Round The States

New Delhi, 3 June 2010

Rajya Sabha Poll

NEW DEALS & HECTIC LOBBYING

By Insaf

Top political circles across the country are abuzz with hectic lobbying for the forthcoming biennial Rajya Sabha polls this month. Some 54 members are retiring from 13 States. These include senior Congress leaders and UPA Ministers such as Ambika Soni (Punjab), Anand Sharma (Himachal Pradesh) Jairam Ramesh (Andhra Pradesh), Mohsina Kidwai (Chhattisgarh) and R.K. Dhawan (Bihar). Six vacancies each are due in Andhra Pradesh, Maharashtra and Tamil Nadu. Uttar Pradesh will account for 11 seats, followed by Bihar 5, Karnataka and Rajasthan 4 each, Madhya Pradesh and Orissa 3 each, Chhattisgarh, Punjab and Jharkhand 3 each and Uttarakhand 1. Sonia Gandhi’s Congress faces the toughest task. It is in no position to renominate most of its members, thanks to the party’s reduced strength in some States. Efforts are therefore on to strike new deals. Fortunately for the Congress, Praja Rajyam Party Chief Chiranjeevi from Andhra Pradesh has already agreed to help. Ajit Singh and his RLD in UP too have decided to oblige, ensuring the re-election of Satish Sharma, Rajiv Gandhi’s old friend.

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Probe Into J&K Encounter

Agitated public opinion has successfully asserted itself in Jammu and Kashmri once again. The Army on Sunday ordered a high-level probe into an alleged “fake encounter” in the Machil sector of Kupwara District on April 30 in which three youths from Rafiabad were killed. Its decision follows receipt of a preliminary police report into the incident in which a Major was named. The inquiry, also demanded by J&K’s former CM and PDP founder Mufti Mohammad Sayeed, will cover all the allegations based on the report. According to Army sources, the report has indicted Major Bhupinder Singh of 4 Rajput Rifles and prime facie established his involvement. Three persons, including a special police officer and a Territorial Army man arrested by the Police, have reportedly admitted their involvement in the killing of the three youths who turned out to be civilians and not militants, as claimed by the Army. The arrested persons are also alleged to have told interrogators that Major Singh had paid them Rs.50,000 each for getting civilians who could be shown as militants.

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Maharashtra’s Mass Weddings

Maharashtra’s Congress-NCP Government has reason to rejoice. Its social initiative of sponsoring mass weddings has proved successful and is viewed by the poor across the State as a boon. Its advocacy of mass weddings that cut costs but retain dignity for heavily indebted families is catching on, especially in Vidarbha. The State Government has spent Rs 33 crore on such weddings since 2006, covering 31,000 couples in a region of over one crore people. That works out to no more than Rs. 10,000 per couple, which is inexpensive at a time of soaring prices and a crippling farm crisis. The mass weddings hold a special attraction for those ruined by the agrarian crisis, which according to the State Governments, has prevented some three lakh families from getting their daughters married. Only recently, 55 Muslim couples of Nandura tehsil of Buldhana district were married in a mass wedding that lasted 90 minutes. The ceremony was much like a civil wedding. There were no bands and no blaring loudspeakers. Rituals were cut down to the barest minimum.

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Slums Blight India

A recent report by the National Sample Survey office on “Some Characteristics of Urban Slums 2008-09” has made various State Governments sit up and knock at New Delhi’s door. Despite the UPA’s solemn promise of a slum-free India, some 49,000 slums continue to blight the country’s urban landscape, forcing lakhs of people to live in pathetic, sub-human conditions. What makes matters worse is the additional factor that of these 49,000 slums, 24 per cent are located along nallahs and drains and around 12 per cent along railway tracks. About 57 per cent of the slums have come up on land, owned by local bodies and State Governments. Mercifully, the sanitary conditions in the slums in terms of toilet facilities in 2008 & 09 showed an improvement since 2002. However, a great deal remains to be done. Toilets with septic tanks (or similar facilities) were available in 68 per cent notified and 47 non-notified slums (up from 66 per cent and 35 per cent respectively in 2002). Around 10 per cent notified slums and 23 non-notified slums have no drainage facility.

