Why Punjab should not provide free power; state can reward farmers via cash
Who will form the next government in Punjab next month is currently sealed in the ballot boxes. In the mean time there are reports that the Election Commission has written to the home minister reinforcing its demand to make electoral bribery a cognisable offence. But what about the assurances made in election manifestos which promise moon before election? Can that not be checked by the Election Commission? The reference is to Punjab elections where all major political parties have promised to waive-off farmer loans. That means any incoming party will be under tremendous pressure to fulfil its promise of loan waiver. And if it is done in Punjab, very soon it will spread like an infectious disease in other states, taking the same shape as was during the 2008-09 mega loan waiver of UPA government, which finally cost the exchequer R52,517 crore. But, if a loan waiver was the solution to the problems of peasantry, there should not have been any farm distress after 2008-09. Problems of peasantry still persist simply because answers lie somewhere else. Take the case of Punjab. Punjab has been a front runner in agriculture since green revolution days. Its agri-GDP registered an average annual growth of about 10% during the first four years of green revolution (1966-67 to 1969-70). But during the period of current government, agri-GDP growth dropped to 1.5% per annum (2007-08-2014-15, latest available data), which is even lower than the national average of 3.2%, and way below the best performer Madhya Pradesh whose agri-growth stood at 10.9% per annum during the same period (see accompanying chart). Notwithstanding the fact that Punjab’s per hectare productivity is pretty high, the moot question is where did Punjab go wrong, and what sort of policies can get it back on high growth trajectory on sustainable basis? First, Punjab seems to have become a victim of its own success. Grain, primarily wheat and rice, occupies 80% of its gross cropped area (GCA), with almost highest productivity in India. This was great when India was suffering from food shortages. However, the situation today is completely different. After 2007-08, India emerged as a net exporter of cereals. Cereal stocks crossed 80 million tonnes (mt) on July 1, 2012, more than double the buffer stock norms. As a result of this ‘abundance’, the increases given in minimum support prices (MSP) of wheat and paddy were very meagre. This has brought down the profitability in these crops, and thus the income of Punjabi farmers. Just to give a flavour of the MSPs in India vis-a-vis some neighbouring countries, the MSP of wheat in China was $385/MT in 2014-15, in Pakistan $325/MT vis-à-vis India’s $225/MT. Similarly, for Indica rice China gave a support price of $440/MT as against $320/MT for India’s common rice. Punjab peasantry suffered due to ban on exports of wheat and rice (during 2007-11), stocking limits on private trade, besides heavy taxes and commissions imposed on purchase of wheat and rice from state, which go as high as 14.5%. In a country where 1% tax on purchase of jewellery creates uproar, it is ridiculous to have 14.5% tax on basic staples like wheat and rice. The net result of this misguided policy is that food processing industry, which can add value, feels extremely reluctant to enter Punjab and most of the roller-flour mills in Punjab buy their wheat from Uttar Pradesh! Second, although Punjab was the first to build a good marketing infrastructure for wheat and rice, it failed to create similar facilities for perishables like fruits and vegetables. As a result, prices of perishables remain volatile increasing the risk of farmers, who feel reluctant to shift to high value agriculture. Only 3.4% of Punjab’s GCA is under F&V compared to 8.3% at all India level. The state has to realise that there is a limit to augment farmers’ incomes through cereals unless lot of value addition is done, and the state has to shift towards high value horticulture and dairy to benefit farmers. Punjab has one of the highest milk productivity in the country, but share of milk production being processed by the organised sector is just 10%, compared to 20% at all India level and 53% in Gujarat. This clearly speaks of the need to ramp up milk processing facilities in the state. Third, the most critical problem of Punjab agriculture is its depleting water table primarily due to paddy cultivation during summer. The nexus of ground water irrigation-free power-assured procurement- are sending wrong signals to farmers. The water table declined by 70 centimeter per year from 2008 to 2012. Currently, 80% of blocks in Punjab are declared dark blocks where water is over exploited (see accompanying map). It looks as if the current generation is taking away the water rights of future generations. With one kg of rice consuming 3,000-5,000 liters of irrigation water, exporting common rice is not a very wise proposition for Punjab’s agriculture. This has to be rationalised and government should incentivise technologies like direct seeding of rice and drip irrigation in rice. Pilots in these areas show savings of 30-50% irrigation water. HomeMarket CommoditiesWhy Punjab