Answer 2:

OIL SUBSIDY POLICY:

Intended objectives : Considering the huge profits government considers upstream oil companies more than able to pay for the ease of availability of oil products to the customers in the form of oil subsidy. The rise of international oil prices has a negative impact on the regulated national oil prices. So in a way govt. holds the upstream oil companies share a part of responsibility of this unavailabity at an affordable price.

Real time effects of oil subsidy: The upstream oil companies tend to curtail some of the most necessary E & P activities which would have otherwise decreased the Indian dependence on imported oil. This reduces Indias energy sufficiency depleting Indias forex reserves.