Travelling with Indian Railway is always a stunning experience. Rich in experience travel starts as soon as one gets to the railway station. And these experiences keep pouring on you throughout the travel irrespective of whether you want it or otherwise. You may get perplexed – which train travel am I talking about? Focus is on long route train travel in India - on the normal trains, which myriad number of people in India use to connect with each other or to go & worship a god or to go & work. What Uttar Sampark Kranti Express, which travels from the capital city of India towards the town in world’s terrorized paradise Jammu & Kashmir – Udhampur, has on the table to offer? How Gitanjali Express, which connects India’s financial hub to the eastern metro city of Kolkata, takes care of passengers travelling in it?
In India, express train travels at 40-45 Km per hour on an average. There are many types of classes in trains, may be maximum in number than any other such setup. Not all trains have all the classes. General class, second sitting, sleeper class, AC chair car, AC 3 Tier, AC 3 Tier Economy, AC 2 Tier, First class, First class AC – these many classes are due to the mix of affordability factor & services which railway has to take into account. One can travel as much distance as one wants on a simple card ticket without any reservation or seat number by getting into general class. This class is generally jam packed with young people going out station for earning livelihood. One has to be very lucky to first get into it & then get a seat. Second sitting is mainly for 2-3 hours of travel. It is available on routes like Delhi- Chandigarh, Mumbai-Pune. AC Chair car is also available for such short distances. In all other classes passengers are allocated a berth & a seat. Except general class, reservation is must for getting inside the compartment. But in India, very much people are considerate. So you will always find people only with tickets or sometimes without any tickets sitting in the lobbies in front of toilets of reserved compartments. Except general class, sleeper class & chair car all the other classes differ in their coziness amongst themselves. Some have air conditioners. Some have less number of seats relative to others in the same space. Some have additional facilities like electricity points to charge mobiles & to operate laptops. Also to facilitate reading, small light bulbs are provided near berths in AC compartments. Things like pillow, bed sheet and blanket are provided when there is a night travel in some classes. The Top most class (fare & facility wise) is the First Class AC. In this 3-4 compartments of 4 people each are designed. It has quite specious & superior arrangements when compared to other classes. Apart from facilities mentioned, Indicators to inform the busy - not busy status of toilet have been placed in each compartment. Every now & then room freshener is sprayed through the air conditioner. Full time attendant is put in place to serve the requests of passengers.
There is a basic difference in AC & Non-AC classes which puts the entire travel experience in two different orbits altogether. In AC coaches, No hawkers except the official ones are allowed to serve the needs of the people. In AC one will get the things served by Indian Railways subsidiary – IRCTC - which looks after catering services. This rule is followed strictly out of economic interests of IRCTC, I guess. But trains near the ambience of Jalsa (Hindi word) in other coaches due to these hawkers. Heavily crowded with the passengers to a maximum possible extent, these hawkers play a hurdle race jumping around the luggage kept in the gangway & bypassing the passengers standing in between, and at the same time doing their business of selling the goods which they have brought. Also IRCTC vendors try to make a point by competing with them to add to the anxiety of standing passengers. All of them come shouting the name of the thing which they have brought. The sound gets mixed with train’s sound & noise made by passengers. Ant it tries to form a very good rhythm. Private hawkers & IRCTC vendors both generally bring food items to satisfy the gastronomic needs of passengers. They carry a variety according to the timings of breakfast, Lunch, Snacks & Dinner. These articles range from Bonda in south to Vada-pav in west to Samosa in North. But Bread Omlet, Cutlet, Soups seem to be in the realm of official vendors. If you are travelling by Kokan railway (Connecting costal Maharashtra, Karnataka till Kerala) a special variety of Banana Pakoda can be tasted. Lunch & Dinner is simple & generally preferred choice is official vendors. These days Veg, Egg & Chicken Biryani seem to be the popular choice of passengers for dinner. Other snacks items include Bhel, Chikki, Laddu, Puri – Sabji & many more. Beverages like Tea, Coffee, Cold drinks, and Mineral water are served incessantly. Recently I have seen Bournvita, Complan (health drinks) being sold.
Let’s move from food items to utility items. Again wide range of products is put in front of sea of people. This includes Maps of different states in India, Road Maps, Wallets, Combs, Mobile Covers, Pens, Batteries, Pirated books (of Arvind adiga’s to Robin Sharma’s to Paulo Coelho’s), Magazines, Newspapers, Some Aayurvedic medicines. These days a new entrant is head massaging unit which has a funnel like shape with a straight stick attached to it. It has 5-6 palettes similar to flower but thin ones. It is to be put inside the hair & moved up–down so as to get read of headache. It is made in China. To allure female passengers, boxes of Earrings, Bangles, Bindis and Hair Bands are brought to the floor. But this is time consuming business. Interested passengers keep on searching for the best one till the time vendor gets frustrated. Finally a transaction worth of 5-10 Rs. happens after a rigorous selection. This entire saga continues till either the train reaches its destination or passengers start looking mobiles & watches to check whether they can call it a day. But if somebody tries to compile the list of the things which you can get in the train in India, It will be the most incomplete list.
