Tag Archive for 'Economy'

India’s reforms 2012: A risky strategy, born of panic

Siddharth Varadarajan in The Hindu:

I asked a senior member of the Prime Minister’s Cabinet what had changed between November 2011 and September 2012. There is still no consensus on FDI in retail, yet a decision has been taken to go full steam ahead. “What has changed is the value of the rupee,” the Minister replied. Every rupee that the dollar gains adds Rs 8,000 crore to India’s annualised oil import bill. “Of course, Manmohan admitted to us that not even one dollar may flow into retail or airlines right now”, he said. But this decision to open the sector and raise diesel prices has to be taken in order to stop the rupee from going into free fall.

Signalling is not an unknown tactic, both in economics and in war. Signals can radiate strength and resolve, but they can also connote weakness. How will those whose ‘animal spirits’ are being propitiated look at the petard the UPA has just pinned upon the door of small retail across India? Dr. Singh must not be fooled by the applause he has garnered from editorialists, TV anchors and corporate leaders for being “tough” and “decisive”. These perfumed words may wash the stain of the Washington Post’s ink on his hands — a recent article in the American paper about his indecisiveness seems to have particularly stung the PMO — but they are self-serving and deceptive. From their vantage point in the White House or on Wall Street, the champions of American finance and enterprise see an Indian Prime Minister who is not tough but vulnerable: a man who believes the only way he can revive the economy and save the rupee is by doing what it takes to pull in foreign institutional investors and even hot money. More:

Gujarat CM Narendra Modi interviewed by WSJ

Amol Sharma in WSJ:

WSJ: Do you see yourself as a future prime minister?

Modi: I don’t carry the burden of the past or the madness of the future. I live in the present. My present is my Gujarat, the 60 million people of this state, the villages, the poor farmers, the children – to change their destiny. I can’t think beyond that.

WSJ: Your critics say you should apologize for the 2002 riots. Why won’t you?

Modi: One only has to ask for forgiveness if one is guilty of a crime. If you think it’s such a big crime, why should the culprit be forgiven? Just because Modi is a chief minister, why should he be forgiven? I think Modi should get the biggest punishment possible if he is guilty. And the world should know there isn’t any tolerance for these kind of political leaders.

Read the full story here, Q&A here.

And what he said on malnutrition:

“We are the first state in the country to raise the issue of malnutrition. It came to our mind that Gujarat is by and large a vegetarian state. And secondly, Gujarat is also a middle-class state. The middle class is more beauty conscious than health conscious – that is a challenge. If a mother tells her daughter to have milk, they’ll have a fight. She’ll tell her mother, ‘I won’t drink milk. I’ll get fat.’ They have money but she’s beauty conscious, she’s not health conscious. So being a middle-class state is also a problem for me. A large segment of the population in my state is middle-class. Second is vegetarianism.

More on this here

 

Made in Bangladesh: Unrest

Jim Yardley in NYT:

Ishwardi, Bangladesh — The air thickened with tear gas as police and paramilitary officers jogged into the Ishwardi Export Processing Zone firing rubber bullets and swinging cane poles. Panicked factory workers tried to flee. A seamstress crumpled to the ground, knocked unconscious by a shot in the head.

Dozens of people were bloodied and hospitalized. The officers were cracking down on protests at two garment factories inside this industrial area in western Bangladesh. But they were also protecting two ingredients of a manufacturing formula that has quietly made Bangladesh a leading apparel exporter to the United States and Europe: cheap labor and foreign investment.

Both were at stake on that March morning. Workers earning as little as $50 a month, less than the cost of one of the knit sweaters they stitched for European stores, were furious over a cut in wages. Their anger was directed at the Hong Kong and Chinese bosses of the two factories, turning a labor dispute into something potentially much larger.

“If any foreigner got injured or killed, it would damage the country’s image around the globe,” said a police supervisor, Akbar Hossein, who participated in the crackdown. “We all know the importance of these factories and this industry for Bangladesh.” More:

United Progressive Alliance – Report to the People 2011-12

Mamata Banerjee personifies populist force in Indian politics

Simon Denyer from Kolkata in The Washington Post:

She spent her life fighting communists but is the biggest obstacle to economic liberalization in India today. She is the leader of a small regional party but wields more power than the prime minister.

Mamata Banerjee, the chief minister of the state of West Bengal, is a rising force in Indian politics, and Secretary of State Hillary Rodham Clinton paid a special visit to Kolkata this month to meet her.

The 57-year-old Banerjee — determined, resolutely populist and hardworking, yet eccentric and intolerant of dissent — holds the balance of power in India’s coalition government and has used that political might to huge effect.

Time after time, Prime Minister Manmohan Singh’s efforts to introduce economic reforms have foundered because of Baner­jee’s opposition. Time magazine recently listed her among the world’s 100 most influential people, and 25 out of 50 CEOs surveyed by a leading Indian newspaper last week said she was the biggest stumbling block to economic growth.

