Australia's change in stance - Could India be looking at Energy efficiency?

There has been a huge story developing in the world of International Politics and Relation over the last couple of weeks - Australia's ruling party's (The Labor Party) decision to sell Uranium to India.

India currently faces a large energy deficit with still around 80,000 villages across the country with no electricity. Industrial growth has been limited due to paramount dependency on traditional sources of electricity generation - Thermal and Hydel Power. This has slowed down Industrial growth and hiked electricity rates across major towns and cities. India currently needs to expand its energy sector. As far as I recollect, India wishes to grow its nuclear power generation four times from its current levels - a major step towards attaining energy efficiency.

Australia has traditionally imposed a ban on Uranium sales to those states which had not ratified the Nuclear Non-Proliferation Treaty (NPT) (like India) . However, Julia Gillard's government has taken a radical decision to establish stronger relations with "dynamic, democratic India". Australia is the World's 3rd largest exporter of Uranium.

Defending their change in stance, Gillard and her ministers have been quoted saying how India is a majorly developing economy and how there is no basis of denying Uranium exports to India, while China are also beneficiaries of Australian Uranium exports. The Australian Uranium Association has also given its full support to the change in policy decision. The only, absolutely invulnerable and non-threatening rider is that India uses the Uranium for purposes only for peaceful, energy developing purposes.

This comes of as an extremely good news for India. But there are still some hurdles on the way. Many experts view that any deal that India and Australia sign, will be very stringent and at least, be in line with the treaty already existing between Australia and China. But that's okay, given India meets most of the International standards and requirements set for handling nuclear material.

The only opposition seems to be the danger in nuclear energy creation, with Fukushima a case in point. However, this view is oblivious to the fact that India has a lot of area under Low and Very Low Seismic Activity zones, unlike Japan (all of Japan almost lies in very high seismic activity zone).

Other opposition comes from the fact that India has not ratified the NPT yet. However, India has its own valid and very justified reasons for not having done so. (You should probably read them up).

Amidst dwindling diplomatic relations between the two countries, due to the infamous 2009 attacks on Indian students in Australia, this move comes across as another opportunity for the two countries to strengthen relations, economic too, besides diplomatic. India and Australia have time and again gotten involved in joint military exercises, being the two major Naval powers in the Indian Ocean. Barack Obama has also come out speaking for such a deal.

Owing to my profound interest in that field, I was naturally drawn into the subject for the simple reason that, if India and Australia strike a deal on Uranium exports, it could give India self sufficiency in the energy sector and the opportunity to finally accomplish the dream of electrifying every village across the country. Energy self sufficiency will obviously translate into further Industrial development across the country. What remains to be seen is how India reacts to this opportunity. 

What a knock!

So the man has done it again! The Nawab of Najabgarh has broken yet another record - and - with style.

24th February 2010 was when many of us thought we might have witnessed the single most brilliant One Day Innings ever. That was the master himself - Sachin's maiden double ton.
But how could you count his protege out?

A year and a half later, BANG. And the record books have Viru's name right up there as the Highest Scorer, now in both forms, Test and ODIs, for India.

219 of 149 balls. Those figures will be hard to erase. It was only appropriate that the first person to come out and officially congratulate Viru was Sachin himself.

It is important here, to note, that Viru has had come close to achieving this on more than one previous occasion. But the flamboyant Sehwag that he is, he always managed to get himself out before he could go finish the job. Not this time, and won't we remember that?

Here are some really amazing records Viru has to his name :
1. Fastest 250 in Test cricket in terms of balls faced (207).

2. Fastest 300 in Test cricket in terms of balls faced (278).

3. Most Test runs in a single day by an Indian. Sehwag made 257 in a day against SA in Chennai. He surpassed this in making 284 in a day against Sri Lanka. The latter was the second consecutive innings in which India scored more than 400 runs in a single day in Tests. Sehwag also made a century at faster than a run a ball on the previous occasion.

4. Only Indian batsman to have scored two triple centuries in Test cricket. He is one of the four batsman in the history of Test cricket to score two triple centuries, alongside Australia's Sir Donald Bradman, and the West Indies' Brian Lara and Chris Gayle.

