User will pay for excess coal imported by coal fired power plants!

India’s Coal production (in million short tons) was 611.719 (2011) against world production of 7954 while in the latest year (2012) it had an anticipated production of 639.627. Its consumption during the same period was 662(2012) against world’s 4961 and the corresponding consumption in 2012 being 721.419. There was a nett import to the tune of 58.995 (2011) against 81.792 (2012).

India professed to an installed capacity of 211 gig watts of power in the coal fired plants. There was a huge shortage of coal in the country, as the primary source of power in India was from the coal fired projects. India has the fifth largest coal reserves, but it is not able to augment demand. India has 20 operational nuclear reactors and 7 more under construction at various stages (Source: eia US Energy Source information). 

India’s per capita consumption of power is less than that of the developed countries and 25% of India’s population lack basic access to electricity while urban areas which are electrified has unwanted blackouts. Largest energy source for production of power in India is from coal, and while industry sector consumed 40% of the power produced from the coal sector. Coal powered power plants are the fastest growing area of energy demand as it grew from 23% in 1990 to 42% in 2012. (US Energy Int Administration- Independent Statistics and Administration). In India, for economic purposes, Services industry which provides India’s half of economic output is relatively a non energy intensive source. Hence lack of urgent importance to the power sector which could accelerate India’s growth.

India imports 81.982 mt of Coal, and 75% of this coal is from Indonesia, while 19% is from S Africa and 1% from Australia. Indonesia is one of the biggest suppliers of Palm Crude Oil and RBD Palmoilein, which is used for distribution amongst the Public Distribution system beneficiaries to the extent of 10 million by providing a discount of 25%. India is one of the nations on which the foundations of Indonesia’s economy are built around. Indonesia exports 180 million tones from their production of 239.41 million tones. The prices for 1 MT FoB is around 50-60 dollar/Metric ton.

This is the general picture of sourcing of coal, its imports, its utilization, power produced used by coal fired plants, etc. The story begins now. Yesterday, the Cabinet Committee on Economic Affairs met under the chairmanship of the Hon’ble Prime Minister of India, wherein a contentious decision was taken to the effect that coal which are imported by individual power companies, or by Coal India Ltd, and the difference in prices paid between the import price and the domestic price shall be passed on to the users or consumers. Presently there is an import tax of 10% and the government in its wisdom will bring it under a Tariff Rate, where the exporter country or the importer at the place of holding will pay a lesser customs rate on the import value, while the invoice value will be his cost price. This price and the domestic price, the difference, will be added to the cost of power that is being distributed today or will be distributed tomorrow. This decision, Government sources claim was inevitable as it is expected to ignite 38,000 MW of new power in this power deficit country. For production of 1 MW of electricity, cost of capacity building would be approximately Rs 5 Cr (govt reveals this) .The Government encourages the power producers to go in for importing power; it is their responsibility. But the differential in sourcing and domestic price will be levied by the power company on the end user. This was what Association of Power producers asked for.

The Hon’ble Finance Minister feels, a few higher paise paid for a unit of power would not affect the common man, but it would have a big effect on boosting the power availability in the country. Our am admi government wants to force a price hike on the throat of the common man who is already bearing the brunt of inflation tsunami and high price rise.

Like importing 30,000 MT of Palm Oil every year to raising it to 1, 00,000 MT at a throw away Tariff value, Government would definitely increase the quantum of imports Y-o-Y. Presently, 65% of the coal required for the power plants is procured from the Coal production centres, and Government is hopeful that they would be able to meet 85% of the requirements by the end of the 12 th Plan. Then the mismatch between supply and requirement would be a measly 15%.

                    (Source: eia- US Energy Source Infmn)

But this is just part of the minutes of the Cabinet Committee on Economic Affairs of the government of India. The actual scenario would be, the imports which are in the 35% region may touch 50% or more. But a peculiar matter that need to strike us is that we are at the receving end of the Rupee devaluation which is hovering around Rs 59/dollar. Our Foreign Exchange Reserves is a bare $ 297 billion. The difference between Imports and Exports in the first 2 months was a deficit $ 40 billion (Balance of Payments).(CAD). If manufacturers who have a poor track record of reducing their sale prices, if given the right to fix the rates, will never withdraw. The consumer will have to bear the cost of Rupee fluctuation, cost of road/rail transport from the port to the Power factory, etc. It is not peanuts as our Minister wants us to believe but will be in excess of at least Rs 5-6 per unit.

It is a pity that nobody is scared of this development.

Inaction leads to Economic Paralysis

Economic Wait and Watch policy ruinous

Economy:

Can Indian economy be consistent to hold on to the growth rate of 9.5% it did 5 years ago? Very very doubtful.