Banerjee is the personification of a fundamental change that is transforming Indian politics: the declining vote share of the country’s two main political parties and the rising influence of regional parties. More:

On the slowdown in the Indian economy

C.P. Chandrasekhar, Professor, Centre for Economic Studies and Planning, School of Social Sciences, Jawaharlal Nehru University, in The Hindu:

To the government’s discomfiture, this incipient stagflation is also not serving to reduce the pressures on the balance of payments front. India had been recording trade and current account deficits that were rather easily financed by the large capital flows the country had attracted. But with international oil prices rising sharply, and a combination of speculation and investor flight to safety increasing the demand for imported gold, India’s import bill rose sharply in the last financial year. In the event, despite exports having held their own in 2011-12, the current account deficit has burgeoned. The result is weakness of the rupee that now seems to have become the target of speculation, resulting in a sharp downward slide in its value. A collapsing currency is a sure negative signal for international investors, and can accelerate their exit. A downward spiral is a possibility that therefore needs to be pre-empted.

However, there appears to be no convincing response from the government thus far. The RBI is wary about stoking inflation by reducing rates to spur growth. The deficit on the government’s budget and India’s relatively high public debt to GDP ratio are preventing the government from raising expenditures (as it did in response to the global crisis of 2008). This is partly because of the government’s own fiscal conservatism. But the more important reason is the fear that larger fiscal deficits or higher taxation would upset foreign investors and hasten their exit.

In the event, we have the Finance Minister speaking of the need for austerity and harsh decisions amidst a slowdown in growth. That could convert falling growth into a recession. Further, the “harsh decisions” involve measures such as cutting subsidies to reduce expenditure and raising oil prices. Combined with the increase in the prices of imports as a result of the rupee’s depreciation, these administered price hikes would only fuel inflation, and further aggravate the tendency towards stagflation. More:

 

Lonely planet guide to economic growth

Shreekant Sambrani reviews Ruchir Sharma’s Breakout Nations. In The Asian Age:

When I was a teenager hundreds of moons ago, I was very impressed by the rate at which I grew taller. I shared my observation with my cousin, a brilliant doctor, that teens must be the fastest-growing people. She quickly disabused me of this conceit by telling me that children under five held that distinction.

I have noticed a similar conceit among the current crop of economists who compare economic development of nations. Their sole concern is the rate of growth, irrespective of the country’s background, stage of development, resource endowment or socio-political realities. The result is not too different from my faulty comparison of growth of infants to adolescents.

Comparison of growth experiences is the theme of Ruchir Sharma’s book, Breakout Nations, and, to put it simply, the growth rate is at the heart of it, despite the numerous details and asides the book abounds in. Sharma’s objective is succinctly summarised in the book’s sub-title, In Pursuit of the Next Miracle Economies, what he terms the breakout ones. Sharma attempts to do this by taking us through his experiences of the last decade as the head of the global emerging markets equity team at Morgan Stanley Investment Management. His unique vantage point exposes him to not just economic realities of a large number of countries but also a wealth of interesting if impressionistic details, which he generously shares with his readers. More:

India’s political paralysis

From The Economist:

A lesseer man might have quit by now. Even Manmohan Singh’s fabled ability to endure humiliation is being tested. That the prime minister defers to his political boss and head of the ruling Congress party, Sonia Gandhi, is widely accepted. That he is undercut by colleagues, including Mrs Gandhi, who are still sceptical about his liberalising reforms, looks increasingly hard for him to swallow. Tougher yet for a man of personal integrity is that he is presiding over such widespread and outrageous corruption. Nor can it be easy for him to accept that, despite an emphatic re-election in 2009, his government has passed no substantial laws.

The price is being paid by India itself. Investors and others lament policy paralysis. Ministers shy away from big decisions, fearing accusations of graft—though Mr Singh this week urged them at least to get on with infrastructure spending. Meanwhile an obstructive opposition, the Bharatiya Janata Party (BJP), has caused gridlock in parliament for much of the year, hoping to tap public fury over corruption.

As a result, the current parliament has done the least work of any in a quarter of a century. A prominent Congress figure, Shashi Tharoor, is so glum he suggested this week scrapping parliament altogether in favour of a presidential system. That will not happen, but nor will much get done. On December 13th the finance minister, Pranab Mukherjee, had almost to beg MPs to collaborate on economic reform. More:

Has India’s growth and development been an “unprecedented success or extraordinary failure”?

Jean Dreze and Amartya Sen in Outlook:

Is India doing marvellously well, or is it failing terribly? Depending on whom you speak to, you could pick up either of those answers with some frequency. One story, very popular among a minority but a large enough group—of Indians who are doing very well (and among the media that cater largely to them)—runs something like this. “After decades of mediocrity and stagnation under ‘Nehruvian socialism’, the Indian economy achieved a spectacular take-off during the last two decades. This take-off, which led to unprecedented improvements in income per head, was driven largely by market initiatives. It involves a significant increase in inequality, but this is a common phenomenon in periods of rapid growth. With enough time, the benefits of fast economic growth will surely reach even the poorest people, and we are firmly on the way to that.” Despite the conceptual confusion involved in bestowing the term ‘socialism’ to a collectivity of grossly statist policies of ‘Licence raj’ and neglect of the state’s responsibilities for school education and healthcare, the story just told has much plausibility, within its confined domain.

