Taking tough decisions doesn't mean burdening people: Dharmendra Pradhan
Interview with Petroleum minister
Sudheer Pal Singh | New Delhi July 5, 2014 Last Updated at 00:48 IST
Petroleum Minister Dharmendra Pradhan tells Sudheer Pal Singh a new gas price will be arrived at soon. He adds the Direct Benefits Transfer (DBT) scheme for LPG (liquefied petroleum gas) will continue, albeit in another form, and the government will not burden consumers with steep price rises in the name of "tough measures". Edited excerpts:
Isn't it odd that a government that talks about taking tough measures rolls back kerosene and LPG price rises?
There is no contradiction here. The term "tough decision" cannot be used according to convenience. Tough decisions don't mean burdening people with price rises. The consumer is an essential part of the entire economics. There was an additional burden on consumers in states that levied additional taxes. A decision had to be taken to roll it back. We have a mandate of serving the people. Persuasion, not burdening, is required. And, persuasion requires respect and confidence in the government. It is a matter of implementation, not merely speech. We will try and persuade states not to levy additional taxes when these aren't justified. As a sensitive government, we have the responsibility to strike a balance, not burden the people.
What steps are you taking to insulate consumers from the impact of supply disruptions such as the crisis in Iraq?
We have taken strong steps. Despite the burden on the government, we have not increased the prices of cooking gas and kerosene. Oil marketing companies (OMCs) have absorbed it. In the case of diesel, too, we have not passed the entire burden resulting from the Iraq crisis to consumers. We have only continued the 50 paise-a-month rise, in practice since the past 17 months. The government has absorbed this in view of public interest. We want to balance the need to minimise the burden on consumers with the health of OMCs.
Why was the gas price rise deferred? How will the new price be decided?
The last government came up with a policy based on the Rangarajan formula, which was approved by the Cabinet. At least three ministries of the same government---finance, fertiliser and power---raised serious objections to it, despite the Cabinet approval. The matter is in court. The Rangarajan formula was based on global well-head prices. But why did it consider the price of the Japanese market? The formula looked at well-heads, not the interests of users. The prime minister has clearly said the first claim on national resources is that of the poor. Now, we will talk to all stakeholders again. The new government will look at all these issues in a new manner that keeps public interest in mind. National interest is supreme. We will frame an investment-friendly regime. We want to de-risk investment. But all this has to be for public interest.
There are talks a new gas pipeline between India and Russia has been proposed. This comes amid the substantial delay in the TAPI (Turkmenistan-Afghanistan-Pakistan-India) pipeline.
The TAPI pipeline project is very much on. There is no doubt about that. It is a priority area. Our aim is to improve India's network with the world. Even if we think of setting up a pipeline from Russia, it will only be ahead of the TAPI line. These new proposals are as important as TAPI.
What is the future of the Aadhaar-linked DBT scheme for LPG subsidy?
Many Bharatiya Janata Party-ruled states have been successfully running such subsidy transfer schemes for years. We are committed to technology-savvy solutions such as DBT, in public interest. Vasundhara Raje's government in Rajasthan and Raman Singh's government in Chhattisgarh, as well as the work done in Gujarat, are examples. But the scheme run by the last government in the name of Aadhaar was politically motivated. It was ill prepared. The court, too, raised questions on the legality of Aadhaar. The scheme had to be stopped, as it was rolled out half-heartedly. It was a political stunt that fell flat.
Speaking in Russia last month, you had said the Centre was considering policy and legislative amendments to attract foreign investment. What is set to change?
Many proposals are being worked upon, including internal reforms to major policy reforms. A statutory body will also be set up for safety-related issues. India's domestic production has declined in the past three years; that is a matter of grave concern. ONGC (Oil and Natural Gas Corporation)'s assets are increasing, but production is declining; that is a concern. We need broad-based policy reforms to introduce forward-looking and conform to world standards and progressive regimes. The power sector was opened up under the previous National Democratic Alliance regime. Today, 35 per cent investment in power is through the private sector. Attracting investment with de-risking efforts is our aim. We are trying to set up an overarching statutory authority to maintain safety standards. We will take the proposal to the Cabinet soon.
What are your priorities for reform in the petroleum sector?
The huge crude oil import bill is the single-largest challenge in the sector. To tackle this, we have identified a few measures. First, we must have institutional price stability. The sector is governed by its own dynamics of demand and supply. Yet, we must maintain good economic relations to maintain continuity of the source. Also, we are trying to put in place a good pricing regime. We have standardised rates for crude oil. In gas, we need to reduce the burden of imports through an effective price mechanism to tackle supply. Second, we are trying to improve domestic production. The petroleum sector was opened up to 100 per cent foreign direct investment in the mid-90s, but the desired level of investment volumes hasn't been seen. We have to remove the bottlenecks in attracting investment through the policy regime. That is a priority.
