BD(Global) Economic Note No.14: July, 2014

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FOR INTERNAL CIRCULATION ONLY

BD(GLOBAL) ECONOMIC NOTE NO.14

(A review of Macro-economic trends including trends in the Oil and Gas sector )

BD(Global) Department OIL INDIA LIMITED

NOIDA

July 2014

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C O N T E N T S

Macro-economic Conditions in Global and Indian Economy- Recent Trends

Analysis of Oil and Gas Production Trends

Analysis of Oil and Gas Price Movements

Analysis of Petroleum Products Production / Consumption Trends

Concept Note: Understanding the Union Budget

Discussion Paper: Budget 2014-15 - Implications for Oil and Gas and Renewable Energy Sector

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BD(GLOBAL) ECONOMIC NOTE NO.14

Macro- Economic Highlights of Global and Indian Economy - Recent Trends

World Economic Outlook

The IMF, in its World Economic Outlook (WEO) has revised the global growth projection for 2014 downwards by 0.3 percent to 3.4 percent, reflecting both the legacy of the weak first quarter, particularly in the United States, and a less optimistic outlook for several emerging markets. With somewhat stronger growth expected in some advanced economies next year, the global growth projection for 2015 remains at 4 percent. Global growth is expected to rebound from the second quarter of 2014, as some of the drivers underlying first quarter weakness, such as the inventory correction in the United States, should have only temporary effects, and others should be offset by policies, including in China. But the first-quarter setback will only be partially offset. Downside risks remain a concern. Increased geopolitical risks could lead to sharply higher oil prices. Financial market risks include higher-than-expected U.S. long-term rates and a reversal of recent risk spread and volatility compression. Global growth could be weaker for longer, given the lack of robust momentum in advanced economies despite very low interest rates and the easing of other brakes to the recovery. In some major emerging market economies, the negative growth effects of supply-side constraints and the tightening of financial conditions over the past year could be more protracted. In many advanced and emerging market economies, structural reforms are urgently needed to close infrastructure gaps, strengthen productivity, and lift potential growth.

Indian Economic Scenario

GDP Growth: As per the Provisional Estimates of the Central Statistics Office (CSO), the growth in Gross Domestic Product (GDP) at factor cost at constant (2004-05 prices) is estimated at 4.7 per cent in 2013-14 with agriculture, industry and services registering growth rates of 4.7 per cent, and 0.4 per cent and 6.8 per cent respectively.

Industrial Growth: Cumulatively, the IIP registered a growth of 3.9 % during April to June, 2014-15 over corresponding period of previous year. The production of Mining sector, Manufacturing sector and Electricity sector increased by 3.2%, 3.1% and 11.3%respectively during April to June, 2014-15 over April to June, 2013-14. The output growth of eight core sector industries — coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, electricity having a combined weight of 37.90 % in the Index of Industrial Production (IIP) — grew by 7.3 per cent in June 2014 over June 2013. During April-June 2014, growth in the eight core industries grew by 4.6 percent from 3.7 percent in the year-ago period.

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GROWTH RATE (in %)

Sector Weight 2013-14 Apr-June 13-14

Apr-June 14-15

Coal 4.379 0.7 -1.7 5.6 Crude Oil 5.216 -0.2 -1.4 -0.1 Natural Gas 1.708 -13.0 -17.6 -3.9 Refinery Products 5.939 1.6 4.3 -1.1 Fertilizers 1.254 1.5 2.5 8.6 Steel 6.684 6.8 13.5 1.6 Cement 2.406 3.0 3.4 9.5 Electricity 10.316 5.7 3.3 10.9 Overall Index 37.903 3.1 3.7 4.6

Exports: Cumulative value of exports for the period April-June 2014-15 was US $ 80112.30 million (Rs 478928.90 crore) as against US $ 73287.72 million (Rs 409750.38 crore) registering a growth of 9.31 per cent in Dollar terms and growth of 16.88 per cent in Rupee terms over the same period last year. Imports: Cumulative value of imports for the period April-June 2014-15 was US $ 113196.23 million (Rs 676694.53 crore) as against US $ 121613.93 million (Rs 678294.38 crore) registering a negative growth of 6.92 per cent in Dollar terms and negative growth of 0.24 per cent in Rupee terms over the same period last year. CRUDE OIL IMPORTS: Oil imports during June, 2014 were valued at US $ 13342.8 million which was 10.90 per cent higher than oil imports valued at US $ 12031.1 million in the corresponding period last year. Oil imports during April-June, 2014-15 were valued at US $ 40785.5 million which was 4.0 per cent higher than the oil imports of US $ 39204.1 million in the corresponding period last year. The trade deficit for April-June, 2014-15 was estimated at US $ 33083.93 million which was lower than the deficit of US $ 48326.21 million during April-June, 2013-14.

