The Venture Intelligence Blog

Deepak Shenoy of Capital Mind has an interesting post on MediaNam a titled "The Economics of Using Uber in India". Extracts: Uber advertises its lowest fare in Bangalore at Rs. 7 per km charge but that is utter bull. For an average 10 km ride in the city, it costs much more: a Rs. 35 base charge that has no free usage, which would be Rs. 3.5 per km. Rs. 7 per kilometer run Rs. 1 per minute as a driver fee. For an average of 3 minutes per kilometer this comes to Rs. 3 per km. These add up to Rs. 13.5 per kilometer. That’s how much you pay for an auto as well. ...The annual costs of a car are tiny nowadays (Rs. 1 per kilometer, assuming Rs. 12,000 service costs for Rs. 12,000 driven). So if my car gives me 12 kms to a liter of petrol, i’m still paying just Rs. 5.5 per km for petrol and Rs. 1 for parking. Add to this the convenience of owning a car, the ability to get groceries from hypermarkets that can’t or won’t deliver, the ability to drive your kids to a location...

Dr. Ajay Shah has timely and extremely well argued post on the government's plans to subsidise LED bulbs costing Rs.400 to be sold for Rs.10! Hopefully the decision makers will take note and switch off this yet-another-money-sucker-in-making proposal before it, well, sees light of the day. Extracts from Dr. Shah's post: The guiding question, in all design of government, should be: What's the market failure? I am not able to see a market failure in the working of the market for LED bulbs. ...Energy efficiency is just one part of economic efficiency. An LED lamp is a big up front payment and then a stream of gains in the future. Whether the LED lamp is worth putting in depends on (a) The magnitude of each gain (i.e. how much you use that lamp) and (b) The discount rate. If the interest rate is high, it will make sense to buy a Tungsten bulb instead.  ...we should be hard headed in how we thinking about what government does. Most of what government in India does is not...

The Hue and Cry over onion prices hitting Rs.100 pr kg, made me revisit this Economic Times feature (written on Oct 1, when the prices were Rs.80 per kg) which had some revealing details on why the License-Permit-IT Raid Raj is alive and well. Extracts (emphasis mine): As it is, the number of traders in onion mandis is not increasing. In important onion markets, it adds, most commission agents and traders have been there for 10-15 and only one or two new licences have been issued . "Such long presence with each other in the market has helped them to develop mutual understanding and gives undue advantage to these established trading firms in the onion trade," says the report. It's anomalous that though most of the produce enters the onion mandis between October and February, this is when prices are highest. This suggests, says the report, that "other exogenous factors like hoarding, market cartels, etc are influencing onion prices." According to Himanshu, sinc...