But looking at contemporary India from another angle, one could equally tell the following—more critical and more censorious—story: “The progress of living standards for common people, as opposed to a favoured minority, has been dreadfully slow—so slow that India’s social indicators are still abysmal.” For instance, according to World Bank data, only five countries outside Africa (Afghanistan, Bhutan, Pakistan, Papua New Guinea and Yemen) have a lower “youth female literacy rate” than India (World Development Indicators 2011, online). To take some other examples, only four countries (Afghanistan, Cambodia, Haiti, Myanmar and Pakistan) do worse than India in child mortality rate; only three have lower levels of “access to improved sanitation” (Bolivia, Cambodia and Haiti); and none (anywhere—not even in Africa) have a higher proportion of underweight children. Almost any composite index of these and related indicators of health, education and nutrition would place India very close to the bottom in a ranking of all countries outside Africa. More:

India’s innovation path

Aditya Dev Sood in 3quarksdaily:

One day, I came home from school to a big commotion in the living room. My dad was working with an electrician and a mason, and they were together struggling to figure out how this enormous apparatus was going to work. What is it, I asked? A split-unit air-conditioner, my dad said! The thing was a deep and dark gray, with fierce frowning fins all around. It sat in our living room that day like a fine objet, detached slightly from the wall into which its cables would soon run, locking firmly into the masonry and coming out the other side, into the sunless side yard we then had, where I also parked my bicycle. The thing was powerful alright, having been designed for industrial use, and it hummed quietly to itself, rather than roaring and groaning in the way air-conditioners usually did back then. No one in our friends or family circle had ever seen or heard of a split-unit AC, and it was quite the source of living-room family pride.

My dad had bought the thing at an auction at the American embassy, which was upgrading from these four-year-old split-units to central air-conditioning. He must have paid, maybe forty thousand rupees for the thing, almost two thousand bucks in 1980s US dollars. But even this second-hand industrial unit must have seemed a good investment, as compared with the kinds of ACs that were available in the market then — old technologies that were made even more expensive by heavy import duties. And when I think back on it, I realize that many of the appliances and consumer goods we enjoyed in our home came from these sales at diplomatic compounds, or else imported by someone else and then sold locally. Our enormous six-burner stove-oven, our banana-yellow Isuzu car, our small upstairs stereo system, our several VCRs, even my silver ten-speed bike, all of these appurtenances came into lives second-hand, through foreign contacts. Nothing like them was then available in India’s local markets. More:

Indian behind US downgrade

From WSJ:

Credit rating firm Standard & Poor’s, which stripped the U.S. of its top-notch triple-A credit rating on Friday, is headed by India-born Deven Sharma.

The downgrade has sent jitters across governments and investors around the world as they try to figure out what this means for them and whether the downgrade could trigger a major market downturn. Major European governments, for instance, held an emergency meeting on Sunday to chart their plan of action.

Meanwhile, S&P has received a lot of flak for the downgrade, especially from U.S. Treasury officials who complained there was no justification for it and noticed a $2 trillion error in S&P’s calculation.

In an interview with The Wall Street Journal published on Sunday, Mr. Sharma said the rating cut was in the best interest of investors. “Our ratings are forward-looking. And part of making ratings forward-looking is for the benefit of investors, to give them a view about how we see the future risks of the credit unfolding,” he said. More

Read Q&A With S&P President Deven Sharma here

The elephant that became a tiger: 20 years of economic reform in India

By Swaminathan S. Anklesaria Aiyar, priminent Indian columnist and a research fellow at the Cato Institute’s Center for Global Liberty and Prosperity:

A foreign exchange crisis in 1991 induced India to abandon decades of inward-looking socialism and adopt economic reforms that have converted the once-lumbering elephant into the latest Asian tiger. India’s gross domestic product (GDP) growth rate has averaged over 8 percent in the last decade, and per capita income has shot up from $300 to $1,700 in two decades. India is reaping a big demographic dividend just as China starts aging, so India could overtake China in growth in the next decade.

When the reforms began in 1991, critics claimed that India would suffer a “lost decade” of growth as in African countries that supposedly followed the World Bank-IMF model in the 1980s. They warned that opening up would allow multinationals to crush Indian companies, while fiscal stringency would strangle social spending and safety nets, hitting poor people and regions. All of these dire predictions proved wrong. Indian businesses more than held their own, and many became multinationals themselves. Booming revenue from fast growth has financed record government spending on social sectors and safety nets, even if these areas are still dogged by massive corruption and waste. Still, poverty is down from 45.3 percent in fiscal year 1994 to 32 percent in fiscal year 2010, and the literacy rate is up from 52.2 percent to 74 percent in two decades, India’s fastest improvement ever. Several of the poorest states have doubled or tripled their growth rates since 2004, and their wage rates have risen by over 50 percent in the last three years.