Foreign Currency Assets stood at US$ 291.3 billion at end-June 2014 as compared to US$ 255.4 billion at end-June 2013.

Exchange rate: The rupee appreciated by 0.3 per cent against Euro and depreciated by 0.7

per cent against US dollar, 1.0 per cent against pound sterling, and 0.4 per cent against

Japanese yen in the month of June 2014 over May 2014.

Inflation: The headline WPI inflation eased to a four-month low of 5.43 per cent in June

2014 from 6.01 per cent in May 2014. The all India CPI inflation (combined) declined to 7.31

per cent in June 2014 from 8.28 per cent in May 2014. Inflation based on CPI-IW stood at

7.02 per cent in May 2014 as compared to 7.08 per cent in April 2014.

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Analysis of Oil & Gas Production Trends in India

Crude Oil production (weight: 5.22 %) increased by 0.1 % in June, 2014 over June, 2013. The cumulative index of Crude Oil during April to June, 2014-15 declined by 0.1 % over the corresponding period of previous year. The Natural Gas production (weight: 1.71 %) declined by 1.7 % in June, 2014 over June, 2013. Its cumulative index during April to June, 2014-15 declined by 3.9 % over the corresponding period of previous year.

Natural Gas production by OIL increased by 3.0% during April-June 2014 over the

production during April-June 2013.

Sources Unit

2014-15

(Apr-June)

2013-14

(Apr-June) % change

ONGCL

Crude (in '000 tonnes) 5507.61 5584.27 -1.4%

N Gas (in MCM) 5654.87 5774.66 -2.1%%

OIL

Crude (in '000 tonnes) 835.74 892.79 -6.4%

N Gas (in MCM) 676.86 657.00 3.0%

Private/JVs

Crude (in '000 tonnes) 3046.36 2921.36 4.3%

N Gas (in MCM) 2276.06 2525.02 -9.9%

Total

Crude (in '000 tonnes) 9389.71 9398.42 -0.1%

N Gas (in MCM) 8607.79 8956.69 -3.9*%

Source: M/o P&NG

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Analysis of Oil & Gas Price Movements

Oil prices consistently increased during April-June 2014 due to geopolitical developments

such as, the confrontation between Ukraine and Russia, return of violence in key oil-

producing countries Iraq and Libya and conflict between Israel and Palestine. In line with

the international crude prices, prices of Indian basket of crude also increased to $109.13/bbl

in June 2014 compared to $105.62/bbl in April 2014. The net impact in rupee terms was

somehow compensated due to marginal appreciation of rupee against USD. On an annual

basis average per barrel oil price of Indian Crude Basket stayed lower at $106.49 during Jan-

Dec-2013 compared to $109.95 and $108.07 during Jan-Dec 2012 and Jan-Dec 2011

respectively.

Movement of World Energy Prices

Energy Commodity

Unit

Annual averages Monthly averages

Jan-Dec

2012

Jan-Dec

2013

Jan-June

2014

Apr

2014

May

2014

June -

2014

Crude oil, Average $/bbl 105.1 104.1 105.0 104.9 105.7 108.4

Crude oil, Brent $/bbl 112.0 108.9 109.8 107.8 109.7 111.9

Crude oil, Dubai $/bbl 108.9 105.4 106.1 104.7 105.6 108.0

Crude oil, WTI $/bbl 94.2 97.9 103.1 102.1 101.9 105.2

Crude Oil Price

(Indian Basket)

$/bbl 109.95

106.49 106.41 105.62 106.94 109.13

Natural gas, Europe $/mmbtu 11.5 11.8 10.2 10.7 10.2 9.8

Natural gas, US $/mmbtu 2.8 3.7 4.9 4.7 4.6 4.6

Natural gas, LNG-Japan $/mmbtu 16.6 16.0 16.0 16.8 16.1 15.2

Source: World Bank and PPAC.