5. Fastest century in ODI cricket by an Indian – 100 runs off 60 balls against New Zealand in 2009.

6. Second fastest ODI 50 by an Indian.  – a record, he shares with Rahul Dravid, Kapil Dev and Yuvraj Singh – when he took 22 balls against Kenya in 2001

7. Six double centuries – the first three of which came against Pakistan. Greg Chappell and Thilan Samaraweera are the other players to have scored multiple double centuries against Pakistan (2). Sehwag and Tendulkar are the only Indians to have made six Test double centuries.

8. Highest score by an Indian batsman in Test cricket. He first achieved this when he scored 309 against Pakistan in Multan in 2004, and bettered his previous record in March 2008 at Chennai against South Africa by scoring 319.

9. Fastest triple century: His second triple century scored at Chennai on 27–28 March 2008 against South Africa was the fastest in terms of balls faced by any batsman (off 278 balls).

10. Consecutive 150+ scores in Test cricket: He holds the record for consecutive test hundreds converted to scores of 150+, at 11.

11. He is one of the only five players to have scored more test hundreds than test fifties (15c/14f), along with Don Bradman (29c/13f), Mohammad Azharuddin (22c/21f),Matthew Hayden (30c/27f) and Kevin Pietersen(13c/11f) as on 7 August 2008

12. Two consecutive double century partnerships in a Test innings. He achieved this record, for the first two wickets in Chennai on 27–28 March 2008 (with Wasim Jaffer and Rahul Dravid respectively). This was the first time in Test history that the first two wickets in an innings have resulted in double-century stands. He equalled this in the innings against Sri Lanka in Mumbai, combining with Murali Vijay and Dravid for the first and second wickets.

13. He is the first person in the history of test cricket to hit two triple centuries and take five wickets in a Test innings.

With that kind of form, it will be quite amazing in a few days, Down Under.

FDI - For Development in India?

It seems the Government has finally decided to completely do away with the policy change regarding FDIs in the Retail sector and there have been a wide range of mixed reactions coming in from every direction.

I remember having first read about such a proposal in The Economic Times around 3 months back and it did seem promising. The article elaborated on how FDIs would be beneficial for the "Indian economy".

3 months to that day, there is much talk about whether or not FDIs in the retail sector should be looked upon as an opportunity to benefit or as a grave threat to the domestic retail sector.

Most of the articles I read covered the issue either in black or in white. However, it is important that we understand such issues are best understood in the grey. Before I begin an amateur assessment of the issue, let us first quickly recapitulate what status quo permits.

a) FDI in Multi Brand Retail Trading (MBRT) is NOT allowed.
b) FDI in Single Brand Retail Trading (SBRT) is allowed.


The Government has sighted a increase in foreign investment in the supply side infrastructure as its principle rationale in adopting this change in policy. The principle arguments for the move includes removal of a certain "middleman" between the farmers and the retailers who are responsible for a lot of inefficiency in the food supply chain. Lack of Infrastructure is noted in figures like how India's cold storage capacity is 23.6 million MT whereas its annual production is 200 million MTs - principally causing huge losses to farmers as their produce literally, is left rotting.

In the absence of FDIs in the retail sector, any development in building infrastructure capacity has be low and insignificant. The government wishes to raise a minimum of $100Million from such a change in policy. Talking of numbers, another lucrative figure is the supposed creation of $1.7Million jobs over the next 5 years. In status quo, due to the presence of so many intermediate players between retailers and the farmers, the latter get only 1/3rd of the prices at which the products are sold. Apparently, in countries which allow 100% FDIs in the Retail sector, the professionalism ensures a stricter, more efficient supply side chain which ensures farmers receive as much as half the price at which the products are sold.

However, in spite of the obvious gap in status quo and the need of change, there has been rampant criticism of the move. Professor Sukanta Choudhury of Jadavpur University wrote a very justified article in The Telegraph yesterday and his points do really make a lot of sense. He speaks how this policy change is misleading and is not going to help - but only worsen the present situation of the retail market and associated employment. Professor Choudhury's principle argument is hinged on a sympathetic view towards the small shopkeeper down the street - The kinara store. The incredibly humongous number of such retailers shall be threatened with extinction if big players of international reputation like Walmart is allowed inside with exploitative market power.

The Professor makes more points which seem to make the proposal's idea look just too naive to have even been conceived in the first place. He talks about the common economic jargon - competition begets monopoly. My small understanding of economics leads me to believe that this point is largely based on the fact that retail "chains" have huge initial capital investments due to infrastructure development. Fair, enough. He builds on the argument of the local retailer's extinction to point out how any creation of jobs by adopting such a policy is at the cost of a greater number of jobs that are linked unofficially to the existing network of retailing existing in India.

