HIGHWAYS Norms for highway projects pact changed The threshold limit in the conflict of interest clause in the model concession agreement (MCA) for highway projects has been increased from 5 percent to 25 percent. Our view is that UPA II will have to work hard in order to put the national highway development programme (NHDP) back on track. Some of the problems were institutional with the National Highway Authority of India (NHAI) not acting autonomously but most of the problems lay with the MCA. The Cabinet Committee on Infrastructure is changing many clauses of the MCA, which were the main cause of investor apathy. In fact the conflict of interest clause was a major stumbling block in the NHDP progress. In the last five years, NHAI completed only 7759 km of highways, about 4 km/day. The target for building 7300 Km. per annum with a four fold increase in the contracts awarded will require a massive change in policy and institutional arrangement governing the highway programme. TELECOM CBI searches department of telecom offices The CBI searched offices of the Department of Telecom in connection with alleged irregularities in allocation of 2G spectrum. The Minister of Communications Mr. A. Raja committed a major policy blunder in not auctioning the cellular licences awarded in January 2008 and in bundling 4.4+4.4 MHz of start up spectrum with the licence. Never in the history of India’s policymaking has the exact cost that a government policy has imposed on the society been this clear. World over spectrum sale is a major source of revenue for governments to carry out their social programmes. The minister denied the country of huge amount of resources of around 60,000 crores. Scam or no scam such a grave error of judgment should not go unpaid for. Without getting into the criminality of the issue accountability asks for Mr. A. Raja to lose his job, but will it ever happen in our country? OIL & GAS EGoM on gas to keep off pricing issue A new empowered group of ministers will focus on the allocation of additional gas from the Krishna-Godavari basin operated by RIL and steer clear of fixing the prices. As we have been commenting through these columns, government will have to establish market based mechanisms with a few checks and balances for the discovery of gas prices. Our view is that the current gas allocation policy is predicated on a completely faulty price-fixation policy. An open bidding process, a cost-plus method or an indexation to oil prices would have been a better way for price discovery in this crucial sector. So while some part of the allocation can be at a pre-determined price a large part of the allocation should be based on a bidding process that should be transparent and unrestricted, unlike the quasi-tender that Reliance used to persuade the GoM to fix its gas price at $4.20 per million British thermal units. The Prime Minister’s Economic Advisory Council examining the bid said it was opaque; it suggested that new bids be invited “in a transparent and well-publicised manner from all parties so as to discover the true arm’s-length competitive price for gas”. POWER Eight new ultra supercritical power plants on anvil After deciding to set up ultra mega power projects (UMPPs) to improve power supply across the country, the government’s next big step would be to set up eight ultra supercritical power plants (USCPPs). It is well accepted that power generation is the primary contributor to greenhouse gas (GHG) emissions in India. This however, does not mean that in meeting our electricity needs we have to be environmentally insensitive. A viable and sustainable solution lies in encouraging generation from “clean” coal. It is important that India moves away from subcritical pulverized coal or “dirty” coal to commercial supercritical combustion technology. The supercritical coal based units have faster starting time & load changes and are more suitable for daily

1. Indicus Analytics, An Economics Research Firm
http://indicus.net/Research/Home/Research%20Area/Policy%20and%20Institutional%20Analysis/
Policy News
&
Views
Volume 1, Issue 12, November 2009
HIGHWAYS
Norms for highway projects pact changed
The threshold limit in the conflict of interest clause in the
model concession agreement (MCA) for highway projects
has been increased from 5 percent to 25 percent.
Our view is that UPA II will have to work hard in order to
put the national highway development programme
(NHDP) back on track. Some of the problems were
institutional with the National Highway Authority of India
(NHAI) not acting autonomously but most of the problems
lay with the MCA. The Cabinet Committee on
Infrastructure is changing many clauses of the MCA, which
were the main cause of investor apathy. In fact the
conflict of interest clause was a major stumbling block in
the NHDP progress. In the last five years, NHAI completed
http://www.indicus.net/Newsletter/Policy_News_Views.aspx

2. Indicus Analytics, An Economics Research Firm
http://indicus.net/Research/Home/Research%20Area/Policy%20and%20Institutional%20Analysis/
only 7759 km of highways, about 4 km/day. The target
for building 7300 Km. per annum with a four fold increase
in the contracts awarded will require a massive change in
policy and institutional arrangement governing the
highway programme.
TELECOM
CBI searches department of telecom offices
The CBI searched offices of the Department of Telecom in
connection with alleged irregularities in allocation of 2G
spectrum.
The Minister of Communications Mr. A. Raja committed a
major policy blunder in not auctioning the cellular licences
awarded in January 2008 and in bundling 4.4+4.4 MHz of
start up spectrum with the licence. Never in the history of
India’s policymaking has the exact cost that a government
policy has imposed on the society been this clear. World
over spectrum sale is a major source of revenue for
governments to carry out their social programmes. The
minister denied the country of huge amount of resources
of around 60,000 crores. Scam or no scam such a grave
error of judgment should not go unpaid for. Without
getting into the criminality of the issue accountability asks
for Mr. A. Raja to lose his job, but will it ever happen in
our country?
OIL & GAS
EGoM on gas to keep off pricing issue
A new empowered group of ministers will focus on the
allocation of additional gas from the Krishna-Godavari
basin operated by RIL and steer clear of fixing the prices.
As we have been commenting through these columns,
government will have to establish market based
http://www.indicus.net/Newsletter/Policy_News_Views.aspx

