At a time when the world seems to be cautious due to fragile global market conditions, India seems to be gung-ho in pursuing market reforms. In a latest move, the government has decided to sell small oil and gas fields to private companies after the state-run ONGC and Oil India surrendered some of their fields. The government, which has been gung-ho about disinvestment even prior to its election, seems to have gotten some of its mojo back.
Of the 69 fields to be put on auction, 63 are from ONGC and 6 are from Oil India. With crude oil currently at $45 a barrel, it is estimated that the production of hydrocarbons from these new fields will be worth around Rs 3,500 crore a year, according to Petroleum Minister Dharmendra Pradhan. The minister described it as a paradigm shift from cost-recovery model to revenue sharing.
India’s Prime Minister Narendra Modi had been emphasising on economic reforms to rekindle global optimism in the India story. Mr Modi had promised to unleash a second generation of economic reforms to boost India’s economy. However, given the present global economic scenario, it is too early to predict if the new measures would bring about tangible change as hoped. At a time when global crude prices are low and the rupee is weakening by the day, the approved reforms by the cabinet may take time to make any positive impact.
While India’s economic position is relatively much better than its other peers among the emerging economies, it still has systemic issues that need to be addressed. In its bid to woo investors and regain positive market sentiments, the government seems to be very upbeat in pushing for economic reforms. While the popular perception is that the government is pro-reform, there is growing external pressure on India to implement more reforms by credit rating agencies such as Moody’s.
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