Wednesday, December 27, 2006

Power crisis in Andhra Pradesh

The one good thing about the rapid change, that seems to characterize the world we inhabit in, is that the chickens are coming home to roost much faster than expected.

The free power for all farmers was introduced with much fanfare in May 2004. The Spin doctors got into the act and praised this wonderful scheme that in their view had no cost associated.
From Business Line 21 May 2004 : Free power, waiving of arrears to boost power utilities' cash flow

"Now, the uncollected power bills would be paid by the Government. Besides, as the power is provided free of cost, there would not be any cases of power pilferage. This meant that the State Government would also be paying for the loss incurred by APTransco so far on account of unauthorised agricultural and one-bulb connections in cash. The corporation has also been relieved of the headache of collecting electricity charges and its operating staff can concentrate on other services," the officials stated.
Even a year back it was all hunky dory
From Hindu 23 March 2005 : No change in power rates for 7 categories
In case of the agriculture sector, the commission endorsed the Government's free power scheme and the internal arrangements thereto. Accordingly, farmers cultivating dry lands and those having less then 2.5 acres of wet lands and using up to three pump sets need not pay anything whether or not they implement demand-side management devices like capacitors. Corporate farmers and IT asses sees will have to pay Re. 1 per unit with such devices and Rs. 2 per unit without them.
The APTransco would have surplus availability and might be in a position to sell power to other States.

And here we are two and half years from when the free power was introduced and things don't seem to be going right ...

From Hindu 27 December 2006 : Power supply turns critical in AndhraPradesh
Irate farmers attacked electricity installations and offices across the State as the power supply situation turned critical for the second time during this season on Tuesday in the wake of a severe shortage of 10 million units a day.
From Hindu 27 December 2006 : Power cut schedule notified
Faced with a worst power crisis leading to protests from farming community all over the State, the Government has announced power cuts in urban areas from Wednesday onwards. The load relief schedule for Ranga Reddy district has been officially announced on Tuesday.
So what went wrong? Why are the farmers, for whose benefit this scheme was conceived, agitating ? Nothing really. Fifty years back you could have announced such a scheme, and then won a couple of elections based on the scheme's "success" before running into problems. Now the speed at which knowledge disseminates, the rate at which people adapt to new conditions has changed and you just run into problems earlier than expected.

One possible solution : Change the way the scheme is organized. Instead of giving free power ( and not monitoring its consumption), bill every farmer for his power. Offer him a subsidy equivalent to amount he would spend if he used an energy efficient motor for the number of hours that you wish to subsidise. Lets say your target is small & marginal farmer, running three 5 HP pump. You want to subsidize one crop a year. You could then say exempt, 3*5*.746*8*30*4 = 10800 KW( Assuming subsidy is only for three, 5 Horse Power pump, given .746 KW = 1 HP, run for 8 hours , 30 days a month , 4 months a year ) or charge this at the current rate 20 ps per KW. Any power consumed above this limit will need to be paid for at the market rates.

The advantages
1) You need not restrict the farmer on which crops he can grow. If he wishes to grow paddy for both Rabi & Kharif he can do so.
2) The subsidy is more targeted. The big farmer ( who runs multiple pumps) can at most claim subsidy for three pumps. For the rest he would have to pay market rates.
3) Since power is not free, there will be judicious use of it. You need not exhort farmers to install capacitors & other energy saving devices, They will do it themselves as it makes sense to them
4) If all farmers are billed, you can no longer hide the power pilferage under broad heading of supply to agriculture & T&D losses.

Will this scheme or any thing that tides over the current distress get implemented? No. The biggest gainers of the free power are our big farmers, people who have so much land that they do not know how much they have, like our CM and every other politician that you can think of.

Friday, December 22, 2006

Should we expect more from politicians in India ?

From North Country Gazette
Embattled Comptroller Hevesi Resignation Likely Friday

Sources have indicated that the Queens Democrat will resign his position Friday in order to avoid being indicted by an Albany County Grand Jury for using state employees to chauffeur his ailing wife for three years.

If this is standard that we held our politicians to, in India too, I wonder how many would still be holding office ? Some times I feel we set too low a standard for our politicians and even the best ones try and meet it or just exceeed it a little.

Thursday, December 21, 2006

Is Moser Baer on a winning track ?

From Economic Times Moser Baer is planning to come out with Hindi movie DVDs at Rs 38, VCD at 24. If they can get this pricing going, It will be run away winner.

Does this pricing sound feasible ?
They are promising FMCG margins to retailers so lets say 20% or Rs 8 per DVD
Royalty , lets say is 10 Rs per DVD
That leaves Rs 20 for manufacturing, packaging, distribution, inventory carrying costs & profits
Blank DVDs retails for about Rs 10, So it appears that if they have got the manufacturing costs right and can get their demand forecast right, they may be able to pull it off.