However, India continues to be hampered by poor business conditions and misgovernance. Almost a quarter of Indian districts have recorded some sort of Maoist violence, and corruption is a major issue. India ranks very low on ease-of–doing-business indicators. Rigid labor laws prevent Indian companies from setting up large factories for labor-intensive exports, as in China. Both governance and economic reforms are needed, but progress on the former lags far behind, is thus more urgent, and can help sustain and promote economic reform.

Read the full paper here in pdf

A Hindi film 20 years in the making

The characters in “Zindagi Na Milegi Dobara (You Only Live Once),” directed by Zoya Akhtar, are the finished products of reforms begun when Manmohan Singh, now prime minister, was the finance minister. Manu Joseph in IHT:

In the hit Hindi film of this season, three Indian bachelors and a Hermès handbag, which they have named Bagwati, go on a road trip in Spain. Their objective is to endure three extreme adventure sports. On the way they meet a beautiful Indian-British diving instructor, a Spanish girl who apparently will let any man into her bath as long as he asks “May I enter?” in Spanish and the artist father of one of the bachelors who had abandoned the boy when he was still in the womb.

Directed by Zoya Akhtar, this joyous film, titled “Zindagi Na Milegi Dobara (You Only Live Once),” is set against a backdrop of affluence, easy sex and relentless reminders that life is meant to be fun. Such ideas and protagonists in a mainstream commercial Hindi film would have been unthinkable in an earlier time. Which is one reason the film was 20 years in the making, almost exactly 20 years.

Ms. Akhtar might view such a statement as an outrageous factual error.

But it’s true.

Her film had its beginnings in a moment in Indian history whose 20th anniversary went by a few days ago, unobserved by an ungrateful nation. On July 24, 1991, when Manmohan Singh, now prime minister, then finance minister, rose to present the national budget, India was in deep financial trouble. It did not have enough foreign currency to import supplies and had to pledge its gold reserves to secure an emergency loan.

It was not hard for Mr. Singh to convince Parliament and the people of India that the country had no choice but to initiate far-reaching economic reforms, to privatize, to liberate itself from socialism and the philosophies of obsolete men.

The characters in Ms. Akhtar’s film are the finished products of Mr. Singh’s reforms. More:

Pakistan’s middle class extremists

Graeme Blair, C. Christine Fair, Neil Malhotra, Jacob N. Shapiro in Foreign Affairs:

The stakes are particularly high in Pakistan. The country provides haven for Islamist terrorists that operate in India and Afghanistan and is itself the victim of a militant insurgency that has killed or injured some 35,000 Pakistanis since 2004. Currently, programs meant to address the problem of homegrown Pakistani militancy by alleviating poverty dominate the Western aid agenda. The 2009 U.S. Kerry-Lugar-Berman bill, for example, proposed spending $7.5 billion on economic development in Pakistan, with the express aim of “combating militant extremism.” To test the assumption that poor people are more likely to become radicalized, we fielded a 6,000-person, nationally representative survey of Pakistanis in the four provinces of Punjab, Balochistan, Sindh, and Khyber Pakhtunkhwa (formerly North-West Frontier Province) in the spring of 2009.

The survey measured attitudes toward four important militant groups: al Qaeda; the Afghan Taliban; the so-called Kashmiri groups, which include Lashkar-e-Taiba, Jaish-e-Mohammed, Hizbul Mujahideen, among others; and sectarian groups such as Lashkar-e-Jhangvi and Sipah-e-Sahaba. The survey was much larger than any previous effort and, for the first time, included rural Pakistan. Previous studies had been undermined by low response rates, perhaps because they asked Pakistanis directly about their support for militant groups. Instead, we measured attitudes toward the groups using an indirect questioning technique called an “endorsement” experiment. We presented respondents with a set of four policy issues, including World Health Organization’s administration of polio vaccinations and the redefinition of the Durand Line separating Pakistan from Afghanistan, and asked how much they supported each. Some respondents were told that one of the four militant groups supported the policy. Comparing the support for each policy of those who were told a militant group supported the policy with those who were not gives the measure of support for the group. More:

India and Bangladesh

Mahfuz Anam, editor and publisher of Daily Star, the largest circulated English daily in Bangladesh, in conversation with The Indian Express journalists:

Mahfuz Anam, editor and publisher of Daily Star, the largest circulated English daily in Bangladesh.

Shubhajit Roy: We have been watching the progress towards secularism in Bangladesh in the last two years. Is this making lasting changes in society?

Mahfuz Anam: Bangladesh is a Muslim majority country. So there is an overwhelming presence of the majority Muslim culture. But in our social interaction, religious tolerance among communities living together have been a historic phenomenon. The birth of Bangladesh has been based on the principles of democracy, secularism, nationalism. In Bangladesh, the entry of religion into politics, in my view, can be directly linked to the involvement of army in politics. This is the phenomenon in Pakistan too. When you have a coterie that has no base amongst people, they look for possible pockets of support and in Muslim-majority countries, unfortunately, Islam becomes a very easy tool for them to play with. We are practising Muslims as we were before and as tolerant of other religions as before. Form the 70s onwards, you had a global rise of Islam and Islamic fundamentalism in the Middle East and other countries. This has had an impact in all Muslim-majority countries, from Indonesia to Malaysia, Bangladesh, and Pakistan. But throughout it all, whenever the people of Bangladesh have had a chance for free expression through elections, they have overwhelmingly voted for secular parties. So the religious party, the Jamafat-e-Islami, never got more than 3 to 8 per cent of the votes. This is not to say that religion hasnft had a rise or a growing impact on politics, but it was not a determining impact. Bangladesh today is veering closer to secular roots through the election of this government led by Sheikh Hasina. Mainstream politics is once again based on nationalism. .

