The Indo-US civil nuclear agreement approved by the 45 nation Nuclear Suppliers Group (NSG) is a "foolish and risky deal" that will make every country free to sell nuclear technology to India while "asking virtually nothing from India in return", said an US based expert.
Mira Kamdar, a fellow at Asia Society, New York, writes in the Washington Post that the deal in the process will undermining the very international system that India so ardently seeks to join.
Kamdar said that while India needs energy, "this foolish, risky deal is not the way to get any of these things. India's democracy has already paid a crippling price, and now the planet may too."
The Indo-US nuclear co-operation agreement was approved by the NSG at its meeting in Vienna this weekend. However, it still has to find US congressional approval.
The deal, Kamdar argues, risks triggering a new arms race in Asia.
If it passes, a "miffed and unstable Pakistan will seek nuclear parity with India, and China will fume at a transparent US ploy to balance Beijing's rise by building up India as a counterweight next door," the Daily Times quoted Kamdar, as saying.
The pact will gut global efforts to contain the spread of nuclear materials and encourage other countries to flout the Nuclear Non-Proliferation Treaty (NPT) that India is now being rewarded for failing to sign.
Kamdar believes that the deal will divert billions of dollars away from India's real development needs in sustainable agriculture, education, health care, housing, sanitation and roads.
It will also distract India from developing clean energy sources, such as wind and solar power, and from reducing emissions from its many coal plants, she added.
Instead, the pact will focus the nation's efforts on an energy source that will, under the rosiest of projections, contribute a mere 8 percent of India's total energy needs - and that will not happened until 2030, Kamdar said.
The deal will generate billions of dollars in lucrative contracts for major Indian and US companies as well as help resuscitate the moribund American nuclear power industry.
France and Russia, both of which support the deal, will reap huge profits in India. According to one estimate, the deal will generate more than 100 billion dollars in business over the next 20 years, as well as a large number of jobs in India and the United States. (ANI)
Monday, September 08, 2008
Australia baulks at selling uranium to India
Australia will not sell uranium to India despite voting with other members of the Nuclear Suppliers Group (NSG) to end a 34-year embargo on nuclear trade with Delhi, officials said Monday.
Prime Minister Kevin Rudd took office in November pledged to withhold uranium sales so long as India remains outside the Nuclear Non-Proliferation Treaty (NPT).
John Howard, his conservative predecessor, held that India's refusal to sign the NPT should not debar it from importing uranium from Australia, custodian of 40 percent of the world's known reserves.
'Labor is committed to supplying uranium to only those countries party to the NPT,' Trade Minister Simon Crean told The Australian newspaper.
'Australia will therefore not be supplying uranium to India while it is not a member of the NPT.'
In a NSG meeting in Vienna at the weekend Australia supported a waiver allowing India to engage in nuclear trade so long as its nuclear programme came under an inspection regime.
The opposition Liberal Party said the Rudd government, which has no objections to selling uranium to China, is being hypocritical by at once supporting technology transfer but banning the export of the feedstock for the nuclear power stations that India wants to build.
The Liberals argue that nuclear power is green energy and Australia ought to be supporting India's efforts to reduce its emissions.
Prime Minister Kevin Rudd took office in November pledged to withhold uranium sales so long as India remains outside the Nuclear Non-Proliferation Treaty (NPT).
John Howard, his conservative predecessor, held that India's refusal to sign the NPT should not debar it from importing uranium from Australia, custodian of 40 percent of the world's known reserves.
'Labor is committed to supplying uranium to only those countries party to the NPT,' Trade Minister Simon Crean told The Australian newspaper.
'Australia will therefore not be supplying uranium to India while it is not a member of the NPT.'
In a NSG meeting in Vienna at the weekend Australia supported a waiver allowing India to engage in nuclear trade so long as its nuclear programme came under an inspection regime.
The opposition Liberal Party said the Rudd government, which has no objections to selling uranium to China, is being hypocritical by at once supporting technology transfer but banning the export of the feedstock for the nuclear power stations that India wants to build.
The Liberals argue that nuclear power is green energy and Australia ought to be supporting India's efforts to reduce its emissions.
How low can the oil price go?
If we assume we’re going to have a global recession similar to the one we had after the bursting of the technology bubble, then it’s worth our while checking what happened to oil prices at that time
Now that international crude oil prices have retreated to around $106 (about Rs4,706) a barrel from a high of $147, the question everybody is asking is how much further can they ease. If we assume we’re going to have a global recession similar to the one we had after the bursting of the technology bubble, then it’s worth our while checking what happened to oil prices at that time.