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Analysis of Petroleum Products Production/Consumption Trends- India

Total petro-product demand for the year 2014-15 were estimated at 159.98 MMT. As against

this the actual consumption during Apr-June 2014 stood at 41.65 MMT ( i.e. 26.04% of the

total demand). Taking advantage of the surplus refining capacity the country was able to

export 14.29 MMT of petro-products during Apr-June 2014. The overall refinery capacity

utilization during Apr-June 2014 was 101.0% compared to 102.0% during April-June 2013.

Petroleum refinery production (weight: 5.94%) increased by 1.2 % in June, 2014 over June,

2013. Its cumulative index during April to June, 2014-15 declined by 1.1 % over the

corresponding period of previous year.

Details Unit 2012-13

( Apr-Mar) 2013-14

(Apr-Mar) 2014-15

(Apr-June)

Production of Petro- products

MMT 219.02 164.71 53.53

Consumption of Petro products

MMT 155.41 117.72 41.65

Export of Petro-Products MMT 63.76 52.17 14.29

Value in USD Terms USD Billion 58.84 46.16 13.20

Value in INR Terms Rs Crore 533907 278269 80226

Crude Import MMT 184.45 141.98 47.98

Value in USD Terms USD Billion 144.29 107.58 36.38

Value in INR Terms Rs Crore 784652 646579 219075

Import of Petro-Products

MMT 15.07 12.04 4.47

Value in USD Terms USD Billion 12.68 8.36 3.30

Value in INR Terms Rs Crore 69296 50937 19857

LNG Import MMT 10.9 8.13 3.05

Source: PPAC

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Understanding the Union Budget

The Union Budget of India, referred to as the Annual Financial Statement[1] in Article 112 of the Constitution of India, is the annual budget of the Republic of India, presented each year on the last working day of February by the Finance Minister of India in Parliament. The budget, which is presented by means of the Financial Bill and the Appropriation bill has to be passed by the House before it can come into effect on April 1, the start of India's financial year.

The Constitution empowers Lok Sabha to grant a Vote-on-Account (Article 116) in the event the Budget is not approved by 1st April so that the government can continue with the necessary expenditure into the new fiscal, before the Budget proposals actually get passed after necessary discussions. The vote-on-account normally covers the expenditure requirement of the government for two months.

Thus, Union Budget, which is a yearly affair, is a comprehensive display of the Government’s finances. It is the most significant economic and financial event in India. Budget is Estimate of inflows and outflows of the Government during a year. Budget is presented for the ensuing Financial year. Every budget consist of Actual figures for preceding years, Budget and revised figures for the current year, Budget estimates for the following years. The Receipt and Payments of the Government is categorised in three parts: 1. Consolidated Fund. : All the inflows like Tax and other Revenues as well as Loans raised by it form part of this category. All outflow including expenses etc also form part of this Account. For withdrawal from this fund parliament authorisation is required. 2. Contingency Fund: It is the money kept at the disposal of the President to meet out any unforeseen expenses. The corpus of the fund is merely Rs.50 Crores. 3. Public Account: This category comprises of money raised from various Schemes of the Government like Provident Fund. But this was the technical framework. To put simply it is Annual financial discipline like other corporates prepare Profit and Loss Account and Balance Sheet.

The first Union budget of independent India was presented by R. K. Shanmukham Chetty on November 26, 1947. Former Finance Minister and Prime Minister Morarji Desai had presented the budget ten times, the most by any.

Time of Budget Announcement

Until the year 2000, the Union Budget was announced at 5:00 pm on the last working day of the month of February. This practice was inherited from the Colonial Era, when the British Parliament would pass the budget in the noon followed by India in the evening of the day. It was Mr.Yashwant Sinha, the then Finance Minister of India in the NDA government, who changed the ritual by announcing the 2001 Union Budget at 11 am.

Objectives of a Government Budget: Rapid and balanced economic growth with equality and social justice has been the general objective of all our policies and plans. General objectives of a government budget are (i) Economic growth (ii) Reduction of poverty and unemployment (iii) Reduction of inequalities/Redistribution of income (iv) Reallocation of resources so as to achieve social and economic objectives (v) Price stability/Economic stability (vi) Financing and management of public enterprises

Impact of the budget: A budget impacts the society at three levels, (i) It promotes aggregate fiscal discipline through controlled expenditure, given the quantum of revenues,

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(ii) Resources of the country are allocated on the basis of social priorities, (iii) It contains effective and efficient programmes for delivery of goods and services to achieve its targets and goals.

