|» INVESTING IN INDIA|
A car in India on average is probably used for about 10,000 kms of driving every year.
Assuming that a typical car delivers 10 kms for 1 litre of petrol, this suggests the car needs 1,000 litres every year.
And assume that, because the roads are being built and car ownership is being encouraged, Indians buy 1 million additional cars every year, that means we need 1 billion litres of extra petrol every year to fuel those extra 1 million new cars.
Since there are about 159 litres in a barrel of oil, this works out to about 50 million barrels of refined and finished petrol - new demand created every year.
A barrel of crude oil sells for USD 75, add transportation and refining costs and we get to maybe USD 85 per barrel.
So we need to buy USD 535 million worth of crude oil for the extra 1 million cars.
But what if the price of crude oil increases? Not so long ago, we saw crude oil prices at USD 150 per barrel. Maybe those high oil prices will come back to haunt us in the next few years.
Building a USA, or a Europe
Should the road minister be working with the railway minister on a plan to build railway tracks in between the roads that can allow trains to ferry passengers and cars? Should there be a system that allows a person going from Bombay to Pune to reach a parking lot at a train station at the start of the Bombay expressway, park his car, alight a express train to Pune, get off at the other end, rent a car or taxi, finish his work and - on the reverse commute - pick up his car and head home?
Is a plan to link the two growing metropolitan regions like Bombay and Pune feasible?
I don't know but maybe the Ministers with all their information gathering powers could figure that out.
The point is, when a build-out for infrastructure is being built out, shouldn't this be the main area of discussion? Are we building a country like USA where the automobile is the centre of all activity or are we building a Europe where public transportation is encouraged? People do own cars in Europe, but they use them a lot less than in the US.
Given the fact that we are already importing over 70% of our energy needs, which model should we be working towards?
China has, in some sense, made a mistake. They have gone the US route of building roads to encourage the production and sale of cars. China has now surpassed the US as the largest consumer of energy in the world due to its car policy and also due to its reliance on manufacturing.
Don't get me wrong - our roads are abysmal and we definitely need roads. But, don't we also need a viable public transportation system?
Building roads and bridges in every city for cars will only lead to the purchase of more cars - adding to traffic, pollution, and to our vulnerability to swings in oil prices.
No, this is not an argument to head back to the bullock cart age. It is a doubt about the true future costs of what we are doing today.
Neither the armchair economists in the Planning Commission nor the Ministers running the various sectors may be really planning for the future. They seem to be more focused on how to get a quick solution for the pathetic state of India's infrastructure.
To show that India can spend.
To show that India can "catch up" with China and USA.
Ten years from now, those highways they are building and financing with our savings will be crowded and they will again dig up those roads to build a high-speed railway line. Just as they are busy digging up roads in New Delhi, Bombay, and Bangalore to build rail links to decongest the roads.
There is no 20 year vision.
There is no real planning.
Each ministry has got their mantra: build and improve infrastructure.
So, each ministry is doing it.
After all, which Minister in his right mind would say "I suggest we build less roads or airports, and wish to allocate my money to the railways ministry"?
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Letting Goldman run the book
A small incident at the Conference.
The entrance was a mess.
Passes were to be mailed to us, but never got to us.
So we stood there in the first line to ensure that we were invited.
After having that cross checked and verified, we had to move to another line to pick up the actual entry badge.
In that chaos, most of us missed the inaugural speech of the Prime Minister. We were shunted into a side room to watch him on a large TV screen and then allowed access to the main hall once he had left.
But, in the melee outside, a point worth noting.
While I was waiting in line - like many others - the book in which we had to sign was picked up from the table, taken to a group standing on the side, duly signed by this group, they their badges and were whisked in to the hear the PM speak.
Not the kind of person to keep quiet, I asked one of the Indian gentlemen helping in this book-building process: Which firm are you with?
"Goldman", he replied.
"Aha", I said, "not only do you run the book, you also get it delivered to you."
What a show of power.
Suggested allocation in Quantum Mutual Funds (after keeping safe money aside)