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How to cut oil import bill? Mr Moily has no clue

September 03, 2013 14:23 IST

How to cut oil import bill? Mr Moily has no clue

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Business Standard

Veerappa Moily's suggestions on oil use do not inspire hope


Petroleum Minister Veerappa Moily said last week that the prime minister, worried about the current account deficit, had instructed him to find ways to reduce the oil import bill, which was almost $170 billion in 2012-13, by $25 billion in the current financial year.

Mr Moily seemed confident of achieving this goal — but, after hearing his ideas, most observers are unlikely to share that confidence.

Most startlingly, Mr Moily suggested on Sunday that closing petrol pumps between 8 pm and 8 am was one way to reduce the consumption of petrol and diesel.

Naturally, this suggestion was greeted with horror or derision, depending on how seriously it was taken.

Taken at face value, it would reveal an unwillingness to understand how market systems work — rationing of this sort is never a solution.

The Prime Minister’s Office has rejected Mr Moily’s suggestion — reportedly noting that the idea would put 250,000 jobs at risk. Mr Moily himself has now had to reverse course, and has claimed that he was merely repeating a suggestion from the public at large. However, that in no way diminishes his culpability in airing such an ineffective idea in the first place.

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Photographs: Reuters

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How to cut oil import bill? Mr Moily has no clue

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Mr Moily has also said that he intends to launch a six-week campaign from mid-September to raise awareness about the need to save fuel.

This will come as a much-needed fiscal stimulus to those who put up street plays and the like — it will cost Rs 17.5 crore (Rs 175 million).

However, it is doubtful if this will alter even one person’s fuel consumption pattern.

But Mr Moily has claimed this campaign will save Rs 16,000 crore ($2.5 billion).

This has to be one of the more optimistic of estimates put out even by this government, even given the high standards for optimism it has set in recent years.

Perhaps Mr Moily had best familiarise himself with the abject failures of previous government campaigns to raise “awareness” in various fields before expecting such great things from this one.

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Photographs: Reuters
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How to cut oil import bill? Mr Moily has no clue

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Mr Moily’s sole useful suggestion was to step up oil imports from Iran, which could be paid for in rupees due to the inability of that sanction-hit country to accept payment in dollars.

Iran was India’s second-largest supplier of crude oil till 2010-11; it is not even in the top five today.

This follows sustained pressure from the United States to reduce trade with Iran; India, in recognition of the fact that it reduced imports from Iran by almost 28 per cent, was granted a further 180-day waiver of US sanctions in June.

However, even here, Mr Moily’s strategy leaves a lot to be desired.

Shouting from the rooftops that India plans to reverse course on Iran is just the sort of thing that will cause eyebrows to be raised in the US.

If Washington, DC, increases pressure as a consequence, then this initiative too will be stillborn. On all counts, Mr Moily has created more problems than he solved.

Perhaps the prime minister should reply to his suggestions with a lecture on the value of silence.


Photographs: Reuters
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