Food inflation fell to a one-and-a-half month low of 7.78 per cent for the week ended June 18 on the back of cheaper vegetables, pulses and potatoes.Food inflation, as measured by the Wholesale Price Index (WPI), stood at 9.13 per cent during the previous week. It was over 20 per cent during the comparable period of June, 2010.As per data released by the government today, vegetables became over 10 per cent cheaper year-on-year during the seven-day period under review.Prices of pulses also went down by 9.50 per cent during the week ended June 18, while potatoes became 2.39 per cent cheaper on an annual basis.However, prices of other food items remained high during the week.The latest numbers on price rise of food items are the lowest since the week ended May 7, when food inflation stood at 7.47 per cent.It comes a day after Prime Minister Manmohan Singh said that inflation will come down to 6.5 per cent by March-end if international oil prices soften and commodity prices do not rise further.Headline inflation in the country stood at 9.06 per cent in May.The latest week-on-week fall of 1.35 percentage points in food inflation is the sharpest in four-and-half months. The previous record of a decline of over 2 percentage points had happened in the first week of February.Meanwhile, inflation in overall primary articles stood at 11.84 per cent for the week ended June 18, down from 12.62 per cent in the previous week. Primary articles have a share of over 20 per cent in the WPI basket.During the week under review, fruits became 24.76 per cent more expensive, while eggs, meat and fish grew dearer by 10.32 per cent. Onions were also up by 16.08 per cent and cereals by 4.76 per cent.Inflation of non-food primary items stood at 17.91 per cent during the week ended June 18, down from 18.43 per cent in the previous week.Fibres were up 39.59 per cent on an annual basis, while minerals became more expensive by 28.51 per cent.The hike in prices of diesel and kerosene announced last week by the government was also reflected in the latest inflation numbers.Fuel and power became more expensive by 12.98 per cent year-on-year. Inflation in the fuel and power index was 12.84 per cent in the previous week.The RBI had said that headline inflation in the next few months would be driven more by high global commodity prices, rather than prices of food items, as was the case in 2010.Food inflation was in double digits for most of last year, before showing signs of moderation since March this year. However, it has again started going up since the second half of May.The latest fall in food inflation numbers is likely to come as a relief to the government, which had to deal with a series of bad news during recent weeks on the economic front.While January-March economic growth stood at 7.8 per cent, the lowest in five quarters, industrial output also slowed down to 6.3 per cent in April. (PTI)
Read More
Michael Spence is a former chairman of the Independent Commission on Growth and Development, which focuses on growth in emerging economies. In 2001, Spence received the Nobel Prize in Economic Sciences for his work on markets with incomplete and asymmetric information. His recent book, The Next Convergence: The Future of Economic Growth in a Multispeed World (Random House) lays out a framework for how the global economy will develop over the next fifty years. In an email interview with Businessworld's Jinoy Jose P., Spence talks about the book and beyond. Your book says the recent growth in developing nations is leading to a convergence with their advanced peers. That sounds like an ambitious thought. Could you talk about how this idea came to you? To get there, that is to the convergence conclusion, one needs to think in terms of relatively long time horizons; several decades. I looked at the spreading pattern of growth accelerations with special emphasis on China and then India following. Recently, the significant effect China has had on sustaining emerging economy growth in the post 2008 period after the crisis. Emerging economy growth now seems sustainable even as the developed economies struggle with growth and issues that affect it. This is new and this degree of decoupling would not have been true even 10 years ago, I don't see anything insurmountable that will stop the EM growth. The global economy remains open and an enabler of technology transfer and catch-up growth.There will be sustainability challenges, globally and especially in Asia, (east and south) where most of the growth in absolute terms will occur. Asia will cause the global GDP to triple in the next 25 years. Asian countries (lead by China and India) will have modified the growth pattern of their predecessors in terms of natural resource impacts, in order to complete the journey. You can go country by country and identify these challenges, which are substantial and vary across nations. Perhaps to some they seem daunting. But developing countries understand the growth dynamics and required reforms and policies and have become very good at economic management and at implementing the required adjustments. So while it is not a sure thing, my best guess is that