While the government faces the music for going slow on reforms, away from the media glare, North Block is working on the blueprint for a fresh push to reforms.
Economic affairs secretary R Gopalan has spelt out the details of the blueprint and says that coal, power and petroleum sector reforms are on the fast track.
“In power we have to make sure that additional capacities are created, distribution losses are reduced, reforms in T&D are carried forward. So in each of these a number of steps are required to be taken. All the concerned ministries are on it currently, a coal EGOM is taking place shortly, a telecom EGOM is taking place shortly, we need to take decisions very quickly, so that we are able to improve the investment sentiment,'' Mr Gopalan said.
Reacting to the issues raised by ratings agency S&P, Mr. Gopalan also said that India needs to take steps to manage its subsidy bill, control its expenditure and achieve targeted revenue to keep the economy on track, adding that “it is not that S&P has to indicate that. We all know about it and we are determined to take these decisions”.
The empowered group of ministers on coal is considering steps that can be taken to boost production, so that all the power plants that have been commissioned can produce power at optimum levels. Power plants fired by coal have been facing acute shortage of fuel, sometimes managing with supplies that barely last a week.
On the issue of subsidies, particularly in the context of pricing of oil products, Mr Gopalan says, “These are all in the works, so that at an appropriate time the political executive will take a decision. We are determined if the fiscal deficit has to be maintained at 5.1 per cent, we would like to better it, but we have kept a reasonable target of 5.1 per cent.”
Speaking specifically about the timing of diesel deregulation, the economic affairs secretary said, ''The sooner we take the decision, the longer time we have got in the year to adjust. There are a number of alternatives, which are at various stages of consideration right now, so I would not like to divulge. How do we handle this as we go along, is an issue that we are looking at.”
Commenting further on the issue that oil companies have not raised prices since November last year, Mr Gopalan said, “It is up to the oil marketing companies to decide on prices. The government provides subsidies only for diesel, LPG and kerosene.'' That clears the air that the government will not make up for the losses of oil marketing companies after they have not raised prices of petrol in the last five months.
According to the assessment of the finance ministry, oil prices are likely to be rangebound over the next few months. On the lower side, crude oil prices could hover around $110-115/barrel, which will help the government in keeping its oil subsidy bill, which peaked at Rs 1.38 trillion last fiscal, under check.
The government is also preparing the ground for replying to the notice sent by Vodafone under the bilateral investment treaty with the Netherlands. The government has decided that tax arbitration is not provision under the India-Netherlands Bilateral Investment Promotion and Protection Treaty (BIPPA).
“This BIPPA does not cover tax disputes,” Mr Gopalan said, clarifying the government stand. A formal reply to this extent will be communicated to Vodafone shortly, he added.
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