Opinion | Offload oil assets
India’s Petroleum Minister Dharmendra Pradhan has said that the government has “no business to be in business”. Coming from a top minister, this is interesting, to say the least. State participation in business has remained high in India despite periodic avowals to privatize public sector units (PSUs)—a legacy of an Indian policy in the early decades of freedom, when the State wanted control of the “commanding heights” of the economy. After liberalization, the government’s withdrawal from assorted businesses has proceeded only in fits and starts. Pradhan’s emphatic endorsement of this free-market agenda makes one wonder if the government indeed wants to offload its ownership of oil companies.
True, the state-owned Bharat Petroleum is being put on the block, but many expect another PSU, Indian Oil Corporation, to be the chief bidder. Pradhan, though, said that his statement was not just a slogan but a philosophy for him. Encouraging private competition in the oil sector would benefit consumers the most, he said, citing aviation and telecommunications as examples of the wonders of opening up.
If the Centre intends to withdraw from the oil sector entirely, it would be welcome. Privatization would turn the industry more efficient, reduce prices and spur innovation—so long as sufficient rivalry prevails. For this, foreign investment would have to play a role. Disinvestment needs to be seen as a programme aimed at better outcomes for the economy, and not
just as a revenue raising measure for the government to contain its fiscal deficit. What’s philosophy for Pradhan needs to become practice.