Articles of interest - 25 October 2012

Here are some interesting reads:

Trains in China : NewYorker magazine

Theft of food in India : Bloomberg news

Future of Solar power : A Stanford university study's findings

Persistence of hunger in India : Bloomberg news

The kingfisher descent

    While Kingfisher Airlines chairman has been issued a non-bailable warrant in connection with a bounced check to the Hyderabad airport the airline's primary hub, Bangalore has seen a sharp decline in it's domestic passenger numbers. (Data source: www.aai.aero)



     To put this in context, growth numbers for international traffic for the same time-frame look just fine. Kingfisher's contribution to international traffic from Bangalore was marginal .

 


    Although the airline is still grounded, final word on the fate of the company is yet to be had. However, all entities which did business with Kingfisher have been badly burned in this long running fiasco. That list includes aircraft lessors, employees of the company, airports across the country, fuel suppliers. Not to mention many of the banks that have about Rs.7000 Crores of exposure in their books. Many of them are state owned banks. In the absence of strict bankruptcy laws, lessons from the government's handling of Satyam may come in handy here.

A tricky fight to pick

   Every once in a while, a long bullied kid springs a stinging surprise on her perpetrators. UPA-2, after suffering serial humiliations at the hand of allies and opposition alike, responded with the single biggest set of reforms since 1991.The Banyan blog over at the economist has an excellent analysis:

 The states run by Congress, Mr Singh’s party, will presumably toe the government line. Others may prefer to wait and watch, but the chances are that all states will eventually agree. ...

The fact that parliament has just finished the monsoon session, and will not sit again for a couple of months, allows everyone to avoid a no-confidence motion. ...

The position of the opposition, the BJP, is now delicate. It forced the boycott, in effect, of parliament throughout most of the monsoon session. It may think of trying to block the government reforms now (despite its own history of being in favour of a more market-oriented approach to the economy) for the sake of pushing the idea of “policy paralysis” in government. But it must also take care, both not to damage India’s main interest—getting the economy revving again—and for not getting the blame itself if the economy does badly.

    From the Prime minister and UPA's point of view this looks like a great gamble. Without a display of some spine they would have been bullied by everyone all the way till the next elections in 2014.  Mulayam Singh Yadav's  SP and Mamata Banerjee's Trinamool are two parties that could potentially bring down the government. If you look a little deeper, their positions are somewhat shaky. Both UP and West Bengal need a lot of help from the centre to make economic progress. That would include higher funding allocations from the planning commission and assistance with handling state deficits.

    If they pull the plug on UPA-2 in the coming months, elections will be held in early 2013. Forecasters of parliamentary elections have gotten their predictions badly wrong in the last two cycles. In the aftermath of mid term elections with unpredictable results, it is improbable that both these parties will enjoy the same leverage and influence they currently command. 

    As for BJP, they are engaged in a fratricidal battle between Naresh Modi and Nitish Kumar for the leadership of NDA in the next elections.And they have their own baggage. After the debacle of 2009 for their obdurate opposition to the nuclear deal, they have to be wary of going to polls in the aftermath of brazen opposition to reforms they supported in the past. Are they willing to risk the prospect of being in opposition till 2018 after the polls, if they are held in 2013?

Articles of interest - September 08 2012

Scrutiny of Narendra Modi's record : NYTimes blogs

India's cram schools : Reuters

Rahul Gandhi's place in India's politics : The Economist

India's Healthcare system: The Economist

Bickering until everybody loses

    This Friday(31st August), India's GDP growth numbers for the quarter of April-June will come out. Analysts are forecasting tepid pace of growth following previous quarter's disappointing numbers. Meanwhile, investments are slowing down , infrastructure development is grinding to a halt .There is more pessimism about near term growth. RBI, worried about persistent inflation is unlikely to ease monetary policy drastically.The solution as ever, is to enact some of the long pending reform measures.

     Presidential elections were seen as a hurdle the government had to get over before starting a fresh reform drive. Elections have come and gone with no major signs of policy response by the government. On cue, the new parliament is in session and a familiar script is playing out. BJP , the main opposition party wants the prime minister to resign, this time over alleged irregularities in the allocation of coal blocks to private enterprises.
  
    Disruption of parliament proceedings is becoming a norm than an exception. To be sure, if BJP comes back to power in the next parliamentary elections who is to say their main opposition(Congress party) would not respond with the same scorched earth tactics. All they need to do is hold up evidence of malfeasance somehow connected to the ruling coalition and demand the ouster of the government. Lord knows there is enough graft and misgovernance to be found among all major parties' state and local governments. This cycle could become recursive. I wonder how long this has to go on before we have a government that is willing to govern and will be allowed to.

Articles of interest - 28 August 2012

Here are some interesting reads:

India's Olympics programme : India ink New York Times

Money in american politics: Bloomberg

Plundering India's PDS scheme : Bloomberg

Impact of enacting Goods and Services tax(GST): Bloomberg

The case for rooftop solar

    Indians who track infrastructure development in the country got a stark reminder of the ground yet to be covered when half the country was left with no electricity. Last week's blackouts may have been caused by problems in the grid. The sources of energy are a cause for concern too.

    Thermal power stations suffer from poor supply of coal leading to many of them remaining idle. When monsoons are deficient the hydro power capacity is hurt. Capacity addition in wind power is showing promise, but has a long way to fulfill it's potential. Solar however, is yet a vastly untapped source.

    I was in southern Germany a couple of weeks ago on vacation. Homes like these in the pictures below(taken during the trip) were all too common, a noticeably large percentage of homes with solar panels installed on their rooftops.

    North India gets about 300 clear sunny days in a year. and in the south that number is around 250 days a year. In many cities, solar powered water heaters are mandatory for new homes. Costs of the panels have been in steady decline in the last three years. Rooftop solar power should have a greater role in India's energy portfolio. India should set up a feed in tariff regime, which would allow homeowners to sell excess power back to the grid(Although the grid needs to be more robust to support feed in power).

   Sure, India cannot afford the levels of subsidy offered by an industrialized country like Germany. At the moment, solar power is still expensive . By having a more conducive regulatory regime, we may well unlock Indians' now famous ability at jugaad innovation in building cheaper systems. It is not wise for a government to drive industrial policy. Promoting solar energy, especially rooftop solar may just be a reasonable exception in India.