Hi NL Team,
This is Gunen from Manipur, I have been a Newslaundry subscriber since June 14, 2016.
It was a breath of fresh air having Samrat X in Hafta 174. Hafta has broadened my spectrum, came to know about Mr Saurav Dwivedi and his Lallantop. The recommendations at the end of every episode is a definite welcome.
What has happened to Mr Anand Ranganathan, miss his erudite interjections and wish Madhu ma’am comes up with a reading list of all the books she read in an order of preference, must be a very long list indeed. Her writing has always been a pleasure since India Today in the late seventies or was it the eighties, so long ago. Further, it would be great if you have a full-fledged panel as most of the time two or three members are missing.
Please keep up the good work and get more people from all the corners of the country including this part of the country as a guest on your panel instead of restricting it to NCR or whereabouts.
Godspeed and more power to you guys,
Rajkumar Gunendrajit
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Hi NL team,
Abhinandan’s comments on Indian democracy stirred the patriot in me. He mentioned another article on how the US is ’embodiment of liberal democracy’ and how Indians are still servile towards the monarchs or the powerful in general. Yes, Indian society has a long way to go. But I do think Indian democracy is an incredible achievement so far, in spite of the flaws. Just look around India, Pakistan/Bangladesh/Sri Lanka all have fewer people, lesser diversity and still have struggled for political stability, faced multiple military coups. Even Nepal has had 7 Constitutions. Barring a few leaders like Nehru or Jyoti Basu, almost every major Indian leader has been embraced and kicked out by the Indian voter, and sometimes accepted again. For all its history of the caste system, India gave universal suffrage as soon as it had a Constitution in 1950, US still did not till Civil Rights Act in 1964. With all the challenges, religious/linguistic/economic diversity, how India has any electoral democracy at all is mind-boggling and makes no sense. It has a long way to go but let’s not lose perspective.
Prakash Iyer
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Dear Hafta team,
I am a subscriber and I support NL’s brave efforts at trying to be the free media. More power to you. I am responding to the discussions a couple of weeks ago — where there was a reference to “khichdi sarkar comment” as the panel was discussing the Karnataka election results. Anand spoke about how the coalition governments in the past collapsed under their own contradictions.
My submission is that the statement “coalition governments are so bad that they are not even an option” is gaining a sort of universal acceptance and currency which is dangerous for democracy. Democracies tend to evolve. In a multi-religious, multi-community, a multi-caste and multi-class society like ours, coalitions may not be the most effective form of government, but they may be the most just. We will have to learn to make coalitions work because they are truly representative of multiple PoVs. The alternative of an absolute majority, with its so-called promise of efficiencies (acche din, good roads and GDP growth), always needs a larger than life pied piper like a Mrs Gandhi or a Narendra Modi to make people get over their legitimate differences and vote en-masse for a pipe-dream. And I believe we will learn to make coalitions work as a country, as we learn to embrace democratic values and stop looking up to a mai-baap sarkar who will take care of everything.
Rajeev Nair
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Hello NL team,
I am sorry if I use some harsh words in this email about the discussion on oil in the Hafta 173. Hafta has gone to a point where it is not conveying the correct economic facts. It is time you guys get a real economist on your panel while discussing economic matters. Below are a few examples of where the discussion was not up to the mark.
- Anand’s point that American sanctions on Iran give India a better bargaining power on oil purchase is false. Sanctions mean that other countries (like India, countries of European Union, etc.) have to limit their imports from Iran, or they could face a sanction themselves. This has a supply-side constraint on oil which drives prices of oil up. Iran is the third-largest exporter of oil to India, and no matter what deal India strikes with Iran (be it in rupee or dollar), India will suffer from higher oil prices.
