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Showing posts from May, 2012

Public Finances

Perched on a cliff – now taking a step forward! #AditJain At our CFO Roundtable in Jodhpur, Vivek Aggarwal of CIBIL raised a pertinent point on the issue of Government finances. He correctly observed that Government expenditure is presented as a percentage of Gross Domestic Product, as are the various measures of deficits. He proposed that we undertake an exercise, if only to present a more realistic perspective, using the methodology adopted by commercial enterprises – simply put, that we look at these metrics as a percentage of revenue . This paper will provide some data along these lines but perhaps more importantly, raise concerns that the current state of fiscal affairs has perched India’s economy precariously. Frankly, it could go either way, and a disaster might not be far. In 2006-07, tax and other revenue receipts amounted to Rs 4.3 tn while total expenses were Rs 5.8 tn, implying a fiscal deficit of Rs 1.4 tn. When measured against GDP, the defi

Euro Crisis - Impact on India

And the mirror cracks from side to side #AditJain After months of haggling, many nail-biting moments, two bailouts (for Greece) and € 1 trillion in cheap credit by the ECB to prop up European banks, the crisis is back with a vengeance. Greek voters in a recent election voted for a hung parliament. The two main political parties, the New Democracy and Pasok, lost appallingly, garnering between them only 30% of the vote. A fractured result will make it impossible to form a government and Greece may have another election in June. The absence of reform will deter European lenders from extending the bailout. It now seems conceivable that Greece will default and depart from the Eurozone. The financial markets have begun to panic and yields on Spanish bonds are rising. A contagion will be hard to prevent, as the rescue fund does not have ammunition to cover more countries. But the unfortunate saga only begins here. Another anxiety for the markets is the outcome

Power of the Sun

Power of the Sun On the 22 nd February 2012, the Government of Gujarat announced the commissioning of a 1 MW solar power plant. Subsequently, Chief Minister Narendra Modi, in an elaborate ceremony, dedicated this to the nation. A tiny power plant should not really have made news, but this project was exceptional. Undertaken jointly by the Gujarat State Electricity Corporation and the Sardar Sarovar Narbada Nigam, the project involved the construction of solar cells over a 750-metre stretch of the Sanand branch of the canal in the Mehsana district. The project was completed in six months with a capacity to generate 1.6 million units of electricity annually. This is fed to the state grid. In addition, it actually prevents evaporation of water from the canal. Evidently, generating 1 MW of solar power involves 5-6 acres of land. The unique feature about using the canal network, and of this Gujarat has no shortage – over 19,000 kilometers of it – is that costs and co