Book Review: Ithaca by David Davidar

This is the story about a person behind the story tellers, a publisher. The protagonist of this story, a person of Indian origin, working for an international publishing firm, climbs up the career ladder for being with a right person (a star author of Angel’s series of books) at the right time, which helps him earn name and money for his firm. But all is not well in his personal life and his relationship with his wife, who is also part of publishing industry, has turned soar. 

To find peace with himself, he tries a vacation in an uncommon place, Thimphu in Bhutan. As heads back to his office in London, he finds that his star author, who was in his old age and facing personal trauma, is no more alive. In the absence of a new book in the Angel’s series, his firm has nothing significant to offer, so the financials of the firm take a hit. And the company becomes an acquisition target. To defend the position of his firm, he has to do whatever it takes. As per advice of CEO of the firm, he heads to meet the translator of his star author, and to his surprise he finds there was a last piece of unpublished work. His company pays a hefty amount to acquire the rights and plans a series of events to promote and distribute the rights of the book to other languages and media, and the promotional event in Frankfurt fair gets the attention he expected and on the other note, reconciliation efforts with his wife seems to be paying off. 

Despite pulling off a new book which has all the potential to improve financials, his firm gets acquired by a bigger firm which is run by a ruthless and ambitious person. And the unexpected developments, that the book was not an original piece of work by the start author but a desperate attempt of his translator putting together pieces from an already published work by another author. This attracts criticism by the media and the protagonist of the story gets fired. He returns to India, his village in a hilly station and gets consoled by an unusual person, a postman of the village. He accepts that no one can escape fate but looks forward optimistically to find a new direction in life.

Viewpoint: Diesel price, Inflation and Deficits: Turning points of economic spiral

Intro:

Diesel prices are on the rise so inflation is at higher levels. Will there be further increase in diesel prices and inflation? Probably not. Here is the reasoning.

Background:

Diesel prices are on the rise. Almost Rs. 15 per litre (approx. 30%) increase in the last 3 years is observed. This increase makes the transportation costlier, input costs rise and the burden is passed to consumer so we witnessed persisting inflation at 11% in 2013 (average CPI).

Why diesel prices went up?

If we take a look at Brent Crude chart, it has remained in a narrow range in the same time frame. Then what is causing Diesel price rise?

USD/INR chart reveals the secret. It is not the international crude prices but the fall in Rupee made the import costlier by around 20% or so. And rest of the rise has come from increase in diesel prices by 0.5 rupee a month with Government’s initiative to reduce the burden on Oil Marketing Companies (OMC). This would continue and further accelerated to reduce the subsidy burden and bleeding of OMC's.

Why diesel prices will top out in a year or two from now?

Even if crude prices remains flat, diesel prices can go up if Rupee weakens further and fuel subsidy withdrawal speeds up. But the Rupee’s weakness has roots in Trade deficit (a gap between exports and imports) and Current Account Deficit (CAD, a gap between outflow and inflow of foreign exchange).

Diesel prices contribute to both deficits. Oil being the second biggest import of the nation, increases the import bill. And fuel subsidy is one of the biggest Government spend that increases Fiscal Deficit (a difference between Government's spend and earnings). But reducing the subsidy and bringing the diesel prices to market levels helps in reducing Fiscal Deficit, reduces Government's borrowings and strengthens rupee. Stronger rupee reduces the import bill and makes the crude import possible at lower prices reducing the trade deficit and further strengthening the Rupee further in the process.

Diesel would cost another Rs. 12 more a litre (approx.) if subsidies are withdrawn. But this would have reduced the current account deficit to the tune of Rs. 100,000 crores a year or approx. 30% of CAD. This will help Rupee appreciate, reduce the import bills and narrow the trade deficit. And the benefits of importing crude at lower prices can be passed back to consumers offsetting the price rise caused by subsidy withdrawal.

