August 22, 2013
Why could’nt our expert designers and architects foresee this when they spent hundreds of crores and built this sophisticated airport, which is as functional as a bus station in Ethiopia ? Wading through rain water @ International Airport; dinghy service will start soon till taxi stand and return ………….!
August 22, 2013
The government of India has tried to blame the recent depreciation of the rupee against the US dollar on everything but the state of the Indian economy. Rupee has fallen because Indians buy too much gold, we have often been told over the last few moths.
Rupee has fallen because foreign investors have been withdrawing money in response to the decision of the Federal Reserve of United States to go slow on money printing in the time to come, is another explanation which is often offered.
While there is no denying that these factors have been responsible for the fall of the rupee, but the truth is a little more complicated than just that.
Mark Buchanan uses the term disequilibrium thinking in his new book Forecast – What Physics, Meteorology and the Natural Sciences Can Teach Us About Economics. He writes, “one of the key concepts of disequilibrium thinking is the notion of ‘metastability’ which explains how a system can seem stable, yet actually be highly unstable, much like the sulfrous coating on a match, ready to explode if it receives the right kind of spark. Inherently unstable and dangerous situations can persist untroubled for very long periods, yet also guarantee eventual disaster.”
The situation in India was precisely like that. The rupee was more or less stable against the dollar between November 2012 and end of May 2013. It moved in the range of Rs 53.5-Rs 55.5 to a dollar. This stability in no way meant that all was well with the Indian economy.
In a discussion yesterday on NDTV, Ruchir Sharma, Head of Emerging Markets Equity and Global Macro at Morgan Stanley Investment Management, provided a lot of data to show just that. In 2007, the current account deficit of India stood at $8 billion. In technical terms, the current account deficit is the difference between total value of imports and the sum of the total value of its exports and net foreign remittances.
The foreign exchange reserves of India in 2007 stood at $300 billion. So the foreign exchange reserves were 37.5 times the current account deficit. For 2013, the current account deficit is at $90 billion whereas the foreign exchange reserves are down to around $275 billion. So the foreign exchange reserves are now just three times the size of the current account deficit, in comparison to 37.5 times earlier.
Another worrying point is the import cover (foreign exchange reserves/monthly imports). It currently stands at 5.5 months, the lowest in 15 years. This is very low in comparison to other emerging markets (like China has 18 months of import cover, Brazil has 11 months).
Now what does this mean in simple English? It means that the demand for dollars has gone up much faster than their supply. And this did not happen overnight. It did not happen towards the end of May, when the rupee rapidly started losing value against the dollar. The situation has deteriorated over the last five to six years, while the government was busy doing other things.
Sharma gave out some other numbers as well. In 2007,the short term debt (or debt that needs to be repaid during the course of the year) stood at $80 billion. Currently it stands at around $170 billion. As and when this debt matures, it will have to repaid (unless its rolled over) and that would mean more demand for dollars and a greater pressure on the rupee. Given this, its not surprising that analysts are now predicting that the rupee soon touch 70 to a dollar.
What remains to be seen is whether companies which need to repay this debt are allowed to roll it over. The situation is very tricky given that 25% of Indian companies do not have sufficient cash flow to repay interest on their loans. The amount of loans to be repaid by top 10 Indian corporates has gone up from Rs 1000 billion in 2007 to Rs 6000 billion in 2013. This makes the Indian economy very vulnerable.
Politicians like to compare the current situation to 1991 and tell us that the current situation is not a repeat of 1991. In 1991, the import cover was down to less than a month. Currently it is around 5-6 months (depending on whose calculation you refer to). Hence, the situation is not as bad as 1991.
But the import cover is just one parameter that one can look at. The current account deficit in 1991, stood at 2.5% of the gross domestic product. Currently its around 4.8% of the GDP. Hence, the situation is much worse on this front than in 1991.
