Tuesday June 25 2013

Rising population is not the real problem but
lack of developmental policies , say experts
 

Thesynergyonline News Bureau

L to R : Dr Ehsanul Haq, Dr Manisha Pandey, Mr Alexander Nevara. at a videoconference in New Delhi to discuss Rising Population of the World. 

NEW DELHI, JUNE 24 :
EXPERTS from Russia and India met through a videoconference between Moscow and Delhi which was organised by RIA Novosti to discuss problems associated with the uneven increase in the population of the world.
 

Some countries are glaring at the  decline in the population, especially Europe and Japan, whereas other are riddled with the questions to manage the explosive growth of population mainly in South Asia and Africa.

Various factors leading to the uneven growth of population came in light. Indian speaker, Prof Dr. Ehsanul Haq, Former Professor, Centre for the Study of Social Systems, JNU, New Delhi insisted that there should be change in the population policy in India. "In case we want o solve the problems of population and take care of challenges, there must be a shift in the policy. We must redraft the population Policy," said Dr Haq.

He further added " Problem of population still exists not because of the increase in population but because of kind of the developmental approach we have. These problems are result of cultural poverty and mind set of the people."
 
Dr Manisha Pandey, Professor, Department of Sociology, Jamia Millia Islamia, New Delhi said that while India does have the advantage of largest young and workable population, there are challenges to convert unskilled manpower to skilled manpower. "Creation of skilled labour will be a big achievement," said Dr Manisha Pandey.

She drew the attention towards the bigger challenge of declining trend in male female ration, which is alarming. "There will be more unmarried males with uncertain social bonds because they will not be getting female partners. This may escalate the violence in the society which becomes endemic in societies with high male to female ratios.

Russian speakers, mainly stressed upon the positive aspects of growing population. Mr Igor Beloborodov,  Director, Institute of Population Studies, Moscow said that efforts should be made to remove gender inequality. Another Russian Scholar Dr. Alexander Akimov Head, Department of Economic Research, Russian Academy of Sciences, Moscow suggested that global community should work towards better management of available resources to feed the entire world.   

Wanted: Local workers for oil, gas industry

The oil and gas industry is facing increasing shortages of skilled workers. This could be an opportunity for oil- and gas-producing countries to boost the involvement of their local workforce.


Thesynergyonline Economics Bureau

GENEVA , DECEMBER 12 :
GLOBAL demand for crude oil and natural gas has escalated in recent years, leading to a surge in investments and, consequently, increasing shortages of qualified workers.

Global energy demand will increase by 35 per cent between 2010 and 2035, according to the International Energy Agency (IEA). New sources of oil and gas mean future demand will most likely be met, but the industry may not find the workers it needs to exploit new reservoirs.

According to ILO oil and gas expert Yasuhiko Kamakura, more than half of all oilfield professionals will reach retirement age in the next decade. This poses a real challenge for the industry.

“While oil and gas companies are expanding operations into new and ever more remote geographic locations, they will have to build local skilled workforces so that they can rely less on expatriate services. To this end, governments, employers and workers need to collaborate at a global level to determine the way forward to solve a shortage of skills in the industry,” he says.

Make the local workforce benefit

Hiring more local workers could be a solution to the skills shortage – along with attracting more women to the sector.

The issue is on the agenda of an ILO meeting on skills, human resources and safety training in the oil and gas industry chaired by Ruek Puok Riek, who heads the Permanent Mission of the Republic of South Sudan to the UN Office and other international organizations in Geneva

Riek points out that his country’s oil producing sector relies on expatriates. “Most of our workers come from China, Malaysia and Indonesia… In South Sudan we do not have the people who can take over.”

Decreasing reliance on expatriates is difficult in some situations, and near impossible in cases where local skilled workers are simply not available.

“It takes six years for a student to get a degree that is relevant to the oil and gas industry. However, training for qualified workers and technicians can happen much faster and be a first step in building a qualified local workforce,” Riek says.

The example of Nigeria shows how difficult it is to develop a professional workforce with the type of skills that the oil and gas industry requires.

“The subjects taught in the science and technology faculties at Nigerian universities do not yet meet the skills demanded by major international oil and gas companies,” says Kamakura. “However, the country is considering a new strategy that will ensure that Nigerian professionals will continue to play a critical role in this industry,” the ILO expert adds.

Training local talent

As companies seek to cut the cost of maintaining an international workforce, they are increasingly recognizing the importance of recruiting local talent - with local knowledge and experience - who could eventually move into leadership positions.

In Angola, training centres - set up with the support of some oil companies - train Angolans to work in the oil and gas industry. Courses on offer include risk analysis, geological systems and structures, industrial drawing and an introduction to drilling, valves and tubing.

Since the discovery of major oil reserves in 2007, Ghana has also adopted an ambitious strategy which aims to achieve at least 90 per cent local content and local participation in all oil and gas activities by 2020.

Kamakura stresses that improving working conditions and career programmes are key to attracting talented workers.

Attracting talented women

•           The number of qualified women in the oil and gas industry is comparatively low. The women-to-men ratio has been stagnant over the past six years.
•           In geosciences, women make up 18-27 per cent of the workforce.
•           11-19 per cent of petroleum engineers are women.
•           Women are often discriminated against at work.
•           Women occupy less senior positions and are more likely to experience career barriers.
•           When women are well integrated at all levels of the organization, they are likely to feel positive about the organization.
 

Balance protection of environment and economic growth : SCOPE

Corporates advised to play key role in environment protection


 Thesynergyonline Economics Bureau

Dr U D Choubey, DG, SCOPE (centre) delivering inaugural address at the Programme on "Environment and Safety - Prevention and Management of Chemical Accidents" organized jointly by SCOPE and Ministry of Environment and Forests in Mumbai. 

NEW DELHI, DECEMBER 02 : "TO waste, to destroy our natural resources, to skin and exhaust the land instead of using it so as to increase its usefulness, will result in undermining in the day of our children the very prosperity which we ought by right to hand down to them amplified and developed."--- Theodore Roosevelt

Against the backdrop of the precocious quote the Standing Conference of Public Enterprises (SCOPE), apex body of public sector enterprises (PSEs), , organized a Programme on “Environment & Safety – Prevention & Management of Chemical Accidents” in collaboration with Ministry of Environment & Forests, Govt. of India on November 30, 2012 to December 1, 2012 in Mumbai. Dr. U.D. Choubey, Director General, SCOPE inaugurated the programme.

Also present among others were Dr Ray Das, Dy  DG, Directorate General, Factory Advice Service & Labour Institutes, Mr R.G. Rajan, CMD, Rashtriya Chemicals & Fertilizers (RCF), Mr  B B Chakravarty and Mr U K Dikshit, Directors (Progms) who addressed the participants. 

A large number of senior and middle level executives from CPSEs attended the Programme.

Dr  U D Choubey, Director General, SCOPE in his inaugural address advised all corporates to play a key role in the protection of environment as increased pollution, degradation of the environment, loss of vegetation, excessive concentration of harmful chemicals in the atmosphere and food chain have posed major threat to the mankind.

Dr Choubey said due to the rapid growth of oil, chemical and other process industries, man made chemical hazards have created a lot of human related environmental problems.

He cited the Bhopal tragedy in India and oil spillage in the Gulf of Mexico and its devastation on our environment and ecology.  He said prevention and mitigation of such hazards have assumed paramount importance. “The need of the hour is to create a balance between economic growth and protection of the natural habitat which has been inherited from our forefathers for the future generations”, he added.

Appreciating public sector enterprises (PSEs) Dr Choubet said that as responsible corporate citizens PSEs have shown great commitment in following environmentally responsible practices. All requirements under various statutes like environment monitoring, pollution control, hazardous waste management and compliance to e-based rules and noise pollution rules are being adhered to by them.  He advocated for strong regulations to protect environment.

Dr Choubey advised the industry to ensure that the chemical waste be treated close to the point of generation, recycled and reused. R&D efforts of PSEs should focus on development of environment friendly and emission compliant products and techniques.

'Volunteerism, multi-agency collaboration springboard to eradication of corruption' '

People, organizations and public bodies must come together and collaborate to come up with and institutionalize necessary checks in the form of both preventive and punitive policies and measures that tackle the issue, opined ONGC CMD.

Thesynergyonline Corporate Bureau

ONGC CMD, Mr S Vasudeva, (Centre) at an interaction on ' Collective Efforts to Reduce Corruption in India'. Also seen alongside are Mr K S Ramasubban, State Vigilance Commissioner of West Bengal and Mr P K Ravi, Deputy Secy, Ministry of Personnel, Public Grievances and Pensions, GoI.

NEW DELHI, NOVEMBER 12 : VOLUNTEERISM and multi-agency collaboration is the key springboard to the possible eradication of corruption, said Mr Sudhir Vasudeva, chairman and managing director of Oil and Natural Gas Corporation (ONGC), to the Global Compact Network India's (GCNI) Delhi business delegation on 'Collective Efforts to Reduce Corruption in India'.

Mr Vasudeva who also is the president of GCNI, in his address that put forth the efforts taken by the corporate sector in arresting the 'pervasive menace' of corruption, highlighted the pioneering role played by ONGC in bringing this disturbing issue to the mainstream discourse and organizational business practice through incorporation of critical elements like the Integrity Pact and Whistleblower Policy.

Mr K S Ramasubban (IAS Retd.), State Vigilance Commissioner of West Bengal and Mr P K Ravi, Dep. Secy, Ministry of Personnel, Public Grievances and Pensions, GoI were the other panelists on the occasion besides ONGC CMD Mr Sudhir Vasudeva.

Mr Vasudeva conceded the alarming rise of corruption in all facets of not just political or commercial life but also of the social spectrum. "The all- pervasive corruption has made such extensive penetration into our lives that no amount of discussions or dialogue could lead to the formulation of a comprehensive solution for this malady", said Mr Vasudeva referring to the deep-set rot in the society.

In such a worrisome scenario Mr Vasudeva opined that it is expressly desirable that people, organizations and public bodies come together and collaborate to come up with and institutionalize the necessary checks in the form of both preventive and punitive policies and measures that tackle the issue. "Effective ERP systems, transparent supply chain mechanisms,

Electronic fund transfers, e-Governance framework and tools like Integrity Pact and Whistleblower Policy are some of the much agreed upon and deployed measures which act as a bulwark against corruption but for all of these to assume any meaning and become effective every concerned stakeholder needs to close ranks and act together", Mr. Vasudeva noted.