       When US announced its qualitative easing, which would deter their bond purchase, Indian markets tumbled, Our markets were sitting on the fence and tumbled by 500 points (2.74%) (BSE) and Nifty shed 166.35 points (2.86%) to send markets reeling. It was an economic tsunami of sorts, waiting to happen, as our financial stalwarts prefer to wait and take no action.

       Our Rupee has slid to nearer to Rs 60/- yesterday and it was a brave effort which saw its devaluation flow to recover to Rs 59.27/dollar. Gold also knocked out the punch and nosedived to Rs 2,550 per gramme to touch Rs 20,400 to a sovereign.

       Our Current a/c deficit is widening due to uneven exports and excessive imports. The entire Foreign Exchange Reserves has nil contribution from exports as it has to consume the import costs, and the surplus in the export-import trade, we have FER which can contain 7 months of import. If there is drawl by FII which is natural, our Reserves get depleted.

       Petroleum costs, add-ons by Oil companies when they have nothing to lose, as the Crude oil is not imported by them, they get it refined at nil taxes, and yet for every paisa increase of the Rupee, they hike the Petroleum prices to compensate what they call under recoveries which fuels inflation in the local market. There is no outstanding increase of oil per barrel, but just because of currency depreciation, oil companies by their monopolies in the market. Of course, the few private players named Reliance would love to hike the prices, because it also considers itself to be a major monopoly.  

       But what is sad is the Economic Advisors to the Government remain bird watchers. Dr Raghuram Rajan, Financial Advisor, is in a state of illusion. He says, we are alert, we have many options. But measured steps will be taken in full measure at the appropriate time. Going further, India’s planning czar, Dr Ahluwaliah, says devaluation of the Rupee is a temporary phenomenon.

       Rupee parity with the dollar was Rs 40/$ (2007), it went steadily up to Rs 60/$(2013), and CAD deficit has been growing alarmingly and FER are depleted.

       Wait and Watch Policy is costing the country dearer; this is no Policy at all. We are inuring the economic growth of the country which will witness a slower growth with Budget deficit going up alarmingly and CAD becoming worse. If we do not leverage advantages now, we will never!

Shiva's thandava causes devastation, destruction in the Himalayan towns

The Himalayan mountain ranges, and places of pilgrimage, mostly Shiva Temples, which were above 10,000 ft above the sea level were witness to furious floods, torrential rains, unbelievable inundation, destruction of life, limb and the very infrastructure built for the development of Uttarakand, Himachal Pradesh and nearby state, throwing caution to the winds. Now, the so called ‘development’ has taken a back street in view of the large catastrophe that engulfed Charm Dharm, Badrinath, Kedarinath, Gangotri, Yammotri and other mountainous cities of pilgrimage by the angry flow of Alakananda, Bhagirathi, downstream Ganga, Yamuna. The temples will take 3 years for opening, claims the Government. Tourism Development will stand still, for 3 years. Development has paid a heavy price for callousness destruction of eco destruction, and ecological destruction, wantonly, knowing full well about the disasters.

The whole of the mountainous holy cities are fuming with the anger of Lord Shiva, who is in a thandava dance. Shiva says, you cannot have money economy, compared to spiritual wealth and paying no heed to mother Alakananda and Bhagirathi, which promoted purity?

Himalayan tsunami was due to Himalayan indifference of men in authority who worried about material pleasures, compared to the spiritual pleasures. Kedarnath, the epicenter of the tragedy had the 8^th century Shiva temple and the Samadhi of Adi Sankara, which remains even though the entire stretch has been covered by slush and mud brought by the river and deposited. Bodies were washed ashore. Thousands of people are reported stranded, large number of them are marooned, many dead, while a few have been rescued.  Some are said to be in ‘pithoragrah (safe location)’A disaster of Himalayan proportion could not be averted and thousands of innocents who paid it with their life cannot be brought back to life by a few proponents of development model who had suicidal economic models. This is the lesson we have to learn from this monumental tragedy.

India has a poor record of anticipation. We react and act only after a calamity has occurred. Why?

Ministry of Environment & Forests’, New Delhi is said to have issued a notification dated Dec 18, 2012, declaring a distance of 130 Km from Gormukh to where Alkanka begins as ‘eco sensitive zone’. This was flagrantly disregarded by state governments who feel that once elected they are accountable to nobody. The assertion of the Government is that vested interests in the name of environmental activists try to impede activities with ulterior motive to rob the people of area from infrastructural development and deal a blow to the tourist interest with ulterior motives. See the tragedy and remember the warning of environmentalists.

The zoning of the river should have been in a manner that loss of life and destruction to building and installations, in the event of flooding, could have been prevented, echoes Union Water Resources authority which had sent many dossiers to the State Government, the covers of the letters which had remained unopened.

