply religious population, the unexpected
blessing of cheaper oil following Modi’s election was an act
of divine intervention to save the economy from further
destruction by his predecessor. Like many others, Manmohan
Singh’s government was unfortunate to be dealt the crushing
economic fall-out of high crude prices holding above
US$100/bbl from 2010 to early 2014.
Modi’s Bharatiya Janata Party (BJP)-led government has
seized the windfall provided by the oil price collapse to try to
overhaul India’s vital but inefficient coal industry, reduce the
country’s crippling fuel subsidies, accelerate the development
of much-needed infrastructure and open up the economy to
foreign investment.
Elected on the platform to revive the economy, the
new government has been able to claim credit for the sharp
turnaround in India’s fortune and business confidence after
years of misrule by the previous Indian Congress Party-led
regime. Riding largely on cheaper energy, India has emerged
as the world’s fastest growing major economy, outpacing
even China’s for the first time this century, according to the
International Monetary Fund (IMF). The Indian economy is
expected to grow by 7.5% this and next year, compared with
China’s average 7% rate.
Praising the new government in a March speech in New
Delhi, IMF Managing Director Christine Lagarde made an even
bolder forecast that by 2019, the Indian economy will exceed
the combined size of Japan’s and Germany’s to become the
world’s third largest after the US and China.
Amid the continued uncertain outlook in the global
economy, she called India a ‘bright spot’ as policy reforms
and improved business confidence has put its US$2 trillion
economy on course to double in size from 2009 - 2019.
The World Bank is forecasting a 12% increase in foreign
direct investment into India between 2016 and 2018 that will
help capital inflows rise from 1.9 - 3.4% of GDP.
The praise is well-earned as Modi, the son of a street
merchant, came to office with a solid track record as Chief
Minister of one of India’s most business-friendly and
fastest growing states from 2001 - 2014. In
encouraging the growth of oil refining,
petrochemicals production,
manufacturing and
shipping trade,
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