Deloitte India 2012 CFO Survey

Call for policies that would ensure long- term economic sustenance 

Thesynergyonline Economics Bureau

THE Indian economy showed promising signs in the beginning of 2012, the time-frame of the inaugural Deloitte India CFO survey. During that time, inflation had dipped to 6.55 per cent , consumer demand and industrial output were on the rise and industrial production numbers were positive. The survey demonstrated general optimism from the respondents with 67 percent of them expecting their industries to perform better than 2011. CFOs were confident in their organization's resilience to external factors in spite of 50 percent of them expressing concerns over competition, pricing trends and availability of skilled people.

This"CFO Survey" (July 2012) was conducted when the Indian economy is going through challenging times with the government and the policy makers wedged in a "balancing act". Caught between the need to curb inflation and the necessity to spur economic growth, the government is indeed on a tight-rope walk over economic dilemmas,

The situation is worsened due to events, such as continued financial worries in the US and Europe and domestic problems such as lack of rainfall, widening fiscal deficit, and rating downgrade of "India Inc." by credit rating agencies. It needs to be observed how the government formulates policy decisions in the coming monthsand, consequently reinforces confidence in the Indian economy. In light of this, the survey shows CFO concerns for India's macroeconomic outlook and its impact on future industrial growth and organizational
sustenance.

The survey provides a perspective on how CFO opinions are evolving with the changing economic and global scenario, slowing industrial growth and increased organizational pressures to maintain margins and profitability. Inthis report, data on ranks were based on actual responses and reflect CFO views on the relative importance of a given set of issues/concerns.

Economic concerns

The Indian economy has been going through a challenging phase with issues such as expanding trade gap, high current account deficit, high fiscal deficit, and increasedlevel of subsidies. The outlook appears challenging especially considering economic conditions in the US and Euro-zone which continue to hamperexports. Moreover,domestic concerns such as weakening consumer demand, looming commodity shortage due to low levels of rainfall and the ever-growing demand for oil imports continue to worsen the situation.

Survey results show CFOs'apprehension on the major macroeconomic indicators with almost half of them projecting a negative outlook.

A sizeable proportion, (43 percent ) of the respondents indicated that political direction towards economic reforms is the major cause of concern. CFOs are looking forward to policies that would ensure long-term economic sustenance, spur consumer growth and bolster investor confidence. As in the earlier survey, CFOs in this survey identified decreasing consumer demand as one of their organization's key challenges. The others being fluctuating exchange rates and rising input costs.

Industry apprehensions and lingering ramifications of the budget

The ramifications of the annual budget continue to generate not-so-positive sentiments and 61 percent of the CFOs expressed concern over industry regulations, inflationary pricing trends and changing cost structures. CFO concerns stemmed from increased rates for excise duty and service tax, which many viewed as indirect causes of price, as well as input cost increases. These concerns were expressed mainly by CFOs from manufacturing, media, consumer, and hospitality sectors. CFOs, who exhibited a more positive outlook,were from industries that have been provided government subsidies and exemptions such as bio-sciences and energy.

Changing optimism

As compared to the last survey the proportion of CFOs who expressed optimism for the future decreased by 16 percent . Although respondents indicated that they are less positive about their company's future, they continued to believe that organizational success is mainly anchored around internal/companyspecific factors such as products, services, operations, financing, etc. CFOs attributed a less optimistic outlook to external factors such as economic scenario, industry performance, export slowdown etc.

CFOs consider factors such as domestic political environment, domestic market conditions (fall in industrial production, declining exports etc.) and decreasing consumer demand as main concerns affecting organizational productivity and profitability. Organizations are rethinking their strategies,to focus on enhancing/maintaining consumer demand, containcost for maintaining margins/profitability,and build organizational resilience to external factors for long-term sustainability.

Growth, inflation, rupee depreciation and fiscal deficit

GDP growth in India has declined to an all-time low of 5.3 percent. CFO concerns are evident from their responses, where 46 percent expect growth to slow , 39 percent expect it to stabilize and only 15 percent expect an improvement in GDP growth rates. This is in contrast to the earlier survey, wherein 78 percent of CFOs expected the GDP growth rate to be in the vicinity of 7 - 7.5 percent by the end of FY12.

The survey also highlights CFO concerns for industrial growthwith some 45 percent of the respondents expecting it to taper down and 37 percent expecting it to stabilize. The industrial growth declining by 1.8 percent in August 2012 reflects the CFOs concerns.

Currently, inflation stands at 7.25 percent (June 2012), and the RBI had intervened by raising the Central Reserve Ratio levels between 2010 and 2011 to deal with the rising inflation. Despite such policy interventions, inflation rate continues to remain at an all-time high and there is a growing apprehension that this might be the new trend for the Indian economy. Popularly viewed as a non-monetary phenomenon, it is increasingly believed that this rise has been driven by temporary cost shocks such as an increase in oil or commodity prices. 46 percent of the respondents feared that the inflation would worsen going forward. While the RBI and the government devise adequate measures, CFOs look to stabilize their organizations' cost structures by innovative initiatives such as securing forward buying rates, hedging against risks etc.

Nearly 50 percent of the respondents expected the rupee to stabilize on the perception that the global economic situationis expected to weaken major currencies such as the US Dollar and Euro, which in turn is expected to strengthen and contain the downward slide of the rupee.

Comparing the CFO responses from 2011 and 2012 we see increasing sentiments towards a not-so positive outlook as depicted in Figure 3, with almost 40% more respondents expecting a further slowdown of GDP growth rate and almost a similar proportion of respondents expecting persistence of high inflation levels (above 7 percent ).

The stabilisation going forward will mainly depend on whether the government is able to contain potentially slower growth and greater exposure to economic pressures by further liberalising the economy or conversely, by rolling back some of its earlier policies, which had increased the role of market forces and private organisations.

Top economic concerns for organizations

The presidential elections were held during the period of the survey along with a change in the finance ministry. This resulted in uncertainty among CFOs, with 43% indicating that political direction towards economic reforms is a major cause of concern.

To add to this, India's consumer spending has been at its weakest in seven years and 15% of the CFOs have identified decreasing consumer demand as one of their organization's key economic challenges in addition to rising input costs. As the government continues to maintain high interest rates leading to higher cost of capital, CFOs are cutting back on their investment spends amid increasing borrowing costs.

While in 2011 respondents were primarily concerned about low consumer demand and inflationary input prices. The overwhelming concern in 2012 is the lack of effective financial policies to contain the current economic situation. Based on responses received from CFOs, the organisations today seem to be depending to a great extenton the government for regulatory and policy level interventions to counter domestic and global economic challenges that they are facing.

Surrounded by a tough economic environment, most industries are being impacted by dearth of adequate political reforms, slowing consumer demand and depreciating rupee.

• The Banking industry is apprehensive about the impact of the current economic situation on the industries that they are connected with as this increases the possibility of defaults on corporate loans. Deloitte experts believe that credit/investment portfolio planning could become more challenging in light of policies such as capital adequacy and priority sector lending. This might increase stringency and return needs of lending institutions, which in turn could compel organizations to exercise more prudency while investing in projects.

• LSHC sector is concerned with the rupee devaluation and excise duty increases, both of which are increasing the input costs. Also, adherence to regulations such as Good Manufacturing Practices (GMP) is improving the quality of products but also resulting in higher costs. In addition, the impending threat from increased coverage of products under price control is pushing down revenue potential. Margin sustenance under such dual pressures – increasing cost and decreasing revenue is a major operational challenge. Deloitte experts opine that such regulations and current operational challenges could eventually lead to marketplace attrition and industry consolidation and /or less fragmentation. Players with better operational practices and with capability of delivering quality solutions to end consumers may eventually sustain.
• Dip in consumer confidence under economic difficulties has resulted in slowing consumer demand. The downward slide in demand has been more pronounced in discretionary spend categories. Deloitte experts believe that the consumer business is seeing a shift in buying pattern within the total expenditure basket. For the average house-hold, although discretionary spend is decreasing, spend on food, which accounts for a significant share (28 percent ), and on other basic sustenance goods, continues. However, consumers are becoming more value conscious in their basic sustenance good purchases. So while on basic necessities, although the average demand is not lower, the pattern of expenditure is shifting towards 'value for money' items.

• Globalization of the Indian manufacturing sector have contributed immensely towards the overall development of the Indian economy but the sector still suffers from barriers in technology usage, infrastructure, labour, land, financing and governance. The
situation has been worsened by factors such as lack of adequate government policies, increased excise duty on imports, and other input cost increases. Deloitte experts believe that in order to resolve the situation, the government could focus on improving the infrastructure and logistics backbone, ensuring fair competition and access to markets, lowering import duties, uplifting awareness/education/skills sets, increasing investment in R&D and supporting SMEs

• The impact on IT companies has been both positive as well as negative. Although slowing global demand negatively affected a significant proportion of their revenue base, the rupee devaluation is expected to help in pricing ITEsservice offerings at relatively attractive rates, boosting sales.In the telecom industry, increase of service tax has had an impact on end customer volume as this has resulted in increased cost for most services including mobile calls. For telecom operators, the increase in call rate has resulted in reduced per-minute usage per user, thereby impacting operator revenue negatively. Deloitte experts believe that such revenue loss could be challenging for telecom operators who inherently suffer from margin issues mainly due to high interest/depreciation charges from borrowings for spectrum licenses acquisition and network equipment rollout

• The Energy and Resources sector, in addition to political issues, view credit availability, cost of capital, and rising input cost as key concerns going forward. Increased rigour and diligence of financial institutions towards investment is increasing cost of borrowing. Moreover, infrastructure companies (including those in power sector) are encountering barriers in raising capital by public issues. According to the RBI annual report (Aug 2012), funding in infrastructure sector has reduced by 46 percent possibly triggered by apprehensions of debt restructuring and non-performing asset write-offs in some sub sectors. In addition, the situation is worsened for the energy and resources sector due to rising input costs. Deloitte experts believe thatthe impact of weakening rupee on imports (crude oil, coal for thermal power), inflationary pressures on operational expensesand high return expectations of investor/debtors could become significant challenges Foreign market access to hedge risks 60 percent of the CFOsbelieve that they would most likely consider accessing foreign marketsto hedge risks by:
• Sourcing from markets that would provide better foreign exchange differential to offset rising import costs
• Increase export to untapped markets to counter slowing domestic demand
• Secure long term forward exchange rates to smoothen the impact of rupee fluctuations


Interestingly, a majority of MNC organizations(66% – 78%) have shown significant interest in stabilizing their performance by building
hedges to offset risks, whereas on the other hand respondents from Indian companies werecomparatively less open to such measures.

Approximately 61 percent of the CFOs express concern over industry regulations, inflationary pricing trends, and hanging cost structures.

