Citizens' Issues
Arvind Subramanian, former critic of Modi, is the new Chief Economic Advisor

After weeks of speculation, Arvind Subramanian, who has previously worked closely with Raghuram Rajan, is appointed as the new Chief Economic Advisor

 

The Indian government on Thursday appointed Arvind Subramanian as the country's next Chief Economic Advisor. Subramanian's name had been in the list of nominees sent by Finance Minister Arun Jaitley to the Prime Minister’s Office (PMO). However, after weeks of speculation, his name was officially confirmed today.

 

Arvind Subramanian has been a celebrated economist and academic. Arvind Subramanian is an alumnus of the St. Stephens College in Delhi, IIM Ahmedabad and the University of Oxford, where he got his M Phil and D Phil. He spoke to the media after the appointment and said that, "It was an honour and privilege to serve in the Government that has a mandate for reform and change." On the challenges ahead, he said that, "Macro economic growth and creating opportunities for growth and development are the two important things for any country."

 

However, in an Op-ed written for the Business Standard in January 2013, he had questioned the Chief Minister of Gujarat Narendra Modi's so-called Gujarat Model. "in the tax collection data, why can one see a Raman Singh effect, a Nitish Kumar effect, a Naveen Patnaik effect, but not a Narendra Modi effect?" he had written.

 

In the same article Subramanian had also spoken of the merits of a reasonable tax regime, "A corollary is that reasonable (but not onerous) taxation ensures that good governance will be durable, outlasting individual leaders," he wrote.

 

Writing about the lacklustre performance on tax collection by the Modi administration in Gujarat, he had said "On this important measure of governance, Mr Modi stands indicted as a mediocre performer and one whose performance has not improved over time."

 

This appointment takes on an interesting dimension in view of Arvind Subramanian's earlier views on Modi's performance in Gujarat.

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Odisha and Cheyyur UMPPs in trouble?

Prequalified bidders, practically all of them, withdrew and left the field open for only NTPC to secure these contracts for setting up ultra-mega power plants in Odisha and Tamil Nadu

 

From the press reports, it is now certain that the two 2x4,000 MW ultra-mega power plants (UMPPs), to be located in Odisha and Tamil Nadu, will now be further delayed, simply because the prequalified bidders, practically all of them, withdrew and left the field open for only NTPC to secure these contracts.

 

It may be recalled that apart from NTPC, others in the race, which were prequalified, for the Odisha UMPP were NHPC, Tatas, Adani, JSW Energy, Jindal Power, Sterlite, CLP and Larsen & Toubro.

 

For the Cheyyur project, also 4,000 MW, in addition to NTPC, others who were prequalified, included Adani, CLP, GMR, Jindal, JSW Energy, Sterlite and Larsen & Toubro (L&T).

 

In order to facilitate the work and based on past experience, the government revised the existing standard bidding forms a year ago, and preliminary bids were invited. While revising the bidding forms, the government it seems, took care to make a provision that, in case of any increase in fuel costs, this could be passed on to the consumer as "higher tariff".

 

However, it would appear that the fly in the ointment was the provision that the successful bidder had to source the equipment from domestic manufacturers.

 

But it is an entirely different story that the domestic manufacturers have protracted delays in supplies and more expensive than imported counterparts; most of which, in any case, in recent times, have come from China which have been found to be "inferior". In fact, to protect the indigenous suppliers, the import duty element was also revised upwards.

 

In the case of Cheyyur Plant in Tamil Nadu, the entire project was to be based on the assumption that the entire coal requirement would be imported, while, in the case of Odisha, it was designed to source its own coal from captive coal blocks allotted for this purpose.

 

There was also the issue of inordinate delays associated with the forest and other clearances in such projects, particularly, in case of coal blocks. In a strategic move, MoEF had decided that the go-ahead for power stations of such projects will no longer be linked to clearance of their captive blocks.

 

For the UMPP at Bedabahal in Odisha, Ministry of Coal had allocated three coal blocks, viz, Meenakshi, Meenakshi B and dip side of Meenakshi. These were in fact allocated in September 2006. In the changed circumstances, where there is only one bidder, NTPC, we do not know what steps the government may propose to take so that these two projects do not get delayed further.

 

At the same time, it is necessary for the Power Minister to have an open discussion with the prequalified bidders as to what made them withdraw their interest in bidding.

So far, three UMPPs are with Reliance, partly operational and only one with Tatas at Mundhra, Gujarat, which is fully functional.

 

Urgent steps are needed to settle this matter.

 

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)

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COMMENTS

Dr Anantha K Ramdas

3 years ago

Frankly, I do not understand what Mr Nishit Dave wants to convey.

Where does the question of propaganda comes up, and in whose favour or against?

Dr Arup Roy Choudhury, CMD of NTPC is reported to have stated to the press that "NTPC would consider plants that were expensive and in the range of Rs 6 crore per MW; he said it would still work if land, power purchase agreements (PPA), cost of coal, fuel linkage, water and other factors fell in place".

NTPC itself has plans to seek clarification from the Supreme Court on the cancellation of two mines - the Tallaipali mines in Chhatisgarh and Dulanga mines in Odisha which are similar to the Pakri-Barwadih coal block in Jharkhand, which the Court had cleared.

Clarification has been sought about the status of mines (Meenakshi mines, which were allocated in 2006). Generally it takes 6/7 years before a coal block becomes fully functional, as per media reports available on the subject, because of clearances. Prakash Javadekar had assured that MoEF would not be a stumbling block and spoke of waivers for government organizations.