the major economies in the developing world and many more (in part carried by the large economies' momentum) will continue to develop and grow and will join the ranks of the advanced countries between 2030 and 2050, depending on where they are now.We now see how economies, at least a few, in Europe are in trouble. The US is also not a bright story these days. How would you link such a scenario to the central thought in your book?These economies are in serious difficulty. Europe has an immediate sovereign debt and contagion problem. Then they will need institutional reform and greater fiscal centralisation to produce a more stable structure in the future. All this has to be done by agreements among countries with different circumstances and perspectives. It is difficult.The US has dysfunctional politics, a big fiscal challenge and structural issues associated with unbalanced pre-crisis growth. I can elaborate on these. Roughly, domestic demand has declined as a result of the reduction of excess consumption. That means the non-tradable sector and part of the tradable sector are not growth engines. That leaves the part of the tradable sector that is participating in emerging economy growth. That part is growing, but the result is overall growth is weak. In addition, the tradable sector is not an employment engine, and has not been for a couple of decades. That means that the employment problem looks persistent and serious. But the effect will be to slow them down for some time. Both growth and employment challenges will be persistent if either one or both have a major downturn, which will slow the emerging economies but not stop them. Eventually the advanced economies will restore balance. But it may take five years or more. For the emerging economies, the big risk is not slow growth in Europe and the US but a huge downturn. The fact that they have slowed down, while slightly accelerating the rate of convergence. But that is not a first order effect. Do you think there is a structural problem in the way global economy has been managed? Yes. First, the extent of economic integration is much further along than any form of effective global economic management. That is not a surprise. Integration has been very rapid. Developing effective global economic management is difficult and will take time. It requires building institutional capability and trust. And it requires some delegation of national sovereignty. In the meantime there will be unaddressed imbalances and as a result, risk and volatility. For much of the post war period, the US and then the US and Europe dominated and largely provided what global economic management there was. And there was by and large, stability, a functioning GATT, now the WTO, adjustments to the international financial system. It was not perfect but it did a lot of good.The governance and economic management challenge has become larger and harder because the major emerging economies are now systemically important and are rightly and necessarily part of maintaining global stability and balance. But there is now more heterogeneity in the group (particularly the g20, where over 85 per cent of global GDP resides. So we are embarked on a process (probably lengthy) of learning how to manage and regulate the global economy. There are a lot of challenges. It does not help that Europe and the US are preoccupied with their own problems. In addition, crisis and post-crisis policies have caused distortions in the global economy, like large capital flows into the higher interest rate emerging economies, requiring unusual measures to counteract them.break-page-breakWhere do you posit China in the whole thesis?China is the second largest economy in the world, but still has a relatively low GDP. It is entering the complex middle-income transition, with several important structural shifts on the supply and demand side of the economy, which are required to sustain growth. In addition, china is now systemically extremely important, dominating large parts of trade and with 3 trillion dollars of reserves. Their policies have a direct effect on others and on global stability. Thus far, china is handling the balancing of its domestic growth and development agenda with its growing international impacts and influence and responsibilities. India is rapidly moving toward the same position. At 8 per cent growth rates, a reasonable estimate that in terms of per capita income and GDP, India is about 12-13 years behind china. Recent setbacks to finance capitalism prompt many to say that the heydays of free market and finance capitalism are over. In your opinion, do these events show that economies lack proper regulation?One has to distinguish between the financial sector and the real economy. The lightly regulated and self-regulating financial market approach is clearly discredited and is being abandoned. This is the right approach. Financial systems left alone and unregulated, become unstable and do considerable damage to the real economy. That has happened in developing countries in the past and now in the developed countries. Capitalist dynamics and incentives in the real economy, however, properly