Nuclear lies and obfuscation

The Civil Liability for Nuclear Damage Bill 2010 is well on its way to become law. The Congress and the BJP have, between them decided to sell the Indian national interest to the multinational corporations, with a few crumbs that the Indian companies will pick up along the way. Here is a set of expert opinion that I wish had received greater attention:

1. Dr. A Gopalakrishnan - former Chairman AEC - and a consistent opponent of the legislation - explains why the preamble and object of the bill is a veil of lies. He clearly lays down the benefits to US companies.
2. A report in the Hindu - that illustrates the way the government is going to bulldoze the interests of the local population

3. My friend M V Ramana, a physicist currently at Princeton and Suvrat Raju explain the moral hazard in the legislation. At an estimated cost of Rs18cr megawatt, it still remains a wonder why the same effort is not spend on solar

4. Vardarajan - who had of late shifted to defending the government policy on nuclear power, is constrained to comment on weak bill that will let foreign suppliers off the hook in the eventuality of a nuclear holocaust

5. More by Ramana and Raju on the moral hazard of the policy being followed by the government.Given the effect we see on the world economy by the relatively benign "moral hazard" of unsupervised banking, I shudder at the effects that this moral hazard will eventually have on India.

Besides the cost of setting up the power plant @18crs per MW (estimated) other costs that need to be considered (and have been outlined in the discussions of the Parliamentary committee - but not quantified) are:
- Finance ministry - Insurance premium will be likely in the range of 1.8% - 2.7% of the 300mn SDR that is mandated
- Home ministry - Costs of damage arising out of conflict, hostilities, war, terrorism - need to add to security forces
- Ministry of Water resources - Ministry does not have facility for testing water quality from view point of nuclear contamination. Need to study impact of contamination on humans, crops, animals
- Ministry of environments and forest - what efforts are to be made to safeguard the environment around the nuclear facility
- Department of food - storage of foodgrains - distance and operating procedure
- Ministry of health and family welfare - Ministry is nowhere ready to meet emergency arising out of nuclear or radiological emergency. Hospitals not equipped - bill does not have a single clause on health care during nuclear emergencies - only compensation due to health effects of radiation.
- Ministry of Agriculture - Disaster Management system not aligned for radiological fallout.
- Ministry of defense - fool-proof protection of nuclear assets cannot be guaranteed

Assuming that these concerns are addressed, what would be the actual "cost" of nuclear power. And of course, we have not even taken into account the cost of storing the "spent fuel" over the next 100 years !

Ofcourse, the Prime Minster has committed to the US that India will pass this bill - and the Prime Minister is an honourable man. If Indian lives are lost, that is just "collateral damage".

MP salary - weighing in on the debate

Over the past couple of days the media has been exercised over the "300%" increase in the salaries of MP's. Protesters have objected to quantum of increase (300%), and to the lack of accountability. Many have suggested that performance should be measured by the number of days the MP appears in parliament. In my view, there are several, mixed issues here. First, if we go by the 300% figure - the amounts are pathetic - from Rs16000 per month to Rs50,000 per month. By itself hardly worthy of comment. The protesters immediately shift to the "cost to country" basis claiming that the salary is closer to Rs 57 lakhs. By that token, the earlier salary was already Rs48 lakhs (see linked article). The increase is therefore a very modest 20%. So what is the issue really?

The issue of accountability is a lot more complex. I would argue that the salary that is to be paid is based on the position. The actual performance of the person occupying the position will decide his/her ability to continue - which in the case of the MP's is what the public does every 5 years. The system therefore has an inbuilt accountability for MPs. Attendance in Parliament, while desirable, cannot be the only measure of performance. It is perhaps not even an important measure. Consider that MP's are REQUIRED to vote on the basis of the party whip - and have no voice of their own. Additionally, in most case, the party will decide which member shall speak and on what. Where does this leave the back bencher the ability to reflect his actual view. In such a case, is it not better that the MP spend time in his constituency rather than in Parliament.

Now the case of bureaucrats is more interesting. They have the perks of power, a battalion of junior officers to support them, perks that rival that of MP's, and a salary that is usually higher. Additionally, they have little accountability - being assured of job security. What most citizens are interested in is in good governance - which is largely the preserve of the the executive - largely comprising the bureaucrats. The MPs are supposed to Legislate, not execute - a fact largely overlooked by the public when venting their ire on the MPs.

