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Why should Ruias

or Mittals sell steel

at international

prices while usinggas at a subsidised

price?

National / Cover Stories / Opinion MAGAZINE | JUL 15, 2013

JUMP CUT

Self-Reliance, Not RelianceWhat we see now is a new and indigenous form of McCarthyism.

MOHAN GURUSWAMY

The price increase seems to be a consequence of RILs demand for a price revision over a year ago, and anattempt to head off a decision on a price revision in consonance with market prices. By offering a price now whichwill only be applicable in mid-2014, the government loses nothing and has everything to gain. Since the major partof the selling price goes to the state, why not let it benefit to then use it in a manner more productive?

I think the difference between the price announced and prevalent international prices is still large. What webasically need is a liberal economic regime, not one that robs Peter to pay Paul. Why should Ruias and Mittalssell steel at international prices while using gas at a subsidised price? I dont think that is a deserved subsidy. Andfertiliser, which is produced using subsidised gas, is a misdirected subsidy and goes to all the wrong people.

There is a direct relationship between oil prices and available reserves. As prices get higher, more reservesbecome viable. Most of the reserves lying just under the surface have been exploited. Now you need to godeeper and in far more hostile environments. Drilling 10,000 metres below in the middle of a deep sea is not aneasy business and few have the expertise and technology to do so. This also becomes more expensive. If ourfeasible reserves go up, then we can extract more and reduce import dependency. Oil imports eat up almost 70per cent of our exports.

Frankly, I dont see many big players being attracted to take up an offshore block.ONGC OVL does not take up overseas blocks at pre-fixed prices. Why should weexpect others to agree to this when investing in India? I think the best way toattract the big oil drillers here is to offer production-sharing options at marketprices. My good friend J aipal Reddy could never understand this. I am not sure if

even Veerappa Moily understands this. But what the latter has understood well isthat there are many oil brokers near and within government who collect goodbrokerages on every import deal. They are huge vested interests now and resortto the usual subterfuges to keep our energy dependency going.

The best yardstick is the international price. Today, we are importing coal at 1.5 times the domestic price. But incase of gas, while the international price is $13.77 per mmbtu, the price stated by the government is $8.2 permmbtu. Is Mukesh Ambani happy with this? Why should Indian producers be penalised? And why is everybody soallergic to corporates making profits? Profits beget taxes and more investment. Companies dont let their moneylie idle. They always reinvest. But when politicians make money, it is for consumption. Besides, how much canone man consume? How many houses will Mukesh Ambani build and how many planes will he buy?

Somehow this issue of basic principles has been turned into a for or anti Reliance debate, when the only concern

should be self-reliance. If there are grievances against Reliance, and I can expect there will be many, appropriateforums and institutions must be used for them. What we see now is a new and indigenous form of McCarthyism.

As told to Arindam Mukher jee

Mohan Guruswamy, chairman and founder of Centre for Policy Alternatives; E-mail your columnist: mohanguru

AT gmail.com

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