supported by public sector policies and supportive investments (in education, infrastructure etc) have not proved dysfunctional at all. In fact, it is the dominating and only successful model of sustained growth. There are lots of variants across countries, but they have the common characteristics of price signals, market incentives, decentralisation, and the dynamics of entry, exit, innovation and productivity growth, and also over time, structural change.You say that information technology is one of the most powerful factors influencing growth today. Isn't this thought a bit aggressive?Well perhaps, but I don't think so. Information technology has been the basis of the integration and increasing efficiency of global supply chains, financial markets and multinational companies. It has reduced transaction and search cost. It has (especially in India) made valuable human resources accessible in the global services industries. With 4.5 billion cell phones, hundreds of millions of people have or will have access to information, financial services efficiently delivered, and a host of other services. One needs to remember that up until 15 years ago, most people didn't have access to a phone, let alone the internet, because of the very high fixed/capital cost of the landline system.That said, what according to you are going to be the most important factors that will define this era of global economic growth? Among the dominant themes will be the growing power and importance of emerging markets and related global coordination and governance issues. The shifting of the economic centre of gravity of the global economy to Asia (east and south) is important. So is the reduced dependence of major emerging economies on the advanced economies, the huge challenge globally -- but mainly in Asia -- of finding, over time, sustainable growth patterns that do not put excessive pressure on natural resources and the environment, and the management of the global economy for stability. There are some important advanced country structural challenges in terms of growth and employment that (with the exception of Germany and some of the northern European economies) have not been addressed; the evolution of Europe, either towards greater integration or the reverse. The status quo is not stable and it could go either way. Whether Europe is a unit or a bunch of medium-sized economies will make a huge difference in the global economy in the next twenty years, in all kinds of ways.On a lighter note, you quote Menotti, George Bernard Shaw and Paul Samuelson as a start to the book. That's a deadly combo! Tell us how this trio has influenced you. I just liked the ideas they expressed. Paul Samuelson was a great economist with a unique combination of technical virtuosity and a balanced view of the world. I thought that his reminder that efficiency is not the be all and the end all was an important message and a reminder that distributional issues and inclusiveness are inherently important elements of effective growth strategies, in all countries. The other two, GB Shaw and Gian Carlo Menotti in different ways, seemed to me the capture the importance of humility in the face of the kind of complexity that we face, in all countries, as we make this journey together. George Bernard Shaw captures the importance of flexibility of mind in response to new information and evidence. Menotti is more purely a statement of the kind of humility that leads to an open mind and effective decision-making. In the post-crisis period, humility seems to me an important starting point for reforms and regaining trust.
Read More
On 10 June this year, Bharti Airtel International BV competed a year of its operations in 16 countries of Africa. The last 12 months have been an interesting journey for the company and its top executives. The journey has not ended. Manoj Kohli, CEO (International) and Joint Managing Director, Bharti Airtel is confident that his team will capture significant market share in many countries where it operates. Speaking to Team BW, he took a walk back into last 12 months of Airtel in Africa and shared some of the challenges, opportunities and vision for the company. Excerpts:How is Africa as a market for telecom?Africa is fantastic and an outstanding place as a future market. A continent that is one billion today will be 2 billion in next 30-40 years. It will be more than India and China as a single market. The best thing about Africa is, the median age 17. It is the youngest population of the world; in Indian it is about 25. In the US, Europe, China, Japan—every geography, is graying. But India and Africa have the youngest population. Africa is therefore, younger than India and that is where we come in. Not many companies have taken this bet of $10.7 billion. We have taken a very big bet; no other company in the world has made this kind of an investment. This proves that this continent (Africa) is very critical for us. Globally it is seen as a last frontier of global market growth. What has Bharti realised after a year of operation in Africa? A Fantastic global outlook; it is very clear that Bharti Airtel will be a global corporation, global