Comparing with 2011 survey results , regulations and pricing/cost structure trends continue to be areas of concern with a large number of CFOs. What is also interesting to note is that market /product competition, which was highly ranked in the last survey, is not shown as a top concern in this round, with regulatory and pricing/cost trends taking over. Deloitte experts believe that this could be an indication of heightened focus of organizations on operational challenges – maintainingrevenue, driving volume, containing costs, utilizing capacity, planning manpower, etc.

The ramifications of the annual budget continue to generate not-so-positive sentiments. This feeling is evident across respondents from various business types and size of the organization. CFO concerns stem from increased rates of excise duty and service tax, which many view as indirect causes of price, as well as input cost increase.The survey indicates that as a result of policies set forth in the union budget (2012) only 8 percent anticipate improvement in the industrial growth, while 59 percent expect a slowdown.

CFOs from industries such as CB, Manufacturing, FS, and TMTare more concerned than others on the budget ramifications, primarily due to fears that an increase in raw materials and other input costs will increase market prices, which in turn will aggravate the issue of slowing consumer demand and low profitability. On the other hand, CFOs from Energy and LSHC sectors, expect either no change or improvement in industrial outlook, and their sentiments can be attributed to inherent demand for their goods (fuels and fertilizers respectively), government subsidies and tax exemptions.

CFOs from small and medium companies have a more positive opinion compared to larger companies. This outlook could have been driven on one hand by government's policy initiatives that were instituted to ease lending for SMEs and on the other bythe respondents' confidence in their respective organization's internal strengths to respond to these challenges more confidently.

In the last survey, 47 percent of the CFOs were optimistic about the performance of their organizations despite economic concerns . Currently however that optimism is guarded with only 31 percent of the respondents indicating that their organizations would perform better going forward and 35 percent are apprehensive about poor performance. Out of the CFOs who envisioned an optimistic.


Twentyfive percent indicated that this would be primarily due to internal/company-specific factors, such as products/services, operations, financing, assets etc. In contrast, 28 percent of the CFOs attributed their anticipated poor performance to external factors such as economy, government, regulations, market trends etc.

Out of the CFOs who are more optimistic about their organization's future, 81 percent represent SMEs. 82 percent of these more optimistic CFOs have confidence in theirorganization's internal strengths such as product/services, operations, financing decisions, core assets etc.

Seventytwo percent of the respondents consider domestic market conditions, political environment and decreasing consumer demand as critical concerns. CFOs are under dual pressure. Revenue sustenance is a challenge due to lower consumer demand (domestic and exports). At the same time sustaining profitability is an issue due to poor economies of scale from low production volume driven by factors such as decline in domestic demand and slowdown of exports in some sectors.

Based on the survey findings and associated sentiments on economic indicators, CFOs are faced with the need to continue revenue growth/preservation, as well as implement cost containment initiatives. In addition, their future strategies may include access to foreign
markets to hedge risks, deliver better consumer solutions and/or products, increase resource and/or capacity/productivity, streamline operations and ensure prudent investments on business projects. Such practices may help them tailor business models that adapt swiftly to changes in the global economy.

Competition advocacy key to take reform agenda forward : Moily 

Thesynergyonline Economics Bureau


NEW DELHI, AUGUST 21 :
IF competition succeeds, everyone is a winner, said M Veerappa Moily, Minister for Power and Corporate Affairs while addressing a meeting on "National Competition Policy and Economic Growth in India" organised by CUTS International, an economic policy think-tank working on competition and regulatory issues.

Thanking CUTS for its efforts on competition advocacy, he urged the participants to take the reform agenda forward. He also said that there should be a holistic approach to take the economic reforms agenda forward. He expressed hope that the Cabinet will approve the National Competition Policy soon.

More than 50 participants representing government, regulatory agencies, consumer groups, business associations, media and other stakeholders took part in the launch of the project which will conduct competition impact assessment in three sectors: pharmaceuticals, electricity, and the marketing of agriculture products.

Welcoming the participants, Pradeep Mehta, Secretary General of CUTS International, talked about studies which were conducted for 13 sectors as part of the work done under the Committee on framing the National Competition Policy and related matters constituted under the Ministry of Corporate Affairs, Government of India.

The project would deepen these studies to propose specific regulatory changes to be implemented in identified sectors in order to enhance competition resulting in dynamic gains to producers and consumers.

Andrew Jackson, Counsellor (Knowledge Economy) of the British High Commission in New Delhi said that the main reason for supporting this project is to enable a more informed debate on India's reform agenda and learn from the same.

Ajay Chhibber, Assistant Secretary General of the United Nations Development Programme and Regional Director for Asia and the Pacific, talked about how the sharp decline in India's growth over the past few years is also a result of lack of competition reforms at micro and meso level. There are several hurdles in starting business in India, taxation policies, etc. serve as bottlenecks in its path to growth and many of them can be tackled by an effective competition policy.

Baijayant Panda, Member of Parliament, deliberated on possible hurdles in the implementation of competition policy. One of the major hurdles to overcome implementation challenges of the economic reform agenda lies in local politics, he said. "The need of the hour is to modernise our polity and what we need right now is new and good politics."

Arun Maira, Member of the Planning Commission of India further emphasised on political-economic challenges in implementing a policy. He said that redesigning of institutions is needed to address these challenges and generating growth which is what the Planning Commission is attempting at the moment.

According to Dhanendra Kumar, Principal Adviser of the Indian Institute of Corporate Affairs and former Chairman of the Competition Commission of India, said that it is necessary to proactively promote competition in the Indian economy. While competition in markets will be monitored by the Competition Commission of India, anti-competitive outcomes of government policies, rules and regulations need to be reviewed through implementation of the competition policy.

He also said that it is very important to bring competition reforms to the state level so as to broad-base the contours of economic democracy through a culture of competition.

Concluding the event, Nitin Desai, president, CUTS Institute for Regulation & Competition and former Under Secretary General of the United Nations, said that quantification of gains from competition reforms will set the agenda for completion advocacy. He hoped that the project will come out with case studies showing conditions necessary for competition reforms to succeed in India and identify sources of gains to producers and consumers.

With support from the British High Commission under its Prosperity Fund, the project will look at emerging challenges to move the competition policy agenda forward in India. It will look into political economy constraints of creating an enabling environment for the adoption of necessary regulatory reforms and will quantify possible economic gains to consumers and producers that are expected to flow from enhanced competition as an outcome of reforms.

INDIA INSIGHT

'India should not be so scared of trying out FDI in multibrand retailing'

Pawan Chopra, Former Secretary, I & B

Certainly, India should not be so scared of trying out FDI in Multi Brand retailing. If it turns out to be so truly disruptive, we can always re think the policy.

If we look to the past, we were scared that 'product patents' would kill are pharma industry; but today it is international big pharma who are scared of Indian capability in generics.

When firms like McDonald came in, there were fears for the hawkers and halwais. However, it was the multinational firms who had a tough time and had to bring down prices to match street food prices, before they got sufficient custom. Also, we now have our own Haldirams and others who provide Indian fast food, using modern techniques. The hawkers still survive, because demand for their competitively products and services expands faster than the operations of the multi nationals and the Haldirams. This will remain so, until our per capita income reaches at least the half way mark for developed countries.

Indian grocery retailing is very efficient at a certain level and it will not be easy for multi-national firms to compete with our perchunawalas. And as and when they do succeed our own grocers would have imbibed management lessons to be used to modernise their own operations.

On account of trade liberalisation, foreign consumer goods are now freely available in our country. FDI in retail is unlikely to significantly increase their share at the expense of our local products. Our local products can loose out for other reasons such as lack of competitiveness in terms of costs and quality - a set of issues which need to be separately addressed.

Further most domestic consumption in terms of foodstuff, clothing, housing - the essentials, will come from Indian production whether retailed by multinationals or otherwise. The volumes will dictate this and it does not matter that a few foreign goods also get a better chance of being sold. If the Indian producer can on account of multibrand retailing give Indian consumers, better designs and quality, more access to farmers to reach their products more efficiently to consumers - that would be a very good thing.

India cannot afford to remain aloof to a worldwide trend. We must approach such reforms with confidence. There is nothing to prevent us to back track, if we find the introduction of FDI in multibrand retail doing more harm than good to the country.

Glitzer Text 

AACCI workshop on 'Prevention of Violence and Aggression among Children and Youth'

Anti-violence , aggression rant will resonate  

There was a long- felt need to plan some interventions and decide to spearhead a project that will get together a variety of stakeholders to plan practical and tenable interventions at various levels, says Dr Swati Bhave, ED, AACCI. 


Thesynergyonline News Bureau

Mr Y S Bhave, Chairman, AERA releasing the CD on ‘Prevention of  Violence and Aggression in Children and Youth’, (L to R) Dr Tannu Anand, Dr Sangeeta Yadav and Dr Swati Bhave, Executive Director, AACCI.

NEW DELHI, AUGUST 07 :
IN view of the escalating violence in many cities of India which involves children and youth in schools, out of school and at home in various aspects Association of Adolescent and child care in India (AACCI ) felt a need to plan some interventions and decide to spearhead a project that will get together a variety of stakeholders to plan practical and tenable interventions at various levels.


Dr Swati Bhave Executive Director, AACCI, said that they felt there is a need for a group of experts, NGOs and stakeholders to come together and brainstorm to come out with recommendations for prevention of this escalating violence and aggression and plan intervention strategies at various levels- school. College, community, parents and last but not the least media .This consultative meeting was planned to meet this target.

This project is a brainchild of Dr Swati Y Bhave Executive  Director , AACCI.  This is being co-hosted by Dr Anuradha Khairnar and ISHP Indian Society of healthcare professionals.  AACCI is a group of doctors from various specialties and mental health professionals who have come together for holistic care of children and adolescents. Children in schools and youth in college can only be reached through the two main pillars of their wellbeing –parents at home and teachers in schools .With this in mind AACCI has also included in the  group parents and teachers.

Since 2008 AACCI has been doing various programs on parenting, life skill education, tobacco control, gender issues, healthy life style, anger management and coping with emotions prevention of obesity and other life style disorders in various cities and states in India.

 

 

 

Chandrajit Banerjee, DG, CII on grid management
steps announced by the Union Minister for Power


THE steps announced by the Union Minister of Power today on third party audits of the protection systems for power grids within 3 months and also finalization of a defence plan by the States on islanding schemes, special protection and automatic demand management schemes in case of grid failures, are indeed very welcome steps, said Mr Chandrajit Banerjee, Director General, CII.

We are hopeful that these measures would prevent recurrence of the grid failures witnessed last week.  There is also an urgent need to address the underlying issues behind the widening Demand–Supply gap for Electricity.

