Saturday, November 30, 2013


THIS article appeared in the economic times of 30.11.2013



GYAN means knowledge which can be goggled or researched. But such knowledge creates relative and a limited understanding of our inquisitiveness.  As an example, light dispels darkness. For a child who is afraid of darkness, lighting a lamp is an act of fascination.  However a young man carries a torch to rid fear of darkness.  An adult realises that darkness is the absence of light. Level of brightness can be increased with intensity of illumination. Still higher understanding may be that light is an “energy” of nature. All living and non-livings beings are also “energies” with different frequencies. Consciousness too is energy. Our consciousness is human at this point of time. All living and non-living being may have active or passive energies of consciousness.
Thus Gyan is gross thinking or thought of lower Mind. Understanding is refinement of Gyan by application of higher Mind. Gyan is egoistic. Understanding brings humility upon realization that all of us are micro-specks in the grand hierarchy of Creation or Supreme consciousness, with invisible connectivity and inter- dependence.  
Mind is a blend of pure divinity mixed with fine, subtle and gross matter. The Mind as a mirror, depending upon its purity, reflects physical or mental perceptions. A polished mirror replicates perfectly.  Deeper appreciation of Gyan or knowledge is directly related to evolved state of mind.  
Mind’s receptivity blossoms when scrubbed clean. Mystics preach cleaning mind with spiritual soap of soul which is the essence of Primal power in meditative concentration that enables it experience “I am He” or Tat-avm-asi. Duality between You and Me ceases. It then attains “sojhi”—the inner realization which is exceptionally intense than mundane knowledge. That is termed Understanding

Friday, November 29, 2013



This is an article from Business Line Paper appeared on 29th November, 2013

Please click on the following link to read :




Tejinder Narang

This year perhaps is the first time since 1976 that there is no single unified pan- India policy for the sugar sector. All States governments are deciding sugar cane prices or policies at their will, creating intra –state distortions in production, marketable values and exports. The nation stands divided by sugar.

Apparent absurdity has ascended to a level where the price of output- finished product- (sugar) equals input cost of sugarcane with traditional rate of recovery. Threats of farmers and counter threats by mills especially in Uttar Pradesh & Maharashtra are reflection of impending uncertainty in this sector. About 70% sweetener is produced by these two states.

The “sugar environment” at the beginning of 2013-14 season has altered.  First, the Centre decontrolled release and levy mechanism in April 2013, which created instant surpluses in the market. Second, because of election year, political pressures are mounting to balance interests of cane-growers, millers and consumers.  

In less than eight months from control to decontrol and then back to active and ad-hoc interventionism by the Centre, represents break down of liberalized profile that is under threat of reversal or modification. Briefly, new sugar policy has gone paralytic. Political doctors are attempting procedures for revival of severely diabetic patient.  

Rangrajan committee

Rangarajan Committee report on sugar decontrol mentions “Rationalization of sugarcane pricing and liberalization of sugar trade need to be introduced over a two to three year period, in a calibrated and phased manner. However, levy sugar obligation and administrative control on non-levy sugar need to be dispensed with immediately”. (Page 10 para 13 of the report).

A committee headed by Principal Economic Advisor to the Prime minister, an eminent Economist, cannot suggest a two-stage or split recommendation unless compelled politically. Rangarajan committee and the UPA Government erred in deferring the issue of sugarcane pricing to an unchartered territory. That is why the mess this year.

Uttar Pradesh

The trigger point is the last year State Advisory Price (SAP) for sugarcane of Rs 280/qtl  (or $44/mt) of Uttar Pradesh (UP). Now, farmers are echoing SAP of Rs 300/qtl plus (or $48/mt). The result-- mills are saddled with massive liability of sugarcane arrears due to non-remunerative market prices.

Since higher Indian sugar output (about 25 million tons) is foreseen in 2013-14 plus 9 million tons of carry in vs demand of 23 million tons, open market value may further decline below last year level of Rs 28-30/kg. Mills can lose heavily under such conditions.

Millers opine Rs 225/qtl (or $36/mt) in UP as the limit for viable operations, that is almost at par with other states (Maharashtra/Karnataka/Tamilnadu), after factoring percentage of rate of recovery.

UP Government finds itself in a bind. How can Socialist Party (SP) Government of Mr. Akhilesh  Yadav  afford to reduce the SAP when annual inflation is around 8% per annum? Nevertheless, Akhilesh administration has refrained from hiking it above Rs280/qtl(or $44/mt). A stalemate between farmers, millers and UP government has arisen.

Skewed market

In sugar cycle of 5-6 years, farmers claim that millers have made profits in some of these years each time due to high market prices. The counter point is that Government invariably intervened to check the abnormal rise in local prices, resulting into significant loss to millers’ potential profitability. However any additional investments made by them from accrued profits are an asset to the nation.