Conclusion:

In a narrower time frame, diesel prices can go up but not consistently as the benefits of deficit reduction start paying back. Moreover, oil supplies are on the rise all over the world so there are good chances that international crude prices may see softening with time. And oil discoveries within India are on the rise, any increase in domestic production will only help to reduce the import bill and strengthening of Rupee. So we may actually see Diesel prices coming down in a couple of years. But what about inflation? It too may soften. If it does not, there could be other reasons driving it and Diesel would not be the one behind it.

References:

1, Diesel price chart: http://www.moneycontrol.com/news/market-edge/chartthe-day-how-diesel-prices-have-doubledlast-decade_757880.html

2. Brent Crude and USD/INR: http://www.investing.com/

3. Subsidies: IMF working paper http://www.imf.org/external/pubs/ft/wp/2013/wp13128.pdf

Perspective: Wind-Hydro hybrid power plants to overcome the demerits of stand-alone wind farms

Introduction:

Wind and Hydro, both renewable forms of energy, both economical and best alternatives to thermal (coal based) energy and avoid harm to nature. But they too come with their baggage of demerits. Wind does not blow when there is a peak demand for energy (i.e. during afternoons) but is at full action in the night generating electricity when we need the least. There are no viable ways to store energy in the scale of mega-watt’s either. On the other hand, hydro, the cheapest source of electrical energy production, has geographical limitations such as elevations which are not significant enough or the insufficient water flow rate to set-up a hydro power plant.

Opportunity:

There are significant water bodies across India acting as reservoirs used for irrigation purposes, but no power generation is done as the elevations are not enough. Often, if not always, wind turbines are co-located around water reservoirs like the one shown in this picture.

So there lies an opportunity to utilize the energy generated from wind-turbines which cannot be stored to pump up the water from reservoir to a tank in upper hill to provide the required elevation needed to set-up a hydro power plant. While this method of storing energy is many centuries old but the benefits of adopting are huge now as Wind turbines these days generate power in the scale of mega-watts and are capable of pumping up great amount of water. The energy that can be recovered could be as high as 80%. Such a hybrid system can turn out to be a cost effective power plant due to higher utilization factor enabling power supply according to the varying demands across the clock.

Financial viability

For such system to be financially viable, capital costs required to set-up a hydro power plant have to be recovered from energy produced from it and there has to be a subsequent increase in the bottom line (profits) of the hybrid power plants. Let us work out a scenario with approximate costs to see if it makes sense or not.

We may consider a pool of wind turbines with a combined capacity of 100 MW, operating 12 hours a day, so generating 1200 MW hours of energy a day. Since there is always a case of production-demand mismatch and with absence of an energy storage system, we may consider an under utilization of capacity, assumed at 30% or 360 MW hours a day. If we consider 80% of energy recovery from a hydro power plant which is being set up which can produce 288 MW hours of energy on daily basis. If thus produced energy is sold at a rate of Rs. 4 per unit, it can create a revenue stream of Rs. 11.5 lakh a day. If we expect that this plant is operational 300 days in a year, it can contribute Rs. 34 crores of additional revenue every year and around Rs. 690 crores in its expected life span of 20 years. If the capital costs for setting up of this hydro power plant with a peak load capacity of 30 MW are around Rs. 100 crores, it would generate 7x returns in its life time or around 30% simple rate of return a year.

Maintenance costs are not considered here as they are minimal and an electrical distribution grid is considered to be already present with wind-power plant is being operational. All these financial figures are for illustration purposes only and the actual figures vary from project to project.

Policy and Regulations

Since the Governments promote production of renewable energy with many incentives, combination of Wind-Hydro power plant would not find any resistance from regulatory bodies even though additional approvals may be needed. Since the water being drawn from the reservoir is being returned to it, it may not invoke any objections from stakeholders of the reservoirs, the farmers.

Adoption and Scalability

While water bodies may not always be present in the vicinity of wind farms, other alternatives such as compressed air or thermal energy storage can be explored (on case to case basis) even though they may not offer the similar benefits of wind-hydro combination.

