Books on India
Irdian Rupee (INR)
India has emerged as one of the dominant players in the international system and a regional power in the South Asian subcontinent. Located in the heart of South Asia, India is unique for its cultural heritage, geographical diversity, and democratic ethos. India's ancient history was marked by series of invasions and foreign rule beginning with the entry of the Aryans in 1500 B.C., the advent of the Mughals in A.D 1000, culminating in British imperial rule around 1858. During this period, India was one of the richest countries in the world. It was renowned for its international trade in spices and textiles. Along with its rich resources, India's geographical location made it an attractive colony. The British wanted to exploit India as a market for the sale of its manufactured goods. They set up a centralized form of administration, built an extensive network of highways, railroads and post and telegraph systems. They also imparted western education to the Indians which led to the emergence of a middle class conscious of their own rights.
To overthrow British tutelage, a section of erudite Indians led by Surendra Nath Banerjee established the Indian National Congress in 1885. The Indian nationalist movement evolved through different phases and the INC emerged as the single largest representative of the Hindus in India. It became an umbrella organization and leaders like Bal Gangadhar Tilak and Lala Lajpat Rai were at the forefront in India's struggle for independence. Of the most famous of India's "freedom fighters", was a man called Mohandas Karamchand Gandhi. In the struggle for liberation against British rule, Gandhi developed concepts like ahimsa (non violence), satyagraha (search for truth) and civil disobedience. As the national movement picked up momentum, British rule began to weaken. From the 1940s, the Muslim League, a party representing the Muslims of India, demanded the creation of a Muslim majority state. The Indian National Congress was ill-prepared for these demands and tensions brewed amongst members of both camps leading to large scale Hindu-Muslim rioting. Finally in 1947, the Congress leaders acceded to the division of the country along religious lines which led to the creation of the separate nation of Pakistan. Partition left a deep impact on the secular fabric of the country. Close to half a million Hindus, Muslims and Sikhs were killed. On August 1947, India gained independence from the British. Yet, the memories of partition remained etched in the minds of Hindus and Muslims and were soon to become the root of an intractable conflict over Kashmir.
From the time of independence, India has fought four major wars with Pakistan (1947, 1965, 1971 and 1999) and one with China (1962). While India suffered a severe debacle at the hands of the Chinese in the 1962 war, the dispute over Kashmir with Pakistan remains unresolved and has led to incessant crises on both sides. The roots of the Kashmir dispute date back to partition and the events of 1947. The end of British rule had compounded the problem of achieving a unified India. In the months after partition, the prince of Kashmir, Maharaja Hari Singh faced tremendous pressure from both India and Pakistan but refused to accede to either country. During the first week of October 1947, a tribal rebellion broke out in Poonch, a region in southwestern Kashmir. Sections of the Pakistani army aided the rebels with arms and men. Within two weeks, the insurgents were close to Srinagar, the capital of Jammu and Kashmir. At this point, Hari Singh appealed to India for protection against the intruders. India's Prime Minister Jawaharlal Nehru agreed to provide assistance to Hari Singh only if the Maharaja acceded to India and the accession was endorsed by Sheikh Abdullah, the political leader of Kashmir. Once the Maharaja signed the Instrument of Accession, Indian troops were airlifted into Kashmir. On 1 January 1948, India referred the Kashmir dispute to the UN Security Council by invoking articles 34 and 35 of the UN Charter. On 24 April, 1948, the UN Security Council passed a resolution stating that India and Pakistan should bring about a cessation of all hostilities and move towards the early restoration of peace in the region. It also urged both countries to conduct a free and fair plebiscite to determine the wishes of the Kashmir people. This resolution was held as the principal term of reference for future negotiations between the two countries. However, the UN achieved little and the dispute continued to rock the relations between the two countries. The problem of Kashmir took on a different dimension from the late 1980s when there was a rise in insurgency within the state of Kashmir. This was the first time that India was witnessing the start of cross-border terrorism. Moreover, while Pakistan has repeatedly sought third party mediation and looked towards the United States to play such a role, India has reiterated its position of resolving the dispute bilaterally.