The fact being that sugar business is skewed. Markets can be right if inputs and outputs operate on principle of free trade, rather than one side being administered by irrational political considerations of SAP and the other side by uncertainty of supply-demand realization.

UPA intervention

Now, Agriculture, Food and Finance ministries of Central Government are interacting for bailing out both farmers and millers, though it has divested the responsibility to States. UPA cannot sort out the matter with SP run Government of UP. Mr Ajit Singh, Aviation Minister and of Rashtriya Lok Dal (RLD-another ally of UPA) has chipped in. Likewise Maharashtra, led by Congress Chief Minister is also approaching PMO for relief.  

Any Central support, if given, goes to the credit of Mr. Sharad Pawar of NCP, though Mr. Thomas (Food Minister) implements the relief from the funds authorized by Mr. Chidambaram (Finance Minister).  Thus, NCP, RLD, Congress and SP are vying each other for sugar vote bank. Any relaxation/subsidy means additional fiscal deficit.  That translates to erosion of value of rupee, higher inflation and diminishing buying power of savings. But in an election year good politics supersedes bad economics any way. BJP is silently watching the confusion to derive its own political mileage.

Buffer stock

Suggestions for 2 to 5 million tons of buffer stocks have been made. Apart from concern of fiscal deficit, the issue of storage is paramount. If this buffer is to be stored at the premises of the mills, the surveillance on such holdings may be controversial. NSEL scam is the case in point where warehouses reflected paper stocks --yet, physical tonnage went missing. CAG has already commented on the paddy stored by FCI in miller’s premises as highly objectionable and questionable.


Exports are not viable, due to surpluses available internationally, except for on and off niche opportunities. Any export subsidy will violate WTO commitments. Moreover, Brazil’s raw sugar value will further plunge down to match Indian competition.


An emergent solution lies in approaching Supreme Court for  authorizing “Fair Remunerative Price” (FRP) announced by CACP, even as an “interim order” as the basis for sugarcane pricing for 2013-14—that is Rs 210/qtl or $33/mt at 9.5% recovery rate, with pro-rata hike linked to higher recovery on pan India basis. This will end diverse policies in different states.

The cause of judicial action has already arisen; the case is logical and doable legally with data, analysis and recommendations of Rangrajan report. The Governmental route may be messy and time consuming unless worked through an Ordinance for forthwith implementation of second phase of Rangrajan report, which may involve Election Commission consent as well.    

Friday, November 22, 2013



 This is an article from Business Line Paper appeared on 22nd November, 2013

 Please click on the following link to read :


Tejinder Narang
The Obama administration and EU for all practical purposes are moving closer to an agreement –or an interim agreement-- with Iran on its contentious nuclear program through Russian inter-mediation. Even with an interim agreement, USA and its allies will lose the moral authority of dictating others not to do business with Iran. This automatically means beginning of tapering of economic sanctions imposed on Iran.   A renewed trading pattern with Iran can emerge thereafter.

India has past experience with Iran of two earlier pacts which came to definite closure abruptly. First, Kudremukh Iron Ore Company Limited (KIOCL) barter of 1976, against which Iran invested $630 million in return of Iron ore. It was abandoned in 1980 due to changed political realities. Thereafter another bilateral trade and payment mechanism –Asian Clearing Union (ACU) was terminated by RBI in December 2010 under US pressure

Under recent rupee trading agreement of February 2012 India’s UCO bank is nominated to deal with four Iranian banks for payment in 55:45 ratio of hard currency and rupees respectively. However counter pressures to deny insurance and especially shipping insurance to Iran-origin cargo is applied simultaneously by USA/EU.    On 6th February 2013 USA mandated that India must trade with Iran by 100% payment in rupees for import of crude oil, to which Iran has remained defiant.  With greater advancement and success in non-proliferation talks, Iran’s attitude on rupee payment arrangement may harden.

All bilateral/special trading agreements are conceived because of political and economic necessities. They survive as per the situational emergencies; and thereafter collapse without a whimper leaving many unsettled issues.  Indo-Iran rupee agreement is trending towards such a sun-set state.

 Pros and cons

Indo-Iranian mechanism has proved to be a blessing for Indian trade—especially exporters of Basmati rice ($2 billion), soymeal ($0.6 billion) annually. Other traditional items like tea, coffee,   textiles, and pharmaceuticals have also witnessed better export prospectus. Price realization and profitability per unit is much superior when compared with other conventional markets.  Corn and raw sugar export from India is also picking up though slowly.

