Indian oil imports from Venezuela have reached the lowest amount yet in about 5 years between November 2017 and February 2018, with only 300,000 barrels of imported oil purchased ,which is a 20 percent fall.
India is concerned about the low production of oil in Venezuela. One of the main reasons for that India has identified is that Venezuela is not utilizing its reserves, which are the largest in the world, properly. On top of that, poor maintenance of national oil facilities have been shown and the nationalized oil company, Petroleos De Venezuela (PDVSA) has not been paying its subsidiaries which include firms like Citgo and PDVAL. As the companies were not given any money, they started to produce very little. Oil prices started to plummet rapidly. Since then, Venezuela’s Gross domestic product (GDP) had been falling at abnormal rates.
India’s concern towards this issue is because it poses a potential threat to the trade relationships between India and Venezuela, which were strengthened due to India becoming Asia’s largest importer of oil (before it was China)from Venezuela and also due to the bilateral meetings held during Hugo Chavez’s time. India losing its trade relationship with Venezuela could also have a negative impact on our economy as well.
We are alarmed by the fact that the low supplies that the Venezuelan economy is producing right could have an influence on the Indian economy. India is the third largest consumer and importer of crude oil in the world. 30 percent of the aggregate energy supplies of industries in India are fuelled by crude oil. Thus, due to only a limited amount of the reserves been available in India, 70 percent of aggregate crude oil consumption needs to be imported from other countries like Venezuela.
Oil consumption n also has an impact on the Gross Domestic Product of the nation of the delegate as reports show how oil consumption rising overtime has also increased the GDP, at almost the same percentage rate, gradually. Therefore, India’s total oil consumption decreasing could mean that there would be a not so fatal, but significant drop in our GDP as about 10 percent (Percentage of Venezuela’s imports to India out of total crude oil imports) of our total crude oil imports can decrease.
As a member of the global community, we are deeply alarmed by the situations that the Venezuelan citizens that are facing many difficulties due to the crisis. We are more concerned as this population includes a micro-community of Indian families who are living within the borders of Venezuala;
The reason for the start of all the problems for the people was when Hugo Chavez launched a political revolution in 1998 with a new constitution and socialist economic and social policies, all boosted by high oil prices. He also started redistributing land and changing income patterns in the country, while nationalizing firms in many industries which are in the oil, finance, agricultural and industrial sectors. He also devalued the exchange rate.
These policies helped a lot of people in the short run but with less cash inflows coming into the country, the system collapsed when the time of Maduro became president. The present financial situation of Venezuela is that they are now only left with $10 billion of money within the treasury. The situation is harder as $7.7 of that amount is gold. This means that the Venezuelan state only has only about $2-an-a quarter-billion of liquid finance to pay their outstanding $7.2 billion. All because of this, the bolivar had lost 99.8 percent of its value also because of the world’s highest inflation rate.
This puts the citizens in an extreme situation as 80 percent of the people live in poverty. And it’s especially hard because they get most of their essentials from abroad. Food and essentials are so scarce that what you would find in a convenience store is sold on the black market. With most of the suffering population on the brink of starvation, food trafficking has become the biggest business in the country.
The nation of India believes that this problem is a huge issue as even basic mphysiological needs are’nt provided to starving citizens.
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