Thursday, June 28, 2007


Heard of a building called Antilia being built in Mumbai with six floors of parking, mini theatre, two floors for terrace gardens, a floor with swimming pool and health club, four floors of apartments and three helipads and all that for a single family?
Yeah thats true. Who else but MK could do that. Read here.

Friday, June 22, 2007

2nd GR (part 2)

In my previous post on GR, some wondered whether the entry of corporates will really better farmers lives and benefit the consumers as well.

Heres what Gurcharan Das says about it in his blog.

The price of potatoes, November 19, 2006

I sometimes wonder why I pay Rs 10 per kilo for potatoes when the farmer receives only Rs 3. My potatoes travel some distance, I realise, from the farm to the mandi to my bania, and each person in the chain must get his cut. Still, the gap of Rs 7 seems excessive, especially when the American farmer receives Rs 4 to 5. This gap varies, of course, depending on the commodity and the season, but studies by agricultural economists show that farmers in the developed countries do get a bigger share of the consumer price because their distribution chain is shorter.

Reliance opened seven supermarkets in Hyderabad last month and my friend bought potatoes there for Rs 10 per kilo compared to Rs 18 at his bania’s shop. Another friend who works with an NGO in rural Andhra reported that farmers, who had supplied potatoes to Reliance, reported receiving higher than the mandi price. How could Reliance pay a higher price to farmers and charge a lower price to consumers? Simple--it had eliminated middlemen in the chain. Thus, we should welcome the entry of large retailers. They will bring logistics efficiencies and competition between them will lower consumer prices and raise farmers’ incomes. We shouldn’t wait too long to open this sector to foreign retailers like Walmart and Tesco lest Reliance become a monopoly.

A typical farmer harvests his crop, loads it on his bullock cart, travels30 km to the mandi, where he is forced to sell often at distress prices. Once at the mandi, he cannot return without disposing his produce. He needs the money and the trader knows it. Had he known the price before he left, he might have waited a few days. Where E chaupals have arrived farmers are happy because they get to know mandi prices via the Internet. The national commodities exchange (NCDEX) is setting up electronic tickers announcing spot and future prices in local languages at mandis and bus stands in some states. Eventually, the mobile phone will be the farmer’s best source of information. All these developments make traders unhappy.

Since his crop is perishable, the farmer needs a warehouse to enhance his staying power. NCDEX is putting up a thousand cold storages with world class grading facilities, but large retailers will also bring air-conditioned warehouses and trucks, and this will save India’s huge post harvest losses, as high as 40% for some crops. Banks ought to lend money to farmers against warehouse receipts, but the Reserve Bank refuses to allow them to hedge against future prices. This is a pity for bank loans would mitigate the farmer’s risk and improve his holding power. In fact, banks should also sell crop insurance. It is amazing that RBI should view futures trading as speculation. If the farmer knows the price of potatoes, he might plant onions instead.

Old habits of the mind die slowly. When you have been a stagnant, peasant agriculture for hundreds of years, it is difficult to grasp how Reliance, commodity exchanges, futures trading, and contract farming will quietly bring a second green revolution and liberate farmers from the clutches of the old mandi system, which is at the heart of rural political patronage. Activists oppose the entry of global retailers like Walmart on ideological grounds. Talk of farmer suicides is cheap. Politician-traders on Agricultural Marketing Committees play on these insecurities. No wonder it takes so long to reform in a democracy.

Sunday, June 17, 2007

Bullet trains in India? You Bet !

Such reports have been coming in the print media for a long time now, so here is one of them. Hoping that it will materialize soon.

Here is report from mint.

"The ambitious high-spe-ed rail project is gaining momentum with several states actively pursuing it.
The response from state governments has given the railway ministry the confidence that there is demand for the project. Punjab, Gujarat, Kerala, Maharashtra, Karnataka and Tamil Nadu are some of the states that have written to the ministry expressing interest in the project.
Of these, Punjab and Kerala have already announced plans to set up a high-speed rail system in their states.
Even as the preparatory work for the project is being done, with the railways surveying routes for construction of high-speed corridors, the ministry is understood to have zeroed in on leveraging railway land as well as carbon credits as two streams of revenue that can be earned from the project in order to fund construction and operation of the high-speed network.
Most states also prefer a public-private partnership option as they are unsure whether they would be able to invest in the project.
“The project will definitely require the railways to look at some revenue streams which would help plough some money into the project. One method of raising money that has been looked at is to hand over land to private players and to allow them to develop the property,” said a person close to the project who didn’t want his name used.
The railways has adopted this strategy of leveraging land for many of its recent ventures, including modernizing 20 railway stations recently and building budget hotels. The ministry also plans to earn from carbon credits as high-speed rail is considered a “clean” technology.
In a presentation before the Prime Minister’s Office in April on the high-speed rail project, the railways said the energy consumption per km is 3.5 times lower than private cars and five times lower than aeroplanes. The emission levels would be “4.5 times lower than even green cars” transporting the equivalent number of people, the ministry officials had said in their presentation."

Sunday, June 10, 2007

A second Green Revolution in agriculture?

While our cities and industries have been growing at an unprecedented rate, our agriculture is stagnant. In India 70% of the people are employed by agriculture but they contribute just 20% of GDP. Several reasons like small land holdings, poor knowledge about soil requirements, unavailability of credit, poor logistics are some of the reasons. Even if agriculture grew by 2% higher than what it currently does, sustaining double digit GDP growth will be possible. When companies like Reliance, Wal Mart enter food retail there will be several changes. These companies will provide cold chain facilities (currently more than 50% of produce is wasted in the supply chain), by eliminating the middle trader they will give better price to the farmers and yet offer lower prices to their customers, also they will export a certain fraction which will only give higher returns to farmers. These companies will also make available better technologies to the farmers hence increasing their farm yields, pushing their sourcing costs down and offering even lower prices to the consumers. Everyone is benefited by this improved farm to plate efficiency. Read my previous post on Mukesh Ambani for more information about this retail strategy. Here is a link which gives M.S.Swaminathans views on a second Green Revolution!

I am pretty optimistic about this.