When Science has grown much, why was apparatus which would forecast, inundation forecasting, through digital elevation maps and bathymetric surveys do be done in the flood vulnerable areas, which had planned funds in the 12^th Five Year Plan was not spend and sophisticated materials purchased and professionals put in place. What is priority for the Government? Is it the well being of the people sans people themselves? We need to have flood forecasting network linked to rain forecasting, if we need to make little headway in saving people in anticipation of destruction. If we cannot take people to safer surroundings even in the case of natural calamities, what will we do, if something happen to our nuclear reactors?(a fear apparently expressed by the people of TN over a nuclear power plant?)

The meteorological department had warned the centre and the states about the impending rain, cloud bursting, and devastation around the Himalayan areas, yet why no action of evacuation and halting pilgrimage to embark yatras not done? The Comptroller and Auditor General of India had warned the state government about the improper construction of infrastructural projects without putting in a mechanism of caution. The Report was simply ignored as partisan.

After a grave lesson learnt from the present tragedy of immeasurable gravity, the Government should come out with a safe mechanism of history not repeating itself.

Preparation for a catastrophe by putting in place warning systems before the occurrence;

Put in place technology, which will not cause callous indifference?

Study the impacts of devastation, even though to some extent such impacts are inescapable in a difficult mountainous terrain.

How does Carbon emissions, global warming affect these events which may become more frequent, aggressive, petulant.

Let us not see phantasmagoria  recover calamity costs from those who were involved in developmental works for the loss of limb and life caused by their carelessness.

Himalayan ecosystem have experienced faster rates of warning in the last century compared to European Alps and other mountain ranges. Land use changes will definitely hurt ecology. Deforestation cover was one of the importat causes for the devastation of the rivers Bhagirathy. Vegetation covers arrests the fury of river spree during rains. The areas need to go in forestation and the river basin and land cover through which river flows need to be protected from soil erosion. Coir Geotextiles, which are used in India for landscaping could be used effectively as it is damn cheap. The Coir pith can be used elaborately as it has the capacity to absorb water and retain 45% with it, which will provide improvement in ground water for vegetation. These people who say that hydro power projects are the only answer should take a leap out of the countries in the Pacific region who beget electricity from Coconut shells. India is the country producing maximum coconuts in a year. They are not even aware of the various alternate modes of energies that can produce power and calls ecologistical destruction as the only method to create development. Development economists should look at alternatives.

“These mountain rivers are like daughters, you never know, how quickly they grow up”..

“The present Himalayan disaster is triggered by natural forces but the catastrophe is

manmade”.

“Floods are the result of indifference to the human mentality”.

Some of these quotes are most relevant in the present context. 

Justice delivery to hapless gender

Judge clarifies the Law for gender justice.

Justice C S Karnan’s judgment (Judge of the Madras High Court) was indeed praiseworthy and comes at a time when gender justice was conspicuous by its absence. The male dominated society always frowned on the female with superiority. The judge was careful in the use of words, 21 year old ‘bachelor’ and 18 year or more ‘spinster’ had pre-marital sex with intention to worry and subsequent to this, the man deserts the woman, the victim woman can approach for criminal filing of proceedings in a court having criminal jurisdiction, but also can avail civil remedy, by substantiating her claims in a legal manner.

The Judge has clearly used the word, ‘Bachelor’ which has the dictionary meaning of ‘unmarried’. In the word context, ‘Bachelor has connotation in the case of a married man divorced/widowed, and when in a state that there is no wife in the legal terms, he is described as the person who can be punished in the judgment. A divorced/widowed woman is called divorcee or widower, hence spinster means, one who has never married.

       This is an excellent concept, persons who came under the provisions of benefit under the judgment or the wrong doer is clearly identified in the judgment.

       Kudos to the judge for opening up new vistas in the judicial made justice operational.

       The Judge had candidly admitted the law to proceed criminally against the wrong doer male on a complaint by the aggrieved woman, and the courts taking cognizance of the case can award exemplary punishment. But there is no provision in law, which enables the woman to remove her social stigma, nor any enabling provision for compensation. Though there is no provision, the judge recalls in this erudite Judgment that the High court is the apex court of the state and Constitutional authority which can impart natural justice, gender justice and genuine justice. The Court has, therefore, intervened, to right a wrong by awarding her civil remedy by treating the contract of entering into a marriage by two connected parties having social relevance, and having pre-marital sex with the premise that before long they would become man and wife.

       But the provision of ‘marriage’, which has a distinct law in force, and the Indian Penal Code and Criminal Procedure Code, and Code of Civil procedure, under which any married women is given alimony, etc, do not support the Judge’s judgement, however, worthy it may be.  Solemn ties of marriage as well as specific contract for marriage in the case of pre-marital sex are one and the same in the eyes of Law. Why is the  legislature in  India, feel shy of changing the provisions of Cr.PC, Civil Procedure Code, IPC, etc to incorporate these provisions so that legislature passed laws can become operational, while judge espousing a law can at best remain a law, only till it is challenged and a divisional bench quashes it. The famous example for this was the sensational Sarita Vs Venkatasubbiah case by the Andhra Pradesh High Court against the orders of the Cuddapha Court. This Case brings out to the fore, the inadequacies of the Hindu Marriage Act of 1955.

