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Aug 14, 2012

BREAKINGVIEWS: Freer fuel price could start Indian chain reaction

By Jeff Glekin

MUMBAI (Reuters Breakingviews) – India’s new finance boss, P. Chidambaram, is renowned for his intelligence. Now he has a chance to use it, by producing a good plan to cut the country’s mounting fiscal deficit. Last year the budget was in the red by the equivalent of 5.9 percent of GDP, and this year could be even worse. His best bet is to propose deregulation of energy prices. That would give the country a fillip in five ways.

First, freeing up energy prices would lower India’s subsidy bill. The OECD estimates that diesel sops alone costs the government three percent of GDP. The state-owned refiner, Indian Oil Corp, posted its worst ever quarterly loss in the three months ending June. ONGC, the country’s largest oil explorer, said discounts it offered to state refiners on crude-oil supplies cut its annual profit in half.

Aug 14, 2012

Freer fuel price could start Indian chain reaction

By Jeff Glekin

MUMBAI, Aug 14 (Reuters Breakingviews) – The country’s
clever new finance chief, Palaniappan Chidambaram, needs a sharp
idea to cut the fiscal deficit. Deregulating fuel prices would
help in many ways, including a lower subsidies bill, more
valuable state-run firms, more efficient resource allocation and
eventually more investment.

Full view will be published shortly.

CONTEXT NEWS

- India’s Finance Minister P. Chidambaram was preparing to
present a fresh plan on fiscal consolidation, the Economic Times
reported on Aug. 8.

Aug 9, 2012
via Breakingviews

India begins the post-Mukherjee clear-up

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By Jeff Glekin

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Pranab Mukherjee’s reign as Indian finance minister was stained by economic meddling and political favouritism. Now he is gone, and some of his excesses are being reversed. An enemy has been pardoned and a friend has not received a plum job. This could be the beginning of a better era.

Aug 1, 2012
via Breakingviews

India’s power vacuum needs to be filled

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By Jeff Glekin

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Perhaps Manmohan Singh and Sonia Gandhi got trapped in the Delhi metro yesterday. If the two leading Indian politicians were indeed victims of the world’s largest electricity blackout ever, they would at least have an excuse for their lack of public response to this clear sign of policy failure. Actually, there was a response, but it was not what might be expected. The power minister was promoted to Home Minister and replaced with a part time substitute.

Jul 31, 2012
via Breakingviews

Take hope from India’s power and water failures

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By Jeff Glekin

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

India’s economic reform agenda has lost its way. Forget trivial reforms like permitting more foreign direct investment in aviation. What the county needs most is improvements in chronically mismanaged infrastructure. But change is hard when the systems are working, even badly. So a huge power outage – the worst blackout for more than a decade which left more than 300 million people without electricity – and yet another unnecessary crop shortage – due to a weak monsoon – could prove a blessing.

Jul 25, 2012

Global slowdown splits Bangalore’s IT industry

By Jeff Glekin

MUMBAI (Reuters Breakingviews) – India’s top four IT outsourcing firms are in a dog-fight. In the boom times, all of Bangalore’s finest were able to grow in tandem. But in today’s climate the game has turned to a scrap for market share. Tata Consultancy Services (TCS.NS: Quote, Profile, Research) and HCL Technologies (HCLT.NS: Quote, Profile, Research) look to be on top, but don’t rule out a revival at Infosys (INFY.NS: Quote, Profile, Research) and Wipro (WIPR.NS: Quote, Profile, Research).

Disappointing results from both Infosys and Wipro look all the worse alongside strong performances by domestic rivals. Earnings at global software and IT services companies are expected to decline by 2 percent on an average this year, according to Societe Generale research. And while HCL’s latest quarterly numbers were good, the group cautioned that large U.S. and European corporations had spent 40 percent less on new projects in the first half compared to the same period last year.

Jul 23, 2012

Anil Ambani under pressure after IPO flop

(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own)

By Jeff Glekin

MUMBAI, July 23 (Reuters Breakingviews) – Reliance
Communications (RLCM.NS: Quote, Profile, Research) just can’t seem to catch a break. The
Indian telco has suffered another big setback in its attempt to
shrink its $7 billion debt mountain, after failing to drum up
sufficient interest for a $1 billion listing of its undersea
cable assets in Singapore. Majority owner Anil Ambani may now
need to consider an uncomfortable solution closer to home.

Jul 20, 2012

Gujarat holds key to Suzuki’s Indian labour crisis

By Jeff Glekin

MUMBAI, July 20 (Reuters Breakingviews) – The Japanese
carmaker’s flagship Indian venture is beset by ongoing labour
unrest. Problems at its Haryana plant echo squabbles at Tata in
West Bengal. But an enterprising Gujarat may come to Suzuki’s
rescue as it did for Tata Motors.

Full view will be published shortly.

CONTEXT NEWS

- A riot at a northern factory of Indian carmaker Maruti
Suzuki, which is majority owned by Tokyo listed Suzuki
Motor Corp, shut the plant on July 19 and inflicted the
biggest loss on its share price in almost two years.

Jul 19, 2012

Feature: How can India’s Liquor Baron keep his Kingdom?

By Jeff Glekin

MUMBAI (Reuters Breakingviews) – Vijay Mallya’s woes at Kingfisher Airlines (KING.NS: Quote, Profile, Research) are infecting the rest of his empire. The airline’s debt is backed by guarantees from his holding company. That means unless he saves Kingfisher, he risks losing another jewel in his crown. With Diageo and Heineken waiting in the wings, Breakingviews has taken at look at what India’s flamboyant “Liquor Baron” can do to survive.

Kingfisher is not yet dead, but it’s certainly on life support. The airline hasn’t turned a profit since it was founded in 2005 and has seen its domestic market share fall from second to last among the country’s six big carriers. Its fleet has been scaled back from 64 planes to 16 and it has stopped flying overseas.

Jul 12, 2012

BREAKINGVIEWS: Infosys woes start at home

By Jeff Glekin

MUMBAI (Reuters Breakingviews) – A company as large as Infosys – $7 billion of annual revenue – cannot escape the economic weakness in most developed markets. But the Indian IT outsourcer bears some responsibility for its slowing growth. In April, the company was expecting 8-10 percent revenue growth in 2012, in dollars. On Thursday, that was cut to 5 percent, despite a weaker rupee. The shares fell by almost 10 percent.

Infosys(INFY.NS: Quote, Profile, Research) isn’t responsible for the world’s problems, but it might be able to resist them better without the unwritten pact that each of the core founders gets a shot at running the company. When it was announced that K.V. Kamath, the ex-ICICI banker, would replace Infosys co-founder Narayana Murthy as Chairman of India’s flagship outsourcer in April last year the firm was valued at $38 billion. Today that is closer to $23 billion. Current Chief Executive S.D. Shibulal, is the company’s fourth, having taken the helm last year from fellow co-founder Kris Gopalakrishnan.

    • About Jeff

      "Jeff Glekin is the India columnist for Breakingviews. Jeff is a former diplomat. He spent four years in Mumbai as the Deputy Head of Mission and First Secretary Financial and Economic at the British Deputy High Commission. Before joining the diplomatic service he spent four years with HM Treasury in London. He has a BA in Philosophy, Politics and Economics from Mansfield College, Oxford University."
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