Showing posts with label Indonesia. Show all posts
Showing posts with label Indonesia. Show all posts

Monday, March 18, 2013

Is it too Little... and Too Late?

Reforms in Coal Sector, on which India’s Power Generation is heavily Dependent, have seen a faint light on The Distant horizon courtesy Reform Proposals in This Budget. B&E’s Anchal Gupta argues that The Steps may be too small considering The Delay and a lot more needs to be done, Quickly

“Not a penny off the pay, not a second on the day.” This blunt reply by the Miners’ Federation of Great Britain (MFGB), the national union of mine workers to coal mine owners was a spark that ignited the chain reaction culminating in the famous 1926 General Strike in the United Kingdom. Mine owners, under the veil of a soaring pound, hurting exports and low productivity of mines decided on wage cuts to normalise profits. Despite massive subsidies to the coal mine owners, the wage cuts were implemented. The strike began on May 3, 1926, and lasted for 10 days. In the aftermath, coal mining was forever transformed in UK with the extra labour being sucked out and productivity rocketing from below 100 tonne per miner per annum to over 300 tonne by the World War II.

Swivel back to the present and India’s coal mining output still hovers at less than 200 tonne for some of its mines while the average productivity is less than one tenth of mining giants in US and Australia. And despite a new glimmer of hope in the form of proposals to reform the sector in this years’ budget, the pertinent question remains: Is it too little... too late? But for all the hype surrounding renewable energy and efficient usage, India stands tall among the planet’s most inefficient energy users (read massive wasters). And till date, more than 53% of our electricity is generated in power plants fuelled by the black treasure hidden deep below our rocky terrains. Estimates suggest that by 2012, India will stare at more than 100 million metric tonnes (MMT) of coal shortage and around 250 MMT by 2025. Ironically, we have the world’s largest coal miner Coal India Ltd. (CIL), a Navratna PSU. The repercussions are perilous.

According to Girish Solanki, Energy Analyst, Religare, “The coal mined in India has not been enough to meet the demand. The shortage has resulted in loss of electricity generation in power plants. The power companies in India imported coal in FY2009 to keep the plants running. Coal India, for the first time in history, resorted to import of coal in FY2009. Further the calorific value of coal mined in India is at 4,000-5,000 kcal/kg substantially lower than the coal mined in countries like Indonesia which have calorific value in excess of 6,500 kcal/kg.” The impending entry of mining giant, Trimex, to strike long term coal supply contracts with Indian power producers is just the beginning of the dark tunnel. Courtesy archaic laws and divided authority over every link of the value chain, much of the coal remains buried and much of India remains dark.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

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Friday, November 02, 2012

If Japan can, so can we

INDONESIA, PHILIPPINES & VIETNAM WERE FAMED TO BE FOLLOWING THE JAPANESE GROWTH PATH... THEY TOOK THE COMPARISON TOO SERIOUSLY WE GUESS. BY VIRAT BAHRI

Looking for vulnerable economies post the devastating global crisis of 2008? You can safely look forward to pay dirt in Southeast Asia. Memories of the 1997 crisis, and how the group of 6 – Indonesia, Malaysia, Philippines, Thailand & South Korea – suffered in its wake – are still fresh in the minds of people. Before 1997, these were the new beacons of capitalism and free markets. Within two years, they became the most embarrassing symbols of what could go terribly wrong with the ‘American way’.

Structural weaknesses in these economies remain, particularly with their financial systems; and with what Nobel Prize winning economist Paul Krugman had referred to as the myth of the East Asian miracle. He made the argument prior to the East Asian crisis, when he said that their growth was growth in factor productivity (labour and capital) and not led by technical innovation. Thanks to the seasonal nature of rice farming, the people of these countries quickly adapted to assembly line manufacturing, but the services and distribution sectors remained weak. This was aptly illustrated in Indonesia, for instance, where there were some 850 banks before the 1997-98 crisis and 800 collapsed during the crisis! And as China became a fiercely competitive manufacturing giant, these economies saw themselves in trouble; also because they had developed little expertise in trading and financial services.

With respect to the current situation, three economies from Southeast Asia qualify as the red flag economies – Indonesia, Philippines and Vietnam. Prof. Edward Lincoln, Clinical Professor of Economics, NYU Stern, does point out that these economies “have come through the current recession with positive economic growth.” But the internal risks are still on a high pedestal.


Source : IIPM Editorial, 2012.

For More IIPM Info, Visit below mentioned IIPM articles.
 
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