So - point the hatchet where is belongs - to the incompetent yet ubiquitous "babu" that holds this country hostage, and cut the MPs some slack  

The PMO intervenes in the Pharma IPR case

Yet another case of the PMO going out of its way to facilitate foreign companies at the expense of Indians. With large Indian companies rapidly getting taken over by multinationals, the lobbying strength of OPPI is only going to increase - and Indian healthcare costs will rise. I wonder what gives with our PM - why is he SO eager to dance to the wishes of the foreigner. Anyone for Laloo as PM? Just saying.

The nuclear sell-out is complete

With the nuclear liability bill emerging from the Parliamentary standing committee with minor, facile modifications, India is well on its path to energy bankruptcy. For some inexplicable reason, India continues down the path of nuclear armageddon - presenting itself as the most attractive destination for dumping poor, outdated technology, with no cost to the manufacturer. Chellany's article has expressed it very well. I have heard commentators attribute motives to him - but no sensible rebuttal yet.

On the Indo US nuclear deal too, the sell out is complete. A couple of years back when the deal was the centre of the vote of confidence in the Lok Sabha, a senior bureaucrat had assured me that the negotiators too were patriots and they would protect Indian interests. The Prime Minister had repeatedly assured the house that the "Hyde Act" was an internal regulation of the US and did not apply to the deal. As was expected, the Prime Minsiter was economical with the truth, and hopes of a deal favourable to India have been belied. The Indian government has reduced India to a level of a rentier state - much like Pakistan. No wonder a fund manager recently commented - "everything is for sale in India" - including ofcourse the National interest.

From "too big to fail" - to "too big, will fail"

The recent banking crisis has brought to the fore the argument against letting banks become too big. For far too long, regulators and politicians (including the erstwhile finance minister - Chidambaram) have argued for the merger of government owned banks. For some strange reason (atleast strange to me) - this is supposed to increase the ability of the banks to compete. With capital adequacy requirements unchanged, why a merger will allow greater competitiveness - especially since in the Indian context the merged banks will typically not be allowed to restructure either branches or staff - has always mystified me. At last, I see a serious academic Prof. Jayanth Varma argue for smaller banks. Hope someone is listening.

Structural reduction in fiscal deficit?

Interesting point - is the Indian economy witnessing a structural reduction in fiscal deficit? This suggestion, made with utmost seriousness by a fund manager recently had me thinking. Perhaps the recent increase in fuel prices, and some changes in fertilizer policy motivated this comment? So here's my take - fiscal deficit cannot be reduced in a democratic country with income disparities as wide as India - not now, not ever (perhaps). We've had "free" pricing of fuel earlier - when the OCC was abolished. Till the need to tax fuel oil higher, and higher prices of crude combined with a pre-elecction period forced a reversion to price control. And yes, even then, Reliance had a retail distribution - that had to be shut down. So Murli Deora and his closeness to the above mentioned industrial house notwithstanding, only low crude prices (and not government policy) can prevent a recurrence of governmental interference in oil pricing.

The government spend is increasing at a trend rate higher than income. Public sector salaries are linked to an inflation rate that is galloping. Endemic corruption increases cost of service delivery across a bloated governmental apparatus. Pension liabilities are unfunded and the government is populist. Its easier to believe that I have goblins living in my closet.

When Bulls meet - Shit happens

The "Market Summit" organized by ET the last weekend revealed yet again the inability of public debate in India to rise beyond cheerleading. Despite some interesting panelists, the discussion remained largely mundane and predictable. Surprising for such a panel, many arguments were simply wrong:

Chris Wood mentioned that inflation in India was good because we need some parts of the world to grow. Whatever happened to growth with moderate inflation - the mantra the fueled the US markets for most of the nineties? Besides, why is inflation needed for growth? Is anyone making a case that India is a "full employment" economy?Inflation is BAD for the poor - who make up large portions of the Indian population, and a government that does not focus on this is hardly managing the economy sensibly. Clearly a case of poor economic argument.

Rakesh and Shankar Sharma mentioned that the Indian economy did not receive a stimulus. Rakesh even made a suggestive statement that with the youngest population in the world, the Indian economy did not need one. Unfortunately, this is completely contrary to facts. The past three years has seen double digit fiscal deficits (just add centre and state. If you take off-balance sheet items, its positively scary). The government expenditure has been well above trend. Importantly, the stimulus continues unabated - with inflation running in high double digits and interest rates low, we have negative interest rates prevailing - which even the RBI has been constrained to comment on. If this is not the largest stimulus imaginable, I am not sure we are on the same page with regard to basic definitions.

A subdued Sameer Arora did make an attempt to inject some balance in the "debate". However, in today's youthful India, it seems that voices of balance can hardly get airtime.