I feel it’s the great Indian Bazaar which makes its way in the trains. Indian Railway drives two economies. One is direct. The other one is indirect. Most importantly Indian Railways, 5th largest network in the world with 63,140 km of rail network, brings in Indianness by offering tremendous amount of diversity in the way one can travel.
- Prasanna Vaidya
Saturday, August 14, 2010
Tuesday, July 6, 2010
BHARAT BANDH!!
Date – 05th July, 2010. Place – India. Reason – Inflation. All opposition parties involved.
While I was writing this post, India was observing a voluntary off from their daily routine. School, Colleges, Private Offices across the country were shut. People also had taken a break to support a Bandh called against rising costs of primary articles.
If one observes the price of any primary food article, one would have to say there should be this kind of Bandh everyday. Since 2004, prices of articles like rice, pulses, milk, sugar and edible oil increased in the range of 150 to 200%. Adding to the woes of common man, Government recently decontrolled the auto fuel prices to curtail the fiscal deficit. The decision was bold. It was perfect if looked with an eye of economist. But timing of the same is in question. With food price inflation already ruling in double digits, decontrol at such time was certainly unwarranted.
Economic growth taken place since 2004, globally, was stupendous. World has witnessed highest ever growth rates from 2004 – 08. It has resulted in raising the income levels across the globe. Each & every commodity traded on bourses was witnessing a tremendous increase in trading volumes both due to speculation & supply constraint. In India, middle class population has been increasing with fast pace as sectors like Auto, Pharmaceuticals, Banking & Financial Services, IT are doing fantastically well. Farmers have got never seen Minimum Support Prices (MSP) for wheat, rice, cotton in last few years. It has helped them to get some cash in their hand. National Rural Employment Guaranty Act (NREGA) has also helped rural people to get cash in the off-agro season. This all has resulted in placing more money in the hands of people. Though wheat, rice & other agro products in India have witnessed record level of production; it is not enough for meeting needs of the people. With agriculture growth rates not surprising us on the positive side, prices are bound to move up. Traders which have become oligopolistic in nature are making it worst.
Government has its task cut out. First of all, they should invade all warehouses & streamline the supply. Book the traders which are holding the grains in warehouses. This would tackle the sporadic price rise in primary articles. This would certainly make sure the price correction in the short term. Secondly, Government should seriously start reforming agriculture sector. They should indulge in finding ways which would raise the farm productivity in India in a sustainable way. This would make sure food sovereignty of our nation. These are obviously not easy tasks to do. But Government should start taking steps in these directions. Their attitude towards the issue of inflation right now is too adamant to accept. If government is not position to do anything, they should come up with the white paper on this. These price levels are hurting common man & their silent support for nationwide strike shows it clearly.
Opposition parties have done a stupendous task of taking up this issue. Yes, they are politicizing the things but which party would not have? It was heartening to see opposition parties coming together & showing their strength. Some agencies are coming out with estimates of amount of national loss happened due to this. Estimates are in the range 13000 Crore Rs. Huge amount!!! But it was necessary to wake up New ICC chief & his bosses. Yes - reduce fiscal deficit, but not at the cost of lives of people. Find new ways to solve the issues. Don’t just sit & say inflation is a global phenomenon & normal monsoon will pacify the things. Act or face the consequences.
Prasanna Vaidya
Prasanna.vaidya@gmail.com
While I was writing this post, India was observing a voluntary off from their daily routine. School, Colleges, Private Offices across the country were shut. People also had taken a break to support a Bandh called against rising costs of primary articles.
If one observes the price of any primary food article, one would have to say there should be this kind of Bandh everyday. Since 2004, prices of articles like rice, pulses, milk, sugar and edible oil increased in the range of 150 to 200%. Adding to the woes of common man, Government recently decontrolled the auto fuel prices to curtail the fiscal deficit. The decision was bold. It was perfect if looked with an eye of economist. But timing of the same is in question. With food price inflation already ruling in double digits, decontrol at such time was certainly unwarranted.
Economic growth taken place since 2004, globally, was stupendous. World has witnessed highest ever growth rates from 2004 – 08. It has resulted in raising the income levels across the globe. Each & every commodity traded on bourses was witnessing a tremendous increase in trading volumes both due to speculation & supply constraint. In India, middle class population has been increasing with fast pace as sectors like Auto, Pharmaceuticals, Banking & Financial Services, IT are doing fantastically well. Farmers have got never seen Minimum Support Prices (MSP) for wheat, rice, cotton in last few years. It has helped them to get some cash in their hand. National Rural Employment Guaranty Act (NREGA) has also helped rural people to get cash in the off-agro season. This all has resulted in placing more money in the hands of people. Though wheat, rice & other agro products in India have witnessed record level of production; it is not enough for meeting needs of the people. With agriculture growth rates not surprising us on the positive side, prices are bound to move up. Traders which have become oligopolistic in nature are making it worst.