There is no contradiction here. The term "tough decision" cannot be used according to convenience. Tough decisions don't mean burdening people with price rises. The consumer is an essential part of the entire economics. There was an additional burden on consumers in states that levied additional taxes. A decision had to be taken to roll it back. We have a mandate of serving the people. Persuasion, not burdening, is required. And, persuasion requires respect and confidence in the government. It is a matter of implementation, not merely speech. We will try and persuade states not to levy additional taxes when these aren't justified. As a sensitive government, we have the responsibility to strike a balance, not burden the people.
What steps are you taking to insulate consumers from the impact of supply disruptions such as the crisis in Iraq?
We have taken strong steps. Despite the burden on the government, we have not increased the prices of cooking gas and kerosene. Oil marketing companies (OMCs) have absorbed it. In the case of diesel, too, we have not passed the entire burden resulting from the Iraq crisis to consumers. We have only continued the 50 paise-a-month rise, in practice since the past 17 months. The government has absorbed this in view of public interest. We want to balance the need to minimise the burden on consumers with the health of OMCs.
Why was the gas price rise deferred? How will the new price be decided?
The last government came up with a policy based on the Rangarajan formula, which was approved by the Cabinet. At least three ministries of the same government---finance, fertiliser and power---raised serious objections to it, despite the Cabinet approval. The matter is in court. The Rangarajan formula was based on global well-head prices. But why did it consider the price of the Japanese market? The formula looked at well-heads, not the interests of users. The prime minister has clearly said the first claim on national resources is that of the poor. Now, we will talk to all stakeholders again. The new government will look at all these issues in a new manner that keeps public interest in mind. National interest is supreme. We will frame an investment-friendly regime. We want to de-risk investment. But all this has to be for public interest.
There are talks a new gas pipeline between India and Russia has been proposed. This comes amid the substantial delay in the TAPI (Turkmenistan-Afghanistan-Pakistan-India) pipeline.
The TAPI pipeline project is very much on. There is no doubt about that. It is a priority area. Our aim is to improve India's network with the world. Even if we think of setting up a pipeline from Russia, it will only be ahead of the TAPI line. These new proposals are as important as TAPI.
What is the future of the Aadhaar-linked DBT scheme for LPG subsidy?
Many Bharatiya Janata Party-ruled states have been successfully running such subsidy transfer schemes for years. We are committed to technology-savvy solutions such as DBT, in public interest. Vasundhara Raje's government in Rajasthan and Raman Singh's government in Chhattisgarh, as well as the work done in Gujarat, are examples. But the scheme run by the last government in the name of Aadhaar was politically motivated. It was ill prepared. The court, too, raised questions on the legality of Aadhaar. The scheme had to be stopped, as it was rolled out half-heartedly. It was a political stunt that fell flat.
Speaking in Russia last month, you had said the Centre was considering policy and legislative amendments to attract foreign investment. What is set to change?
Many proposals are being worked upon, including internal reforms to major policy reforms. A statutory body will also be set up for safety-related issues. India's domestic production has declined in the past three years; that is a matter of grave concern. ONGC (Oil and Natural Gas Corporation)'s assets are increasing, but production is declining; that is a concern. We need broad-based policy reforms to introduce forward-looking and conform to world standards and progressive regimes. The power sector was opened up under the previous National Democratic Alliance regime. Today, 35 per cent investment in power is through the private sector. Attracting investment with de-risking efforts is our aim. We are trying to set up an overarching statutory authority to maintain safety standards. We will take the proposal to the Cabinet soon.
What are your priorities for reform in the petroleum sector?
The huge crude oil import bill is the single-largest challenge in the sector. To tackle this, we have identified a few measures. First, we must have institutional price stability. The sector is governed by its own dynamics of demand and supply. Yet, we must maintain good economic relations to maintain continuity of the source. Also, we are trying to put in place a good pricing regime. We have standardised rates for crude oil. In gas, we need to reduce the burden of imports through an effective price mechanism to tackle supply. Second, we are trying to improve domestic production. The petroleum sector was opened up to 100 per cent foreign direct investment in the mid-90s, but the desired level of investment volumes hasn't been seen. We have to remove the bottlenecks in attracting investment through the policy regime. That is a priority.
