Policy News & Views August 2009
by Indicus Analytics Private Limited on Sep 30, 2009
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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
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.
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.
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
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