Government has its task cut out. First of all, they should invade all warehouses & streamline the supply. Book the traders which are holding the grains in warehouses. This would tackle the sporadic price rise in primary articles. This would certainly make sure the price correction in the short term. Secondly, Government should seriously start reforming agriculture sector. They should indulge in finding ways which would raise the farm productivity in India in a sustainable way. This would make sure food sovereignty of our nation. These are obviously not easy tasks to do. But Government should start taking steps in these directions. Their attitude towards the issue of inflation right now is too adamant to accept. If government is not position to do anything, they should come up with the white paper on this. These price levels are hurting common man & their silent support for nationwide strike shows it clearly.
Opposition parties have done a stupendous task of taking up this issue. Yes, they are politicizing the things but which party would not have? It was heartening to see opposition parties coming together & showing their strength. Some agencies are coming out with estimates of amount of national loss happened due to this. Estimates are in the range 13000 Crore Rs. Huge amount!!! But it was necessary to wake up New ICC chief & his bosses. Yes - reduce fiscal deficit, but not at the cost of lives of people. Find new ways to solve the issues. Don’t just sit & say inflation is a global phenomenon & normal monsoon will pacify the things. Act or face the consequences.
Prasanna Vaidya
Prasanna.vaidya@gmail.com
Tuesday, April 20, 2010
Inflation Vs IPL
Its Sunday, Sunny & Simran are enjoying their weekend at home. Suddenly, while pouring milk in tea cup, Simran says: Do you know milk price has gone up once again. 35 Rs. / Lit.
Sunny: Yes, I heard our cancerous agriculture minister predicting the same 10 days in advance. Such a nice minister he is!! Every time the price of any article is to go up, He makes sure all citizens are aware of it well in advance. I like the way he manages the prices.
Simran: Have you gone mad? Is he there just to tell what the next thing to blow up is? Should he not try to control the prices? Look at the prices of primary articles. Go to some mall, then you will understand.
Sunny: See, first of all you don’t understand what he is trying to convey. (Sunny cuts lose….) Why the hell IPL is on? So that people should stay at home, watch cricket, drink beer & sleep. Who has told you to go out & shop daily? Look at me; I don’t go for shopping, so I don’t feel inflation. It’s all how you take it dear. Perception you know!!!
Simran: Keep your crap jokes with you. We don’t have to worry about our tonight’s food, that’s why you have lost your feet from the ground. Look around. People are starving. Even income of 10k per month is not sufficient these days. Do you remember your father’s first salary? It was 500 Rs. /month. Still all were happy.
Sunny: Please. Don’t compare. These are just unfair comparisons. Our life styles have changed & rather improved.
Simran: Tell me what has changed? (Voice & temp both are rising with each passing second)
Sunny: When my father was on job, there was no IPL.
Simran: You are just hopeless. There is no point in having healthy discussion with you.
Simran gives a cup of tea to Sunny & goes back to her work. These days she is doing painting to keep her mind stable.
After taking in some sips of Tea, Sunny start fighting with his excited neurons.
What are the real issues? Inflation or IPL? Amitabh or Afzal Guru? Shashi Tharoor or Shoib Malik? Dantewada or Dance India Dance?
Nobody seems to be worried about daily perils experienced by common man. We have a load shading of immense magnitudes. Those who can afford put generators, inverters. Those on the margins mess up their day & night without electricity. But our politicians are busy in managing their own egos, interests. Media channels continuously for 2 days reported what tricks Maharashtra CM applied so that he won’t share stage with our “Actor of the millennium”. People watch it religiously. Overall none seem to care.
IPL is of utmost importance to India. Even if “Mr. Arrested for Drugs” sneezes, it becomes a Breaking News. These days “Mr. Arrested for Drugs” & “Mr. Class within the Cattle” are having their own IPL running. Kochi team has managed to come into IPL with the blessings of our MoS External Affairs. But “Mr. Arrested for Drugs” wanted something else. Already Minister has lost his wicket along with the stake in Kochi, other scams related to IPL have come to the fore now. While all this was happening, ISRO has failed to launch its GSLV, “Mr. Be the change” has praised our cross border friend once again for showing some action dramas against Kasabs, Our “Red friends” have attacked investigating team itself in Dantewada, & Mumbai University, is bored of printing Question Papers itself.
How come we are not able to understand what is important for our lives, for our future generations? Agreed, we can’t do anything to change all this. But we can help ourselves. “Jo Khud ki Madat karana nahi janata, usaki madat to Bhagwan bhi nahi kar sakata” – dialog by Kaveri Amma in block buster movie Swades. Government, Politicians won’t be able to do anything for common people. Politicians are totally immersed in making their own life good, so we have to change our lives for good too. Only thing which we need to keep in mind is “Our lives can be improved without degrading someone else’s life.” We should strive for this. We can’t expect that government will provide enough electricity; those who can afford should search for their own ways to keep their homes enlightened. Same is the case with all other needs. Government is just not needed. We are our own government!!!...
Umpires start walking into the middle. After them comes Kolkata Knight Rider’s Team – Prince of Kolkata leading from the front. Young blood from Delhi is to carry a new ball. And suddenly a well known roar feels the stadium, Master Blaster is about to face the first ball.