The government has tried to control the fall of the rupee against the dollar by making it difficult for Indian companies as well as individuals to take dollars abroad. But that was already happening. The amount of money Indian corporates invested abroad in 2008, stood at $21 billion. It has since come down to $7 billion. The amount of money taken abroad by individuals through legal channels remains minuscule.
The point is that the Indian economy has been extremely vulnerable for sometime, “much like the sulfrous coating on a match, ready to explode if it receives the right kind of spark.” It is just that where the spark will come from leading to explosion of the match, is hard to predict in advance.
As Buchnan puts it “the disequilibrium view….explains in simple terms why the moment of collapse is hard to predict: the arrival of the key triggering event is typically a matter of chance.” And this matter of chance in the Indian context came when Ben Bernanke, the Chairman of the Federal Reserve of United States, the American Central Bank, addressed the Joint Economic Committee of the American Congress ,on May 23, 2013.
As he said “if we see continued improvement and we have confidence that that is going to be sustained, then we could in – in the next few meetings – we could take a step down in our pace of purchases.”
Over the last few years, the Federal Reserve has been pumping money into the American financial system by printing money and using it to buy bonds. This ensures that there is no shortage of money in the system, which in turn ensures low interest rates. The hope is that at lower interest rates people will borrow and spend more, and this in turn will revive economic growth.
After nearly 5 years, some sort of economic growth has started to comeback in the United States. And given this, the expectation is that the Federal Reserve will start going slow on money printing in the months to come. This has pushed interest rates up in the United States making it more interesting for big international investors to invest their money in the United States than India.
This has led to them withdrawing money from India. Since the end of May nearly $10 billion of foreign money has been withdrawn from the Indian bond market. When these bonds are sold, foreign investors get paid in rupees. They need to convert these rupees into dollars, in order to repatriate their money abroad. This puts pressure on the rupee.
And this is how the decision of the Federal Reserve to go slow on money printing in the days to come has led to the fall of the rupee. This is the story that the government officials and ministers have been trying to sell to us. But the point to remember is that the decision of the Federal Reserve of United States to go slow on money printing was just the ‘spark’ that was needed to explode the ‘sulfrous coating on the match’ that the Indian economy had become. The spark could have come from somewhere else and the ‘sulfrous coating on the match’ would have still exploded leading to a crash of the rupee. Also, it is important to remember that foreign investors have not abandoned India lock, stock and barrel. When it comes to the bond market they have pulled out money to the tune of $10 billion. But they are still largely invested in the equity market. Since late May around $2 billion has been pulled out of the Indian equity market by the foreign investors. This when they have more than $200 billion invested in it.
Ruchir Sharma’s panelist in the NDTV discussion referred to earlier was Arun Shourie. He called the current rupee crisis a swadeshi crisis. It is time that the government realised this as well because the first step in solving any problem is recognising that it exists.
source: Mr. Vivek Kaul
Fear of Fed Retreat Roils India
August 22, 2013
August 19, 2013
Contact Ms. Kalpita Dighe firstname.lastname@example.org.
August 14, 2013
Clara Lewis, TNN |
MUMBAI: The Mumbai Metropolitan Region Development Authority (MMRDA) is considering four options for constructing the Mumbai Trans-Harbour Link (MTHL) after the latest round of bidding failed to elicit interest from construction firms.
The MTHL is a 22-km sea link between Nhava and Sewri that will connect Mumbai to the hinterland and offer a quick getaway to Pune, Nashik and Goa.
The four options under consideration include a direct cash contract wherein the government foots the bill; the developer constructs the sea link and is paid back in annual installments; taking up the project under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) where the Centre will bear 35% of the cost, the state government 15% and the implementing agency (MMRDA) will bear 50% of the cost; and approaching either the World Bank or the Japan International Cooperation Agency for a loan on the lines of the loan for the Mumbai Urban Transport Project.
Senior MMRDA officials said within a month the proposals will be placed before chief minister Prithviraj Chavan, who also heads MMRDA.
