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?Uniform petro taxation policy is necessary?

india Updated: Feb 09, 2007 23:55 IST

Former Chairman and managing director of ONGC, Subir Raha (58), who is also president of All India Management Association, completed his MBA with distinction from the University of Leeds, United Kingdom, in 1985. Before taking over the reins at the ONGC, he was the Director (human resource) on the Board of Indian Oil Corporation Limited. Under his leadership, ONGC was adjudged the most valuable company in India. Raha, who was in the City to address the IMA National Convention, spoke to Manoj Ahuja. Excerpts:

Do you think we need a uniform taxation policy on petrol and diesel nationwide instead of different taxes in different states?

Yes, I think it is very important because crude is a declared good, which is taxed at four per cent everywhere and similarly natural gas should be made declared goods and as far as products (petrol, diesel, etc) are concerned I think it is very important and very urgent that we have VAT and uniform tax across the states because in many ways it would improve efficiency and cut wastage. Generally, I think that would be helpful to the customers because today we quite often see that one would drive from one state to another because of price difference. Between Delhi and UP, I believe the price difference is Rs 3 to 4 a litre. Similar things occur in southern states. So it would be more efficient and more customer-friendly.

With so much politicking over increase or reduction in retail fuel prices, what do you think is the right way to link international crude prices with domestic retail prices?

No, the issue really is not benchmarking of prices. That benchmark is already there. The issue is that while the government dismantled administered pricing mechanism in March 2002, the pricing continued to be regulated or controlled whichever way. If the pricing is really made free and transparent, I am sure market forces would come into play.

Right now the pricing mechanism is very complicated and there are illogical differences in taxes across products. The second thing is that since the pricing is not free, prices are not competitive. The rest of the world also has free pricing. And the prices, I am sure, will drop significantly (once it is made free). See, the same company is offering the same product like  diesel to bulk consumers at low prices, which shows that there is a margin. So to my mind the answer is that taxes should be rationalised. For example, there are extremely high taxes on petrol, but petrol is used in two-wheelers, which are not rich man’s vehicle.

So those old dogma need to be revisited. Second thing is that government should just let the market happen, and when that happens the prices will surely come down.

With Indian economy growing at a fast pace, do you think we have enough management schools to meet the demand for future managers?

My concern is not that we don’t have enough management schools. I believe there is data according to which there are some 1,400 management schools in the country.

I think the concern is the quality of teaching and the contents of teaching. Quality even in engineering colleges also is a matter of serious concern because many of these schools do not have proper faculty, proper facilities and so forth. Content-wise, we continue to teach management by western examples. We (at AIMA) are talking to Association of Indian Management Schools (AIMS) that we should jointly set up a corpus, which would sponsor and facilitate Indian case studies. That would be considered by AIMS board shortly so that would be a step in the right direction in terms of contents. Then we also need to look at the quality.

Looking back what was the most significant achievement of ONGC under your leadership?
There are quite a few things. One of the exciting things was that we reversed the production graph of domestic operations by inducting technology, by changing processes and by right people. We managed to step up the production in all the fields and achieved net increase of 10 to 15 per cent.

I think for any oil and gas company it is a major breakthrough. Similarly overseas, we expanded from one property in one country to over 30 properties in 15 countries, which made ONGC Videsh the biggest explorer of India. Of course, in terms of shareholder value we created maximum value in India’s history. So I think in every field we made great strides.

What are your future plans?

Well, I am not going to join any company. I am looking at developing some projects with some friends. Then, I am on some boards (of companies). I have taken this decision for two reasons. One is that if I join another oil and gas company, there is conflict of interest. Other thing is that there are issues with becoming a whole-time employee. I have worked for over 35 years and want to enjoy life.