A newsletter from Indicus Analytics on economic policy

1. Indicus Analytics, An Economics Research Firm www.indicus.net
Volume 1, Issue 2, January 2009
TELECOM
TRAI Moots Steps to Push Rural Telephony
Pointing out the widening gap between rural and urban teledensity, TRAI has called
for several measures to improve rural telephony. It has proposed that all operators
offering communication services in Rural India and sharing their infrastructure with
other players be given financial support from the Telecom Development Fund. At
present, all telcos pay 5% of their annual revenues towards this fund—Universal
Service Obligation Fund (USOF)
Our view is that in order to increase rural teledensity the universal service
policy should be minimalist. The current universal service levy of 5 percent
is distortionary especially as large amount of the money collected is
unspent. The flaw in the design and execution of the Universal service
policy has made it ineffectual.
Read More ...
Mobile VAS Companies May Stay Unlicensed
TRAI has proposed that Companies providing value-added services (VAS) such as
music and videos on the mobile phones will not be brought under a licensing
regime. In addition to this the regulator has also decided not to interfere in the
commercial agreements between VAS operators and telcos. TRAI is also likely to
put guidelines to enable content producer and creators to protect their copyrights.
The regulator is also looking at the possibility of issuing norms that will allow VAS
companies to sell their products and services directly to the consumers without
having to go through the operators
Our view is that this is a welcome step since the current regulatory
environment is not very conducive for the content providers. By allowing
VAS companies to sell their products and services directly to the
consumers without having to go through the operators will address the
current unequal bargaining position between the operators and the
content providers.
Read More ...

2. Indicus Analytics, An Economics Research Firm www.indicus.net
CLIMATE CHANGE
Global Attention on Carbon Emissions Reduction
The 14th Conference of parties (Cop) to the United Nations Framework
Convention on Climate Change (UNFCC) was held in Poznan during December 1 –
12 2008. While India does not have a legal or binding obligation to reduce carbon
emission, United States, the biggest carbon emitter continue to state that
emerging economies like China, India, Brazil and South African must also take
action on reducing carbon emission. India has been pushing for equitable sharing
of carbon space.
Our view is that the only discernable framework or logic for India’s
stance vis-a-vis the rest of the world is the normative standard that
national emissions entitlements should be determined by the principle of
“per capita emission entitlements” (PPCEE). However, the nation might
be better served by a somewhat more critical examination of India’s
naïve stance. PPCEE is problematic because its normative and positive
moorings are unclear or do not exist.
Read More ...
ENERGY
Government to Consider Opening of Nuclear Sector to Private Players
With India’s civil nuclear cooperation with different countries gathering pace, the
Government is considering opening up the sector for private players. After a
decision in September by the Nuclear Suppliers Group to waive its ban on the
trading of atomic technology with India, India has signed agreements with US,
France and Russia.
Our view is that the opportunity and risk costs associated with the
business of nuclear electricity generation are very high making it
unattractive to the investors. Investors are also wary of nuclear plants
because of the construction delays and cost over-runs that have
historically plagued the industry. Till the Government gives iron clad
guarantees to the investors, private capital will shy away from this
sector.
Read More ...
Edited by: Payal Malik
29th December 2008

3. Indicus Analytics, An Economics Research Firm www.indicus.net
MORE NEWS
NHAI pulled up for delays in PPP Cabinet approves Integrated Energy
highway projects Policy
According to a recent report by The Union Cabinet has approved an
Comptroller and Auditor General of Integrated Energy Policy for the country.
India on roads, majority of the 17 road A monitoring committee, to be chaired
works awarded under the public private by the Cabinet Secretary, will be set up
partnership (PPP) as part of Phase-I of to review the progress of the policy’s
National Highways Development implementation
Programme (NHDP) were delayed.
NHDP's road stretches likely to be Regulators may be barred from core
built on annuity model PPP projects
The government may switch over from Government agencies that also act as
build-operate-transfer (BoT) model to regulators may soon stop partnering
annuity model for the stretches of the with private companies for new ports,
National Highways Development power and railways projects. The move
Programme (NHDP) that have not will prevent a clash of interest between
received a good investor response. the government and the private sector in
These are mostly in Bihar, Orissa, public-private partnership (PPP) projects
Jharkhand, Chhattisgarh and Kerala. It
is hoped this would make these
segments of the projects more
attractive to potential bidders
Providing Affordable Broadband to Coal Pilferages on the Rise as
Rural Areas Next Priority Shortages Haunt Power Units
At a conference on '3G: The Next Wave' At a time when a coal crisis is walloping
Telecom Secretary, Siddhartha Behura the country’s power sector, with over 50
said that providing affordable of the 77 thermal stations in the country
broadband, especially to the suburban facing “critical” fuel stocks, coal is
and rural communities is the next focus increasingly being siphoned out of
area in telecom. Provision of broadband mines. Coal India Ltd (CIL) estimates
in rural and remote areas will also help that during the first five months of the
in bridging the so called 'digital divide', current fiscal, over 11,500 tonnes of
he said pilfered coal have been recovered by it
in raids conducted across the country.
Government readies blueprint for No competitive bidding for coal
world's first energy savings market blocks: ministry
India will have the world’s first market The coal ministry has ruled out allocation
for trading in energy savings. Under the of coal blocks to power, steel and
National Action Plan on Climate Change, cement industries by way of competitive
the power ministry has prepared the bidding in the near future and blamed
blueprint for trading in energy by the mines ministry for delaying the bill
industrial plants that save energy which would amend the Act under which
beyond the target set for them. mining blocks are allotted
Nelp-VIII likely to offer 100 blocks Government pushes through IT Bill;

4. Indicus Analytics, An Economics Research Firm www.indicus.net
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