3. Indicus Analytics, An Economics Research Firm
http://indicus.net/Research/Home/Research%20Area/Policy%20and%20Institutional%20Analysis/
mechanisms with a few checks and balances for the
discovery of gas prices. Our view is that the current gas
allocation policy is predicated on a completely faulty price-
fixation policy. An open bidding process, a cost-plus
method or an indexation to oil prices would have been a
better way for price discovery in this crucial sector. So
while some part of the allocation can be at a pre-
determined price a large part of the allocation should be
based on a bidding process that should be transparent
and unrestricted, unlike the quasi-tender that Reliance
used to persuade the GoM to fix its gas price at $4.20 per
million British thermal units. The Prime Minister’s
Economic Advisory Council examining the bid said it was
opaque; it suggested that new bids be invited “in a
transparent and well-publicised manner from all parties so
as to discover the true arm’s-length competitive price for
gas”.
POWER
Eight new ultra supercritical power plants on anvil
After deciding to set up ultra mega power projects
(UMPPs) to improve power supply across the country, the
government’s next big step would be to set up eight ultra
supercritical power plants (USCPPs).
It is well accepted that power generation is the primary
contributor to greenhouse gas (GHG) emissions in India.
This however, does not mean that in meeting our
electricity needs we have to be environmentally
insensitive. A viable and sustainable solution lies in
encouraging generation from “clean” coal. It is important
that India moves away from subcritical pulverized coal or
“dirty” coal to commercial supercritical combustion
technology. The supercritical coal based units have faster
starting time & load changes and are more suitable for
daily start up/shut down operation and have better
efficiency at part load operation. While the adoption of
http://www.indicus.net/Newsletter/Policy_News_Views.aspx

4. Indicus Analytics, An Economics Research Firm
http://indicus.net/Research/Home/Research%20Area/Policy%20and%20Institutional%20Analysis/
supercritical technology in the coal power plants is a part
of the proclaimed government agenda, the poor
achievements of the same in the tenth five year plan
mean a lot has to be done in order to make them a
reality.
MORE NEWS
3G spectrum auction from 14 January; government
allows foreign bidders
The DoT would hold a pre-bid conference on 16 November
2009 and the mock auction would be conducted on 11-12
January next year.
Textile Ministry gives Rs 3,500 crore subsidy to
farmers through MSP
Through the minimum support price (MSP) in cotton, the
Ministry of Textiles has disbursed around Rs 3,500 crore
worth subsidy to farmers.
Right to Education Act to be amended
The government is likely to amend the Right to Education
Act in the winter session of Parliament to exempt the
minority institutions from implementing admission quota
and give them right to form governing body of their
choice.
New norms to restrict bidding at PPP port projects
The Ministry of Shipping is revising the policy guidelines
for awarding projects on the public-private partnership
(PPP) basis for expanding capacities at major ports across
the country.
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5. Indicus Analytics, An Economics Research Firm
http://indicus.net/Research/Home/Research%20Area/Policy%20and%20Institutional%20Analysis/
Autonomous body to look into broadcasting: Soni
Minister for Information and Broadcasting Ambika Soni
has said the government was mandated to set up an
independent mechanism, which would look at all aspects
of the broadcasting sector.
Government to amend print media Act
The government will soon amend a 142-year-old law to
make it contemporary with the phenomenal growth of the
print media in the country.
Banks may be kept out of CCI ambit
The government would examine the possibility of keeping
banking and shipping sectors out of the purview of the
Competition Commission of India, Corporate Affairs
Minister Salman Khurshid said.
Government may take six months to notify CCI's
M&A norms
The government may take at least six months more to
notify the crucial provisions of the Competition Act that
would empower Competition Commission of India (CCI) to
scrutinise high value mergers and acquisitions (M&A).
Rs 21,000 crore investment in fertiliser stuck for
want of gas
Over Rs 21,000 crore investments in six new fertiliser
plants, that would have raised India's urea making
capacity by 30 percent, is stuck for want of natural gas.
HC issues notice to Centre on reservation policy
The Rajasthan High Court has issued notice to the Centre
and the state government on a petition challenging the
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6. Indicus Analytics, An Economics Research Firm
http://indicus.net/Research/Home/Research%20Area/Policy%20and%20Institutional%20Analysis/
109th Constitutional amendment extending the
reservation policy by another ten years.
Price control stifles ethanol projects
Price control derails India’s biofuel investments; industry
hopes government will hike ethanol price in November;
supplies fall short of refiners’ requirement.
Planning Commission wing to evaluate government
schemes
Planning Commission deputy chairman Montek Singh
Ahluwalia said an independent evaluation office would be
set up to study if the poor are benefited from different
government schemes.
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