Shekhar Gupta: This dramatic turnaround in Bangladesh is a story that has largely been ignored and unappreciated.

Mahfuz Anam: That provokes me to say what is really a very strong emotion in my heart. I wish the Indian media would give Bangladesh a little more attention. I strongly appeal to the Indian media to take more interest in Bangladesh. We are your neighbour, a very important neighbour and we can also become a troublesome neighbour. You encompass us, except for a little bit of Myanmar. We are almost in your belly; if we are an unstable society, it tells on your security. If the Bangladesh state is unable to respond to the peoplefs needs, the burden will be on this side of the border too. On the positive side, Bangladesh is roughly a six-billion-dollar market for India–formal or informal. Now if with a per capita income of close to four hundred dollars, Bangladesh can be a market to you of close to six billion dollars, then if our per capita income goes up to six hundred dollars, whose market is it going to be? So look at Bangladesh as your prospective market and give us the respect of a market that buys six billion worth of your goods. You are not even looking at it as an issue of self interest. Then there is the issue of security in the North East, and other insurgency issues. With a prosperous Bangladesh, with a secure Bangladesh, your whole security situation changes. India-Bangladesh becomes a model bilateral relationship which you can then flaunt with Nepal, even all over the world. More:

Searching for something good to say about India

Manu Joseph in The International Herald Tribune:

Nobody loves India like the Indian who does not live here anymore. When they were in India, they just had to emerge from their house, go onto the road, and the whole nation would assemble itself into an unambiguous pyramid of social hierarchy with them somewhere at the top. Respect came with the lottery of birth.

But in the First World, it is not so easy. This, and the natural love for home, make the expatriate so patriotic that he or she finds it hard to tolerate the often embarrassing portrayal of the nation, especially in the news media outside the country.

Among the nonresident Indians, and also the Indians who live here, there is a common view that what the Western news media want to tell their readers about India is stories that involve cows, poverty, honor killings and other exotic, depressing or weird things. But is it possible to tell a happy Indian story, an honest, complete story, that would fill Indians with pride?

Some Indian newspapers have consciously tried to make Indians feel good about themselves. So there are frequent stories about India as an emerging superpower, and India as a cultural force whose curry and music apparently have mesmerized the world, and about how alpha-male Indian companies are taking over foreign corporations.

There are commercial rewards for carrying such good news. About three years ago, the shrewd promoter of an Indian publication, a deep philosopher of sorts, explained this when he walked into an editorial meeting and smiled with sympathy at the journalists. More:

In India, dynamism wrestles with dysfunction

Jim Yardley in The New York Times:

Gurgaon, India: In this city that barely existed two decades ago, there are 26 shopping malls, seven golf courses and luxury shops selling Chanel and Louis Vuitton. Mercedes-Benzes and BMWs shimmer in automobile showrooms. Apartment towers are sprouting like concrete weeds, and a futuristic commercial hub called Cyber City houses many of the world’s most respected corporations.

Gurgaon, located about 15 miles south of the national capital, New Delhi, would seem to have everything, except consider what it does not have: a functioning citywide sewer or drainage system; reliable electricity or water; and public sidewalks, adequate parking, decent roads or any citywide system of public transportation. Garbage is still regularly tossed in empty lots by the side of the road.

With its shiny buildings and galloping economy, Gurgaon is often portrayed as a symbol of a rising “new” India, yet it also represents a riddle at the heart of India’s rapid growth: how can a new city become an international economic engine without basic public services? How can a huge country flirt with double-digit growth despite widespread corruption, inefficiency and governmental dysfunction?

In Gurgaon and elsewhere in India, the answer is that growth usually occurs despite the government rather than because of it. India and China are often considered to be the world’s rising economic powers, yet if China’s growth has been led by the state, India’s growth is often impeded by the state. China’s authoritarian leaders have built world-class infrastructure; India’s infrastructure and bureaucracy are both considered woefully outdated.

Yet over the past decade, India has emerged as one of the world’s most important new engines of growth, despite itself. Even now, with its economy feeling the pressure from global inflation and higher interest rates, some economists predict that India will become the world’s third largest economy within 15 years and could much sooner supplant China as the fastest-growing major economy.

Moreover, India’s unorthodox path illustrates, on a grand scale, the struggles of many smaller developing countries to deliver growth despite weak, ineffective governments. Many have tried to emulate China’s top-down economic model, but most are stuck with the Indian reality. In India, Gurgaon epitomizes that reality, managing to be both a complete mess and an economic powerhouse, a microcosm of Indian dynamism and dysfunction.

