Books on India
Irdian Rupee (INR)
Update No: 015 - (29/04/05)
India's Relations with Pakistan and China
This month marked a historic moment in India's relations with both her
neighbours. Pakistan President Pervez Musharraf visited New Delhi in the middle
of April and agreed to discuss the Kashmir issue on a step by step basis.
Musharraf proposed an "out of box" solution without any "rigid
timeframe" indicating that a military option for settling the issue was
least favourable. The two countries also issued a joint statement declaring the
peace process between the two as irreversible and that terrorism would not be
allowed to impede the process. The leaders of both countries have agreed to
continue discussions on Jammu and Kashmir in a "sincere and purposeful
manner" towards reaching a final settlement of the issue. President
Musharraf, however seems to have placed a larger onus on India for maintaining
the peace process by stating that "every nation guards its sovereign
equality but magnanimity should be shown by all". A number of confidence
building measures have been proposed which include the following items:
· A meeting with Oil ministers in May to discuss the setting up of a pipeline.
· In June, Defence Secretaries will come up with a plan to demilitarise the
· The consulates in Mumbai and Karachi will open before the end of the year.
· The rail link between Kokhrapar and Munnabao will be ready by January 2006.
· The joint Indo Pak business council will meet with immediate effect.
· More meeting points and bus links will be opened along the Line of Control
for divided families.
· The frequency of the Srinagar-Muzzaffarabad bus will increase.
· Trucks will be allowed on this route to enhance trade.
India and Pakistan have also signed an agreement to expedite the release of
prisoners in each other's jails. Border security officials of the two countries
who signed the agreement in Karachi after four days of talks also agreed for
joint patrolling of the borders and a coordinated crackdown on cross border
smugglers (PTI Report). Pakistan recently released around 41 prisoners held in
its jails for visa violations after completion of their terms. The remaining 70
or more prisoners in its custody are scheduled to be released soon.
With regard to relations with its northern neighbour, relations between India
and China took a giant leap forward when Prime Minister Manmohan Singh and
Chinese Premier Wen Jiabao signed an agreement outlining a new strategy to deal
with border disputes. The shift in strategy was evident as India was presented
with a new map of China without the state of Sikkim. The Chinese Premier Wen
Jiabao's visit to India is symbolic of the end to old rivalries and the start of
a fresh chapter in strategic partnership. A concrete manifestation of this
proposal is Chinese support for India's bid for a seat on the UN Security
Council. This is justified in its own right, but it can also be seen to be a
part of Chinese diplomatic moves to exclude Japan which similarly has an
excellent claim. It remains to be seen whether the price of China's support will
be for India to similarly oppose Japan's entry, but the claim of India stands
apart from any other nation. We may assume that Indian diplomats will be glad of
China's support but will not be prepared to be used as pawns in any East Asian
Indian Prime Minister Manmohan Singh and Wen Jiabao agreed that differences on
the boundary question; a by-product of the 1962 war - should not be allowed to
affect the relationship between both countries. As in the case with Pakistan,
India and China have also agreed on specific guiding principles that give
special representatives the political mandate to settle the 3,500-km boundary
issue once and for all. Other confidence building measure include efforts made
by each state's special envoy to assess how they can reach a deal without
disturbing settled populations, make adjustments which reflect new geographical
and technical realties and the fifteen year old Joint Working groups are looking
at maps and Line of Actual control to avoid large-scale military exercises, air
intrusions and maintain peace at the border. However, some of the issues that
were not brought to the table and still remain unresolved are India's claim on
Aksai Chin and Chinese pressure on India to illegally occupy the state of
Arunachal Pradesh. India also did not discuss an important issue which has been
a source of much controversy amongst the political establishment in New Delhi,
namely, China's continuing military supplies to Pakistan. China's concerns on
the growing strategic partnership between India and the United States also did
not figure on the agenda. One of the most successful steps taken in
strengthening Sino-Indian relations is the Joint Statement issued by both
countries and the report of the India-China Joint Study Group on Trade and
Economy and Business
Prime Minister Manmohan Singh believes that India will aim at a 7.5 per cent
growth rate by taking steps to open up further. Addressing an Indian community
in Jakarta, Indonesia, Singh stated that the Congress party was committed to
building a more open economy, more open society and more open polity. He further
added that "winds of change are creating a situation for the growth of
India. We want to see the growth rate go up to 7.5 per cent in the future."
