Moily Bus Day debut this Wednesday but forex saving plan draws flak

Within his own ministry, many are ridiculing this conservation drive. They say the idea of conservation campaign is nothing new

This Wednesday when petroleum minister M Veerappa Moily makes his Bus Day debut as part of a mega petroleum conservation campaign, his armed guards might not be able to accompany him when he boards a commuter train for getting to office. But it is just one of the problems he faces. Even finance minister P Chidambaram has termed his mega plans to save foreign exchange through conservation drive "ambitious".

When the rupee had dived to 69 against the dollar last month, Moily had drawn up a $20-billion plan to save on the country's import bill. The two important components of it were conservation and rupee trade with Iran. As part of the conservation campaign, officials of his ministry and oil companies under the administrative control of the ministry will travel by bus or metro rail every Wednesday starting October 9.

Within his own ministry umbrella, there are many are ridiculing this conservation drive. They say the idea of a conservation campaign is nothing new. It is an annual affair on which the oil marketing companies spend about Rs 25 crore every year.

MEASURES QUESTIONED

Moily's road map for conserving forex

• Conservation campaign to save $2.5-5 billion
• Reduction in demand of LPG to save $258 million
• Rupee payment for Iran imports to save $8.47 bn
• To save $340 mn through ethanol blending

Derailment Doubts

• Finance ministry calls it ambitiuous, lack of mechanism in place to judge success, only extension of yearly campaign by spending Rs 25-30 crore
• There is already a drop in demand due to measures like cap on subsidised cylinders and linking it with Aadhaar
• Iran's new government has completely rejected the proposal of 100 per cent rupee payment and wants India to pay at least 55 per cent in currencies like yen, yuan or ruble
• The scheme that failed to take off in the last 10 years is still stuck in procedural hurdles

"There is nothing new in this. How are they going to quantify whether $5-billion or $2.5 billion is saved from conservation only? After six weeks, the only thing left before the government to show would be a decline in consumption, which is already there," said a senior oil marketing company executive.

According to the Petroleum Planning and Analysis Cell, during April-August, consumption of both liquefied natural gas and diesel fell 1.6 and one per cent, respectively, while kerosene has seen a 4.3 per cent decline. "The ministry can show these figures and claim the credit for the decline," the official added.

While the ministry has roped in cricketer Virat Kohli and badminton star Saina Nehwal for this, Moily had also mooted ideas like oil marketing companies (OMCs) providing free cycles to consumers for mobility.

The minister's grand plan also includes asking public sector and their joint venture refineries to keep imports to the last year's level, launching of ethanol blending programme and allowing OMCs to arrange external commercial borrowing to meet their working capital demand. Responding to these ideas, Chidambaram had suggested financing oil imports through foreign borrowings to help cut current account deficit (CAD).

Of the $20-billion plan, the idea of saving $8.47 billion is through 100 per cent payment in rupee terms for Iran imports. However, this overboard announcement seems to have miffed the West Asian country, with its new regime showing reluctance to accept payments in rupees.

Even the ambitious ethanol blending programme that is expected to save $340 million is stuck in procedural hurdles, making Moily's road map of $20 billion savings a distant dream.