A global recession is technically defined as growth below 2.5%. By that criterion, the last recession the world had was in 2001, when gross domestic product (GDP) growth fell to 2.22%, from 4.67% in 2000. Nymex crude oil prices, which had gone above $35 a barrel in September and October 2000, fell briefly below $20 a barrel in late 2001 before recovering in April 2002 to above $26 a barrel. According to the graphic shown below (which shows the month-end prices) oil prices fell from $33.12 a barrel at the end of August 2000 to $19.44 a barrel by the end of October 2001. To cut a long story short, the fall in oil prices from the peak to the lowest point was about 44%. This time, at around $106 a barrel, oil prices are already about 28% off their highs.
The world recession before the 2001 one occurred during 1991-93—global GDP growth was 1.45% in 1991, 2.02% in 1992 and 2% in 1993. At that time, taking the month-end price figures, crude oil prices went down from $39.5 per barrel at the end of September 1990 to $14.17 per barrel by the end of December 1993, a fall of 64%. Admittedly, the peak oil price at that time was the result of the first gulf war, so the situation then was very different from the present. At the same time, the recession of the early 1990s had some features common to the current downturn—they both had a housing crunch in the US at its core.
If the current slowdown mimics the recession of 2001 and oil prices drop by around 44% or so, then the lower level for crude could well be within the $80-$90 a barrel level. If, however, this recession is going to be longer and deeper, closer to that of the early 1990s, then the drop in oil prices would be much more.
Which is the more likely scenario? Those who argue that oil prices are not likely to fall much say that the world of 2008 is very different, with emerging market growth well above the levels they were at in 2001 on the one hand and with supply constraints on the other. For example, in its August short-term energy outlook, the US government’s Energy Information Administration said it expects crude prices to average $124 a barrel in 2009.
Also, there are those who argue that oil has been a massive bubble and we’re going to see a major correction in oil prices. A research note from broking firm First Global, for instance, says, “Over the next 12-18 months, we expect oil prices to reach around $50 a barrel, which is roughly the same level from where the current oil bubble began. And who knows, we could see oil back at $30 over the next couple of years.”
In 2001, only one large sector—technology—was hurt badly. This time the cause of the downturn is the US housing sector and research has shown that it takes much longer for an economy to climb out of a housing bust. Add to that the impact of the bust on big banks and the currently ongoing process of de-leveraging, the current slowdown is likely to be worse than in 2001. That calls for lower global growth and bigger declines in commodity and oil prices.
India’s premium rises against other emerging markets
The Indian market has been one of the chief beneficiaries of the fall in international crude oil prices. According to the S&P/Citigroup Global Equity Indices, the one-year forward price-earnings (P-E) multiple for Indian market estimates (based on earnings forecasts from IBES, or the Institutional Brokers’ Estimate System) was 14.98 at the end of August, a 38.5% premium to the P-E multiple for emerging markets and a 20.6% premium to Asia-Pacific emerging markets.
Despite being at the centre of the economic storm, the US has done well
At the end of July, the Indian market traded at a forward P-E multiple of 14.4, a 26% premium to emerging markets and a 15.4% premium to Asia-Pacific emerging markets.
At the end of June, India’s premium over emerging markets was even lower, at 12.4%, while that over Asia-Pacific emerging markets was 11.4%.
The premium over other emerging markets has come down quite a bit from 64.2% at the beginning of the year, but it has increased once again in recent months as oil prices waned.
That’s not very surprising. But what is unexpected is that the Indian market is now cheaper than the US, where the one-year forward P-E multiple at the end of August was 15.23. The US market was at a 19% premium to the global market P-E at end-August. At the beginning of the year, that premium was just 7.6%. Despite being at the centre of the storm that has battered global markets, the US has done very well indeed.
Now that international crude oil prices have retreated to around $106 (about Rs4,706) a barrel from a high of $147, the question everybody is asking is how much further can they ease. If we assume we’re going to have a global recession similar to the one we had after the bursting of the technology bubble, then it’s worth our while checking what happened to oil prices at that time.