Understanding the Budget Documents

One need to carefully read the Part - A & Part - B of the Budget Speech of the Finance Minister to understand the proposals. Part A of the Speech is more concerned about the Macro aspect of the Economy. This part is of more interest to the economist. This broadly covers covers the broad outlays of money for different Sectors. Introduction of new Schemes, Priorities of the Government and focus areas are also indicated in this part. For proper and clear understanding of this Part, it is necessary to refer to Volume -1 and /volume-2 which deals with the entire matter in a very objective and quantitative terms. Here the last year "s Budget data is compared with that of actual (the same is called revised estimates which is usually based on transactions till 31st Dec.)

PART B deals with Taxation proposals- both Direct tax( Income and Corporate taxes) and Indirect tax (Excise, Customs, Cess etc) Proposlas. It has direct bearing over corporate, business and household finances. PART B should also be read with Finance Act. Finance Act is a document containing Legal provisions. A general reader can grasp the provisons by going through the Memorandum of Explanations attached, which gives the broad background of the new changes etc.

Process of Budget approval:

The Finance Minister introduces the budget in the Lower House of the Parliament or the Lok Sabha & makes a short speech, giving a overall view of the budget. After the presentation of the Budget, Parliament allots some time for a general discussion on the Budget. The finance minister replies at the end of the general discussion. The reply is also of a general nature and no specifics of the Budget are discussed. However, no motion is moved nor voting required at this stage.

After the finance minister's reply, Lok Sabha takes up for discussion each ministry's expenditure proposals, and is known as demand for grants. The demands for grants presented by each ministry are taken up by the House.

After, the prescribed period for the discussion on demands for grants is over, the Speaker applies the `guillotine', and all the outstanding demands for grants, whether discussed or not, are put to vote at once. Only the Lower House is entitled to vote. Appropriation Bill is introduced in the Lok Sabha after it has passed all demands for grants relating to all ministries. This is to authorise the government to draw funds from the Consolidated Fund of India. Once this Bill is passed, it becomes the Appropriation Act and is certified as a Money Bill.

After passing of Appropriation Bill, the Finance Bill is introduced and it incorporates all taxation proposals. At this stage, amendments for tax proposal can be moved. After the passing of this Bill, it enters the statute as the Finance Act. Thus the final Budget gets approved.

Components of Union Budget

The budget is divided into two parts:

(i) Revenue Budget and

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(ii) Capital Budget.

The Revenue Budget comprises revenue receipts and expenditure met from these revenues. The revenue receipts include both tax revenue (like income tax, excise duty) and non-tax revenue (like interest receipts, profits). Capital Budget consists of capital receipts {like borrowing, disinvestment) and long period capital expenditure (creation of assets, investment).

Capital receipts are receipts of the government which create liabilities or reduce financial assets, e.g., market borrowing, recovery of loan, etc. Capital expenditure is the expenditure of the government which either creates assets or reduces liability. Capital budget is an account of assets and liabilities of the government which takes into consideration changes in capital.

Measures of Deficits in the Union Budget:

There are three types (measures) of deficit:

Revenue Deficit:

Revenue deficit is excess of total revenue expenditure of the government over its total revenue receipts. It is related to only revenue expenditure and revenue receipts of the government. Revenue deficit signifies that government’s own earning is insufficient to meet normal functioning of government departments and provision of services. Revenue deficit results in borrowing.

Fiscal Deficit:

Fiscal deficit is defined as excess of total budget expenditure ( both revenue and capital) over total budget receipts ( both revenue and capital)excluding borrowings during a fiscal year. In simple words, it is amount of borrowing the government has to resort to meet its expenses. A large deficit means a large amount of borrowing. Fiscal deficit is a measure of how much the government needs to borrow from the market to meet its expenditure when its resources are inadequate.

3. Primary Deficit:

Primary deficit is defined as fiscal deficit of current year minus interest payments on previous borrowings. In other words whereas fiscal deficit indicates borrowing requirement inclusive of interest payment, primary deficit indicates borrowing requirement exclusive of interest payment (i.e., amount of loan).