So, for any reason, if the authorities decided to cancel the bidding process, because there is only one bidder, would we not have lost so much valuable time? NTPC are already doing a great job but these delays would affect their ultimate plans to deliver the power,which appears to be beyond their control. This is what I had mentioned in the case of Odisha/TN.

No where have I said that we should buy Chinese goods or not to buy indigenous equipment! We need to expedite deliveries so that the overall project does not get inordinately delayed.

It is your turn, Mr Dave, to tell us what you are talking about?

Nishit Dave

3 years ago

What are you talking about, AK Ramdas?

Have you seen the recent bid awards for Mega power projects of 1,320 MW and 1,980 MW? The costs are well below Rs.4 cr. / MW despite the equipment being manufactured domestically. Four years ago, this used to be much higher, while the Chinese were selling at these rates by importing equipment for which we neither had verifiable operational history, nor the ability to trace the actual cost structure. It is well known that the Chinese Gov't helps its exporters undercut the overseas market by providing free financing and other facilities, as well as various subsidies.

It is extremely fair that India's domestic manufacturers, who have invested a huge amount of money in technology and manufacturing capacities, who are burdened with Excise etc. are put on a level playing field with imported equipment - and therefore, you have both Countervailing Duties and Anti-dumping Duties levied on Chinese equipment.

One advantage that the Chinese used to have was an undervalued currency. However, they have been forced to reduce the undervaluation, and at the same time, the INR has depreciated heavily. This makes imported equipment, already bearing CVD+ADD unattractive for Indian power producers.

There are no private players willing to invest in new thermal capacities. They have solvency problems, stuck or loss making projects, and nobody willing to pay them a premium on equity - only their fault. Only State and Central utilities have some appetite. The CEA has recommended buying domestically till October 2015, but Tamil Nadu violated this guideline recently for the Ennore 600MW project.

However, the biggest stumbling block for the Chinese is their equipment's efficiency. Now all Gov't Gencos including NTPC have started following an evaluated price mechanism, where lifecycle costs are considered, not the nominal bid price. This makes Chinese equipment uncompetitive after duties, taxes & Forex, and rewards domestic manufacturers for higher efficiency and cost reduction through value engg. + supply chain management efforts.

The real reasons UMPPs may fail are: 1. Lack of visibility of coal supply, even from captive mines, and 2. Inability of State Discoms to absorb higher power costs due to imported coal or domestic price hikes.

Paint a correct picture. Don't slap on propaganda.

REPLY

Ram

In Reply to Nishit Dave 3 years ago

Cost did not fall and is very much at 6cr/mw, please see the following BS report:

BHEL bags Rs 7,800 cr order in Tamil Nadu

Bharat Heavy Electricals Ltd (BHEL) has received Engineering, Procurement and Construction (EPC) orders worth Rs 7,800 crore from Tamil Nadu Generation and Distribution Corporation Ltd (TANGEDCO) for a 1320 mega watt (MW) plant near Chennai. The company said that the order is to set up a 2X660 MW coal-fired supercritical thermal power project at Ennore SEZ.

http://www.business-standard.com/content...

Will there be a new Emergency Medical Services Act in Maharashtra?

A PIL filed by Dr Sarita Parikh and Apoorva Agwan, from Crisys Foundation has widened the scope of emergency medical services with the Bombay High Court asking Maharashtra government to look into the NGOs research and methods for reducing deaths due to snake bites

 

The Bombay High Court, while hearing a public interest litigation (PIL), has asked Maharashtra government to consider whether the report prepared by Creative Responsible Integrated Systems Foundation (Crisys Foundation) can be accepted and inform the Court on other steps that can be taken to help snakebite victims.

 

While hearing the matter in detail, Justices VM Kanade and PD Kode pointed out, “We have heard the learned amicus curiae (JD Mistry). He has submitted a report on Snakebite Project Proposal. The said report contains details about snake problems in India; the main causes for deaths on account of snakebites and the reasons why prompt action is not taken. The report also considers global solutions, which have been found by various countries, including Bombay High Court. Australia is where the largest number of snakebites is reported every year and the report is about the snakebite management in Australia. It also takes into consideration whether it is possible to have a Public Private Partnership between Crisys and the Government of Maharashtra. We are quite impressed by the research which has been done by Crisys Foundation. It has given statistical data about snakebites in Maharashtra and the other States in India. It gives a definite proposal how this problem can be resolved. The report also mentions about equipment which can be manufactured and used to help prevent snakebites.”

 

The High Court has directed the police in Thane, Maharashtra to ensure that members of Crisys Foundation, which has been helping tribals in the district in case of snakebite, are not obstructed by anyone in carrying out their work. There was some resistance to the work carried out by the NGO from Anantashram Trust and some adivasis, including an ex-sarpanch and a social worker.

 

The Bombay HC gave the directive after hearing the PIL filed by Dr Sarita Parikh and Apoorva Agwan, both members of the NGO. The court said: "Senior police inspector of the station should see that no one obstructs the petitioners and their apprentices who deal with cases of snakebite in tribal areas."

 

In conclusion, the Judges observed, “The learned amicus curiae have invited our attention to an Act passed by the State of Gujarat, which is called “the Gujarat Emergency Medical Services Act, 2007”. He has also invited our attention to the various provisions in the said Act and the comprehensive mechanism which has been evolved by the Gujarat Government under the said Act to provide emergency medical services to its residents. The State of Maharashtra may look into the provisions of the said Act and may consider whether it will be advisable to promulgate an Act of this nature in this State.”

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