TELECOM PMO moots cell banking for masses PMO asked the department of telecommunications to find ways to expand mobile banking services to the remotest corners of the country. This in our view is a welcome announcement by the PMO and is a step to ensure financial inclusion. Given that limited access of the poor to established financial channels exposes them to financial risks and less secure transactions, several developing countries have introduced simple, low-cost mobile systems for transferring funds. The G-CASH system, launched in the Phillipines in 2004, is a pioneer in enabling mobile phone users to send remittances, make donations, settle loans, and pay bills with a simple text message. M-PESA, introduced in Kenya in March 2007, also uses SMS to support financial transactions, including depositing and withdrawing money, transferring money to another party, or buying prepaid airtime. India needs to put in place a regulatory system that encourages m-banking for the unbanked. The regulatory system has to ensure security of such transactions and also the Central Bank does require that the amount of m-money in circulation should always be backed up with an equal amount by its issuer. Banks should see it as an exciting chance to exploit telecom firms’ vast retail networks and powerful brands to reach new customers. Tie-ups between banks and operators will help reassure regulators. The regulatory ecosystem has to evolve to allow such exciting innovations and should not act as a constraint Government to hold 3G spectrum auction on December 7 The government will hold the much-awaited 3G spectrum auction for GSM operators on December 7. In our view delaying spectrum allocation has meant that services to consumers are held up by the government resulting in a potential loss of consumer surplus. Moreover, too high a reserve price might drive away potential international bidders. There have been complaints that the licensing process already favors established domestic players. Under these circumstances one must take into account the actual likelihood of collusion as well as the nature of the players that may or not be affected by how the reserve price is set. The fact that capital is very scarce at the moment may also be worth considering in setting auction terms (i.e. look at the ability to pay of different parties). So what matters is how the auction designed. Poor designPoor outcomes. The auction has become a mere budgetary exercise! GOVERNANCE States resent BPL numbers ‘thrust’ on them by Centre The States have called upon the Centre to allow States to have their own lists pertaining to the BPL category and also desist from targeting the public distribution system (PDS). Our view is that in the spirit of decentralization of the PDS, the beneficiaries of the PDS should be identified by the states. In fact the Food Security Act is in an imbroglio as the issue of contention is who should be the beneficiaries. The problem arises as there are disparate numbers when it comes to the number of BPL households. Moreover, a centralized targeted scheme has been prone to corruption and leakages. Under these circumstances universalizing food security as has been achieved by the states of Tamil Nadu and Kerala has to be seriously considered. This may be a feasible option if the PDS system is revamped to address the problems of leakages, such that costs of a universal system are minimized. Food stamps may be one such solution. COMPETITION POLICY AND REGULATION CCI cries foul over shipping firms’ lobby for anti-trust immunity The ship liners association has approached the corporate affairs ministry seeking exemption from competition law, a move that is being severely opposed by the Competition Commission of India (CCI). Shipping carriers are often members of several consortia. Mostly the carriers also offer services, both individually and within a consortium. However, these practices may have impact on the competitive o

