India Insight

India’s energy price reforms face hurdles

(Any opinions expressed here are those of the author and not of Thomson Reuters)

India has raised gas prices and also made it easier for power companies to pass on the rising costs of imported coal to customers – two policy steps aimed at boosting fuel supplies and helping to minimize the country’s chronic power shortages.

However, the reforms are unlikely to be a quick fix for India’s blackouts. It may take at least two years for the gas price rise to boost fuel supplies as investments in output and import facilities bear fruit, but even then the key to the plan may lie with distribution companies.

The state-owned distributors – known as discoms – will have to find money to buy the more expensive electricity from power stations. But passing on too much of the costs to consumers will be politically unpopular and the discoms may opt instead to simply halt supply.

Reuters spoke to Vinayak Chatterjee, the head of Feedback Infra consultants about the reforms.

Chatterjee said the coal policy change was an imperfect solution but better than nothing.

The BJP and the Congress: a muddled economic ideology

(Any opinions expressed here are those of the author and not of Thomson Reuters)

As debates in India go, the one between Amartya Sen and Jagdish Bhagwati – two of India’s leading economists – has been fairly civil. Not the belligerent speeches or noisy protests that characterise public discourse in the country. Instead, this battle of ideas is taking place in the rarefied circle of the nation’s think tanks and financial pages, with economists, writers and policy makers weighing in. But the civility cannot mask the intensity on both sides; moving beyond economic data and models, the debate has become personal. At stake is a very powerful question – what is the best way to improve the lot of India’s citizens?

Conveniently, both sides have articulated their vision for the country in two recent books. The first by Sen and his long time collaborator, Jean Dreze, titled “An Uncertain Glory” questions why India continues to lag on all social indicators despite two decades of free-market reforms. Their data shows that the country’s growth has largely bypassed the poor and that the reforms have benefited a privileged minority. To correct this imbalance, Sen and Dreze make the case for greater public intervention in health and education.

On the other side of the economic spectrum is ”Why Growth Matters“ by Bhagwati and Arvind Panagariya, his colleague at Columbia University. Their book is a forceful defence of India’s growth story. Bhagwati and Panagariya assert that reducing the role of the government and allowing private enterprises to flourish is the only way to lift millions of Indians out of poverty. The state can fund welfare programs only if the economy is growing at a fair clip and public revenues are healthy. That such an idea is even up for debate is frustrating to them.

India’s Telangana fight explores new frontiers in political attack ads

(Note to readers: contains slightly graphic language and an aggressively provocative image.)

Dear American political consultants: you might think you know how to produce negative political attack ads, but you have much to learn. Caravan magazine’s senior editor Jonathan Shainin on Sunday shared on Twitter what he called “Unquestionably the greatest political poster of all time.” I admit that I have made no broad study, but this ad, coming from Hyderabad in Andhra Pradesh, seems to me to break some kind of sound barrier in the business. (Correction: I cannot confirm that this ad appeared in Hyderabad. A readers whose comment appears below tells  me that the ad appears in Tanuku in West Godavari District)

The Telugu-language ad features a local politician scolding Lok Sabha parliamentarian K Chandrasekhar Rao, a proponent of splitting Andhra Pradesh into two states. Reuters explains why creating a new state, Telangana, is controversial:

Deficit? What deficit? India makes a golden version of everything

(Any opinions expressed here are those of the author and not of Thomson Reuters)

Indians use gold for all sorts of things. As the world’s biggest gold consumer, its citizens use coins, bars and jewellery  as gifts, dowries and investments that are literally more solid than a share in a company. The ill effect that this has on India’s current account deficit has led the government to try to curb demand.  Here are a few examples of demand that nobody can seem to curb.

This week, gold importer RiddiSiddhi Bullion’s subsidiary Dia Jewels unveiled India’s first gold-plated motorbike. About 35 to 40 kilograms of silver went into making the miniature two-wheeler model, which is gold plated and studded with diamonds, and took six months to make, said Mukesh Kothari, director of Riddisiddhi Bullions.

