CLIMATE CHANGE India cannot take legally binding GHG emission cuts: Ramesh India said it was not in a position to accept any "legally binding" reductions in green house gas (GHG) emissions. Our view is that though accepting any “legally binding” reductions in GHG emissions may not be a politically palpable, but this does not mean that India should not make some compromises on its “business as usual” approach to climate change. It can self regulate and achieve certain benchmarks on GHG emissions. Bargaining strategy should then be to ask the developed world for technology transfer to facilitate reductions. If India and the developing world continue to take an intransigence stance it is not hard to predict the outcomes of Copenhagen which will not yield anything other than you vs. us. Climate Change Negotiations Stalemate and copenhagen TELECOM Raja cornered over spectrum allocation Opposition leaders put union minister A. Raja on the mat by charging that allocation of spectrum to mobile operators resulted in a loss of Rs 60,000 crore to the exchequer. Our view is that the opposition is right but will the minister go! By issuing licences bundled with a promise of allocating 2G spectrum at an arbitrarily decided price of Rs. 1651 crores, the minister violated all the principles of efficient allocation of this scarce resource. Once these firms got the licence they resold large chunks of their businesses at a price that was determined in the market. Not surprisingly it was way above the paltry licence fee that they had paid. This rent seeking on the part of these companies was an obvious outcome of the flawed spectrum allocation mechanism. The policy of bundling spectrum with licence meant that the firms got spectrum cheaply and this denied the public huge amount of money. Was it naïveté? We have been suggesting market based procedures, like auctions of spectrum, precisely because they reduce the incentives for corrupt public officials to use their discretion to serve sectional or private interests. POWER CERC reviewing power trading margin cap The Central Electricity Regulatory Commission (CERC), the apex power sector regulator, is reviewing the 4 paise per unit cap on power traders’ margin. The cap on power traders’ margin was put in place to discourage gaming by the power traders; such that they do not divert quota based allocated power from the beneficiary states to deficit states that were willing to pay higher prices in the open market. Our view is that power trading margins were a distortion created in the power markets. The distortion was introduced in order to address the problems with vested contracts, where states had some assured power from central government generation companies at a very low price. However, these states denied electricity to their own state and sold it in the open market. Prominent among these was West Bengal, but trading margins were not a way to address this as it did not allow power markets to develop. This speculation did harm the consumers and they responded to this in the Lok Sabha elections. EDUCATION Rajya Sabha passes landmark Right to Education Bill A landmark bill providing for free and compulsory education as a fundamental right of children in the 6-14 age group was passed by Rajya Sabha. A more interesting provision of the Bill is the requirement that private schools register at least 25 percent students from marginalised communities, with the state reimbursing the schools based on average spending per child. Given the anectodal evidence from Delhi and some micro survey results of this mechanism of social inclusion, we are inclined to endorse these reservations. These reservations unlike the recent caste based reservations in institutions of higher learning are more likely to achieve the objective of providing equal opportunities. Since, poor schooling and poor training disadvantages talented kids from poor household at higher levels of educati

1. Indicus Analytics, An Economics Research Firm
http://indicus.net/Research/Home/Research%20Area/Policy%20and%20Institutional%20Analysis/
Policy News
&
Views
Volume 1, Issue 9, August 2009
CLIMATE CHANGE
India cannot take legally binding GHG emission cuts: Ramesh
India said it was not in a position to accept any "legally binding"
reductions in green house gas (GHG) emissions.
Our view is that though accepting any “legally binding” reductions in GHG
emissions may not be a politically palpable, but this does not mean that
India should not make some compromises on its “business as usual”
approach to climate change. It can self regulate and achieve certain
benchmarks on GHG emissions. Bargaining strategy should then be to ask
the developed world for technology transfer to facilitate reductions. If
India and the developing world continue to take an intransigence stance it
is not hard to predict the outcomes of Copenhagen which will not yield
anything other than you vs. us.
Climate Change Negotiations Stalemate and copenhagen
TELECOM
Raja cornered over spectrum allocation
http://www.indicus.net/Newsletter/Policy_News_Views.aspx

2. Indicus Analytics, An Economics Research Firm
http://indicus.net/Research/Home/Research%20Area/Policy%20and%20Institutional%20Analysis/
Opposition leaders put union minister A. Raja on the mat by charging that
allocation of spectrum to mobile operators resulted in a loss of Rs 60,000
crore to the exchequer.
Our view is that the opposition is right but will the minister go! By issuing
licences bundled with a promise of allocating 2G spectrum at an arbitrarily
decided price of Rs. 1651 crores, the minister violated all the principles of
efficient allocation of this scarce resource. Once these firms got the
licence they resold large chunks of their businesses at a price that was
determined in the market. Not surprisingly it was way above the paltry
licence fee that they had paid. This rent seeking on the part of these
companies was an obvious outcome of the flawed spectrum allocation
mechanism. The policy of bundling spectrum with licence meant that the
firms got spectrum cheaply and this denied the public huge amount of
money. Was it naïveté? We have been suggesting market based
procedures, like auctions of spectrum, precisely because they reduce the
incentives for corrupt public officials to use their discretion to serve
sectional or private interests.
POWER
CERC reviewing power trading margin cap
The Central Electricity Regulatory Commission (CERC), the apex power
sector regulator, is reviewing the 4 paise per unit cap on power traders’
margin.
The cap on power traders’ margin was put in place to discourage gaming
by the power traders; such that they do not divert quota based allocated
power from the beneficiary states to deficit states that were willing to pay
higher prices in the open market. Our view is that power trading margins
were a distortion created in the power markets. The distortion was
introduced in order to address the problems with vested contracts, where
states had some assured power from central government generation
companies at a very low price. However, these states denied electricity to
their own state and sold it in the open market. Prominent among these
was West Bengal, but trading margins were not a way to address this as it
did not allow power markets to develop. This speculation did harm the
consumers and they responded to this in the Lok Sabha elections.
EDUCATION
Rajya Sabha passes landmark Right to Education Bill
A landmark bill providing for free and compulsory education as a
fundamental right of children in the 6-14 age group was passed by Rajya
Sabha.
http://www.indicus.net/Newsletter/Policy_News_Views.aspx