- About why government oil companies make losses all the time, and companies like Reliance are more profitable, you have to understand the architecture of the oil industry. Upstream oil companies are responsible for oil exploration and benefit from higher oil prices (examples are NTPC, GAIL, ONGC). Downstream companies or commonly referred to as oil marketing companies (HPCL, BPCL, IOCL) are in the business of oil refining and selling in the form of finished products. For them, crude oil is a raw material and rising crude oil prices are an impediment as their gross refining margins (the difference between the total value of petroleum products coming out of an oil refinery and the price of the raw material consumed i.e. crude oil) go down. These companies right now are under financial stress, not the upstream oil companies which are having a good time. The issue that the upstream companies face is the potential for an additional government tax which they might have to pay on their profits. This is still a speculation and the government has not yet introduced such a tax. Reliance, on the other hand, is a fully-integrated oil player. However, reliance benefits more from higher crude oil prices as its net revenue is higher from oil exploration. Also, Reliance has a large number of subsidiary companies (Reliance retail, Jio, Network 18, etc.). In the last filing, Reliance showed remarkable growth in its retail business. In the Jio deal, Reliance used the free cash flow it generates from oil exploration to market its new wireless network business, which some would call efficient usage of capital if the Jio IPO is a hit and reliance can make significant money from that. @Abhinandan, hope this clarifies some of your doubts.
- The Indian government was very smart when they raised taxes during falling oil prices because they made a windfall which allowed them to achieve lower fiscal deficit. Right now, a large portion of Indian government’s revenue goes into paying off interest costs on loans that it has raised by selling government bonds. They need to either raise revenue (albeit higher tax collection) or decrease their costs (via selling their assets like IPOs of public companies) to reduce the amount of debt. In the last few years, they improved their revenues by increasing taxes on fuel and selling stakes in some of its subsidiaries (like General Insurance Corporation).
In the case of fuel, the state governments have about 40 per cent share in the fuel taxes. They can levy VAT on fuel as it does not come under the ambit of GST. In a nutshell, central government levies excise duty and road cess while the state government levies VAT. Both benefitted when oil prices went down. These two combined raised petrol prices.
I do not expect you to read my email on Hafta as it is too long. As a subscriber and an NL lover, I expect the team to be more careful about discussing things which fall outside the ambit of your team’s expertise. I would also like to propose having a respectable economist in your Hafta discussion to clarify these facts. If you are unable to find someone, I can also consider doing a podcast with you guys to clarify some of these issues. I am not an economist by any stretch of the imagination, but I do delve a lot into factors which affect stock markets. Economics proves to be a big one.
Harsh Beria
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Anand’s response:
I am briefly clarifying below the misinterpretation of my limited argument about India’s advantageous bargaining power in oil commerce with Iran in the aftermath of expected US sanctions on Iran ( following US withdrawal from nuclear deal). Also, since I didn’t speak on the second issue raised by you, I am not responding to that part.
(1) My argument wasn’t denying the obvious fact that sanctions would bring import-constraints which in turn would push overall oil price (that’s a settled reasoning in supply-side oil economics). My point was limited to understanding why even in post-sanctions scene and reduced import, India would have certain advantages in oil commerce negotiations with Iran vis-à-vis other countries. These advantages can be important within restrictions of sanction regime too: (a) Iran’s oil extraction and technology is quite old and hasn’t undergone modernisation. The crude oil Iran produces is more suitable for countries having old refineries- still equipped to process it. India is one of those. Having refineries which can still process Iranian crude oil has been giving India an advantage in its bargaining power with Iran and will continue to do so in the scenario of sanction-hit Iran (b) One must remember that earlier when sanctions were in place, Iran’s place in negotiations was very weak. Analysts have pointed out that in order to generate enough cash for sustenance of its economy, Iran had to approve less-than-market price offers from India. There is also a speculation that India may push for revival of barter arrangement for oil commerce with Iran.
We may wait and watch which way it moves when actual sanctions and import-restrictions are imposed. (c) That’s what I meant to say. If that wasn’t clear in what I said or I ended up saying something else, I regret the lack of lucidity. Also, there is no denying the fact that the subject would be better addressed by professional economists, particularly those specialising in global oil economy. I was making a limited point on its bilateral repercussions and diplomatic ramifications.
(2) I didn’t speak anything on comparison between Reliance and oil PSU, so I guess that comment wasn’t directed at me.
Thanks,
Anand
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