Wednesday, April 24, 2013
Tuesday, April 16, 2013
Can Gold Prices Go Lower? Absolutely Says Experts - Biggest two-day decline since 1983
Can Gold Prices Go Lower? Absolutely Says George Gero, RBC - Kitco.com
Apr 15, 2013 Gold plunged $144 an ounce today to its biggest two-day decline since 1983 as investors sold the precious metal amid declines in commodities of all types. Losses today widened to 9.6 percent as gold fell to $1,357 per ounce at 4:23 p.m. ET on the spot market. With Friday’s drop of 5.3 percent, the total two-day decline hit 14.9 percent. Stocks fell 1.8 percent as the Dow Jones average slid to 14,599. As ABC Radio’s Richard Davies reported this morning, the reasons for the plunge are linked to the rise in the stock market, the slow, steady improvement of the US economy and the recent strength of the dollar. Crude oil futures tumbled on global markets, down to less than $89 for West Texas crude, the lowest price since December, 2012. Silver was down and so was copper. Last week Goldman Sachs issued a report predicting gold prices would tumble. Another factor is China’s economy, which grew 7.7 percent in the first quarter, less than analysts expected and coming off a 2012 that showed the softest growth in 13 years. “We have seen massive liquidation from all quarters – ETFs, funds, CTAs, specs and even Chinese and Indian physical buyers. This is a market that has only got one thing on its mind … get me out,” David Govett, head of precious metals at Marex Spectron in London, told Reuters. In a research report, Goldman Sachs said: ”The decline in prices since last fall and our updated forecast suggests that the turn in the gold price cycle is likely already underway. As a result, although our U.S. economic forecasts point to modest near-term upside to gold prices, we believe that a sharp recovery in prices to our previous price forecast is unlikely.” “In fact, we suspect that if indeed our forecast for further declines in gold prices proves correct, the fall in prices could end up being faster and larger than we expect.” By Bill McGuire
Gold had more than doubled since the beginning of the 2008 financial crisis and rose 30 percent in 2010 and 25 percent in 2009. In 2000 it was just $272 an ounce. It reached its all-time high of $1913 in August 2011.
Apr 15, 2013 Gold plunged $144 an ounce today to its biggest two-day decline since 1983 as investors sold the precious metal amid declines in commodities of all types. Losses today widened to 9.6 percent as gold fell to $1,357 per ounce at 4:23 p.m. ET on the spot market. With Friday’s drop of 5.3 percent, the total two-day decline hit 14.9 percent. Stocks fell 1.8 percent as the Dow Jones average slid to 14,599. As ABC Radio’s Richard Davies reported this morning, the reasons for the plunge are linked to the rise in the stock market, the slow, steady improvement of the US economy and the recent strength of the dollar. Crude oil futures tumbled on global markets, down to less than $89 for West Texas crude, the lowest price since December, 2012. Silver was down and so was copper. Last week Goldman Sachs issued a report predicting gold prices would tumble. Another factor is China’s economy, which grew 7.7 percent in the first quarter, less than analysts expected and coming off a 2012 that showed the softest growth in 13 years. “We have seen massive liquidation from all quarters – ETFs, funds, CTAs, specs and even Chinese and Indian physical buyers. This is a market that has only got one thing on its mind … get me out,” David Govett, head of precious metals at Marex Spectron in London, told Reuters. In a research report, Goldman Sachs said: ”The decline in prices since last fall and our updated forecast suggests that the turn in the gold price cycle is likely already underway. As a result, although our U.S. economic forecasts point to modest near-term upside to gold prices, we believe that a sharp recovery in prices to our previous price forecast is unlikely.” “In fact, we suspect that if indeed our forecast for further declines in gold prices proves correct, the fall in prices could end up being faster and larger than we expect.” By Bill McGuire
Gold had more than doubled since the beginning of the 2008 financial crisis and rose 30 percent in 2010 and 25 percent in 2009. In 2000 it was just $272 an ounce. It reached its all-time high of $1913 in August 2011.
Sunday, April 14, 2013
Saturday, April 6, 2013
Surat best to live in, Ahmedabad finishes close second: Survey
AHMEDABAD: Living in Ahmedabad and Surat is a blessing if one considers quality of life as compared to other major cities of the country. Or so the state government claims. On Thursday, the Gujarat information department in a press release claimed that Ahmedabad was runners up while Surat won at the Annual Survey of India's City-Systems ( ASICS) in different categories.
The survey included 11 cities with sizeable population. The survey covered aspects like: urban planning and design, urban capacities and resources, empowered and legitimate political representation and transparency and accountability. These factors were defined as important issues related to the quality of life in a city. Indian cities have scored in the range of 0.7 to 4.5 on a scale of 0 to 10, across all four categories. The cities of New York and London were taken as benchmarks as they scored between 8.1 and 9.9 on the same scale. The average scores of Indian cities in each of the four categories was bound between 2.2 and 3.4. But experts who did the analysis claimed that there were wide variations in scores between cities within each category. Most cities were tended to be strong in certain areas and weak in others.
Tuesday, March 26, 2013
A Gulf without Keralites a reality ?
