It is not the QE! Blame your rising bills on this...
In this issue:
» RBI raises interest rates to control inflation
» Does the environment minister have blinders on?
» PE firms to drive consolidation for India Inc
» Japan rebuilding will boost steel demand: Mobius
» and more!
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Not really. There is a bigger reason. Bad infrastructure and the snail like pace of its development, is stoking India's inflation woes. Private companies are at risk of paying more for freight and surcharges for delays in shipments of their goods. In addition to this, firms are already struggling with higher costs as they are forced to keep larger inventories due to supply-chain constraints and bottlenecks. All these lead to higher costs for the companies and add to the inflationary pressure.
It is high time that the government tightened its execution plans. Just committing higher amounts towards infrastructure will not ease the country's problems. These funds need to be used in the most effective manner. Just as a point of reference, the government invested only US$ 1 bn in the last 4 years of the current 5-year plan towards ports. And this is just 17% of the total targeted investment.
Unless words and commitments are converted into actions, the country will not see its infrastructure improving. And unless this is improves, the inflation rates may not be seen coming any lower. This is no matter how many times the RBI adjusts its monetary policies.
Do you think the government is doing enough to improve infrastructure in India? Share your comments with us or post your views on our facebook page.
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So, why another rate hike, you may ask? Well, the disastrous news flashing from Japan has made us forget two very important things. Oil prices and Middle East politics. While oil prices might have eased a bit lately, since Japan is a large oil consumer, they may be back up very soon. High crude prices are of major concern to the central bank. Troubles in Libya and Bahrain have still not eased. And with threats of a nuclear disaster in Japan, the RBI expects that Japan may substitute thermal energy for nuclear power. This may impact fuel prices further.
What does the future hold? With WPI inflation standing at 8% in mid March 2011, the RBI is still off its 7% inflation target. Thus the watchdog has indicated that it will continue with its current anti-inflationary stance until further notice.
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Let's look at some facts about the Jaitapur project. The plant, with a massive power generating capacity of 10,000 MW, is expected to be commissioned by 2020. It is located near the coastal area of the Arabian Sea in Maharashtra. According to the earthquake hazard zoning of India, it comes under Zone III - a moderate risk zone - on the scale of I to V. However, the Geological Survey of India revealed that the site and the surrounding area experienced 91 tremors between 1985 and 2005, ranging from 2.9 to 6.3 on the Richter scale and the area falls in Zone IV. Whatever the number be, the danger still remains.
Regarding the Jaitapur project, Mr Ramesh has stated that the seismicity aspects have been taken care of. Is seismic zone III or IV not a concern? And how about the tsunami aspects? To that, he seemed unsure if a tsunami probability was factored into the clearance process.
We agree that nuclear power is critical to an energy starved nation like ours. But probably the environment ministry needs to take some important lessons from the Japan crisis.
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6 Responses to "It is not the QE! Blame your rising bills on this..."
Anil
Mar 18, 2011Governmeny is not doing anything except futile talks and tall claims. This is the worst ever central govt. India ever had. Entire burearacracy except few honest one and all the functionaries / minister of rulling govt are indulged in corruption and looting. This is a govt of thugs and corrupts. Days not far away when India would see a revolution like Egypt or Lybia
AJMAL HUSSAIN
Mar 18, 2011Last 3 years there has been a radical change that has set in with the National Highways, and the Roads that are trying hard to shape the destiny and future of the Indian Industry.
Notwithstanding, regional and the umpteen indifferences that we have set in for ourselves, the Governance that we have been patiently forbearing and the delays in execution of many projects.
Unlike other countries, we are privileged to have a vast sore line accompanied with some natural harbours. Thank fully these were created by nature. Where there has been human intervention, ironically, we have been badly hit. Nature is keenly watching, and if continue with our god forsaken policies and don't set about better governing councils, Nature will soon devastate us. There have been striking examples, I wouldn't like to quote.
Shome suvra chakraborty
Mar 18, 2011Private investment and public-private funding is important.Venture capital should enter through project developers and equipment suppliers. Banks should tap capital markets for infrastructure financing. Sovereign wealth fund is important. Improving management of utilities, ensuring adequate maintenance, promoting regional integration, recovering costs while recasting subsidies to enable broader access, and improving allocation and spending of public resources are some of the techniques of gap financing.The weaker states should spend greater % of GDP on infrastructure.
sunilkumar tejwani
Mar 17, 2011it's a sad commentary, infra is a only a pretext, infra was always a problem, due to presence of vested interests. Among them Road based transport manufacturers who bribed their way to prevent rail network from getting developed. High inflation is a result of cartelization by politicians & industrialists. JAY HO!
Kailash Chogle
Mar 17, 2011The Goverment is trying to Improve Infrastructure but it fails to do so because in INDIA the corruption is Fundamental Rights of most of all Political & Goverment personals , as in India there is no Single Window Clearance for any Projects , so the time of completion of any development take more time( three times more) than the actual schedule , as whole world first develop Infrastrutre & than start developemnt but in INDIA development start first & to cope up the situation we start Infrastruture development which gives negative result .
In country Like CHINA the Infrastructre is first priority , so there are no Religions /Politicals / Judiciary Obstrcules came in between for any Infrastructure developemnts but in INDIA TEMPLES OR MOSQUES become hurdles while makeing Roads OR Bridges , till the completation of Bridges the another end of Bridge caputred by Slum Dwellers , this is common story of INDIA , India should have Strict Laws & the Law should be implemented Strictly.
ramaraom3
Mar 27, 2011we are in the habit of blaming the government and pointing fingers when some scam is uneathed. is the rest of the society blameless?are they doing their bit? why cant editors guild chalkup a plan to undertake audit of all major spending departments ,especially the infrastructure related departments,and socil welfare and education departments with regard to their policies,their implemewntation, their drawbacks, targets etc,etc? ,thus keeping them on their toes. but ofcourse ,they have to ensure that the auditor doesnt compromise its integrity.
the retired officers ,who are worth their salt, should also chip in with their contributions in a more cohesive fashion to make an impact.