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Books on India
REPUBLICAN REFERENCE
Area (sq.km)
3,287,590
Population
1,049,700,118
Capital
New Delhi
Currency
Irdian Rupee (INR)
President
Abdul Kalam
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Update No: 031 - (29/08/06)
POLITICS
TROUBLE IN THE CONGRESS PARTY
A political dispute has arisen in India after the former foreign minister
Natwar Singh accused India's Prime Minister Manmohan Singh of leaking a judicial
report, which had been critical of Natwar Singh's role in the United Nation's
Iraq oil-for-food program. Three political parties, including the main
opposition BJP, have agreed to support the move to censure the prime minister.
This led to angry exchanges in parliament; the latter being forced to be
adjourned. Natwar Singh has refused to yield to Congress pressure and withdraw
his privilege motion against the Indian prime minister. N. Singh has created
history by becoming the first member of a ruling party to file a privilege
notice against his own prime minister. In an interview with the Indian daily,
the Asian Age, Natwar Singh made it clear that he had nothing personal against
Prime Minister Singh. "I have good relations against him, but the Pathak
Committee report has been leaked from the Prime Minister's Office and someone
has to be held accountable," he said. The Congress Party has reacted
defensively to the former minister's decision to declare war. He said he was
quite prepared to be expelled from the party now. Visibly disillusioned with the
party's attitude towards him, Natwar Singh said he would welcome the expulsion
order as "then I will be free". He said the party had made it apparent
during the crisis that he had no place there and so now they could not turn
around and claim otherwise. Several leaders in the party are supportive of
Natwar Singh and have been critical of Congress president Sonia Gandhi's refusal
to support him. The allegations against Natwar Singh first surfaced in a UN
report published in October 2005, in which the then Indian foreign minister
Natwar Singh and the ruling Congress party were named as non-contractual
beneficiaries of the oil-for-food program. The report, written by former US
Federal Reserve chairman Paul Volcker, said more than 2,000 firms made illegal
payments to Saddam Hussein's government. Under the UN program, Saddam Hussein's
government could sell oil as long as the proceeds were used to buy humanitarian
goods. Singh resigned from his post as foreign minister in December following
the allegations.
INDIA AND SRI LANKA
India has been carefully assessing the collapse of the ceasefire in Sri
Lanka. The prospect of a failed state on its borders has made India cautious
about its dealings with Sri Lanka. Violence has continued in Sri Lanka's north
and east during the fourth week of the worst fighting since 2002 and showed no
sign of stopping. Thousands have fled their homes, many taking refuge in
churches or camps. Hundreds have fled to India by boat. Aid workers say 160,000
people have been displaced. All sides estimate the fighting has killed hundreds.
"We're an impotent regional power and have abdicated our responsibilities
in Sri Lanka," says Major General Ashok K. Mehta, a commentator on
strategic affairs who served as a divisional commander in the IPKF in 1988-1990.
India, he argues, has failed to pursue a coherent foreign policy in Sri Lanka
because of the dictates of coalition politics. Both the Congress-led United
Progressive Alliance coalition and its BJP-led predecessor have depended on
powerful Tamil regional parties for their majorities in parliament. With more
than 50m indigenous Tamils in southern India, and 75,000 refugees from Sri Lanka
living in camps there, instability in the Jaffna peninsula is felt in India. As
a result, politicians from the state of Tamil Nadu, where militants have over
the years procured arms, cash and training, have an effective veto on Indian
policy. Although India has banned the Tamil Tigers and refuses to countenance
the partition of the island, it also denies the Sri Lankan army supplies of
weapons and has prevaricated for years over a defence pact. "Delhi has got
stuck without a policy and is simply reacting to events," says Paikiasothy
Saravanamuttu, executive director of the Centre for Policy Alternatives in
Colombo. India's concerns for Tamil "aspirations" and calls for a
"fair" negotiated settlement appear to be annoying Colombo. At the
same time, New Delhi's fundamental opposition to the creation of a separate
Tamil homeland - because of the boost that would give to separatist groups in
India's north-east - is incompatible with the Tamil Tigers' one-point political
program. But both the rebels and the government also see India as the only
guarantor of an eventual peace deal and have called for greater involvement.
Indian diplomats say that they are working with the co-chairs on an acceptable
"political package". Meanwhile, officials in New Delhi see an outright
military victory for either side as disastrous. If the Tigers win new territory,
India might have to intervene to prevent de facto partition. If the government
pushes into the Tamil north-east, India fears a "burnt earth policy
comparable to East Timor". Continued stalemate may be the least bad
outcome.
INDIA AND CHINA
"Year of friendship" !
China and India are embarking on a rocky road to neighbourly relations they
hope will be mutually beneficial. The two nations, who fought a border war in
1962, are realizing the importance of becoming world economic and political
powers which demands cooperation and stability among neighbours. Experts predict
the two Asian giants, which together account for one-third of the world's
population, will, along with the United States, have the world's largest
economies by 2050. The latest breakthrough in Sino-Indian relations was the
recent decision to reopen the strategic Nathula pass, the Silk Road trade route
high in the Himalayas, closed since the war. The two also are trying to reduce
military tension. They have designated 2006 as their "year of
friendship" culminating in a summit of Chinese President Hu Jintao and
Indian Prime Minister Manmohan Singh. Major hurdles remain, as well as
suspicions on both sides and India's distrust of China's relations with
Pakistan. But experts on both sides feel economic realities, such as growing
bilateral trade that is expected to reach US$20 billion this year, will help
overcome these obstacles.