He speculates how the Government's idea of removing the "middleman" is at the cost of creating and legalizing another set of middlemen - the foreign brands - who, in due course of time, might even lead on to deciding land use patterns in India (Since such retailers will be directly dealing with farmers and might coerce them to grow upmarket crops only).

These points, more or less, very well summarize the overall dissatisfaction that several commentators have made over the proposal.

However, what every single one of these commentators have missed out on, is the proposal itself. The first two lines of the proposal - upto 51% FDIs in MBRT and 100% in SBRT - is just a prologue to the story which unfolds. Here's a link everyone should go through : PBI, GoI

As you might have noticed, the proposal has made several riders, sighted several examples and has made it more than convincing that it is quite feasible. Lets first discuss the MBRTs.

In such cases, the proposal strictly prohibits branding of food commodities like fruits, vegetables, grains, pulses, fishery, meat products, etc from being branded. This shall ensure the absence of any Brand-Image when it comes to daily utility goods. An important rider in the expansion of FDIs in MBRTs is that at least 50% of such investments "shall be in developing back end infrastructure". This is ideal since India primarily faces huge inefficiencies in this exact section of the supply side of the Retail sector - processing, manufacturing, etc.

Examples of China and Thailand show how such measures have shown positive results. Other economies close to India's, South Africa and Brazil also have such liberal policies in as far as the retail sector is concerned!

Another important, probably the most important rider, is that for SBRTs, for procurement of holdings more than 51% (allowed in status quo) at least 30% of manufactured products should be from Small scale industries indigenous based in India. For those who feel the proposal is inconsiderate towards the local industries, there is hardly any need for more to prove the fallacy in your thoughts.

The last absolutely important point I shall ask you to read is how this proposed policy shall be applicable only in 53 cities across the city (which qualify with population more than 10 lakh) out of the 8000 prominent towns and cities.


Now, let me tackle the point on extinction of local retailers. In the short run, it is quite obvious that such local players already have an existing network of supply chains. As long as these international players don't establish their own infrastructure, such retailers, as well as retain chains like the Future Group in India, will stay in an advantageous position. So, the extinction point is non-applicable in the short run.

Lets talk about the long run now. The retail sector in India is tending towards perfectly competitive. This is because there are just so many retail shops. The idea of a kinara shop comes from the fact that there is a retail shop in India, round the corner. Its easy to understand how, with two retail shops right next to each other, no one will try to sell the 'same' product at a different price. Thus, there exists equilibrium prices for every commodity. Retail chains like Big Bazaar already exist in India, and over the years NO retail shop has had to close because of people abandoning them for Big Bazaar.

The reason? Simple consumer psychology. Big Bazaar does give considerable discount for items when you buy them together. You won't see someone going inside the big supermarket outlets for, lets say, one loaf of bread. This is where the kinara shop comes in. Even if tomorrow, we have a Walmart next to a Big Bazaar, understand that their supply side economics wont be very different and consumer psychology is not going to go through a radical metamorphosis overnight.The retail shops round the corner has always thrived on such dispersed small pockets of sales. And they have, and will definitely not, run into losses. This also nullifies the argument on how the projected increase in employment is misleading. It is definitely not.

The point on "Competition begetting monopoly" is also wrong because unlike a natural monopoly where competition does beget monopoly, with the expansion of the industry (by increased capital investment) does not reduce a single firm's profits since the relevant demand is not in the region of economies of scale, but hugely more.

Also, if I may add, this proposal strongly asserts that only the government shall be procuring agricultural output instead of the corporates. This will ensure events like Reliance Fresh's pull out from UP a few years back don't repeat.

So that's about a refutation to all major issues that have cropped up against the proposal. I certainly don't see a reason for the bureaucracy to not discuss the issue more and maybe try and arrive at solution.

(PS. I am open to accepting that my logic might be at fault since my economic knowledge is barely 5 months old. But, I'd definitely like positive criticism so I can better my arguments).

Deciphering the last decade through the eyes of an Economist

Following my Class 12 board examinations, I have now decided to pursue a Honors Graduate degree in Economics. Of course, a month back I was deeply rooting myself to make a cut into the top L-schools of the country but since that didn't really work out pretty well, I was swift to shift to my other love - Economics.


