From the editor

After sitting on the issue for months, the government finally mustered the courage to increase the pump prices of petrol and diesel and the retail price of LPG by Rs 5, Rs 3 and Rs 50, respectively.

Prime Minister Manmohan Singh, in an unprecedented televised address to the nation following the announcement of the hike, said: "It must be appreciated that the price hike has been a bare minimum with the government and the oil companies still shouldering the bulk of the burden." But far from being a mitigating factor, this reluctance to pass on the increase in global crude prices to consumers is scary and also, in the long run, irresponsible. As our cover package, written by Assistant Editors Rishi Joshi, K.R. Balasubramanyam and Rohit Viswanath, points out, the massive subsidies being doled out by the government to shield consumers from high oil prices may actually be compromising the country's long-term ability to sustain high growth rates and also oil conservation efforts. Meanwhile, oil marketing companies- and now, upstream companies as well-will continue to bleed as they are forced to pick up a third of the tab arising from under-recoveries.

This can have serious repercussions on their long-term health, but political considerations have obviously overridden all other arguments. High oil prices are a reality that Indians have to learn to live with. This should provide an impetus to efforts at developing alternative energy sources. But India's efforts in this direction have been half-hearted at best. The country's utilisation of alternative sources such as wind, bio-power, solar and nuclear energy is way below its potential. These initiatives need to be speeded up on a priority basis to overcome the energy deficit that we are grappling with.

High ATF prices and massive overcapacities are hounding India's till-recently high-flying aviation industry. Almost every airline is incurring massive losses and there are whispers that a few of them may go bust soon. Read about it in Mayday!.

Elsewhere in this issue, we have features on how a handful of PE companies (actually, three-Baring Private Equity Partners, Actis and India Value Advisors) is using control, or majority ownership in portfolio companies, to mitigate risk and earn better returns. Then, Sun Pharmaceutical's negotiated takeover of Israel's Taro Pharmaceutical Industries has come unstuck over valuation. We take an in-depth look at the issues involved and set out the options available to Sun CMD Dilip Shanghvi. And our Special Report, by Shalini S. Dagar and Shamni Pande, this time is on pension reforms.