The case is listed in the citation AIR 1983 AP 356, is a judgment by Hon’ble Justice P Choudhary most poignant. One Venkitasubbah, married Sarita, a young grown up girl at Tirupathi on 13-12-1975. Thereafter, she resided with him who had agricultural gardens in Cuddapha for about 6 months. Later she left for Madras, stayed with her parents. Later she became very famous and most wanted heroine, made Crores of Rupees. At this stage, Venkatasubbiah moved an application under Sec 9 of the Hindu Marriage Act for restoration of conjugal rights by filing a case at Cuddapha, Andhra.  

The Judge of the Cuddapha after protracted argument decreed upholding Sarita to pay heed to Venkatasubbiah’s petition to restore his conjugal rights. Aggrieved by this, she filed an appeal in the Hon’ble High Court, arguing two important points. She argued that Cuddapha Court did not have jurisdiction because Sec 19 talked about permanent residence or couple resided last, where they married, or where there was irrevocable separation to invoke jurisdiction. She said she had no residence in Cuddapha but resided which is not the terminology used by the Section in the Hindu Marriage Act, and Madras was the place she and he co-habited, and hence Cuddaph magistrate was wrong jurisdictional aspect. Her second point went deeper, pointing at the validity of Sec 9 of the Hindu Marriage Act which was in direct conflict with Article 14, 19, 21 of the Indian Constitution. Conjugal rights are in deferment of right to liberty, right to life itself, human dignity and decency. Order 21 Rule 32 of CPC and sub para 2 and 3 contemplated that any judgment which permits restoration of conjugal rights, if failed to be performed, then, the person committing the crime can be sent to prison, property can be  attached and so on. Order 21, Rules 32 and 33 enforces financial sanctions. In this respect, when drawing up the Hindu Marriage Act of 1955, the Conjugal Rights enforced by Ecclesial law of England which was enforced in India prior to independence were retained. However, it should be remembered that England under Sec 20 of Matrimonial Proceedings and property Act of 1970 removed the right to claim conjugal rights. The learned Judge, therefore, held that Secrtion 9 of the Act was in direct violation under items 5 of the list III and VII Schedules of the Indian Constitution as  it infringed the Chapter III right embodied in the Constitution and offended, the inviolability of the body and the mind subjected to the decree and offends dignity  of a human-being. The judge claimed that it was a parody that males moved courts asking for restitution of conjugal rights, while no woman had ever filed a petition. 

We have to reason with this judgment and compare it with the averments of Justice C S Karnan’s well diagnosed judgment.

However, when a Judge delivers his judgment in the precincts of the Court, it becomes Law unless challenged at a higher forum. However, a Judge who had delivered judge releases a statement for public consumption justifying his reasons and conclusions by which he delivered the judgment was unnecessary. The Judge is answerable to no one for his judgment except his allegiance to the constitution. This statement would cause unnecessary public debate. It was not necessary.

Kudos to the Judge who gave gender its justice. Women should rejoice. People like Sonia Gandhi and Sushma Swaraj, Jayalalitha, Mamata, should make common cause to make the Government of India change the outdated anarchic clauses of the Cr PC,Cvl PC,IPC, and/or other Acts.

Assembly or Parliament, temple of democracy

Legislatures are Temples of Democracy

I feel dumbstruck when the events of a last few days in the sphere of our democratic institutions we see, not debates, arguments, fierce oratory, but pandemonium. We see, the Parliament of India rocked by interruptions, disorders, stalemates, which enforces the theory the ‘Devils quoting the scriptures’.  Or we in for autocracy, might is right, or for fighting wars in the four walls of our parliamentary democracy.

We have some of the best Parliamentarians, both in the ruling party, Opposition, and in Politics. Spread across all parties. Our founding fathers had immense nationalism, sentiments, patriotism. There may be different views, manifestation of different thinking, but in true spirit, we have to respect the institutions if we want respect for ourselves.

We have a moral responsibility because we have taken an oath. An oath to preserve the integrity of our cherished institutions. If we do not respect our elders, how can we command respect from our younger ones. Is not running of Parliament or state legislations, involve the exchequer. It is based on people’s faith, the prescription of our Policy as well suited for their well fare, brought us to win in our constituency. Can our action or inaction put them to trouble? Is discipline, not the very essence of our institutions? Should we not create honour by precept and practice? Can we expect our forces to be undisciplined? Can we expect the Police force to be awesome?

