News Wrap


In line with a complex pricing formula suggested by the Rangarajan Committee, the Union Government of India recently approved an increase in the price of natural gas, effective April 2014; a move which hopes to boost exploration and investor sentiment. The decision will lead to higher power tariffs, and a jump in the prices of Urea, CNG and PNG. From April 2014, the final price of natural gas in each quarter will depend on the long term and spot LNG imports of the previous quarter. Considering the high cost of Australian LNG imports, and the higher price of Qatari gas from Jan 2014, the price of natural gas is likely to be at least $8.55 per million British thermal units (mBtu) from the present $4.2 per mBtu. Electricity generation at any price of gas higher than $5 per mBtu would be economically unviable. Pricing the fuel in US dollars implies any depreciation in the Indian currency, would further burden consumers.

Paddy in Kalahandi
Starvation deaths, migration, and reports of families in distress selling off their children were the norms in Kalahandi district (Odisha) till the early 2000s. Today Kalahandi is amongst the top 25 rice producing districts of Odisha. Rajiv Gandhi’s Kalahandi-Bolangir-Koraput Development Scheme (1985) was soon forgotten as funds dried up. The Upper Indravati Multipurpose Project, conceived in 1987-88, has supplied water since 2000, to six of the thirteen blocks of Kalahandi. This had led to green fields that the district could only dream of earlier. The project irrigates over 76,400 hectares, of Kalahandi‘s cultivated area of 1.9 lac hectares. Plans to extend the project will cover an additional 6000 hectares in Golamunda district. Government irrigation and improved farm input are now providing Kalahandi farmers two crop seasons every year.

Year 2012-13 recorded rice production in the Kharif season touching 4.89 lac tons, with Rabi yielding another 1.85 lac tons, making total of 6.74 lac tons, a record for Kalahandi. Per hectare yield in Kalahandi in 2012-13 has crossed 40 quintals, compared to the modest Odisha state average of 34.88 quintals. Almost all the villages in Kalahandi have good roads, under government schemes. Transformation into a rice bowl, has led to a reverse migration in Kalahandi, with rich farmers from neighbouring Andhra Pradesh now investing in Kalahandi’s fertile tracts. Kalahandi has more power tillers (2500) than any other Odisha district. Farmers are renting expensive combined harvesters for Rs 2300 an hour, to harvest paddy. From Rajasthan, Tamil Nadu and Kerala, traders bring in hundreds of automated paddy threshers to the district. Kalahandi now has 82 active rice mills, whereas ten years earlier there were only a handful of rice processing mills. Earlier Food Corporation of India had one paddy procurement centre in 1996, and now has 50 centres in the district. The railway link between Lanjigarh-Bhawanipatna-Junagarh is coming up soon.

Most farmers in Kalahandi now grow paddy throughout the year. Earlier the farmers would grow pulses and millets, such as ragi, during the rabi season. The lack of crop diversification has led to a decline in soil quality and texture. The paddy crops are vulnerable to pest attacks and diseases. The farm-hands are in short supply, as labourers prefer to work under NREGA. Rising rice production is forcing farmers to sell their produce below the minimum support price of Rs 1250 for every quintal of paddy. The rising mechanization has led to a sharp drop in livestock population. Rich farmers from Andhra Pradesh are buying land from small and marginal farmers, in Kalahandi.

Venezuela’s oil Sales
Due to the US and European oil sanctions, Iran is losing in the booming Asian market, particularly China and India. But Venezuela, a close ally of Teheran, has captured some of the markets. Venezuela has nearly doubled its oil exports to China, the world’s second largest oil consumer, and to India, the fourth largest, over the past two years. One million barrels a day is being exported by Venezuela to China and India. Iran’s oil exports to both countries, have been halved to about 500,000 barrels a day, over the same period. During 2013, Venezuela has become the third largest oil supplier to China and India, a rise from seventh position in 2011. Till two years ago, Iran was the third top supplier to China and India, has fallen to sixth and eleventh respectively. The sanctions are helping Iran to diversify its oil export destinations, away from the US. Iran’s oil production has slumped to a 25-year low, caused by the loss of export markets in Asia. There has been a sharp drop in the value of Iran’s national currency, against the dollar, as Teheran relies on oil revenues to cover roughly half of its spending. Venezuelan oil exports to the US, have fallen 25% to an average of 900,000 barrels a day, in 2012, over the past decade. The surge in Venezuelan oil exports into Asia has received a boost from the repayment of several oil-for-loans programmes with China.

Leaderless Rebellion
A seemingly minor street protest against bus fare increases in Sao Paulo, has suddenly erupted into wholly unforeseen popular revolt. The Brazilian cabinet went into emergency sessions, the Confederation Football Cup was faced with threat, and awkward challenges were posed for the organizers of the 2014 Football World Cup to be held in Brazil. There was spontaneous and leaderless uprising in more than 100 cities. With the gap between super-rich and super-poor becoming unsustain-able, the protests revolved around inflation, anger at Brazil’s sporting elite, the privatised bus system, sluggish growth and retrenchment.

Vol. 46, No. 6, Aug 18-24, 2013

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