Cruel fuel world

From Portfolio magazine (via Saja):

Portfolio magazine has an interactive graphic on gas prices around the world. Here is what people in South Asia pay per gallon of petrol (1 gallon = 3.8 litres):

Afghanistan…..$2.30
Pakistan……….$4.02
India……………$4.94
Nepal…………..$5.51
Sri Lanka………$5.52
Bangladesh…..$4.82
Bhutan…………$3.91

(For some reason, Portfolio does not have the Maldives on the map)

The gas price in the United States is listed as $3.73.

The highest price is in the Gaza Strip ($26.5) followed by the Netherlands ($9.97).

The lowest price is in Venezuela ($0.12) followed by Iran ($0.41).

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Cost-cutting in New York, but a boom in India

Wall Street’s losses are fast becoming India’s gain, as jobs higher up the financial food chain are being exported to India and places less costly than New York and London. Heather Timmons in The New York Times:

Gurgaon, India: On the top floor of a seven-story building in this dusty aspiring metropolis, Copal Partners churns out equity, fixed income and trading research for big name analysts and banks. It is a long way from the well-cooled corridors of Wall Street, and quarters are tight; business is up about 40 percent this year alone.

“This is one bulge-bracket bank,” said Joel Perlman, president of Copal, pointing toward a team behind an opaque glass wall. “And this,” he said, motioning across a narrow corridor “is another.”

The banks edit and add to what they get from Copal, a research provider, then repackage the information under their own names as research reports, pitch books and trading recommendations.

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So near and yet so far

From The Guardian

From The Economist:

In many examinations, 90% is an excellent score, deserving a prize and a handshake from the headmaster. In Geneva this week, only full marks would do, and the world’s trade ministers failed. No matter that they came closer to a deal than anyone should have expected (see article). No matter that they stuck at it for nine days and several nights, in the longest ministerial meeting in the history of the World Trade Organisation (WTO). No matter, too, that this time they parted in stunned disbelief, heads shaking, rather than in acrimony, recrimination and spite, as at Cancún in 2003. They managed “convergence” on 18 of the 20 topics set before them by Pascal Lamy, the WTO’s director-general, but they stumbled on the 19th, a device for protecting farmers in developing countries against surges in imports. They never reached the 20th, cotton. Failed.

You can construct a plausible argument that the collapse of yet another set of talks on the Doha round, which is now coming up to seven years old, is of little importance. While the world’s trade ministers have alternated between talking and not talking to one another about Doha, the world’s businesspeople have carried on regardless: the growth of global commerce has outstripped the hitherto healthy pace of global GDP. Developing countries in particular have continued to open up to imports and foreign investment. You might say that not much was on offer in Geneva anyway: one study put the eventual benefits at maybe $70 billion, a drop in the ocean of the world’s GDP. Global stockmarkets, with so much else on their minds, either didn’t notice or didn’t care. On July 29th, the day the talks broke up, the S&P 500 index rose by 2.3%.

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Hard line at WTO earns Indian praise

From The Washington Post:

After nine days of talking tough at the Geneva global trade meeting, which ended in collapse, chief Indian negotiator Kamal Nath returned to New Delhi on Thursday to a hero’s welcome.

He was congratulated by colleagues at a cabinet meeting for “bravely fighting the nation’s battle.” During an interview, his cellphone beeped constantly with text messages reading “Well done,” “You have made India proud” and “You held your own in Geneva.”

The World Trade Organization talks collapsed Tuesday when developing nations, speaking through Nath, stood firm on safeguard measures that they said were vital to protect the livelihoods of millions of farmers against a likely spike in food imports from rich nations.

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The new new middle class

Yes, China and India are leading the surge in the new global middle class. This could be great news for multinationals, which have so far seen developing nations as a cheap source of labour, but now have new markets for their goods. Note of caution: while this class is potentially profitable, it’s also unpredictable. From knowledge at Wharton.

A new global middle class is rising up from poverty in emerging economies around the world, providing competition for labor and resources, but also enormous promise for multinationals that tailor products and services to the burgeoning ranks of first-time consumers, according to Wharton faculty and analysts.

Coca-Cola’s newly appointed chief executive Muhtar Kent sees this market as critical to his company’s future and describes the scale of the opportunity as equivalent to adding a city the size of New York to the world every three months. The World Bank estimates that the global middle class is likely to grow from 430 million in 2000 to 1.15 billion in 2030. The bank defines the middle class as earners making between $10 and $20 a day — adjusted for local prices — which is roughly the range of average incomes between Brazil ($10) and Italy ($20).