സൗദിയിലെ സ്വദേശിവത്കരണം: മലയാളികള്ക്ക് കോടികളുടെ സാമ്പത്തികനഷ്ടം
27 Mar 2013
മലപ്പുറം: സൗദിയില് സ്വദേശിവത്കരണത്തിനുള്ള നിതാഖത്ത് നടപ്പാക്കുമ്പോള് തൊഴില്നഷ്ടപ്പെടുന്നവരിലേറെയും മലയാളികളായ പ്രവാസികള്. ജോലി പോകുന്നതോടൊപ്പം കോടിക്കണക്കിന് രൂപയുടെ സാമ്പത്തികനഷ്ടവും ഉണ്ടാകും. വിവിധ സംരംഭങ്ങള്ക്കായി മുതല് മുടക്കിയ കോടിക്കണക്കിന് രൂപ ഉപേക്ഷിച്ച് നാട്ടിലേക്ക് മടങ്ങേണ്ടിവരും. ഏതാണ്ട് ഒന്നരലക്ഷത്തോളം മലയാളികളെ ഇത് ബാധിക്കും. അറബിയുടെ സ്പോണ്സര്ഷിപ്പില് സ്വന്തമായി ബിസിനസ് നടത്തുന്നവരെയും തൊഴിലാളികളായാണ് പരിഗണിക്കുക. ഏഴ് ലക്ഷത്തിലധികം മലയാളികള് ഗള്ഫ് നാടുകളിലുണ്ടെന്നാണ് കണക്ക്. അതിലേതാണ്ട് പകുതിയോളംപേര് സൗദിയിലാണ്. അവിദഗ്ധ മേഖലയിലും സാങ്കേതിക മേഖലയിലെ താഴേത്തട്ടില് ജോലിചെയ്യുന്നവരുമാണിവര്. ചെറിയ കഫേകള് (ബൂഫിയ), ഹോട്ടലുകള് എന്നിവ നടത്തുകയും ഇവിടങ്ങളില് ജോലിയെടുക്കുന്നവരും ഒട്ടേറെയാണ്. മലയാളികള് ഒറ്റയ്ക്കും കൂട്ടമായും ചെറുകിട ഹോട്ടലുകള് നടത്തുന്നവരും ഏറെയാണ്. ഇവിടങ്ങളില് മലയാളികളാണ് ജോലി ചെയ്യുന്നവരില് കൂടുതലും. അഞ്ഞൂറും അതിലധികവും കാറുകള് ടാക്സിയായി സര്വീസ് നടത്തുന്ന കമ്പനികളിലെ ഡ്രൈവര്മാരേറെയും മലയാളികളാണ്. വെല്ഡിങ്, ഫിറ്റര്, വര്ക്ക്ഷോപ്പ്, ചെറുകിട വ്യവസായ ബിസിനസ് സ്ഥാപനങ്ങളില് ജോലി ചെയ്യുന്നവരെയാണ് ഈ നിയമം ബാധിക്കുക. ഉന്നത വിദ്യാഭ്യാസം നേടിയവരും പ്രൊഫഷണലുകളും ദുബായ്, കുവൈത്ത് രാജ്യങ്ങളെ ജോലിക്കായി ആശ്രയിക്കുകയാണ് ചെയ്യുന്നത്. മറ്റ് ഗള്ഫ് രാജ്യങ്ങളെ അപേക്ഷിച്ച് വേതനം കുറവാണെങ്കിലും സമ്പാദ്യം സ്വരൂപിക്കാന് സൗദിയാണ് നല്ലതെന്ന കാര്യവും ഇവിടേക്കുള്ള ഒഴുക്ക് കൂട്ടുന്നു. നിയമം പ്രാബല്യത്തിലാകുന്നതോടെ 20 ലക്ഷത്തോളം വിദേശികള് സൗദി വിടേണ്ടിവരുമെന്നാണ് കണക്ക്. പത്തില്താഴെപേര് ജോലിചെയ്യുന്ന സ്ഥാപനത്തില് ഒരു സ്വദേശിയെ ജോലിക്ക് വെക്കണമെന്ന ഉത്തരവ് നടപ്പാക്കുന്നതിനുള്ള സമയപരിധി ബുധനാഴ്ച അവസാനിക്കും. രണ്ടരലക്ഷത്തോളം ചെറുകിട സ്ഥാപനങ്ങളെ പുതിയ ഉത്തരവ് ബാധിക്കും
Article credits Mathrubhumi Daily
A Gulf without Keralites could soon be a reality
News Report of October 18, 2012
For those reading this article in the Gulf region, conduct this little exercise – take a quick look around you and count the number of Keralites you spot. Now, try to imagine your surroundings (workplace, grocery store, the Metro, etc.) void of all Keralites. Impossible? That’s what we thought, but a new survey begs to differ.
Gulf nations may soon see less of the ubiquitous Keralite (a.k.a. Malyali due to the language connection) as the migration trend of Keralites from their native town to Gulf nations seems to be peaking, and may reverse soon.
According to the latest iteration of the Gulf Migration Survey, the number of Keralites in the UAE has declined about 4 per cent in five years – from 918,122 in 2008 down to 883,313 in 2011. This decline is in sharp contrast to the 37 per cent growth that UAE saw in migrants from Kerala in the preceding five-year period – from 670,150 in 2003 to 918,122 in 2008.
The principal countries of destination of Kerala emigrants have remained more or less unchanged over these years, with 90 per cent of the Kerala emigrants going to one or other of the Gulf countries.
The UAE, in fact, is home to the maximum number of Keralites outside Kerala, followed by Saudi Arabia (574,739 Keralites in 2011), Oman (195,300), Qatar (148,427), Kuwait (127,782) and Bahrain (101,556). Outside of the Gulf, the most number of Keralites can be found in the US (68,076) and the UK (44,640).
“Nearly 40 per cent of Kerala’s emigrants live in the UAE and 25 per cent in Saudi Arabia. In the last three years, especially, after global crisis, Saudi Arabia has gained about 2 percentage points and UAE has lost out by the same proportion,” the report points out.
While it will be tough to not find a Keralite within any given square kilometre in the Gulf region (no, uninhabited desert doesn’t count!), the survey points out that the growth in number of migrants from Kerala is declining and if this trend continues, within a few years, the number of migrants returning to their homeland may outnumber those leaving in search of new opportunities.
