Economic Survey 2012-13 called for clarity in terms of the New Exploration Licensing Policy (NELP) in order to remove impediments to implementation of projects in infrastructure, especially in the area of energy.
While the Survey did not elaborate on what clarity was needed in NELP, it said the long term strategy should focus on issues like… petroleum price distortion (and) natural gas pricing.
The survey said over the years, IndiaÂ’s energy prices have become misaligned and are now much lower than global prices for many products. The extent of misalignment is substantial, leading to large untargeted subsidies, the survey said.
The survey argues that rational energy pricing provides incentives for reducing consumption on one hand and stimulating production on the other. It also provides the right signals to both the producers and consumers and lead to a demand—supply match, the survey said.
The survey calls for aligning domestic energy prices with the global prices, especially when large imports are involved as misalignment could pose both micro and macro economic problems.
At microeconomic level, under-pricing of energy to the consumer not only reduces the incentives for being energy efficient, it also creates fiscal imbalances, it said.
While auto and cooking fuel are sold at subsidised rates, natural gas also is priced at rates way lower than global rates.
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