Ignorance is bliss post APM abolition in March 2002

Vol 5, PW 15 (12 Sep 01) People & Policy

Can it be true that the Indian oil ministry is still unprepared for March 2002, when the complex set of subsidies and cross subsides that govern this country's oil sector are swept away With seven months before the anachronistic-sounding 'Administered Pricing Mechanism' is consigned to history, India still has no post-APM road map in place! Three oil ministry representatives admitted as much during a one-day seminar on the 'Deregulation of the Indian Petroleum Industry', organised by the Tata Energy Research Institute in Delhi on 30th August.

Oil minister Ram Naik, former oil secretary Subbaram Narayan, and joint secretary finance Ravi Saxena admitted the Indian government needs help - fast! Saxena summarised it best. "Dismantling the APM is easy," he said.

"It's harder knowing what to do afterwards." His radical solution: "Leave it to the invisible hand of Adam Smith." Naik boasted he would abolish controlled pricing "ahead of schedule" but couldn't resist asking delegates to come up with ideas and send them to him direct! Narayan seemed confused about how to manage the kerosene and LPG subsidies post-APM. "I can't think of an efficient way of delivering the LPG subsidy to consumers," he said.

"The kerosene subsidy should be easier to manage under the PDS (Public Distribution System)." With such confusion, APM abolition will most likely be delayed, not brought forward.