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Bihar’s Super-30 Scores

Full marks to Bihar’s famous Super-30. It has pulled off a hat trick with all its 30 students making it to the IITs for the third consecutive year in 2010. In 2002, maths wizard Anand Kumar, who was unable to pursue studies at Cambridge University due to poverty, took the Super-30 initiative under which 30 poor students are coached free of cost every year to crack IIT-JEE.  Altogether, 212 of the 240 Super-30 students have successfully cleared one of India’s toughest exams during the last eight years. As in the past, the Super-30 stars this year too are the wards of landless farmers, typists, a domestic help and a grade IV Government employee. Of these 20 are OBCs, one is a Scheduled Caste and nine belong to the general category. Importantly, Anand Kumar is all modesty and asserts: “More than me, the credit goes to the students who slogged for 16 hours daily for months to the run up of the all-India exams…” He also has heart-warming news for other poor aspirants for admissions to the IITs. He has decided to increase the intake of his Super-30 from 30 to 60 from this year. Three cheers for Super-60!.

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Kerala’s Passport Racket

Air India’s most tragic crash in Mangalore has exposed a major fake passport and visa racket in Kerala. Twelve passengers who travelled in the ill-fated aircraft had secured passports through fraudulent means, thereby complicating their identification and insurance. Not many outside Kerala are aware that a fake passport industry has been flourishing in the Gulf for providing forged passports, visas and travel documents to unemployed youth for securing jobs in the Gulf. Trafficking in women is also done through manpower recruitment agencies, according to immigration officials. A parallel racket in the Gulf helps expatriates stranded there to return to Kerala on being ill-treated by their employers. The beneficiaries pay 3,000 to 10,000 Dirham to obtain forged passports. This happens when employers in the Gulf take possession of the passport of workers on arrival. Some times Kerala’s job seekers in the Gulf are forced to sell their passports to members of the racket. A passport with at least some months of validity reportedly fetches upto Rs.25,000 in Saudi Arabia.

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Gorkha Adivasi Pradesh

Gorkhaland, demanded by the Gorkhas of Darjeeling for the past two decades, has been given a new name. The Gorkha Janmukti Morcha has announced that the separate State that it is pressing for well now be called Gorkha Adivasi Pradesh. The move is clearly an attempt by the GJM leadership to legitimize their demand for the inclusion of parts of the Terai and the Dooars in north Bengal in the proposed State. It is also an attempt to placate the Adivasis, who comprise a substantial segment of the Terai and the Dooars, and to delink it from the legacy of Subhash Ghising, who had coined the “exciting and inspiring” term Gorkhaland (which rhymes with Nagaland) and launched a popula movement for its creation as a separate State in 1986.

 ---INFA

(Copyright, India News and Feature Alliance)

Economic Highlights

New Delhi, 29 May 2010

Euro ‘Bush Fire’

INDIA MAY NOT GO UNSCATHED

By Shivaji Sarkar

The Eurozone sovereign debt crisis or the “bush fire”, as it is being dubbed, may not leave India unscathed. The fears have been expressed by none other than Finance Minister Pranab Mukherjee and his chief economic advisor Kaushik  Basu.

The rising gold prices, accentuated by the Europe situation, signals further trouble. It might make fund availability and lending dearer.  It could trip the fundraising plans of Indian companies at home and abroad and dent confidence, while the euro's weakness will hurt exporters selling in the currency. 

Clearly, it has started impacting the equity markets worldwide and companies may be forced to defer fundraising. This would translate into stymieing of future growth pattern not only of individual corporate houses but of many nations.

Many companies have started treading with caution. Recently, 28 companies received approval to issue initial public offers (IPO). Most of these have deferred the plans, including Reliance Infratel and Emaar MGF. Another 45 companies have applied for new IPOs with the SEBI. The Essar Group called off its $750-million bond issue. Such moves are denting the corporate confidence. That explains the anxiety of the finance minister and his economic advisor.

Conditions are not being seen as stable. The CMD of Prime Database Prithvi Haldea says that institutional investors are driving a hard bargain. The Euro crisis would impact markets, including India, he asserts. This is in sharp contrast to the Wipro CMD, Aziz Premji’s remark that India would not be affected and that his company had been the least hit. The very next day his company lost heavily at the stock market.

A weaker euro has added to the anxiety of exporters. The euro tumbled to a 14-month low against the dollar, reeling from escalating concerns that Greece's debt crisis may spread to other euro zone states. Spain, Portugal and Ireland are on the list already. France and Germany, which along with the IMF came out with a $ 146 billion assistance to bail out Greece, fear that they also might be dragged into the crisis.

