12.05.2008

• Our oil under-recoveries
• These are expected to be about $40 bn this financial year.
• With international crude prices having breached the $125 per barrel mark, there are increasingly calls for revamping the advalorem tax rates on petroleum products in India. Will the state governments let go of advalorem rates and switch to specific duties?
• Speaking of high oil prices, is it time for fuel rationing?
• In the ‘Face-Off’ column that appeared in today’s ET while Sudhakar Reddy of CPI and TNR Rao (former Petroleum Secretary) took differing views, we get a chance to consider all the myriad suggestions for fuel conservation. Take a look:
• The concept of pooling cars ought to be considered for the bureaucracy.
• Fuel rationing, as a temporary measure against indiscriminate consumption.
• Improving the public transport system.
• Diversifying the different modes of transport for goods transport.
• Other forms of mass transport, in addition to metros and bus services.
• Are the prices really high?
• It all depends on how it is measured according to a Deutsche Bank analyst.
• If seen against the growth of income in the Group of Seven countries, the price has to rise to $134 per barrel to set back its consumers to 1981 level. If it has to eat into Americans’ share of disposable income to the same level, the price has to rise to $145 per barrel. If it has to swallow the same share of the present GDP as it did then, the price has to shoot up to $150 per barrel.
• What will India be in the next 15 years?
• As envisioned by the noted Management Guru CK Prahlad, it will be home to 30 of the Fortune 100 companies.
• Will have 200 mn college graduates and 500 mn certified and skilled technicians.
• Why is inflation targeting bound to fail and what should be done, to manage the current global inflation?
• Enter Joseph Stiglitz, the celebrated author on ‘Globalization’ and the Nobel laureate (2001).
• “Inflation targeting,” which says that whenever price growth exceeds a target level, interest rates should be raised, is based on little economic theory or empirical evidence; there is no reason to expect that regardless of the source of inflation, the best response is to increase interest rates. One hopes that most countries will have the good sense not to implement inflation targeting.
• Today, inflation targeting is being put to the test — and it will almost certainly fail. Developing countries currently face higher rates of inflation not because of poorer macro-management, but because oil and food prices are soaring, and these items represent a much larger share of the average household budget than in rich countries. Inflation in these countries is, for the most part, imported. Raising interest rates won’t have much impact on the international price of grain or fuel. Indeed, given the size of the US economy, a slowdown there might conceivably have a far bigger effect on global prices than a slowdown in any developing country, which suggests that, from a global perspective, US interest rates, not those in developing countries, should be raised.
• India’s impending HR crisis
• At a time when it has the best growth prospects in history, we are facing a crisis of immeasurable magnitude on HR front, says TV Mohandas Pai of Infosys.
• India has around 450 universities and 18,000 colleges with 11 million graduates in our colleges. India’s enrolment rate in higher education in the age group of 18-24 years is just 11% as against the emerging markets’ average of 25% and an average of 50% plus in developed markets.
• A view of the macro-data will provide an idea of the immensity of the problem. Today, India has about 6-6.5 crore people in the formal sector, meaning people who are on a payroll. This includes about two crore employees in government and para-government organisations across the country and the remaining in the public and private sectors. Government figures of employment do not show the true picture since data collection is outdated and outmoded.
• We need the higher education sector to be accorded No. 1 priority for India. We need to ensure that every youngster in the age group of 18-24 gets the right college education. The state has to implement this.
• India’s first helium extraction plant
• ONGC has launched this at its Kuthalam gas collecting station.
• Helium is a strategic gas and finds uses in space technology, cryogenics and medical equipment.
• India requires about 180,000 cubic meters of Helium every year. All of it is imported from the US. All this at a cost of Rs 20 crores.
• India’s gas producing fields are younger than 60 mn years and have little or no helium. Since Kuthalam is a cretaceous age gas field in India, it has about 0.05% of helium. Though this is way below the 0.3% required to commercially exploit, ONGC is going ahead with it on a pilot basis. The total cost of the plant is Rs 6 crores.