Chief Economic Advisor (CEA) V. Anantha Nageswaran on Monday stressed that policy stability and transparency were critical to ensure the success of the government’s asset monetisation programme. He also separately flagged the hurdles to making a switch away from fossil fuels and highlighted the constraints, both fiscal and in terms of supply of raw materials like metals and minerals, to meeting this key global challenge.
While the National Infrastructure Pipeline envisages creating digital and physical infrastructure to support economic growth of 7% and above, Mr. Nageswaran said that asset monetisation was not just about garnering revenues for the government but also ensuring the economic efficiency of these assets by bringing them back to productive use.
Noting that regulatory consistency, clarity and predictability and a certain sense of stability in the regulatory framework were very important, the CEA said these had “been somewhat variable in the past, to put it mildly”.
“So that gives an element of uncertainty for investors and even the government that wants to monetise these assets. Policy stability, consistency and transparency would have to spill over into the regulatory framework that would govern asset monetisation moving forward and that is what would make a very big difference between a success and a not so successful programme,” he said.
For the world to meet its energy efficiency targets, the key questions were sequencing actions in the right order and the ability to convince the public, he said during a keynote address on India’s most salient challenges, hosted by The Centre for Policy Research and the British High Commission, New Delhi.
“We all have learnt from 2008 and the subsequent policy framework implemented in the last 14 years to recover from that crisis and then the pandemic, there is a certain disconnect from what the policy makers aim to achieve and the kind of impact they have on the ground with respect to the average family or household, whether it is [in] the developed world or developing world,” the CEA remarked.
“Post-2008 and post 2020, both developed and developing countries face huge debt burdens and therefore, debt servicing will become onerous as interest rates rise so we need to come a long way down from homilies… from general principles to specifics to be able to convince the public and ensure that whatever capital is available is on realistic, sustainable terms which doesn’t endanger or jeopardise fiscal health both in developed and developing countries,” he said
With coal reserves worth 120 years of production still remaining in the world, strong incentives would be needed for people to switch to renewables, which ‘at the moment are unreliable on supply, as well as continuity’, he pointed out. “We may have to offer them an even higher subsidy to incentivise the switch. Now, where is the fiscal ability to do so, after the 2008 crisis and the COVID-19 pandemic?” asked Mr. Nageswaran.
The CEA also emphasised the need for greater investments in metals and minerals for renewable energy technologies, which were highly metal-intensive.
“Even if investment is made, we have to have an international regulator to be able to ensure that they are available to all countries if we want all countries to progress to net-zero emissions by 2050 or 2070 at the same time, imagine the quantum of these metals and minerals required. And who will ensure they are fairly allotted? We know how the COVID-19 vaccines got allotted [over the] last two years despite the COVAX programme,” he averred.
“While we all agree on the importance of global warming and climate change and the need to ensure that we move on to sustainable ways of living and support island states, build resilience, all these are laudable goals, we have to ensure that we make the transition in a manner that doesn’t become counterproductive,” he concluded.