India's relations with China took a downslide after the 1962 war and also when the Chinese tested their first nuclear device in 1964. However, India has not been engaged in any major conflict with China since 1962 but continues to be wary of the Chinese presence north of the Himalayas. Another one of India's concerns with regard to China has been the technical and material support that China provided to Pakistan in developing the latter's nuclear weapons arsenal.
With regard to the United States, India has predominantly enjoyed a cordial relationship. During the height of the Cold war between the US and the erstwhile Soviet Union, India advocated a policy of non-alignment and sought to distance itself from the power struggle between the two super powers. The United States was not very interested in South Asia during the Cold War but was careful not to allow the spread of communism to the region. Most of America's strategic interests in the region during the Cold War were guided by its fear of communist expansion. America maintained stronger relations with Pakistan and established a military alliance with Pakistan in 1954. While the US provided military assistance to both India and Pakistan, by 1964, Washington was unhappy with both countries and began to withdraw itself from the region. It was only after 1979 and the early 1980s that Washington began again to take an interest in India. In the period after the Cold war, Washington was particularly concerned with the development of India's nuclear capabilities and pushed for non-proliferation efforts in the region. The conduct of India's nuclear tests in the summer of 1998, followed by the Kargil war of 1999 between India and Pakistan raised fears in the international community about the possibility of a nuclear war between the two adjacent neighbors. Since then, the United States has repeatedly urged both countries to exercise restraint.
Political Structure and Elections
India's political structure is modeled along the British parliamentary system. Under the Indian Constitution, executive power resides in the President who represents the symbolic head of the nation. The President is also the Supreme Commander of the Indian Armed Forces. The Prime Minister is the executive head supported by a cabinet of ministers and is responsible for the actual execution of policy. The Indian Parliament consists of two houses: the Lok Sabha which is the lower house and is popularly called the House of the People and Rajya Sabha, the upper house. The members of the Lok Sabha are elected on the basis of universal adult suffrage directly from India's 25 states. The members to the Rajya Sabha are nominated by the President on the basis of their expertise in the fields of literature, science and social service.
Since 1951, elections in India have witnessed the gradual decline of the Congress party and from the early 1990s the rise of the Bharatiya Janata Party (BJP). From 1989 to 1998, India has had four national elections and except for the period between 1996 and 1998, these elections produced unstable short term coalition governments. In the 1996 and 1998 elections, four distinct political groups emerged, namely the Congress and its allies; the BJP and its allies; the United Front and a large number of caste based and regional parties. In the 1998 elections, the BJP came to power and won 25.47 percent of the vote and 179 seats. The Bharatiya Janata Party still continues to be the dominant party at the Center and is heading a multi party coalition called the National Democratic Alliance (NDA).
In post independence India, there were major debates about the future of the Indian economy and the type of model India should adopt for economic reconstruction. India's Prime Minister Jawaharlal Nehru was interested in building a strong decentralized state along socialist lines. In 1948, the Industrial Policy Resolution was passed which called for a mixed economy in which some industries like railroads and atomic energy would remain under the public sector while industries like coal, iron and steel and manufacturing would be open to private enterprise. As part of this model, India embarked on a set of Five Year plans which continued well into the mid 1960s. In the 1960s, India was faced with the challenge of liberalization and the Fourth Five Year Plan encompassed the need for allowing a more free hand for the market. From 1963 to 1973, a series of constitutional amendments were initiated to restructure the Indian economy. This was a period of structural reform in which Prime Minister Indira Gandhi nationalized a number of private sector banks and the government took over a large part of the private sector. From 1973 onwards, a second phase of liberalization began. However, even though the liberalization produced some changes, the Indian economy took a downslide and by the early 1990s India was practically bankrupt, forcing it to borrow loans from the International Monetary Fund (IMF). This in turn unleashed a new spate of economic reforms and led to the complete liberalization of the Indian economy. Ever since then, different governments at the Center have dealt with the process of liberalization in various ways and it remains a fundamental bedrock of the Indian economy. Over the years, India has opened up its markets to numerous multi national corporations and has become a thriving market for the import and export of international products.
