The government’s move to almost double gas prices with effect from April 2014 will have a “cascading effect” on power tariffs, said the President of the Confederation of Indian Industry (CII), S. Gopalakrishnan. Addressing a press conference here on Thursday Mr. Gopalakrishnan said “dollarised” gas tariff had made the situation “more difficult” for industries, especially because of the rupee’s slide in recent weeks.

Referring to the fact that the price had been denominated in dollars, Mr. Gopalakrishnan said, “I do not believe that the price of gas (produced in India) ought to be set in dollar terms.”

Asked if the industry’s demand for lowering interest rates was compatible with the objective of arresting the widening current account deficit, Mr. Gopalakrishnan said although the central bank had moderated rates somewhat in recent months, “lower interest rates could be used to stimulate the economy.” He cautioned that the government’s “fiscal consolidation” ought to be done “gradually, over the next few years.” “The challenge is to cut the fiscal deficit without cutting capital expenditure,” he said.

Observing that many of the projects run in public-private partnership mode “are either going slow or have remained stalled”, Mr. Gopalakrishnan said the appointment of an independent PPP commission for such projects would hasten implementation.

“In many cases, state agencies are adopting an adversarial stance,” he claimed.

Speedy clearance

The Cabinet Committee on Investment ought to focus on speedy clearance of 50 large projects involving investment of more than Rs.1,000 crore each, within the next three months. Investment in manufacturing projects, involving a minimum investment of Rs.250 crore each should also be “fast-tracked”, he said.