India offers a lower band on oil prices

New Delhi, Nov 26 (UNI) Faced with the global risk of volatility in crude prices, India today made an offer of a lower band on oil prices on the condition that oil-producing countries will not cross a higher band to ensure orderly growth of the world and Indian economy.

Finance Minister P Chidambaram made the suggestion in this regard while participating in the Plenary Session at the 22nd India Economic Summit on 'India in a World at Risk.' The Summit has been organsied jointly by the World Economic Forum and CII.

As an illustration, Mr Chidambaram offered the lower limit below prices would not fall as 40 dollars a barrel on the conditionality that prices would not go above 50 dollars a barrel.

The Finance Minister was critical of the industrialised countries for preaching to India that it should lower energy intensity in its development process, saying the per capita consumption of energy in the developed world was much higher in these countries than the developing world. Besides, these countries had no constraint of this resource when they were developing.

He said their advice in this regard was unfair and unsolicited.

But offered to ensure that oil prices do not fall below a level.

''All the oil consuming countries should sit together and fix a band and then I am ready to pay 40 or 50 dollar a barrel. But they should give me a guarantee that the price would never rise beyond that,'' he said.

''India was being robbed of growth when global oil prices touched 75 dollars a barrel. The country lost one per cent GDP when oil prices went through the roof,'' he remarked.

The Minister charged that oil prices were not based on demand and supply situation, but it was a speculative market. He asked what has changed in the scenario that prices moved up and down in this manner.

Mr Chidambaram said he had to sacrifice issues of inter-generation equity by issuing oil bonds to compensate the oil marketing companies.

The proposition with regard to the risks stated, ''As India begins to fulfill its promise as the world's largest free market democracy with stellar growth rates, the world is facing increasing global uncertainties. A growing list of risks is beginning to weigh heavily on global confidence about the future.'' The issue that was examined in this regard was what can the country do to address these new risks.

Those who participated in the session included Mr Nandan M Nilekani, CEO and MD Infosys, Mr R Seshasyee, Managing Director, Ashok Leyland, Mr Klaus Schwab, Founder and Executive Chairman, World Economic Forum, Mr Mohammed A Alabbar, Chairman, Emaar properties, United Arab Emirates, and Mr Ralph R Peterson, Chairman and Executive Officer CH2M HLL Companies, US.

The session was chaired by Mr Nik Gowing, Main Producer, BBC World, United Kingdom. Mr Chidambaram was a Special Guest.

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