Why govt needs to oil-proof India’s economy and promote energy security
An RBI working paper has laid emphasis on the need to oil-proof India’s economy with a government policy that promotes energy security and sustainability as extreme changes in global crude oil price are transmitted to sectoral indices of the Indian stock markets.
The paper titled ”Measuring Contagion Effects of Crude Oil Prices on Sectoral Stock Price Indices in India’ examined the asymmetric aspect of the contagion effect on sectoral indices and said that “Given India’s import dependence on crude oil and the observed co-exceedances, any negative stock may lead to a decline in market capitalisation and loss of wealth for investors.”
“The paper used generalised Pareto distribution to distinguish normal return from excessive returns by determining threshold returns, and in turn, positive and negative excess returns, namely exceedances.
