Impacts of Falling Crude Oil Prices and Reduction of Energy Subsidies on the Indian Economy: A CGE Modelling Approach

This study analyzes the impacts of international crude oil fluctuations and energy subsidy (on LPG, petrol and diesel) removals on Indian economy. We have applied computable general equilibrium (CGE) modelling as our relevant methodology, following Shoven and Whalley (J Econ Lit XXII: 1007–1051, 198...

Full description

Saved in:
Bibliographic Details
Published in:Vision (New Delhi, India) India), 2016-12, Vol.20 (4), p.345-360
Main Authors: Ganguly, Amrita, Das, Koushik
Format: Article
Language:English
Subjects:
Consumers
Consumption
Cost control
Crude oil
Crude oil prices
Economic growth
Economic models
Energy economics
Energy industry
Equilibrium
Expenditures
Experiments
Fossil fuels
Gasoline
GDP
Gross Domestic Product
LPG
Profits
Reimbursement
Subsidies
Taxes
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:This study analyzes the impacts of international crude oil fluctuations and energy subsidy (on LPG, petrol and diesel) removals on Indian economy. We have applied computable general equilibrium (CGE) modelling as our relevant methodology, following Shoven and Whalley (J Econ Lit XXII: 1007–1051, 1984) based on energy social accounting matrix (ESAM) of India for the year 2007–2008. It is seen that the international crude oil price fluctuations has a greater effect in determining gross domestic product (GDP) and exchange rate as compared to the effect of energy subsidy removal. With decrease in international crude oil price, GDP increases and exchange rate appreciates. On the other hand, with decrease in energy subsidy, GDP decreases and exchange rate appreciates. Moreover, with introduction of direct cash transfer scheme in lieu of subsidy for LPG, it is seen that the impact on demand of LPG (substitution effect) is negligible indicating that LPG is an essential commodity.
ISSN:0972-2629
2249-5304
DOI:10.1177/0972262916668741