Update No: 003 - (29/04/04)
India's 14th parliamentary elections are well under way. The general trend is that a right of center coalition of 22 parties led by the BJP will come to power. While polling has begun in various constituencies, final voting will take place on 13 May and approximately 675 million people are eligible to vote. The second phase of polling ended on April 26 and voters in 136 parliamentary constituencies across eleven states cast their ballots. At the end of this phase, 55% of the electorate participated in voting. While this is a substantial number, it still falls short of expected higher numbers. However, the next two phases of polling could in all likelihood mark an increase or further decrease in turnout. In understanding how the BJP is pitted against the Congress party, it is imperative to notice the dynamics of the parties and their allies. The BJP's main allies are the Janata Dal (a socialist party), Telugu Desam led by Chandrababu Naidu in Andhra Pradesh, AIADMK led by Jayalalitha in Tamil Nadu, Shiv Sena in Maharashtra.and the Akali Dal in Punjab. The Congress's major allies are the National Congress Party, Rashtriya Janata Dal led by Laloo Prasad Yadav in Bihar and DMK in Tamil Nadu. While the BJP is emerging as a stronger player in the race for power, the Congress has been plagued by internal feuds and its complete dependence on the Gandhi family for propaganda has conveyed a sense of weakness in party leadership. However in a dramatic turn of events in the state of Andhra Pradesh, the prominent government under the leadership of Chandrababu Naidu's Telegu Desam Party has been severely challenged by the Congress. The state of Andhra Pradesh has also recorded the highest voter turnout with 68-70% polling in the state's 21 Lok Sabha seats. The possibility of a Congress victory at the state level in Andhra Pradesh will be a significant watershed in the current elections. There is also speculation that this election will witness a greater proliferation of regional parties. According to analysts like Pratap Bhanu Mehta, the exact distribution of seats across regions will also matter a great deal. According to a recent expressindia exit poll, the BJP and its allies should win anywhere between 69 and 93 of the 140 seats contested at the end of the first phase of polling. The exit polls also predicted that the Congress is a little behind between 41 and 55 seats. The BJP has been able to win a large number of Muslim votes by dropping its Hindu agenda. Compared to the 1999 elections where voter turnout was around 60 percent, in the present elections voter turnout has been comparatively lower between 50 and 55 percent. While Prime Minister Vajpayee is conducting rallies in Uttar Pradesh and L.K.Advani is trying to consolidate the BJP's position in West Bengal, the Congress Party leader Sonia Gandhi also happens to be in Uttar Pradesh with Rahul and Priyanka Gandhi but is campaigning from the Aligarh constituency.
Election Phases: There are primarily five phases to the 2004 Election campaign in India. The first phase of the parliamentary polls on April 20 was held in 15 states and union territories covering 139 constituencies. The second phase on April 22, was held only in Tripura covering 2 seats. The April 26 polls were held in 11 states and union territories covering 137 Lok Sabha seats. In the fourth phase of the polls on May 5, 2004, people from seven states which account for 83 seats will cast their votes. On May 10, 2004, the last day of the elections 16 states and Union territories will go in for polls covering 182 seats. Nearly 675 million voters are eligible to cast their votes which will be for the first time across the country through electronic voting machine to elect a 543 member Lok Sabha.
This month records further changes in the dynamics of the Indo-Pak dialogue. India and Pakistan have collaborated in opposing an intrusive UN backed resolution which demands that all states adopt "effective laws" banning the proliferation of nuclear weapons to "non-state actors". They further declared that the UN Security Council must refrain from passing laws on domestic issues which must lie within the jurisdiction of the countries concerned. This reiterates India's regular position that the Kashmir issue must be settled bilaterally. India's Permanent Representative to the UN, Satish Nambiar also told the UN Security Council that the necessity to take active measures to prevent terrorists from getting hold of weapons of mass destruction "does not obscure our more basic concerns over the increasing tendency of the Security Council to assume newer and wider powers of legislation on behalf of the international community and binding on all states." Meanwhile, observing that progress was being made on relations between India and Pakistan, US President Bush urged that the two countries should get some of their "sticky issues" resolved. Bush has routinely praised the Pakistani President Pervez Musharraf for cracking down on the Taliban and fighting terrorism. Yet Pakistan's relations with India go through periods of "highs" and "lows". In a set back to India's plans to run a visa camps in places like Karachi to meet the surging rush for visas, Pakistan said it would agree to such a proposal only after India agrees to restore full strength in the respective diplomatic missions in Islamabad and New Delhi. Flying for the first time after the two countries restored air links, Pakistan Premier Zafarullah Khan Jamali congratulated Atal Behari Vajpayee for the "well deserved victory" of the Indian cricket team. Jamali also wanted to seek India's support for Pakistan's membership to the ASEAN Regional Forum (ARF) and hoped that India would not oppose Pakistan's entry into the ARF. India and Pakistan are intent on trying to resolve their outstanding issues by holding talks on nuclear confidence building measures in May. To this end, India has accepted a Pakistani proposal to hold such talks on May 25-26. New Delhi has also accepted Islamabad's proposal for the joint committee on drug trafficking and smuggling to meet on June 15-16.