According to the survey, the number of Kerala emigrants living abroad in 2011 was estimated to be 2.28 million, up from 2.19 million in 2008, 1.84 million in 2003 and 1.36 million in 1998. This data clearly shows that the number of Keralites leaving their hometown annually for a job abroad is on a steady decline. “The increase could vanish much before 2015 and the migration trend could very well slope downward,” the survey points out.
However, the survey also points out that the money that Keralites are remitting back home is on a much steeper rise than the number of migrants. “Remittances from emigrants abroad to Kerala in 2011 were estimated to be approximately Rs49,695 crore [Dh35.5 billion] compared with Rs43,288 crore [Dh30.92 billion] in 2008. Remittances were Rs63,315 [Dh4,523] per household in 2011 compared with Rs57,227 [Dh4,088] in 2008,” the report states.
“Increase in remittances during 2008-11 (15 per cent) was much larger than increase in the number of emigrants (4 per cent),” it elaborates. The report goes on to state that the macro-economic impact of emigration and remittances are very significant, and they remain the single most dynamic factor in Kerala’s economic scenario.
“Remittances were 31 per cent of the state’s domestic product. The per capita income in the state is Rs52,000 [Dh3,714] without taking into consideration remittances, but would be Rs68,000 [Dh4,857] if remittances were taken in to consideration,” reckons the report.
Nevertheless, notwithstanding the increase in remittances, the report concludes that emigration from Kerala may be approaching an inflexion point in history. “Kerala’s Gulf connection is edging towards a turning point,” states the report.
“Emigration from Kerala in 2011 is more or less at the same level it was in 2008, indicating that 2011 is not far from the inflexion point in the history of emigration from Kerala. Many of the major centres of emigration in Kerala are already experiencing a decline in the number of emigrants and/or emigrants per household,” it highlights.
The report provides statistics from one of Kerala’s districts – Patahanamthitta – as supporting evidence and as how things may eventually pan out throughout the South Indian state. “The experience of Pathanamthitta district could be seen as forerunner of things to come in Kerala. In Pathanamthitta district, the number of emigrants was 98,000 in 1998, 134,000 in 2003, and 121,000 in 2008 but only 91,000 in 2011 – lower than the number in 1998.
“Emigrants per household was 33.1 per cent in 1998, 44.3 per cent in 2003 and 37.4 per cent in 2008 but only 28.4 per cent in 2011. The point of inflexion in emigration trend in Pathanamthitta district was as early as 2003,” it says.
The report attributes this decline to many things, key among them being dwindling wage differentials between Kerala and the Gulf region, competition from other Indian states in India and other countries abroad, and above all, the rapidly increasing cost of emigration.
“All these trends point towards emergence of an era of decreasing trend in emigration from Kerala. Kerala’s Gulf connection could reach its inflexion point in a matter of 4-5 years,” the report concludes.
Are you a Keralite or know one in the Gulf? What do you think are the reasons behind the shrinking numbers of Keralites coming to the Gulf? Let us know in comments below.
Migration Survey shows overseas Keralites remitted approx. Dh35.5 billion in 2011
27 Mar 2013
മലപ്പുറം: സൗദിയില് സ്വദേശിവത്കരണത്തിനുള്ള നിതാഖത്ത് നടപ്പാക്കുമ്പോള് തൊഴില്നഷ്ടപ്പെടുന്നവരിലേറെയും മലയാളികളായ പ്രവാസികള്. ജോലി പോകുന്നതോടൊപ്പം കോടിക്കണക്കിന് രൂപയുടെ സാമ്പത്തികനഷ്ടവും ഉണ്ടാകും. വിവിധ സംരംഭങ്ങള്ക്കായി മുതല് മുടക്കിയ കോടിക്കണക്കിന് രൂപ ഉപേക്ഷിച്ച് നാട്ടിലേക്ക് മടങ്ങേണ്ടിവരും. ഏതാണ്ട് ഒന്നരലക്ഷത്തോളം മലയാളികളെ ഇത് ബാധിക്കും. അറബിയുടെ സ്പോണ്സര്ഷിപ്പില് സ്വന്തമായി ബിസിനസ് നടത്തുന്നവരെയും തൊഴിലാളികളായാണ് പരിഗണിക്കുക. ഏഴ് ലക്ഷത്തിലധികം മലയാളികള് ഗള്ഫ് നാടുകളിലുണ്ടെന്നാണ് കണക്ക്. അതിലേതാണ്ട് പകുതിയോളംപേര് സൗദിയിലാണ്. അവിദഗ്ധ മേഖലയിലും സാങ്കേതിക മേഖലയിലെ താഴേത്തട്ടില് ജോലിചെയ്യുന്നവരുമാണിവര്. ചെറിയ കഫേകള് (ബൂഫിയ), ഹോട്ടലുകള് എന്നിവ നടത്തുകയും ഇവിടങ്ങളില് ജോലിയെടുക്കുന്നവരും ഒട്ടേറെയാണ്. മലയാളികള് ഒറ്റയ്ക്കും കൂട്ടമായും ചെറുകിട ഹോട്ടലുകള് നടത്തുന്നവരും ഏറെയാണ്. ഇവിടങ്ങളില് മലയാളികളാണ് ജോലി ചെയ്യുന്നവരില് കൂടുതലും. അഞ്ഞൂറും അതിലധികവും കാറുകള് ടാക്സിയായി സര്വീസ് നടത്തുന്ന കമ്പനികളിലെ ഡ്രൈവര്മാരേറെയും മലയാളികളാണ്. വെല്ഡിങ്, ഫിറ്റര്, വര്ക്ക്ഷോപ്പ്, ചെറുകിട വ്യവസായ ബിസിനസ് സ്ഥാപനങ്ങളില് ജോലി ചെയ്യുന്നവരെയാണ് ഈ നിയമം ബാധിക്കുക. ഉന്നത വിദ്യാഭ്യാസം നേടിയവരും പ്രൊഫഷണലുകളും ദുബായ്, കുവൈത്ത് രാജ്യങ്ങളെ ജോലിക്കായി ആശ്രയിക്കുകയാണ് ചെയ്യുന്നത്. മറ്റ് ഗള്ഫ് രാജ്യങ്ങളെ അപേക്ഷിച്ച് വേതനം കുറവാണെങ്കിലും സമ്പാദ്യം സ്വരൂപിക്കാന് സൗദിയാണ് നല്ലതെന്ന കാര്യവും ഇവിടേക്കുള്ള ഒഴുക്ക് കൂട്ടുന്നു. നിയമം പ്രാബല്യത്തിലാകുന്നതോടെ 20 ലക്ഷത്തോളം വിദേശികള് സൗദി വിടേണ്ടിവരുമെന്നാണ് കണക്ക്. പത്തില്താഴെപേര് ജോലിചെയ്യുന്ന സ്ഥാപനത്തില് ഒരു സ്വദേശിയെ ജോലിക്ക് വെക്കണമെന്ന ഉത്തരവ് നടപ്പാക്കുന്നതിനുള്ള സമയപരിധി ബുധനാഴ്ച അവസാനിക്കും. രണ്ടരലക്ഷത്തോളം ചെറുകിട സ്ഥാപനങ്ങളെ പുതിയ ഉത്തരവ് ബാധിക്കും
