Books on India
Irdian Rupee (INR)
Update No: 011 - (01/01/05)
Looking back at 2004
As we approach the New Year and leave 2004 behind, one is forced to address
those issues which were prominent in the last year. In India, the most important
change that occurred in 2004 was the ousting of the BJP from power in a
democratically held election and the return of the Congress party under the
leadership of Manmohan Singh and his cabinet. The BJP had dominated Indian
politics for several years, all the while promoting a hindutva ideology. The new
Congress government is much more secular in nature. Although former Prime
Minister Atal Behari Vajpayee was an astute diplomat, Vajpayee's efforts in
building a more secular India were often frustrated by the right-wing elements
in the BJP like the Rashtriya Seva Sangh (RSS) and the Vishwa Hindu Parishad (VHP).
The Congress government under the leadership of Manmohan Singh has offered to
rebuild an India that was fractured along religious lines during BJP rule. In
this regard, Manmohan Singh and his advisors bring with them a new hope of
building a truly secular and democratic India.
India-Pakistan relations have always been a critical and controversial subject.
A major step was taken in 2004 to resolve the outstanding Kashmir dispute.
Leaders from both Pakistan and India met to facilitate dialogue on the
resolution of the Kashmir conflict. Besides a number of confidence building
measures, there appeared to be a sincere effort on both sides to address the
nature of the boundary dispute by finding a suitable way of delineating the Line
of Control. Compared to previous years, there was also a significant decrease in
the number of terrorist activities in Kashmir. While such efforts mark a
positive step forward since the Kargil war of 1999 and the terrorist attacks on
the Indian Parliament in December of 2001, there are a few obstacles to
surmount. First, Pakistan has continually pushed for international or third
party mediation in resolving the Kashmir issue while India is firm on settling
the matter bilaterally. Second, it is not clear whether President Pervez
Musharraf's intentions in resolving the Kashmir issue are genuine to begin with.
Musharraf's recent proposal of withdrawing Indian troops from the Line of
Control was viewed with much skepticism by India's political establishment and
military. For the political establishment in New Delhi, Musharraf comes across
as a shrewd politician guided by US interests. Musharraf's apparent crackdown on
terrorist groups in Pakistan and in Pakistan occupied Kashmir (POK) was
precipitated post 9/11 when the United States put pressure on countries that
were harboring terrorists. New Delhi sees Musharraf's efforts to curb terrorism
and resolve the Kashmir issue as part of a strategy to appease the United States
rather than a sincere effort to resolve the issue. Third, the presence of
nuclear weapons between the two countries has added a further problem. Any
possible crisis in the future will occur in the shadow of nuclear weapons and it
is not clear whether both countries have an accurate understanding of their
respective nuclear doctrines. This has increased the possibility for greater
miscommunication between the two countries.
This month New Delhi expressed its concerns over the nuclear issue during US
Defense Secretary Donald Rumsfeld's visit to India. While the US is seeking
trade in civilian, nuclear, space technology and missile defense systems with
India, it is simultaneously courting Pakistan by equipping the latter with high
technology weaponry. Rumsfeld appeared to have reassured India that US relations
with Pakistan would have no direct bearing on its relations with India. In an
official statement Rumsfeld declared "it is important that our two
countries developed a stronger cooperative relationship. Over the past four
years we have been working to do that. We have had numerous discussions,
exercises and exchanges. The military-to-military and defense-to-defense
relationship is a strong one and we intend to see it further knitted together in
the months and years ahead."(Source: Times of India).
2005 will be an important year for India specifically with regard to its
relationship with both Pakistan and the United States. Progress on the
Indo-Pakistani dialogue on Kashmir will hinge on how well both countries assess
each other's intentions without getting trapped in rhetoric. Also, the success
of confidence building measures and Track II diplomacy between the two countries
could help open an avenue to find an amicable settlement to the Kashmir issue.
If indeed both countries succeed in developing a concrete time frame for
resolving the Kashmir conflict with a clearly stated agenda in the coming year,
2005 may be a historic year for improvement in relations between both countries.
However, the downside to the failure of talks on Kashmir is that any possible
deadlock in communication between the two countries could fuel a crisis.
Therefore, there does not seem to be any middle-ground in the relations between
these two countries. Relations could either be positive if all impending issues
are resolved. Or relations could go downhill if a crisis-like situation arose.
This is where the United States will possibly play a critical role in South Asia
in the coming year. US presence in countries like Afghanistan and Iraq and its
initiatives in promoting democracy have to be aided by the support of democratic
countries like India. While the United States would ideally like India and
Pakistan to resolve the Kashmir issue at the earliest, America has become
accepting of India's concerns on combating terrorism. This could work in India's
favour in the near future. The problem for the United States is to find a
suitable way of balancing the interests of both India and Pakistan without
alienating either country since both these countries are critical to its foreign
policy in the region.