In Gurgaon, economic growth is often the product of a private sector improvising to overcome the inadequacies of the government. More:

Pakistan and India: A rivalry that threatens the world

In The Economist:

Outsiders, especially Indians, have expressed dismay ever since Osama bin Laden was killed this month in Abbottabad, a prim military town in Pakistan. Here is a state that both fights, and protects, Islamic fanatics. Even when Pakistanis themselves are the main victims of attack by jihadis, the state fails to act.

On May 13th suicide-bombers sent by an al-Qaeda-affiliated group, the Pakistani Taliban, killed 80, mostly young army cadets, in Shabqadar, a town in the north-west. That attack was claimed as retaliation for bin Laden’s death, but such strikes have grown dismally common. As America’s ambassador in Islamabad, Cameron Munter, puts it, “If you grow vipers in your backyard, you’re going to get bitten.”

At moments Pakistan sounds ready to co-operate with America against extremists. John Kerry, chairman of the Senate Foreign Relations Committee, whizzed through Kabul and Islamabad this week and claimed, after four hours of talks with General Ashfaq Kayani, Pakistan’s army chief, that the troubled bilateral relationship was again “on track”. Pakistan will hand over the remains of the stealth helicopter blown up in the Abbottabad raid. And America’s secretary of state, Hillary Clinton, will visit in the coming weeks.

Outsiders, especially Indians, have expressed dismay ever since Osama bin Laden was killed this month in Abbottabad, a prim military town in Pakistan. Here is a state that both fights, and protects, Islamic fanatics. Even when Pakistanis themselves are the main victims of attack by jihadis, the state fails to act.

On May 13th suicide-bombers sent by an al-Qaeda-affiliated group, the Pakistani Taliban, killed 80, mostly young army cadets, in Shabqadar, a town in the north-west. That attack was claimed as retaliation for bin Laden’s death, but such strikes have grown dismally common. As America’s ambassador in Islamabad, Cameron Munter, puts it, “If you grow vipers in your backyard, you’re going to get bitten.”

At moments Pakistan sounds ready to co-operate with America against extremists. John Kerry, chairman of the Senate Foreign Relations Committee, whizzed through Kabul and Islamabad this week and claimed, after four hours of talks with General Ashfaq Kayani, Pakistan’s army chief, that the troubled bilateral relationship was again “on track”. Pakistan will hand over the remains of the stealth helicopter blown up in the Abbottabad raid. And America’s secretary of state, Hillary Clinton, will visit in the coming weeks. More

 

India Rising

In Foreign Policy, six top experts on South Asia look at an emerging superpower:

Whispers Behind the Welcome – by Sadanand Dhume

On the face of it, Barack Obama has much to look forward to when he visits India this weekend. His poll numbers at home may be at a low ebb, and his party may have been shellacked in Tuesday’s midterm elections. But the U.S. president remains popular in the world’s largest democracy, if not his own. According to the Pew Research Center, three out of four Indians say they have confidence in Obama (only two out of five Americans said the same in a July Washington Post-ABC News poll). The president will likely receive rapturous applause when he addresses India’s Parliament, an honor denied to President George W. Bush on his visit in 2006. One of New Delhi’s best known restaurants promises to unveil its much-anticipated “Obama platter,” and the president’s hotel in Mumbai is keeping a $11,250 bottle of Scotch handy, just in case. More:

New Delhi’s Grand Strategy — by C. Raja Mohan

The problem for India’s top strategists is not that they don’t seek a grand bargain with the United States. It is about negotiating equitable terms. It is also about bringing along a political elite and bureaucracy that are adapting too slowly to the new imperatives of a stronger partnership with Washington. But make no mistake: Engagement with the United States has been the Indian establishment’s highest foreign-policy priority over the last decade and a half. More:

India’s Unfinished Business — by Arvind Pangariya

We Need an Indian Civilian Surge — by Richard Fontaine

New Delhi Surprise — by Sumit Ganguly

Weak Ties — by Anja Manuel

Survey of Pakistan’s young predicts ‘disaster’ if their needs aren’t addressed

survey1

From the New York Times:

Pakistan will face a “demographic disaster” if it does not address the needs of its young generation, the largest in the country’s history, whose views reflect a deep disillusionment with government and democracy, according to a report released in Lahore on Saturday.

The report, commissioned by the British Council and conducted by the Nielsen research company, drew a picture of a deeply frustrated young generation that feels abandoned by its government and despondent about its future.

An overwhelming majority of young Pakistanis say their country is headed in the wrong direction, the report said, and only 1 in 10 has confidence in the government. Most see themselves as Muslim first and Pakistani second, and they are now entering a work force in which the lion’s share cannot find jobs, a potentially volatile situation if the government cannot address its concerns. More:

Click here to read the full survey.

Frustrated by endless war, young Afghans are abandoning their country

From the New York Times:

Kabul – Through two decades of war, Abdul Ahad never contemplated leaving Afghanistan. But as his country started to deteriorate rapidly in 2007, so did his life. He was laid off from his full-time driving job and forced to take the only work he could find: a once-a-week driving gig through Taliban territory.