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Secret report: biofuel caused food crisis

Aditya Chakrabortty in The Guardian:

Biofuels have forced global food prices up by 75% - far more than previously estimated - according to a confidential World Bank report obtained by the Guardian.

The damning unpublished assessment is based on the most detailed analysis of the crisis so far, carried out by an internationally-respected economist at global financial body.

The figure emphatically contradicts the US government’s claims that plant-derived fuels contribute less than 3% to food-price rises. It will add to pressure on governments in Washington and across Europe, which have turned to plant-derived fuels to reduce emissions of greenhouse gases and reduce their dependence on imported oil.

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India’s new corporate jet set

Neeta Lal in Asia Sentinel:

India’s newly rich are acquiring that increasingly contentious totem of the western corporate world, the executive jet, in record numbers. At a time when it is becoming de rigueur to be concerned about the carbon footprint - the contrail of greenhouse gases that jets that spew across the stratosphere — India’s 100,000 high-net worth individuals, those with more than US$1 million in assets, are snapping up spiffy aircraft at mind-boggling prices for their personal and business use.

Until very recently, corporate jet travel was a rarity in Asia overall as tightfisted titans eschewed private aircraft as an unnecessary frivolity. That has started to change, with India and China at the forefront, giving succor to manufacturers such as Cessna, Bombardier and General Dynamics and others as the US and Eurozone economies start to flag.

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P Chidambaram: ‘We are serious about making poverty history’

Indian Finance Minister P Chidambaram speaks to Tehelka’s Shantanu Guha Ray and Shoma Chaudhury about poverty, SEZs and the I-word: inflation

A long wait in an ante-room and then the summons. A neat man in meticulous white at the far end of a football field-size room. In a stellar career, P. Chidambaram, 62, has gone from being a left-wing trade unionist to Finance Minister, driving a globalised new economy. Inevitably, he’s in the crosshair of every major argument about the future of India. Certain of his vision, contemptuous of doubting socialist romantics, in an hour-long interview he spoke less numbers, more vision, with combative eloquence

SGR: Let’s start with what’s top of mind. Inflation. Wholesale inflation just hit a whopping 7.83 percent. Given that the tolerance level for inflation has come down in India from a time when people were willing to tolerate 8-10 percent inflation, does this put your government on notice?

PC: I’ve said this many times in the past. In the 70s and 80s average inflation was well over 8 percent, in the 50s and 60s it was even higher but since the 90s the tolerance level of inflation has come down drastically. Since the turn of this century, I think tolerance level of inflation is only between 4 to 5 percent. Therefore when the headline inflation number goes beyond 5 percent there is resentment and naturally political parties seize the opportunity to feed this resentment. We are doing everything to control the situation, but I don’t think it will have too adverse an impact on our government.

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And the two shall never meet

India has always been a land of extremes. After 16 years of reforms, India has the most billionaires of any nation in Asia, another 100,000 millionaires and a growing middle class estimated to be anything between 200 million and 250 millioin. But 700 million Indians still live on less than $2 a day. Amelia Gentleman has the story for the International Herald Tribune.

There is a kind woman who parks her car near my gate once a day to distribute parcels of rice, neatly wrapped in newspaper, to the wild and possibly rabid dogs who roam the quiet street in this rich part of central Delhi. She caresses them and addresses them by name. One mangy yellow, malevolent animal she calls Bruno.

It is an act of generosity that I still find confusing. Around the corner, sitting by the traffic lights, is a family of four, which receives no rice parcels. The mother, Sayari, is bony thin, and the children’s matted hair has a dull orange tint, a sign of the malnutrition affecting nearly half of all under-fives in India.

Sayari, who goes by only one name, has spent most of her life selling flowers (bracelets made of jasmine, bunches of wilting roses) at this junction. Unable to make a living in his Rajasthan village, where there was neither work nor water, her father brought her here when she was a baby, about 25 years ago.

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Mystery Indian analyst spooks world economy

A man who gives no interviews and never appears on business television is driving an information hungry media batty. Chidanand Rajghatta finds out why in The Times of India

They are calling him Arjun ‘‘Spike” Murti, but his real middle name is Narayana, the supreme manifestation of the Hindu god Vishnu. Supreme he is, in the oil world. The little known Indian analyst at Goldman Sachs has become a cause cilhbre — a doomsday prophet — for his forecasts about oil prices, based on what he calls the ‘‘super-spike” theory, predicated on rising demand for crude and limitations in refining capacity.

