Last year, India had the highest increase in production of natural gas worldwide as well as the highest corresponding increase in consumption in natural gas worldwide, BP Plc Group chief economist Christof Ruhl noted
India recorded the highest rise in natural gas output worldwide in 2009 after Reliance Industries' (RIL) eastern offshore KG-D6 field came into production, reports PTI.
Billionaire Mukesh Ambani-run RIL began gas production from the Krishna-Godavari (KG) basin in April, 2009, and its 60 million standard cubic metres per day (mmscmd) output led to a 75% jump in natural gas availability in the country to 140 mmscmd.
"Last year, India had the highest increase in production of natural gas worldwide. And I just checked, it also had the highest corresponding increase in consumption in natural gas worldwide," BP Plc Group chief economist Christof Ruhl said.
The jump in natural gas production in India was possible because the government allowed private sector firms to take a lead in exploration for hydrocarbons.
"When you look at countries where gas production is heavily government-controlled, like Russia, they had the biggest decline in gas production and consumption," he said.
"When you look at countries where new technologies have been developed like unconventional shale gas in the US... it was because they have an investment environment which is very competitive," he said.
Shale gas, trapped in sedimentary rocks, is said to hold the potential of doubling gas output in US.
Mr Ruhl said that it was very clear who was left behind, as countries where natural resources were tightly controlled were less flexible.
He said the recent Supreme Court ruling in the Ambani gas dispute will help investment in the sector.
For investors, "rule of law" and "sanctity of contracts" they sign is important, he said.
The court in May upheld the provisions of the Production Sharing Contract (PSC) an explorer enters into with the government for oil and gas prospecting. It said the PSC gives the government the right to approve a gas price and fix its users, rejecting Anil Ambani Group firm Reliance Natural Resources Ltd's (RNRL) claim for gas from RIL at subsidised rates.
"That (judgment) has certainly improved stability and the sanctity of contract," he said. "That was a step into the right direction.
"India is facing its worst inflation problem in a decade, and since the central bank can do little in the short run, the government must play a greater role in addressing it, Moody's Analytics said
The government needs to play greater role in taming inflation by reigning in spending, as the Reserve Bank of India's (RBI) tightening of its policy rates will have little impact on checking price rise, global research firm Moody's said today, reports PTI.
"India is facing its worst inflation problem in a decade, and since the central bank can do little in the short run, the government must play a greater role in addressing it, Moody's Analytics said.
"The problem cannot be tamed by simply raising interest rates to slow monetary growth," it added.
Moody's said growth of bank credit and money supply were sluggish in May at 18.8% and 15.1%, year-on-year, but surging prices of food and imports saw consumer inflation reach 13.9% during the month.
It said although the government has taken steps to divest stake in public sector undertakings (PSUs) and cut oil subsidies, it needs to reign in spending and borrowing because the combined central and state deficit is close to 10% of the gross domestic product (GDP), total economic output.
The research firm added that fiscal austerity would slow prices and boost the economy's longer-term prospects.
"With economic growth on a solid footing, inflation spiking, and liquidity in the banking system short, there is little excuse for not taking aggressive action to quickly reduce the budget deficit," Moody's said.
It said that with key state elections coming up there was a major question over whether the government would have the political will to step up austerity measures.
Moody's added, however, that with business confidence revived and firms looking to expand, it should set aside concerns about upsetting coalition members and tighten its fiscal affairs.
These stocks are going up on the hope that high 3G auction prices will prevent players from continuing their cutthroat tariff wars and that the recent regulatory recommendations will be toned down
Telecom stocks have been rising for the past few sessions and today they simply flared up. At the time of writing this, Bharti was trading at Rs303, up 8%, Idea was up 11% at Rs65 and RCom was up 2% at Rs192. What is driving all this buying?
What is driving telecom stocks is the hope that high 3G auction prices will prevent incumbents from engaging in further highly competitive tariff wars and that the recent recommendations of the Telecom Regulatory Authority of India (TRAI) will be toned down.
In fact, using this logic, a host of brokerages have been pushing telecom stocks aggressively to institutional investors over the past few days. Credit Suisse (CS) came out with a report today in which it upgraded its EPS estimate for Idea for FY11 by 100%! The report goes out on a limb to assume a stable competitive environment, which will lead to steady revenue per minute. It says, “Incumbents have positively surprised us on mobile metrics over the past two quarters, and we have come across instances of tariff increase." CS has a price target of Rs360 for Bharti and Rs75 for Idea. Religare too came out with a report today in which it assumes that a number of Idea\'s loss-making circles will turn profitable in FY11.
But an even bigger assumption in the market is that since the recent TRAI recommendations are now with the Cabinet, they will be overturned or at least watered down. TRAI has recommended that 2G auctions should be along the lines of the recent 3G auctions and that a one-time fee should be paid for spectrum between 6.2MHz to 8MHz. This means existing telecom players such as Bharti and Vodafone will have to shell out large sums.
In Bharti\'s case, market players are also hoping that Bharti will unlock value in its tower business Indus in which it holds 42% stake (like Reliance Communications recently did) and bring down its debt (which it has incurred for its Zain buy). Besides, it had got a boost from the Life Insurance Corporation of India recently upping its stake in the company to 5%. Yesterday when Bharti closed at Rs281, traders were anticipating that the stock would face its first resistance at Rs300, which it has cleared in a day. The next level to watch out for is Rs330. Two important red flags, especially if you are a short-term trader. One, a casual observation of Bharti\'s chart shows that these kind of sharp up-moves have usually been followed by sharp pullbacks. Two, serious buyers, such as financial institutions do not generally engage in undisciplined trades, i.e., they will not bid up a stock by 10% in a day. Therefore it is safe to assume that the \'serious\' buying has already quietly happened over a few sessions, earlier in the week and today\'s gain is more speculative in nature.