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Key Economic Data 
  2003 2002 2001 Ranking(2003)
Millions of US $ 598,966 515,000  481,400 12
GNI per capita
 US $ 530 480 470 160
Ranking is given out of 208 nations - (data from the World Bank)

Books on India

Update No: 054 - (30/06/08)

Progress on India-Iran Pipeline (IPI) Project 
India is all set to sign an agreement on a 7.5-billion-dollar gas pipeline with Iran and Pakistan in the coming weeks. In an interview with the NDTV network, Indian Petroleum Minister Murli Deora said that an agreement on the Iran-Pakistan-India (IPI) gas pipeline is very likely in the next four to five weeks. Deora, who held talks with his Iranian counterpart Gholam Hosein Nozari at a recent summit, said that some of the issues on the pipeline with Pakistan were resolved. To quote Deora, “I met the Iranian Petroleum Minister, Gholam Hosein Nozari, on the sidelines of the day-long summit [of oil producers and consumers] in Jeddah on Sunday. I assured him that India was very much willing to go ahead with the pipeline. Almost all the bilateral issues have been sorted out and now only trilateral talks are left to be held.” India had boycotted the IPI talks since August 2007 following differences over the transit fees demanded by Pakistan for passage of gas through that country. India had also wanted Iran to hand over custody of gas at the India-Pakistan border, and not at the Iran-Pakistan border, to cut transit risks (for political reasons), through the neighboring country. New Delhi was also opposed to Tehran’s attempt at inserting a price revision clause in the Gas Sales Agreement. But many are hopeful that the immediate talks that will be held in Tehran will be a success. Pakistan’s Foreign Minister, Shah Mahmood Qureshi, is scheduled to visit India later this week to clarify Pakistan’s positions and resolve any differences prior to the talks. India is pressing Iran to dedicate a particular gas field for the IPI pipeline and get its reserves certified by a third party. It has also sought to know about alternative supply sources in the event of depletion of reserves. The entire project is estimated to cost $7.4 billion.

India-Australia Partnership Evolves
Indian External Affairs Minister Pranab Mukherjee and his Australian counterpart Stephen Smith have embarked on a program that promises to usher a new era in the diversification and strengthening of political links between the two countries. The ministers of both countries have reviewed the bilateral framework for dialogue and are committed to taking negotiations to the next higher level. As part of this growing relationship, the two foreign ministers have emphasized frequent high-level political meetings as a way of strengthening bilateral relations. As part of the talks, Smith and Mukerjee said they would work for closer Australia-India economic and security ties and signed various agreements, from combating terrorism, to initiating yearly defense and intelligence meetings, and allowing the extradition of criminals. 

Mukherjee welcomed Australia’s bid for a non-permanent UNSC seat for the 2013-2014 term and affirmed that India was fully committed to non-proliferation. But even though both countries share a common goal of nuclear non-proliferation, a very important part of the negotiations is Australia’s consideration of uranium sales to India, if New Delhi is able to strike a landmark nuclear pact with the United States and satisfy international concerns about safeguards. Smith told the press that “if and when the 123 Agreement gets to either the International Atomic Energy Agency or the Nuclear Suppliers Group (NSG), Australia will then give consideration to what its attitude to that agreement is.” But more importantly, India is trying to persuade the 45-member NSG (which includes Australia) to support a waiver on trade with non-NPT members which can allow the sale of nuclear material and help reach an agreement on IAEA safeguards. Both Australia and India have had a fairly unblemished record in nuclear disarmament but the potential for an Australian supply of uranium for Indian nuclear technology is undoubtedly predicated on the US-India nuclear deal. If the Americans support a nuclear agreement with India, only then will Australia go ahead with its promise of delivering uranium. Clearly this facet of the relationship indicates that even though India would like to be recognized as an independent player in world issues, the international community is extremely sensitive to the non-proliferation arguments made by major powers like the United States. The positive part of the emerging India-Australia partnership is that there is possibility for greater progress in trade related issues. The two way trade between both countries was worth $10 billion in 2007. Both nations are also working to lift Australian resource exports to India. 