CII has consistently been highlighting that urgent steps need to be taken for addressing key issues ailing the Power sector, such as improving the supply of coal for thermal power plants, rationalizing tariffs and reforming the state distribution utilities. This should be seen as an opportunity for addressing these issues on priority said Mr Chandrajit Banerjee.

Dominance of IAS in regulatory bodies


TO my mind, I think too much is being made of the dominance of the IAS in Regulatory bodies. This is not to deny the advantages and headstart given by "networking" and also on account of working closely with the political executive.


The real problem is that very few from the private sector, with the experience, seniority and understanding required for the job of a regulator, would be willing to join a regulatory body on account of the emoluments - which in all probability be a small fraction of their existing emoluments. There are also restrictions on post retirement work. Further, the environment in Government is more like working in a nest of crabs and private sector entrants cannot find this an easy adjustment.

In the US, the difference in emoluments is not so large and restrictions of moving between Government and private sector are few. Fitting in into Government is not a problem. We may also note thatthe revolving door between Government and Private sector has both plus and minus points.


In India even a person like Russi Mody found himself floundering handling Air India.
Fortunately, there is now at least a one way flow from the Government and the public sector to private sector positions - and this over time will lead to a better understanding on both sides. The reverse flow will not take place until emoluments between public and private differ less - orunless you getthe occasional Nandan Nilekani working only for a token payment.

The constraint of emoluments would also apply to outstanding professionals like chartered accountants and lawyers, who would be reluctant to leave when they are at the peak of their practice to become regulators. There would have to discontinue to be in practice during the period they function is regulators and be subject to residual restrictions afterwards.

As far as academics from management institutes are concerned they could certainly have a bigger presence provided they had done a stint, however brief, at middle levels in Government or even in private sector firms of standing and therefore had a ring side view of actual formulation and execution of policies - otherwise they will continue to be ruled out on grounds of possessing only theoretical knowledge. Therefore, greater secondment of management institute staff to Government positions does need some encouragement.

True IAS officers or other bureaucrats are reluctant to rock the boat - but Government institutions need people who are inclined towards stability and not revolutionaries - but of course, sometimes stability can go to the extreme of stagnation and complete status quoism. Also, please keep in mind that even the conduct of Regulators is likely to become more and more open to examination by inquisitory or watchdog bodies like the CAG, CVC, CBI , Parliament and the media. So one has to strongly factor in accountability even when working for change.

So if conditions can be created to attract suitable non bureaucrats into regulatory bodies that would bring about a balance between stability and change. We have all to work at it instead of wringing our hands about the domination of the IAS.

Pawan Chopra
Former Secretary, Ministry of Information & Broadcasting

 

Dominance of superior service is not a new concept for this has been going on since British days in India. But the members of service used to have nerve of steel. They had courage, conviction and decision making capabilities and they never buckled under political pressure. These qualities are rarely seen now for fear of losing political patronage which is needed most to garner favours like choicest postings, post-retirement benefits etc.

The well-known "Networking" of the IAS fraternity is being used at times for maintaining efficiency of output and mostly for safeguarding the interests of their superior service. But the fact remains that interests of efficient and quality achievers of other central services are looked after neither by the political bosses nor by officers of superior service. The former remain busier in their constituencies to find little time to ponder over such glaring inequalities and the latter do not allow them to come up for fear of losing their own interests or prominence or superiority.

Government records would show clearly that IAS officers are preferred over officers from other services without any so called justification. Many of the officers of the Central Secretariat Service who were empanelled for appointment to Deputy Secretary and above posts for over five years or soretired before getting the posts because of this tendency. However, some posts have since been reserved for them now and this trend does not continue as before.

There has been other major shift in that many Joint Secretary level posts are now being manned by the officers from central services. This is due to the compulsion (and not as a capacity building exercise)arising out of low in-take in IAS in 1990s and the refusal of some of the State Governments to relieve IAS officers in excess of the deputation quota. This may reverse the trend if the experience gained by these non-IAS Joint Secretaries could be utilized by giving them Additional Secretary/Secretary level appointments in times to come. The other alternative could be to keep the post of Cabinet Secretary reserved for personnel outside IAS e.g. the experts in media, law, academics, economics, industry and so on. Apart from this, the Secretaries in key economic Ministries may be experts (and not the generalists) on the subject. Key posts in regulatory organizations need also to be offered to the experts on the relevant subject.


H.G. Upreti, Former Deputy Secretary, Government of India

Time-bound approvals in energy and infrastructure sectors

Formation of Project Clearance
Board positive and encouraging


Chandrajit Banerjee, Director General, CII

THE Confederation of Indian Industry (CII) had strongly recommended a push to infrastructure development as a tool to create demand and revive growth momentum. In this respect, CII had particularly recommended to PMO the need for setting up an Infra Fast Tracking Board to micro-track and resolve impediments project by project, at a granular level.

The announcement for the formation of Project Clearance Board by the PMO to facilitate time-bound approvals in Energy and Infrastructure Sectors is thus extremely positive and encouraging and on the lines of CII recommendations.

This institutionalized mechanism for issuing clearances in a time-bound manner on the lines of FIPB, could remove the hurdle of delays faced by project implementing agencies and private firms.

Talent transition in oil and gas sector a global challenge: ONGC Director-HR

Thesynergyonline Corporate Bureau

ONGC Director-HR Mr K S Jamestin addressing participants at HR Summit of Oil & Gas Sector PSUs in Shimla.

NEW DELHI, JULY 18 :
DELIVERING the welcome address at the 46th edition of the HR summit of oil and gas sdector PSUs held at Shimla recenty, Mr K S Jamestin, Director-HR set the tone for the summit explaining the facets and magnitude of the issue of talent transition in the oil and gas sector.

Talent transition in the oil and gas sector is a global challenge and needs to be addressed seriously, lest it should lead to permanent loss of differentiating technical capabilities, he added.

The HR summit of oil and gas sector PSUs (earlier known as Personnel Chiefs' Meet of Petroleum Sector) is a forum to deliberate key concerns of human resource management in oil and gas sector. ONGC played hosts to the 46th edition of this summit.

In the inaugural session Mr Jamestin shared that employment in oil and gas industry has had a linkage with the principles of oil economics, which in turn, is linked to several geopolitical factors. The large recruitment of talent in the oil and gas sector in 80s and 90s, has resulted in the average age of employees being above 45 years with majority of them due for superannuation in the next couple of years.

Talking on talent transition, he alluded to several studies conducted by several agencies especially the one commissioned by the Ministry of Petroleum and Natural Gas through Ernst and Young in 2010.

Put off GAAR at least up to
2015 : Assocham president

Serious implications for the tax-payers and
investors – both domestic and global


Thesynergyonline Economics Bureau

NEW DELHI, JULY 02 :
AS the General Anti-Avoidance Rules (GAAR) have created bad perception about the Indian tax laws among global investors, the proposal should be put off well beyond April, 2013 and at least upto 2015, ASSOCHAM president Rajkumar N Dhoot said on Monday.
 

Mr Dhoot said GAAR has serious implications for the tax-payers and investors – both domestic and global.

He also said, "No rush job should be done because India cannot afford to send a signal suggesting there is no stability in taxation policies".

Each and every provision of the anti-avoidance rules should be debated and discussed threadbare by all the stakeholders- industry, tax planners, legal professionals and tax administrators so that a well-thought out proposal is placed before Parliament.

"Since it would be a big exercise, one year is not good enough," he said. A similar proposal was debated in Britain for four-five years before they implemented it, added Mr Dhoot.
Moreover, the timing of the GAAR is also not correct. "We cannot afford to scare away investors in the stock market at a time when the big concern is to halt the capital outflows and to damage-control routing of the rupee," Mr Dhoot said.

He said the foreign institutional investors (FIIs) are quite a touchy tribe of investors. They build and destroy perceptions about countries in the short-times. Negative perception, unfortunately, feeds on itself and even influences the credit rating agencies. This is exactly what has happened in India.

These perceptions were built especially after the GAAR was introduced in the Budget. While its put-off by the government at least for one year is a positive development, it would be in the fitness of things if the proposal is put on the backburner. If it has to be kept alive, it must be debated well, he said.

Mr Dhoot, however, took satisfaction in the fact that things appear to be changing in the last one week and the government looks sincere in winning back the investor confidence. This was also highlighted by a quick poll of about 150 CEOs by ASSOCHAM.

They all agreed that the business confidence is looking positive, of late. The stock market too has responded well and the rupee is beginning to look stable.

The ASSOCHAM president urged the Prime Minister Dr Manmohan Singh, who is also looking after the finance portfolio, to overhaul the country's tax administration so that it becomes transparent, less discretionary and totally free from Inspector Raj.

"We hope the Direct Tax code gets passed by Parliament and gets implemented this year," disclosed Mr Dhoot. DTC would infuse sense of certainty among the tax-payers and investors.

Likewise, introduction of the Goods and Services Tax would be indeed a landmark event bringing in drastic changes in the country's tax administration. In-so-far as the debate on tax avoidance is concerned, the guiding principle should be incentivising the savings and investment, Mr Dhoot said.


"If the tax breaks are given to promote savings and investment, tax-payers should be free to do his tax-planning in a manner that he saves to invest in nation-building. That should not be taken as tax avoidance and should not attract the much-feared GAAR.

Tax planning should rather be encouraged so long as it goes to the capital formation in the country. "India would continue to need huge investment for growth and equity. It has to largely come from domestic sources. FIIs and FDI will also complement the domestic sources, Mr Dhoot said.

THE MAN WITH MIDAS TOUCH  

 

Health of Indian power system
and its impact on economy

Engineer , Yogendra Prasad, Hydro Expert

THE power supply position of India is deteriorating day by day due to lack of fuel, poor implementation and poorer hydro/ thermal mix. The hydro /thermal mix at the end of 6th Plan between thermal and others was 66.04 percent and hydro was 33.96 percent . At the end of 11th Plan this has widened further and the ratio of thermal and others generators has increased to 79 percent and hydro has decreased to 21 percent , which has caused further worsening of power supply position in India.

On the basis of the latest Indian grid code, the power supply position has to be maintained between the frequency range of 49.7 HZ to 50.2 HZ. In order to have satisfactory power supply position it is essential to have 40-60 mix of hydro and thermal & other generators.

Frequency can be smoothened only when we have maximum generation through hydro power generators and the immediate requirement which has been assessed in this country is 40% hydro and 60 percent thermal. This has been decided on the basis of load difference of power consumption between peak hours and off-peak hours.

Normally, peak hour is considered between 7 AM to 9 AM and between 6 PM to 10 PM. On account of wide variation of frequency, higher grid security and increased efficiency of power plant equipment will not be achieved. Only in order to maintain frequency nearer to 50 HZ, it is desirable to have maximum hydro reservoir projects and Pumped storage projects.

