Let domestic energy prices move up, give poor cash: Kelkar
Press Trust of India / New Delhi Nov 24, 2009, 14:01 IST
Finance Commission Chairman Vijay Kelkar today said domestic fuel prices should be allowed to move in line with global prices, while the poor should be protected through direct cash support.
"We must accept energy prices are going to be high. We should allow prices to move... There should be direct cash transfers to protect the vulnerable, instead of through low prices," Kelkar said at the 8th Petro India conference here.
"We should learn to pass on the prices. Price flexibility is one way of attacking volatility," he said.
Days of cheap energy are over as every country wants to ensure energy supply to promote growth, thereby increasing demand. On the supply side, he said days of finding jumbo or giant fields are receding altering the market structure.
"The market structure has changed. There is increasing financialisation of commodity markets. Hedge funds, private equity funds and the likes to diversify their own risks, increase the risk of high energy prices," he said.
New York's main contract, light sweet crude for January delivery was at $77.52 a barrel, and Brent North Sea crude for January delivery was at $77.53 today.
India needs to diversify its sources, change the gas policy and over 20-30 years, switch over to solar energy, he said. The Solar Mission of India envisages to generate 20,000 MW of solar power by 2020.
Mr. Kelkar, due cognizance to your concern over the energy situation & the affected poor people. How will you ensure cash reaches the intended beneficiaries? Though, you are well aware we are still a country facing bureaucratic hurdles and malign intermediaries. Please ensure these suggestions don't not reach govt ears. suggest something more material and growth oriented, in which poor can find his living.
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