Murti, 38, now a managing director at Goldman Sachs, first came to the fore as far back as 2003-2004 when he predicted that oil prices would breach $80 a barrel when it was still in the 30s. He was sneered at. He was mocked again when he predicted in 2005 that it would double from $50 to $100 before the end of the decade. Last month, when he forecast that a barrel of oil could even touch $200, no one was laughing as it surged to $125 on Friday.

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No room at India’s inns

A serious hotel shortage has businessmen wandering the country in search of a bed. Neeta Lal in Asia Sentinel:

Paul Douglas had a surreal experience on his maiden visit to India last year. Although the Los Angeles trader was on a business trip to India’s Silicon Valley - Bangalore - he put up in Mumbai, nearly 1,000 kilometers away. Douglas would fly to Bangalore every morning during his three-day stay and then jet back after wrapping up work.

Douglas found the city’s hotels so expensive, he says, that he preferred “to stay with a friend in Mumbai, fly in for meetings to Bangalore and then catch the day’s last flight back.”

Much like Douglas, foreign visitors to India are experiencing the country’s worst hotel room crunch ever. As its economy booms, with growth projected at 8 percent in 2008-09 despite the global slowdown, demand for hotel accommodation has far outstripped supply. The shortfall is so acute that hotel rooms in most Indian metropolitan areas are either unavailable or to be had only for outrageous prices.

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Why China needs India’s transparency

Tarun Khanna, Jorge Paulo Lemann Professor at Harvard Business School and the author of Billions of Entrepreneurs: How China and India are Reshaping their Futures and Yours, in BusinessWeek:

A few months ago the gentleman driving my car between New Delhi and an old fort in Alwar district in Rajasthan had to stop to accommodate a collection of villagers protesting water shortages. It is perhaps a sad commentary on this serious problem-water shortages are endemic to Rajasthan, a desert state bordering Pakistan -that the protest barely registered with me.

But what I found interesting, after being stuck behind a line of bullock carts, buses, trucks, and cycle rickshaws all patiently waiting to move around the protest, was the equanimity with which the protest was received. Everyone was inconvenienced, but there was no “protest” against the protesters. Nor was there any attempt by the political classes against whom the protests were directed to subvert the protesters in any way.

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Pakistan’s brain drain

Irum Sarfaraz in All Things Pakistan

The term brain drain was coined by the spokesmen of the Royal Society of London to describe the outflow of scientists and technologists to the United States and Canada in the early 1950s. Since then the term has become synonymous with human capital or the migration of highly educated individuals from the developing, mostly third world countries, to the developed ones.

Over the past few decades, more since Pakistan has been lurched full throttle into economic and political chaos, the phenomenon has become the bane of the society. The number of repining Pakistanis who wish to settle abroad is rising every year and the ones who are actually capable of breaking loose are coincidentally the educated ones, contributing alarmingly to the growing crisis of the Pakistani brain drain. To leave the country and settle abroad has become the zeitgeist of current day Pakistan.

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Oh! Kolkata!

Can Kolkata rise above its poverty to become the Bengali entrepot for the East asks Robert D. Kaplan in The Atlantic

When judging a new place, a traveler must first always reckon with his or her point of departure. Arriving in Calcutta by bus from Dhaka, the capital of next-door Bangladesh, is like arriving in West Berlin from East Berlin during the Cold War—a trip I made several times. Grayness is left behind. Instead of the rusted signs of Dhaka, giant, swanky billboards advertising global products glow in the night like back-lit computer screens. Traffic is dominated in Dhaka by creaky old bicycle rickshaws; in Calcutta, by late-model cars. There are, too, the sturdy yellow Ambassador taxis, zippy little Indian-produced Marutis loaded with families, and many luxury vehicles.

Yet the rickshaws that you also see in Calcutta provide a signature image of exploitation worse than almost anything you’ll see in Dhaka: one human being is transported by another, who is not merely furiously pedaling uphill, but actually running uphill on his bare feet, pulling the rickshaw like an animal.

Calcutta is, frankly, obscene.

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[Pic: Running out of time: New Laws are forcing rickshaws off Kolkata's streets. Atul Loke]

What microloans miss

James Surowiecki in The New Yorker looks at the limitations of microfinance

Making loans and fighting poverty are normally two of the least glamorous pursuits around, but put the two together and you have an economic innovation that has become not just popular but downright chic. The innovation—​microfinance—​involves making small loans to poor entrepreneurs, usually in developing countries. It has been around since the nineteen-seventies, but in the past few years it has seized the imaginations of economists, activists, and bankers alike. The U.N. declared 2005 the International Year of Microcredit, and the microfinance pioneer Muhammad Yunus won the Nobel Peace Prize in 2006, while celebrities like Natalie Portman and companies like Benetton have become fervent microloan advocates. Even ordinary Americans can now get in on the act, at sites like Kiva.org, where you can make a microloan yourself. (Right now, a clothing vender in Cambodia needs seven hundred dollars to “purchase more clothes to sell.”)

