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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)

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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 sharing intelligence. 
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--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 December.
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 and UBS.
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 or families.
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, 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 few years,"
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.


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