The Prime Minister noted that in the next five to ten years, India's working
population was going to increase substantially, resulting in the rise in the
savings rate of the economy. (PTI)
Prime Minister Manmohan Singh has also stressed the need to create more wealth
to tackle mass poverty. He said that the focus in the next decade would be on
projects which emphasize health, education and agriculture. Human resource
management is important as are education, health and information technology in
the growth of a country. "We still have a knowledge gap, we have to ensure
elementary school education to all," the Prime Minister said (PTI Report).
Referring to the direction and focus of the country, Singh felt that since 1991,
Indian policies had been excessively oriented towards Europe and the US. Singh
declared that "India is currently purposely and actively engaged with
South-East Asia. Our horizons are expanding to cover more countries of East
Asia." He also stated that "our partners in South-East Asia and East
Asia have accepted the reality of India's role in the world economy." India
will be a part of the East Asia summit to take place in Malaysia later this
As part of building stronger ties with the paper tiger, India has set up a
financial dialogue mechanism with China to boost cooperation in major
international financial issues. The bilateral mechanism is meant to promote the
global economy in a balanced and orderly manner. The dialogue will cover the
economic situation of the two countries, their financial policies, financial
reform and exchanges on matters related to international economic forums and
institutions, according to the statement (PTI Report). The Chinese ministry said
the dialogue between the two countries will be held once every 12 to 18 months
at a deputy ministerial level or other levels the two sides agreed upon. China
has set up similar financial dialogue mechanism with the United States, the
European Union, Britain and France on a regular basis at ministerial levels.
Indian stocks may rally soon on positive earnings forecasts
Strong profit-growth forecasts could spark a rally on the Indian stock market,
many local and international analysts and investment managers say, the Wall
Street Journal Europe reported.
In the near future, Indian companies will be announcing results for the quarter
ended March 31st. Analysts expect many bluechip concerns to report earnings
growth of more than 20% from a year earlier.
Because the January-March quarter marked the end of the fiscal year for most
Indian companies, many of them also are expected to make profit projections for
the year that began April 1st. Robust economic growth at home and growing demand
for India's products and services abroad are likely to mean upbeat forecasts
from many companies.
"Most sectors should report positive earnings (growth) including the
metals, petrochemicals, software, capital goods and oil-refining
companies," Dhiraj Sachdev, portfolio manager at ASK-Raymond James
Securities in Bombay, said.
After surging more than 50% in 10 months to a high of 6900 in early March, the
Bombay Stock Exchange's 30-share Sensitive Index, or Sensex, has slipped 7%
during April to 6467.92.
Fund managers have been hoping that a bright outlook for earnings in the new
fiscal year could be enough to re-ignite the rally. If earnings are on track the
Sensex could climb as much as 20% during the next 12 months, predicts Pathik
Gandotra, head of research at SSKI Securities in Bombay.
"As long as good earnings come, funds will find their way here," he
says. "There are a lot of new local funds and foreign funds that are just
starting to get a taste of India."
India's economy is among the world's fastest-growing as companies expend
production facilities, The government spends billions on new roads and power
plants, and an expending middle class of 300m Indians spends more. In the year
that ended March 31st, India's inflation-adjusted gross domestic product grew
almost 7%. Many economists project growth of more than 6% this fiscal year.
Analysts expect some of India's largest concerns to announce year-to-year profit
growth of at least 40% for the quarter ending March 3rd. Among the companies for
which such a performance is generally expected are software and outsourcing
companies Wipro and Satyam Computer Services, aluminium refiner Hindalco
Industries, oil refiner Oil and Natural Gas and energy companies Tata Power and
Samsung India aims to sell 2mn handsets in '05
Samsung India Electronics (SIEL) has targeted sales of two million mobile
handsets across all model ranges this year, and expects to maintain a Growth
rate of 60%, Business Standard website reported.
"The target sales for 2005 for our handsets of all models in India is two
million," SIEL director, sales and marketing, Ravinder Zutshi said.
"The industry is growing at about 60%. Last year, we managed to grow at the
same pace and this year also we are looking at a similar growth," Ravinder
said when asked about the expected growth in its mobile handset sales.
SIEL has added another top-end model, D500, priced at Rs 22,500, with 96 mb of
user memory, 1.3 mega pixel camera and 1.9 inch lcd screen. The model supports
messaging in Hindi, Marathi, Tamil, Bengali, Punjabi, Gujarati and Kannada.
Cricketers Virender Sehwag, Mohammed Kaif and Irfan Pathan are launching it at
the ongoing Lakme India fashion week, 2005.
"This model has been positioned as a lifestyle statement at the top end of
our handset portfolio," Zutshi said.