1. Indicus Analytics, An Economics Research Firm
http://indicus.net/Research/Home/Research%20Area/Policy%20and%20Institutional%20Analysis/
Policy News
&
Views
Volume 1, Issue 11, October 2009
TELECOM
PMO moots cell banking for masses
PMO asked the department of telecommunications to find
ways to expand mobile banking services to the remotest
corners of the country.
This in our view is a welcome announcement by the PMO
and is a step to ensure financial inclusion. Given that
limited access of the poor to established financial channels
exposes them to financial risks and less secure
transactions, several developing countries have introduced
simple, low-cost mobile systems for transferring funds.
The G-CASH system, launched in the Phillipines in 2004, is
a pioneer in enabling mobile phone users to send
remittances, make donations, settle loans, and pay bills
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/
with a simple text message. M-PESA, introduced in Kenya
in March 2007, also uses SMS to support financial
transactions, including depositing and withdrawing money,
transferring money to another party, or buying prepaid
airtime. India needs to put in place a regulatory system
that encourages m-banking for the unbanked. The
regulatory system has to ensure security of such
transactions and also the Central Bank does require that
the amount of m-money in circulation should always be
backed up with an equal amount by its issuer. Banks
should see it as an exciting chance to exploit telecom
firms’ vast retail networks and powerful brands to reach
new customers. Tie-ups between banks and operators will
help reassure regulators. The regulatory ecosystem has to
evolve to allow such exciting innovations and should not
act as a constraint
Government to hold 3G spectrum auction on
December 7
The government will hold the much-awaited 3G spectrum
auction for GSM operators on December 7.
In our view delaying spectrum allocation has meant that
services to consumers are held up by the government
resulting in a potential loss of consumer surplus.
Moreover, too high a reserve price might drive away
potential international bidders. There have been
complaints that the licensing process already favors
established domestic players. Under these circumstances
one must take into account the actual likelihood of
collusion as well as the nature of the players that may or
not be affected by how the reserve price is set. The fact
that capital is very scarce at the moment may also be
worth considering in setting auction terms (i.e. look at the
ability to pay of different parties). So what matters is how
the auction designed. Poor designPoor outcomes. The
auction has become a mere budgetary exercise!
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/
GOVERNANCE
States resent BPL numbers ‘thrust’ on them by
Centre
The States have called upon the Centre to allow States to
have their own lists pertaining to the BPL category and
also desist from targeting the public distribution system
(PDS).
Our view is that in the spirit of decentralization of the
PDS, the beneficiaries of the PDS should be identified by
the states. In fact the Food Security Act is in an imbroglio
as the issue of contention is who should be the
beneficiaries. The problem arises as there are disparate
numbers when it comes to the number of BPL households.
Moreover, a centralized targeted scheme has been prone
to corruption and leakages. Under these circumstances
universalizing food security as has been achieved by the
states of Tamil Nadu and Kerala has to be seriously
considered. This may be a feasible option if the PDS
system is revamped to address the problems of leakages,
such that costs of a universal system are minimized. Food
stamps may be one such solution.
COMPETITION POLICY AND REGULATION
CCI cries foul over shipping firms’ lobby for anti-
trust immunity
The ship liners association has approached the corporate
affairs ministry seeking exemption from competition law,
a move that is being severely opposed by the
Competition Commission of India (CCI).
Shipping carriers are often members of several consortia.
Mostly the carriers also offer services, both individually
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/
and within a consortium. However, these practices may
have impact on the competitive outcomes. It has been
alleged that shipping carriers are involved in horizontal
price fixing and they use consortia and shared operations
as platform for this. As a result, some of the competition
agencies around the world have been taking steps to
restrain these activities. For example EU, which initially
had exempted shipping consortia and their shared
agreements from competition policy, has now changed
consortia regulations and imposed restrictions and even
forced many agreements to be dissolved. On the other
hand it is argued that these agreements improve
roundtrip vessel economics resulting in lower freight rates
in the long-term. In our view it is important for the CCI
to carry out a comprehensive economic analysis of the
arrangements and their impact on prices before taking
any view.
MORE NEWS
Draft bill on realty watchdog unveiled
The government has unveiled a draft new law on the real
estate regulator that when implemented, will protect
homebuyers’ interest and discipline builders and lead to a
transparent and healthy real estate sector.
Government to set up autonomous environment
regulator
The Ministry of Environment and Forests has proposed to
set up a National Environment Protection Authority to
grant environmental clearances to different projects,
besides ensuring compliance with environmental laws.
http://www.indicus.net/Newsletter/Policy_News_Views.aspx

5. Indicus Analytics, An Economics Research Firm
http://indicus.net/Research/Home/Research%20Area/Policy%20and%20Institutional%20Analysis/
Delayed monsoon: CERC to cap price of traded
power
In the wake of delayed monsoon, which has enhanced
power shortages in the country, the Central Electricity
Regulatory Commission (CERC) has decided to control the
escalating price of power traded in the domestic market.
Online registration of companies gets e-stamp
Entrepreneurs can now pay stamp duty sitting anywhere
in India electronically by logging on to the corporate
affairs ministry’s website.
Miners get new lease of life in fresh norms
A mining lease that is not renewed or cancelled by a state
government in the two years to its expiry may be
extended for 20 years, benefiting companies that lose
time and revenues due to states’ apathy.
Rs. 1 lakh crore fertiliser sop going down drain?
A steep increase in fertiliser subsidy, currently touching Rs
100,000 crore, have failed to bring about anything more
than a niggardly 1.3% annual growth in farm production
over the past 6-7 years.
Expert group set up for faster winding up of sick
companies
The government has set up an expert group to suggest
ways to speed up liquidation of sick companies by
resolving procedural and legal complexities involved.
http://www.indicus.net/Newsletter/Policy_News_Views.aspx

6. Indicus Analytics, An Economics Research Firm
http://indicus.net/Research/Home/Research%20Area/Policy%20and%20Institutional%20Analysis/
RIL losing $120 mn on less gas production than
capacity
Reliance Industries Ltd is losing over $ 120 mn in
revenues every month on being forced to produce natural
gas less than capacity as the Government is yet to name
buyers for the fuel beyond the initial volumes.
Trai asks DoT to refer uniform licence fee to
regulator
The Telecom Regulatory Authority of India (Trai) has
urged the government to consult it before deciding on a
uniform license fee for operators, saying it has
implications on the Centre’s revenue as well as on service
providers.
‘Short-term power’ price surges on peak shortage
Short-term electricity prices in the country have tripled
over the last five years, with forecasts of a further rise as
the peak shortage is projected to cross 18 % by the end
of this fiscal.
Finmin rejects BRPSE plan to revive fertiliser PSUs
The finance ministry has turned down a proposal by the
Board for Reconstruction of Public Sector Enterprises
(BRPSE) to use government funds to revive loss-making
public sector fertiliser units.
States asked to form independent redress forum for
electricity
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7. Indicus Analytics, An Economics Research Firm
http://indicus.net/Research/Home/Research%20Area/Policy%20and%20Institutional%20Analysis/
The Chairman of the Appellate Tribunal for Electricity has
urged the State Governments to set up an independent
consumer redressal forum and ombudsman.
http://www.indicus.net/Newsletter/Policy_News_Views.aspx