New Delhi, Aug. 16 -- India's dependence on imported crude oil remains a significant macroeconomic and strategic vulnerability. Hence, increasing domestic exploration and production is an important policy goal.

The government's approval of the Samudra Manthan scheme is welcome in its intent. Its emphasis on modern seismic data, common offshore infrastructure and local oilfield capabilities addresses gaps that markets are unlikely to correct. Geological information and basin knowledge are public goods, and governments have a vital role in creating them.

The programme departs from this logic in its proposal to reimburse up to half the cost of selected exploration wells. This invites a basic question: what makes an upstream petroleum fisca...