Policy News And Views January 2009


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A newsletter from Indicus Analytics on economic policy

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Policy News And Views January 2009

  1. 1. Indicus Analytics, An Economics Research Firm www.indicus.net Volume 1, Issue 2, January 2009 TELECOM TRAI Moots Steps to Push Rural Telephony Pointing out the widening gap between rural and urban teledensity, TRAI has called for several measures to improve rural telephony. It has proposed that all operators offering communication services in Rural India and sharing their infrastructure with other players be given financial support from the Telecom Development Fund. At present, all telcos pay 5% of their annual revenues towards this fund—Universal Service Obligation Fund (USOF) Our view is that in order to increase rural teledensity the universal service policy should be minimalist. The current universal service levy of 5 percent is distortionary especially as large amount of the money collected is unspent. The flaw in the design and execution of the Universal service policy has made it ineffectual. Read More ... Mobile VAS Companies May Stay Unlicensed TRAI has proposed that Companies providing value-added services (VAS) such as music and videos on the mobile phones will not be brought under a licensing regime. In addition to this the regulator has also decided not to interfere in the commercial agreements between VAS operators and telcos. TRAI is also likely to put guidelines to enable content producer and creators to protect their copyrights. The regulator is also looking at the possibility of issuing norms that will allow VAS companies to sell their products and services directly to the consumers without having to go through the operators Our view is that this is a welcome step since the current regulatory environment is not very conducive for the content providers. By allowing VAS companies to sell their products and services directly to the consumers without having to go through the operators will address the current unequal bargaining position between the operators and the content providers. Read More ...
  2. 2. Indicus Analytics, An Economics Research Firm www.indicus.net CLIMATE CHANGE Global Attention on Carbon Emissions Reduction The 14th Conference of parties (Cop) to the United Nations Framework Convention on Climate Change (UNFCC) was held in Poznan during December 1 – 12 2008. While India does not have a legal or binding obligation to reduce carbon emission, United States, the biggest carbon emitter continue to state that emerging economies like China, India, Brazil and South African must also take action on reducing carbon emission. India has been pushing for equitable sharing of carbon space. Our view is that the only discernable framework or logic for India’s stance vis-a-vis the rest of the world is the normative standard that national emissions entitlements should be determined by the principle of “per capita emission entitlements” (PPCEE). However, the nation might be better served by a somewhat more critical examination of India’s naïve stance. PPCEE is problematic because its normative and positive moorings are unclear or do not exist. Read More ... ENERGY Government to Consider Opening of Nuclear Sector to Private Players With India’s civil nuclear cooperation with different countries gathering pace, the Government is considering opening up the sector for private players. After a decision in September by the Nuclear Suppliers Group to waive its ban on the trading of atomic technology with India, India has signed agreements with US, France and Russia. Our view is that the opportunity and risk costs associated with the business of nuclear electricity generation are very high making it unattractive to the investors. Investors are also wary of nuclear plants because of the construction delays and cost over-runs that have historically plagued the industry. Till the Government gives iron clad guarantees to the investors, private capital will shy away from this sector. Read More ... Edited by: Payal Malik 29th December 2008
  3. 3. Indicus Analytics, An Economics Research Firm www.indicus.net MORE NEWS NHAI pulled up for delays in PPP Cabinet approves Integrated Energy highway projects Policy According to a recent report by The Union Cabinet has approved an Comptroller and Auditor General of Integrated Energy Policy for the country. India on roads, majority of the 17 road A monitoring committee, to be chaired works awarded under the public private by the Cabinet Secretary, will be set up partnership (PPP) as part of Phase-I of to review the progress of the policy’s National Highways Development implementation Programme (NHDP) were delayed. NHDP's road stretches likely to be Regulators may be barred from core built on annuity model PPP projects The government may switch over from Government agencies that also act as build-operate-transfer (BoT) model to regulators may soon stop partnering annuity model for the stretches of the with private companies for new ports, National Highways Development power and railways projects. The move Programme (NHDP) that have not will prevent a clash of interest between received a good investor response. the government and the private sector in These are mostly in Bihar, Orissa, public-private partnership (PPP) projects Jharkhand, Chhattisgarh and Kerala. It is hoped this would make these segments of the projects more attractive to potential bidders Providing Affordable Broadband to Coal Pilferages on the Rise as Rural Areas Next Priority Shortages Haunt Power Units At a conference on '3G: The Next Wave' At a time when a coal crisis is walloping Telecom Secretary, Siddhartha Behura the country’s power sector, with over 50 said that providing affordable of the 77 thermal stations in the country broadband, especially to the suburban facing “critical” fuel stocks, coal is and rural communities is the next focus increasingly being siphoned out of area in telecom. Provision of broadband mines. Coal India Ltd (CIL) estimates in rural and remote areas will also help that during the first five months of the in bridging the so called 'digital divide', current fiscal, over 11,500 tonnes of he said pilfered coal have been recovered by it in raids conducted across the country. Government readies blueprint for No competitive bidding for coal world's first energy savings market blocks: ministry India will have the world’s first market The coal ministry has ruled out allocation for trading in energy savings. Under the of coal blocks to power, steel and National Action Plan on Climate Change, cement industries by way of competitive the power ministry has prepared the bidding in the near future and blamed blueprint for trading in energy by the mines ministry for delaying the bill industrial plants that save energy which would amend the Act under which beyond the target set for them. mining blocks are allotted Nelp-VIII likely to offer 100 blocks Government pushes through IT Bill;
  4. 4. Indicus Analytics, An Economics Research Firm www.indicus.net Contact Info indic@indicus.net Indicus Analytics,2nd floor, Nehru House, 4 Bahadur Shah Zafar Marg, New Delhi -110002 Phone No: 011-42512400