It shows how much government borrowing is going to meet expenses other than Interest payments. Thus, zero primary deficits means that government has to resort to borrowing only to make interest payments. To know the amount of borrowing on account of current expenditure over revenue, we need to calculate primary deficit. Thus, primary deficit is equal to fiscal deficit less interest payments.

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Discussion Paper:

Budget 2014-15-Implications for Oil and Gas sector

The 2014-15 Budget has provided a thrust on reviving investments, with a significant increase in outlay on the road sector, proposal for setting up greenfield ports and airports, incentives for low cost housing, intention to revive the Special Economic Zones, establish new industrial corridors and Smart Cities, put priority on Renewable Energy Sector etc. In light of the huge financing requirements to bridge India’s sizable infrastructure deficits, the permission to Banks to raise long term funds for lending to infrastructure projects with minimum regulatory pre-emption such as CRR, SLR and priority sector lending is a positive step. With growing urbanisation and aspiration of Indians for better civic services, the focus on creation of new smart cities, improving services in rural as well as urban habitations is a positive initiative. While there was no change in the stance regarding the sovereign right to retrospective taxation, the Government’s assurance of a stable and predictable taxation regime is expected to create a conducive environment to attract investment in various sectors. Moreover, the extension of the 10 year tax holiday to entities that commence generation, distribution and transmission of power by 31.03.2017 would boost investment in this sector. The investment allowance at the rate of 15% to a manufacturing companies investing in excess of Rs. 0.25 billion in any year in new plant and machinery upto 2016-17 is expected to provide a thrust to manufacturing. Furthermore, the raising of the investment limit under Section 80C of the Income Tax Act would boost the economy’s financial saving rate, while the higher deduction limit on account of interest on loan in respect of self-occupied houses would benefit the housing and construction sectors. The new Government’s focus on fiscal prudence and announcement of the roadmap for consolidation with the commitment to reduce the fiscal deficit to 3.0% of GDP by 2016-17 are encouraging. However, additional clarity is awaited on plans to overhaul the subsidy regime, as improved targeting is critical to free-up resources for more productive capital spending. The fiscal deficit target has been fixed at 4.1% of GDP for 2014-15. Considering the unfavourable progress of the south west monsoon so far and delay in sowing of most major crops, agricultural growth and rural demand are expected see downsides in the remainder of this year. However, investment activity is expected to pickup gradually, drawing support from the constructive measures announced in the Budget for 2014-15. Budget provisions for Oil & Gas sector

The budget has proposed to enhance usage of piped natural gas (PNG) as a mission since it is a clean and efficient fuel.

It is proposed to develop 15,000 km of gas pipeline in addition to present capacity of around 15,000 km to complete gas grid across the country, using appropriate PPP models. Besides, piped natural gas (PNG) pipelines may be laid in more cities to enhance focus on the use of PNG (instead of LPG) as a cleaner fuel. Further, the use of domestic gas as well as RLNG would be encouraged to reduce dependence upon any one source of energy (crude oil). Overall, enhanced focus on gas sector will be positive for gas transportation players and city gas distribution (CGD) entities. However, the utilization of existing and upcoming gas pipelines could vary with the availability of natural gas, which critically depends upon the

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faster review of domestic gas pricing along with resolution of NELP related issues. Moreover, in light of low visibility on domestic gas availability in the medium term and concerns over the affordability of R-LNG, the appetite of the investors towards gas grid projects may remain low in view of the capital intensive nature of these projects.

The Government intends to accelerate production and exploitation of Coal Bed Methane reserves. The possibility of using modern technology to revive old or closed wells, to maximise production from such fields is also been proposed.

The budget has proposed to reduce the excise duty on branded petrol from Rs 7.50 per litre to Rs 2.35 per litre. This will lead to reduction in the price differential vis a vis unbranded petrol; this measure could help revive branded petrol sale for OMCs, which otherwise had been experiencing sharp decline in the past few years due to high price differential and increasing price trends in petrol in general.

The fuel subsidy allocation of Rs. 634 billion in 2014-15 BE is lower than the allocation of Rs. 855 billion in 2013-14 RE. With projected gross under-recoveries (GURs) of OMCs at ~Rs. 1,045 billion in 2014-15, the shortfall will have to be met through revision of diesel/LPG prices and sharing of part of the subsidies by upstream companies. While the Budget emphasises on reducing fuel subsidies, the specifics for the same are not yet announced. The rationalisation of subsidies on LPG, Diesel and other petro-products would play a major role in cutting down fuel subsidies and a concrete plan of action for the same could be imperative. The overall subsidy burden shared by the upstream companies are likely to be moderate in the current FY compared to last FY.