Article credits Mathrubhumi Daily
A Gulf without Keralites could soon be a reality
News Report of October 18, 2012
For those reading this article in the Gulf region, conduct this little exercise – take a quick look around you and count the number of Keralites you spot. Now, try to imagine your surroundings (workplace, grocery store, the Metro, etc.) void of all Keralites. Impossible? That’s what we thought, but a new survey begs to differ.
Gulf nations may soon see less of the ubiquitous Keralite (a.k.a. Malyali due to the language connection) as the migration trend of Keralites from their native town to Gulf nations seems to be peaking, and may reverse soon.
According to the latest iteration of the Gulf Migration Survey, the number of Keralites in the UAE has declined about 4 per cent in five years – from 918,122 in 2008 down to 883,313 in 2011. This decline is in sharp contrast to the 37 per cent growth that UAE saw in migrants from Kerala in the preceding five-year period – from 670,150 in 2003 to 918,122 in 2008.
The principal countries of destination of Kerala emigrants have remained more or less unchanged over these years, with 90 per cent of the Kerala emigrants going to one or other of the Gulf countries.
The UAE, in fact, is home to the maximum number of Keralites outside Kerala, followed by Saudi Arabia (574,739 Keralites in 2011), Oman (195,300), Qatar (148,427), Kuwait (127,782) and Bahrain (101,556). Outside of the Gulf, the most number of Keralites can be found in the US (68,076) and the UK (44,640).
“Nearly 40 per cent of Kerala’s emigrants live in the UAE and 25 per cent in Saudi Arabia. In the last three years, especially, after global crisis, Saudi Arabia has gained about 2 percentage points and UAE has lost out by the same proportion,” the report points out.
While it will be tough to not find a Keralite within any given square kilometre in the Gulf region (no, uninhabited desert doesn’t count!), the survey points out that the growth in number of migrants from Kerala is declining and if this trend continues, within a few years, the number of migrants returning to their homeland may outnumber those leaving in search of new opportunities.
According to the survey, the number of Kerala emigrants living abroad in 2011 was estimated to be 2.28 million, up from 2.19 million in 2008, 1.84 million in 2003 and 1.36 million in 1998. This data clearly shows that the number of Keralites leaving their hometown annually for a job abroad is on a steady decline. “The increase could vanish much before 2015 and the migration trend could very well slope downward,” the survey points out.
However, the survey also points out that the money that Keralites are remitting back home is on a much steeper rise than the number of migrants. “Remittances from emigrants abroad to Kerala in 2011 were estimated to be approximately Rs49,695 crore [Dh35.5 billion] compared with Rs43,288 crore [Dh30.92 billion] in 2008. Remittances were Rs63,315 [Dh4,523] per household in 2011 compared with Rs57,227 [Dh4,088] in 2008,” the report states.
“Increase in remittances during 2008-11 (15 per cent) was much larger than increase in the number of emigrants (4 per cent),” it elaborates. The report goes on to state that the macro-economic impact of emigration and remittances are very significant, and they remain the single most dynamic factor in Kerala’s economic scenario.
“Remittances were 31 per cent of the state’s domestic product. The per capita income in the state is Rs52,000 [Dh3,714] without taking into consideration remittances, but would be Rs68,000 [Dh4,857] if remittances were taken in to consideration,” reckons the report.
Nevertheless, notwithstanding the increase in remittances, the report concludes that emigration from Kerala may be approaching an inflexion point in history. “Kerala’s Gulf connection is edging towards a turning point,” states the report.
“Emigration from Kerala in 2011 is more or less at the same level it was in 2008, indicating that 2011 is not far from the inflexion point in the history of emigration from Kerala. Many of the major centres of emigration in Kerala are already experiencing a decline in the number of emigrants and/or emigrants per household,” it highlights.
The report provides statistics from one of Kerala’s districts – Patahanamthitta – as supporting evidence and as how things may eventually pan out throughout the South Indian state. “The experience of Pathanamthitta district could be seen as forerunner of things to come in Kerala. In Pathanamthitta district, the number of emigrants was 98,000 in 1998, 134,000 in 2003, and 121,000 in 2008 but only 91,000 in 2011 – lower than the number in 1998.