The high and low frequency both are detrimental to the life of the generating equipments. As such we have to have proper balance of reservoir projects and pumped storage projects.

Whenever there is low frequency in the system it shows that we have more power demand than the available power generation in the system. In that case we start generation from hydro reservoir projects and maintain frequency nearer to 50 HZ that is up to optimum level and we also maintain the frequency from the pumped storage projects if we have storage of water in the upper reservoir of pumped storage projects.

In case of high frequency in the system it shows that there is less demand than the power generation in the system. As such frequency goes high which is also detrimental for higher grid security and increased efficiency of power plant equipments.

In the high frequency range we have to provide adequate load to the system for balancing the frequency for which we create load through pumped storage scheme and we pump the water to the upper reservoir of the pumped storage project and once the frequency goes down we generate the power with the help of water available in the upper reservoir of pumped storage project to balance the frequency.

In the pumped storage schemes when we pump water in the upper reservoir by using 100 percent consumption of power we can generate approximately 70 percent of power which was consumed for pumping the water.

Normally, in almost all the developed countries in order to balance the frequency we do this because high and low frequency beyond the grid code limit is highly detrimental for the generating equipments and grid security. The power generators are designed for synchronous speed and wide variation in frequency causes abnormal change in
the speed of the machine which causes substantial damage to the generating equipments. As such wide variation in frequency causes lot of financial impact on the economy of power generation and power transmission.

In annual maintenance period of generators we have to spend substantial money for purchase of spare parts of generating equipments which increases the maintenance cost of the plant in case we do not control the supply frequency of power within the range permissible for the power supply system. Sometimes it causes major faults in generating equipment resulting in interruption of power supply in the system.

In India about 60 years ago it was assessed that we can have installed capacity of 93,000mw (approx.) from pumped storage schemes. But till date we have not been able to install more than 4,700 MW (approx.). We have reservoir projects as per old report of 40,000 mw (approx.) capacity but we have not been able to install more than 20,000 mw (approx.) capacity of the reservoir projects.

Quick control of power generation according to requirement is possible only from hydro generators which accept full load within a few minutes and reject the full load within few minutes. It is not possible with thermal generators. Wherever hydro generation is not possible other alternative is gas power projects where increase and decrease of power generation could be achieved faster. But in India there is acute shortage of gas and we do not have surplus gas and hence development of hydro power project is a technical compulsion.

According to an earlier report, we have about 148,000 mw of hydro potential which should have been developed by now but till date only 38,990 mw (approx.) has been developed though if we really assess the total available potential of hydro power as on date, it may be more than 300,000 mw approximately. In the year 1999 Hydro Power Policy for accelerated development of hydro power projects was approved by the Government of India.

In the year 2003 for the development of hydro power potential of India the Prime Minister of India had launched a program of 50,000 mw of hydro power development. He had also given instructions that for supplying power at proper frequency and voltage the development of hydro power should be done on war footing. But till date nothing has been developed even as per instructions and desire of the Prime Minister of India.

Just to give an idea of the cost of the lost power potential of one hydro project of 500 mw getting delayed by one year costs the nation Rs.500 crore loss of revenue given the available load factor of water at 50 percent . Gone for ever!! While the delay in thermal power projects does not cost any loss of potential as the coal is still in the ground.

At present we are maintaining the power supply of the country within the desired range of frequency under forced economical circumstances because whenever the frequency is at 49.5HZ the Electricity Boards i.e. power utilities are required to pay very high tariff in case of unscheduled interchange of power.

At 49.5 HZ frequency the U I charge as on date is Rs.9.00/kWh whereas it was only Rs.4.80/kWh in the year 2009. The average tariff of power supply in the country including all types of load is about Rs.4/- per KWh approximately. The realization of payments from consumers by State Electricity Boards is Rs.3.00/kWh (approx). As such Electricity Boards are already incurring huge losses in power supply to the consumers because they are purchasing at higher rates and supplying to the consumers at very low rates and hence unable to pay the debts.

The average cost of power supply in the 2004 was Rs.2.54 per unit and the realization from the consumers including agricultural load was Rs 2.09 and as per available figure of 2010 the average cost of power supply was Rs.4.00 per unit (approx.) and the realization including the agricultural load was Rs.3.00 per unit (approx.).

Thus, on each kWh sold power the Electricity Boards are incurring a loss of Rs.1.00 per kWh.

A few months back Economic Times have also reported that Electricity Boards have suffered losses of Rs. 81,000 crore (approx.) in India at the end of March 2011 and this loss might have gone by more than Rs. 1 lakh crore by March 2012. As the load is increasing day by day the amount of loss is also increasing abnormally. In order to keep the system within admissible frequency range huge load shedding of power is being made by the Electricity utilities in order to maintain the frequency within the range as a result of which more than 15-16 hours power cuts are made in village areas and 6-7 hours power cuts are being made in urban areas per day.

Because of instability in the system the period of power cuts are also not known to the consumers. Intermediate power cuts are even being seen in Delhi and NCR areas of the country. As a result of this all the industries are unable to function economically. Some of the industries are running with the help of captive power generation and even offices are running with the help of captive power i.e. through D.G. sets which increases the cost of power generation very high and it becomes difficult for the Indian industries to compete in the global market with the competitive price of their products. In order to minimize the loss factories of different categories are retrenching their skilled and non-skill staff in order to reduce the cost of the product for their survival.

The unemployed youths out of frustration are getting engaged in criminal activities for their bread and butter as the job opportunities are getting reduced day by day.

NHPC is one of the premier organization under Schedule-A for the development of hydro power projects in India which was headed by me as CMD during 1997 to 2005. While working as CMD many hydro projects were started by me out of which about 2,000 mw (approx) projects were completed by 10 Plan period and work on more than 7,000Mmw (approx.) projects was started in 10th Plan period the commissioning of which was to be done by 11th Plan . But only 1150 mw could be commissioned during 11th Plan and for the balance it is not known as to when it will be completed because of pending decisions at the top level of the company.

As the planning was made at that time to work on more than 30,000 MW (approx.) projects where work would have been started by now and it was planned to be completed by 12th Five Year Plan.

The decision making process at the top management level is not taking place because of lack of understanding of the complexity of the hydro projects.

In the state of Arunachal Pradesh NHPC has prepared D P R of 23,000 mw (approx) hydro power to be developed. 2,000mw Subansiri Project work in Arunachal Pradesh was started by me while I was working as CMD of NHPC and balance was distributed in private sectors after my retirement and none of the projects have been completed till date and no active work has yet been started on any of the projects.

The projects namely Chamera-II (300mw) in Himachal Pradesh, Dhauliganga (280mw) in Uttarachal and Indra Sagar (1,000 mw) in Madhya Pradesh were completed within the time schedule of 5 years for the first time in India.

With the help of NHPC engineers , while I was having additional charge of CMD, NJPC , I could complete Nathpa Jhakri Project (1,500mw) which was devastated during the flood of 2000 and now this project is generating valuable generating capacity of 1,500mw.

While I was working as CMD of NJPC, the present Chief Minister of Himachal Pradesh, Mr Prem Kumar Dhumal and the then Chief Minister also had seen my work and dedication in the project.

Again while working on additional charge of CMD, NHDC, I got completed the 1000 mw Indra Sagar Project within a record period of 5 years with the help of NHPC engineers, major works of Omkareshwar Project (520mw) was also completed during that period.

The then Chief Minister, Mr Digvijay Singh had seen my work and had given lot of support for sorting out problems of the project. NHPC/NHDC completed the most difficult work where we had to shift 249 villages in Indra Sagar Project and Harshul town with 15000 population and railway line of 57 km. on main route of Delhi and Mumbai.

There I worked in close association with the Chief Minister Mr Digvijay Singh and he knows me very well how I have done the work in that State where the power supply position improved considerably with the completion of two hydro electric projects i.e. Indra Sagar and Omkareshwar.

I would also like to point out that execution of hydro project is such a complex matter that even premier organizations like NTPC who were executing the thermal power stations within a period of 3-4 years got permission from the Ministry of Power for execution of hydro electric projects and they started work on hydro electric projects in the year 1997. Their first project was Kol Dam (800 mw) in Himachal Pradesh but they could not complete that project even today in spite of the facts that it was one of the easiest project to be constructed without any tunnel.

Even after coming in hydro projects business for the last 15 years, NTPC has not completed even a single project till date in spite of the facts that they have enough financial resources and experienced engineers for thermal power projects construction. This shows that construction of hydro projects needs special knowhow.

Once the dedicated workforce of NHPC was dislocated it resulted in non-completion of hydro projects in NHPC as a result of which today all the important projects of NHPC are at standstill and more than 40 percent expert engineers have already left the organization and they have joined various private sectors and public sector organisations.

Hydro project needs worldwide technology for execution. As such this is the only sector where world organization like International Commission on Large Dams (ICOLD), which have expert members from more than 100 countries in the world. We have also other organization like International Hydro Association (IHA) where more than 100 countries are participating.

In ICOLD we discuss normally the various problems being faced for dam construction by the worldwide recognized experts and all the practical difficulties faced in different countries are also discussed in the meetings of experts and remedial measures are sorted out.

Similarly, in IHA the various problems being faced in the different countries worldwide for development of hydro power projects are discussed and technical solutions are arranged for the same with the help of various experts in the world who participate in the meeting.

The formation of such bodies itself clarifies that technical problems being faced in hydro projects are not easy. Such type of bodies are not created in the world for thermal power and other power projects because in thermal power projects or in other power projects uncertainty is not there.

In hydro projects work is completely underground and engineers have to work under various adverse circumstances where highly skilled man power is required.

At present the total share of hydro power in the Indian system has come down to 21% because of non implementation of major projects of NHPC during my tenure as CMD, NHPC, I had planned and proceeded towards making the decline in hydro-thermal mix to get reversed and by 12th Five Year Plan it would have reached nearer to 40:60 ratio of hydro and thermal power projects which would have resulted in minimum cut of power. These facts can be verified by the Government if so desired by engaging the Central Agency like CBI so that facts are brought in light before the Government of India in order to avoid such occurances in future. No body has the right to destroy the system of India and those who are responsible must be punished.

After retirement from NHPC in 2005 I was posted as Chairman of Uttaranchal Jal Vidyut Nigam by the then Chief Minister Mr B C Khanduri in May 2007 where I completed Maneri Bhali Project within a period of 6 months time and got it commissioned in another two months time, which was languishing since last 30 years at that time. During that time an Expert Committee was also created by Government of India for development of hydro power projects on Bhagirithi river where the Environmentalists had raised objections for stoppage of work on Lohari Nagpala 600 mw capacity which was being executed by NTPC and 400 mw capacity Pala Maneri project which was being executed by UJVNL.

