Integrated Model of Computable General Equilibrium and Social Cost Benefit Analysis of an Indian Oil Refinery: Future Projections and Macroeconomic Effects

Social Cost Benefit Analysis has long been used as a useful tool to appraise the value of a range of investment projects. Various aspects of this method have been subject to scrutiny over the decades. Other aspects concerning financial flows and appropriate ‘shadow prices’ have also undergone considerable attention. This study, a sequel to a paper that ignores such macro-aggregative benefits, examines the costs and benefits of Vadinar refinery in Gujarat with a focus on this welfare dimension on society for the project. The study allows for this large-scale benefit accrual and examines the net economic benefit of refining at Vadinar by Essar Oil to the region. The framework thus explores a methodological breakthrough in SCBA studies. SCBA when combined with CGE as an analytical tool can be gainfully employed to appraise or evaluate large-scale projects like oil refineries, especially when they make a splash with their mega-sizes as the Essar Oil refinery is. [WP-2016-024]