“Emigrants per household was 33.1 per cent in 1998, 44.3 per cent in 2003 and 37.4 per cent in 2008 but only 28.4 per cent in 2011. The point of inflexion in emigration trend in Pathanamthitta district was as early as 2003,” it says.
The report attributes this decline to many things, key among them being dwindling wage differentials between Kerala and the Gulf region, competition from other Indian states in India and other countries abroad, and above all, the rapidly increasing cost of emigration.
“All these trends point towards emergence of an era of decreasing trend in emigration from Kerala. Kerala’s Gulf connection could reach its inflexion point in a matter of 4-5 years,” the report concludes.
Are you a Keralite or know one in the Gulf? What do you think are the reasons behind the shrinking numbers of Keralites coming to the Gulf? Let us know in comments below.
Migration Survey shows overseas Keralites remitted approx. Dh35.5 billion in 2011
Sunday, March 24, 2013
Gujarat's power sector turnaround story -A case study for Kerala
Executive Summary: Gujarat's power sector was in a shambles in 2001, when Narendra Modi became chief minister. A decade later it is in the forefront of states that have carried out sweeping power reforms, as a result of which it now has surplus power. This case study details the key steps the government took to bring about the change, which was carried out in a manner fair to all stakeholders.
When Narendra Damodardas Modi took over as chief minister of Gujarat in October 2001, he found the state's power situation grim. The Gujarat State Electricity Board, or GSEB, had posted a loss of Rs 2,246 crore for 2000/01, on revenues of Rs 6,280 crore. Interest costs alone were Rs 1,227 crore. Transmission and distribution, or T&D, losses were a substantial 35.27 per cent, and load shedding was frequent. GSEB had no funds to add generation capacity on its own, nor was it able to persuade the private sector to invest.
Reforming the GSEB, thus, became one of Modi's top priorities. "He feared that a bankrupt power utility could derail his vision for the state," says Saurabh Patel, Gujarat's Industries and Power Minister, then as now. "He knew electricity is crucial for growth."
Modi's first step was to identify a bureaucrat capable of taking on the enormous challenge. He chose Man- jula Subramaniam, a Gujarat cadre officer, who had been joint secretary in the prime minister's office from 1993 to 1998, playing a key role in the country's liberalisation, and appointed her Chairperson of GSEB and Principal Secretary, Energy and Power.
Subramaniam quickly realised that GSEB was too large an entity to be managed effectively. But she did not rush into unbundling it. Instead, she initially concentrated on two areas: bolstering the power utility's finances and building employee morale. Discovering that GSEB had secured loans at interest rates of 18 per cent or more, she sought debt restructuring, convincing banks and financial institutions to lower their rates, which resulted in savings of Rs 500 crore in 2002/03.
Her next step was more radical. Rarely before had electricity boards renegotiated power purchase agreements, or PPAs, already signed with private players. But having examined the PPAs her board had entered into, Subramaniam felt the heat rate - a measure of generator efficiency - had been inflated by the power suppliers, who were consequently charging more than they should have.
Though the private players initially resisted, the government-constituted committee set up for the process stood firm, and ultimately, after more than 18 months of hard bargaining, got the rates lowered, leading to a further saving of Rs 675 crore in 2002/03 and Rs 1,000 crore in 2003/04.
Simultaneously, Modi's government began plugging the leakages in distribution. Power thefts in Gujarat then ranged between 20 per cent in urban areas and 70 per cent in rural regions. It passed a law against power thefts and set up five police stations across the state, solely to nab such thieves. Stringent action began against those who ran up large power bill arrears, including disconnecting their supply.
Unmetered power supply, which some rural areas were getting was stopped altogether, with GSEB entering into a structural loan re-adjustment with Asian Development Bank to fund the installing of meters.
Subramaniam also found that many employees, disturbed by widespread talk of power reforms, feared for their jobs, and were feeling somewhat alienated from GSEB. She appointed a consultant to suggest ways to win back their loyalties.
From mid-2002, armed with the consultant's suggestions, the board began its special effort to reach out to employees. It started training programmes at all levels to reassure them that while people may be redeployed, no one would be laid off. Senior officials increased their interactions with the staff, including holding 'town hall' meetings where they shared details of the board's financial position and encouraged employees to ask questions. An internal newsletter was also started.
Once assured of retaining their jobs, the employees themselves began discussing possible reforms. A 'reforms progress management group', comprising GSEB employees, was also set up.
It was now time for the unbundling. In May 2003, the Gujarat government passed the Gujarat Electricity Industry (Reform and Reorganisation) Act, which divided the GSEB into a holding company, a power generation company, a power transmission company and four distribution companies. This enabled better management and more efficient operations.
Another key reform was the separation of the feeder line that supplied power to the rural areas into two: one to supply power for agricultural needs and other for household and other needs. This was part of the Jyoti Gram Yojna, a scheme Modi announced in 2003 to supply round-theclock power to villages.
"A single feeder has its limitations," says Mukesh Puri, Managing Director of the holding company, Gujarat Urja Vikas Nigam. "The villages got power for only 12 to 15 hours a day, often of poor quality and at odd hours."
Since the tariff for power used for agricultural purposes was much lower, many used this subsidised supply for their household needs as well, resulting in huge losses for GSEB.
"The chief minister asked us to have separate feeders, which was a path-breaking step no state had attempted before," Puri adds, "The results were good." Though many rural residents had higher power bills to pay than in the past, they cooperated with the government, once they found they were assured of uninterrupted, better quality power.