The project was proposed in the 70s. However, the first serious attempt to build the bridge was made in 2008 but it fell through because of a dispute between the Ambani brothers. For the third time the government failed to get any bids for the bridge.
The project was to be developed on a build-operate-transfer basis in which the developer was to quote a price with interest, which he would recover in 35 years after building the link over five years. To address some of its financial risks, the Union finance ministry has sanctioned viability-gap funding to the tune of Rs 1,920 crore for the project.
A source said one of the reasons that no bid was made for the project was the uncertainty over the proposed international airport in Panvel. “If the airport does not take off then the projected 60,000 vehicles traversing the bridge daily will also not happen which makes the project will become unviable,” said a source.
Ministry of Road Transport and Highways to launch RFID based Electronic Toll Collection (ETC) system
August 14, 2013
ETC will enable automatic toll collection, vehicle identification and traffic monitoring.It would be installed at toll plazas on all national highways by the Indian Highways Management Company Limited by March 31, 2014.
The Ministry of Road Transport and Highways aims to rollout Electronic Toll Collection (ETC) across all the toll plazas on National Highways in the entire country by March 31, 2014.
This was stated by Dr. CP Joshi, the Union Minister for Road Transport and Highways (MoRTH) here today while delivering the keynote address at a discussion organised on” India’s Highways – Next Gen Tolling and Corridor Management”.
Electronic Toll Collection is a system enabling collection of toll payments electronically allowing for near-nonstop toll collection and traffic monitoring. ETC utilizes vehicles equipped with transponders (electronic tags), wireless communication, in-road/roadside sensors and a computerized system (hardware and software) for uniquely identifying each vehicle, electronically collect toll, providing general vehicle/traffic monitoring and data collection.
Here is the text of Minister’s speech:
“I am confident that the daylong discussions would have sparked off ideas that have the potential of revolutionizing Tolling and Corridor Management on Indian Highways. The mission of Government of India has been to make quality highway network across the country and make the system transparent and responsive. In our bid to do so I am glad to share that by the end of this financial year we would complete construction of nearly 3000 kilometers of National highways, which is a record till date.
Along with constructing highways we are also re working our systems to sync with times. To make the system transparent we first introduced e-tendering, followed it with pilot project to Electronically Collect Toll. Now we have a vision to mark national highway network on maps making it compatible to mobile devices and even have apps for highway network.
I will elaborate a bit on our endeavor to implement RFID based Electronic Toll Collection (ETC) system across National Highways. The RFID technology shall expedite the clearing of traffic at toll plazas and the need of carrying cash shall also be eliminated when toll plazas shall be duly integrated with each other throughout India.
We started a Pilot Project on ETC last year in April at Parwanoo on NH-5. The pilot is being carried successfully and concessionaires have been requested to work out necessary modalities with the ETC solution providers and banks for setting up of Central Clearing House (CCH).
A few more stretches have also been selected for ETC implementation. They are Mumbai – Ahmedabad, Chennai- Bangalore and Gurgaon – Jaipur – Beawar. I would like to assert that by March 31, 2014 we aim to implement ETC across all the toll plazas on our National Highways. For implementation of nationwide electronic toll collection we have recently constituted Indian Highways Management Company Limited (IHMCL) with equity partnership from NHAI (50%) Concessionaries (25%) and institutions (25%).
Government of India is also amending the Central Motor Vehicle Rules, 1989 for fitment of RFID tag on vehicles by the automobile manufacturers. I am happy that Feedback Brista Highways OMT Pvt Limited (FBH) has organized this special session to discuss the issues that affect user comfort at the Toll Plazas and how we can develop an effective and efficient mechanism at Toll Plazas on National Highways.
Our endeavor will be to develop policies and systems for happy user experience on Indian Highways through better safety measures and lower waiting time at the Toll Plazas. We will be happy to partner with the Government of Portugal to develop a mechanism for better cooperation and collaboration in this regard.”