Having done a fair bit of inquisitive learning over the past few years, I have been able to accumulate certain general principles of economics ingrained within me. How a good monsoon would mean a good economic year for the country is something we are taught in India since the lower grades. To understand the craze of the subject among the younger minds of the country, it doesn't take Rocket Science. The following is my very first and a small attempt at Objective Economic Journalism. Hope it serves some purpose!

Deciphering the last decade through the eyes of an Economist: The Indian Case

"India is booming economy" is probably the most used phrase over the last decade in socio-political circles all around the world.

It is, however, not just India. The shift of global economic supremacy towards the east has been happening for a long time! China has been slowly and carefully mastering the art of Economics for decades now. Slow - because the time frame in context is more than four to five decades - and careful - because its policies have proved to be just about ideal for a communist regime. Needless to say, China is now well on its way to overtaking the US Economy by the next decade and a half.

But this article is not just another politically motivated piece which states what has been read and what has been heard so often over the last decade. This is my assessment, as an Indian teenager, of how, when and where we clicked and how, why, when and where we did not. The last decade has been a great experience for the Indian economy. From the IT boom (which had the essence of perpetuity) in the earlier half (in conjunction to the grand Business called ‘Outsourcing’) to the relative stability of the Economy throughout the years of recession, it has been a learning curve for one and all.

So this brings me to an attempt to decipher the last decade through the eyes of an Economist. Let me begin with our country's greatest resource - Human Resource. The latest Census figure puts our population to 1.21 billion. A large section of this population has the boon of, what is a popular scale of assessing a country's economy, employment. (The employment figures, when plotted, show a positive curve over the last few decades now.) Such a huge work force is inevitably a great attribute to any country with huge economic dreams, China is a living example. But it is not just quantity, it is more about quality. Japan would be an example for us to sight right now. And it pleases me to admit India lacks neither. The country produces top-notch Engineers, Doctors, Economists and Entrepreneurs (in thousands) every year with global recognition. India's Human Resource has been very well managed over the last decade by both the NDA and the UPA governments. The relative increases in the Literacy rate and the Percentage of under-14 children attending primary schools is a great indication of just that. (Before proceeding though, I might add, it is a certain other Census scheduled in June 2011 which would interest me more - the BPL Census. In essence, the true achievement of India's policy makers would be reflected in those figures!)

However, it is not just Human Resource which counts. A closer look at, what the current Chief Economic Adviser of India, Kaushik Basu writes in his BBC article (dated 29 June 2004), the 'Nuts and Bolts' of the Economy which provides us a better insight as to why our GDP (Gross Domestic Produce) - the often considered scale of growth - has never touched double figures.

If I had to constrict what our CEA had said nearly 6 years ago, and what is still relevant today, is that the Indian Governance fails to provide Entrepreneurial incentives. In this article that I'm speaking about, he draws a brilliant comparison. Let me now reiterate two classic sets of figures which I came across in this article. First, the number of days it takes to start a business in India, on an average (as of 2003) is 88 days in sharp contrast to 1 day in US, Singapore and 2 days in Hong Kong and14 days in China. And more startlingly, the number of months it takes to resolve Insolvency of a Firm in India is 136 months in yet sharper contrast to 8 in Singapore, 36 in US, 12 in Hong Kong and 31 in China. If I were to break that data down to layman terms; in India, it takes you a (relatively) very long time to start a business (thereby losing out on the most important resource - time) and it takes an enormously longer time (11 years) to stop a business which has faced insolvency (thereby losing out on the second most important resource - money). If "Time is Money", running business in India is difficult to explain.

The current figures of these Nuts and Bolts of the economy may be a hard statistic to get for someone in my position, but it isn't very difficult to understand how the change wouldn't be much different.

A strong argument against that case would be - the recession did happen.

Let's not forget those days of August 2007 to January 2009. The after effects of the recession are still widely prevalent. Theories have also suggested how the current Inflation in the Indian markets (and likewise around the world) is one such after effect. But to suggest lack of entrepreneurial encouragement helped India sustain the recession better than, let’s say the US, is absolutely immature. To think of it, the effect of recession in India could have been far worse, agreed. But there ware different reasons for the aforementioned observations.

