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Pool energy prices

The gregarious Montek Singh Ahluwalia, a key member of the team that unleashed reforms in 1991, has an uncanny ability of explaining intricate economic issues in lucid terms and has been a great asset for the UPA.

HE CANDIDLY CONCEDES the many shortfalls in the administration that come in the way of delivering results.

He says that till 2008, we grew at 9 per cent despite the compulsions of coalition politics and points out that since then with most countries hardly growing, India’s 5 per cent growth is not all that bad. He points out that the average growth of 8 per cent during the Eleventh Plan period was the highest for any plan period, it was just less than the target set of 9 percent.

Excerpts from his address at the Southern India Chamber of Commerce and Industy (SICCI).

Need to boost the manufacturing sector

The immediate agenda is to make the manufacturing sector do better. Two ministries, mining and infrastructure, hold the key. Both the Centre and the states must put tonnes of effort in taking performance to the next level. A lot depends on the private sector.
Major issues relate to three areas:
•    Power: clearances for large projects were delayed due to regulatory issues.
•    Fuel supply for power was a major constraint
•    On regulatory clearances, we need faster turnaround.

Due diligence has become a joke

Many seem to be eager to question the legitimacy of projects. Activism seems to be on the rise with an eye at stopping projects. PILs are piling before the apex court. Everybody wants power but nobody wants power projects! Gram Panchayats complain of no consultations. We should have meetings with Gram Panchayats and videograph these. Objections range from lack of approval from Gram Panchayats to cutting of trees. Lot of earth is removed for building roads. Is it a mining activity? Mud is classified a minor mineral! In that background due diligence has become a joke.

Quick clearance the imperative

The Cabinet Committee on Investment, set up for quick clearances, even suggested giving up a major
hydroelectric project on which Rs 900 crore had already been spent.

We have added a lot of capacity for power in the Eleventh Plan; yet large capacity is lying idle. While generation capacity has increased, availability of coal and gas has not.

Imported coal is thrice as costly as indigenous coal. We should go for pooling of prices but the Coal Ministry is not agreeable to this. Coal sector has problems of expanding capacity.

The problem is worse for the gas sector. With domestic gas price frozen at $4.20, even while imported gas costs over $14 per 1000 BTU, pooling of prices is a must.

Looming water deficit...

Growth is broad-based and inclusive, thanks to the accelerated growth of agriculture. But sustainability is a
serious concern. When GDP grows at 9 per cent and agriculture at 4 per cent, demand for water will increase. We will face a large water deficit. Agriculture uses 80 per cent of fresh water. In most states it is free, but this is not sustainable and we need to focus on more efficient use of water.

Electricity is underpriced. We need to eliminate these distortions in the next five years.  
All these are words of Montek Singh Ahluwalia, a man who seems to mince no words.  

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