India Anxiously Awaits Opec Decision On Output Cut

India is keeping its fingers crossed over the continuing decline in the international prices of crude oil. The celebrations, though, will have to await the results of the November 14 meeting of the Organisation of Petroleum Exporting Countries (Opec) convened to decide on a production cut to prop up the sagging prices.

While the prices have now come down to a mere $19.75 a barrel from the high of $31 a barrel on September 12, a day after the terrorist attacks in the US, officials are apprehensive that the situation may not last long. The forthcoming meeting of Opec members holds the key to the oil prices during winters when, traditionally, they tend to move up because of the increased demand from the West.

There is no denying the fact that the price relief, howsoever temporary, has come at the most opportune moment for India which is in the final year of transition to a decontrolled oil economy. As the oil pool deficit, which was hovering around Rs 13,500 crore around September 11, will have to be absorbed by the general budget after the dismantling of administered pricing mechanism (APM) on March 31, 2002, any reduction in it is a welcome development for the finance ministry.

The Oil Coordination Committee (OCC) has calculated that every $1-a-barrel change in the international prices of crude oil translates into a change of Rs 200 crore in the oil pool deficit on a monthly basis.

Therefore, a drop of $8 a barrel in the prices of crude oil in the last two months would have reduced the oil pool deficit substantially.

In case, the international prices of crude continue to rule at the current level, India