Even if they don't, I like the bold move made by the company which has been through some tough times in the last couple of years

Dislosure : I do not own any Moser Baer stock.

Dark Days ahead for the Tamil Movie fan

From The Hindu : The Tamil Nadu Government has capped the ticket prices in theatres in the state. Rs 50 is the maximum that a theatre with AC can charge, Rs 10 is the minimum.

When will the people ( and therefore the Government) learn that the best way to counter rapacious pricing is not trying to fix the prices but increasing competition.

Here is my view of how the future for Tamil Theaters & Tamil Movie industry is going to play out.

These wonderful price controls ( assuming they stand legal challenges that will follow ) will lead to one or more of the following response

1) Supply will dry up. New theatres will not come up, old theaters will become marriage halls etc. If you have an option between investing in a movie theater where prices are controlled and say a mall/restaurant/shop where prices are not controlled, where would you put your money ? Does not take a genius to figure that

2) Quality of supply will fall. Would you as a theater owner not try cutting your AC cost by setting optimum temperature at 28 C? Since no new competitors will be entering the market, you can get away with this. Why should you repair half broken chairs ? or rid them of bugs ? Since demand will be greater than supply, you are always sure of selling your seat ( buggy/broken or not ) or why should you invest in the latest sound systems ?

3) Bundling will increase : You can no longer buy just a movie ticket. You have to buy a movie ticket + chips/pop corn + soft drink all for Rs 150 ( or what ever price) , all sold as a package. So you would need a new legislation to force unbundling. Also be prepared to pay more for parking

4) Black Market will increase : The theater owners will have a greater incentive to sell tickets in the black. So don't be surprised if soon the only way to buy tickets will be in the black.

5) Shorter movies would be screened : Theatres would prefer to screen shorter movies ( Mostly English ) as they can then run extra shows per day. So you would need to legislate to fix a minimum quota for Tamil movies.

6) Fewer Movies : Fewer theaters ( Assuming scenario 1 happens ), would mean fewer movies can be released. This directly benefits big budget movies as they will have the clout to get the theaters for their movies. Small budget movies will find it difficult to release. So movie making will get increasing concentrated in fewer hands, You will only have super stars & extras. You will find fewer people risking money on new directors/actors as the cost of failure is very high.

So in the end if you are a fan of the Tamil movie .. it is dark days ahead. So hold off the rejoicing and put on your thinking caps.

Addendum : On second thoughts, if I were a theater owner, I would convert my theater to free seating ( i.e first come , first served for seating) and charge a premium for reserved seating. and yeah you would now need to legislate to cap the cost on this service :) . Cap that, and I have the next service ready, you can only book tickets online, for which I will charge a premium and so on. This should buy me the few years needed to recover my investment and then bye bye to owning theaters and back to sand quarrying :)

Wednesday, December 13, 2006

Cap on College Fees

A couple of days back I had commented that the Indian education system was in such a bad state, that a very large percentage of those that emerge from it can't reason. They can remember, but can't apply. Refer to the India Today Report . Here is another example of that.

The Hindu reports that the AP Government is planning to restrict the fees charged by Corporate Colleges & I see the congratulatory messages on this brilliant move pouring into news papers like Deccan Chronicle.

Can't these people see that if you successfully cap prices ( the previous attempt was unsuccessful as these colleges found a loophole), either supply will disappear, or will be of inferior quality? These corporate colleges are in the business of education. Recognize that ! You squeeze their profits, they just move to a different business and you will be stuck with finding "good" colleges for yourself / your kid(s). Of course if you are an offspring of the ones making these laws or the ones holding the pen to sign them, you can get a seat in the few colleges that would remain by using your pop's/mom's influence. For the rest of the folks, get ready to face enormous pressure to secure good marks in your 10th standard exam.

And anyone who thinks that with the kind of fees mentioned below they still will have a college to go to is living in a dream world..

Prescribed fee

He said that tuition fee of Rs. 451 and Rs. 495 had been prescribed for the first and second year for 2006-07 in private aided junior colleges and Rs. 903 and Rs. 993 for the first and second year in private unaided/cooperative junior colleges.

Here is a back of pad calculation
Lets say you need a student teacher ratio of 30 to have some semblance of an education. So even if all the money paid by the students goes towards teacher's salary, the teacher's salary would be a princely sum of 993*30= 29,790 a year or a monthly salary of Rs 2,482. And you expect some one to teach you 11th & 12th standard subjects for a salary less than what an average house maid in the city makes ?

And people still find this move something to congratulate the government about ?

Monday, December 11, 2006

A tale of two approaches to governing

Here is a news article about CET being abolished. From the looks of it the Tamil Nadu Government is planning to do that this year.

Here is another news article about 12th Standard marks being given weight age for determining your Engineering/Medical entrance ranks. This is planned for 2009.

Irrespective of whether either of the above decisions are right or wrong, what I like is the way in which the AP government is going about implementing this system. It has given enough notice to the student community, of over three years atleast for them to be prepared . All those who are still studying in 10th, can go about choosing their college taking this extra requirement into view.