One of those reasons is this innovative line of thought which has been intriguing me for some time now. Its still a largely debatable conclusion, but one which finds plenty of arguments for it, nonetheless. In 1977, India's ForEx reserves at a meager $ 5,824 million which rose to $ 14 billion in 2005 and then $ 310 billion in 2011. Subsequently, what has more importantly increased is the International investment of this Foreign Exchange. From somewhere around 20% (if I recollect properly) in the late 1970s, early 1980s to 35% of her ForEx last fiscal, this could well be the masterstroke India played.

Along with that, what was another major achievement of India in this field was the establishment of the attributes of Professionalism, Punctuality, Deliverance and Sustainability of India Inc. because of the Software and Outsourcing boom which totally re-shaped the Silicon Valley of India’s fortunes over the decade. The Liberalization and Privatization policies of 1991 could probably be thanked a million times over and yet be under-acknowledged. India targets a 10% growth on GDP in its 12th 5-year plan commencing 2012. That shows the confidence which the last 10 years has pushed into the Indian system.

However, my thoughts will not just be restricted to what has happened over the last decade that we see India among the topmost developing nations in the world. A comprehensive review of the last decade shall be incomplete without noting the deficiencies of our policy making.

Firstly, India's infrastructure. Statistics say that it takes an Indian good 32 days to be shipped to the US for marketing purposes. The same good takes 16 days from Japan. No, its not the obvious proximity geographically, it is also the lack of large ports in India. This point is entirely adopted from Kaushik Basu's Journal in "An Economist's Miscellany", a book the CEC of India published earlier this year. He mentioned this point a few years back in a convention in Singapore which also assessed the economic growth of China and India over the years, slowly taking shape as the global leaders. India's goods have to be first ferried to large ports in Free Trade zones via small vessels before car-going them to their intended destination.

Secondly, the lack of dependence on Non Conventional sources of Energy. I believe the signing of the 123 Agreement with US in 2008 was a major achievement on the part of the then ruling government. It gives us access to nuclear fuel which we can comprehensively utilize in obtaining energy. The crude oil import in India is equivalent to its 1/3 rd of its gains from exports. Coal reserves are also reducing and will be over in a couple of decades. In as such, nuclear fuel is the most fitting alternative. What happened at Fukushima earlier this year should not be the sole deciding factor in this regard. The plant was constructed at a High Risk Zone (Earthquake prone demarcation) and such an incident could well be accepted to be "bound to happen". 

My suggestion would be allocating Low risk zones ONLY for such purposes. Nuclear fuel is clean and is very cost effective. In connection to this, the hue and cry over the Jaitapur project is absolutely baseless. Jaitapur lies in a low risk zone and it is highly unlikely that a Fukushima - like incident would happen. Moreover, the precautions are aplenty and it is relatively much safer than what it was even a decade back.

A positive development of the Indian economy is an absolute guarantee with a shift to Non Conventional energy sources.

Thirdly, India’s domestic policies. India's revenue accounts for only 13% of its National Income. This too, I attribute to Kaushik Basu. (Yes, that man is actually amazing!) If India were to increase that even slightly, it would show as a major development. In fact, India is already on its way to doing this. Consider subsidy reduction by strategic increase of Petroleum prices over the last 2 years a case in point.

It is still however, very premature for us to accept the above as the say all while reviewing the last 10 years. Plenty is unknown and plenty shall be made known over the next few years. The 12th 5 year plan, as I had mentioned, holds the key now for India to give that much needed push – a push similar to the push of 1991 to come out of the tag of “Potential leaders of tomorrow” and become the leader in the World Economy.

The time is now. The next International Monetary Fund (IMF) chief’s position is likely to be overtaken by either the current RBI (Reserve Bank of India) governor Duvvuri Subbarao or the current Deputy Chairman of the Planning Commission, Montek Singh Ahluwalia. This is the absolutely the best time for India to announce itself to the world forum in a more assertive way. The power to lead lies in our hands, and whether we do succeed or let slip this glorious opportunity – only time will tell.

Tomorrow's Verdict !!

Inspired by the spark of a moment, a few school students from Kolkata have started a new community page on facebook to discuss and debate on issues of national concern.

Are you somebody who has a say on something? Do you like to debate? Are you an avid MUNner who likes to stand up for his foreign policy? Do you understand Political and Social issues in India?

If your answer is a yes to any of the questions above, this is your place to be : Tomorrow's Verdict 

Join the movement, its time we started to talk about things.

Lets bring a change!
Lets BE the change!