Energy security policy required

ECONOMIC SURVEY 2007-08

COMMENT: Rahul Dhir, Managing Director and CEO, Cairn India

These are clearly good times for the Indian economy, which is projected to continue to grow at 8.7 per cent, as the Economic Survey shows.

It says that the growth story has crossed the "tipping point", as reflected in direct tax collections for the first time exceeding the indirect tax collections. Foreign exchange reserves are ready to touch the $300-billion mark while the size of our economy have crossed the trillion-dollar mark.

There will be a few areas that may slow our growth in the near term "" the much-debated US slowdown, the appreciating rupee, which adversely impacts export-oriented and employee-intensive sectors, rising commodity prices triggering inflation, and finally, the stagnation in food grains and oilseeds production that impacts the agriculture sector.

Since oil prices will also impact our economy, important policy initiatives are required to build and protect the long-term energy security of the nation.

The emphasis on privatisation of old oil fields to improve output through application of technology is extremely laudable, as higher output would reduce India's import dependence.

To meet the ambitious growth targets, India needs energy on a sustained basis and at reasonable price. I believe that the real challenge for the future lies in strengthening the foundation for sustained industrial growth through initiatives, such as:

The promotion of public-private partnership to acquire overseas "equity oil and gas" assets and exploration acreages.

Round-the-year open acreage access and opening up exploration and development of other natural resources under a model similar to NELP.

Focus on the development of energy infrastructure, including gas, crude oil and products.

Encouraging the import of gas which can substitute liquid fuels in a cost-effective manner.