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World banker and his cash return home to India

From International Herald Tribune:

Sindhekela, India: An important man from the World Bank recently arrived in this isolated village, where monkeys prowl rutted roads, rain pours through the school roof and the native son who achieved the most did so by going away.

Lessons about global poverty were waiting, but so were his sisters’ chapattis. Migrant and migration scholar, Dilip Ratha was home.

No one has done more than Ratha to make migration and its potential rewards a top-of-the-agenda concern in the world’s development ministries. And no place has done more to shape his views than this forgotten hamlet, where he studied under the lone streetlight and began a poor boy’s improbable journey to the front ranks of an elite field.

“When I think about the effects of migration, I think about Sindhekela,” he said.

Working from his office in Washington five years ago, Ratha produced the first global tally of remittances, the money that migrants send home, and stunned experts from himself on down with the discovery of their size. Gathered from a trickle of hard-earned cash, the sums now exceed $300 billion a year.

[Photo: Dilip Ratha of the World Bank, standing at left, speaking to students at a school in his hometown, Sindhekela, India]

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New oil giants rise in Gandhi’s native land

In The Spectator Richard Orange visits Mahatma Gandhi’s stony homeland in north-west India to find local tycoons competing to build oil refineries that will dwarf capacity in Europe

Gazing out over India’s Gulf of Kutch from the small jetty owned by Essar Oil, you would hardly think you were witnessing the birth of one of the world’s new industrial heartlands. Placid turquoise waters stretch out to the low landmass opposite; behind you lie mile upon mile of shimmering salt pans where flocks of flamingos aimlessly totter.

But this great natural harbour — sheltered to the south by the Kathiawar peninsula, better known as the birthplace of Mahatma Gandhi — may soon be the world’s busiest oil terminal. So far, India has made its mark on the global economy by taking on outsourced clerical and call-centre work from the west; now it is turning its hands to the altogether more potent business of oil refining. And the Gulf of Kutch, the closest Indian harbour to the oil fields of the Persian Gulf, is where the crude comes in.

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The making of Budget 2008

In the run-up to the general elections scheduled for 2009, the Indian government puts rising prices and the flagging farm economy at the forefront of P. Chidambaram’s fifth and last full Budget, reports Reuters. Loan waivers to farmers and enhanced spending on education and health are some features. For a detailed Budget 2008 report by Reuters click hereBusiness Standard on what goes into the making of the Budget:

Every year in mid-February, a motley group comprising top officials of the finance ministry, experts, printing press technicians and stenographers pack their bags and head off to North Block, the British building designed by architect Herbert Baker.

Over the next 10 to 15 days, they are confined inside the walls of this imposing building that adjoins Rashtrapati Bhavan, the presidential residence and former viceregal palace, penning and printing India’s Annual Financial Statement, which the layman calls the Budget. This is the penultimate stage of a process that starts nearly six months before with the issue of the Budget circular by the Department of Economic Affairs in September.

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Making economics relevant again

Which economists are managing to do influential work on the crucial questions facing modern society? David Leonhardt in the New York Times on the small group of economists who work at the Jameel Poverty Action Lab at MIT, led by Esther Duflo and Abhijit Banerjee. “They want to overhaul development aid so that more of it is spent on programs that actually make a difference.”

It was only a decade ago that economics seemed to be an old and tired discipline. The field no longer had intellectual giants like John Maynard Keynes or Milton Friedman who were shaping public policy by the sheer force of their ideas. Instead, it was devolving into a technical discipline that was even less comprehensible than it was relevant.

Some Wall Street firms had become hesitant to hire Ph.D. economists, and the number of undergraduates majoring in the subject was plummeting. “A good deal of modern economic theory,” John Cassidy wrote in an article titled “The Decline of Economics” that appeared in The New Yorker in 1996, “simply doesn’t matter much.”

