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Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
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: 047 - (21/12/07)

JANUARY 2008
2007 was an eventful year in Indian politics in various dimensions. On the domestic front, the year provided a dismal picture of state politics. On the international front, the India-US nuclear deal continued to engage the strategic community in a dialogue but the presence of the "China factor" in India-US relations could turn the tide on the nuclear agreement. On the economic front, India has continued to make giant strides in various sectors and is surging ahead. While politics within India appears to falter, the economy continues to flourish. All these and other contradictions will be the focus of this year's overview. 

AN OVERVIEW OF THE STATE OF INDIAN POLITICS
A recent article by Ashgar Ali Engineer, neatly addresses the multi-pronged challenges to Indian democracy. Amongst the most notable of these challenges are the threat posed by communal politics and the role of politicians with vested interests. Engineer claims that our constitution is based on individual rights but very often an individual's right challenges the collective right of society, leading to conflict and tensions. These tensions are then exploited by Indian politicians to further their own political agenda. Unfortunately, even after 60 years of India's independence, this characterization of Indian politics is an accurate depiction of the actual state of affairs. 

For instance, Engineer notes how politicians become extremely calculating as elections approach. The author provides an example of specific parties who seem to have mastered this art. For example Bal Thackeray of Shiv Sena, Advani and Narendra Modi of BJP have become adept in exploiting communal sentiments. Engineer reports that BJP uses people like Advani Modi to propagate Hindu rhetoric, very similar to the way in which Jinnah applied Islamic rhetoric in pre-partition days. In the 2007 assembly elections in Gujrat, Narendra Modi first raised developmental issues but sought the shelter of communal politics when doubtful of attaining victory. Engineer further goes on to point out that the state of Gujrat, under the leadership of Narendra Modi has divided Hindus and Muslims and is fast emerging as a "pro-Fascist" state. 

Engineer's criticism directed at Indian politics is not an outlier. In fact, according to a new survey, Global Corruption Barometer 2007, conducted among 1,069 respondents by the Indian chapter of Transparency International, political parties are regarded as the most corrupt organs in India. Nearly 76 per cent of the respondents polled perceived political parties as "extremely corrupt" and another 14 per cent rated them as "corrupt to some extent". Only the police (with a corruption rating of 72 per cent) give politicians any serious competition. Again, the Gujrat assembly elections seem to have proved how bad political parties can get. However, we would further point out that it is not one state like Gujrat that is plagued by issues of state failure. As highlighted in the next section, the current West Bengal regime has unleashed a brutal onslaught on petty farmers and landowners in the Nandigram, only to emulate a capitalist model. 
The presence of a Communist government for the last 30 years has created tremendous problems for the people of West Bengal and Nandigram is just another example of a state government failing to provide for its people. Both Gujrat and West Bengal are separate cases. In one state, politicians have used communalism to restore their strength while in the other politicians have used a redundant ideology to inflict misery on its people. Yet both states share one thing in common: the failure of state governance. 

STATE FAILURE IN WEST BENGAL 
Nandigram. -- the latest anguish of West Bengal. Nandigram screams out the names of innocent victims of violence and their brutal perpetrators. It is a word associated with a regime that has kept West Bengal in the dark ages even today; a regime that thrives on the legacy of Communism. Nandigram has been in the news for quite a while, sparking international attention. On November 12, 2007, the British daily, The Guardian reported: "clashes between communists committed to emulating China's economic success and farmers opposed to the establishment of a vast industrial zone in eastern India came to a head yesterday when leftwing activists stormed several villages - leading to accusations of murder and rape." Other reports talked about how, the Left Front (LF) government in the state of West Bengal, in an effort to introduce investment opportunities, displaced thousands of petty landowners, poor cultivators and wage labourers out of their homes and off their land. When the farmers were left with no choice but to fight for their rights, their resistance was met with state sponsored aggression with state police killing more than 20 people on January 7 and March 14. 

The spate of killings has been sporadic but began in the last two years. In December 2006, in Singur, 50 kilometres from West Bengal's state capital Kolkata, the state government tried to evict 9020 landholders and their share-croppers from 635 acres of land in order to construct a car manufacturing plant funded by the Tatas. The Singur farmers put up a struggle despite facing repression. In January and March of 2007, a fresh spate of violence was unleashed, this time in Nandigram, 150km south-west of Kolkata. The state government usurped 22,500 acres of land for creating a "special economic zone" (SEZ), intended to develop a 10,000-acre chemical center. On reading such reports of heinous injustices meted out to farmers by West Bengal's present communist government, it is not surprising to hear people lament their loss of faith in a failed system. 