A study by Indian Institute of Management, Ahmedabad has estimated that the project saved the state capital expenditure of around Rs 23,000 crore, or about 5,000 megawatts, or MW.
The Modi government has also taken scrupulous care to ensure that the state electricity regulator - unlike in most states - remains truly independent of political pressures. The regulator has, thus, been able to revise power tariffs every year, which ensured the state bridged the gap between the average cost of supply and what users paid for it.
The result? The state electricity board posted its first profit of Rs 203 crore - after tax - in 2005/06. By 2010/11, net profit had risen to Rs 533 crore, while T&D losses had fallen to 20.13 per cent. Tariff collection efficiency is close to 100 per cent. Private players, once reluctant to invest in Gujarat's power generation, are now rushing in: of the power plants with a total installed capacity of 16,945 MW coming up in the state, 6,864 MW - or roughly, a third - is by the private sector. "Abundant power is a major USP of our state today," says minister Patel.
A few worries remain. Though T&D losses have fallen, they are still higher than those of the southern states such as Andhra Pradesh, Karnataka, and Tamil Nadu. The cost of power in Gujarat has been traditionally high, and remains so.
"Our share of hydel power is very low and our power plants are very far away from coalfields," says Puri. "At times the cost of transporting coal equals the cost of the coal." A sizeable proportion of its power - around 29 per cent - also comes from gas-based plants, and the high cost of gas has forced scaling down the operations of some of them.
But ultimately, it is a remarkable transformation for a state which was power deficient barely a decade ago, but now has a surplus of 2,114 MW and a vibrant energy sector. Article credits N. Madhavan BI
When Narendra Damodardas Modi took over as chief minister of Gujarat in October 2001, he found the state's power situation grim. The Gujarat State Electricity Board, or GSEB, had posted a loss of Rs 2,246 crore for 2000/01, on revenues of Rs 6,280 crore. Interest costs alone were Rs 1,227 crore. Transmission and distribution, or T&D, losses were a substantial 35.27 per cent, and load shedding was frequent. GSEB had no funds to add generation capacity on its own, nor was it able to persuade the private sector to invest.
Reforming the GSEB, thus, became one of Modi's top priorities. "He feared that a bankrupt power utility could derail his vision for the state," says Saurabh Patel, Gujarat's Industries and Power Minister, then as now. "He knew electricity is crucial for growth."
Modi's first step was to identify a bureaucrat capable of taking on the enormous challenge. He chose Man- jula Subramaniam, a Gujarat cadre officer, who had been joint secretary in the prime minister's office from 1993 to 1998, playing a key role in the country's liberalisation, and appointed her Chairperson of GSEB and Principal Secretary, Energy and Power.
Subramaniam quickly realised that GSEB was too large an entity to be managed effectively. But she did not rush into unbundling it. Instead, she initially concentrated on two areas: bolstering the power utility's finances and building employee morale. Discovering that GSEB had secured loans at interest rates of 18 per cent or more, she sought debt restructuring, convincing banks and financial institutions to lower their rates, which resulted in savings of Rs 500 crore in 2002/03.
Her next step was more radical. Rarely before had electricity boards renegotiated power purchase agreements, or PPAs, already signed with private players. But having examined the PPAs her board had entered into, Subramaniam felt the heat rate - a measure of generator efficiency - had been inflated by the power suppliers, who were consequently charging more than they should have.
Though the private players initially resisted, the government-constituted committee set up for the process stood firm, and ultimately, after more than 18 months of hard bargaining, got the rates lowered, leading to a further saving of Rs 675 crore in 2002/03 and Rs 1,000 crore in 2003/04.
Simultaneously, Modi's government began plugging the leakages in distribution. Power thefts in Gujarat then ranged between 20 per cent in urban areas and 70 per cent in rural regions. It passed a law against power thefts and set up five police stations across the state, solely to nab such thieves. Stringent action began against those who ran up large power bill arrears, including disconnecting their supply.
Unmetered power supply, which some rural areas were getting was stopped altogether, with GSEB entering into a structural loan re-adjustment with Asian Development Bank to fund the installing of meters.
Subramaniam also found that many employees, disturbed by widespread talk of power reforms, feared for their jobs, and were feeling somewhat alienated from GSEB. She appointed a consultant to suggest ways to win back their loyalties.
From mid-2002, armed with the consultant's suggestions, the board began its special effort to reach out to employees. It started training programmes at all levels to reassure them that while people may be redeployed, no one would be laid off. Senior officials increased their interactions with the staff, including holding 'town hall' meetings where they shared details of the board's financial position and encouraged employees to ask questions. An internal newsletter was also started.
Once assured of retaining their jobs, the employees themselves began discussing possible reforms. A 'reforms progress management group', comprising GSEB employees, was also set up.
It was now time for the unbundling. In May 2003, the Gujarat government passed the Gujarat Electricity Industry (Reform and Reorganisation) Act, which divided the GSEB into a holding company, a power generation company, a power transmission company and four distribution companies. This enabled better management and more efficient operations.
Another key reform was the separation of the feeder line that supplied power to the rural areas into two: one to supply power for agricultural needs and other for household and other needs. This was part of the Jyoti Gram Yojna, a scheme Modi announced in 2003 to supply round-theclock power to villages.
"A single feeder has its limitations," says Mukesh Puri, Managing Director of the holding company, Gujarat Urja Vikas Nigam. "The villages got power for only 12 to 15 hours a day, often of poor quality and at odd hours."
Since the tariff for power used for agricultural purposes was much lower, many used this subsidised supply for their household needs as well, resulting in huge losses for GSEB.
