Manmohan Singh

New Delhi, April 3: Prime Minister Manmohan Singh today said his government would resolve fuel supply problems holding up mega power projects within three weeks, make more room for FDI, besides ensuring strong foreign exchange inflows over the next two years.

Singh asked business leaders for help to “prove the prophets of gloom wrong. I would urge Indian industry to have faith in our determination and avoid getting swamped by a mood of negativism”.

The Prime Minister, who was speaking at a CII annual meeting, readily acknowledged that “bureaucratic inertia” and corruption were problems for investors, but added that economic growth above 8 per cent was possible if his government and industry worked together.

Power boost

“The main thing we can do to revive investment is to deal with the impediments affecting infrastructure projects …. The problem of fuel supply — both coal and gas — to power projects has been posing problems … I hope we will see results in the next three weeks,” Singh said.

A plan to pool price of imported coal with coal mined locally by state-run Coal India has run into rough weather with ministries bickering over it and state governments strongly objecting to the move. They expect the move to make coal available at cheaper rates to upcoming mega power plants being set up by big power houses — Reliance, Tata and Adani — but at the same time make electricity sold by state power boards costlier for end-users. Top officials said the government was working on a new formula to break the conundrum.

A similar plan to pool imported and locally mined gas for sale to power plants is also stuck over the pricing formula. Officials say non availability of natural gas at reasonable rates for the power sector has put at risk new-capacity investments worth Rs 36,000 crore, including Rs 25,000 crore of bank finance.

A fortnight back, new power plant owners, including Reliance ADAG chairman Anil Ambani, Lanco chief Madhusudhan Rao, GVK Group chairman G.V.K Reddy and GMR’s G.M. Rao had met petroleum minister Veerappa Moily, seeking a solution.

Unlocking these coal-fired and gas-fired power investment in the pipeline are expected to create thousands of new jobs, add big-ticket investment and help catalyse faster economic growth.

Liberalise FDI

India’s markets in the Western world are either in recession or showed zero growth, which has affected exports, Singh said.

As a result, India’s current account deficit, or the gap between what it earns and spends in foreign exchange, has expanded to around 5 per cent. To bring this down, India “will take all steps to ensure (foreign exchange) inflows remain strong for the next two years,” he said.

The Prime Minister also made it clear he expected to deliver on liberalising FDI rules.