But Nandigram is not the first episode of its kind. Nandigram has been the culmination of years of decadent rule by a government that has failed to provide its people with the life they deserve. It is surely time now for the people of West Bengal themselves to take a step forward by removing the CPI(M) government from power in the next election. As long as the Communists control West Bengal, the state and its people will live in poverty and misery. The reason for removing a communist-led government in the wake of the Nandigram massacre takes on greater urgency, because this episode reveals the growing incidence of violence in West Bengal in recent years, problems with supporting a communist regime that follows a contradictory ideology, and, the peculiar state of our political process. 

It appears that the spate of violence initiated by the government against helpless farmers and small landowners is the fallout of a communist government, trying hard to exploit a capitalist formula for success. Is it not ironic to see a government that prides itself in socialist principles, making capital and industrial investment a high priority? Why would the current administration in West Bengal want to assign greater priority to building an industrial zone at the expense of its own farmers? For very long now, the administration of West Bengal has been following a capitalist and industrial model in the garb of socialism. The rise of urban townships, super sized malls and gigantic flyovers in Kolkata in the last five years bears testimony to this fact. There is nothing wrong with proposing economic development, indeed it is generally called 'progress,' but when it is done by government on behalf of big corporations, without consideration or compensation to the 'little people' who suffer as a consequence, it is hypocritical to propose such measures while propagating and clinging to a Marxist ideology. Obviously, the West Bengal government is just holding on to an obsolete Communist label. All its actions and policies demonstrate a move away from socialist principle and thought. 

THE CHINA EQUATION IN INDIA-US RELATIONS
2007 has been a particularly constructive year in the history of India-China relations. The two Asian powers have entered into several economic and defence partnerships with a view to improving their relations. Moreover, they have tried to put an end to the boundary dispute. UPA chairperson, Sonia Gandhi, became the first foreign leader to visit Beijing, marking a high point in bilateral relations during the year. Prime Minister Manmohan Singh was expected to visit China in 2007 but is now expected to visit the Asian neighbor in January 2008. But, despite the positives in the relationship, China's position on the India-US Nuclear Deal could act as an obstacle to stronger relations. The Indo-US civilian nuclear has remained a cause for concern in Beijing. India's agreement with the United States appears to be a thorny issue for China. China has not provided any public objections to the deal but has continually maintained its reservations on the issue. China has said that the US and India should address the concerns of the international community on their nuclear deal while acknowledging that both countries can cooperate on the peaceful use of nuclear energy. The deal has come under pointed attack of the official media, including the ruling Communist Party of China's (CPC) mouthpiece, the People's Daily which has repeatedly criticized the deal, labeling it as "double standards" and an act that could undermine global non-proliferation efforts. The state media has even gone a step beyond, by proclaiming that that the era of UPA government's rule may be short-lived given the opposition to the deal from India's Left parties. 

INDIA'S ECONOMIC GROWTH AT RECORD HIGH
At the end of 2007, most evidence points to the fact that India is likely to exceed a gross domestic product (GDP) growth rate of nine per cent by end of fiscal year 2007-2008. Indian Commerce and Industry Minister Kamal Nath has reported that the rise in India's growth rate has been exceptional even though there has been an accompanying rise in oil prices, an appreciation of the rupee (against the dollar), and high interest rates. On the issue of the rising rupee adversely affecting exports, Nath stated that New Delhi is looking at various mechanisms, such as reimbursing state levies and taxes (to exporters). The minister also noted that a rise in the value of the rupee has adversely affected industries such as textiles, leather, handicrafts and marine products, all of which are facing job losses. Nath said that "there have been 120,000 job losses (both direct and indirect)." Textile exports have come down by about 22 per cent, handicrafts exports have declined 66 per cent, marine products 20 per cent and leather nine percent, according to ministry officials. Despite this disturbing picture in some industries, India's foreign direct investment rates have also recorded a significant high. 

FOREIGN DIRECT INVESTMENT 
Foreign Direct Investment popularly known as FDI flows are continuing with great speed. FDI (foreign direct investment) equity inflows during the fiscal 2007-08, as of September 2007, were $7.2 billion, which is a growth of 65 per cent over the same period previous year. Moreover, the 170-member World Intellectual Property Organization (WIPO) has endorsed India's recognition as an International Searching Authority (ISA) and an International Preliminary Examining Authority (IPA). India will soon emerge as an IPR (intellectual property right) producer rather than IPR user. According to Nath, foreign investment in India jumped 65 percent in the first half of the fiscal year that began in April, compared with a year earlier. India received a total of 15.7 billion dollars in foreign investment in 2006-2007, more than a 100 percent increase from a year earlier. India's services sector, dominated by the call centre business, saw the biggest investment followed by telecom services and real estate, the report said. Even though India has maintained a steady performance in the investment sector, India still falls behind China, which receives at least five times as much foreign investment. India's market reforms have been gradual and its inability to match Chinese foreign investment levels is the fallout of gradual liberalization. Also, India's Communist Party' presumably for arcane ideological reasons, (clearly different to their confreres in China), has offered significant opposition in raising foreign investment levels.

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