West Asia has started feeling its impact led by Saudi Arabia and Abu Dhabi. Oil prices are coming down at the height of the recent sovereign debt crisis in Dubai. This has a more direct impact on India as plummeting fortunes of the Gulf region might affect its exports, business and the job market. The European problem would certainly delay recovery of Dubai and there are chances of it hitting other Gulf states.

As West Asia and Europe plunges into trouble, the happiness in India might remain fragile. Fortunately enough exports do not have a large share in the economy. But whatever little it has it might lead to problems that might be difficult surmount as euro goes on losing its sheen against the dollar every day. Since most international deals are made in dollar terms it makes Indian exports expensive in the European market, which also faces the problem of its people losing purchasing power owing to the impact of the recession that hit it two years back.

The European Union Energy Commissioner, Guenther Oettinger, has warned that the rescue package for Greece is the only beginning of the battle. It would not be over till the European governments draw up their budget next year when they have to reduce the huge piles of debt that many EU member States have racked up. What he indicates should cause concern. Some of these countries have over 90 per cent of debt. It would not be prudent to expect them to clear it up in the course of the next nine months. The indication is clear, the Eurozone crisis would continue. In fact, it has already engulfed some of the erstwhile East European countries as well. Some of them have become members of the EU and some others are waiting in the wings.

One would have expected the US to come in support of the EU. India too would like that. Though the Obama administration for record’s sake is showing interest in solving the crisis, the US per se would not like that. It is now a battle between the dollar and the euro. A stronger euro is an anathema for a weakened US economy. It might give it lip sympathy but would prefer to do little.

Meanwhile, the Mannmohan Singh government has to play its card well to come out unscathed. It is difficult. The economy and corporate are too globalised. The banking sector owing to domestic opposition had the fortune of the proposed reforms not happening. It has partially saved the day. But it is not in a position to meet the demands of the finances being made by the government and the large corporate borrowers.

The Euro crisis is drying up fund flows. Large budget deficits have strained the banking system. Corporate growth is being are planned on debts. So are many infrastructure projects. This is a critical area. New investments to banks are slowing down as the uncertainty continues in the international market and high prices cause concern in the domestic area. The investors of late have started avoiding the banks and the stock markets. A survey by brokerage firm Indian Infoline Ltd (IIFL) found that about 35 per cent investors showed interest in buying jewellery, 27 per cent in gold exchange trade funds and 12 per cent in coins and bars.

The stock market is being avoided for its volatility and banks are being shunned as there are apprehensions. The investments are clearly going into gold. It is not productive investment but a safe tool that protects the principal and as the gold prices are surging ensures safe and often high return. The flip side is it might make finance dearer particularly in the wake of the Rs 68000 crore 3G deals. The telecom companies do not have that money. They are depending on the banks to finance it. It might further add to the finance crunch.

Indeed, this has a risk. Apart from the scarcity of funds that might stall many deals and projects, it is likely to make lending expensive as interest rates might rise. An economy that is witnessing almost 20 per cent rise in prices would end up further with higher inflation. Apart from losing on the international front, if this is not managed well, it might lead to a euro type crisis in the domestic sector. That would mean more job losses and slipping on growth target, which now officially is pegged below 7.5 per cent. New policy formulations are required to fight the seemingly unseen. Let us not waste precious time. –INFA

(Copyright, India News and Feature Alliance)

Open Forum

New Delhi, 26 May 2010

Selling To The Poor

FROM POVERTY TO PROSPERITY

By Dharmendra Nath (IAS, Retd.)

Selling to the poor. This is the central theme of C K Prahalad’s work. Economists are notorious equivocators. On the one hand this, on the other that. So somebody wished for a single-handed economist. Prahalad, Professor at the University of Michigan, who passed away recently, almost certainly fits this bill.

He spoke loud and clear on matters that concern all of us. His was a grass-root approach. He started off on corporate business strategy with the concept of core competency. Companies should never confuse their roots with the leaves and the fruits. One can lop off leaves and fruits without harming the tree but we cannot do the same to its roots. His more powerful work, however, was yet to come. It relates to the fortune at the Bottom of the Pyramid theory which is a very significant and an eminently workable contribution to the anti-poverty literature.