Whereas if you are a student in Tamil Nadu, you still don't know if you need to study for the entrance test or concentrate only on your 12th Standard even for the current year.

Wish more Governments set a clearly drawn timetable when they propose big changes, not just in education, but in other areas too

Land acquisitions, the way out

In response to Confused's post Gaurav made a point that restoring Fundamental right to Property will solve the issue. I had also made the same point here. Is the current dispensation at the Centre in a position to push for Fundamental Right to property ? I doubt it. So what is the way out?
Get the Government out from the process of buying land and handing it out to the industry. Lets say Tata Motors wants 1000 Acres to set up a factory. Government should restrict itself to approving the project and stating that as long the land is not an ecologically fragile zone it will covert the land for factory use. It is up to Tata Motors to identify a land suitable to them, negotiate with the owners the terms etc.
This process leads to the following
1) Land owners get market prices i.e No artificial pricing which states that a multi crop per year land is just twice as valuable as a single crop land etc.
2) Tata Motors(or any Industry) gets land that it is looking for. It also means that since it is paying market rates, It will rework its land requirements to suit its budget and make appropriate trade offs ( i.e will a four floor plant office be cheaper than a single floor plant office, if it can result in acquiring 2 acres less etc )
3) Government does not use its powers unjustly to coerce citizens. It gets the credit for the development without getting the flak for power misuse.

Sunday, December 10, 2006

Singur Row & Fundamental right to property

The Singur row is interesting not just because of the strange set of bedfellows it is producing ( Tatas, Sitaram Yechury & Co on one side ranged against Medha Patkar, Rajnath Singh & the BJP, Arundathi Roy, Mamta Didi et al ) but because of where this whole ability of government to usurp property comes from.

It started with the First amendment to the Constitution in 1951 which inserted article 31A. This article allowed government to take over any estate/property by passing laws. The underlying idea for this was to introduce the Land Ceiling acts. Better still was the article 31B, which created the ninth schedule and stated that acts placed in that Schedule(i.e the Land Ceiling acts) would not be open for judicial review.

All would have been hunky dory, only the courts intervened on the ground of inadequacy of compensation. So various amendments were tried till in 44th Amendment, the right to property was altogether dropped. Instead you got Article 300A which stated that persons are not to be deprived of property save by authority of law. This article does not mention that such deprivation can only occur for public purpose or that compensation should be paid.

So what started as attempt to take away from the rich and give to poor has come a full circle. What is the way out of the mess ? Bring back fundamental right to property. Let people decide if they would rather sell their land or continue using it as they deem fit.

Thursday, December 07, 2006

Schools in Hyderabad

Note : The data in this post is for academic year beginning June 2007. Dates, Fees, etc may have changed for the academic year beginning June 2008

Note 2 : A publicly editable spread sheet is now available. Click here to view/edit that spread sheet. Click here to view the original spreadsheet.

This is a compilation of information about some schools in Hyderabad and Secunderabad. Hope some one out there finds this useful as a starting point for the dreaded "searching for a good school for my child/children". This was the information I had gleaned while searching for what school to put my niece/nephew into in Hyderabad , when they return from the US next year. I have considered 15 schools which might fall into the wish list of a SEC A parent in the city .

Here are some "findings" :

* The sought after schools charge upwards of Rs 25000 p.a
* The upcoming schools are located in places like Kompally , Cyberabad, Kondapur etc - These are the places where the real estate market is booming as well.
* The application forms are issued for barely a week . And sometimes filled in forms are to be submitted within 2 working days.So it's best to check out the newspapers everyday for their adverts
* They do have entrance test for 1'st std in Maths and English . This is followed by an interview with parents and the child. HPS insists on a parent interview.
* Bharatiya Vidya Bhavan and HPS do not admit students into pre primary. They take students only at 1'st std level.
* Among the surveyed schools , DPS and Oakridge International . seem to tout their teacher calibre the most .
* The new age concept schools like Gowtham Model , Narayana Concept etc , do not have a play ground even for nursery. However they do take students( primary upwards) to the Corporation Park twice a week for PT Classes.

Here is the complete spread sheet

Schools covered
Hyderabad Public School
Bharatiya Vidya Bhavan
Bhavan's Vidyashram
Chinmaya Vidyalaya
Gowtham Model School
Narayana Concept School
Delhi Public School
DRS International
Chirec Public School
St Anns High School
Slate-The School
Little Flower High School
Oakridge International School

Columns in the spread sheet
School Name
Phone No
Streams offered ( CBSE,ICSE, SSC)
Admission process
a.Application Form
Prospectus Cost
Registration Fees
Entry Level
Age eligibility
a. Tuition Fees
b.One time Fees/deposit
Facilities offered
a.Play Area
c.AC Classroom
e.Swimming Pool
Other information
Student Profile
Web References