Books on India
Irdian Rupee (INR)
Update No: 023 - (01/01/06)
An important year
2005 was a particularly important year in India's growing global recognition
as a major power and the strengthening of its relations with the United States,
Russia, France and other regional powers in Asia. Before focusing on India's
burgeoning foreign relations this year, we will briefly highlight the
developments in India's political landscape this month.
India's Election Commission has proposed a number of electoral reforms making
the argument that the existing legal provisions were not adequate to stop the
growing criminalisation of politics. The Election Commission also expressed
concern over reports that "government officials who sincerely work to the
model code of conduct earned the ire of some political parties." In
previous months, India's political arena has been marred by a frequent spat
between the present Congress-led government at the Centre and the right wing BJP
and Left parties. Most of the opposition faced by the current government
revolved around the recommendations of the Volcker Report; the conduct of
elections in various states; and the numerous proposals included in the Congress
party's electoral agenda. While state elections were conducted in many states,
the onset of elections was marked by factionalism and electoral malfeasance.
India's Relations with the World
In December India and Russia signed three agreements including one on
protection of intellectual property rights to regulate joint defence work. The
agreements were signed after talks between Prime Minister Manmohan Singh and
Russian President Vladimir Putin in Moscow. Talks between both sides covered
India's requirement of civilian nuclear energy, cooperation in space sector and
ways of enhancing bilateral economic and trade ties. India and Russia also
signed a Technology Safeguard Agreement to operationalise the 2004 pact on joint
use of space-based Global Navigational Satellite System to provide for joint
development of new generation navigational satellites. Singh stated that
"India and Russia share the perspective to move towards collaborative
defence projects, designs, develop and market next generation military
products." Russia has decided to further partnership in civilian nuclear
projects. The signing of both agreements begins a new chapter in India's
relations with Russia.
India and Pakistan have agreed on a series of measures to stop trans-border
crimes including narcotics trafficking by conducting joint patrolling and
Both sides have assured each other that full co-operation and help will be
extended in sorting out all issues at the field-commanders level so that civil
populations feel secure and their problems are settled. The Indian delegation
was headed by Additional Director-General of the Border Security Force, N P S
Aulakh, while Director General of Pak Rangers, (Sindh) Javed Zia, represented
the Pakistani side. According to Aulakh, "fine tuning of existing
procedures" was finalized to facilitate a coordinated working relationship
through enhanced contact at commander and other levels. He said both sides
decided to "exercise mutual restraint" and take steps to check
trans-border smuggling and crime through "exchange of intelligence"
and for handing back inadvertent border crossers. Despite these talks, India and
Pakistan continue to live in a tumultuous relationship. Earlier last year,
Pakistan's President, Pervez Musharraf, criticized the United States for
abandoning Pakistan as a strategic ally and embracing India. In an interview to
Time magazine, General Musharraf said, "before 1989, we were a strategic
ally of the US and fought a war in Afghanistan for 10 years. Then we got left
high and dry." The growing US-India partnership in 2005 has increased
Pakistan's insecurity with regard to its relative power vis-à-vis India.
Despite the present insecurities, however, both countries have been making
attempts to further talks on issues ranging from trade, relaxation of visas and
curbing cross border terrorism. 2006 will provide yet another opportunity to the
leaders of both countries to continue dialogue and cooperation on these issues
with the end goal of settling the Kashmir dispute.
In moving toward building a regional partnership, India and Malaysia have been
working together closely. At the 11th ASEAN Summit, Malaysian Prime Minister,
Abdullah Badawi, stated that India has the potential to be an important partner
in the Southeast Asian region and that they would encourage India to play its
role for the promotion of peace, security and stability in East Asia as well as
advancing international peace and equitable development. He also noted that with
the emergence of India and China as the region's major powers, there would be a
re-alignment in power arrangements. India's recognition as a regional power with
a global reach can only work in its favour by building stronger ties with
countries such as Malaysia and using that as a way to forge similar
relationships with countries such as Singapore and Thailand.
Perhaps India's most important strategic partner in 2006 will undoubtedly be the
United States. In November India and the US conducted joint air and naval
exercises. Assistant Secretary of State for South Asia, Christina Rocca, has
described the Indo-US ties as moving to a "new level." The two
countries have begun working on civilian nuclear cooperation. The agreement was
signed in Washington on July 18 between Prime Minister, Manmohan Singh, and US
President, George W Bush. Under the agreement US recognized India as a nuclear
weapons state and agreed to supply fuel for the Tarapore reactors following a
series of commitments by New Delhi which included the separation of civilian and
military facilities. According to Rocca, the July 18th meeting was in many ways
the culmination of "four years of hard work to take the relationship to a
whole new level." With Manamohan Singh's visit to the United States this
year, George Bush is scheduled to be visiting India in 2006 but his visit hinges
on whether the civilian-nuclear deal between the two countries reaches fruition.
The Indian Institute of Management, Ahmedabad, (IIMA) has tied up with the
Paris-based Essec, the world's eighth ranked business school, for a double
degree program. Students of IIMA will now have an option to pursue an additional
degree in Essec and would spend their first year in the respective institute
where they are admitted and then apply for the double degree program in the
partnering institute. The new program comes as a special bonus for the IIMA
students, who will not be required to pay any extra fee for the option.
Essec, on its part, is keen for its students to get more exposure to the Asian
markets, where the future of the global economy lies.