With regard to the latest stock market results, the current elections seem to have had a deep impact on the market. The Indian SENSEX crashed by 213 points and the Bombay Stock Exchange (BSE) recorded the biggest fall in three years. These results display a sense of unease and uncertainty about the structure of power at the Center. India's Gross Domestic Product (GDP) has risen by 8.9% due to tremendous growth in agricultural, industrial and service sectors. India's Finance Minister Jaswant Singh believes that this comes close to the expected calculations of the government's projected figures. India's exports in particular products like tea has also marked a major increase in non-traditional sectors. Over the years Indian tea has become extremely popular among Americans, Australians and the Japanese. In the area of commerce, India's Minister of Commerce Arun Jaitley has drawn up a plan called Vision 2004 which envisages spending up to 50,000 crores on infrastructure. The BJP government is also interested in allocating sums of money for power projects and water transportation. In addition, towards achieving higher growth rates, the government is developing "economic growth clusters" in both urban and rural sectors. With regard to current WTO trade negotiations, India has objected to the framework advanced by the US representatives of trade. "New Delhi suspects that the model mooted by the EU and the US will play a subversive role for it by distancing the significant opening up of global agricultural trade from the crucial question of cutting down the high levels of farm subsidies in the US and EU" (Source: Economic Times, February 24, 2004). India wants the framework to provide some indicators on tariff reduction, export subsidies in different aspects of the negotiations whether it pertains to agriculture, industrial products or services. The terms of the framework were discussed during US Trade Representative Robert Zoellick's recent visit to India. In the banking sector, the government is trying to come up with guidelines for allowing foreign banks to set up their subsidiaries in the country.
Buyers warm to Indian convertibles
Three convertible bonds launched by Indian borrowers on highly favourable terms recently have underlined the rising global appeal of Indian paper, the Financial Times reported on April 29th.
Bankers in Mumbai say there is a pipeline of US$500m to US$1bn of new issues as companies take advantage of easier access to cheaper overseas money and foreign investors' rising demand for Indian convertible securities.
Among companies lining up to launch convertibles are Mahindra & Mahindra, the trucks manufacturer, Tata Tele-services and some pharmaceuticals companies, according to bankers.
The busy Indian issuance coincides with the recent take-up in Asia of this relatively cheap form of finance, which allows investors to convert bonds into shares at a premium at a later date.
Convertibles have only recently emerged as part of a wider tapping of foreign capital by Indian issuers from the south Asian country in the past year.
India's nuclear tests in 1998 led to its sovereign rating being cut to junk level, effectively shutting off companies from the international capital markets. Moody's restored India's investment grade rating in January and investor sentiment has improved.
The availability of Indian convertibles means global funds dedicated to these securities can diversify their portfolio away from a deluge of issuance by Taiwanese companies. At the recent three offerings demonstrated, investors have responded enthusiastically to the Indian paper.
Recently Tata Motors, the second largest vehicles manufacturer, raised US$400m in convertible bonds, while Zee Telefilms, the biggest media group and Ashok Leyland, a south Indian commercial vehicles company, both launched US$100m issues.
This almost matches the US$653 raised through six convertible bonds launched since July 2003, when domestic rule changes allowed Indians to access the market.
Pricing on the latest issues was very tight for bonds that were several times covered.
Analysts say three factors have driven the improved terms. The Indian convertibles launched last year were a new asset class and the extra risk was reflected in pricing; the lack of alternatives penalised new issuers; and dedicated convertible funds have now recognised India as a growth market.
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