brand, with a global outlook, global culture, very open and aiming to transform the global ethos. This is a commitment that Sunil (Sunil Bharti Mittal) I and my other senior colleagues of Bharti Airtel have given to ourselves. Why shouldn't a global corporation germinate from India, why only from US, Europe or Japan? It is one mission that we all have and are confident that we will achieve it.After one year, my conviction is that we have taken the right step at the right time as a company. We are digging our heels deep in a continent which is the biggest future market of the world. For telecom, a market is equivalent to its population. If China is going to be 1.3 billion in next 30-40 years, India is going to be 1.6 billion and if Africa is going to be 2 billion, India and Africa will be 3.6 billion markets. Add Bangladesh and Sri Lanka, and Bharti Airtel will have a coverage of 4 billion. This is the potential that we have to leverage and convert into revenues and profits. Both (India and Africa) are youthful markets. What are the five critical lessons you have learnt in this time period?I had set five goals for myself before I went to Africa. The first was that the integration of Africa with Bharti Airtel and Bharti Airtel to Africa, should be seamless and fast. We completed that in 90 days. This must be one of the fastest integrations after an acquisition; a large and multi-country, cross cultural acquisition anywhere in the world. What did it involve?It involved all systems and all processes. We met all the stakeholders, employees, dealers and distributors, government officials, banks and key people and institutions in the 16 countries. We shared with them what Bharti Airtel is and how India is coming to Africa in the form of our company.How did the process of branding go in Africa?Psychologically people in Africa love the red colour. Luckily there were already two good brands using the colour red: Coke and Toyota, 80 per cent of the vehicles in Africa are Toyota. We are the third red and when we launched our brand, people loved it.Was the brand made for Africa?No, but it was made for the youth. It is a youthful brand. We had all the 16 launches in November 2010, our commercials had R Kelly and eight African musicians, singing together and it topped the charts in Africa. The second was a commercial of a boy playing football and third was a joint ad with Nokia on bundling scheme. People loved the brand and the initial products and services that we launched. The Airtel brand was very well accepted and recognised within six months from its launch. It was not easy, since in India and South Asia, Airtel was a known brand but not in Africa. The India connect (in Africa) went to up to Airtel connect. The learning was that the consumers are the same, anywhere; we have to build bond emotions and bond of trust has to be built in with the customers in Africa or India, it is the same.What was the next big challenge?The challenge was to implant our unique business model (managed service) in Africa. It took us about 8 years to do that in India and we are trying to implement it within two years, in Africa. The entire network has gone to our three big partners, Ericsson, Nokia Siemens Network and Huawei. The information technology aspect has been given to our three IT partners, IBM, Avaya and Comviva. BPO and call centers have gone to another three big partners, IBM Daksh, Tech Mahindra and Spanco. We have also taken a huge number of partners for passive infrastructure, such as Kirloskars and Mahindra. About 1500 employees have been transacted to our partners some more will go in the next couple of quarters.Can these employees come back to Bharti Airtel?We have made commitments to these employees that in the next two years if they do not like it, they can come back. But we are confident that will not happen, because we have done this successfully in India. Not even one employee came back. So there is nothing wrong in giving a commitment that will make an employee happy and assured.So this is part of your minute factory…Yes this is part of it.How do you define a minute factory?We define it as, we will do what we know and we know five things: branding, employee motivation, smell of the customers, financing and regulation.Our partners will do what they know the best. It is about domain knowledge; it is not about core and non-core. A lot of people confuse Bharti's model as core and non-core. The BPO call centre business has gone to IBM Daksh and network to Ericsson because they know it best, not because it is non-core.break-page-breakDid you get any help from the Indian government?Luckily the Prime Minister's announcement of $5 billion credit for Africa was timely. And we are very eager to utilise this Indian government's support for our vendors from India. So the vendors will get help from government and us. Local US, German, Japanese and Chinese companies have been helped abroad by their respective governments. It is good that the Indian government is also doing the same. I would say it is a joint venture between the Indian government and Bharti to help medium to large companies to grow beyond India.Will