'West Asia war a good opportunity for energy reforms, lower costs for industry'

Mumbai: The conflict in West Asia, which exposed India's limitations on the energy front, provides a good opportunity to start reforms in the sector critical for growth and cut electricity prices for industry, a senior economist has said.

Neelkanth Mishra, the chief economist of Axis Bank and a member of the External Advisory Council to the Prime Minister, said it is essential to use energy "carefully" for future growth.

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"We have the cheapest energy in the world, cheapest electricity in the world for households and farmers, and we have the most expensive electricity in the world for industry and commercial use," Mishra said, speaking at an event organised by Kotak Private Banking here recently.

He said that the "first thing" any nation, which is short on energy, can do is to price its energy right and ensure that it can fuel the growth.

"I've been saying to the government repeatedly that look, it is important that industry gets cheap energy because then you create jobs so that people can pay for the power themselves instead of just giving free power everywhere," Mishra said.

The more than one-month-long West Asia conflict, which started after the joint attack by the US and Israel on Iran in late February, is a "great opportunity" to set the pricing correctly for energy, he added.

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Citing the experience of Japan, he said the East Asian country worked on improving energy efficiency after the oil shock of the 1970s, and it is now generating four times the GDP per unit of energy than we do.

"We need to improve efficiency. Efficiency comes from better pricing. We need to do pricing reform," he urged.

Mishra warned that the rupee may touch Rs 100 to the dollar if crude oil prices go back to the USD 110 per barrel level and stay there for long.