Saturday, June 2, 2012


01st, JUNE, 2012





1.    NEWS :Yesterday (31st,May) was Bharat Bandh, called by BJP. 

VIEWS : It was ostensibly against the Petrol price Hike. Of course, it was justified. A huge petrol hike at one go hurts common man – very badly. People are angry at the insensitive way  Government does such things. On top of it, many Ministers are arguing for hiking the prices of LPG, Kerosene, Diesel etc similarly – saying that these unpopular measures are a MUST RIGHT NOW. The petroleum Minister may view from the OMCs’ point of view. But, the Government must see from the common man’s point of view. 

Any big dosage of such Hikes hurts very badly. The common man can go nowhere. A man who pays Rs.5 for Bus fare will feel very bad about paying Rs.10 the next day. A minister’s home budget may not suffer, but a common man’s home (only) budget suffers very badly. Unfortunately no one in Government now seems to remember what Mahatma said – that Government should think of the poorest man in the country and think how his actions affect him. Western Educated Ministers are good at theory from the west -   but, very poor when it comes to Gandhian economics. And, it is showing. So, the Bandh was Justified. 

On one side, Government pleads of shortages of oil and gas and high international prices, which any way, have fallen now. On the other side, Government puts all conceivable constraints on exploration and production efforts of CAIRN, RELIANCE etc. Too many approvals are needed for moving the left foot or the right foot forward. 

Why don’t you give them total freedom in the Blocks given to them – and just ask them to perform – without the DGHC or the ONGC or the oil Ministry breathing down their necks. The country needs performance – and these companies can perform. Government’s revenues will come anyway – if they perform. Government must find a way with any objections from CAG. They are bound to be there – if there is lack of transparency and lack of written record on why this, this, this was done.

If everything is documented and absolute freedom is given to the companies – CAG cannot find fault with such transparent decisions. There is a saying in my language – cover this today, it will stink very badly, tomorrow. That is what is happening.

2.    GROWTH SLIPS TO THE LOWEST : THIS IS A WAKE-UP CALL :CSO says, GDP Growth in Q4 FY 12 is a mere 5.3%, said to be the lowest in 9 years. Somewhere in the figures, there is a huge, baffling trade surplus of $10b in Q4 FY 12, and based on this, the GDP growth has crawled to 5.3%.

VIEWS : It is becoming increasingly difficult to put total reliance on CSO’s figures which don’t add up to our sense – many times.  And, we don’t find any attempt being made, to modernize and make accurate the figures coming from CSO. Their job is tough; there is no doubt about it; but, they seem to be ages behind in their methods. Yet, when CSO says, GDP growth was a mere 5.3% in Q4 FY 12, it is a definite WAKE-UP CALL for the Government. 

Enough of dithering. Enough of blaming the opposition and the allies. The Economic Times says – Act, at least Now! I am of the same opinion.

This writer never believed that allies and the opposition were responsible for the Policy Paralysis of the Government.  

The Lok Pal Bill could be passed. If not in Anna’s way, it could be the BJP’s way. What if, the bill was passed with amendments suggested by BJP? It could have got Majority support and passed even as a constitutional authority. But, if Team Anna always sounds almost sheepishly like – “It’s my way or the Highway”, the same thing is equally true or more true in case of the Government. It never seriously seemed to have wanted a strong Lok Pal Bill. It never seemed to have wanted majority support for Lok Pal Bill. It’s views are almost like the views of those who say – corruption was always there; so, let it be there.

Government’s Lok Pal Bill was almost like creating another secretary’s post in a Government department – and not an INDEPENDENT LOK PAL  to probe into grave corruption charges against top bureaucrats, MPs, Ministers etc. 

The Land acquisition Bill is not even tabled in Parliament, so, how can it blame opposition for not passing it? 

If environmental and other clearances are pending for Major projects for years, who is to be blamed?

Failure in Coal and Gas supply to power plants – is not opposition’s failure – by any stretch of Imagination. It is not that this Government cannot do it. It is just not doing it. It was approximately the same Government in UPA I which did far, far better than most Governments.