there be a change in the business model…Africa needed a structural change in the business model and Bharti has initiated that structural change. Africa's business model was more Western, a high cost model. We are now introducing this model that is unique, innovative and is lower cost. So sharing of fibre, tower etc. is a very important goal for us to change the business model, not only for Bharti Airtel but for the entire industrial sector. Tower sharing is at the initial stage but every month, hundreds of towers are being shared.Do you think the India model will work in Africa?I want to clarify that this is not an India model being replicated in Africa but a model that has been customised for Africa. A lot of customisation is taking place that is different from India. It may take another 6-12 months to reach perfection, but it will be an Africa model.You said that Indian government has been supportive, what about countries in Africa?Unlike India where you have one DoT and don't have to deal with states, in Africa each country is different with their own the rules and regulations. But the good news is that within six months we have started on a positive note, built joint agendas with the government. We have had exchanges on what each others' needs and requirements are and are jointly working towards the goal. Joint agendas take care of the objective of the government and Bharti Airtel. Today, governments are promoting sharing of infrastructure and asking why are you building new towers? The Tanzanian government for example, said, that we should build a fibre network together; Vodacom, Milicom and Bharti, four of us will build the network. I am confident that we have started a long term commitment with all the governments.So what is for the future?Three big plans for future: first are tower companies. We have already build tower companies in all 16 countries. They are registered as separate companies and in next two months we will start building towers in those tower companies and start moving towers from the existing companies to those new companies. Sharing has already started. Some companies did hesitate in the beginning which is normal, but when we offered our towers market suddenly opened up.Second is broadband internet plans, HSPA, 3G service. As I said Africa has a large youth population and they will love to work on internet and download music. Spectrum has been given in for 3G in 10 countries and the balance we will get it in 1-2 years.The third major plan is M-commerce. India has not yet seen the power of m-commerce. This is a big strategic move that Bharti is taking. Central Bank approvals are in place. By next year we would have launched this in all 16 countries.Have you taken forward the CSR initiative in Africa as you have done in India?As in India, we give free education and books to poor children. The hearts of the governments have been touched by this initiative introduced by Bharti. We have taken special efforts in training youth.Is there a fear and fright of losing out?There is no fear or fright. When we took over in the first few months, we corrected the premium that Zain maintained, which was 30-40 per cent on price over normal price in each country. It was not sustainable and so we corrected it and brought it down to competitive levels. There was no price cut, if the price was Rs 2:80 we brought it down to Rs 2. At no point, Bharti as a culture and philosophy, will go under and start price cutting. Prices are now stable; we would like to utilize the pricing power of Africa. As our costs go down because of the restructuring etc., we will see how we can bring in more affordability. I believe the last few quarters from Africa have been good. Our revenues have also grown and margins have increased.
Read More
US job growth accelerated more than expected in July as private employers stepped up hiring, a development that could ease fears the economy was sliding into a fresh recession.US payrolls increased 117,000, the Labor Department said on Friday, above market expectations for an 85,000 gain. The unemployment rate dipped to 9.1 percent from 9.2 percent in June, but this was mostly the result of people leaving the labor force.The payrolls count for May and June was revised to show 56,000 more jobs added than previously reported.The report was the first encouraging piece of economic data in some time.Fears that US economy might be sliding back into recession, coupled with Europe's inability to tame its spreading debt crisis have roiled global financial markets. Economists see the odds of a recession as high as 40 per cent.US stocks on Thursday suffered their worst sell-off in two years.Top policymakers at the Federal Reserve will sift through the report when they meet on Tuesday but are not expected to announce any new measures to support the sputtering recovery.The US central bank has cut interest rates to zero and spent $2.3 trillion on bonds. Policymakers have said they want to see how the economy fares before taking any further action. Growth Has StalledUS growth stalled in the first half of 2011, fanning fears of a new downturn. Gross domestic product grew at a 1.3 percent