Globalisation & Indian Society

Easing Oil Prices: What it means for India?

Context: Recent developments in global oil markets, influenced by policy shifts in the United States, have led to a decline in crude oil prices. This trend holds significant implications for India.

Relevance of the Topic:Prelims: Brent Crude, West Texas Intermediate, Global Oil Prices- Impact for India.

Global Context

In January 2025, U.S. President Donald Trump urged the Organisation of the Petroleum Exporting Countries (OPEC) to reduce oil prices. This was aimed to pressure Russia financially amid the ongoing Ukraine conflict.
This appeal contributed to a decrease in oil prices, with Brent crude futures falling to $77.97 per barrel and West Texas Intermediate to $74.16.

Implications for India

As the world's third-largest oil importer, India sources over 80% of its oil needs from abroad. The reduction in global oil prices presents several potential benefits.

Economic Growth: Lower oil prices can reduce India's import bill, positively impacting the current account deficit and supporting economic expansion.
Inflation Control: Decreased fuel costs can lead to lower transportation and manufacturing expenses, helping to keep inflation in check.
Energy Security: Lower prices provide an opportunity to India to stack its strategic oil reserves.
Fiscal Health: Savings from reduced oil import costs can provide the government with greater fiscal flexibility, potentially allowing for increased public spending or deficit reduction.

Brent Crude

It serves as the most widely used benchmark that defines oil prices around the world.
The term "Brent" refers to the Brent oil field, which was discovered in the 1970s and became a significant source of oil production.
About two-thirds of all internationally traded crude oil supplies are priced relative to Brent, making it the most widely used marker of all.
It is extracted from different oil fields in the North Sea. Its unique properties, low density and low sulphur content, make Brent crude oil simpler to process into products such as gasoline.
As its supply is water-borne, Brent crude oil is easy to transport to distant locations.

West Texas Intermediate (WTI)

West Texas Intermediate (WTI) is another grade of crude oil. It is one of the main three benchmarks in oil pricing, along with Brent and Dubai Crude.
WTI is considered a high-quality oil that is relatively easy to refine.
WTI is known as a light sweet oil. It contains less than 0.50% sulfur, whereas the norm is about 0.24% to 0.34%, making it "sweet." It also has a low density, making it "light."
WTI is the underlying commodity of the New York Mercantile Exchange's (NYMEX) oil futures contract.

Rankings, and the Realities of higher education

Context: The National Institutional Ranking Framework (NIRF) recently released the India Rankings for 2023. Notwithstanding some of the criticisms on the methodology adopted and the parameters chosen by the Ministry of Education, a scrutiny of the 2023 edition as well as some of the available data on higher education raises some important issues warranting policy attention.

About NIRF

The NIRF evaluates institutions on five parameters: teaching, learning and resources; graduation outcome; research and professional practices; outreach and inclusivity; and perception.
Ranks are assigned based on the sum of marks institutions secured on each parameter.

Issues associated with NIRF Ranking

The first is the issue of the participation of institutions.
According to the Ministry of Education, in this edition of NIRF, 5,543 institutions offered themselves for ranking under overall, category-specific or domain-specific ranking.
In all, 8,686 applications for ranking were submitted by these institutions.
This has to be seen in conjunction with the total number of universities and colleges in India.
As per the All-India Survey on Higher Education (AISHE) 2021, there were 1,113 universities and 43,796 colleges in 2020-21.
This implies that only 12.3% of higher educational institutions participated in the ranking process.
That there is near to no information on the parameters decided by NIRF for the remaining 87.7% of higher education institutions is a matter of concern, especially for a nation aspiring to reap rich demographic dividends.
This issue gets accentuated further when we examine the rural-urban divide in participation.
The list of the top 100 colleges shows a scant presence of colleges from rural areas.
AISHE data show that about 43% of the universities and 61.4% of colleges are in rural areas.
The lack of participation of institutions from rural areas raises questions on the inherent urban bias of the ranking framework, reinforced by choice of parameters.

The second issue is the incongruence between quantity and quality.

Of the top 100 colleges ranked by NIRF, 35 are from Tamil Nadu, 32 are from Delhi, 14 are from Kerala, and the remaining are from the rest of India.
According to AISHE, Uttar Pradesh has the highest number of colleges in the country, followed by Maharashtra and Karnataka.
The list of top 100 colleges does not feature a single college from U.P. It features three colleges from Maharashtra and two from Karnataka.
The fact that 81% of high-quality colleges are in three States highlights the need for a mission to improve quality across the country, with both the Union government and the States earmarking substantial funds in their respective budgets for this.
Quality differences are evident between private and government institutions as well.
In the overall rankings, the highest rank secured by a private institution is 15.
In the university rankings, the highest rank secured by a private institution is six.
There is also tremendous scope for many more State universities to figure in this list.
If the quality of State universities is enhanced, it would also serve students in rural locations.

The third issue stems from the close correlation between faculty strength and rankings.

A comparison between the top 100 and the remaining institutions shows vast differences in this regard.
The average number of faculty in the top 100 universities is 645, while for the remaining universities, it is only 242.
In the case of colleges, it is 173 for colleges in the top 100 list and 71 for the remaining institutes.
Needless to say, quality education cannot be provided by brick and mortar alone.
Even in the case of engineering, where the ranking is often advertised by the institutions, only 33.98% adhere to the AICTE-prescribed faculty-student ratio of 1:20.
87.71% of the scholarly output from India comes from eligible institutions in the overall category.
This means that 12.3% of institutions that have participated in the ranking contribute close to 90% of scholarly output in the country.
This is even more startling in the case of engineering, where 99.98% of total scientific publications came from the institutions participating in the rankings.
Interestingly, in management, 50% of the institutions which applied for being included in the rankings had zero publications.
The rankings underscore the urgent need for quality enhancement in the higher education system.