|Another China-India land route being studied

China will explore reopening the historic Stilwell Road to connect India's northeast with the Yunnan province to push two-way trade and cooperate in the energy sector, Chinese Ambassador to India Sun Yuxi has said.
"The Chinese government actually attaches great importance to revitalize this route, especially since we are commemorating the 60th anniversary of the World War II victory and this route had made a lot of contribution," he said.

Sun said India's Petroleum Minister Mani Shankar Aiyar had informed him that, during the war, to supply fuel to the Chinese a petroleum pipeline also ran along this route that could also be revived and rebuilt.
"If we can lay a pipeline in those difficult war years, now it will be very easy to do it and revitalise it again. So we are all studying the possibility," Sun told.

The ambassador said besides Beijing, the governments of India and Myanmar were also keen to revive the Stilwell Road, called Tea Horse Road in Yunnan, to reach the bilateral trade target of $ 20 bn between India and China.
"Now, we are promoting the business people to think of the possibility and the feasibility. It should be there."

The road stretching 1,800 km via Myanmar was named after Gen J.W. Stilwell and built during World War II to help the allied armies enter China from India to resist the advance of Japanese forces.
The Chinese side of the road is now an expressway of over 1,000 km while in India the 70-odd km road stretches from Ledo town in Assam to Phangsu Pass in Arunachal Pradesh. Traversing Myanmar, the road connects Ledo with Kunming, the capital of Yunnan province, officials explained.

Sun said efforts were also on to join efforts in the area of energy security for the two countries, instead of competing with each other in developing oil assets in areas like the Middle East, Africa, Central Asia and Russia.
"We should have the power to define prices of oil. We must have that. We have discussed it with the Indian petroleum minister. He is going to talk on this with his counterpart in Beijing." He said India had also invited China to participate in an energy roundtable this year to discuss various aspects of energy security.
"We are working on it."

Sun said technical reasons alone were responsible for China being unable to reopen the Nathu La pass, which connects Sikkim with Tibet, on Oct 1.
"The Indian side said they are making it very quickly, but much simpler. But we are planning a lot of permanent structures -- set up buildings for customs, storage and immigration," he said, adding he hoped the work would finish by the summer in 2006. He said simultaneously the two sides will also decide on issues such as how to connect the road, the kind of offices to be established, how the transiting goods should be checked and the timings for the border gates to open and close.

Source: Asia Pulse ||India should redirect subsidies to those who need them by Andy Mukherjee

25-10-05 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 the National Council of Applied Economic Research, as much as 39 % of subsidized kerosene was diverted last year by middlemen to other users. These other users gladly paid above the price set by the government because even at a 100 % premium, subsidized kerosene is a cheap source of energy.

With the surge in world oil prices this year, the burden on Indian taxpayers for subsidizing the rich and the unscrupulous is enormous. Last year's kerosene subsidy cost taxpayers 100 bn rupees, or $ 2.2 bn. This sacrifice is largely useless because many needy families return empty-handed from shops that sell subsidized goods.
Most attempts to plug subsidy leaks by tinkering with procedures solve nothing. Stricter eligibility criteria for receiving subsidies create new problems.

One example is food benefits. The Indian government decided a few years ago to limit distribution of subsidized wheat, rice and sugar to poor families. The logic was admirable: Middle-class families and rich households, many of whom were getting their chauffeurs to line up for their "ration," must be excluded from feasting at public expense.
Limiting the subsidy to the so-called Below Poverty Line families appears to have worked well in the cities, though in the villages it has led to a new problem. A lawmaker in the federal Parliament who recently toured the country to assess government programs reported upon his return that in one poor village he visited, the richest person was the only one who possessed a Below Poverty Line card.

While the malfunctioning kerosene benefit shows that any loosely defined subsidy will end up in the wrong hands, the lawmaker's observation demonstrates that any attempt to better define the entitlement will also, thanks to a slothful and corrupt bureaucracy, divert the assistance to the undeserving.
There are other examples of subsidies causing economic distortion. In Australia, the variable component of the cost of water services is borne entirely by users; taxpayers pay for renewal of the water-supply infrastructure. In India, by contrast, taxpayers pay for a very large part of the variable cost of water services, while users pay next to nothing. The result is that no one pays to replace old, leaking reservoirs and pipes.

A large part of India's manufacturing economy chugs along by burning artificially cheap diesel in inefficient and polluting generators. Utility power would be a cheaper alternative, though in many parts of India it is unavailable for up to 14 hours a day mainly because farmers must be given power for free.
What is to be done? The answer is obvious: Eliminate all subsidies and decide upon an inflation-indexed cash amount that an average household will need in order to buy subsidized goods and services. Once this amount is determined, the government should assign unique social security numbers to all citizens.

These numbers should become a basis for any household wishing to receive cash from the government to open special accounts at banks or post offices. To obtain cash, each household would be required to self-certify on a quarterly basis that it has not owned a car, a motorcycle or a mobile phone in the preceding three months.
Dishonesty will be both low and easy to monitor. Wireless phone companies will be required to connect all their subscriber accounts to the identification numbers; a nationwide vehicle registration database will do the same for car and motorcycle owners. Welfare cheats will be caught.

After the rich and the middle class are weeded out, about 800 mm Indians, or about 160 mm households, will be entitled to receive cash from the government every month. Annual subsidies, explicit and implicit, account for about 14 % of India's $ 692 bn gross domestic product.
If the government cancels the subsidies and redistributes the money as cash, each of the 160 mm households will get $ 600 a year at current prices. With this money, poor households will be able to bear the full cost of everything from water, kerosene and electricity to commuter bus rides and insurance premiums for government health services. The quality of services will improve. The burden on present and future taxpayers will decline.

Subsidies of specific products and services cause economic distortions and are expensive to deliver.
It would be more efficient for the heavily indebted Indian government to simplify its welfare policies. And what could be simpler than cash?