The Guyana Way: How Indian oil reserves could act as a big ticket for global investment
fastest-growing economy in the world? Not India. It is Guyana. The country's GDP is expected to grow 38% in 2023, after registering growth of 62% in 2022 and averaging over 30% in the two years before that.
Until a decade ago, the low-income country of 8 lakh people on the South American mainland was known mainly for sugar, rice, bauxite, and its cricketing prowess. West Indian batsmen Rohan Kanhai and Shivnarine Chanderpaul are among Guyana's most famous individuals. Now, it is famous for what IMF has called an 'unparalleled' oil sector expansion.
Guyana, 40% of whose population is of Indian origin, may hold some lessons for India, the fastest-growing major economy in the world.
Under Prime Minister Narendra Modi, India's economy has strong fundamentals. One of its few vulnerabilities is global oil prices. India's demand for oil is over 5 million barrels a day.
Its domestic production is 0.7 million barrels daily. Its import dependence has risen to over 85% and growing as domestic production has declined each year over the last decade. Almost 30% of India's import bill is on account of oil and associated products.
Unsurprisingly, when oil prices rise above a threshold of over $75 per barrel, it puts pressure on CAD, the value of the rupee, inflation and GoI's fiscal position.
Despite an impressive expansion of RE, the reality is that the demand for oil will continue to rise in India until at least 2045 when it will be over 11 million barrels per day, more than double the current level. This is the biggest rise among all major economies. On the flip side, forecasts of domestic production see it stagnating at around 0.8 million barrels per day.
