Publisher’s Page

It's election time. As usual, our election campaigns are always characterized by a lot of sound and fury. In the din and bustle of elections, the issue of good governance is as usual confined to the backburner (for that matter it never was or is on the front burner). Nor do we know what the policies of the parties are on industrial development and growth and, in particular, towards chemical industry? Do the political parties have any plans and proposals on crucial sectors of the Indian economy like on oil and gas, refineries, petrochemicals, etc.? On what policies should be adopted towards the fertilizer industry which is crucial for the food security of the country or towards drugs & pharma industry which concerns the health of our citizens? Do the political parties have any proposals to promote innovation and R&D in the country? Or to address the dearth of skilled human resources required for our industrial growth, despite the growing unemployment?

While industry associations are quick to come up with long lists of grievances and supplications just before the budget, there seems to be very little interaction of industry associations with political parties during pre-election. While industry bodies need not politick, it is important for industry bodies to have a dialogue with various political parties so that the interests of industry are well articulated and political parties are made aware of the challenges involved in every sector of our economy. Such awareness will help political parties get a better perspective on the needs of industry and would lead to a thought process in our political class towards policy requirements to facilitate industrial growth. In a democracy, the election process is fundamental to the formation of a government that should deliver and therefore industry associations instead of remaining aloof, should modulate opinion among our rulers to be.

It is difficult to hazard any guess on what kind of dispensation the new government will take. Of whatever hue, it will have to address the economic slowdown and issues of security, first and foremost. Revamping our judicial system and educational process should not brook any further delay.

The election process itself with its huge expenditures at this juncture would also contribute towards shoring up a few pockets of our economy, though this expenditure is largely unproductive.

While there is a recession in the West, there is no recession in Asia and, in particular, in India and China, which are still growing. What India is experiencing is only a slowdown. Despite this, doomsday scenarios are being spread. In fact, there is every reason to believe that with the concerted action being taken by the Western countries, Japan, China and India with trillions of dollars being pumped into global financial systems, the recovery will be sooner and faster than we think. Already in the US, Goldman Sachs has reported profits this quarter and is even wanting to return the federal government loans. Citibank has also reported turning the corner. In India key infrastructural sectors like cement, steel have reported higher off take. Cost competitive polymers have seen higher imports from the US, Europe & S. Africa into the country, from 50,000 tonnes per month of polyolefins to 70,000 tonnes. Sectors like packaging, construction, automobiles, power, textiles are seeing a step up in demand in India. However, exports from India have shrunk by over 20%, but this seems to have plateaued. In any case India is not an export led economy, as exports contribute not more than 20% to our GDP.

So it looks like the worst is over. Amidst not so despondent situation has come the welcome news of Reliance's KG gas fields opening its tap. Power projects and fertilizer plants which were starved of gas will be able to resuscitate itself with the availability of Reliance gas. Additionally, new projects could take off with gas being available. At full production the country will save $9 billion in the annual oil bill and it will generate $42 billion in revenue over the 11 year life of the field, with the government itself netting $14 billion. While the government approved price for gas is $5.34 to 5.87 / mmbtu, the global prices of gas have crashed and companies may be able to import LNG at prices even slightly less than this, though the international prices may firm up once economies pick up.

Though hydrocarbon prices are down, the world should not slow down R&D work on finding alternatives to petro based fuels and feedstocks.