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Petroleum Secretary Vivek Rae did some plain speak at Petrotech 2014. Stating that India faces a deep energy crisis, he said the country has not yet gone to the IMF but is pretty close to doing that. Two factors- NRI remittances and IT exports, buffered the increased demand for foreign exchange due to rising oil imports in the country, he said.

Also of help was the growth of unconventional energy sources in the US, which had prevented a sharp spike in the price of crude oil. But for this, the sharp rise in demand for foreign exchange in India would have seen the Rupee touch around 100 to the dollar, Rae said. He advocated allowing the oil market to function freely, saying that not doing so would result in unintended consequences.

The government will always be under pressure to intervene with subsidies, but there should be a belief in the market's ability to shape outcomes. Stating that subsidies have been a dark hole, he said free play of market forces is a process of creative destruction and should be allowed to run its course. There will be winners and losers in the process.

Source-On Request