India: More blasts of reality from Andy Mukherjee

Bloomberg columnist Andy Mukherjee has been busy lately. Aside from Monday's piece on India's software industry at risk, he has written two more pieces this week outlining clearly the need for reform. Here are some excerpts:

It's Time for India to Fix Subsidies Programs (25 October)

Frustrated in attempts to trim billions of dollars in consumer and producer subsidies, India has tried to cut the waste and fraud that make handouts more expensive and less effective than they could be. Most efforts have failed spectacularly. A recent study by a New Delhi-based research organization has revealed some shocking statistics about subsidized kerosene, which is the main cooking and lighting fuel for people too poor to buy electricity and gas.

According to India's National Council of Applied Economic Research, or NCAER, as much as 39 percent of subsidized kerosene was diverted last year by middlemen to other users. These other users gladly paid a higher price than set by the government because even with a 100 percent premium subsidized kerosene is a cheap source of energy.

Forget Oil - India's Bigger Problem Is Water (27 October)

For all the hand-wringing over how much rising oil prices might hurt India's expanding economy, a dearth of water could present a bigger threat. India produces 15 percent of its food and meets 80 percent of its household needs by "mining" its fast-depleting groundwater. By 2025, three out of five aquifers in India will be in critical condition, the World Bank said in a recent study. According to the bank's estimates, by 2050 demand in India will exceed all available supplies.

In many cities, water scarcity has already assumed crisis proportions. In the Indian capital of New Delhi, which was my home for 11 years, taps are mostly dry except for brief periods in the morning and evening. What trickles out of the taps during those precious minutes is neither odorless nor colorless.

No one in my neighborhood drank this liquid or used it for cooking. People bought water from the grocer in 20-liter (5.3 gallons) cans. That was the situation four years ago. Since then, the shortages have worsened. Water tariffs have gone up, service levels haven't.

..."Unless dramatic changes are made," the bank's study said, "and made soon in the way in which the government manages water, India will have neither the cash to maintain and build new infrastructure, nor the water required for the economy and the people."

Here is a link to the draft World Bank report, India’s Water Economy: Bracing for a Turbulent Future, by John Briscoe.

More power to Mukherjee's elbow.