3. Indicus Analytics, An Economics Research Firm
http://indicus.net/Research/Home/Research%20Area/Policy%20and%20Institutional%20Analysis/
A more interesting provision of the Bill is the requirement that private
schools register at least 25 percent students from marginalised
communities, with the state reimbursing the schools based on average
spending per child. Given the anectodal evidence from Delhi and some
micro survey results of this mechanism of social inclusion, we are inclined
to endorse these reservations. These reservations unlike the recent caste
based reservations in institutions of higher learning are more likely to
achieve the objective of providing equal opportunities. Since, poor
schooling and poor training disadvantages talented kids from poor
household at higher levels of education, the point of intervention has to be
primary school. This will also take care of the fact that many
disadvantages are just due to poor English language skills and by the time
they reach the university it is too late to fix that.
Read
INSTITUTIONAL FRAMEWORK
Mamata virtually nixes land acquisition bill
Mamata Banerjee has virtually capped the government's proposal to
introduce a greater balance between the land holder's rights and the
imperatives of land acquisition for industry and public purposes by
shooting down the twin land acquisition and relief and rehabilitation Bills.
The basic issue of contention is who should have the rights to acquire
land, the state or the private sector. Under ideal conditions with clear
titles and ownership rights well defined the private developers should
acquire the land at a market determined price and there are various
possibilities to address the issue of bargaining equity. The problem,
however arises when the land is too fragmented and private property
rights are poorly assigned, the private sector will be chary to acquire land
and will require state support. By not allowing any role of state, private
parties may not be interested and this is especially true in the case of
West Bengal where there is no market for land. This may not be the case
everywhere.
More News
India flags off another phase of port privatization
India has flagged off yet another phase of port privatization with the
signing of a concession agreement for construction of a deep draught iron
ore terminal at Paradip Port.
http://www.indicus.net/Newsletter/Policy_News_Views.aspx

4. Indicus Analytics, An Economics Research Firm
http://indicus.net/Research/Home/Research%20Area/Policy%20and%20Institutional%20Analysis/
Government to introduce Food Security Bill soon
The government has said it will soon introduce a Bill to enact a Food
Security law that will provide 25 kg of rice and/or wheat at Rs 3 to each
family below the poverty line - a key poll promise of the Congress that
heads the ruling coalition.
Not possible to end cesses: Plan panel
People will have to live with cesses and surcharges as it is not possible for
the government to eliminate them at present as has been advocated by
the Economic Survey.
Few takers for JNNURM
Four years after the launch of the Jawaharlal Nehru National Urban
Renewal Mission, just above a third of the central funds allocated under
the scheme have been used.
KG basin gas belongs to government: Deora
Petroleum Minister Murli Deora has asserted that the KG basin gas
belongs to the government and not to either of the Ambani brothers,
Mukesh and Anil, who have taken the battle to court.
Six states breach unbundling deadline
The government’s six-year initiative to unbundle state electricity boards
into separate entities for power generation, transmission, distribution and
trading businesses is set to be delayed further, with seven states still to
do so.
Private oil companies may get government subsidy
The government is open to allowing private sector oil firms such as
Reliance Industries Ltd (RIL), Essar Oil Ltd and Shell India to access
government subsidy on domestic fuel sales, provided they pass on the
benefits to consumers.
India breaks Potash cartel to save Rs 5000 crore
India has managed to clinch almost 3 million tonne of its annual average
of 5 million tonne potash imports at a record low price of $ 460 per tonne
after busting a global potash cartel’s stranglehold on pricing.
No proposal to free fuel prices: Minister
http://www.indicus.net/Newsletter/Policy_News_Views.aspx

5. Indicus Analytics, An Economics Research Firm
http://indicus.net/Research/Home/Research%20Area/Policy%20and%20Institutional%20Analysis/
The government is not considering a proposal to free controls on retail
prices of petrol and diesel, minister of states for oil and gas Jitin Prasada
said.
Government to set up expressway authority: Kamal Nath
The government plans to set up an expressway authority for the speedy
execution of expressway projects, road transport & highways minister
Kamal Nath said.
No plans to open up retail sector further: Minister
In a signal that India's retail trade sector may not be opened any further,
the government has said the interests of small traders will be protected as
the industry is the second largest employer after agriculture.
DoT wants Trai to limit number of telcos
Confronted with the pending applications of 24 companies for telecom
licences, the department of telecom now wants sector regulator Trai to
cap the number of telecom players who are allowed to offer mobile
services in the country.
http://www.indicus.net/Newsletter/Policy_News_Views.aspx