Sunday, October 12, 2014

Senior scribe and consultant asks Government of India not to “bribe” Pak with gas when India needs it most

Aiyar
By Our Representative
This has come from one of the most influential scribes on economic affairs of India. Swaminathan S Anklesaria Aiyar, who is consulting editor of the Economic Times and has been a consultant to the World Bank and the Asian Development Bank, has revealed that the Government of India is all set to come up with a “ridiculous proposal” — of supplying Pakistan five million units of imported gas per day, enough for two large power plants, at a time when India is “desperately short of gas”. He advises Government of India not to “bribe Pakistan with gas” when we need it more.
Suggesting the proposal to give gas has been floated at a time when “many Indian power plants lie closed for want of gas”, Aiyar says, “The consequent power shortage translates into lakhs of farmers with idle tubewells, hundreds of industries without power, and hence thousands of people without jobs.” The situation is such that “one industry is buying gas from coal mines at $22unit, five times the government controlled price of $4.2unit, indicating high scarcity.”
Giving details of the proposal, Aiyar says, “India imports gas from the Gulf. Pumping it to Wagah will entail much cost and energy. The Jalandhar-Wagah pipeline will cost Rs 500 crore”. He wonders, “Don’t we have better uses for scarce funds? Pakistan is believed to have offered a price that covers costs of transporting gas to the Wagah border. So what? Surely Pakistani consumers must compete with Indians in open auctions. If Indians are willing to pay $22unit, how can Pakistan be offered a lower price?”
Aiyar asks, “Indian consumers pay 5% import duty on gas. Yet the government proposes waiving import duty for sales to Pakistan. Why favour Pakistanis over Indians? Why deprive Indians of gas to meet Pakistani needs? Diplomats claim the gas deal will improve Indo-Pak relations. I am all for it, but why in this manner?”
Aiyar says, “As a free trader, I favour lifting all barriers to trade and investment between the two countries. But Pakistan says no. For decades, it refused to normalize economic relations till the Kashmir dispute was resolved, which meant forever. In recent years, Asif Ali Zardari and Nawaz Sharif have spoken of normalizing relations. Yet neither has found it politically possible to take the first step: giving India equal trade access with all members of the World Trade Organization.”
Pointing out how India has been trying to unreasonably woo Pakistan, Aiyar says, “India has long granted Pakistan most favoured nation (MFN) status, but Pakistan has refused to reciprocate — an explicit declaration of hostility. Two Pakistani leaders have promised MFN status but not delivered. Clearly, Pakistan is not ready for normalcy.”
Saying that he is not “among those seeking to ban economic relations with Pakistan till it stops aiding terrorists”, Aiyar says, “I believe India must give Pakistan MFN status. But if Pakistan refuses to reciprocate, it is plain silly to try and bribe it into friendship through gas deals at the expense of Indian consumers.”

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