Letters to the editor: Privatise PSUs

Jan 22 2014, 20:54 IST
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SummaryAAP government in Delhi, in a populist measure, cut the power tariff by half for consumption below 400 units and Haryana government followed suit with massive cuts.

Apropos of the edits “Power shock” and “Sacrificial lambs” (FE, January 21), the AAP government in Delhi, in a populist measure, cut the power tariff by half for consumption below 400 units and Haryana government followed suit with massive cuts. The Maharashtra government joined soon after. The central government, meanwhile, is seriously considering increasing the annual subsidised LPG cylinders allowance. The CAD shall rise as a result and become structural, fed by the US Fed’s tapering. Stoking the CAD fire, ONGC being pushed to buy IOC shares will add to its debt burden which is already large, thanks to the oil subsidies. Even though McKinsey suggests bringing in private players to coal mining, the government seems to have little appetite for such a move. The state-owned coal producer, despite its monopoly, is ridden with inefficiencies and is churning out far less coal than is required. As a result, the entire power sector is in a comatose state. Flawed policies of the government in both the coal and the power sectors have hit manufacturing so bad that the country has been pushed to a corner and is managing with imports which, as expected, push up the CAD further. Divestment of PSU shares and increasing private sector participation through PPP and strategic liberalisation of key sectors will help resume the inflow of private investment. This will revive the infrastructure sector and bring the power sector out of its moribund state. The next government’s policies ought to be directed at whether the PSUs fill the state coffers or exacerbate the debt trap further.

Elangalloor Mana Edapal (Kerala)

Reduce national debt first

This refers to the report “AAP to unveil biz-friendly face” (FE, January 20). Policy pronouncements of every party, from the AAP to the BJP, are mostly old wine in new bottles. In his column "What is to be done?" (FE, January 20), Meghnad Desai has suggested that priority be given to reducing the national debt. Whatever the need increasing government expenditure, we cannot afford to go on if we have no income flowing. The government should take special measures to clear the national debt.

Jacob Sahayam

Thiruvananthapuram

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