High Court asks Arvind Kejriwal to justify stadium session for anti-graft Jan Lokpal Bill

Needed – some Simple Answers !

This is with reference to the controversy surrounding the pricing of KG-6 gas of Reliance , which started with $ 2.4 , is currently $ 4.2 and slated to rise to $ 8.4 / unit , from April 2014

Writing in yesterday’s Times of India , ( Swaminomics ) , eminent economist , Swaminathan Anklesaria Aiyar , made following points :

> Reliance ( KG – 6 ) accounts for only 10 % of the gas production in our
country . Balance 90 % is by Public Sector Companies such as ONGC etc

> Hence , any increase in selling price will mostly benefit government itself
( Any idea , what will government do with this windfall ? )

> Price – hike envisaged is recommended by a committee headed by Mr C
Rangrajan ( – implying , infallible / sacrosanct ? )

> By introducing price control on gas , ” India’s name is mud globally , and
top exploration companies now avoid India ”

> An economic rule of thumb is that ” traded Commodities ” should be
priced on par with the import price ( my question : irrespective of the
actual cost of production in India ? )

The Rangrajan price of $ 8 / unit , is well below the import price

Not being an economist , I am confused !

May be Mr Aiyar can dispel my following doubts :

# By taking out of our own soil ( or sea ) , does gas become a ” traded
commodity ” ? – even if entirely sold in India ?

# Is KG-6 gas a ” Natural Resource ” which belongs to the Nation – and
not to Reliance ?

# Is Reliance the ” Owner ” of the gas or a mere ” Contractor ” ?

# Would Mr Aiyar , want the Central Government to extend the same logic
to other ” Natural Resources ” ( belonging to the country ) , being dug
out from the earth ( by private companies ) , such as :

* Oil / Coal / Shale Gas etc ( Fossil Fuels )

* Ores of Iron / Copper / Zinc / Aluminum etc

* Trees ( timber ) that grow in our jungles

* Any number of minor minerals / chemicals

Should these too , be treated as ” Traded Commodities ” , whose local
selling prices must be same as Imported prices ?

# What about the air / wind that blows freely over our land ?

Does it belong to the Nation or not ?

Or , does it belong to the Companies setting up WIND FARMS , to
generate electricity ?

Should such power be ” Price Controlled ” or not ?

# What about the Sunlight that falls on our vast land ?

Who does it belong to ? To our government or to the companies setting
up mega Solar Power Projects ?

Should there be a price control on such power – produced , using a National Resource ?

# What about the hydro – power generated by private sector companies
from the water flowing in our Country’s rivers ?

Does – or does not – that water belong to the Nation ?

Should not such power be price – controlled ?

# Tomorrow , if a private sector company ( or a consortium of Indian
Companies , in joint venture with foreign companies ) , invest Rs 1 Lakh
Crores , to build the 22 Km long Kalpsar Dam across the Bay of Cambay
in Gujarat , and generate 10,000 MW of power from Oceanic Tides , –
can they be allowed to set any selling price ? At International price ?

I suppose , it would be next to impossible for them to ” Export ” such
power beyond the shores of India !

# Incidentally , what about the Airwaves ( the 2G / 3G Spectrum ) ?

Is that also a Natural Resource which belongs to the Nation ?

Having ” licensed ” it from the Central Government , can Mobile
Phone companies , set any selling prices for their services ?

Even with a combined debt of around Rs 2 Lakh Crores , how are these
Mobile companies , able to deliver ( nearly ? ) cheapest mobile phone
services in the entire World ? May be at 10 % of international price ?

# In ALL of the above – mentioned cases , should Central Government
carefully calculate / frequently audit , the ” Cost of Production ” ? Then
link the ” Local / Domestic , Selling Prices ” to such ” Cost of Production ”
allowing certain pre-determined ” Return on Investment ” ?

# Even as we agree that ” Export prices ” of gas are governed by prevailing
international prices , how come the ” Domestic Prices ” of gas are vastly
different in different countries , ranging from under $ 1 to $ 5 / unit ?

Does this itself , not prove that , in each country , domestic prices are
linked to their own local ” Cost of Production ” ?

# Very often , have we not exported , food grains , at ” Below the Cost ” ?

Mr AIYAR ,

You will be doing a great service to millions of ignoramus like me , by offering your own ” Views ” on the points raised above

And , I suppose , since the fall in production from KG – 6 , is purely and entirely , due to ” Technically Sound ” reasons , raising of the selling price to
$ 8 ( or even $ 16 / – ! ) , won’t result in any increase in production !

Time alone will tell !

* hemen parekh ( 17 Feb 2014 / Mumbai )