A global recession is technically defined as growth below 2.5%. By that criterion, the last recession the world had was in 2001, when gross domestic product (GDP) growth fell to 2.22%, from 4.67% in 2000. Nymex crude oil prices, which had gone above $35 a barrel in September and October 2000, fell briefly below $20 a barrel in late 2001 before recovering in April 2002 to above $26 a barrel. According to the graphic shown below (which shows the month-end prices) oil prices fell from $33.12 a barrel at the end of August 2000 to $19.44 a barrel by the end of October 2001. To cut a long story short, the fall in oil prices from the peak to the lowest point was about 44%. This time, at around $106 a barrel, oil prices are already about 28% off their highs.
The world recession before the 2001 one occurred during 1991-93—global GDP growth was 1.45% in 1991, 2.02% in 1992 and 2% in 1993. At that time, taking the month-end price figures, crude oil prices went down from $39.5 per barrel at the end of September 1990 to $14.17 per barrel by the end of December 1993, a fall of 64%. Admittedly, the peak oil price at that time was the result of the first gulf war, so the situation then was very different from the present. At the same time, the recession of the early 1990s had some features common to the current downturn—they both had a housing crunch in the US at its core.
If the current slowdown mimics the recession of 2001 and oil prices drop by around 44% or so, then the lower level for crude could well be within the $80-$90 a barrel level. If, however, this recession is going to be longer and deeper, closer to that of the early 1990s, then the drop in oil prices would be much more.
Which is the more likely scenario? Those who argue that oil prices are not likely to fall much say that the world of 2008 is very different, with emerging market growth well above the levels they were at in 2001 on the one hand and with supply constraints on the other. For example, in its August short-term energy outlook, the US government’s Energy Information Administration said it expects crude prices to average $124 a barrel in 2009.
Also, there are those who argue that oil has been a massive bubble and we’re going to see a major correction in oil prices. A research note from broking firm First Global, for instance, says, “Over the next 12-18 months, we expect oil prices to reach around $50 a barrel, which is roughly the same level from where the current oil bubble began. And who knows, we could see oil back at $30 over the next couple of years.”
In 2001, only one large sector—technology—was hurt badly. This time the cause of the downturn is the US housing sector and research has shown that it takes much longer for an economy to climb out of a housing bust. Add to that the impact of the bust on big banks and the currently ongoing process of de-leveraging, the current slowdown is likely to be worse than in 2001. That calls for lower global growth and bigger declines in commodity and oil prices.
India’s premium rises against other emerging markets
The Indian market has been one of the chief beneficiaries of the fall in international crude oil prices. According to the S&P/Citigroup Global Equity Indices, the one-year forward price-earnings (P-E) multiple for Indian market estimates (based on earnings forecasts from IBES, or the Institutional Brokers’ Estimate System) was 14.98 at the end of August, a 38.5% premium to the P-E multiple for emerging markets and a 20.6% premium to Asia-Pacific emerging markets.
Despite being at the centre of the economic storm, the US has done well
At the end of July, the Indian market traded at a forward P-E multiple of 14.4, a 26% premium to emerging markets and a 15.4% premium to Asia-Pacific emerging markets.
At the end of June, India’s premium over emerging markets was even lower, at 12.4%, while that over Asia-Pacific emerging markets was 11.4%.
The premium over other emerging markets has come down quite a bit from 64.2% at the beginning of the year, but it has increased once again in recent months as oil prices waned.
That’s not very surprising. But what is unexpected is that the Indian market is now cheaper than the US, where the one-year forward P-E multiple at the end of August was 15.23. The US market was at a 19% premium to the global market P-E at end-August. At the beginning of the year, that premium was just 7.6%. Despite being at the centre of the storm that has battered global markets, the US has done very well indeed.
Indian economy may perform better in Q2: Barclays
The global investment banker projected a growth rate of 7.5%for 2008-09 with risks tilted to the upside
The Indian economy is expected to perform better in the second quarter (July-September 2008) and is likely to record a growth rate of 8.5%, up from 7.9% witnessed in the first quarter, says an international investment banker.
“In Q2 of the current fiscal, GDP growth is likely to be about 8.5%,” Barclays said in its recent Emerging Markets Research report.
According to the global investment banker, the country’s annual growth is running well above 8% and the first quarter growth rate of 7.9% is likely to be revised upwards by 0.3-0.5 percentage points.
However, Barclays projected 7.5% growth rate for 2008-09 with “risks tilted to the upside.” India recorded 9 per cent Gross Domestic Product growth rate during 2007-08.
