Economics Assignment

India is the world’s third largest consumer of oil. Oil demand could more than double in
the coming years because of strong industrial growth and increasing number of Indians
who will be able to afford to buy cars and motorcycles. As demand grows so will India’s
dependence on imports. India imports around 70% of its oil.

Discuss in detail the possible economic benefits for which India is importing oil which is
70% of its import bill. What are the benefits that India is getting?

Ans:
Economic growth is the increase in the total output of the country. It is the increase in the
production of economic goods and services over a while. According to the reports India’s
economy has to be declined by 5.7% in 2020 but will return to a 7% growth rate in 2021. The
main reason that affected the economy is COVID-19 Pandemic. As it is said that in coming
years India will be having strong industrial growth which means there will be an increase in
the output increasing GDP. When the output will be increased more workers will be needed,
therefore reducing unemployment and making a better standard of living. In addition to this
when output will be increased India will be able to make products that can be exported
from which they will generate higher revenues, boosting their economy.
Besides, If we talk about how India is the third-largest oil consumer or why India is importing
too much oil? India needs oil for all the industrial and domestic demands. Firstly the
population of India is increasing excessively, as the population will increase the need for
vehicles will be increased which means there will be more oil consumption by the
consumers and all the vehicles will demand petrol. The demand for petrol will be amplified
that India will need to import more oil and when they will be importing they will increase
the petrol prices in the country so they can generate tax revenue, again boosting their
economy resulting in a coverup of their import bills. Importing oil is important as it also
fulfills the needs of such as jet fuel, heating oil, and gasoline. In addition to this India has oil
refineries, so they can Import the oil and after refining it they can export it from which they
will generate higher revenues resulting in economic growth. The better the economic
growth will be the better it would be for consumers.