It is encouraging to see that the initiatives announced in the Union Budget 2018 acknowledge the current needs for the development of infrastructure, agriculture, finance, health, education and social protection. However we see little action in addressing the fundamental immediate need of the economy to attain energy security and reduce the burden of crude oil import at a time when oil prices are rising. With India’s huge import bill, there is a need for the Government to take the reforms and reliefs route to spur domestic oil production and give a big boost to the country’s energy security objectives.
Contrary to the burden of import, domestic production will add substantial revenues to the Government’s exchequer – at the same time create jobs and help the economy at large. The best way is to create an eco-system to encourage domestic production and cut down dependence on imports with a sustained, targeted approach. Reducing the Cess rate from 20% to 8% in line with industry recommendations, creating a level playing field for domestic production vis-à-vis imported crude, and addressing other issues of fair pricing of domestic produce and additional royalty burden will spur confidence and help both investment inflow and the nation’s energy independence.
We look forward to having these issues addressed in the near future and working closely with the Government to reduce dependence on crude oil imports. This will be important to balance the fiscal and trade accounts and will be a step towards fulfilling Prime Minister Narendra Modi’s vision of reducing dependency on imports by 10% by 2022.
(Mr. Sudhir Mathur is CEO of Vedanta Cairn Oil & Gas, Views are his personal)