In the past eight months, a suicide bomb and a firefight nearly took his life. Now, Mr. Ahad, 26, has had enough. He has begun scouting potential smugglers to take him to Europe, he said, looking to join the surge of young Afghans who are abandoning their country, frustrated by endless war, a lack of prospects and the slow pace of change.

While foreign diplomats hold out hope that the August presidential elections and President Obama’s new troop deployments could change things here, Afghans are voting with their feet. More:

Nepal bans airline staff pockets to fight bribes

From BBC:

Staff at Nepal’s main international airport are to be issued with trousers without pockets, in an attempt to wipe out rampant bribe-taking.

The country’s anti-corruption body said there had been growing complaints about staff at Kathmandu’s Tribhuvan airport.

A spokesman said trousers without pockets would help the authorities “curb the irregularities”.

The move comes after the prime minister of Nepal said corruption was damaging the airport’s reputation, AFP reported. More

A head start for India’s next premier

Aravind Adiga in Financial Times:

Visitors to India are dazzled by the chaos and unpredictability of life here, but those who observe its politics are bewildered by the opposite. Crises are visible from a distance and grow to size in full public view, yet still seem to catch the government by absolute surprise. We have to wait until May 16 – or perhaps even longer – to know whether India’s next prime minister will be the incumbent, Manmohan Singh, or his Hindu nationalist rival, L.K. Advani, or someone from a smaller party. But this much is already clear: the new prime minister will almost certainly have to deal with four emergencies in the course of his term.

Emergency One: Terrorism is a part of daily life in India now, but at some point during the new prime minister’s term there will be a spectacular strike – on a plane, temple, parliament or nuclear installation. When the strike takes place, it will be found that the local police did not have enough guns, walkie-talkies, training or manpower to fight back quickly. Co-ordination between local security agencies and elite commando forces in Delhi will prove to be poor. When the terrorists are overpowered, they will probably say that they received training and assistance from jihadists in Pakistan; they may even be Pakistani nationals. More:

The Maldives’ struggle to stay afloat

From TIME Asia:

The Maldives’ coffers, though, are perilously low. In part that is a consequence of the global downturn, which has hit international tourism hard. The crunch was exacerbated by profligate spending in the final years of the Gayoom regime, as it sought to cement votes with new infrastructure projects. In February, Nasheed’s government moved to auction off some of the former ruler’s more extravagant state possessions, including a personal yacht, a private pleasure island and a gold-plated toilet.

Gayoom’s supporters point to the influx of foreign cash that flooded into the country after he assumed power. His government opened dozens of the archipelago’s islands to international tourism, which now directly contributes to 30% of the Maldives’ GDP. In a country short on land, construction became a lucrative business: the cramped capital Malé, where more than a third of the population lives, is a maze of concrete. Rents sometimes match those of world cities such as Hong Kong or New York City, and a bleary-eyed community of foreign laborers hammers away at building sites daily. That’s quite a change. Not long ago, Malé was a sleepy fishing island with sand-packed streets and pens for livestock, only reachable after a perilous weeklong journey by ship from Colombo. Now, most people there sport flashy cell phones; at night, a few Porsches and Maseratis rev their engines impotently around the 500-acre (2 sq km) capital’s congested roads. More:

Pessimism growing in Pakistan

Pakistanis are becoming increasingly pessimistic about prospects for their country and for themselves. According to an opinion poll conducted by the International Republican Institute (IRI), a US-based group that promotes democracy, about 88 per cent Pakistanis feel their country is headed in the wrong direction, 59 per cent say the next year will be worse than the current year and 67 per cent believe democracy has made no difference to their wellbeing.

Read the Dawn report here, and click here for the the full IRI survey:

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Pakistan turns to ‘friends’ in its hour of need

Jeremy Page from Islamabad in the Times:

Welcome to Pakistan’s “Street of Dreams” – your chance to buy into a future free of suicide bombers, power cuts, crumbling infrastructure and bad shopping.

So goes the sales pitch for Canyon Views, a 1,000-acre complex of 5,000 luxury homes in Tuscan, Portuguese and Moorish styles being built on the outskirts of the Pakistani capital. “It’s a dream come true,” said a sales executive on a recent tour. “This is the new Islamabad.”

When a Dubai-based developer invested $2.4 billion (£1.6 billion) in this and two similar projects in Pakistan in 2006, the dream seemed almost real. The economy was booming, the consumer class spending, the stock market outperforming the world. The first 250 villas – costing as much as $400,000 each – sold in a flash.

How times have changed.

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An old army in a new war

The Pakistani army is engaged in a gritty battle with Afghan militants in a border area where it has never had authority. Jason Burke reports from Loesam in the Guardian:

Loesam is a long way from anywhere. Once a small town in north-west Pakistan, on the Afghanistan frontier, it has been razed to the ground. The bazaar is a pile of rubble, homes scraped down to their concrete foundations. The only building still upright is the mosque that stands in the corner of what once was the local petrol station. The population has fled.

