India, Malaysia Risk Inflation, Protests, With Fuel Price Rise

Asian governments are falling behind in their battle against record oil prices, risking public protests, higher interest rates and slower growth.

Indian Prime Minister Manmohan Singh and his Malaysian counterpart, Abdullah Ahmad Badawi, relaxed fuel price controls yesterday, joining Indonesia, Taiwan, Pakistan and Sri Lanka in boosting costs for business and consumers. The moves will drive India’s inflation to 8.5 percent, a 13-year high, said Lehman Brothers Holdings. Malaysia’s consumer-price growth may double to more than 7 percent by June, said Goldman Sachs Group.

The country’s central banks may also follow Pakistan in raising rates, as policy makers lose bets that a global slowdown would temper price increases. Higher gasoline, diesel and cooking-gas charges are ``inevitable’’ as India can’t afford to shield its 1.2 billion people forever, Singh said in a televised address. His allies, India’s four communist parties, have scheduled a week of protests starting today.

``The current phase of high energy prices has huge political implications,’’ said N. Bhaskara Rao, chairman of the Centre for Media Studies, a New Delhi-based political policy group. ``Governments simply can’t do anything about it.’’

Abdullah and Singh are risking a political backlash after losing ground in elections in the past year. Abdullah’s coalition lost its two-thirds majority in parliament and ceded control of five states to the opposition in the March 8 general elections.

Topple Government

Opposition leader Anwar Ibrahim, freed from prison in 2004, said May 29 he’ll ``immediately’’ contest a parliamentary seat once he confirms his eligibility, in a bid to topple the government by mid-September.

The Indian National Congress party has had nine electoral setbacks in 11 provincial polls since January 2007. Singh’s parliamentary majority hinges on support from the communists, who pledged to block rail and road routes during the demonstrations.

The main opposition Bharatiya Janata Party says Singh’s government has run out of ideas to tackle the oil crisis.

If an increase in fuel prices ``is inevitable, then the exit of the prime minister and his government is inevitable as well,’’ party spokesman Rajiv Pratap Rudy said.

There is a precedent for higher prices to force out governments in Asia. Indonesia’s attempt to increase fuel costs in 1998 sparked protests that led to the ouster of President Suharto after almost 32 years in power.

Rising Prices

India, which imports 70 percent of its oil, increased prices for gasoline by 11 percent, diesel by 9 percent and cooking gas by 17 percent after oil reached a record $135.09 a barrel in New York on May 22. India previously raised fuel prices in February, the first time since June 2006. Cooking-gas prices had been capped since April 2005.

India also cut customs duties on gasoline and diesel by two thirds to 2.5 percent and scrapped a 5 percent import tax on crude oil to reduce revenue losses at government-run refiners that have reached an unprecedented $1 billion a week, constraining their ability to import oil.

In Malaysia, the price of 97-RON grade gasoline will now be adjusted monthly to track global prices. Tenaga Nasional Bhd., the government-controlled power producer, will be allowed to raise electricity prices in peninsular Malaysia starting July, as it will have to pay higher prices for gas, Abdullah said.

``Because crude-oil prices and commodities at the international market have gone up drastically, the government needed to restructure the subsidy system,’’ he said.

Similar Tactic

Malaysia and India are using the same tactic as some of their neighbors. Indonesia raised fuel prices by an average 29 percent on May 24, the first increase in three years, to cut subsidy costs. Ceylon Petroleum Corp., Sri Lanka’s government oil company, increased fuel prices for the second time this year on May 25 to trim losses. Lanka IOC Ltd., the Sri Lankan unit of India’s biggest refiner, Indian Oil, boosted diesel prices three times and gasoline once this year.

Reserve Bank of India Governor Yaga Venugopal Reddy has called inflation ``totally unacceptable,’’ as it gives little room to spur an economy that’s growing at the slowest pace since 2005.

The bank has held interest rates at 7.75 percent, near a six-year high, since March 2007. It has relied on telling banks to set aside more cash against deposits to tackle inflation; it increased the cash ratio twice in the past two months to the highest level in seven years.

Malaysia has also avoided raising interest rates, relying on price controls and subsidies until now to keep inflation contained. Its central bank has kept borrowing costs unchanged at 3.5 percent since April 2006.

