The Hindu Business Line : Hike petrol price, not diesel: Montek

Mr Montek Singh Ahluwalia (right), Deputy Chairman, Planning Commission, and Mr Venkat Kedlaya, Vice-President, BCIC, addressing an interactive session organised by the BCIC in Bangalore on Saturday. — G.R.N. Somashekar

Bangalore , Aug. 27

THE Planning Commission is in favour of linking domestic fuel prices to international prices, according to Mr Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission.

Speaking at a meeting with members of the Bangalore Chamber of Industry and Commerce here on Saturday, Mr Ahluwalia said, that he favoured an increase in the price of petrol instead of diesel. He said, "I would rather have a higher price for petrol than for diesel, since it is an input for the industry."

Referring to the mid-term appraisal of the Tenth Plan, Mr Ahluwalia admitted that there were slippages in growth targets for the gross domestic product. Growth during the Tenth Plan was only about six per cent. "Industrial performance has not reached the growth we want," Dr Ahluwalia said.

However, the mid-term appraisal would attempt to push up growth to 7 per cent for the rest of the period through a fine-tuning policy. He said that the Planning Commission is concerned about the deceleration in the farm growth. Farm growth was targeted at 4 per cent, but the actual rate was barely one per cent. One major problem with the farm sector is the low utilisation of water resources, the Deputy Chairman said. Irrigation projects taken up by State governments were behind schedule for want of resources. The Centre, he said, is prepared to intervene wherever necessary to help complete the projects.

Referring to infrastructure, he said, the key area of concern is power, Mr Ahluwalia said. Distribution, wherein losses are as high as 44 per cent, is also a major problem. There is little the Centre can do in the power sector, since it is a State subject. "We are in favour of incentivising Central support to the power sector," he said. This implies that Central support to the State power sector would be linked to specific reform achievements.

Mr Ahluwalia said that the Centre is in favour of advancing the open access deadline beyond 2009 to increase competition. In four to six weeks, he said, the national tariff policy announcement would clarify some of the issues. He added that the Planning Commission is in favour of removing the 15-megawatt limit for open access.

The National Highways Authority of India had spent Rs 30,000 crore for the development of the Golden Quadrilateral, but it would need to spend another Rs 170,000 crore till 2009, Mr Ahluwalia said. The Planning Commission also supports the build operate and transfer (BOT) approach, since there is little resistance from the users towards tolls. For increasing the role of the private sector, the Government is preparing a single model concession pact. However, the public expenditure would be continued for rural roads. This is essential, he said, for improving rural connectivity.

For the railway sector, the Government is planning a dedicated freight corridor linking Mumbai, Delhi and Kolkata. A feasibility study on the corridor is getting prepared by the Railways and the project is expected to be implemented on the same lines as the Konkan Rail Corporation. The corridor would be ready by 2009, he added.

The financial bids for upgrading the Delhi and Mumbai airports are expected to be awarded by October. The last phase of drafting the concession had been completed and is now awaiting the clearance of the Law Ministry, he said. The modernisation of the Chennai and Kolkata airports would also be taken up on similar lines. A fund of Rs 5,000 crore has been created for urban development. However, cities or towns would have to prepare a detailed plan on fiscal sustainability to access funds from the plan for the creation/ugradation of urban infrastructure, he added.

Mr Ahluwalia said that the Centre is setting up a separate infrastructure corpus of Rs 1,500 crore to meet the viability gap for funding the requirements of projects. For this gap, the Government had also sought assistance from multilateral financial institutions, he added. This would be in addition to the proposed special purpose vehicle for raising sovereign guaranteed funds from the markets.

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