Strong governance needed for efficient resource management: CII

NEW DELHI: Strengthening of governance as well as gradual unwinding of subsidies are necessary to ensure efficient resource management in the country, CII President B Muthuraman said today.

Calling for an integrated approach to address energy issues, Muthuraman said the government can take a number of policy actions such as unwinding of subsidies.

"This government, this country needs to strengthen the governance mechanisms and strengthen ministries which are into resources... Unwind subsidies on a gradual basis. Subsidies are not going to help behaviour," Muthuraman, who is also the Vice Chairman of Tata Steel, said here.

"Pricing is a policy and pricing must be used to ensure that there is a conscious effort to conserve what is expensive," he said while speaking at an event organised by the Bureau of Energy Efficiency (BEE).

While petrol prices are market-linked, the government decides the rates of LPG, kerosene and diesel, which usually results in a large budgetary expenditure on subsidies.

In January, the Reserve Bank of India (RBI) said that particularly, as the food subsidy bill is expected to rise, it would be prudent to fully deregulate diesel prices to "contain both aggregate demand and the trade deficit".

According to Muthuraman, there is a need to strengthen resources ministries with more expertise. "I am not saying that there is no expertise, there is lot of expertise but in a country like India, which I believe there is resource shortage... you will always focus attention on something that we don't have".

Speaking on the occasion, BEE Director General Ajay Mathur said energy efficiency initiatives have a huge amount of business potential.

Energy efficiency steps are expected to result in avoided capacity -- which would otherwise have been needed -- of over 10,000 MW in the 11th Five-Year Plan ending March 31, 2012, he said.