``The countries in Asia, which are dependent on imports, will have to live with the specter of accelerating inflation and slowing economic growth this year,’’ said Kaushik Das, an economist with Mumbai-based Kotak Mahindra Bank Ltd. ``The situation may reverse only if there is a sharp decline in global crude-oil prices.’’

This Environment Day, let's kick the CO2 habit

Climate change has been designated as the single biggest threat to nature and humanity. It’s a change that’s happening too rapidly for our comfort and action has to be taken immediately before the situation worsens.

It is unfortunate that despite progress in different spheres, India has landed itself in an ecological crisis. We have lost half our forests, polluted our water and air, and degraded major chunks of our cultivable lands. Three of our cities – Kolkata, Delhi and Mumbai – are among the 15 most-polluted cities in the world. Several of our plant and animal species have gone extinct or are on the verge of dying.

While the per capita emission is still relatively low as compared to developed nations, it is expected to grow by an average of 3% per year until 2025. India’s oil consumption is expected to increase to 2.8 million barrels a day by 2010, from 2.65 million barrels a day in 2004. The alarm bells on national carbon release have clearly started ringing.

Every World Environment Day on June 5, the UN has been advising nations, peoples and communities on devising ways to create environment awareness and enhance political action in a sphere that has been considered an intangible fringe.

This year’s slogan is – ’CO2, Kick the Habit! Towards a Low Carbon Economy.’ In short, the focus is on reducing greenhouse gas emissions.

That some presence of carbon dioxide in the atmosphere is inevitable, we all know. All of us exhale it; and it is essential for plant growth. And so we urgently need to do our bit to curtail its emission further. In our own simple ways, we need to slash carbon economies and modify lifestyles to give longevity to nature.

We must also send a clear message to our governments that we want quick and effective transformational changes to put green economies in place around the globe and urge them to ensure collective action is taken at the personal, corporate and political levels to "Kick the C02 Habit".

Global warming is a menace the world is unable to stop in its tracks, and it is getting its biggest fillip due to government inaction in curbing environment-unfriendly modes of growth.

Recognising that climate change is becoming the defining issue of our era, the UNEP has asked countries, companies and communities to focus on reducing greenhouse gas emissions.

World Environment Day will highlight resources and initiatives that promote low carbon economies and lifestyles, such as improved energy efficiency, alternative energy sources, forest conservation and eco-friendly consumption.

The theme is enough indication that carbon dioxide is one of the major greenhouse gases triggering increased global warming and that it is high time that its use is drastically curtailed before the situation goes beyond repair.

How petrol price is calculated in India

The ’fuel fire’ created by the hike in petroleum prices announced by Manmohan Singh government on Wednesday continues. The Left parties and the Bharatiya Janata Party are holding strikes across the country to protest the fuel price hike.

Do you know how the fuel price is calculated in India?

Suppose if the petrol price per litre in Chennai is Rs 56.90, here the break-up of cost calculated by the government:

Basic Price = Rs 26.93
Excise duty = Rs 14.35
Education Tax = Rs 0.43
Dealer commission = Rs 1.05
VAT = Rs 5.5
Crude Oil Custom duty = Rs 1.1
Petrol Custom = Rs 1.54
Transportation Charge = Rs 6.00
Total price = Rs 56.90

So for a Rs 22 litre petrol at pumps, consumers in India pay Rs 28 tax extra.

India's fuel price hike divides rich and poor

Indians were divided on Wednesday over the biggest hike in fuel prices in 12 years, with the poor saying it would hit their pockets hard, while the more comfortable shrugged it off as inevitable given global trends.

On the streets of the capital, New Delhi, Balaram, an office driver earning a little over $100 a month, and businessman B. Hans were in opposite corners.

While Balaram worried how to afford now more expensive cooking gas from his tight household budget, Hans, who drives a Mercedes, was more relaxed but said a lower rate of increase would have been good for those less well off.

"Already milk, vegetables, wheat -- the price of everything has gone up so much," Balaram said.

"And now gas and petrol. With my salary, after paying my rent and my expenses, what will I send home? How will I feed my family and what will I save?"