should not provide free power; state can reward farmers via cash Why Punjab should not provide free power; state can reward farmers via cash There are reports that the Election Commission has written to the home minister reinforcing its demand to make electoral bribery a cognisable offence. By: The Financial Express | Published: February 27, 2017 3:41 AM 12 SHARES FacebookTwitterGoogle+LinkedInEmail Punjab Politics, PUnjab Elections, Election Commission, EC, farmer loans, BJP, UPA Government, AAP, green revolution, Punjab agriculture, incentivise technologies There are reports that the Election Commission has written to the home minister reinforcing its demand to make electoral bribery a cognisable offence. Who will form the next government in Punjab next month is currently sealed in the ballot boxes. In the mean time there are reports that the Election Commission has written to the home minister reinforcing its demand to make electoral bribery a cognisable
ONGC set to create energy giant with control of HPCL
Oil and Natural Gas Corporation(ONGC) will take control of Hindustan Petroleum Corp (HPCL) as part of the government’s plan to create an integrated public sector oil entity comparable with big global oil companies like Shell BP and Exxon, top government officials said. “It is a very big decision. A Cabinet note will soon be moved. The government of India will transfer its majority shareholding (of 51.11% in HPCL) to ONGC, which will then become the holding company of HPCL,” said one of the officials cited above. The move will stop short of a complete merger, which may take longer, but the purpose will be served with this step, said the people cited above. ET was the first to report on February 21 that the government plans to integrate either HPCL or Bharat Petroleum Corp. Ltd (BPCL) with ONGC in line with the February 1 budget announcement to “create an integrated public sector oil major which will be able to match the performance of international and domestic private sector oil and gas companies.” ET had also reported that the status of all other oil companies such as Oil India Ltd (OIL) and Indian Oil Corp. (IOC) would remain unchanged. ONGC’s exploration functions will be integrated with HPCL’s refining and distribution capabilities. HPCL, which owns and operates two major refineries in Mumbai and Visakhapatnam, has India’s largest lubricants unit and second largest pipeline network of 3,015 km apart from a vast marketing system. The thinking behind such vertical integration is that it will reduce risk-high crude oil prices will boost the exploration business and when they drop, the distribution segment will benefit. “The world over, the largest and most successful oil companies like Shell, BP and Exxon, are vertically integrated,” said an official, stressing that ONGC-HPCL’s earnings will become more stable and investors will benefit from this reduced volatility. Royce Freeman Womens Jersey
80% of Rakhine gas goes to China
A report called “Myanmar’s natural resources ownership, management, income sharing and impact” carried out by the Ethnic Nationalities Affairs Centre says the Shwe natural gas project off the Rakhine coast has a daily natural gas production capacity of 500 million cubic feet and 80 per cent of it will be exported to China for 30 years. Only about 100 million cubic feet would be sent to Kyaukphyu in impoverished Rakhine State, the report said. It also said Myanmar received just US$13.8 million a year from land rental for the gas pipeline that stretched nearly 800km from Rakhine State to China. An oil pipeline runs parallel from an island near the port of Kyaukphyu. The oil pipeline sent about 22 million tonnes a year to China from Rakhine State, which remains one of the poorest areas of Myanmar with a large proportion of its citizens living in wretched conditions. The gas pipeline was built jointly by six companies from China, Myanmar, South Korea and India. The gas pipeline is estimated to have cost about US$5 billion. Residents and non-governmental organisations have condemned the Shwe project for offering no benefits to Rakhine State. The state remains distracted and divided by ethnic disputes, which were sparked in 2012, coinciding with the exploitation of the state’s energy resources. Barry Church Womens Jersey
Giant Leap in Iran’s Gas Condensate Exports
The National Iranian Oil Company exported 24 million barrels of gas condensates in January to Asian and European buyers — the outbound volume being over and above the average figures seen during the past several months. Since the easing of international economic sanctions in January last year, Iran’s gas condensates exports have risen nearly four times, reaching a daily average of 550,000 barrels from just around 150,000 barrels per day in 2012 when trade and financial restrictions were in place, Shana reported. According to Ali Kardor, NIOC managing director, gas condensates output was around 300,000 bpd in 2013, but production capacity has since shot up by 50%, exceeding 600,000 barrels per day. Combined exports of crude oil and condensates have also climbed to 2.8 million bpd, said the official. Condensates are in the twilight zone between crude oil and natural gas. They possess