Expert Zone

Straight from the Specialists

The enigma of diesel prices

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

Budget considerations make it necessary to raise prices of diesel; political exigencies make that difficult. No wonder Chief Economic Adviser Kaushik Basu was cautious enough to suggest ‘partial decontrol’. But the present is the time to do more than that.

Diesel prices were last increased in June 2011. With the current administered price, marketing companies are forced into under-recoveries which now amount to over 9 rupees per litre. Not all under-recoveries are subsidies. The government funds the major part with oil companies absorbing the balance. Call it whatever but there is an outflow of cash from the government.

The planned under-recoveries keep the price of diesel deliberately low. Diesel is 20 percent cheaper in India than in Pakistan, 27 percent cheaper than in China and 34 percent cheaper than in Brazil. This under-pricing of diesel has resulted in two major undesirable consequences.

Is inequality inhibiting growth?

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By Raghuram Rajan
The opinions expressed are his own

To understand how to achieve a sustained recovery from the Great Recession, we need to understand its causes. And identifying causes means starting with the evidence.

Two facts stand out. First, overall demand for goods and services is much weaker, both in Europe and the United States, than it was in the go-go years before the recession. Second, most of the economic gains in the U.S. in recent years have gone to the rich, while the middle class has fallen behind in relative terms.

What’s right with India

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

Whenever I pick up a newspaper or a magazine — especially The Economist — I keep reading pieces about what’s wrong with India. Corruption is rampant, the infrastructure, what there is of it, is falling to bits, the government is senile and feeble and the economy is flagging — and so on. All of which may be true — but it rather depends on your perspective.

FDI in insurance — to hike or not to hike?

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

FDI in insurance might just be increased to 49 pct. This sounds way too familiar and has been the situation for quite a long time now. Or we could do some scenario building and even see it being delayed by a few more years.

Great potential in India long-term growth story

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(Rajan Ghotgalkar is Managing Director of Principal Pnb Asset Management Company. The views expressed in this column are his own and do not represent those of either Principal Pnb or Reuters)

Reforms seem to be the flavour of the season after we relished and put aside the corruption issue.

India Market Weekahead – Time to book partial profits

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

A stupendous rally towards the end of June was followed by consolidation in the first week of July. Though the benchmark Nifty index ranged in a narrow band of 60 points between 5270 and 5330, the broader market especially the mid-caps were in focus with some of them returning more than 20 pct during the week. After a long time we saw domestic investors returning to the equity markets albeit with a lower risk appetite.

Bashing China won’t fix U.S. economy

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

Both ends of the political spectrum seem to be competing to be tougher on China economic issues. They’re both wrong.

Fukushima disaster report: relevance of cultural traits

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

The first report of the three major investigations commissioned by the Japanese government into the Fukushima nuclear disaster of March 2011 was released in Tokyo on Thursday. The findings of the investigation, chaired by Dr. Kiyoshi Kurokawa challenged the dominant assumption that this tragedy unfolded due to a confluence of natural calamities of tectonic proportion — namely a tsunami and an earthquake — and concluded that Fukushima was alas, ‘man-made’ and occurred due to “a multitude of errors and wilful negligence” that implicated the government, safety regulators and the operator of the nuclear plant.

No silver lining in this monsoon cloud

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

India’s monsoon rains have been delayed and were already 30 percent deficient by the end of June. There are doubts whether rains will pick up during the rest of the season. August and September are likely to be dry which will damage crops and reduce farm incomes.

Pakistan apology deal incidental to real problem of its support for terrorists

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

As Washington closed down for the Independence Day holiday, U.S. Secretary of State Hillary Clinton publicly apologised to Pakistan for the deaths of 24 Pakistani soldiers inadvertently killed by a NATO military strike along the Afghan border last November.

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