A few hundred metres out of Loesam, the 25th Punjab regiment of the Pakistani army is digging in. Those few hundred metres were seized the day before in a short, sharp engagement with militants entrenched in mud-walled compounds, stands of slim ash, birch trees and dry valleys with their yellow dust walls on their outskirts.

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Slaves who build modern monuments

It is already home to the world’s glitziest buildings, man-made islands and mega-malls – now Dubai plans to build the tallest tower. But behind the dizzying construction boom is an army of migrant labourers from South Asia and elsewhere lured into a life of squalor and exploitation. Ghaith Abdul-Ahad reports in The Guardian:

Ghaith Abdul Ahad

Workers sleep on the street in Dubai. Photograph: Ghaith Abdul Ahad

I have left Dubai’s spiralling towers, man-made islands and mega-malls behind and driven through the desert to the outskirts of the neighbouring city of Abu Dhabi. Turn right before the Zaha Hadid bridge, and a few hundred metres takes you to the heart of Mousafah, a ghetto-like neighbourhood of camps hidden away from the eyes of tourists. It is just one of many areas around the Gulf set aside for an army of labourers building the icons of architecture that are mushrooming all over the region.

Behind the showers, in a yard paved with metal sheets, a line of men stands silently in front of grease-blackened pans, preparing their dinner. Sweat rolls down their heads and necks, their soaked shirts stuck to their backs. A heavy smell of spices and body odour fills the air.

Next to a heap of rubbish, a man holds a plate containing his meal: a few chillies, an onion and three tomatoes, to be fried with spices and eaten with a piece of bread.

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Imran Khan’s bakeries fight Pakistan food crisis

Bronwyn Curran from Lahore in The National:

Matthew Tabaccos for The National

A baker makes roti at a sasta tandoor run by Imran Khan. Photo: Matthew Tabaccos for The National

Imran Khan, Pakistan’s revered cricket hero who has transformed himself into the country’s angriest politician, forfeited a place in parliament when he boycotted February elections. Now he is doing what the crisis-burdened government is failing to: feeding the poor.

In depressed urban neighbourhoods of the Punjab, Pakistan’s most populated province, Mr Khan’s party, Tehreek-e-Insaf, has begun operating sasta tandoors (cheap tandoor bakeries), selling fresh roti and nan from traditional tandoor ovens for less than half the market rates.

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15 people the next US President should listen to

Wired magazine has a “Smart List of 15 Wired people” it says the next president should listen to. These 15 are “the best minds” on climate change, the military, space exploration, democracy, global health, terrorism, China and India. They have “big ideas about how to fix the things that need fixing.” The list includes:

Jagdish Bhagwati: As the world’s preeminent globalization buff, Jagdish Bhagwati doesn’t toe standard party lines. The Columbia University economist, 74, who has advised everyone from the Indian government to the World Trade Organization, is a rare nonpartisan in a field dominated by ideologues. A registered Democrat who is willing to face down the anti-free-trade wing of his own party, Bhagwati is also comfortable arguing against what he sees as the compassion-free laissez-faire attitude exhibited by many of his fellow globalization advocates.

Parag Khanna: In his book The Second World: Empires and Influence in the New Global Order, Khanna, 31, describes a planet dominated by a trio of superpowers: the US, China, and Europe. In this tripolar era, America’s fate depends on tough national choices, not lame historical analogies. If the US wises up – by tightening trade and energy ties to the rest of the hemisphere, pursuing economic innovation at home, and establishing a “diplomatic-industrial complex” – it can grow stronger even as the globe becomes less red, white, and blue.

Ram Shriram: In the face of terrorism, global warming, and economic stagnation, spectrum policy may not seem like a top presidential priority. But it ought to be. Ram Shriram, a venture capitalist who helped fund Google a decade ago, says wireless carriers are hamstringing the mobile industry. He advocates opening the airwaves – and even mounted an (unsuccessful) bid on a chunk of radio spectrum in January. What’s at stake? “The greatest wave of innovation since the PC-platform era.”

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India’s iconic electric car gets volt of energy

Rina Chandran / Reuters:

Long before “green” cars became trendy in other parts of the world, a boxy electric two-seater began rolling out of a small factory in the Indian city of Bangalore, which was then emerging as a software services hub.

Today, scores of Reva electric cars can be seen tootling down Bangalore’s crowded streets, their bright colours and minimalist design drawing curious looks, even smiles, from commuters.

“It is simply beautiful,” said T. Shivaram, a small business owner who bought a yellow-and-black Reva last year to cut his fuel bill.”It gives me driving pleasure and everyone stares at it and wants to know more about it.”

The Reva was among the world’s first electric vehicles sold commercially. It did not take off initially quite as its maker had hoped but it has blazed a trail for other electric cars — such as General Motors’ new Chevrolet Volt — which are coming into their own in an age of high oil prices.

Reva Electric Car Co was set up in 1994 by India’s Maini Group and AEV of the United States. The company was the first to successfully commercialise electric vehicles, according to consultancy Frost & Sullivan.

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