In the history of Kerala’s parliamentary democracy, which even saw the first Communist government elected on adult franchise, getting power to rule the state. The faith repository of the most enlightened literate people, who gave power to a Communist Government under veteran E M Shankara Namboodiripad. This is a Guiness Book of World Record entry. 2 years later, another Communist government came to power in Cuba. We had formidable leaders who could through their gift of the gab, oratory, by the might of arguments, pull down governments. Not anymore. The legislators have lost the respect of the people. For, they believe in street fight, proving that might is right. Rushing to the speaker’s podium, squatting in front of the seats. Using placards, shouting slogans, degrading the supremacy of the Speaker by simultaneously creating impediments to the smooth conduct of the house. This is most undemocratic.  

Political leaders must engage in meaningful debates, arguments, express their opinions without fear or favour, and challenge the ruling party or opposition by a string of arguments, characteristic evidence, and should aim at expressing their democratic credentials through the instruments that is provided by the Assembly rules to take head on the ruling party or opposition, as the case may be. But today’s events do not bestow confidence on the well being of democracy, the ruling party or the opposition both throwing decorum to the winds. In 2 minutes all major financial transactions were approved. There may be merit in financial proposals. There might not be merit. Some may be successful projects while some others may not be viable. All these money approvals should be debated, discussed thread bare and then passed. If they are passed in a casual manner, then what is at stake is Crores of Rupees.

Whole parliament sessions have been washed out over lung uproar. Is it healthy democracy? The leaders and the political parties must ponder over this. Anna Hazare advocated the ‘Right to Recall a Representative’ which did not find agreement with the Election Commission nor the Political parties. How can people express their resentment?

Do we need silver lining when we like Gold?

Silver lining gave dark clouds and no rain?

Rupee on the downhill:

When the Banker’s bank in India assiduously avoided a cut in its CRR rates, playing over caution, Rupee made bold to venture into new lows (falling around 1.5% against the dollar) and plummeting to 58.77/78 against the Dollar. Another danger await us: tinkering with US monetary stimulus by Federal Reserve, would cascade into further erosion in dollar value. Appreciating Yen has further weakened Rupees strength. Rupee also might become q victim of carry trade unwind, as Rupee has become a pain in the neck for investors. It is not surprising that Rs 750 Cr moved out of India in the last two days.

Though there were inflows of around $ 3.6 billion during FY 2013-14, the pull out by FII was $ 3.5 billion. This has put tremendous pressure of the Rupee.  The cascading effect was dampening of sentiment in BSE, NIFTY.

Current a/c deficit:

The experts argue that the widening was due to concerns of high Current A/c deficit, widening trade deficit, which has already impacted the Rupee. India’s exports were $ 48.67 billion against India’s import of US $ 86.6 billlion.India’s reckless import of Crude Oil ($15.6 billion), non crude oil ($ 29.62 billion). This has created trade deficit. For the month of May alone, the deficit was $ 20.1 billion while it was $ 17.8 billion in April, 2013. The gap was $ 16.9 billion in the corresponding month of the previous year. Input imports, and machinery import has come down considerably as export units are not working to 60% of their capacities leaving an idle capacity of more than 40%.

Son-in-law status for Gold import:

Government treated Gem and Jewellery industry as a key growth oriented industry. The votaries of Gold import saw a gold lining. But it remained only as clouds fleeting away because of the strong wind!  This has resulted in massive availability of Gold with prices running above Rs 20,000/a sovereign. Gold import stood at a high of 89.7% to import figure of $ 8.4 billion. Many firms in the SEZ were importing gold and there are many instances when the gold imported instead of export found itself in the DTA. With abundant supply, and Rupee reeling and prices of land falling correspondingly, Gold prices rose steadily; this did not hurt the gold shops, as there were enough buyers as they felt Gold was the best asset to appreciate.  Purchasers thought we need to preserve wealth. Gold was the best option because of lavish appreciation. This logic was spread by the Gold merchants and government did nothing to dispel the impression.

The import of gold drained the Foreign Exchange Reserves. Only belatedly, the Government has woken from its slumber to declare that Gold imported should have a minimum 3% value addition and 5% value addition in gold and precious stone studded jewellery.

Reckless import; no balancing act:

Thanks to our policy of importing crude edible oil valued Rs 65,000 Cr, we have helped the South East Asian economies to substantially increase their exports. They have become large scale proucers of edible oil, and their economic growth of 40% comes from this oil sales. When the GoI distributes imported Palm oil through the Public distribution system by offering 25% subsidy to benefit 1 million stakeholders, are we not helping Philippines, Malaysia, Indonesia, god sent opportunity to revive their economic growth while putting down India’s domestic India, which receives rather ‘nil’ support from the Planning Commission to increase output of edible seed growth, enhance the area of edible sees sowing, getting better productivity.