IPL is on. Today it’s MI Vs KKR. Inflation? What it is?
Prasanna Vaidya
Prasanna.vaidya@gmail.com
Sunny: Yes, I heard our cancerous agriculture minister predicting the same 10 days in advance. Such a nice minister he is!! Every time the price of any article is to go up, He makes sure all citizens are aware of it well in advance. I like the way he manages the prices.
Simran: Have you gone mad? Is he there just to tell what the next thing to blow up is? Should he not try to control the prices? Look at the prices of primary articles. Go to some mall, then you will understand.
Sunny: See, first of all you don’t understand what he is trying to convey. (Sunny cuts lose….) Why the hell IPL is on? So that people should stay at home, watch cricket, drink beer & sleep. Who has told you to go out & shop daily? Look at me; I don’t go for shopping, so I don’t feel inflation. It’s all how you take it dear. Perception you know!!!
Simran: Keep your crap jokes with you. We don’t have to worry about our tonight’s food, that’s why you have lost your feet from the ground. Look around. People are starving. Even income of 10k per month is not sufficient these days. Do you remember your father’s first salary? It was 500 Rs. /month. Still all were happy.
Sunny: Please. Don’t compare. These are just unfair comparisons. Our life styles have changed & rather improved.
Simran: Tell me what has changed? (Voice & temp both are rising with each passing second)
Sunny: When my father was on job, there was no IPL.
Simran: You are just hopeless. There is no point in having healthy discussion with you.
Simran gives a cup of tea to Sunny & goes back to her work. These days she is doing painting to keep her mind stable.
After taking in some sips of Tea, Sunny start fighting with his excited neurons.
What are the real issues? Inflation or IPL? Amitabh or Afzal Guru? Shashi Tharoor or Shoib Malik? Dantewada or Dance India Dance?
Nobody seems to be worried about daily perils experienced by common man. We have a load shading of immense magnitudes. Those who can afford put generators, inverters. Those on the margins mess up their day & night without electricity. But our politicians are busy in managing their own egos, interests. Media channels continuously for 2 days reported what tricks Maharashtra CM applied so that he won’t share stage with our “Actor of the millennium”. People watch it religiously. Overall none seem to care.
IPL is of utmost importance to India. Even if “Mr. Arrested for Drugs” sneezes, it becomes a Breaking News. These days “Mr. Arrested for Drugs” & “Mr. Class within the Cattle” are having their own IPL running. Kochi team has managed to come into IPL with the blessings of our MoS External Affairs. But “Mr. Arrested for Drugs” wanted something else. Already Minister has lost his wicket along with the stake in Kochi, other scams related to IPL have come to the fore now. While all this was happening, ISRO has failed to launch its GSLV, “Mr. Be the change” has praised our cross border friend once again for showing some action dramas against Kasabs, Our “Red friends” have attacked investigating team itself in Dantewada, & Mumbai University, is bored of printing Question Papers itself.
How come we are not able to understand what is important for our lives, for our future generations? Agreed, we can’t do anything to change all this. But we can help ourselves. “Jo Khud ki Madat karana nahi janata, usaki madat to Bhagwan bhi nahi kar sakata” – dialog by Kaveri Amma in block buster movie Swades. Government, Politicians won’t be able to do anything for common people. Politicians are totally immersed in making their own life good, so we have to change our lives for good too. Only thing which we need to keep in mind is “Our lives can be improved without degrading someone else’s life.” We should strive for this. We can’t expect that government will provide enough electricity; those who can afford should search for their own ways to keep their homes enlightened. Same is the case with all other needs. Government is just not needed. We are our own government!!!...
Umpires start walking into the middle. After them comes Kolkata Knight Rider’s Team – Prince of Kolkata leading from the front. Young blood from Delhi is to carry a new ball. And suddenly a well known roar feels the stadium, Master Blaster is about to face the first ball.
IPL is on. Today it’s MI Vs KKR. Inflation? What it is?
