2nd April

Handle with care

The article talks about the serious implications of a high current account deficit to the Indian economy compounded by capital account deficit. However, the situation is not as acute as 1991 crisis but caution needs to be taken by RBI to avoid the worst.

The balance of payment (BoP) numbers for the third quarter has raised serious concerns as current account deficit slides to $14.46 billion (5.43% of GDP), which is three times the same last year. Besides that the import bill of $8 billion showed by RBI is unusually higher then the same shown by commerce ministry. While it is possible that some importers might have rushed for dollar purchases over the risk of depreciating rupee, the outlook is not as robust as we might wish. For the first time in a decade, even the capital account has shown a deficit which means capital inflows in third quarter would not be able to fund the current account deficit. This is surprising as well as worrying since ideally current account deficit should remain in the comfortable range of 2-3% even as capital inflows are able to fund it. But the current figures are not good considering that much of our imports consist of oil imports which are price inelastic. Thus, considering the global outlook, any deterioration in current account deficit could have serious implications. 

However, the current crisis is nowhere near to 1991 crisis owing to our healthy forex reserves of $240 billion and also because of low oil prices. Also Indian economy is more resilient now. However, the exchange rate would definitely come under pressure once BoP numbers in subsequent quarters exhibit some trend. 

Not so bright a scenario

The article talks about the worsening power sector scenario in the country. It tries to provide suggestions to improve the power infrastructure in the country.

While the peaking shortages increase from 12.3% in January to 13.2% in February, according to Central Electricity Authority, it is time for politicians to avoid promises on reckless give-aways and free electricity. Open ended subsidies and huge revenue leakages coupled with increasingly huge investment backlog has contributed to the deteriorating supply side situation. In spite of economic slowdown, when the electricity demand is expected to ease, the constantly increasing power shortages indicate systemic rigidities. Despite of two decades of reforms and opening up, the state level power sector has hardly improved on their performance, particularly in the western and northern region. On panoply of rigidities, the Planning Commission called for efficiency ratings of Electricity Regulatory Commissions (ERC) in the states. However, it has failed to improve the performance as well as finances. What is needed is more disclosures and performance measures along with use of IT and expert system to track performance. Also the corporate structures in state power utilities need to rev up transparency and operational efficiency. 

A proper market where efficient power producers and suppliers can seek custom in real time would also revive the prospects in power sector. Otherwise the future seems really dark.

Identical twins

The article narrates the true story of Chandigarh twins wherein one of them secured, first, a job for himself and later on for his brother without being noticed by their employers. The article compares the case with Gulzar’s old movie Angoor which has a quite similar plot.

Prem and Ratan where identical twins with same features, voice, height and even birth-marks. Only the IQs were different. While Prem sat for UPSC exam in 1974 to secure a job for himself in the central excise department, he also sat for another exam conducted by Punjab government to secure a job for his brother in state’s weights and measures department. Rattan continued for 28 years without being unnoticed. However, the crime was detected in 2002 when Rattan applied for VRS. While a criminal case is filed against him, he has sought a stay order from the court on vigilance department’s recommendation for recovery of Rs. 8.11 lakh in job benefits but the plea was rejected on the grounds that since he was not the person appointed for the job. While this could be a good story for making a blockbuster movie, it reminds the author of 1982 Gulzar movie “Angoor” where in two identical brothers separated in childhood lands up in the same city 25 years later. The complication comes when one of the brother has to share the bed with his sibling’s wife but escapes committing the sin. 

Height of complication comes in another case in Karnataka that involved a single person secured two jobs in two different towns and continued it for two decades by taking leave in either of the offices to work in the other.