Planning Rethinking:

 From 15% in the First Plan, we have descended to provide 5.4% in the 12^th Plan for the entire agriculture. The efficiency in the rationalizing of such actions need to be put to test by asking s simple question- have we forgot our foundations? The bench mark of our growth will lie in giving excessive importance to agriculture. We talk about Food Security, while we destroy the foundation of Agriculture that would provide Food. Farmers are as important as consumers, because without the farm output consumption will reach a zero end. 

Kerala's crisis? Why?

Kerala’s notoriety of excessive Greed

Kerala does not have an economy of its own. Nor is there, any favourable industrial climate which attracts investment. Its insipid industrial Policy does not generate confidence amongst investors, while money order economy places lot of money in the hands of families who have workman abroad. Recently, Kerala based economists and broadcasters wanted Rupee devaluation to continue so that the remittances in foreign exchange from abroad will lead to more exchange rates when converted to Rupee. These experts even asked the Gulf employed Malayalees to raise loans and send the money to Kerala to beget higher returns.  Kerala’s thriving economy depends on the sweat of the brow of these hapless people who are all over the Middle East eking out their livelihood. Kerala does not labour, hence migration from Bengal, Bihar, Orissa, Tamilnadu, Andhra Pradesh, etc. This is cheap labour for you.

          How can you become an entrepreneur without a base? Kerala’s highly literate population can easily be fooled. That is Kerala model for you. Like the Dengi dengue, fly by night blade companies minted money from this highly literate people. These blade companies looted the public money, and left without a trace. No lessons were learnt from the fearsome collapse of the money lending blade companies which one after another failed in the 90s because, they could not afford to pay interest. Even top level companies which floated money lending companies fled, pulled their shutters and the middle class, pensioners lost a tidy Rs 10,000 Cr or more. There were many companies which promised plantation cum animal farms. There were multi level marketing firms, and money chain companies. Now, the green initiative companies have taken over. Why do all these companies flourish? Because they offer higher returns of around 30-50% against Bank’s 8.5% for a five year deposit.  It is because, people have corpus money, wealth, which they want to invest. There may be black money, too. Gold selling companies had variety of schemes; they offered gold by paying in installments.

          Take Kerala’s dubious business marketing strategies of some of the successful firm which failed to deliver after amassing wealth. Total 4 u scam consumed Rs 200 Cr with alleged cheating of investors of around 700 investors. Tycoon Money fooled  24,000 investors who lost Rs 410 Cr.Nans Excel, multinational marketing Company deprived 250 investors of a near Rs 500 Cr. Apple a Day, a construction company is alleged to have collected Rs 100 Cr by promising housing to around 700 people. All the cheated, belonged to the middle class. Why are they gullible? Greed?

          Today, if you want to make a fast buck, go for Green Energy initiatives. This is what Team Solar did. People are said to have been cheated to the tune of Rs 35 lakhs and Rs 40 lakhs. All these monies were collected by the Team Solar management in Cash.

          Literate Kerala, park their funds in dubious paper companies. People who have large liquid cash, which they want to multiply in good time select these companies unaware of the dangers. They lose lot of cash but never complain, because they have to revel the source of hard cash which they had.

          RBI has come out with stringent Gold loan policy. This has helped the private banker to double/treble his business. They seek 12-15% interest per annum. Before the granting of loan, they deduct 3-5% as service charges from the loan amount. The craze for gold goes on, inspite of the cost of glittering gold which no longer glitters.  In spite of higher Tariff value imposed by Customs, there are no diminishing imports. Why? In spite of higher prices, there is demand for gold. This is simple Economics, my dear Watson (PC).

          These incidents have brought bad name to the state; no genuine investor wants to come to Kerala to set up an industry. Entrepreneurial cult is conspicuous by its absence. With global recession, there is lot of investors including NRIs looking around. Nobody has in their list Kerala as a destination because of state’s poor entrepreneurial heritage. Money order economy may boost consumption because of excessive spending, which will post a higher State Domestic product growth but will not create permanent assets which will recycle investment and spending. No new jobs will be created because of absence of industrialization. The colleges who spun out more graduates add to the unemployment picture of the state. They desert the state to greener pastures.

          Kerala’s poor political leadership has been responsible for the mess it finds itself in. It needs people who will avoid chaos in the investment front

RBI Monetary Policy and fall in Indian Rupee

Mid quarter review of RBI Monetary Policy: Will they prescribe lending or mending monetary Policy

When the RBI wise men release the midterm quarterly Monetary Policy, will they stick to status quo or be ebullient to course a new path?