I participated in the Expert Committee on behalf of Uttarakhand Government in the Committee headed by Mr P.Abraham, retired Power Secretary, the Government of India as the Chairman. After the deliberations of the various meetings, it was decided that Lohari Nagpala project and Pala Maneri projects should be executed and we had also recommended minimum flow of water from the river during lean period to meet the environment requirement as per norms and guidelines of the Ministry of Forest & Environment, Government of India but the work on the project was finally got closed by the order of Government of India under the pressure from the Environmentalist and Mr. G.D. Agarwal one of the environmentalist was on fast till death for getting the work closed.

It could be a most unfortunate decision for India as the work of Lohari Nagpala project was closed which was being executed by NTPC was started in 2003-04 and excavation of the entire tunnel was made and about 40 percent foundation work of dam work was also complete and 50 percent work in totality was completed. Only lining of the tunnel was to be done. 400 KV transmission line work on which was also started for evacuation of power was also to be completed within two years time has also become redundant.

At that time NTPC engineers were stating that total expenditure on the project already incurred was more than Rs.3,000 crore (approx.) and arbitration cases have been started by contractors for closing the work which may end between Rs. 5,000 crore to Rs 6,000 crore.

After conclusion of the meetings with the approval of majority of the members we had suggested measures and recommended for commissioning of the projects thinking the power requirement of the country and on the further consideration that downstream of the Lohari Nagpala and Pala Maneri projects of river Bhagirithi, 1,000 mw Tehri Reservoir project has already been constructed and it is already generating most important peaking power in India. We had suggested that with construction of Tehri Dam Project, the justification for stopping of work on Pala Maneri and Lohari Nagpala project was not justified as both the projects were run of the river projects but the suggestions of the Committee were ignored on account of pressure from the Environmentalists.

When we were examining the various aspects of the projects it also came to our notice that from river Ganga flow of water does not go beyond Narora dam near Buland Shehar, U.P. for seven months as the Ganga water is used for irrigation purposes from Hardwar and Roorkee and other nearby places before Narora dam.

The water in river Ganga beyond Buland Shahar is received through small rivers, tributaries and Nallas for 7 months from Nov. to May from the catchment area of river Ganga and from the month of June to October whenever there is flood water available in river Ganga flows down the area of Kanpur, Banaras, Patna, Farakka to Bay of Bengal etc.

Many Environmentalists used to say that we should not make any project on river Ganga even this fact is not known to many people of the country. Hon. Members of Parliament were also saying that river Ganga should be allowed to flow free from dams and no dams be made on river Ganga.

The detailed report which was submitted to the Government of India through Mr P. Abraham, Chairman of the Committee mentioned all the facts about justification for making dam on Bhagirithi river.

Now because of stoppage of these projects the expenditure on these projects as well as transmission lines has gone to waste and finally people of the country are going to suffer on this account.

At present on account of various cases as well as lack of knowledge in the country senior officers in the Government are not taking any decision for faster implementation of the hydro electric projects and projects already completed 50 percent to 60 percent have been stopped for want of decisions in respect of the various claims of the contractors who are executing the projects.

SOLUTIONS

The only solution to the problem as on date is to start work on all languishing hydro electric projects on war footing by the Central Government. In case of requirement the consent of State Governments should also be taken. For immediate completion of the projects the all experts in hydro projects execution be called to work unitedly for completion of this national task without considering whether the experts are working in the Government or private sector.

The environment and resettlement issues should be sorted out with legal empowerment which should be fair to all through a Committee of experts in minimum possible time.

We should also take lesson from Three Gorges H.E. Project of 21,000 MW in China where 12,00,000 (twelve lacs) (approx.) families were shifted in one year. Important authorities from India should visit China and see the actual working of that country.

Alternatively, the Government of India should make an effort to arrange enough gas for power generation which can be commissioned in 1-1/2 years time without considering the cost of the gas to meet emergency.

 

Infrastructure development  

Review, Re-emphasis and Collective
Goal Setting positive and encouraging

Chandrajit Banerjee, Director General, CII

AT a time when the India economy is going through a tumultuous phase, the Review, Re-emphasis and Collective Goal Setting on infrastructure development for the year 2012-13, under the leadership of Prime Minister of India, is extremely positive and encouraging, said Chandrajit Banerjee, Director General, CII.

CII has been voicing concerns over the dwindling growth rate and shaky investors' confidence for some time now and had strongly recommended a push to infrastructure development as a tool to create demand and sustain growth momentum. In this respect, CII had particularly recommended the need for better coordination among different departments and ministries to speed up clearances and implementation.

Yesterday's meeting was a clear indication of Government's commitment to improve coordination among different line Ministries to make infrastructure happen. This will certainly boost the confidence of the investors.

The announcement of flagship projects such as - 2 new Major Ports, Speedy progress on Greenfield Airport projects in Navi Mumbai, Goa and Kannur, development of 10-12 new PPP Airport Projects, target of awarding Road Projects of 9500 kms, Bullet Train between Mumbai-Ahmedabad and target of capacity addition of 18000 mw in Power Sector – will enhance flow of projects, bringing new life to the Indian Infrastructure sector.

However, these targets need to be closely and regularly monitored to avoid any slippage, cautioned Mr. Banerjee.

 

Prof. Sebastian Morris, IIM Ahmedabad

BUSINESS OF THE STATE - SOCIALIST TENDENCIES IN UPA GOVT'S TENURE KILLING INDIA INC


Not at all. While I agree that industry can usefully develop the finesse talk more in terms of what is good for the economy, today the situation is absurd. We have killed growth - it requires innovation to bring down growth in India to these low levels of under 5 percent. Investment growth is less than 4 percent
!
The RBI is killing investment through rate increases and tight money when actually the economy was hit by a supply side inflation, allowing the exchange rate to appreciate between 2006-08, the government's innovation of governance through ban first and then think, and bureaucrats being demoralised enough to not take even the simplest of decisions forewarns to a collapse of the economy.

The corporate sector is most maligned. Besides suffering from high domestic interest rates (an adverse fisher open) it has to bear quixotic pricing, price based subsidies that distort markets, taxation than inhibits competition, very high input prices esp energy than cannot be vatted, no strategic support by government, woeful provision of public services (water, municipal infr, electricity), that all handicap it in external competition.

Your position was possible in the 80s, though even then many studies showed that the protection levels enjoyed by industry was negative (non-electricty sector, auto ancillaries, electrical machinery etc). Labour productivity in the corporate sector has been growing in excess of 6% when turnover growth has exceed 11 percent. It also bears the brunt of taxation. Ultimately of course it is consumers, lenders (banks, ultimately citizens) and equity holders who bear the cost - higher prices, lower earnings and forgone growth.

When socialists who should be worried about incomes at the lowest levels crib against growth they hurt the very poor . Empirically. the very high growth over the periods 1993-94 to 1997-98 and then from 2003-04 to 2007-08 that made significant dents to poverty. These were led by rising investments from the private corporate sector and exports.

Rishi Raj, Associate Editor, The Financial Express

The problems with the government -- the current term being policy paralysis -- is more than adequately discussed. However, the contributions of the corporate sector in the current mess often gets either ignored or not assessed properly. The period 2003-07 saw a mad competition amongst the corporate sector to grow big in areas where the raw material was being allocated by the government -- telecom, power, steel, mines etc. The strategy was to corner as much raw material for yourself at cheap rates and block the same for your competitors as that was the best to grow big. In the process the government became a willing ally and all the corruption cases which are coming out now are the result of this unholy nexus. Whatever the problems today, the shining members of India Inc are responsible for them as much as the government. None of them have ever spoken on record on the misdeeds of their fellow brethren barring let the law take its course or you can't pronounce anyone guilty unless proven kind of cliches.

Petroleum price and tax
rationalisation necessary: CII
P

Conservation should cut consumption by 5 %

Thesynergyonline Economics Bureau

 
NEW DELHI, MAY 27 :
COMMENTING on the current debate on the pricing and taxation of petroleum products – particularly diesel and LPG, CII has suggested that the Government move forward swiftly on the route of rationalization.
 
In a Press release issued on Saturday CII has said that the impact of diesel price regulation is evident in multiple sectors of the economy, and in the final analysis, it is obvious that diesel subsidy is doing more harm than good in its various ramifications.
 
Mr Chandrajit Banerjee, Director General, CII said “fuel subsidies were introduced in India at a time when disposable incomes were low, and when an overwhelming section of the population could not afford to pay for fuels that were pegged to international prices.”

“For a number of decades, such subsidies played a useful role in buffering the meager incomes of millions of middle class and lower middle class Indians. However, in the India of 2012, fuel subsidies may perhaps do more harm than good and distorts the energy economics of the country. Instead of lowering inflation, actually contributes to inflation by significantly increasing the government’s outlay,” he added.
 
The release went on to say that India imports almost 80 percent of its oil requirements and with a fast depreciating currency, even at present global prices, the impact on India is like that of an “oil shock”.
 
Today, for every liter of diesel that is imported, the government pays a subsidy of Rs 15 currently, subject to changes in international prices. A complex system of duties and cess, which vary from state to state, distorts the entire diesel pricing mechanism, the release added.
 
Mr Banerjee went on to say “Diesel is widely used in transport, agriculture, and power generation. Inefficient pricing distorts modes of usage as also macroeconomic indicators such as fiscal deficit, inflation and balance of trade.”
 
It is generally believed that that raising price of diesel will add to inflationary pressures in the economy. However, it needs to be understood that indirectly, diesel price is already contributing to inflationary pressure through a ballooning fiscal deficit, the CII release said.
 
It is estimated that under-recoveries from oil have shot up to Rs 1,39,000 crore for the state-run oil marketing companies. The Union Budget for the present year sets compensation to oil marketing companies at Rs 40,000 crore. However, given the volatility in crude and the sharp depreciation in the rupee, it is very likely that this subsidy amount will be exceeded – a prospect that could impair every effort of the government to bring fiscal deficit under control. This, in turn would seriously impair inflation control.
 
CII believes that the impact of increase in diesel prices would be far higher on profligate diesel consumers than on the ordinary person. Therefore, it would hopefully help curtail diesel demand. In fact, there is little option for the government, and a systematic plan for lowering subsidies in regular stages could curtail inflationary expectations that are currently stoking price rise, and add certainty to the price outlook.
 
On usage, the diesel subsidy has encouraged road transportation of goods through trucks which is the least efficient logistical system as compared to rail and water transportation. Rail transport is cheaper and more efficient besides being a cleaner option.
 