annual pace in the second quarter after a scant 0.4 percent rise in the first three months of the year.A stand-off between Democrats and Republicans over raising the country's debt ceiling poisoned the atmosphere for employers and consumers. The economy's poor health has eroded President Barack Obama's popularity among Americans and could hurt his chances of reelection.The borrowing limit was raised this week in a deal that relied on spending cuts. Economists estimate the budget cuts and expiring stimulus -- including a payroll tax cut and emergency unemployment benefits -- could subtract more than a percentage point from GDP growth next year.Private Hiring Steps UpAll the gains in non-farm employment in July came from the private sector, where payrolls rose 154,000 -- an acceleration from June's 80,000 increase and more than the 115,000 expected by economists.Government payrolls dropped 37,000 in July, a ninth straight month of job losses. The drop was mostly due to a government shutdown in Minnesota that left thousands of state workers without pay checks during the survey period for July payrolls.With looming budget cuts at the federal government level and state and local governments still tightening their belts, the burden of job creation falls on the private sector.Within the private sector, most of the job gains were concentrated in the services sector. Temporary help -- a harbinger of permanent hiring - rebounded modestly after declining for three straight months.Manufacturing payrolls rose 24,000 after increasing 11,000 in June. Most the gains came from the auto sector. Construction employment increased 8,000 after dropping 5,000 in June.The average work week was steady at 34.3 hours, but average hourly earnings rose 10 cents.(Reuters)
Read More
The latest innovation in the smartphone arena has come from HTC. The leading smart phone designer has come up with its 3D smart phone called HTC EVO 3D which not only captures and views the high definition videos but also share them at a faster rate. The multimedia phone comes with a 5 MP camera and a much faster processor called the Snapdragon. Qualcomm's Snapdragon S3 1.2GHz dual-core processor enables an immersive glasses-free 3D experience. "EVO 3D is the first smartphone available in Indian market offering a 3D viewing experience without glasses," said Faisal Siddiqui, Country Head of HTC-India during the phone's launch. "This latest addition in HTC's smartphone segment will set a benchmark for 3D viewing."Built on the latest Android technology called Gingerbread (2.3), EVO 3D features the 4.3 inch display and a resolution of 540x960 pixels. The new smartphone is priced at Rs 35,990 and is available at all authorised HTC dealers across the country.
Read More
Food minister K.V. Thomas gave a nod to possible exports of grains because of bumper crops and overflowing storage on Wednesday, after government sources told Reuters there could be one million tonnes of both wheat and rice offered.India is one of the world's biggest producers of rice and wheat but also one of the largest consumers and has kept a tight rein on exports since 2007 to ensure it can provide cheap food grains to the poor.Farm Minister Sharad Pawar has called for grain exports but so far the food ministry has not echoed that call publicly, wary of high inflation and possible demand in a proposed Food Security Bill to provide cheap grains to the poor."The food ministry is not negative to exports, but we will have to look at demand in view of the Food Security Bill. We will place the issue before (the Empowered Group of Ministers)," Thomas told reporters on Wednesday.The empowered group of ministers can implement any decision it takes on exports.Concerns over food inflation, which is currently around 9 percent, and the need for supplies to fill commitments for more subsidised food in the proposed Food Security Bill have stayed the government's hand on exports so far.But with storage overflowing after three years of bumper harvests and the onset of the monsoon, concerns are growing stocks outside could be damaged, adding to pressure for sales."The benefit of exports should reach farmers. We will take the decision at the earliest. My food production is very high and I have to think about storage as well," Thomas said.Farmers have also been calling for exports to take advantage of attractive international prices, but these are now slipping.Wheat, supported earlier on worries over output from major producers like the United States, is now falling as the U.S. harvest advances and concerns grow a global recovery is tepid.Rice prices have been supported in recent weeks by demand from Africa and Indonesia.Thomas said the Empowered Group of Ministers would meet "at the earliest," to decide on possible exports.(Reuters)
Read More
