EGoMs are becoming the preferred forum for decision-making by this government. That may not be a bad thing. A smaller group of ministers is less unwieldy and, therefore, more likely to be firm and decisive (and faster in decision-making) than the full Cabinet. And a collective decision-making process also helps iron out any inter-ministerial differences that may exist on a particular issue. So, Murli Deora?s call to reconstitute the eGoM on the issue of further allocation of gas from the now controversial K-G D6 seems sensible?for one, it will help iron out the differences between the petroleum ministry and power ministry (which represents many buyer interests, mainly power PSUs) on allocation issues. And second, given that the minister himself has been drawn into unnecessary and unseemly controversy on K-G D6, it is perhaps best that a final decision on allocation is taken by a collective group of ministers rather than his ministry alone. The eGoM on 3G, for example, worked out very well, sorting out differences between the finance ministry and the telecom ministry on reserve pricing and came up with a credible final decision that could not be pinned on the telecom minister alone.
Still, it is important to get the mandate of the eGoM right to achieve the optimal outcome. The Planning Commission has now recommended decontrol of gas pricing?Vijay Kelkar, chairman of the 13th finance commission and former petroleum secretary, had recently suggested the same. But the government seems undecided. Unfortunately, this may lead to more controversy rather than less. The government would do much better to free the pricing and allocation of gas. The market mechanism is certain to achieve an optimal outcome without generating controversy. The government, of course, has the right to share in the revenues of the natural resource, gas. But taking a decision on what the government?s share should be is where government intervention should end. It?s like in 3G?the government gets a price for spectrum, but does not subsequently interfere in how private operators roll out 3G and at what price they sell it to consumers?competition in the free market takes care of that, just as it would do in the pricing and allocation of gas. We have made these arguments before in these columns. And as the government gets ready to set up another eGoM on gas, it would do well to allow the eGoM to consider the possibility of decontrolling the price and allocation of gas while fixing revenue sharing with the government. That would be the most rational way to move forward.