India raised prices of petrol and diesel by about 10 percent and a cylinder of cooking gas by 17 percent after its state-run oil companies said they were on the verge of bankruptcy, hammered by crude oil’s race to record highs while having to sell fuels at heavily discounted prices.

The government spared kerosene, used by many of India’s 1.1 billion people for cooking and lighting. A litre of diesel, the popular auto fuel, will now cost 34.5 rupees ($0.8) in Delhi.

"Well, what can I say? We have to pay, you see, even if we don’t like to," Hans, whose monthly fuel bill is more than Balaram’s salary, said.

Salaried families, hit in recent weeks by fast rising food prices which have pushed inflation above 8 percent, said they were looking to cut corners to absorb the fuel price hike.

"We have to cut down on other expenses such as eating out and things for yourself because it’s not in your budget anymore," Bina Chadha, a government worker, said.

"I suppose we’d have to think twice about taking a long-distance trip with the car," said Joaquim Johnson, a 38-year-old trainee counsellor.

MINEFIELD

The increases could prove a political minefield for the ruling coalition ahead of a general election next year.

Add to that inflation already running at a 3-½ year high and the opposition seem to have an upper hand if Kolkata housewife Tapasi Bose is to be believed.

"It will become very difficult for us to make both ends meet," Bose told Reuters. "The price rise will affect the fortunes of the rulers in the next elections."

But some understand the government’s compulsion. "It’s inflation. You can’t blame the government," said Suresh Rathod, a 33-year-old auditor at a law firm.

"We are helpless. Another government would have not made any difference," Subrata Roy, an IT executive in Kolkata, said.

Will Congress pay for fuel price hike?

The government finally showed the guts on Wednesday to raise fuel prices against the wishes of its own communist allies, but may struggle to sell the decision to an increasingly unhappy electorate.

Whether that will cost the centre-left Congress party power in national elections due next year remains to be seen, but rising inflation has left the opposition in the driving seat, political analysts said.

In truth, economic compulsions left the government with little choice on Wednesday but to bite the bullet on retail fuel prices, with oil Companies on the verge of bankruptcy and the oil ministry pressing for an even bigger hike.

But the decision to raise petrol and diesel prices by around 10 percent was braver than most analysts had expected from a Congress-led coalition government with a reputation for avoiding tough decisions.

"The time had come when the Congress party had to show they were a leader of the coalition and not a puppet in the hands of their allies," said V.B. Singh, a political analyst at New Delhi’s Centre for the Study of Developing Societies. "They have not succumbed to the allies as everyone thought.”

And the predictable backlash has already begun. Both the government’s own communist allies and its chief rival, the Hindu-nationalist Bharatiya Janata Party (BJP), condemned the decision to raise heavily subsidized fuel prices, and called for street protests and strikes starting Thursday.

Many private sector economists meanwhile were unimpressed, and said more should have been done to prevent an ominous rise in government borrowing.

But some political analysts were a little more forgiving. "This is a courageous move and shows they have some degree of confidence they can take on the storm of protests which will follow," said Mahesh Rangarajan, a political analyst and history professor at Delhi University.

Inflation, already running at a 3-½ year high of 8.1 percent, is likely to rise further, especially as higher diesel prices feed through into transport costs.

Signs Of Hope

But Rangarajan said signs of strong economic growth and good harvests in key crops like rice and wheat seemed to have given the government some hope of weathering the storm.

"Obviously they have confidence this economic upturn will tide them through," he said. A year is a long time in Politics. Although Congress has lost a string of state elections to the BJP in the past year, it has not given up hope of regaining the initiative.

The problem, though, is that the party seems to lack the leadership either to inspire the electorate or explain away tough decisions like the fuel price hike, political analysts said.

"I don’t see any spark, any mettle from the people supposed to be at the helm of affairs," said N. Bhaskara Rao, a political analyst at the Centre for Media Studies.

"When they take hard decisions, they are not able to convince people, they don’t have anyone equipped for it."

Prime Minister Manmohan Singh is expected to address the nation later on Wednesday to try and do just that, but he lacks the conviction of previous leaders like Indira Gandhi, some analysts said.

On the streets of New Delhi and Mumbai, anger at rising prices was tinged with the realisation the government’s hands were largely tied.