Will they reduce CRR as demanded by many banks including SBI? Already there are strong arguments that money parked by Banks with the monetary authority is ‘dead money’ and no economic activity results from this. If RBI reduces 25 basis points, the banks will get around Rs 3000 Cr which can be recirculated into the system by way of interest cuts or new loans can be sanctioned. Today, CRR stipulation detests them with tinkering with the base rate. The brazen policy of no CRR cut, and if done will fuel inflation has been the cause for less money for loans, less circulation of money, production cuts, and decrease in consumption, which retards growth rate.

RBI is in the excessive caution mode, which results in stifling of economic growth which is around 5.2%.

The Rupee’s has been gathering reverse momentum. It is set to touch Rs 60 to a dollar and may even climb higher to touch Rs 65-Rs 70 sooner or later. RBI’s intervention of buying dollars may at best be a short term effort; it will not give effect to a permanent solution. It may even back-fire, as contended by RBI Governor.

The easy argument is that all currencies are under pressure. There is a silver lining that American economy is starting to glow. It is a sign of recovery. Even if American economy dazzles, what is the guarantee that there will be trade inflows and capital inflows to India. It may be in the reverse direction.

Importers buy dollars and transact while the exporters hold on to their dollars hoping for an even better exchange rate.

Does market sentiment play a role in the diminishing value of the Rupee? It is unlikely because India has a herd mentality among market participants.

Indian Government encouraged commercial borrowings by companies from external sources. Currency risks and asset liability mismatch proved the blunder of Government Policy.

India has Foreign Exchange Reserves of around $ 290 billion. This did not come from export dealings. Foreign exchange from exports were eaten away by the imports which was $ 150 billion more ($450 billion) against export receipt of ($300 billion).This residue of $ 290 billion, are dollars accumulated by RBI through short term flows. They are in the nature of ‘debt’ assets. A portion of the reserves were spent by the benign Government of India  to fund infrastructure.

We have bad economic advisors who do not have the prodigal wisdom to take the right decisions. Country’s economy suffers in the bargain, both in the short- to medium- to long term.

Where is Kerala's Coir industry heading?

Sulking Coir industry travels towards jolt

Coir industry has been one of the mainstay traditional industries which raked in foreign exchange to Kerala in abundance. During the time of the British, most of the factories were owned by them, and they produced mats and mattings and these were in abundance use in their own residences where, the first floor mostly consisted of wooden floors. A play of colours carpets gave a special artistic touch to the interiors.

Coir door mats and mattings were used immensely in the household of Europeans and the Coir mats and mattings that were manufactured by the Alleppey factories found their way to Europe. Alleppey, which was christened Venice of the East, thrived on Coir industry.

Most of the Britishers who ran the companies left India along with their counterparts in Fort Kochi(1960). They left the residue of the industry in the hands of Indian masters who were left with the opportunity of turning round an industry which was a legacy of the Britishers.

Kerala had a unique white fibre, which was famous for the mat industry. The industry lived in its primitive form, until a doyen Ravi Karunakaran, went abroad and tried to modernize some of the Coir operations. Tufted mats became a reality thanks to this far sighted man.

Kerala had the highest Coconut trees, but the productivity was steadily declining due to variety of causes including shrinkage of the area of its crop. Slowly Tamilnadu took over, with factories located in Kerala while the coconut husk was available in Tamilnadu. Kerala did not nourish de-fibering units, as a result 80% of the Coir fibre has to come from Tamilnadu. Chineese agents beseech Pollachi and began to buy from them directly through local agents. Now the fibre manufacturers owe allegiance to Chinese merchants with the result, Coir fibre does not find way to Kerala. 80% of Chinese purchase of coir fibre jacked up domestic price considerably. The option should have been to ban export of coir fibre from India. Either the authorities did not find the need nor know about the serious consequences this would put to, if the indiscriminate at throw away prices continued.

When the demand for Coir door mat and matting decreased, the local industry went for Rubber based coir mat, as architectural changes abroad, and shedding of fibre made coir mat loose its quality and market, which sealed forever, the coir mat and matting market. They were unknown victims to destroy the very product they had created! The owners felt that soaring production costs, lower productivity, overall dwindling contribution of overall value added products to country’s coir exports, has done the industry to its fall. Is not country’s coir industry sulking without markets and margins. One exporter commented dryly that revision of sourcing price 4 times over five years which witnessed increase from 15% to 30% production costs destroyed the coir industry comprehensively, speaks for itself.

The spokesmen of the body which should develop coir industry was of the view that coir competed with replacement products and synthetic products which had a lesser value. He was of the view that school bags, women bags, chapels, conference bags, gift items would bail out the industry. These items suggested by him were craft items, and their sale price would not compensate running of the huge industries for which crores of rupees have been invested. Handicraft items have their own demand but they are cheap priced products which can at best sustain a cottage industry and not the coir industry which has ploughed in more than Rs 1000 Cr in investment costs and the same cost for creating the infrastructure.