Another area where usage is impacted by lower diesel prices is power. Manufacturing units use generators based on diesel to make up for power supply deficiencies, although the cost, even at subsidized rates, is high. Given that India possesses good coal reserves, manufacturers should be supplied with adequate thermal power supply from the grid, rather than have to depend on their own generators. Rationalisation of diesel prices should incentivize power production.
 
CII believes that under-recoveries could be shared by central government, state governments and consumers.
 
Industry feels that subsidy could be equalized on petrol and diesel. It is also possible to undertake supply of diesel to targeted groups such as farmers for tractors and water pumps through other channels.
 
CII has said that the Constitution Amendment Bill for Goods and Services Tax proposes leaving out oil prices from the GST mechanism, including exploration and distribution activities. This would be detrimental to the purpose of the GST which is to be a comprehensive tax with set-offs. Since petroleum has upstream and downstream linkages, GST should be applicable to the sector. Appropriate additional levies could be imposed to recover revenues instead of leaving out the sector altogether.
 
The release said that it is vital that at this juncture of economic development, the government sends out a signal that it is firm on its decisions and that it is serious about curtailing fiscal deficit.
 
Advocating the same principle of rationalization, Mr Banerjee said that “the huge subsidy on urban use of LPG should be phased out”.
 
Looking at the future and India’s import dependence on oil imports, Mr Banerjee said that “CII is in favour of a programme to cut consumption of oil by 5 percent in the course of the 12th plan period.”
 
Outlining some possible measure, the CII Director General said “the short term recommendations include correcting distorted Petroleum Product Pricing, Traffic management, phased removal of subsidies on LPG to Metros, upgradation and revamping of refining operations, organization of people awareness programmes on petroleum conservation, among others.”
 
In fact, CII has offered that since some of the largest segments of oil users are part of its membership, CII would embark on pro-active measures to suggest and facilitate implementation of various conservation measures in the user segments, in order to bring about significant demand side management the release said.
 
While the Medium term suggestions include Technology up gradation, greater thrust to private participation in the coal sector, intensification of domestic Exploration and Production efforts, use of bio-fuels, usage of cost efficient transportation, acceleration of the rural electrification programme etc,
 
The long-term suggestions include strategic storage initiatives, Comprehensive Combined Heat & Power (CHP) Policy, etc. 
 
“CII believes that keeping these measures in mind and with time bound implementation mechanism in place, the government could respond to the international oil price situation and depreciation of the Rupee by phased increases in retail prices of all petroleum products, with the exception of kerosene, while having in place targeted schemes for the economically less privileged”,Mr Banerjee said.
 

Will RBI be a better judge
for banking mergers?

 

Udai S Mehta, Associate Director, CUTS International  

ON the one hand, bank regulators possess important sector information of relevance to merger decisions, and are also in a better position to monitor behavioural remedies for mergers. On the other hand, competition agencies enjoy the advantage of possessing analytical skills and judgment honed in
reviewing many more mergers than bank regulators are likely to encounter.

It  is interesting to note that although the United Kingdom has given concurrent  powers to several sector regulators to enforce competition laws regarding anti-competitive agreements and abuse of dominance; it has not done so as regards merger review.

The interface between the Competition Commission vis-à-vis sectoral  regulators is critical. The basic premise to be recognised is that sectoral  regulators have domain expertise in their relevant sectors.

The Competition  Commission, established under the Competition Act, 2002 on the other hand,  has been constituted with a broad mandate to deal with competition for which certain very specific parameters are laid down under the Act. The starting  point, however, is for both to try and appreciate the difference between technical and competition issues. The sector regulators should have the  leading role in regulating technical issues.

Thus, for structural issues,  which in most cases are ex ante, sector regulators should take a leading  role. But, for competition issues which are largely behavioural and ex post,  competition authorities should take a leading role. Let us not forget, the  role of competition authority is to ‘Protect’ competition and the role of  sector regulators is to ‘Promote’ competition, thus it is important to ensure synergies between sector regulators and the competition commission.

Above all, nowhere in the world, banking is exempted from the purview of the  competition authority except in one or two countries, and they are not irrational in taking such a step.

Thus, a formal mechanism for coordination between the competition commission  and the sectoral regulators is, therefore, of key importance. Coordination between sectoral regulators and competition commission should be made
mandatory through suitable provisions in the Competition Act, 2002 and  sectoral laws.

When we have a regulator for a sector, the regulator should concern itself with its sectoral mandate. The mandate of the Competition Commission as a regulator is not the same as the  mandate of the sectoral regulator.

By this token, merger of securities market intermediaries (merchant bankers, mutual funds, stock brokers etc.) should be with SEBI, mergers of insurance companies should be with the IRDA, airline company mergers should be with  the DGCA, mergers of pension funds should be with the PFRDA, mergers of  telecom companies should be with TRAI, merger of broadcasting companies should be the MIB, and in short, merger of any regulated entity should be governed by its sectoral regulator.

The Competition Commission may be left with little work to do, with oversight over just those who are unfortunate enough not to have a sectoral regulator (say information technology companies, BPO companies etc). The mandate by Parliament in the law is not envisaged to be structured thus.

Just as government policy covers entry of foreign banks and their expansion, the entry of foreign players in many sectors is subject matter of regulatory, and by the same token, the CCI should have no role. For example, the MIB has a policy on ownership of DTH companies and therefore the CCI
should be kept out because policy is involved which would leave next to nothing for CCI to do – contrary to the mandate in the statute.

-- Somasekhar Sundaresan Partner

 

Banks have been regulated entirely by the RBI. There is a huge concentration of ownership with government. The stability and economic security of the banking system are vital to the health of the economy.

At the level of price competition, the RBI has tended to follow the directives of government. Most recently when RBI reduced repo rates by 0.5 percent and banks did not immediately reduce rates, banks were compelled to reduce lending and deposit rates. This should have been a purely commercial decision but RBI intervened presumably because government was anxious to respond to the pleas of industry that lower rates would stimulate growth. CCI did not charge RBI with anti-competitive practice.

As far as M & A's are concerned we must distinguish between foreign banks, private and the nationalised banks. The latter are the largest in number and financial strength. Foreign banks and their expansion are part of government policy. CCI cannot have a role in this.

Similarly private domestic ownership is watched closely to prevent  industrialists from getting control over banks. There is a lot of lobbying  by many to do so. CCI does not have a role because policy is involved. That leaves government banks.

Will CCI intervene if and when SBI amalgamates SBM, SBH, and other associate banks with it or will it leave this alone?

I do not think that CCI should enter the bank space. We cannot have two regulators for one sector. It causes confusion and sends wrong signals -- S. L. RAO

As a prudential regulator, the central bank cannot step into the shoes of the Competition Commission of India. What is needed is more cooperation between the two authorities

Ever since the Competition Commission of India (CCI) started taking baby  steps to regulate the jungle of competition abuses in the country, and some very successful cases, many started howling for an exemption from its bite.

The latest one is from banking circles asking for an exemption from CCI’s  remit to review mergers under the Competition Act, 2002, in that sector.

Other strong contenders include the Department of Telecommunications seeking an exemption for the telecom sector. These moves are tragic and will affect  the integrity of our economic governance system, and should be discouraged as strongly as the demand being made for exemptions.

In the case of giving the Reserve Bank of India (RBI) power to review  mergers in the banking sector, let me argue thus. The banking sector’s  stability is critical for the whole economy and we have learnt bitter lessons from the regulatory failures in the mecca of capitalism: the US.

Second, there are too many banks in the public sector in India that need to  be consolidated. However, these are two different issues and should not be confused. In Brazil, the central bank reviews all banking mergers from the angle of financial stability, but only when the competition authority refers the matter to the bank after it carries out its own due diligence.

----Pradeep S Mehta

 

MANAS Chaudhuri, has hit the bull on the eye. As always, he has a new perspective . I endorse what he has opined. CCI can and is the only regulator whose brief is to preserve, protect and promote competition. Dilution of CCI's ambit (thru exemptions) will undermine its authority and effectiveness. I loathe to say it but it is a truism in India. Loopholes, exemptions and exceptions impelled and articulated by strong lobbies find favour with policy makers .

 

-- Dr S CHAKRAVARTHY
(Former Member MRTP Commisssion)

 

I also agree with the views of Manas and Dr Chakravarthy that since the Competition Act provides a well-structured legal framework for merger review, CCI is a better forum suited for review of even banking mergers. And yes, no one is yet celebrating the “success” of CCI, rather it is being observed with “awe” and a bit of skepticism!


Yet, I must compliment Pradeep Mehta for starting this important debate through his article under review. The Article actually touches upon the core issue of exemptions from purview of the Competition Act, which does not so far seem to have been addressed by anyone so far. I have done some research on it and my article on “Economics of Exemptions from Competition Law” has recently been published in Manupatra’s journal, Competition Law Reports.(April,2012 issue) I quote relevant extracts from the same for throwing some insight into this issue.

An overview of exemptions granted to specific types of economic activities and sectors under the competition laws of various countries suggests that there are more similarities than differences between jurisdictions. Enough guidance is available on the economics for grant of exemptions, such as -Exemptions should be granted on a limited-time basis with a “sunset” clause and provisions for periodic review. It is hoped that the Central and State Governments will consider the above basic economic principles and heed to the lessons drawn from International experience.

However, as Government needs to respond to such demands, more often than not ,on political rather than economic considerations, it may be useful to adopt certain basic principles in the granting of exemptions, such as exemptions should be granted on a limited-time basis with a mandatory “sunset” clause and provisions for periodic review based on analysis of their impact on economic efficiency and consumer welfare and that exemptions should be generic in nature, relating to types of economic activities or arrangements, and be less industry- or sector-specific.

Luckily, the draft National Competition Policy, has recognized some of these economic principles and has devoted a Para 5.2 for “Deviations from Principles of Competition Policy” which at least in principle accepts the “time –limits” for such exemptions and the need for having a “sun –set “clause in such exemptions.


M M Sharma
Head-Competition Law and Policy
Vaish Associates Advocates


I agree that CCI as a regulator has to preserve, protect and promote competition. However, I disagree that other regulators have no role in this. As a former Electricity Regulator, I am aware of many provisions of the Electricity Act which mandate the regulator to protect consumer interests, competition being one of the means. What is important that all regulators faithfully perform their roles in the larger public interest, and in case of any overlap of functions, best resolved by mutual interactions and agreements. There should not be one upmanship in such matters.


K K Garg


 

THE government has again bestowed faith on the generalist over the specialist which should not be seen in one reference only.If you will see the appointment of RBI Governor, the government had shown faith on the Finance Ministry Secretary rather than any economist in the tough phase of economic condition worldwide.