“It was my dream project to make such a bike, which has never been made before in the Indian markets … Moreover it’s not for sale, so neither have we priced it nor have we marketed it,” Kothari said. The bike cost around $100,000.

Markets this week: Coal India, ITC top Sensex losers

The BSE Sensex lost 3 percent in the week ending Aug. 2, extending its losses from the previous week and marking its biggest weekly fall since mid-March.

Markets remained on the edge on uncertainty over how long the Reserve Bank of India (RBI) would continue measures to defend the rupee. The rupee fell 3.4 percent over the last five trading sessions and ended at a record closing low on Friday.

The central bank left the repo rate and cash reserve ratio unchanged at its policy review on July 30, but said it will roll back recent liquidity tightening measures when stability returns to the currency market.

Interview: Have to ensure women feel safe, says Delhi’s new police chief

(Disclaimer: This interview is website-exclusive and cannot be reproduced in any form without prior permission)

By Aditya Kalra and Sankalp Phartiyal

New Delhi’s police force considers women’s safety as one of its primary tasks, its new police chief Bhim Sain Bassi said in an interview on Tuesday. Bassi takes over the job on July 31, succeeding Neeraj Kumar who held the post for 13 months.

Ensuring safety for women in Delhi is no small task. The city is dealing with the aftermath of last December’s fatal gang rape of a 23-year-old student, which sparked riots and criticism of the police.

Tracking Sensex: L&T top loser this week

By Aditya Kalra and Sankalp Phartiyal

The Sensex lost 2 percent and the Nifty slipped 2.3 percent in a tough week for stocks as Indian markets remained cautious ahead of the Reserve Bank of India (RBI) policy review on July 30.

The benchmark Sensex, which ended in the red for three of five trading sessions, touched a 2-1/2 year high during the week as consumer goods shares surged.

The rupee continues to be in focus as it hit a five-week high on Friday. The RBI tightened liquidity further on Tuesday to support the rupee and the central bank is likely to hold rates at its policy review next week.

A look at some of India’s cheap food schemes

Nearly 70 percent of India’s population lives on less than $2 (around 120 rupees) a day, according to World Bank data. The country, the world’s second-largest producer of wheat and rice after China, is also home to a quarter of the world’s hungry.

Helping the poor has always been on the ruling government’s agenda since independence. India, which currently spends 900 billion rupees on giving the poor access to cheap food, hopes to increase it to 1.3 trillion rupees ($22 billion) and widen its scope with an ambitious food security programme launched this month.

The problem is many of the intended beneficiaries don’t realize they’re missing out on existing schemes.

Tracking Sensex: top gainers, losers this week

It was a good week for Indian shares as the BSE Sensex gained 1 percent to close at 20,149.85, after the index touched a near two-month high during trade on Friday. The rupee gained for the second week and ended at 59.35/36 after rising 0.3 percent.

Markets reacted negatively on Tuesday to the Reserve Bank’s moves to tighten liquidity in the system in a bid to support the weak rupee. However, Prime Minister Manmohan Singh said on Friday that these steps may be temporary.

Bank of America-Merrill Lynch expects the Sensex to remain range-bound with limited upside of 5 percent until regional elections in mid-November. The bank recommends investors to be ready to buy on dips at levels of 19,000-19,300.

In search of the lost telegram

(Any opinions expressed here are those of the author and not of Thomson Reuters)

I sent my first and last telegram over the weekend, thanks to the flood of newspaper reports that warned of India’s telegraph service winding up after more than 160 years.

My curiosity was fuelled by memories of Bollywood movies from the 1960s and 70s. On receiving a telegram, the hero’s mother either fainted or treated the family to sweetmeats – depending on whether the news was good or bad.

The best known telegram in Indian fiction is probably the one in R.K. Narayan’s “Malgudi Days” collection. In a popular short story, the fictional messenger doesn’t deliver a telegram with news of a relative’s death because it could have ruined someone’s wedding day.

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