In the latest report of the National Sample Survey Organization, there is
damning evidence that the Indian farmer is facing a crisis. The average farmer's
monthly income today is less than that of a workers daily wage. On an average, a
farmer's household spends just a little over Rs 500 rupees per month. In only
four states, farmer households spent more than Rs 615. Farmers in the state of
Orissa have received the worst brunt. The report also indicates that rural
families who don't depend on agricultural income are a little better off. The
problems in the report point to the current government's neglect of agricultural
jobs and its focus on spending money in nonagricultural sectors. The crisis
faced by rural farmers is bound to have an effect on urban India.
During his July visit to the United States, Indian Prime Minister, Manmohan
Singh, highlighted the role of the Indian expatriate community and hailed their
contribution to the US economy as laudable. Singh attended a luncheon with the
members of International Relations Committee of the Congress and reiterated that
the expansion of the Indian economy would be of strategic interest to
Washington. Singh also stated that "the United States can contribute
significantly to the success of this process and help us to accelerate growth
rates in India by its own policies and that it is in US strategic interest that
the Indian economy expands rapidly in the years to come. In the coming year, the
Indian community in the US is expected to further aid India's growing economy
making it a global economic partner.
SocGen to set up unit in India
Societe Generale has launched a private banking operation in India, joining
other financial institutions in establishing a foothold in an emerging industry
set to boom as incomes in the country soars, the financial Times reported on 1st
SG Private Banking will offer its wealth management services to high net-worth
individuals in India as well as non-resident Indians from offices in Mumbai and
Delhi, which will begin with 20 private bankers.
"SG has been keen to increase market share in the high net-worth Indian
diaspora," said Balakrishnan Kunnambath, SG Private Banking's global head
of Indian subcontinent, speaking at a press conference in New Delhi.
He said wealth held by high net-worth individuals in India has grown at a
compound annual growth rate of 22% over the past three to four years, and
currently amounts to uS$260bn.
Although asset management for wealthy individuals in India has been available in
various forms for a number of years, the private banking industry as it is know
in Europe and US, offering customised and structured investment products,
started in earnest a few years ago.
Industry watchers estimate the number of players in India at less than 10, but
several banks are seen starting operations in the near future, including HSBC
Existing foreign private banking players include ABN Amro and Deutsche Bank as
well as local groups such as HDFC Bank and Kotak Mahindra Finance.
"India is poised to increase the number of providers, clients, and assets
under management in coming years," said Mr Kunnambath.
SG Private Banking estimated that it would have some 1,000 clients in India by
the middle of next year, and a "few billion dollars" in assets under
management in the country in three to five years.
The firm has had its business in the Asia region expand at an average rate of
35% each year since 1997 when it began operations in the region, where it now
has US$10bn under management.
Private banks in India target individuals with investable assets of about US$1m,
numbered at roughly 70,000 and rising rapidly at 15% each year.
Since launching private banking operations in India in 2002, ABN Amro has had
its assets under management grow to more than US$600m from a base of zero. It
now claims 600 "customer relationships," defined as either individuals
Sutapa Banerjee, head of private banking at ABN Amro, said competition will
accelerate in coming years with the ramping up of private banking operations in
India by Citibank, Standard Chartered and HSBC because they have established a
strong brand presence in India.
"When these all seriously launch, they will be formidable
competition," she said.
Fujitsu to introduce palm vein authentication system in India
Japanase IT giant Fujitsu is planning to soon introduce in India a Palm vein
authentication System that could read a palm of an individual without the hand
being kept on a machine.
''We will try to bring it to India within the next 90 days,'' Fujitsu Asia
Regional Group Senior Vice President, Choi Chee Kong, said on the 19th of
December, NewKerela.com reported.
The system, which had been successfully marketed in Japan, has now been
introduced in Singapore and soon to be launched in Thailand and Indonesia.
''We plan to bring it to India with the demonstration sets available within the
next 90 days'' he said, adding that Fujitsu was targeting Governments and other
high security areas such as Defence Department to provide the system.
The system is non-touch based and has evoked good response in view of the fear
of the spread of communicable diseases such as SARS, he said. The delay in
launching the system in other countries was mainly due the constraint in
production to meet huge markets, he added.
India's Reliance and China telecom sign direct call deal
Leading Indian mobile operator, reliance Infocomm, and china Telecom, the
country's main fixed-line carrier, have signed a deal to provide the first
direct telecoms connection between the two Asian country's, the Financial Times
reported on December 13th.
Telephone calls between China and India, which have been contentious neighbours
in the past, are currently routed through the US and Europe.
Reliance Infocomm, by some estimates India's largest wireless carrier with 15.5m
subscribers, will now route calls through the under-sea cable lines operated by
Flag Telecom, a UK-based wholly owned unit it purchased in 2003.
A connection between Flag and China Telecom's domestic infrastructure has been
established in Hong Kong. Direct connectivity will bring down high phone tariffs
between the two countries, which have seen increased business links in recent
years as both economies enjoy growth of 8 to 9 per cent.
A local newspaper said calls from India to China would fall by about 55 per cent
to Rs8 (US$0.17) per minute.
"India and China are fostering trade in a very big way," a spokeswoman
from Reliance Infocomm said. "Communications needs have grown over the last
India's total trade with China grew by 46 per cent in the 2003-2004 fiscal year
and 40 per cent the previous year, according to figures from the India's
Department of Commerce.
At some 67m subscribers, India is home to the world's fastest-growing mobile
phone market. Revenues are growing 35 per cent each year over the next few
years, and the number of subscribers is seen growing to 300m by 2009.
Reliance Infocomm is an unlisted company owned by Anil Ambani that operates
mostly on the CDMA network. China Telecom is a large state-owned enterprise.