As J S Verma is putting his papers after the end of tenure the government has appointed Commerce Secretary Rahul Khullar as TRAIs new Chairman who is known for the impeccable integrity and great credentials which he has shown in the Ministry. Under his leadership various secretary-level committees have been set up for increasing the FDI cap.

But this is again agni pareeksha for him because right now Supreme Court has cancelled 122 licences. Although the new bidding process, which TRAI has kept as the base price, is facing harsh criticism, the first priority of Khullar would be to set up revised base price by gaining confidence of all telecom players.

The appointment gives the clear cut message to the nation that the government has immense faith on bureaucrats rather than specialists. The telecom sector is facing crisis since the 2G scam so the question once again arises that why all specialist posts are generally served by IAS and not subject domain. I do not have any doubt on anyones capability but in my opinion subject and domain expertise is necessary.

TRAI was facing criticism during the tenure of Pradeep Baijal which was somehow solved by Verma. Let us hope Khullar will perform some miracles and everyone will be on board.

Vivekanand
Associate Consultant

A new Chairman of TRAI has been appointed, once again an IAS. To be sure, good people are there also, but why the Government excludes a huge catchment area of 'others', equally if not more competent? Unlike in many other cases, there does not seem to be a transparent process of a search committee, open advertisement, short listing and final selection.

Recently New Zealand had advertised for a Member of their Telecom Regulatory body, in The Economist. The position was open to global competition.

To be sure, even when I was appointed to TRAI as a part time Member, I do not think there was any process! After I superannuated, my successor, from my own Institute was also appointed similarly, without a process. I consoled myself thinking that, part time Members did not require a process, even though I was fully aware they had the same rights in decision as full time members, and was vigorously independent, much to the chagrin of the erstwhile Chairman. He was a man full of energy, who drank ate and slept telecom; but like most bureaucrats, was quite innocent of both the domain technical knowledge and the functional economic knowledge and tried his best to make up for these with 'common sense'. This works well upto a point, but we need more of domain and functional expertise as we move up the chain of sophistication in regulation. When will we evolve and recognize these aspects and become a 'developed country'?

Prof. V. Ranganathan (retd., IIMB)
Former Member, TRAI

REGULATORY APPOINTMENTS?


Time and again, appointments of Chairmen and most of the members of economic regulatory institutions in India are 'selected' from either retired or soon to be retired IAS officers with decades of government service, with complete neglect of people who are from outside their realm, as if there are no better people available. We have been raising this issue again and again, but to no avail.

This has been proven once again with the appointment of, soon to retire, Rahul Khullar, currently Commerce Secretary as the next TRAI Chairman, totally ignoring other non-government or civil servants from being considered. The invincible IAS trade union! Indeed, Khullar is a very competent civil servant with a doctorate in economics, but there are several more like him in this huge country.

Just a few days ago the respected economic journalist, T. N. Ninan wrote critically about this in his Weekend Ruminations editorial of 5th May in the Business Standard. He mentioned, that with the Telecom Regulatory Authority of India having become yet another rogue regulator, the time has surely come to take a good, hard look at how the experiment with "independent† market regulators has worked. If you put aside the theory on independent regulators, and look at the way the model has worked in practice, it has helped just one powerful trade union — the Indian Administrative Service, which has progressively engineered a monopoly on virtually every regulator's job, including the governorship of the Reserve Bank of India (which, once the ICS era was over, had been the rightful preserve of economists for the large part of three decades). The electricity regulator's job was once kept vacant for several months so that a particular IAS officer could retire and step into what he must have seen as a sinecure. Being such a regulator is the babu's dream — absolute power with no retribution for wrong decisions, no ministerial oversight, no substantive answerability to Parliament, and guaranteed tenure of three to five years, and all of it post-retirement. No one wants to go back to the old licence-permit raj. But if market-oriented policy options are to work in key sectors, we need a new paradigm for independent regulators.

REGULATORY APPOINTMENTS?
A one point agenda for second stage reform. All positions of JS and above should be advertised for application from industry, academia etc. We have been arguing for this for the last 10 years and have got it included in the ARC but the same has not yet emerged as an agenda in the media and in the popular discourse. The problem is not the officers per se but the cadre. It is high time there is lateral entry.

Prof. Sebastian Morris
Indian Institute of Management
Vastrapur, Ahmedabad 380015

REGULATORY APPOINTMENTS?
This argument is a hoary chestnut. Laws are drafted by the higher bureaucracy. They saw a post retirement opportunity in the many regulatory commissions, for employment of retired or about to retire central services officers. The selection committees were packed with government nominees and the selections were almost invariably of retired/retiring bureaucrats. Inevitably selections as Chairmen and Members were of retired/retiring bureaucrats to the exclusion of almost any other profession.

Hence the reform must start at the composition of the selection committee. We must have a rule barring a commission from having more than one ex government servant. We need to be more open on selecting people aged well below 60. Only then will we avoid the present pliable commissions-whether state electricity regulatory commissions, TRAI, Information Commissions or the many others and others still to come.

It is not that ex government servants do not have anything to contribute. But so do others-from media, academia, business, trade, law, finance, etc. We also need to delete restrictive clauses on post commission employment in a related sector. It keeps away many otherwise interested people.

We must also have an oversight body, preferably the higher judiciary, to ensure accountability of regulators.

SLRAO
S L Rao

REGULATORY APPOINTMENTS?

As long as the bureaucrats drive the selection process, it will be foolish to assume that right persons out side the bureaucracy, barring exceptions, would be picked up.
Who cares if the person is not suitable, his mentors will be there to justify all his actions or inactions. Laws may be good intentioned but same is not true when it comes to implementation.

K K Garg
________________________________________

REGULATORY APPOINTMENTS?
Heavyweights in race for top TRAI job
--But why only retired babus?

Now that Dr J S Sarma, Chairman, TRAI is retiring in mid-May, there is a race for his replacement (http://www.financialexpress.com/news/heavyweights-in-race-for-trai-top-job/931771/). And no prizes for guessing who are in the race!

Appointing someone before Dr Sarma demits his office is welcome, because often posts in our various bodies remain vacant for quite some time and the body functions in a rudderless manner. The reasons are many, but one strong one is the jockeying which goes on as we had witnessed in the race for the Chairman of the Competition Commission of India (see trail under this posting at yahoogroups). The situation is ubiquitous.

What is tragic and has been happening again and again is that the selection committees comprising mainly of serving or retired IAS officers cannot look beyond their own ilk, i.e. self-serving, knowledge-proof and arrogant bureaucrats (there are exceptions though), without any sound understanding of economics and law. As if there none others who can be equally meritorious and more competent. Since no serving officer would like to join a regulator, the only ones available are retired or about to retire officers.

The Financial Express reports that the incumbent Commerce Secretary, Dr Rahul Khullar is in the lead. His name was going around for being appointed as our Ambassador in Brussels, a vacancy which has been there since February, but he is unwilling to go. This post is critical because the Ambassador also works with the European Commission, with who we are currently negotiating a Free Trade Agreement, which could result in huge gains for the economy. Grapevine says that he wanted this appointment, but has changed his mind due to poor health etc. Others in the race include Mr R. P. Singh, former DIPP Secretary and Mr Ajay Bhattacharya, the current Fertiliser Secretary. Mr Singh's name has also been in the news for other appointments ("I want some or the other job after I retire†).

Another specious and irrelevant argument has been raised in the FE news item is that the Chairman should be of a batch senior than the incumbent Secretary of the Telecom Deptt, so that he can use his rank. Therefore Rahul Khullar stands the best chance, because Singh and Bhattacharya are both junior to him in service. We are all very aware that a regulator is always subservient to the Departmental Secretary, because our laws do not give the independence and freedom to the regulator. It is therefore, that the former TRAI Chairman, Pradip Baijal had observed that he was the de facto Joint Secretary (Regulation) in the Ministry.

In this forum, there was also a debate about Ashok Chawla being junior than two other Members of the CCI in terms of their batch numbers, when he was being appointed, but that did not matter in the end. As if, the seniority principle is about meritocracy or at all valid once the person has retired. One Member in CCI had also threatened to resign but has not done so as yet. After all, he will continue to benefit from his sinecure, so how does it matter.

In rejecting the National Road Safety & Traffic Management Board Bill, the parliamentary standing committee headed by Sitaram Yechuri had inter alia observed that the Board will become another parking lot for retired bureaucrats IAS officers, whiles its Member, Saifuddin Soz, MP had observed sarcastically, that IAS officers never ever retire. Similar expressions have been used by many, including the Prime Minister. The Bill is yet to be resubmitted to the parliament while over 1.5lakh people get killed on our roads every year costing about 3.00 percent of GDP.

There some good news also in terms of sinecures, such as T N Seshan who reformed the electoral system, or that of Vinod Rai the incumbent CAG who has been shaking up the system, but both are constitutional appointments and therefore not that of some de facto Joint Secretary in some Ministry, subservient to some other babus or ministers. Even in the services there are many good people, but as I wrote above they do not consider such appointments because of the lack of real independence. Many good lawyers end up in judicial appointments at the cost of a lucrative career, but the independence and status over rides money considerations.

In the above few submissions I have tried to highlight economic costs of such appointments, and that of independence, not that they always end up in downsides but that we need to challenge the same as a given.

Pradeep S Mehta
Secretary General,

SENIOR CCI MEMBERS OPPOSE ASHOK CHAWLA AS NEW CHIEF


Is it a birthright that only IAS retired officers are eligible to be considered? Surely there are many others who are highly qualified can do the job better. If it has to be the prerogative of an IAS officer, why should the accident of prior birth or passing an examination or getting a rank 35 years ago determine relative status for life?

There is no doubt that there has been a creeping tendency for the bureaucrats to capture key positions after retirement, and Manmohan Singh's UPA government has allowed, perhaps even encouraged this to happen. It is no longer a creeping capture but open, righteous and blatant.

Appointments under RTI at Centre and states, the infrastructure regulatory commissions, CCI and others, all have retired bureaucrats at their top and many as members. There is nothing wrong with their occupying a few such positions, but not all of them! India is richer in talent than this inundation would make us believe.

Reversing this capture along with making individual bureaucrats accountable for all their actions, stemming corruption and punishing it severely, stopping frequent transfers, giving sufficient tenures, are some actions that the next government must take as first priority.

Meanwhile with so many post-retirement jobs available, it is not surprising that the bureaucracy is now on a drive to create more regulatory bodies-for coal, fertilizer, upstream oil and gas, pharmaceuticals, education, etc. After all fairness demands that such jobs should be available to ALL retiring officers.

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