The Telegraph
Sunday , November 25 , 2012
Since 1st March, 1999
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Output advice for Coal India

Calcutta, Nov. 24: C. Rangarajan, chairman of the economic advisory council of the Prime Minister, today advised the country’s largest miner Coal India to enter into an arrangement with private players to increase production.

“Coal India and its subsidiaries can use the private sector as an agent. They (private players) can supply coal to Coal India at some agreed price,” Rangarajan said at an interactive session of the MCC Chamber of Commerce and Industry today. He added that it could act as a temporary measure to boost production.

His advice comes at a time the government is battling hard with the growing current account deficit fuelled by high imports of commodities, including gold and coal.

The current account deficit rose sharply in 2011-12 to touch 4.2 per cent of the GDP on account of high trade deficit.

According to the Planning Commission, coal imports are likely to go up to 185 million tonnes (mt) by 2017. CIL has fixed a production target of 464mt for 2012-13. The company had achieved 435.84mt output in 2011-12 against a scaled-down target of 447mt.

Industry association Ficci has suggested opening up of the coal sector. Chamber president R.V. Kanoria had said privatisation of CIL would create competition and correct domestic prices.

Subsidy check

Rangarajan said the government should be “willing and courageous” to cut down subsidies to 2 per cent of the GDP from the present 2.4 per cent. But it should be mindful of food subsidy that is critical for the country.

“The target of the government as part of the fiscal consolidation exercise is to bring down subsidies as a percentage of the GDP. But providing complete food subsidy is of paramount importance for countries like India,” he said

The former RBI governor said taming inflation through the right balance of monetary and fiscal policies was also important.