Higher prices at diesel pumps across India will nibble at demand rather than crush it as robust growth in Asia's third-largest economy fuels oil consumption.Before the price hike, India's oil ministry estimated its million-plus barrels a day diesel market was set to grow by 5-6 per cent this fiscal year for the most popular transport fuel among its 1.2 billion population.The latest price increase may see industrial users and power plants switch to cheaper fuel oil, analysts said, trimming growth in diesel demand by at most 19,500 barrels per day, from estimated growth of about 60,000-80,000 bpd in 2011.Much of India's diesel demand is inelastic, driven by the main consumers in the transport and agriculture sectors."I expect there to be some moderation in diesel demand growth although this will be due to seasonal as well as pricing factors," Thomas Grieder, an analyst at IHS Global Insight, said."It will not be too extreme as many consumer groups have limited options to switch their consumption patterns."India's fractious coalition government raised prices of diesel and kitchen fuels to cut the hefty bills it has to pay to allow state oil firms to sell at subsidised rates.The government also eliminated the import duty on crude boost the finances of the state oil firms, which dominate the retail market.Morgan Stanley estimates the government could save as much as a third of its near $40 billion subsidy payout to state oil firms in the current fiscal year, helping it stay on course to meet a fiscal deficit target of 4.6 per cent of gross domestic product in 2011-12.Some Indian states have also not added local levies to the Rs 3 a litre increase in diesel prices. For example, the increase in Delhi would have been 3.40 rupees/litre if the state government had also levied extra tax on the fuel."Even if there is no tax reduction (by state governments) the impact on demand growth may be 5-10,000 bpd, but closer to 5,000 bpd," said Mark Freier, senior analyst at PFC Energy."If you look at the last seven years, demand is pretty inelastic in transportation and agriculture."Profit Cuts?Satwant Singh, a 46-year-old rice and wheat farmer in Punjab, expresses views typical of many rural users of diesel."Because of higher prices, I have brought down usage of diesel in the past few years, but it's not possible to cut it further ... the diesel price rise will cut our profit, but we don't have an option," he said.HSBC expects growth in diesel use to ease to around five percent -- or 61,000 bpd -- in the current financial year and the next, down from 6.6 percent in the year to March 2011."We expect moderation in diesel demand growth due to several concurrent factors including the latest end-user price increase," said Kumar Manish, HSBC's senior oil and gas analyst for India.Praveen Kumar, senior consultant at FACTS Global Energy in Singapore, does not see a change in diesel demand."As this remains a one-off price hike we do not expect demand to take a major hit. From a seasonality point of view, diesel demand usually takes a drop during Q3 due to monsoons. Thus a hike around this time would also limit the extent to which diesel demand could take a hit," he said.FACTS sees an annual 4.5 percent rise in India's diesel demand to about 1.3 million bpd in 2011.Freier said the government could even consider a reduction in diesel prices later in the year depending on the outlook for inflation and global oil costs."There is little upside potential for crude prices in the second half, so that the Indian government may opt to lower diesel prices somewhat in the fall, depending on its inflation expectations for the winter months," he said.Economy To Fuel DemandState fuel retailers feel India's diesel demand is unlikely to soften much because of the price increase and will be more sensitive to the country's economic growth, targeted at 8.5 percent in 2011/12."As it is, product demand is growing because of growth in the economy. We have seen in petrol, the demand has not come down despite price increases," said S. K. Joshi, head of finance at BPCL.India freed petrol prices a year ago and since then they have gone up in stages by about 23 percent.While India should keep growing at rates many nations would envy, Asia's third-largest economy faces a period of reduced growth and stubbornly high inflation.India's industrial output growth slowed in April, the latest sign that the rising cost of credit and inflation are acting as brakes on the economy.Inflation, currently at about nine percent, could climb into double digits with the latest fuel increases and prompt further interest rate rises, adding to pressure on family finances in a country with 500 million people living on under $1.25 per day. (Reuters)
Read More
Softening its stance on mining in heavily-forested areas, the Environment Ministry on Wednesday gave its nod for clearing six coal blocks, including five in 'no go' areas, for three major power plants in Orissa."All the six coal-blocks are part of the IB Valley coalfield and only one (Meenakshi-A) is presently in the 'go' area, the other five being in 'no go' areas...All six blocks will now be considered by FAC (Forest Advisory Committee) as 'go' areas," Environment Minister Jairam Ramesh said in a statement.Giving green signal to clear coal-blocks linked to UMPP, NTPC and OPGC power plants, the Minister said the Power Ministry should give "special focus" on ash disposal and water availability.Three coal-blocks (Meenakshi-A, Meenakshi-B and Meenakshi Dipside) have been allocated