characteristics of both oil and gas, and have values and market drivers both similar to, and distinctly separate from, oil and gas. Underscoring that the main buyers of Iranian gas condensates in Asia are its traditional oil customers, namely China, India, South Korea, Turkey, Taiwan and Japan, he noted, “BP received its first gas condensates cargo from NIOC last year under single-shipment contracts and negotiations are underway for NIOC to sign long-term contracts with Shell.” In related news, Iran had stored up 10 million barrels of condensates in China as part of efforts to expand its presence in the world’s second-largest energy market, but the entire inventory has been sold, the Oil Ministry said earlier in the week. Tehran turned to leasing oil storage tanks in China during the sanctions, making the country an export base for its petroleum products in the Far East as financial and trade restrictions had significantly curtailed Iranian oil trade and shipment. “With each barrel at $40, export of 50 million barrels of condensates generates $2 billion in revenues, Kardor was quoted as saying by Shana on Saturday. Condensate output is slated to reach 1 million barrels a day upon the launch of all phases of South Pars, the giant gas field shared by Iran and Qatar, the NIOC chief added. But Tehran has said it wants to reduce the outbound shipments of condensates and instead use the fossil fuel for manufacturing goods with higher value added. Condensate exports are set to decrease sharply upon the launch of several oil processing plants, including the Siraf and the Persian Gulf Star Refinery, the latter said to be the largest refinery project in the Middle East. Export of petroleum products has also risen to record levels in the first 10 months of the current fiscal year as 450,000 barrels of oil derivatives such as naphtha, diesel, bitumen and sulfur, were exported in large volumes to Southeast Asian clients from Mahshahr, Asalouyeh, Lavan and Bandar Abbas ports in southern Iran. Drew Stafford Authentic Jersey
Odisha govt withdraws tax sops to IOC’s Pradip refinery
In a big jolt to Indian Oil, the Odisha government has withdrawn tax incentives given to the Rs 345.55-billion Paradip refinery, making the company reconsider its plans to invest another Rs 520 billion in the state. Less than two months after serving the first show-cause notice, the Odisha government on February 22 wrote to its single-biggest investor saying it is withdrawing the promised 11-year deferment on payment of sales tax on Paradip refinery products sold in the state, sources said. The withdrawal will cost Rs 20 billion to Indian Oil Corporation (IOC) this year and will progressively increase every year as more petrol and diesel as also petrochemicals are sold within the state. The sources said that besides leading to levy of sales tax on 2 million tonnes of petrol and diesel sold in the state annually, the withdrawal is threatening viability of investments in downstream petrochemical plants as products from it will be consumed by an array of synthetic fibre and plastic industries and now tax will also be levied on them. When asked, IOC Director (Refineries) Sanjiv Singh said he would not like to discuss merits of the state government’s decision in the media. “IOC had invested about Rs 500 billion in Paradip refinery on the Odisha coast and in associated projects (like pipelines and port). We had plans for more investment, especially in downstream petrochemical projects and refinery expansion, considering the incentives given by the state. But in the present scenario, future investment options will require to be reassessed,” he said. IOC plans to expand the 15-mt-a-year Paradip refinery by 5 million tonnes as well as set up a polypropylene plant and a monoethylene glycol production facility at the site of the 1-year old refinery. He hoped Odisha will reconsider the decision and restore the incentives that were mutually agreed upon in 2004. Odisha had originally offered the tax incentives to IOC and its then partner Kuwait Petroleum Corp (KPC) in December 1998 to invest in setting up a refinery in the state. These investments were withdrawn in February 2000, leading to the company shelving the project. It restored the incentives and signed an MoU with IOC on February 16, 2004, for providing a set of eight sops. The sources said the state government withdrew the tax incentives in “public interest”, citing 6-year delay in commissioning of the project that was larger in capacity than originally planned 9-mt plant. IOC, however, is quick to point out that the February 16, 2004, MoU clearly allowed change in design, capacity and configuration of the project. Sources said the Odisha government was informed about the change in capacity and the delay in construction caused by cyclone, land acquisition and law and order problems. Also, the state government had allowed the company to avail of construction period incentive, listed in the MoU, totalling Rs 5.50 billion. Singh said restoration of the tax incentives will send a positive signal to prospective investors in the state. “Paradip refinery has already added to the overall development of the area in and around Paradip,” he added. Justin Simmons Womens Jersey