Minister of State (Independent charge) for Petroleum and Natural Gas Dharmendra Pradhan took to the podium at the Business Standard Infrastructure Summit on 15 January and spoke about the various challenges facing the fuel sector and the policies being formed by the government to meet these. Excerpts from the speech:
Railway Minister Shri Suresh Prabhu has spoken on this platform before me. Shri Prabhu is a special personality in the area of policymaking. He has a lot of experience.
Every person here has his own opinion on the infrastructure sector. We have been associated with it for the past many years as administrators, making policies, implementing and improving them, too.
I have been handling the work of the petroleum ministry for the past eight months.
I have been reflecting upon and analysing my own experience of the past 33 years as a social and political worker and also as a student of social science. There has been a fundamental shift in the country's economy since early 1990s. If you look at land acquisition as a case study within the gambit of infrastructure, you will be looking at four-five major subjects. These include land, capital, energy, market and policy. If we create a cocktail of all these issues, we get the overall picture of the country's infrastructure and the economy.
I started my social life as a student. I come from Odisha - perhaps the only part of the country where 25,000 hectares of land has been acquired by the government over the past 50 years. It is a major coal mining area in and around Talcher and Angul districts. This land has been acquired for multiple purposes including irrigation, power, steel, aluminium and coal mining projects. I belong to the place where maximum coal mining happens. This is the area where opencast mining started in 1960s.
As a political worker, I had to learn the issues associated with coal mining. I became the representative of the area in the Odisha Assembly, and later the Rajya Sabha. I tend to evaluate my own role in the socio-political arena of mining and economy. I started understanding the nitty-gritty of these issues in the 1980s before the first major fundamental shift in the economy happened in 1990s.
The economy was opened up in the early 1990s and the government had to invite non-state capital in infrastructure development. Looking at all of this, I believe the biggest challenge before the current government is to evolve and implement a transparent policy. While the economy was opened up in a few sectors, we created the framework of principles guiding our policy-making based on a socialised pattern. There was a framework of what should be the state's role, intervention and responsibility. A state-centric economy must have been a necessity in those early days. Now, while we have integrated into the global development agenda and pattern of growth, the required change in the infrastructure-related policies could not be achieved. I personally believe the reason for this failure to achieve the required transition in economic policy-making was lack of experience. We could not properly visualise the path of reforms and the benefits accruing from it.
Shri Dattopant Thengadiji was one the major influential thinkers whose speeches I listened to in the early 1990s. One of his concerns was democracy becoming a victim of a market-based economy.
But I want to ask: Should we not welcome a market-based economy? Openness in the economy should have come but the policymakers failed to visualise it. This, I believe, may have been a genuine mistake.
There have been a few good examples, too. If the electricity sector was not reformed, the country would have been in the dark today. The benefits from NTPC's performance, however good, may have been limited if independent power producers (IPPs) had not entered the sector. But the policymakers did not think properly on how to take the benefit of reforms flowing from the Electricity Act of 2003 forward. This is particularly true in the lack of initiatives taken over the past few years on the area of fuel supply and availability. The nation is today bearing the brunt of that inaction.
Over the past 20 years, we have been opting for international bidding as a route to award of oil and gas blocks under the New Exploration Licensing Policy. This policy provides for 100 per cent foreign direct investment. We have formulated a production-sharing contract (PSC) for sharing of benefits.
This policy was criticised.
While the government has awarded over 100 assets under NELP, monetisation has happened in only two to three assets. The Comptroller and Auditor General of India also made some observations on the PSC.
Today, policy-makers tend to think that PSC is the devil's document and must be scrapped. But is there a successful alternative model for PSC available globally? The current government wants to develop and implement a model that is progressive. We do not want to bind ourselves with the PSC model alone. At the same time, we do not think revenue sharing is the only model. We want to adopt a model that is best for the country's economic policy.
People have been suggesting different models from Japan, China and the US. But do any of these economies have a stronger democracy than India?
The challenge for the present day policymakers is to ensure consistency in policy with transparency. We have to sometimes take positions that are unpopular. But this can be done in the larger public interest only by a leader who is honest.