Prasanna Vaidya
Prasanna.vaidya@gmail.com
Saturday, February 20, 2010
De-regularization of Fuel Prices in India
In India fuel prices are controlled by government. Although government announced the dismantling of Administered Price Mechanism (APM) effective 1st- Apr-2002 in order to move towards market determined prices for petroleum products, it has not taken off its hands from determining fuel prices. This intervention even after dismantling APM was due to unprecedented rise in crude prices since late 2003. Oil marketing companies (OMCs) such as Indian Oil, Bharat Petroleum & Hindustan Petroleum, which deal in refining & marketing activities of petroleum products, sell auto fuels & cooking fuels below prevailing international market prices. Estimates say OMCs will have under-recoveries of around Rs.45,000 Cr in this financial year assuming crude oil at $70 per barrel. Out of this Rs.15000 Cr will be on account of Auto Fuels (Petrol-Diesel), Another Rs.17000 Cr will be due to Kerosene & remaining Rs. 13000 Cr will be shaved off on account of LPG. Indian Oil (IOC), Hindustan Petroleum (HPCL) and Bharat Petroleum (BPCL) lose Rs 4.69 per liter on petrol and Rs 3.09 a liter on diesel. They sell LPG at a loss of Rs 158.55 per 14.2-kg cylinder and kerosene at Rs 17.15 per lit loss. These under-recoveries will be reimbursed in part by government in the form of oil bonds which would cover losses incurred due to Kerosene & LPG. So government has to issue oil bonds worth Rs. 30,000 Cr to OMCs. Some part of losses will be shared by upstream (e.g. ONGC) & downstream (IOC, BPCL, HPCL) companies. Government will try to offset losses of OMCs on Auto Fuels by asking companies like ONGC to sell crude oil & LPG to retailers (OMCs) at discounted rates. Still part of losses has to be taken care of by OMCs. Some help will come from Rs.3109 Cr which is provided under the head of Petroleum Subsidy in union budget 2009-10. Now let’s look at the other side of the saga. Government earns huge tax revenues from petroleum products in the form of customs as well as excise duties. In FY2008-09 total tax revenues earned from petroleum products was Rs.78373 Cr. If we assume those to be more or less on similar lines for the year 2009-10 as well then government seems to be in green. Tax rates in India on Petroleum Products are irrational. Petrol is highly taxed. Around 50% of the petrol price is made up of taxes if central sales tax & state sales tax are taken into consideration. Diesel taxes are relatively lower in comparison with Petrol. Around 30% of its price will be on account of various taxes. This is the prime reason for diesel consumption to have leapfrogged in India. Diesel forms 85% of the total consumption of auto fuels. Taxes on Kerosene & LPG form a tiny part of their prices. It has been so due to the government’s perception of kerosene & LPG as household’s cooking fuel – more precisely a fuel of poor people. So can Government of India continue with such kind of pricing in future? Is it sustainable? Let’s look at it -
Pricing of these products has always been a political issue than an economic one in India. Those having reins of the country always find it difficult to increase the prices as it has been considered as an unpopular measure. Some feel it will lead to an increase in prices of primary articles leading to a spiraling inflation. Many governments have reduced the prices when elections were just around the corner in order to cash in votes. Governments have set up many committees to formulate a strategy for pricing of petroleum prices, recommendations of which have been hardly implemented. With fiscal deficit looming large at 6.8% of GDP, is India in a position to continue such kind of Fuel subsidies? Government is set to borrow around Rs. 4,00,000 Cr from market to power its various initiatives. Such kind of mammoth borrowing will definitely lead to increase in interest rates. This will in turn affect capital expenditure plans of corporate sector as they will not get capital at lower rates. It will impede employment generation to some extent. De-regularization of fuel prices will help in reducing the ballooning fiscal deficit. Issuing oil bonds to OMCs was thought to be a financial innovation as it facilitates OMCs to cover up their losses & government is not required to pay upfront money as well. But it is anybody’s guess that government has to pay interests on the bonds issued plus at maturity principle amount also has to be returned back. Consider this as your children paying taxes for the petrol or LPG you have used. Does this sound rational by any means? The answer is big NO. Why Indian citizens should pay back, for fuels which we are using now, after 10 years? Is it because we should get fuels are discounted rates? Do people who really require subsidies getting any help by all this? Why people driving Mercedes & BMWs should get subsidies? Going forward - Why Indian middle class should get LPG at a discount of 158 Rs? Let’s churn this aspect out -
Let’s consider a household of 4 members with earnings of 15,000 Rs. per month. How much burden it will be on such households if LPG cylinder is made available at market prices? Is 158 /- Rs. such an enormous amount? Just imagine how much government can save through this. The way people having higher incomes do not get anything through Public Distribution Systems, they will not get LPG at subsidized rate if they fall in high income group. Government just needs to check pan cards of the gas applicants. I really don’t see any major hurdle in implementing this. Pyramid like subsidy structure can be followed for LPG if required. High the income lower will be the subsidy burden. Now let’s focus on petrol & diesel. Petrol & diesel prices are pretty much nearer to market prices. So those can be made fully in line with prevailing rates. But government has to shun its control from dictating prices to OMCs. OMCs should be given a total freedom to increase & decrease the prices at par with international prices. For e.g. when crude oil was boiling at 140 $ per barrel, government intervention to increase fuel prices came too late. At that time OMCs were losing around Rs.500 Cr a day. Such kind of losses affects health of the OMCs. They cannot go ahead with their expansion plans because of uncertainty of under-recoveries. If government de-regularizes these products even private players will come to the fore in retailing business. Then eventually we may get fuels at little lower rates due to competition. Refining companies like Reliance will try to sell products in India because they don’t have to export the same to get free market prices since selling in domestic markets will reduce their freight charges. De-regularization will automatically impact the demand of these products. It is said that people in India are poor so they are entitled to get subsidies. Simple statistics shows that fuel consumption increases with rise the per capita income. Subsidies are not targeted at people who are really poor because they are not using fuels in large quantities. Rich people use more fuels & more subsidies they get. This is not what government intends, Right?