India Seeks to Build Military Ties with Sri Lanka
India is beginning to display greater attention to the military needs of Sri Lanka particularly since the country has been dependent for weapons systems and military supplies on India’s long term adversaries, China and Pakistan. India plans to forge a military relationship with Sri Lanka whereby New Delhi will provide arms supplies “defensive” in nature, and in accordance with a policy to supply mainly “non-lethal” equipment to the island nation. These defensive weapon systems include 40mm L-70 anti-aircraft guns and ‘Indra’ low-flying detection radars, all of which are solely intended to thwart aerial strikes made by LTTE. India believes there cannot be a “military solution” to the bloody ethnic strife in Sri Lanka, and is trying to simultaneously push for a dialogue with the Tamils without disrupting the country’s territorial integrity. The Indian government has led a high-level delegation with national security advisor M K Narayanan, foreign secretary Shiv Shankar Menon and defense secretary Vijay Singh, making a visit to Colombo to convey the need for renewed political effort to the Mahinda Rajapakse government. But even though India places greater faith in a political and diplomatic solution, it cannot ignore Sri-Lanka’s military relationship with China which is providing the Sri Lankan government with a large repository of “cheap” arms and ammunition, to improve its success in the ongoing battle with LTTE. Various press reports suggest that China is situating itself very strategically in Sri Lanka by not only undertaking a number of arms deals, but also exploring construction projects like the Hambantota port project. But the evidence of a military agreement between China and Sri Lanka is quite obvious. Colombo, for instance, has signed a $37.6 million deal with Beijing based Poly Technologies, for a wide variety of arms, ammunition, mortars and bombs. Sri Lanka is also getting some Chinese Jian-7 fighters, JY-11 3D air surveillance radars, armoured personnel carriers, T-56 (a copy of the famous AK-47) assault rifles, machine guns, anti-aircraft guns, rocket-propelled grenade launchers and missiles. Therefore, Sri Lanka’s reliance of Chinese military supplies has been the underlying theme of this visit and Indian delegation has tried to communicate to President Mahinda Rajapakse and Sri Lankan Defense Secretary Gotabhaya Rajapakse that India is willing to provide “all help” in military supplies, intelligence and training. 

Increase in World Fuel Prices Affects India
With rising inflation, New Delhi announced the highest ever increase in retail fuel prices which has not only produced disgruntled political responses but also angry street protests! Indian petroleum minister, Murli Deora stated that gasoline prices would rise by the equivalent of 55 cents per gallon, about 11 percent, and diesel by 32 cents, almost 10 percent. The price of cooking gas cylinders is to rise by a little over a dollar, or about 16 percent. Prime Minister Manmohan Singh declared that the decision was inevitable and that Indians had to “learn to adjust” to international economic conditions. India is especially vulnerable to global trends in oil prices because its economy is heavily reliant on foreign imports. The government plans to reduce import and excise taxes to soften the impact of rising oil costs on state-run refiners and oil marketing companies, which have been posting losses of about $1 billion a week. The government also promised oil bonds worth $22 billion to help compensate for below-market sales. 

From April to June, inflation has gone up by 8.1 percent, the highest since 2004. The hike in the price of diesel has also pushed up the prices of various commodities in India. In a move that has become quite a common feature of the Leftist political machine, communist parties that back the government threatened to launch a week of nationwide street demonstrations, strikes and blockades of rail and road traffic. The government relies on the support of 59 lawmakers in communist parties. The price hikes have come during an important time in Indian politics with four states going to the polls in November and the national elections scheduled for May 2009. But what the Leftist parties in India simply refuse to recognize is that alterations in international oil prices will affect not only India but most other countries in the world. And most governments have to deal with this unavoidable situation. As K.V. Kamath, president of the Confederation of Indian Industry, argues, the government has been presented with a tough balancing act and this surely calls for long-term energy-efficiency strategies. But in the present, an increase in the commodity prices is absolutely unavoidable.

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