Source: Press Information Bureau
August 12, 2013
JOHN L. PAUL
A good share of bridges built by the National Highways Authority of India (NHAI) or maintained by it in the city are neck-deep in trouble.Traffic has been banned through three of them after they were declared unsafe, while vehicles move at a snail’s pace through the ill-maintained bridge on the north-western side of Vyttila Junction.
The latest to join the list of bridges that are out of bounds for vehicles is the Kumbalam-Aroor bridge on Edappally-Aroor NH 47 Bypass. As a result, vehicles in both directions have to cram through the parallel bridge, often resulting in accidents.
The NHAI is awaiting a team of experts from the Indian Institute of Technology, Chennai, to conduct a “full-scale probe” on how much area of the tarred surface of the bridge was damaged a few months ago and finally gave way in the rains, making commuting through it an unsafe and back-breaking experience.
On why experts from institutions within the State were not invited, the NHAI’s Kochi project director C. T. Abraham said it would have given rise to allegations that the probe team was being influenced.
Sources in the Cochin University of Science and Technology (Cusat) said they did not have a full-fledged team of experts that could handle the probe.
The bridge was resurfaced by CVCC-RDS, a joint venture firm, over two years ago. A senior official of CVCC refused to comment on the issue.
DAMAGED IN RAINS
Civil engineering experts said it was shocking that a good share of the tarred surface of the bridge was washed away in the rains, since such damage was reported only with roads that were not properly resurfaced.
Traffic is yet to be restored through the new bridge built parallel to the second Goshree bridge because of the alarming level at which its gap slab is sinking. The bridge is awaiting structural correction. It was built by Soma Constructions and was opened to traffic by the NHAI in May 2012.
To a question on how the problem could be rectified, an NHAI official said the number of spans would have to be increased by extending its via duct. This is a complex and expensive procedure, and was suggested by experts from the NIT, Kozhikode.
Similarly, the Moolampilly-Kothad bridge on the Vallarpadam-Kalamassery Container Road that was also built by Soma Constructions was declared out of bounds for vehicles within a year of it being opened to traffic. This was after a huge chunk of concrete fell off the bridge’s surface, leaving a gaping hole in the bridge.
The NHAI is yet to rectify problems with the expansion joint pieces over the Vyttila bridge, a decade after the bridge began giving trouble.
Motorists have to endure a strenuous ride since a few expansion joints have suffered severe damage. Potholes have begun developing over the bridge on the eastern side as well, within two years of it being resurfaced.
August 12, 2013
Ramu Bhagwat, TNN |
NAGPUR: City MP Vilas Muttemwar in a lengthy meeting with chief minister Prithvira jChavan on Wednesday took up several pending city projects. With elections round the corner, the MP made it clear to Chavan it was high time to remove the growing perception that most public projects in the second capital were languishing because of the government apathy.
“I brought to chief minister’s notice that Mihan was a dream project on which people had very high hopes. That did not take off as planned because of several constraints. I told him even at this late stage, it can be salvaged by at least activating the passenger transit hub aspect by increasing Nagpur airport’s connectivity to all state capitals,” Muttemwar told TOI. MP has also stressed on the need for dedicated and full-time officials from aviation field to be posted at Nagpur to expedite Mihan project. “Currently, UPS Madan is joint MD and vice-chairman of the project. This is his additional charge as he has to devote more time to MMRDA in Mumbai. I told Chavan he should be replaced immediately with an expert from aviation. All retired officials working as consultants with Mihan should also be replaced with young and motivated personnel,” said Muttemwar.
“If the chief minister takes it up the with all private airlines, it would not be difficult to persuade Tatas who are starting a new service in tie-up with Air Asia to use Nagpur airport for parking of their aeroplanes. Once this is done, it would automatically improve connectivity as the parked planes would fly on new routes,” said the MP. He said there is scope to connect city with 30 domestic destinations if convenient time schedules were provided for business travellers. Right now, city has only one international flight to Sharjah and there is scope to include some more destinations like Dubai, Hong Kong, Malaysia, Singapore and Thailand.