"The chief minister asked us to have separate feeders, which was a path-breaking step no state had attempted before," Puri adds, "The results were good." Though many rural residents had higher power bills to pay than in the past, they cooperated with the government, once they found they were assured of uninterrupted, better quality power.
A study by Indian Institute of Management, Ahmedabad has estimated that the project saved the state capital expenditure of around Rs 23,000 crore, or about 5,000 megawatts, or MW.
The Modi government has also taken scrupulous care to ensure that the state electricity regulator - unlike in most states - remains truly independent of political pressures. The regulator has, thus, been able to revise power tariffs every year, which ensured the state bridged the gap between the average cost of supply and what users paid for it.
The result? The state electricity board posted its first profit of Rs 203 crore - after tax - in 2005/06. By 2010/11, net profit had risen to Rs 533 crore, while T&D losses had fallen to 20.13 per cent. Tariff collection efficiency is close to 100 per cent. Private players, once reluctant to invest in Gujarat's power generation, are now rushing in: of the power plants with a total installed capacity of 16,945 MW coming up in the state, 6,864 MW - or roughly, a third - is by the private sector. "Abundant power is a major USP of our state today," says minister Patel.
A few worries remain. Though T&D losses have fallen, they are still higher than those of the southern states such as Andhra Pradesh, Karnataka, and Tamil Nadu. The cost of power in Gujarat has been traditionally high, and remains so.
"Our share of hydel power is very low and our power plants are very far away from coalfields," says Puri. "At times the cost of transporting coal equals the cost of the coal." A sizeable proportion of its power - around 29 per cent - also comes from gas-based plants, and the high cost of gas has forced scaling down the operations of some of them.
But ultimately, it is a remarkable transformation for a state which was power deficient barely a decade ago, but now has a surplus of 2,114 MW and a vibrant energy sector. Article credits N. Madhavan BI
Power to the Masses - Narendra Modi initiative luded by the World
Gujarat’s success in the power sector universally lauded- amid gloom Gujarat sets an example says one newspaper!
Wall Street Journal lauds Gujarat’s reforms in power sector. Says it’s the only state that consumes less than it produces.
From international and Indian media to netizens, immense praise for Shri Modi’s handling of the power sector over the last decade.
A sector that was previously facing problems was successfully turned around and his now winning awards from the Government of India.
For two days, starting 30th July 2012 a large part of India including the national capital Delhi plunged into darkness due to a massive power grid failure. On 31st July, it was not only the Northern Grid but also the Eastern Grid that failed leaving more than 60 crore people and 19 states in the dark. Experts have called it India’s worst power crisis.The crisis once again brought to the forefront some elementary lessons that were often repeated but scarcely followed by most states vis-à-vis the power sector. However, one state that remained totally unaffected from the massive power crisis across more than half of India was Gujarat.
Since the last three days, there has been renewed focus on Gujarat’s success in the power sector. From international media houses, the Indian mainstream media to the netizens on Twitter, Gujarat’s “brightness” in the time of Delhi and other part’s “darkness” became the hot topic of discussion.
Yet again, Gujarat established itself as a benchmark of development and transparent governance. Dated 1st August 2012, leading international newspaper Wall Street Journal carried a story titled “More Power to India’s States” in which it critiqued the lack of reforms in the Indian power sector for the last few years. Wall Street Journal however notes Gujarat’s success in the power sector as a major exception. It writes, “But perhaps the greatest display of political gumption and policy creativity comes from Gujarat in the west.
Chief Minister Narendra Modi’s first victory was curbing the theft of power, one reason for transmission and distribution losses.” WSJ notes that Gujarat’s biggest innovative zeal has been to establish a parallel distribution network that has led to stability in supply along with giving farmers competitive prices.
It acknowledges Gujarat as, “…the only Indian state that generates more power than it consumes.” But WSJ notes that while all states may not be as bold as Gujarat, the real scope for power reforms comes from the states Shri Narendra Modi is a stark contrast to the Centre and could be an inspiration for other states.
Similar praise for Gujarat’s power sector turnaround has come from leading international brokerage firm CLSA. CLSA noted how Gujarat made 100% power in the villages a reality ending a history of power theft and poor management.
The Indian media has been equally forthcoming in praising Gujarat’s power successes. The Times of India carried a story with a catchy title, ‘Power grid failure: Amid gloom, Gujarat sets an example.’ The story notes how it is not only the big cities of Gujarat but also the 18,000 villages of the state that are beneficiaries of uninterrupted electricity.
It also notes the success of the Jyotigram Yojana in this commendable transformation.Gujarat’s power sector turnaround is the result of a determined effort that began approximately a decade ago.
In February this year, leading business magazine Business Today did a comprehensive narrative of what Gujarat did differently that led to this amazing turnaround.
Till a decade ago, Gujarat’s power sector was in urgent need of reform. The state electricity board GSEB was incurring heavy losses, interests were rising and transmission losses were frequent. These were exactly the things Shri Modi altered when he took charge. Beginning with restructuring finances, Shri Modi went on to unleash other reforms including renegotiating power purchase agreements and controlling leakages.
An act passed in 2003 even enabled better management. The rest of course is history…Today not only has the power sector witnessed a complete turnaround but also Gujarat’s power companies are winning awards at the national level. In March this year, 3 companies of the Gujarat Government were awarded for their outstanding performance in the power sector.But, if you thought Gujarat was content with these advances you may want to think again. Despite being a power surplus state, Gujarat is looking at making wide scale advances in renewable sources of energy.
Shri Modi began with solar power and is now moving towards wind, thermal and tidal energy.
In April this year he inaugurated Asia’s largest solar park at Charanka in Mehsana. Days later he dedicated India’s first canal top solar power project to the nation.