"This government’s job is done by announcing the increase, it is the poor people who suffer," said Ali Ahmed, a three-wheel taxi driver in Delhi, who nevertheless was not sure the move would affect the government’s electoral prospects.

"People vote for a candidate for many reasons -- some vote in exchange for a bottle of alcohol, some for money," he said.

Red wine 'can prevent ageing'

Red wine not only complements meal but is also known to protecting heart and prolonging life. Now add one more benefit to the list -- a glass of the drink daily can help you stay young.

Researchers have found that resveratrol, a compound present in the skin of red grapes used to make wine, curbs the effects of ageing. The natural compound is already known to having anti-cancer as well as anti-inflammatory properties.

"Resveratrol is active in much lower doses than previously thought and mimics a significant fraction of the profile of calorific restriction at gene expression level," lead researcher Tomas Prolla was quoted by the Daily Mail .

Their finding is based on a study on laboratory mice.

They investigated the influence of resveratrol by looking for changes in gene expression, or activity, in heart, muscle and brain tissues in the rodents.

As the animals age, gene activity in different parts of their bodies change as genes are switched on and off.

In the mice heart, there are at least 1,029 genes whose functions alter with age, leading to impaired function. When the rodents are fed a restricted diet, 90 per cent of this age-related change is prevented, the study found.

The study also revealed that low doses of resveratrol blocked harmful changes in 92 per cent of the heart genes. At the same time, declines in heart function associated with ageing were also prevented.

A glass of red wine, or food supplements containing even small doses of resveratrol, were likely to represent a "robust intervention in the retardation of cardiac ageing, according to the researchers at Wisconsin-Madison University.

"There must be a few master biochemical pathways activated in response to caloric restriction, which in turn activate many other pathways. And resveratrol seems to activate some of these master pathways as well," Prolla said.

The results of the study have been published in the latest edition of the PLoS ONE journal.

Airlines may treat people like bags

Imagine two scales at the airline ticket counter, one for your bags and one for you. The price of a ticket depends upon the weight of both. That may not be so far-fetched.

"You listen to the airline CEOs, and nothing is beyond their imagination," said David Castelveter, a spokesman for the Air Transport Association, a Washington, DC-based trade group. "They have already begun to think exotically. Nothing is not under the microscope." He declined to discuss what any individual airline might be contemplating, including charging passengers based on weight.

With fuel costs almost tripling since 2000, now accounting for as much as 40% of operating expenses at some carriers, according to the ATA, airlines are cutting costs and raising revenue in ways that once were unthinkable. US Airways Group Inc. has eliminated snacks. Delta Air Lines Inc. is charging $25 for telephone reservations. AMR Corp’s American Airlines last month became the first US company to charge $15 for one checked bag.

Even a cold drink may be harder to come by aloft. Singapore Airlines Ltd, whose shares have fallen 8.9% this year, is "trying to eliminate unnecessary quantities of extra water" to save weight, chief executive officer Chew Choon Seng said in an interview.

"When you hear some people talking about putting showers on their planes, that strikes me as counterintuitive," he said.

After US airlines reported combined first-quarter losses of $1.7 billion and crude oil jumped to a record $133.17 a barrel on May 21, almost double from a year earlier, fares based on a passenger’s weight may be a logical step, said Robert Mann, head of R W Mann & Co, an aviation consultant based in Port Washington, New York.

"If you look at the air-freight business, that’s the way they’ve always done it," he said. "We’re getting treated like air freight when we travel by airlines, anyway."

"Laughter aside, the airlines are just in a desperate situation," said David Swierenga, president of consulting firm Aeroecon in Round Rock, Texas, who dismissed weight-based ticket sales and steep price increases as unrealistic.

Airlines have also taken shorter-term steps even if they have stopped short of weighing passengers. Japan Airlines Corp is using crockery in first-class and business-class cabins that is 20% lighter than the service items they replaced.

Southwest Airlines Co is flying slower - by 72 seconds, for example, on Houston-Los Angeles flights, which now take 3 hours 14 minutes.

That saves 8.7 gallons of fuel for each of the airline’s four daily nonstops on the 1,387-mile route. Southwest comes closest to charging for weight, asking passengers to buy a second seat if their girth prevents the armrest from lowering.