No one likes hike in commodity prices. Human tendency is to use resources available in nature as tools to achieve economic progress. But the way we look at commodities needs to change a lot. These commodities are not available in unlimited quantities. There are going to be supply constraints in future. With current consumption rate we will consume all fossil fuels by 2040. We have not found fuels which can replace them. India imports 80% of its fuel needs. There is a need to maintain austerity. For e.g. If prices are made market driven then people who just manage to maintain cars may shift to public transport. It will modulate the demand of fuels. Government has to break its shackles & de-regularize the prices. It is time to think beyond politics for this issue at least.
Terms Used:
1) Administered Price Mechanism (APM): In an administered price mechanism Price of a good is specified by a governmental or some other nonmarket agency. Sellers are not allowed to sell goods as per supply-demand scenario.
2) Oil bonds: Bonds issued by Government of India to Oil Marketing Companies in order to compensate for losses which they have made by selling petroleum products at government dictated prices. OMCs sell these bonds to mutual funds, insurance companies and other such financial institutions in secondary market so as to get hard cash. Government of India has to pay annual interest rates & principle at maturity to the entity holding these bonds.
3) Upstream & Downstream Companies:
Upstream companies deal in searching of underground or underwater oil & gas fields, drilling of exploratory wells, and subsequently operating the wells that recover & bring the crude oil and/or raw natural gas to the surface.
Oil & Natural Gas Corporation (ONGC), Oil India Limited.
Downstream companies deal in refining of crude oil, and selling and distribution of natural gas and products derived from crude oil.
Indian Oil Corporation (IOC), Bharat Petroleum Corporation limited (BPCL), Hindustan Petroleum Corporation Limited (HPCL).
4) Petroleum Subsidy: Freight subsidy for far flung areas & other related compensation of Rs. 3109 Cr has been provided under the head of Petroleum subsidy in Union Budget 2009-10.
5) Custom & excise Duties: Custom duty is a tax which government imposes for any import into the country from outside. Excise duty is sales tax which government charges on sale of any good.
6) Inflation: It is a rise in the general level of prices of goods and services in an economy over a period of time. When the price level rises, each unit of currency buys fewer goods and services; consequently, inflation is also erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy. A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the Consumer Price Index) over time.
7) Fiscal Deficit: When a government's total expenditures exceed the revenue that it generates (excluding money from borrowings) it is called Fiscal Deficit.
References:
1) Official website of Ministry of Oil & Gas, India :
http://www.petroleum.nic.in
2) News report in Economic Times : http://economictimes.indiatimes.com/articleshow/4998275.cms
3) C. Rangarajan Report of the committee on pricing & taxation of Petroleum Products : http://www.petroleum.nic.in/Report1.pdf
4) Union Budget 2009-10, Government of India :
http://indiabudget.nic.in/ub2009-10/eb/npe.pdf
Prasanna P. Vaidya
Prasanna.vaidya@gmail.com
Pricing of these products has always been a political issue than an economic one in India. Those having reins of the country always find it difficult to increase the prices as it has been considered as an unpopular measure. Some feel it will lead to an increase in prices of primary articles leading to a spiraling inflation. Many governments have reduced the prices when elections were just around the corner in order to cash in votes. Governments have set up many committees to formulate a strategy for pricing of petroleum prices, recommendations of which have been hardly implemented. With fiscal deficit looming large at 6.8% of GDP, is India in a position to continue such kind of Fuel subsidies? Government is set to borrow around Rs. 4,00,000 Cr from market to power its various initiatives. Such kind of mammoth borrowing will definitely lead to increase in interest rates. This will in turn affect capital expenditure plans of corporate sector as they will not get capital at lower rates. It will impede employment generation to some extent. De-regularization of fuel prices will help in reducing the ballooning fiscal deficit. Issuing oil bonds to OMCs was thought to be a financial innovation as it facilitates OMCs to cover up their losses & government is not required to pay upfront money as well. But it is anybody’s guess that government has to pay interests on the bonds issued plus at maturity principle amount also has to be returned back. Consider this as your children paying taxes for the petrol or LPG you have used. Does this sound rational by any means? The answer is big NO. Why Indian citizens should pay back, for fuels which we are using now, after 10 years? Is it because we should get fuels are discounted rates? Do people who really require subsidies getting any help by all this? Why people driving Mercedes & BMWs should get subsidies? Going forward - Why Indian middle class should get LPG at a discount of 158 Rs? Let’s churn this aspect out -
Let’s consider a household of 4 members with earnings of 15,000 Rs. per month. How much burden it will be on such households if LPG cylinder is made available at market prices? Is 158 /- Rs. such an enormous amount? Just imagine how much government can save through this. The way people having higher incomes do not get anything through Public Distribution Systems, they will not get LPG at subsidized rate if they fall in high income group. Government just needs to check pan cards of the gas applicants. I really don’t see any major hurdle in implementing this. Pyramid like subsidy structure can be followed for LPG if required. High the income lower will be the subsidy burden. Now let’s focus on petrol & diesel. Petrol & diesel prices are pretty much nearer to market prices. So those can be made fully in line with prevailing rates. But government has to shun its control from dictating prices to OMCs. OMCs should be given a total freedom to increase & decrease the prices at par with international prices. For e.g. when crude oil was boiling at 140 $ per barrel, government intervention to increase fuel prices came too late. At that time OMCs were losing around Rs.500 Cr a day. Such kind of losses affects health of the OMCs. They cannot go ahead with their expansion plans because of uncertainty of under-recoveries. If government de-regularizes these products even private players will come to the fore in retailing business. Then eventually we may get fuels at little lower rates due to competition. Refining companies like Reliance will try to sell products in India because they don’t have to export the same to get free market prices since selling in domestic markets will reduce their freight charges. De-regularization will automatically impact the demand of these products. It is said that people in India are poor so they are entitled to get subsidies. Simple statistics shows that fuel consumption increases with rise the per capita income. Subsidies are not targeted at people who are really poor because they are not using fuels in large quantities. Rich people use more fuels & more subsidies they get. This is not what government intends, Right?