But if one takes a look at the geographical chart of India, each state on an average has at least 10 locations where wind farms and water bodies are co-located. There lies an opportunity to harness the infrastructure deployed to provide energy for growing India.

This system can be scaled and extended for projects such as linking of water reservoirs to bring a balance in the water availability across geography instead of wasting the enormous power generated by wind turbines when there is no load.

References:

1.     Wind Generates Electricity When We Need It Least  (Institute for Energy and Research) http://www.instituteforenergyresearch.org/2012/10/24/study-wind-subsidies-disproportionately-produce-electricity-when-we-need-it-least/

2.      Calculating the amount of available hydro power

 where,

P is power in watts; η is the dimensionless efficiency of the turbine; ρ is the density of water in kilograms per cubic metre; Q is the flow in cubic metres per second; g is the acceleration due to gravity; h is the height difference between inlet and outlet (Source: Wikipedia)

3.      Picture shown is taken at Vanivilas Sagar in Karnataka

4.      Scientific American magazine, March 2012, page 50, reports energy recovery from pumped up hydro power plants can be 80%

Book Review: Young Tagore

This book is about Tagore in the making. It is a careful reconstruction of days of Tagore during his childhood and youth. It has liberal references to Tagore’s memoirs ‘My Reminiscences’ and ‘My Boyhood Days’ and his other works to create a psycho biography of young Tagore, the inner world within him shaping the genius.

Rabindranath’s creativity and literary interests were evident when he translated Shakespeare’s works when he was 13. His ability to write poems brought him praise from his school teachers but won him no friends instead he was bullied by schoolmates for being feminine. He lost his mother when he was 14. While making efforts to overcome the feeling of abandonment, he became emotionally closure to his sister in law, Kadambari (his elder brother’s wife) who nurtured the creative abilities of Tagore. And a travel to England for a year, when he was 17, expanded the universe of Tagore making him more expressive and liberal in thoughts. On his coming back, his literary works flowed uninterrupted and brought him name and fame. But his marriage against his liking proved an emotional drain and the suicide of Kadambari puts Tagore into depression which was expressed in his works produced during that time, more evidently in Ghare Baire (The Home and the World).

While the world knows of Tagore as a poet, novelist, story writer, painter, and philosopher (and so on), this book shows he was a private person and a series of untimely deaths in his family made him more sensual and gave him an ability to create stories from his own life.

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After reading this book, I thought of checking with Sudhir on the question I had and he replied. Here is the e-mail conversation.

Dear Sudhir,

Reading your ‘Young Tagore’ helped me understand the sensual young Tagore but a question raised in myself, that, if Rabindra was not born in a rich family, or if he was forced to earn for his daily bread, was his sensual creativity still remained high?

I thought many are born with creative abilities but that does not see nurturing or the person cannot spend much time in creative expressions in the form of writing, painting, theater etc. as their daily chores of life forces them to earn from some other routine jobs to feed themselves and their family. For young Rabindra, there were no such financial worries or denying access to resources he wanted. Did this help him to spend time in what he was good at and what he liked to do and flourish?

Thanks,

Anand

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Dear Anand,

You are right that creative ability need facilitating circumstances, social and financial, to express itself.

Regards

Sudhir Kakar

Book Review: Ecstasy

This is the story of a village boy Gopal (symbolic representation of Ramakrishna Paramahamsa), coming in contact with sadhus residing in the rest house of his village, developing an interest in mysticism and reaching spiritual heights, quite unconventionally and rapidly. Another story of Vivek (representation of Swami Vivekananda) runs parallel who becomes disciple of spiritually enlightened Gopal, known as Ram Das Baba. While Gopal takes up his destined path of becoming a Yogi with a little resistance from his mother, Vivek had no idea of taking up spiritual path until his father’s death even though his horoscopes suggested that is his destiny.

This would have been a fictional biography of Ramakrishna Paramahamsa, but author had made changes by setting up the story in a different time, so the protagonist characters become symbolic representations of the spiritual legends.