The presidential election has given him a new lease of life and prompted Congress President Sonia Gandhi to announce that he will remain India’s prime minister until the next general election, due in 2014. He has also been handed back control of the Finance Ministry as outgoing Finance Minister Pranab Mukherjee competes for the presidency next month.
But Manmohan Singh also has another reason to smile: international oil prices have been falling in recent months.
Had oil prices continued their recent upward trend even as the rupee reached a record low of 57 to the dollar, it would have created a nightmarish scenario for any government in New Delhi. The good news for the ruling United Progressive Alliance, though, is that international oil prices are falling, and on a downward trend that’s generally likely to continue.Enjoying this article? Click here to subscribe for full access. Just $5 a month.
Indeed, energy analysts have predicted that the global benchmark Brent crude, which is currently hovering around $ 94 per barrel, may tumble as low as $40.
This is a welcome respite for India, which is currently struggling with an economic slowdown. It has also allowed the government to announce a cut in petrol prices of 2.46 rupees (4 cents) per liter.
Moves by Saudi Arabia have proven especially important in bringing about lower oil prices, a point captured well in a recent article in Foreign Policy:
“The Saudis are out for blood when it comes to fellow petro-states Russia and Iran, the former for failing to help calm the fury in Syria, and the latter for refusing to go to heel and give up its nuclear ambitions; in both cases, the Saudis think lower prices will produce a more reasonable attitude. In addition, Saudi Arabia is terrified of a current U.S. boom in shale oil; it is hoping that lower prices will render much of the drilling in North Dakota's Bakken Shale and Canada's oil sands uneconomical. Finally, the Saudis are well aware that low oil prices helped to turn around the global economic downturn in 1998 and 1999, and they hope to help accomplish the same now, and perhaps win new affection from the world's leading economies.”
Oil prices had seemed on an upward path with the conflict in Libya last year. But India’s policy makers won’t have been the only ones to be grateful that prices seem on a downward slope now.