All these advances have received praise from none other than UPA Cabinet Minister for Renewable Energy Dr. Farooq Abdullah. Thus, as India plunged into darkness clamour for asking the other states and particularly the Centre to emulate Gujarat’s model of power reforms is only increasing. Shri Modi himself came down heavily on the Centre’s mismanagement of the power sector.
Expressing his views on Twitter, he said, “Pradhan Mantri ji, 60 cr people & 19 states are in darkness. Country wants to know is there any coalition dharma you are following here too?” He added, “With poor economic management UPA has emptied pockets of common man; kept stomachs hungry with inflation & today pushed them into darkness!”
The power is the lifeline of any nation’s growth. Such blackouts do not augur well for an aspiring superpower likes India. In such a time, it was heartening to see Gujarat’s power sector turnaround being appreciated across various sections of the national and international media, thinkers and netizens. When Shri Modi assumed office, the request people made to him was to give them as much electricity that they can enjoy their evening meal.
Today, the entire Gujarat is covered by brightness, every single day of the year!
Wall Street Journal lauds Gujarat’s reforms in power sector. Says it’s the only state that consumes less than it produces.
From international and Indian media to netizens, immense praise for Shri Modi’s handling of the power sector over the last decade.
A sector that was previously facing problems was successfully turned around and his now winning awards from the Government of India.
For two days, starting 30th July 2012 a large part of India including the national capital Delhi plunged into darkness due to a massive power grid failure. On 31st July, it was not only the Northern Grid but also the Eastern Grid that failed leaving more than 60 crore people and 19 states in the dark. Experts have called it India’s worst power crisis.The crisis once again brought to the forefront some elementary lessons that were often repeated but scarcely followed by most states vis-à-vis the power sector. However, one state that remained totally unaffected from the massive power crisis across more than half of India was Gujarat.
Since the last three days, there has been renewed focus on Gujarat’s success in the power sector. From international media houses, the Indian mainstream media to the netizens on Twitter, Gujarat’s “brightness” in the time of Delhi and other part’s “darkness” became the hot topic of discussion.
Yet again, Gujarat established itself as a benchmark of development and transparent governance. Dated 1st August 2012, leading international newspaper Wall Street Journal carried a story titled “More Power to India’s States” in which it critiqued the lack of reforms in the Indian power sector for the last few years. Wall Street Journal however notes Gujarat’s success in the power sector as a major exception. It writes, “But perhaps the greatest display of political gumption and policy creativity comes from Gujarat in the west.
Chief Minister Narendra Modi’s first victory was curbing the theft of power, one reason for transmission and distribution losses.” WSJ notes that Gujarat’s biggest innovative zeal has been to establish a parallel distribution network that has led to stability in supply along with giving farmers competitive prices.
It acknowledges Gujarat as, “…the only Indian state that generates more power than it consumes.” But WSJ notes that while all states may not be as bold as Gujarat, the real scope for power reforms comes from the states Shri Narendra Modi is a stark contrast to the Centre and could be an inspiration for other states.
Similar praise for Gujarat’s power sector turnaround has come from leading international brokerage firm CLSA. CLSA noted how Gujarat made 100% power in the villages a reality ending a history of power theft and poor management.
The Indian media has been equally forthcoming in praising Gujarat’s power successes. The Times of India carried a story with a catchy title, ‘Power grid failure: Amid gloom, Gujarat sets an example.’ The story notes how it is not only the big cities of Gujarat but also the 18,000 villages of the state that are beneficiaries of uninterrupted electricity.
It also notes the success of the Jyotigram Yojana in this commendable transformation.Gujarat’s power sector turnaround is the result of a determined effort that began approximately a decade ago.
In February this year, leading business magazine Business Today did a comprehensive narrative of what Gujarat did differently that led to this amazing turnaround.
Till a decade ago, Gujarat’s power sector was in urgent need of reform. The state electricity board GSEB was incurring heavy losses, interests were rising and transmission losses were frequent. These were exactly the things Shri Modi altered when he took charge. Beginning with restructuring finances, Shri Modi went on to unleash other reforms including renegotiating power purchase agreements and controlling leakages.
An act passed in 2003 even enabled better management. The rest of course is history…Today not only has the power sector witnessed a complete turnaround but also Gujarat’s power companies are winning awards at the national level. In March this year, 3 companies of the Gujarat Government were awarded for their outstanding performance in the power sector.But, if you thought Gujarat was content with these advances you may want to think again. Despite being a power surplus state, Gujarat is looking at making wide scale advances in renewable sources of energy.
Shri Modi began with solar power and is now moving towards wind, thermal and tidal energy.
In April this year he inaugurated Asia’s largest solar park at Charanka in Mehsana. Days later he dedicated India’s first canal top solar power project to the nation.
All these advances have received praise from none other than UPA Cabinet Minister for Renewable Energy Dr. Farooq Abdullah. Thus, as India plunged into darkness clamour for asking the other states and particularly the Centre to emulate Gujarat’s model of power reforms is only increasing. Shri Modi himself came down heavily on the Centre’s mismanagement of the power sector.
Expressing his views on Twitter, he said, “Pradhan Mantri ji, 60 cr people & 19 states are in darkness. Country wants to know is there any coalition dharma you are following here too?” He added, “With poor economic management UPA has emptied pockets of common man; kept stomachs hungry with inflation & today pushed them into darkness!”
The power is the lifeline of any nation’s growth. Such blackouts do not augur well for an aspiring superpower likes India. In such a time, it was heartening to see Gujarat’s power sector turnaround being appreciated across various sections of the national and international media, thinkers and netizens. When Shri Modi assumed office, the request people made to him was to give them as much electricity that they can enjoy their evening meal.
Today, the entire Gujarat is covered by brightness, every single day of the year!
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