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What makes a miracle

Some myths about the rise of India and China by UC, Berkeley Economics professor Pranab Bardhan in the Boston Review 

After more than a century of relative stagnation, the economies of India and China have been growing at remarkably high rates over the past 25 years. In 1820 the two countries contributed nearly half of the world’s income; by 1950, with the industrialized West having pulled away, their share had fallen to less than one-tenth. Today it is just less than one-fifth, and projections suggest that by 2025 it will rise to one-third. (In 2008 the World Bank is expected to issue revised numbers about cost of living in China and India, which may somewhat reduce these estimated income shares, both current and future).

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India’s investors lack sophistication

From the blog, Riding the Elephant by John Elliott, Fortune’s India correspondent  

India has unsophisticated investors. I’m talking about stock market investors of course following the stock market crash, with Mumbai’s key Sensex index plummeting 19% from an all time and over-priced high of above 21,000 on January 8 to under 17,000 by Tuesday. Such a remark, judging from past Riding the Elephant experience, will generate a furious tirade of comments, especially from readers based in the United States who are always anxious to protect India’s reputation.

But how else can you explain a market which swings from such extremes. Last week it mobilized bids totaling an astronomic $180 billion for the $2.9 billion initial public offering launched by Anil Ambani’s Reliance Power (which has yet to produce a revenue stream). On Monday and Tuesday, it crashed, seemingly ignoring the country’s strong economic fundamentals. As Palaniappan Chidambaram, India’s finance minister, pointed out when he tried to calm nerves during the slide, the fundamentals are strong. The economy, he pointed out, is growing at around 9%, and the prime minister’s economic advisory council is forecasting 8.5% for 2008-09.

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Can China and India boom on regardless?

The booming economies of China and India are not invulnerable, says Bill Emmott, former editor of the Economist, in The Guardian.

It is so nice when a consensus forms among economic commentators. There is going to be a recession in America, the pack says, and probably in Britain too, for we have both sinned with our debt, our deficits and our soaring house prices. But the world as a whole won’t suffer, as the great emerging economies of Asia - China and India - will carry on booming regardless. News that China’s output expanded by an extraordinary 11.4% last year, its fastest rate for 13 years, only strengthened this view.

When a consensus is so clear, it is always time to wonder whether it might be wrong. That contrarian instinct was reinforced this week by the way that Asian stock markets, including those in Mumbai, Shanghai and Hong Kong, reacted to markets in America and Europe by going through wild gyrations of their own. A widely followed measure of such shares, the MCSI Emerging Asia Index, was at one point this week down 25% from its October high.

Why should that be, if Asia is just going to boom on regardless?

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China & India: Why cooperation matters

Tarun Khanna, Jorge Paulo Lemann Professor at Harvard Business School, in International Herald Tribune

HANGZHOU, China: There are some telling signs of economic rapprochement between China and India.

During wintry mornings in the Indian city of Gurgaon, home to call centers, offshore software companies and luxury high-rises near New Delhi, dozens of busy Chinese 20- and 30-somethings rush off to work in software companies and manufacturing facilities.

This is extraordinary. There were no Chinese in Gurgaon just a few years ago. As I grew up in Delhi, Mumbai and Bangalore, the only Chinese I met were those who ran (excellent) restaurants. Indians did not use polite terms while referring to the few Chinese in their midst, and Chinese elsewhere reciprocated with disdain. Now Gurgaon’s Chinese are part of the local fabric.

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Next stop Asia?

The Economist on how an American recession might hit Asia 

INVESTORS in Asian stockmarkets were until recently big fans of the “decoupling” theory: the notion that Asian economies can shrug off an American recession. This week’s plunge in shares, taking the MSCI Emerging Asia Index down by 25% at one point from its October high, suggests they have changed their minds. But the fact that Asian markets have not decoupled does not necessarily mean that their economies will follow America’s over a cliff.

Decoupling was always a misnomer, seeming to imply that an American recession would have no impact on Asia. In fact exports and hence profits would certainly be reduced. The pertinent argument is that they would be hurt by much less than in previous American downturns.

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The new Asian tiger poised to match China

Randeep Ramesh on the rise of the Indian economy in The Guardian

It took one minute to sell all $3bn (£1.53bn) worth of shares to the public in India’s biggest share floatation. The buying frenzy of stock in Reliance Power will almost certainly see 48-year-old Anil Ambani overtake his older brother Mukesh to become the country’s richest man with a fortune of more than $60bn when the shares debut on the Bombay stock exchange later this month.

What is remarkable is that Indians have been buying into a company that has little more than a famous name, Reliance, and big ambitions. The soaring stockmarket is a symptom of India’s overflowing optimism. Little wonder that Gordon Brown, who arrives in the country tomorrow night, has decided to make India the second stop on his Asian tour.

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