to the 3960MW/4000MW Ultra Mega Power Plant (UMPP).Coal-blocks (Manoharpur and Manoharpur Dipside) have been allocated to the 1320 MW power plant of Orissa Power Generation Corporation (OPGC). One coal-block (Dulanga) has been allocated to NTPC's 1600 MW power plant.Hailing the Environment Ministry's move, the Power Ministry said it will now pave way for raw material security for the project."We are delighted... We will immediately go for further process of the Orissa UMPP," Power Secretary P Uma Shankar said.Ramesh, who last week granted a stage-I forest clearance to three blocks in dense forests in Chhattisgarh, said the Environment Ministry's intervention will help reduce biodiversity impacts on the forests where coal blocks will be opened up.After a developer gets stage-I forest clearance, it needs to demonstrate and provide requisite documents that the project will be restricted to the area for which the clearance has been given.Ramesh said both the Power and the Environment Ministry had a relook into the three projects to assess biodiversity impact and also took satellite imagery of the forest areas to be mined.He said the power units which will set up with the coal mined in these six blocks will use supercritical technology, "which will result in a saving of around five to eight per cent in terms of carbon dioxide emissions from each of the generating units as compared to a comparable sub-critical 500 MW unit".The additional condition that will be imposed over and above the usual conditions governing forest clearance is that the project proponents will bear the cost of regeneration of an area of open, degraded forest land equivalent to the amount of medium density forest land being diverted, Ramesh said. (PTI)
Read More
India's gross domestic product (GDP) growth in the April-June quarter is disappointing, Finance Minister Pranab Mukherjee said on Tuesday, after data released earlier showed the economy expanded at its weakest pace in six quarters.India's economy grew 7.7 per cent in the three months through June, with further sluggishness looming as a spate of interest rate increases, high inflation and weak global conditions take a toll.(Reuters)
Read More
Dragging the PMO in the CWG mess, CAG on Friday said Suresh Kalmadi had been appointed Organising Committee chief at its behest in 2004 despite "serious objections" and highlighted how wasteful expenditure worth several hundred crore rupees was caused in organising it.In its voluminous report on the October 2010 mega sporting event, the CAG found "irregularities", "favouritism" and "bias" in award of contracts for various projects like construction and development of Games venues and Village, infrastructure development and beautification in Delhi and broadcasting rights.The government auditor also faulted the government for not setting up a "single point of authority and accountability" and said there was "lack of clear governance structure, a multiplicity of coordination committees were created, disbanded and reconstituted at different points of time."Referring to the controversial appointment of Kalmadi, the CAG said, "The (CWG) bid document of May 2003 envisaged the OC as a 'government-owned registered society' with the Chairman of OC Executive Board (EB) being a government appointee, and the IOA President being only the EB Vice Chairman."However, "the OC was ultimately set up in February 2005 as a 'non-government registered society' with the IOA President Shri Suresh Kalmadi as the Chairman of the OC EB," it pointed out. The CAG said "despite serious objections" from the then Sports Minister late Sunil Dutt, Kalmadi was "appointed as the OC Chairman, based on a PMO recommendation of December 2004."This decision facilitated conversion of the originally envisaged government-owned OC into a body outside governmental control without commensurate accoutability to government and concomitant controls to ensure propriety and transparency (despite full financial guarantee and funding from government)."The auditor said attempts in 2007 by then Sports Minister Mani Shankar Aiyar and then Sports Secretary S K Arora with the PMO, the Group of Ministers and the Cabinet Secretariat, "highlighting the ineffective position of the Sports Ministry in exercising control over the OC, met with strong resistance from the Chairman OC, and were hence rendered unfruitful."It pointed out that the commitment of the central government in conjunction with Delhi government in Sept 2003 to become parties to the Host City Contract (HCC) was "critical to the success of the IOA bid for Delhi" to host the Games."...thus, the Games became the property of the nation, rather than merely that of the IOA. This was, however, inadequately reflected in the subsequent construction of the Organising Committee," the CAG observed."In our opinion, the unique challenge of managing and monitoring the activities of multiple agencies for delivering the Games project should have been met by entrusting its stewardship to a single point of authority and accountability, with adequate mandate to ensure all deliverables in time, to cost and to specified quality standards. (PTI)
Read More