RBI forecasts a GDP growth rate of 8% in the current fiscal, while the Prime Minister’s Economic Advisory Council expects the economy to rise by 7.6%.
Inflationary spiral
Referring to the inflationary spiral, the investment bank has said demand-side pressures on inflation would persist for the next one-two quarters and the apex bank would continue to keep the liquidity conditions tight over the next 3-6 months.
The banking regulator meanwhile, in its Currency and Finance 2006-08 report, has indicated that it is important in the present scenario to show continuously “a determination to act decisively, effectively and swiftly to curb any signs of adverse developments in regard to inflation expectations.”
Inflation which is reining over 12% is still way above the RBI’s projection of 7% by the end of the current fiscal and the regulator has in phases raised the Cash Reserve Ratio (CRR) and reserve repo rate to 9% to tame rising inflation.
The Indian economy is expected to perform better in the second quarter (July-September 2008) and is likely to record a growth rate of 8.5%, up from 7.9% witnessed in the first quarter, says an international investment banker.
“In Q2 of the current fiscal, GDP growth is likely to be about 8.5%,” Barclays said in its recent Emerging Markets Research report.
According to the global investment banker, the country’s annual growth is running well above 8% and the first quarter growth rate of 7.9% is likely to be revised upwards by 0.3-0.5 percentage points.
However, Barclays projected 7.5% growth rate for 2008-09 with “risks tilted to the upside.” India recorded 9 per cent Gross Domestic Product growth rate during 2007-08.
RBI forecasts a GDP growth rate of 8% in the current fiscal, while the Prime Minister’s Economic Advisory Council expects the economy to rise by 7.6%.
Inflationary spiral
Referring to the inflationary spiral, the investment bank has said demand-side pressures on inflation would persist for the next one-two quarters and the apex bank would continue to keep the liquidity conditions tight over the next 3-6 months.
The banking regulator meanwhile, in its Currency and Finance 2006-08 report, has indicated that it is important in the present scenario to show continuously “a determination to act decisively, effectively and swiftly to curb any signs of adverse developments in regard to inflation expectations.”
Inflation which is reining over 12% is still way above the RBI’s projection of 7% by the end of the current fiscal and the regulator has in phases raised the Cash Reserve Ratio (CRR) and reserve repo rate to 9% to tame rising inflation.
Indian industry see Rs1.2 trillion investment in nuclear power
Industry bodies Ficci and CII hope to see the country usher into a robust force in global nuclear trade
Indian industry bodies expect 18-20 new nuclear power plants to be set up in next 15 years costing Rs1.2 trillion after a ban on nuclear trade with India was lifted by the Nuclear Suppliers Group.
On Saturday, the 45-nation approved a US proposal to lift a global ban on nuclear trade with India in a breakthrough towards sealing a controversial US-Indian atomic energy deal.
“The NSG clearance has now instilled confidence of business opportunities worth Rs1.2 trillion in the next 15 years, which would add about 18-20 nuclear reactors at the cost of Rs5,000 to 6,000 crores each,” the Confederation of Indian Industry said in a statement.
“The nuclear deal will also enable addition of new capacity and help fulfill the target of adding 63,000 MW by 2030,” it said.
The Federation of Indian Chambers of Commerce and Industry said the lifting of the ban would enable India to get nuclear fuel for all its nuclear reactors, which have been running at almost half the capacity.
“It will open the doors for foreign investments in the nuclear power generation and usher India into the world’s top Nuclear Club,” it said.
Indian industry bodies expect 18-20 new nuclear power plants to be set up in next 15 years costing Rs1.2 trillion after a ban on nuclear trade with India was lifted by the Nuclear Suppliers Group.
On Saturday, the 45-nation approved a US proposal to lift a global ban on nuclear trade with India in a breakthrough towards sealing a controversial US-Indian atomic energy deal.
“The NSG clearance has now instilled confidence of business opportunities worth Rs1.2 trillion in the next 15 years, which would add about 18-20 nuclear reactors at the cost of Rs5,000 to 6,000 crores each,” the Confederation of Indian Industry said in a statement.
“The nuclear deal will also enable addition of new capacity and help fulfill the target of adding 63,000 MW by 2030,” it said.
The Federation of Indian Chambers of Commerce and Industry said the lifting of the ban would enable India to get nuclear fuel for all its nuclear reactors, which have been running at almost half the capacity.
“It will open the doors for foreign investments in the nuclear power generation and usher India into the world’s top Nuclear Club,” it said.
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