If a new paradigm shift should overtake the industry, there is need for infusion of fresh capital including FDI. The outdated rats and looms should be replaced by modern machines, and a long term solution should be put in place instead of short term programmes which will not revive the industry.New thinking entrepreneurs should be in saddle in drive a resurgent Coir industry.

If the Coir industry should be some industry manufacturing innovative products, it should get out of the Domotex mind set, and move on, and bring out innovative products which match the need of the people.  There are still people in the Coir industry who can reengineer their capacities, end products and usher in a revolution. The earlier it is done, it is better.

Election of 2014 in India- a forecast

Who will rule India in 2014?

India is expected to go to the Polls by 2014. Every political party has arrayed with one another, most of them waiting for the outcome to forge an post election alliance to derive maximum advantage.

In the present context, leading the pack of cards is UPA which has been in rule since 2004. Opposing them is the NDA which has lot of space in much state as well as in various union territories.

The elections of 2014 are expected to bring out queer results. Both the national formations UPA, NDA have lost touch with the people and their aspirations. But, both of them are confident of sweeping the Polls. There is also clamour for the third front, as both NDA and UPA seem to be the bird of the same feather which flocks together. The extreme eagerness amongst the regional parties, who would want to forge a federal front has been getting clamour. But it looks non starter since inception. Their divergence is the moot point that they cannot come together. They have fundamental differences, that will inhibit becoming part of a front, even if formed can be found to suffer longevity.

Each state has two fronts, each enemy of one another

DMK/AIDMK

Nitish Kumar/Lalu Prasad Yadav

Mamata/Communists

SP/Mayawati

Abdulla/Mehabooba (JK)

In Karnataka, we have a Yedurappa factor, which can spoil sport. Even Gowda, the spent sport can also rejuvenate at times. NCP will be coy to any developments in Maharashtra. BJP/Shiva Sena can send shock waves in Maharashtra, but Shiv sena divided, may be not be invincible as it was.

North East may play considerable role which may not be significant but important to both the fronts.

The fresh infighting in the BJP due to NaMo factor may see cross voting. But who will stab who remains to be seen. This will rule true in MP, Rajasthan, Himachal, Haryana, and other places. Congress too, will be struck with in-fighting. There may be permutations and combinations on the eve of elections. Subsequent to the elections, Aya ram, Gaya Ram, will come to play. But stable government is ruled out. The electoral moods of people, if taken as of today, the people are a worried lot. They do not expect any miracle.

A new alignment mat manifest.

Based on our intricate study, following will be the electoral success in the 2014 elections.

State	Lok Sabha seats	Third Front	Congress	BJP	Left Parties	Independent	Others	Unknown
Andhra Pradesh	42		5	2	3	6	26
Arunachal	2					2
Assam	14		5	4	3	2
Bihar	40	20	18	2
Chhattisgarh	11		4	7
Goa	2			2
Gujarat	26		1	23	1		1
Haryana	10		5	4	1
HP	4		2	2
J&K	6		3				3
Jharkhand	14		7	4	2
Karnataka	28		14	9			5
Kerala	20		11		8	1
MP	29		7	22
Maharashtra	48		21	27
Manipur	2		2		1	1
Meghalaya	2		1			1
Mizoram	1					1
Nagaland	1		1
Orissa	21	15	2	4
Punjab	13		4	9
Rajasthan	25		14	11
Sikkim	1		1
Tamilnadu	39		5		2	1	32
Tripura	2				2
Uttarakhand	5		2	2		1
UP	80		15	20	4		41
West Bengal	42	25	8		9
Delhi	7		3	3		1
Andaman Nicobar	1		1
Chandigarh	1	1
Dadra Nagarhavali	1					1
Daman Diu	2							2
Lakshadweep	1	1
Pondicherry	1						1
Total	574

If there is a Third front consisting of Trimool Congress, BJD (Biju), BJ(U) Nitish Kumar, they stand to bag 80 seats out of 574 parliament seats in the 2014 Poll. Jayalalitha’s AIDMK is expected to bag 25 setats, also 1 seat in Puducherry, while DMK may win 7 seats, while SP/Mayawati may win positively in 41 seats.  Chandra Babu Naidu may wrest 26 seats. Left front may romp home with 36 invaluable seats, while the tally of independents posting wins will be around 18. Two seats may go to anyone.

Congress may bag 162 seats, while BJP will emerge as the large single party with a mandate of 169.

The seat position in the 15^th Lok SDabha will be as follows:

Sl Number	Party	Strength
1.	Congress led UDF	162
2.	BJP led Front	169
3.	Third Front	80
4.	Left Parties	36
5.	Others*	109
6.	Independents	18
7.	Unknown	2
	Total:	576

Let us hope, the election of 2014 will crop up new leadership decisive to lead the nation to prosperity and Rama Rajya.