No one likes hike in commodity prices. Human tendency is to use resources available in nature as tools to achieve economic progress. But the way we look at commodities needs to change a lot. These commodities are not available in unlimited quantities. There are going to be supply constraints in future. With current consumption rate we will consume all fossil fuels by 2040. We have not found fuels which can replace them. India imports 80% of its fuel needs. There is a need to maintain austerity. For e.g. If prices are made market driven then people who just manage to maintain cars may shift to public transport. It will modulate the demand of fuels. Government has to break its shackles & de-regularize the prices. It is time to think beyond politics for this issue at least.
Terms Used:
1) Administered Price Mechanism (APM): In an administered price mechanism Price of a good is specified by a governmental or some other nonmarket agency. Sellers are not allowed to sell goods as per supply-demand scenario.
2) Oil bonds: Bonds issued by Government of India to Oil Marketing Companies in order to compensate for losses which they have made by selling petroleum products at government dictated prices. OMCs sell these bonds to mutual funds, insurance companies and other such financial institutions in secondary market so as to get hard cash. Government of India has to pay annual interest rates & principle at maturity to the entity holding these bonds.
3) Upstream & Downstream Companies:
Upstream companies deal in searching of underground or underwater oil & gas fields, drilling of exploratory wells, and subsequently operating the wells that recover & bring the crude oil and/or raw natural gas to the surface.
Oil & Natural Gas Corporation (ONGC), Oil India Limited.
Downstream companies deal in refining of crude oil, and selling and distribution of natural gas and products derived from crude oil.
Indian Oil Corporation (IOC), Bharat Petroleum Corporation limited (BPCL), Hindustan Petroleum Corporation Limited (HPCL).
4) Petroleum Subsidy: Freight subsidy for far flung areas & other related compensation of Rs. 3109 Cr has been provided under the head of Petroleum subsidy in Union Budget 2009-10.
5) Custom & excise Duties: Custom duty is a tax which government imposes for any import into the country from outside. Excise duty is sales tax which government charges on sale of any good.
6) Inflation: It is a rise in the general level of prices of goods and services in an economy over a period of time. When the price level rises, each unit of currency buys fewer goods and services; consequently, inflation is also erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy. A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the Consumer Price Index) over time.
7) Fiscal Deficit: When a government's total expenditures exceed the revenue that it generates (excluding money from borrowings) it is called Fiscal Deficit.
References:
1) Official website of Ministry of Oil & Gas, India :
http://www.petroleum.nic.in
2) News report in Economic Times : http://economictimes.indiatimes.com/articleshow/4998275.cms
3) C. Rangarajan Report of the committee on pricing & taxation of Petroleum Products : http://www.petroleum.nic.in/Report1.pdf
4) Union Budget 2009-10, Government of India :
http://indiabudget.nic.in/ub2009-10/eb/npe.pdf
Prasanna P. Vaidya
Prasanna.vaidya@gmail.com
Monday, January 18, 2010
I Own My Garbage
In the last decade, we were learning not to throw garbage and damage the surroundings. But I was not aware that in the near future, paradigms would change a lot. The new paradigm is “I own my garbage”. It was interesting to know that 6 tonnes of solid waste can produce up to 0.25 tones of methane, and horrifying to know that just 2 cities Kalyan and Dombivli dump more than 700 tonnes of garbage daily. Methane traps 64 times the heat that can be trapped by equivalent amount of carbon dioxide. Contribution of garbage to global warming and hygienic life is much beyond our imagination. So, we need to contribute on individual basis, which can make a big difference. Lets see how it can.
Nowadays, the awareness on reducing garbage is slowly gaining ground. As far as my town is considered, the municipal corporation is really trying hard to manage garbage effectively. But garbage increases exponentially. And residential areas contribute a lot. We really cant spend much of our time on that. More importantly, we also need to know the options as what to do. If we think different, we can practically do some small but positive things. I realized it when I started doing “Garbage to Fertilizer” project in a basket in my apartment. It takes very less space in my home and takes almost 15-20 min a day to put my kitchen waste and mix with bio-culture. It worked successfully, and in last 10 months I converted more than 300 kg of garbage to fertilizer. So, individual efforts do count. I met a few amazing people working for the same cause. Mrs. Nirmala Lathi from Pune has pioneered this project and implemented in more than 200,000 homes in Maharashtra. Mr. Kaustubh Tamhankar from Thane is implementing zero garbage at home, and he has even gone further to avoid non-degradable plastic from going in dust bin. One society in Thane is implementing a zero garbage project from last 9 years successfully. Many more people are coming up for this cause. A small group of Nyaan Prabodhini in my town helped manage the flower waste during Ganeshotsav.