“On the Indira Gandhi Government Medical College and Hospital whose modernization plan is gathering dust since 2000, I told the CM to take an urgent decision on whether to execute on build-operate-transfer (Bot) basis by a private developer or by a state agency. But the work on the modern hospital in the prime 49 acres of land in the heart of city should be completed in three years from now,” said Muttemwar. He also discussed the matter with guardian minister Shivajirao Moghe. “A 1000-bed hospital with several operation theatres and staff quarters can come up in place of the old dilapidated structures that now house city’s oldest medical college,” the MP said.
On the issue of Nagpur Sahkari Vinkar Society Sut Girni on Umred Road in south Nagpur, he said it was time the state textile department along with the Central government schemes bailed out the defunct unit. “The state as well as the Centre have several schemes for such units. They remain on paper. I also met state textile minister Naseem Khan and requested him to be present in the city on July 31 when Union textile minister Sambasiva Rao is visiting. In the 55 acres of land that remain with Sut Girni (weaving mill), a Common Facility Centre for value addition to handloom and textile units along with a powerloom cluster or a textile park can be started with a potential to employ 20,000 people. If this project is revived, it will give new lease of life to thousands of weavers, artisans and handloom workers living in penury in Nagpur and Kamptee,” said Muttemwar.
Source - http://timesofindia.indiatimes.com
August 5, 2013
By PTI |
Urban Development (UD) Secretary Sudhir Krishna said the RRTS corridors which are expected to be built in five years, once the construction work starts, would “completely transform the National Capital Region”.
Speaking to reporters after signing of memorandum and articles of association of NCRTC, he said the Union cabinet had on July 7, approved the formation of the corporation.
He said that the new body would have a share capital of Rs 100 crore of which the UD and Railway ministries would contribute 22.5 per cent each, the NCR Planning Board 5 per cent, while Delhi, Haryana, Rajasthan and Uttar Pradesh governments would put in another 12.5 per cent each.
The funding pattern of the three rail-based corridors, however, would be chalked out separately, keeping in mind factors like the territory that a line covers in various states.
Speaking further, Krishna said that since the financing requirements of the projects are to a tune of Rs 72,000 crore, the resources of state and central governments would not be sufficient. He advocated methods like allowing additional Floor Area Ratio (FAR), levy of impact fee and loans from domestic sources for raising of finances.
August 5, 2013
By PTI |
The NCR states today signed an agreement with ministries of Urban Development and Railways and the NCR Planning Board for the creation of the NCRTC.
Officials told PTI that as per the proposal for the three RRTS corridors, Delhi-Alwar is the longest at 180 km and would traverse 19 stations in a travel time of 117 minutes.
The corridor from Delhi to Panipat is 111 km and 12 stations long and the travel time is 74 minutes. The 90-km- long Delhi-Meerut route has 17 stations and a proposed travel time of 62 minutes.
Speaking to reporters after signing memorandum and articles of association of NCRTC, Urban Development Secretary Sudhir Krishna said the RRTS corridors were expected to be built within a timeline of five years once the construction work starts and would “completely transform the NCR”.
He said that the union cabinet had on July 7, approved the formation of the NCRTC which would have a share capital of Rs 100 crore.
The Urban Development and Railway ministries would contribute 22.5 per cent each to the share capital while the NCR Planning Board would add 5 per cent. The NCR states of Delhi, Haryana, Rajasthan and Uttar Pradesh would put in another 12.5 per cent each, he said.
Krishna said that the three rail-based corridors would cost an estimated Rs 72,000 crore but funding pattern of each line would be chalked out separately, keeping in mind factors like the territory that a line covers in various states.
He said since the financing requirements of the projects are huge the resources of state and central governments would not be sufficient. He advocated methods like allowing additional Floor Area Ratio (FAR), levy of impact fee and loans from domestic sources for raising of finances.