The energy sector in general and oil and Gas sector in particular is likely to witness significant demand boost as a result of some budget announcements made in industrial and infrastructure sectors. The plan to accelerate development of industrial corridors with emphasis on Smart Cities linked to transport connectivity to spur growth in manufacturing and urbanisation will create significant demand for all types of energy resources including oil and gas energy related infrastructure such as pipelines, CGD networks etc. The proposal to award 16 Port projects in FY15 through PPPs will create new opportunities for import of LNG and other energy products into the country.

Budget provisions for Renewable Energy sector The budget has provided for a number of concessions in duties which will have a direct positive impact in improving the competitiveness of the domestic solar and wind manufacturing industry and the viability of generation projects. Other announcements are indicative of the policy direction and would help in improving investor confidence. The main budgetary provisions for solar energy sector are;

Allocation of Rs. 5 billion for setting up of four Ultra Mega Solar Power Projects in the states of Rajasthan, Gujarat, Tamil Nadu and Ladakh.

Allocation of Rs. 4 billion for installation of solar power driven agricultural pump sets and water pumping stations.

Allocation of Rs. 1 billion for the development of canal bank solar power projects of 1 MW each.

Green Energy Corridor Projects will be accelerated in this financial year to facilitate evacuation of renewable energy across the country.

Increase in the Clean Energy Cess from Rs. 50 per tonne to Rs. 100 per tonne to finance new initiatives such as financing and promoting clean environment initiatives and funding research in the area of clean environment.

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To encourage domestic manufacture of solar photovoltaic cells and modules, exemption from basic custom duty for:

Specified inputs for use in the manufacture of Ethylene vinyl acetate (EVA) sheets and backsheets.

Flat copper wire for the manufacture of photo-voltaic (PV) ribbons.

A concessional basic customs duty of 5% is also being extended to machinery and equipment required for setting up of a project for solar energy production.

Reduction in basic customs duty from 10% to 5% on forged steel rings used in the manufacture of bearings of wind operated electricity generators.

Exemption from SAD of 4% on parts and raw materials required for the manufacture of wind operated generators.

Concessional basic customs duty of 5% on machinery and equipment required for setting up of compressed biogas plants (Bio-CNG). Higher budgetary allocation & duty rationalisation are positive for the clean energy sector. The announcement of ultra mega solar projects in four States is expected to facilitate a large sized solar capacity addition in the country and would also encourage domestic manufacturing of solar projects. Duty measures announced for wind and compressed bio-gas projects are a positive, which will help to reduce the capital cost and hence tariffs. In addition, focus on facilitation of evacuation of renewable energy through faster implementation of Green Energy Corridor Projects is expected to further encourage capacity addition.

The impact on the solar sector is positive because of the favourable policies which reaffirm the Government’s commitment towards increasing the share of alternative energy in the domestic energy basket. Additionally, the proposed allocation towards installation of solar power water pumping systems would provide funds for setting up of ~65 MW of such systems. These systems are likely to replace diesel powered pumps, reducing diesel subsidy burden, albeit marginally. Also, the duty waivers on manufacture of some of the material used in production of PV modules would result in some reduction in their costs. However, the reduction would be higher for thin film modules, as the material intensity is more for such modules as compared to crystalline silicon based ones. Nevertheless, the fiscal incentives augur well for manufacturing these materials domestically, a significant portion of which is currently imported by the module manufacturers.

Post budget, the government has announced to re-introduce the accelerated depreciation scheme for the wind energy sector. Accelerated depreciation allows companies to claim a bigger deduction during the initial years after the purchase of an asset compared with other depreciation accounting methods, under which the cost is spread evenly over the lifespan of an asset. Reintroduction of Accelerated depreciation would encourage more investments into wind turbines and renewable assets.

Conclusion: The stated focus on fiscal consolidation, absence of populist measures, focus on growth and other measures to revive investor confidence, would support the improved business sentiments seen in recent months. The extent and pace of reforms carried out by the Government and the speed with which the investment cycle revives would determine whether GDP growth can accelerate to levels well above 6% over the medium term. OIL as a active player in upstream Oil and Gas sector and Renewable energy sector will be overall benefit from the budget outcomes.