The nationalisation of the coal mines, over three decades ago, vastly restricted tapping the potential of the massive reserves, leading to increased imports of costlier coal. After the Supreme Court ordered cancellation of licences to coal blocks there has been a huge increase in coal imports to feed power and steel plants. The three ports at Paradip, Krishnapatnam and Kamarajar on the east coast handled over 90 million tonnes of coal imports during the current year resulting in a huge outgo of foreign exchange. The opening up of coal mining to Indian and foreign private companies, not just for captive consumption but also for trading, through transparent bidding is a welcome, long pending reform.
The recent initiatives promising a handsome share to the states through much higher royalties and taxes have enthused mineral producing states to support the bills in the Rajya Sabha. This helped the NDA government get these bills passed despite strong opposition from the Congress and the left parties. Happily regional parties understand better the language of money! Exploration for coal and bauxite will receive much needed attention.
Similar reforms are also needed for the exploration of oil and natural gas. After a large fortuitous break in the 1970s, the country was not lucky with new discoveries. The big break promised at the KG Basin in 2009 when Reliance stepped up gas output to over 60 msmcmd was not sustained. With more attractive pricing, output from Reliance and other explorers, including ONGC, Cairn and GSPC, will help realise the potential of the KG Basin.
Land acquisition bill lapses
The only ordinance that could not be regularised is the one related to the land acquisition. The ordinance will lapse and will have to be re-issued. Congress has mobilised its forces; the party, supported in parallel by Anna Hazare’s and scores of other farmers’ associations, is determined to oppose this reform. In fact, the bill on this subject passed by the UPA II government was substantially the same as the one mooted by the NDA. The latter has also expressed its willingness to reconsider few changes in the new bill. But sensing the opportunity to get support from the large farming community, Congress, the DMK and other political parties have been stepping up opposition to the bill.
This is the irony of our country. Political parties, cutting across the spectrum, treat key legislations differently depending on which side of the table they sit in Parliament.
Over Rs 800,000 crore worth of projects stuck...
A major issue necessitating the bill relates to the humongous delays suffered in the clearance and implementation of hundreds of projects due to determined opposition by numerous pressure groups demanding better compensation and other terms. P Chidambaram as Finance Minister at the end of his term seemed to have realised the gravity of the problem. He expressed serious concern over Rs 700,000 crore of projects getting stuck for clearances of various types. There were differences over this issue among senior Congress ministers. The party was pulled in different directions by Chidambaram, Kamal Nath, and Veerappa Moily on one side and Jairam Ramesh, Jayanthi Natarajan and a number of ministers from the coalition parties on the other, resulting in stagnation, huge escalation in costs and even the abandonment of several large projects.
Arun Jaitley as NDA II’s Finance Minister, estimated the value of projects getting stuck at over Rs 800,000 crore. Such delays had their bearing on investments, both foreign and domestic. The country witnessed the sad spectacle of large Indian corporates like the Tatas, Reliances, Birlas and Adanis spending handsome amounts on a variety of projects in foreign countries even while our own has been in crying need for such. The slowdown in investments, raging inflation, drop in savings rate, ballooning deficits and the compulsion to borrow more and more for balancing the budget had cumulatively depressed revenues and growth.
Negative/low growth of manufacturing...Like: in the budget for 2015-16, of the total revenue receipts estimated at Rs 11,41,575 crore, debt servicing alone is estimated to cost Rs 681,719 crore; in this interest payments on the humongous public debt of over Rs 40 lakh crore, is estimated at Rs 456,145 crore. The subsidies that accounted for Rs 71,431 crore in 2008-09, shot up to Rs 266,692 crore in 2014-15. There is a compulsion to borrow more: the budget estimates debt receipts for 2015-16 at Rs 463,355 crore.
The negative/low growth of the manufacturing sector in recent years and steep fall in revenue collections are the direct result of lack of investments. This in turn is traceable to the difficulties in the acquisition of land and its cost.