Few big things to add. Adarsh school of Badlapur implemented Ecosan sanitation system with municipal corporations help and got great recognition. Similarly, in recent news, Municipal Corporation of Navi Mumbai got recognition for its 3 plants for treating waste water. The huge hoardings in South Mumbai constantly bombard on people to stop spreading waste. These measures are good, and will help in long run to fight the ever increasing garbage. But we are apparently addressing the tip of the iceberg. Big projects can handle garbage, but “increasing garbage” is the real nightmare which we are facing. Day after day, garbage is increasing. The land and ocean, both are proving short to accommodate our garbage. Someday, we might start using the Moon and the Mars to dump the garbage.
My garbage to fertilizer efforts are required lifelong, and wont stop now. It has given a cause to my life. It’s a long way to go, and I am trying to mold myself accordingly. The busy life always tries to pull me away from that, but the cause is great enough to keep this going. I believe that whatever nature gives us, we need to give it back in a proper manner. I have been getting a good response from people who adopted this method, and hope that this awareness spreads the new paradigm”I own my garbage”.
Amey Joshi
E-mail - trekamey@yahoo.com
Date – 13th January, 2010
Nowadays, the awareness on reducing garbage is slowly gaining ground. As far as my town is considered, the municipal corporation is really trying hard to manage garbage effectively. But garbage increases exponentially. And residential areas contribute a lot. We really cant spend much of our time on that. More importantly, we also need to know the options as what to do. If we think different, we can practically do some small but positive things. I realized it when I started doing “Garbage to Fertilizer” project in a basket in my apartment. It takes very less space in my home and takes almost 15-20 min a day to put my kitchen waste and mix with bio-culture. It worked successfully, and in last 10 months I converted more than 300 kg of garbage to fertilizer. So, individual efforts do count. I met a few amazing people working for the same cause. Mrs. Nirmala Lathi from Pune has pioneered this project and implemented in more than 200,000 homes in Maharashtra. Mr. Kaustubh Tamhankar from Thane is implementing zero garbage at home, and he has even gone further to avoid non-degradable plastic from going in dust bin. One society in Thane is implementing a zero garbage project from last 9 years successfully. Many more people are coming up for this cause. A small group of Nyaan Prabodhini in my town helped manage the flower waste during Ganeshotsav.
Few big things to add. Adarsh school of Badlapur implemented Ecosan sanitation system with municipal corporations help and got great recognition. Similarly, in recent news, Municipal Corporation of Navi Mumbai got recognition for its 3 plants for treating waste water. The huge hoardings in South Mumbai constantly bombard on people to stop spreading waste. These measures are good, and will help in long run to fight the ever increasing garbage. But we are apparently addressing the tip of the iceberg. Big projects can handle garbage, but “increasing garbage” is the real nightmare which we are facing. Day after day, garbage is increasing. The land and ocean, both are proving short to accommodate our garbage. Someday, we might start using the Moon and the Mars to dump the garbage.
My garbage to fertilizer efforts are required lifelong, and wont stop now. It has given a cause to my life. It’s a long way to go, and I am trying to mold myself accordingly. The busy life always tries to pull me away from that, but the cause is great enough to keep this going. I believe that whatever nature gives us, we need to give it back in a proper manner. I have been getting a good response from people who adopted this method, and hope that this awareness spreads the new paradigm”I own my garbage”.
Amey Joshi
E-mail - trekamey@yahoo.com
Date – 13th January, 2010
Sunday, January 10, 2010
A Big Frenzy for Small States
Soon after the home minister of
We have a heavy bag of experiences from the creation of smaller states. Uttaranchal for e.g. has been able to project & create its own identity in tourism space since it has been balkanized from Uttar Pradesh. As the needs for the region ‘Uttaranchal’ were far too different from that of Uttar Pradesh, it was not able to garner enough resources, access points to spur the tourism which is the mainstay for a region involving such a scenic beauty. On the other side, we have smaller states like Jharkhand,
After seeing the current frenzy of demands for myriad small states made by various groups – outfits-political parties-influential people, it can be said that as a nation we have come a long way. We as a Nation, mature with every passing second. New ideas fill our hearts; we want to have things in different order rather than maintaining a status quo. Due to the current demographics we also get emotional & aggressive quite easily. At the time when we were getting our freedom back, our visionaries thought the criterion for dividing
Factors behind separate statehood may include Population, Culture, Language, Geography, Public Emotions, and Development. It should be looked on case to case basis. Government in centre should come up with a policy which will cater to all these requirements. Nobody should be allowed to take political mileage out of it. Each state must be divided into regions & development models should be implemented accordingly. Also population striving for state government machinery should be considered. As long as
Prasanna Vaidya
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