John F. Kennedy put a single Goal before the US - of putting an American on the Moon in next 10 years; that one Goal spurred every single industry and even agriculture in US, towards achieving that fantastic objective ; US achieved it in the grandest style; this one goal put America on top of the world in economy , industry, agriculture, sciences, education, and so many seemingly unrelated fields.

It is time, the Government of India also puts such a single, all-encompassing Goal before itself and the Nation, and started achieving it. I would say – DOUBLE DIGIT GROWTH IN GDP in every quarter from now – is such a goal. Align all your policies and actions, including that of RBI, towards this one goal. Let not your taxation policies, environmental policies etc be a block to it.  If double digit growth is there, even lower rates of taxes will achieve much higher revenues for Government. 

Of course, Government will tend to fritter it away good amounts in unproductive schemes like NREGS, instead of building solid, highly productive capital assets for the nation, adding to GDP. This temptation needs to be avoided. 

Inflation must be taken care of by fiscal and other governmental measures – not by repo rate increases. Government must not always be looking at RBI’s monetary policy for tackling Inflation. Given the level of parallel economy in India, the monetary policy did not succeed at all in last 2 years in tackling Inflation – especially in the absence of supportive Governmental measures.

India must achieve Growth – and far more and far superior production. India must aim for surpluses in every field of production – not for scarcities. A BOSTON TEA PARTY of dumping surpluses – or donating to others - is OK. But, having scarcity in the ingredients of our Morning Tea is definitely not OK.

Distributive Justice - is taken care of more than 70 percent if production surpluses are achieved. Productive environment should always therefore precede distributive justice. 

Else GDP growth may slip even further - if Foreign capital is taking a flight and Indian capital is shy of investing. There is TRUST DEFICIT which can be killing, if it continues further.

3.    NEWS :-POWER PRJECT OF RPOWER AT KRISHTNAPATNAM :- This project is just an example of what can happen to projects in India. It depends on Imported coal and the power tariff agreed in 2007 was Rs.2.33 per unit. Now, imported coal from Indonesia has become much costlier due to decisions taken by Indonesian Government. RPOWER is said to have abandoned the Project works at Krishnapatnam a year ago – saying that, at this Rate, the project is unviable. 

RPower is said to be invoking the FORCE MAJUERE clause, as the decisions of Indonesian Government are not within its control. But, the 4 beneficiary state Governments have approached  the Delhi High court against RPOWER.

4.    VIEWS :- POWER PROJECTS are in the Nature of Public utilities, whether implemented by PSUs or private sector Units. The way, differences must be tackled by Governments must be – as of the Power company is a Public sector Unit. ADAG Group is of course not very famous for dealing straight forwardly with its counterparts in Government / PSUs. But, all said – the way out is almost always across the table. If Delhi High court or the Regulatory commission hands down a decision – if both Parties can accept it – can they not sit around, discuss and finalize such a decision in a mutually acceptable way, and then approach the Regulatory commission for it stamp of approval? In all such projects, costs are bound to increase – and there must be a way for the power supplier to get back the additional costs. 

Escalation clauses must take care of such events. If such escalation clauses are absent, it becomes necessary for CAG to comment adversely. The blame is not of CAG – but of the state Governments and the Power Company, which do not think of problems and solutions at the tendering and agreement stages.

One year ago, the project was stated to be abandoned – and till today, there is no way out from either side. Suppose, RPOWER abandons it, and the Governments levy their fines etc – will it solve their problem? If another company is appointed to carry out the project, or if a State/Central PSU were to handle it, will it not seek much higher price for its Power? 

Governments and the power company must both have sufficient foresight to solve such problems. They can approach the regulator with the problem and with their solution for it. It doesn’t seem to be such an unsolvable problem – except that both parties do not seem to know what is good for them in the long run. 

How much time do the state Governments and RPOWER expect that the High court will take to solve the issue? If Court is the only solution giver, the High court also does not have the final say on the issue. There is the Supreme Court too. The Battle goes on. In the mean time, people enjoy their Black days out, without Power.

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1 comment:

  1. When all pleas fall on deaf ears. When all options of advise die down. When elected Govts behave as per their whims and fancies. When the common man is really hit under the belt by his on representative, then bandh is the only option left to him. Here teh UPA and especially the Congress has become very adamant and this bandh is justified. Let people resolve to put an end to Congress rule.