On the economic front, this year has been extremely positive for India. India's
economy has grown significantly and now comes close to China. This month, one of
India's largest corporations, Reliance Industries, came under heavy strain due
to infighting within the company. Reliance has been one of India's most
successful private industries run by the Ambanis and has been a major source of
capitalist ventures in India. A weakening of Reliance's performance could
possibly affect India's economy in adverse ways.
However, foreign direct investment seems to have increased significantly over
the last year which could balance out any setbacks to the economy. The
automobile industry also received a major boost when the Rolls Royce chief
executive John Rose visited India this month. Royce was positive that India's
growing economy had created a large number of opportunities for further
investment. One of the major objectives of Rose's visit was to explore avenues
to collaborate with Indian tech firms for outsourcing some IT-related work. The
firm was looking for new partnerships with Indian universities under its
university technology centre program for research activities. He noted that
"we invest about $1 billion annually in research activities, and nearly 60
per cent of this budget is spent outside the UK. We want to look at Indian firms
and institutions now". (Source: Times of India). India accounts for £100m
in Rolls Royce turnover, half of which comes from its civil aerospace business.
The head of the world's largest steel company Lakshmi Mittal, a renowned UK
businessman is keen to have his firm's presence in India and China in an effort
to supply to global customers. "If you look at us, we are in 14 countries,
in four continents, and this is the only truly global steel company. But this is
not enough," the NRI business tycoon, head of the newly-created Mittal
Steel Corporation, said in an interview published in 'The Sunday Telegraph' (Oct
31, 2004). Mittal is Britain's richest resident with a fortune of 12 billion
pounds. The business tycoon's desire is to revamp the steel industry which was
in the midst of a tremendous upheaval that could potentially lead to the
disappearance of local companies and rise of global giants. Mitall's vision is
to build on creating five or six world class groups each producing 100 million
tonnes of steel each year.
This year also witnessed a remarkable development when inflation fell to 7.34
per cent during the week ended November 13 due to cheaper vegetables and other
essential food and manufactured products even though fuel became costlier.
Inflation based on Wholesale Price Index fell to 7.34 per cent from 7.76 per
cent a week ago but was still significantly higher than 5.42 per cent in the
year-ago period. The price level fell by 0.42 per cent during the week ended
November 13 as essential primary food and non-food articles became cheaper by
0.4 per cent and prices of manufactured products moved down by 0.2 per cent. But
fuel prices rose by 0.1 per cent.
Warsaw, Delhi mull options
Poland and India will explore options aimed at intensifying trade in arms and
cooperation in upgrading Indian military equipment, the Polish and Indian
defence ministers were quoted as saying by Deutsche Presse-Agentur (dpa) on
Novemebr 2nd in the Polish capital Warsaw, New Europe reported.
Following official talks with visiting Indian Minister of Defence, Pranab
Mukherjee, Polish Defence Minister, Jerzy Szmajdzinski, announced the creation
of a special joint Polish-Indian working committee focused on the modernisation
of Indian-owned tanks, anti-aircraft and rocket systems and the sale of Polish
radar equipment. Mukherjee said India was also interested in joint training
exercises with NATO-member Poland as well as technology transfer. India has been
a buyer of Polish arms since the early 1980s when Poland was still a communist
country within the soviet sphere of influence.
Bulgaria, India mull business cooperation
An India-Bulgaria Joint Business Council meeting took place during a recent
visit of a Bulgarian delegation to New Delhi, India. Led by Bulgarian
Agriculture Minister, Nehmed Dikme, to India, the Bulgarian businessmen
discussed exports of Bulgarian wine to India. Sofia News Agency reported that
during the talks the Indian businessmen said there are just tow brands of wine
offered at the local market, underlining it is still unexplored and offers major
According to the Indian party, the Indian market shows a major demand for wine.
The Bulgarian businessmen revealed that their Indian counterparts have shown a
considerable interest in importing wine from Bulgaria.
Both parties called for a decrease of the customs taxes and the implementation
of measures to bolster Bulgaria's exports to India.
Apart from exporting wine to India, Bulgaria is also enhancing relations with
India in the information technology (IT) sector. Three Bulgarian IT companies
are making software products for new BMW cars, said Bulgarian Deputy Minister of
Transport and Telecommunications, Nedelcho Nedelchev.
The firms were subcontracted by Soft WAP which makes products for the car giant.
The three Bulgarian firms were selected among competing global producers for
their cheap and high-quality products, according to Nedelchev. Bulgarian
companies may be hired to build hydropower plants and reservoirs in the
Himalayas. Bulgarian companies will struggle for public procurements
commissioned by India's government. Dikme elaborated that some of those
companies have already taken part in such projects in the Arab countries.
India, Serbia sign tourism deal
India and Serbia on November 5th signed an agreement to enhance cooperation
between public and private sectors to boost tourism in the two countries, SE
The agreement was signed in Belgrade by Minister of Tourism, Renuka Chowdhury,
who was on a visit there, and Serbian Minister of Trade and Tourism and
Services, Bojan Dimitrijevic. According to the agreement, both countries would
support mutual business contacts, exchange of experts, knowledge, workshops
among industry representatives in the area of tourism.