The Federation of Indian Chambers of Commerce and Industry (FICCI) has made a strong pitch for privatising Coal India, while expressing concern about the country's energy security.
Stating that the country's energy security was under grave threat, FICCI President R. V. Kanoria called for radical reforms to break the monopoly of public sector Coal India and also attract investments in the oil and gas sectors.
Addressing the media here on the eve of FICCI's national executive meeting on Monday, he said the power sector continued to be throttled due to lack of availability of coal supplies, inadequate investments in coal exploration and high international spot prices. Energy shortage was crippling the industry even as the demand-supply gap was widening.
He also pressed for rationalisation of subsidies on petroleum products and encouragement to renewable energy sector to reduce the mounting fuel import bill. At present, India imported 73 per cent of oil, 20 per cent of natural gas which were expected to rise during the XII Plan. Coal imports would reach 400 million tonnes in 20 years.
“As a result, our economic parameters have started looking bleak, country's credit rating has been downgraded. It is a wake-up call for the government to act for overall good of the economy,” he said
He said the FICCI estimated that the combined fiscal deficit of the Centre and the states was likely to touch 10 per cent. “We can't afford to have fiscal profligacy anymore”. He questioned the need to provide subsidy on diesel and called for a re-thinking on fertilizer subsidy.
R. S. Sharma, Head, FICCI committee on energy, said CIL, sitting on Rs.56,000-crore cash reserve, had clearances for 200 million tonnes coal excavation. Yet, its output was stagnating. Mr. Kanoria said, in the oil and gas sector, too, the scenario was gloomy. If the subsidies continued, the import bill, with a trade deficit of $185 billion, would further increase. Subsidies intended for the target groups were enjoyed by all and misused by vested interests.
The power sector faced the problem of irrational retail tariffs. While the government gave free power to the agriculture sector, it passed on the difference to the industry. Populism should not become a compulsion, he added.
Later, addressing the members of Federation of AP Chambers of Commerce & Industry, Mr. Kanoria said that any policy of the Centre should not be discretionary. Referring to the tendering process for private plants, he felt that the policy of awarding the contract only to the lowest bidder was not always sustainable.