At the same time, Indian companies are always exposed to OFAC (office of Foreign Assets Control of US) surveillance. Their non- Iranian business is under threat of being restricted by withholding of dollar/hard currency payments through the punitive actions on the banks dealing with remittance to Iran.
Iran’s exports to India peaked to $13billion in 2012-13 for supply of crude oil, urea, petroleum products, saffron, dry fruits. By April 2013, trade balance in favor of Iran was about $8 billion (Rs 432000 millions @Rs54=$). Any steep depreciation in the rupee vs dollar either due to Bernanke’s tapering off and higher twin fiscal deficits, CAD and fiscal, results in invisible loss of buying power of Iranian surplus. Since rupee has declined by about 17% (from Rs.54 to Rs 63 to a $) its value would have been 504000 millions. Loss of Iranian purchasing power is Rs 72000 millions (Rs 504000-432000=72000 millions) or 17% or $1.4 billion on $8 billion surplus. Had this amount kept in Nostro dollars/euros a/c, Iran could have shopped more by Rs 72000 millions This also implies that Iran sold crude oil cheaper by 17% to India. With imminence of US tapering, rupee may weaken  more in coming months.

  Iran also finds difficult to source large tonnage of “quality” wheat, corn, sugar from India. it prefers sourcing them from origins of its choice, if hard currency is amply available.

Looking beyond rupee trade
Indian trading entities in their zeal and momentum to make quick buck, forget the financial risk that may be caused by any “peaceful solution” between Iran and international community.  There is no legal recourse or any procedure of winding up the rupee agreement under that eventuality.  India can attempt is to seek diplomatic intervention that means rounds and rounds of “discussions” either in New Delhi or Tehran.

If trading restrictions are phased out or tapered by the US/EU, Iran will undertake business on competitive basis. Indian Basmati rice will be pitted against aromatic varieties of Thailand and Pakistan. Soy meal, corn, raw sugar will meet the challenge of South American and Black sea prices. The base of business will shift back to Dubai from Tehran. Iranian trading companies will compete with new/old private players based in Dubai. All the existing contracts will be threatened or might be renegotiated unfairly. In short, preferential treatment to India will end forthwith.

On the positive side,  all international insurances will be freely available to India and Iran; OFAC will no longer pose a threat to Indian companies; surplus in UCO bank may be used for import of all type of commodities and services leading to its faster liquidation of surplus—may be with some over invoicing; agency commission may be permissible; legal jurisdiction and awards can be negotiated rather than being limited to Iranian law; enforcement of arbitration from which Iran is presently insulated will be feasible.

The way forward

The citing above is only an illustrative rather than comprehensive. However, time is ripe for the Industry Chambers to start developing a model that may assist the Deptt of Commerce, Ministry of finance and Ministry of External Affairs (MEA) for strategizing the policy frame work to deal with sun set of rupee agreement to minimize dislocation in the bilateral trade. UCO bank should also provide necessary inputs to all concerned and RBI.  MEA’s role and Indian embassy in Tehran will be vital in smoothing the winding down operation of the rupee agreement with back up assistance of all concerned. Idea is to get prepared for what can be anticipated in the nearest future.

Monday, November 18, 2013






1.     Bids that may be awarded business are around $284.70-$289.90 fob/metric ton.

2.    Escalation of $25-$29 pmt from the last tender quote of --$260- is in line with price rise in world markets in last 35 days.

3.     None of the MNCs submitted bids at the highest level.  

4.    Large/medium sized traders in Singapore and Dubai made the highest bid. May be they are taking a new positions.

5.    MNCs have virtually revealed values on which they can fill in their short positions.



-        AL GHURAIR               -           284.70 – 30 K/ 277 – 25k
-        AVANTI                       -           272.09  - 25 K
-        AGROCORP                 -           285.95  - 50 K
-        EMMSONS                  -           277.40  - 30 K
-        TOEPHER                     -           260.00  - 60 K
-        CARGILL                      -           280.00 – 40 K/282.75 – 30 K
-        STARCOM                   -           268.00 – 25 K


-        AMIRA                         -           282.00 -  30 K 
-        AGROCORP                 -           280.00 -  50 K
-        LOUIS DREFUS             -           278.28 -  30 K
-        EMMSONS                  -           278.01 -  30 K
-        AGRI COMMODITIES  -           286.20 -  30 K
-        AL GHURAIR               -           285.85 -  30 K
-        PROMISING INTL.        -           279.75 -  30 K


-        CARGILL                      -           280.00  – 40 K
-        LOUIS DREFUS             -           276.12  - 30  K
-        CONCORDIA                -           280.26  - 30 K
-        AL GHURAIR               -           284.70  - 30 K
-        EMMSONS                  -           278.01  - 40 K
-        STARCOM                   -           268.00  - 30 K


-                  AMIRA FOODS  - 70 K  284.70
-                  AGRI COMMODITIES – 30 K 289.90
-                  CARGILL – 30 K 279.75
-                  VITOL – 30 K 273.10