INDIA AND NEPAL
India has offered to strengthen its bilateral trade relations with Nepal by
proposing a comprehensive economic partnership agreement (CEPA) to include
services and investment. It has also offered to negotiate a more liberal
bilateral investment promotion and protection agreement (BIPPA). According to
senior government officials, India is keen to expand the scope of the economic
engagement to include sectors like information technology, tourism, education
and healthcare. The offer to deepen economic engagement with Nepal is part of
the broader strategic importance of Nepal in the wake of recent political
changes there. The issue was raised by Commerce Secretary S N Menon with his
Nepalese counterpart Bharat Bahadur Thapa during the two day India-Nepal
Inter-Governmental Committee on Trade, Transit and Cooperation to control
unauthorized trade which concluded in the capital today. Nepal has agreed to
examine the proposal and officials say that if Nepal agrees, both sides would
initially set up a task force to examine the viability of the CEPA. The two
sides discussed the extension of the bilateral trade treaty which is expiring in
March 2007. Officials said that India conveyed its readiness to work with Nepal
to address the latter's concerns on non-tariff measures. The Nepalese delegation
sought assistance for new economic infrastructure projects, which would be
discussed further by the two sides. Officials said both sides had agreed to
resume negotiations for a BIPPA which would be based on the lines of the
proposed SAARC Investment promotion and protection agreement. The two sides had
been talking of a BIPPA earlier which was later stalled. Commerce Ministry
officials said that the present bilateral trade agreement was likely to be
extended by another five years.
ECONOMY AND BUSINESS
THAT AFGHAN PIPELINE!
The Asian Development Bank (ADB) is currently revising framework agreement
and inter-state agreements between Turkmenistan, Afghanistan and Pakistan (TAP)
in a bid to include India in the US$6.9 billion project. The three countries are
interested to develop a complete energy corridor under multi-billion dollar TAP
project including two parallel gas and crude oil pipelines, railway track, road
and optic fibre system but India is interested in a gas pipeline alone. Sources
said India is seeking to incorporate in the agreement special clauses that could
guarantee that gas volumes contracted to India would in no circumstances be
disturbed at any stage if Pakistan required higher quantities than original
contracts for Gwadar port. This would, however, not restrict Pakistan to have
maximum supplies subject to pipeline capacity. The revisions in the framework
agreement would allow the ADB to include extension of the TAP gas pipeline to
India in the pre-feasibility study including routes, pipeline capacity, design
and security aspects. The agreement would also define in clear terms the right
of the participating states to inject or draw gas from the pipeline in case of
additional gas quantities.
SHINE OFF DIAMOND EXPORTS
Diamond exports from India, the world's biggest processor of the stones, may
drop by US$1 billion this year after the country's main polishing centre was
flooded by heavy rains. Surat city in the western state of Gujarat, which
accounts for 75% of India's diamond polishing industry, was swamped this month,
forcing jewellery factories to shut for more than two weeks. India's jewellery
exports were worth US$16.6 billion last year, accounting for a fifth of the
nation's export revenue. Bakul Mehta, chairman of India's Gem & Jewellery
Export Promotion Council, said that the losses could rise." India needs
faster exports to boost growth in Asia's fourth-largest economy, and narrow a
widening trade deficit. Several diamond factories in Surat have yet to resume
working at full capacity as workers left the city amid fears that the
floodwaters could trigger outbreaks of disease, Mehta said. Equipment worth 3
billion rupees (US$64 million) was damaged by the floods, he said. India
processes 11 out of every 12 of the world's diamonds, accounting for 80% in
terms of volume. Gem and jewelry exports, including cut and polished diamonds,
dropped 4.4% to US$4.8 billion in the four months ended July from a year ago
because of volatility in the rupee, according to the council. Heavy rains in
Gujarat and Maharashtra caused rivers and reservoirs to overflow. India ordered
the army into Surat to help with relief and evacuation operations. (Bloomberg)
India's headline annual inflation rate neared 5 per cent in mid-August, data
showed on Friday, and the government said it was trying to keep the rate below
that level in the financial year ending March 2007. The widely-watched wholesale
price index rose 4.92 per cent in the 12 months to Aug. 12, higher than forecast
and above the previous week's annual rate of 4.82 per cent due to an increase in
food and manufactured product prices. The government has taken steps to curb
price rises, including cutting import duty on wheat, and the central bank raised
interest rates in June and July to keep inflation down. The rupee weakened
marginally to 46.60/61 per dollar from 46.59/60 but the yield on the 10-year
benchmark bond was unchanged at 7.90 per cent, a two-month low. The Reserve Bank
of India (RBI) raised its main short-term rate by 25 basis points to 6.0 per
cent on July 25, its second increase in six weeks, as it stepped up its fight
against mounting price pressures in the fast-growing economy. It forecasts
inflation to end the financial year between 5.0-5.5 per cent but analysts expect
inflation pressures to continue in the months ahead.
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