By all means give the poor skills, give them jobs, give them assets. All are very valid approaches, though they involve government expenditure. What Prahalad uniquely taught us about them is to look at them also as consumers who can provide their own funding. They too consume, though not as much individually. In the aggregate that constitutes a massive buying power. He drew attention to the importance of tapping into it as a driving economic force.

At first glance the whole thing may sound like a contradiction in terms. How can the poor provide the resources and the driving force of the economy? But when we look at it more closely we realize that the small purchasing power of a very large number of small people multiplies into a very large sum indeed. That is a largely untapped pool of un-actualised demand. Tapping into it is the key idea of Prahalad. Today, it is the source of a lot of retail revolution we see around us.

Effective demand is demand backed by buying power. People may demand any thing but unless the demand is backed by the power to buy, the demand does not materialize. It remains ineffective, unactualised. So it does not make a difference and does not enter into economic calculations.

Prahalad noticed that the power to buy or not to buy is not absolute. It is a matter of degrees. You may have inadequate buying power in most cases. He concentrated on inadequate buying power and actualizing it so that it acts as an effective demand. We are amazed at the all-round windfalls this approach could generate.

He studied the lower end of the market. His message was, look at the needs of the less well-off and try to find what you can sell to them and in what quantities. You design a product around an acceptable price – a price acceptable to them - so that you are in tune with the consumer right from the beginning. This set off a flood of much-needed small packs and sachets in the FMCG market.

Demand for these things was always there but was on stand by and no one understood its potential. Consumers too were frustrated. They felt left out. Prahalad made it the driving force of a virtuous cycle leading to more production, creation of more jobs and even more consumer demand. The entrepreneur enriched himself and besides creating economic prosperity for all he also made their lives better. He called it the strategy of selling to the poor.

Services too can be provided on similar lines. Aravind Eye Hospitals practice it. They started with Madurai, now they are in five locations. Their secret is large volume and streamlined operation. Sulabh Shauchalaya is another instance. They have evolved over the years providing a much-needed service at such reasonable rates. At another level Ginger Hotels of the Tata group are another instance. They are in 27 locations within the country today. Key concept is affordable pricing. Dormant demand has thus been actualized and that has created a lot of economic activity.

The entrepreneurial eye on the lookout for gainful economic activity can through this approach transform a landscape of poverty into one of prosperity over a period of time. Hordes of entrepreneurs are now following up that lead. It was a long ignored opportunity.

As a poverty eradication – or poverty alleviation strategy, if you will, it does not go quibbling into numbers of the poor or who should be called poor and be in the entitled group. Instead, it goes straight to the heart of the matter. You operate it and you see benefits flowing.

The communist system of central planning put us in the questionable habit of collecting a lot of statistics, much of which is not needed and in any case much of which is plain fudged to suit the situation. If we can move away from that habit then we will begin to see the advantages of systemic reform which operates on its own strength and creates its own evidence in the form of solid achievement. It is powered from within.

The approach is universal and benefits whoever can. No outlays of government funds are involved. Its corollary of corruption is cut out. Other weaknesses of government programmes such as slackness and lack of commitment get eliminated. It is a truly path-breaking anti-poverty strategy relying on the resources already available within the society.

We can see that service to the poor does not mean burdening them with outside help; rather it should be an attempt to find how they can help themselves. Its basis is inner motivation and voluntary participation both at the giving and the receiving ends.

We can also learn from another of Prahalad’s related messages. It says that to bring about improvement in a given situation the important thing is to concentrate on where you want to be rather than where you are. We should therefore not shed tears over poverty; rather we should set our sights on the goal and look for opportunities in the existing situation. Most problems carry the seeds of their solution within them.

Prahalad’s down-to-earth approach and his contribution to the theory and practice of social and economic transformation – from poverty to prosperity - is a great step forward whose benefits will keep flowing in the years to come.--- INFA

(Copyright, India News and Feature Alliance)

Round The World

New Delhi, 28 May 2010

UPA-II 1st Year

FEW MAJOR DIPLOMATIC FOOTPRINTS

By Monish Tourangbam

Research Scholar, School of International Studies (JNU)

The Manmohan Singh administration completes the first year in office of its second term and a general recap indicates that the diplomatic plate has been more than full. As expressed by the Prime Minister in his press meet, India has tried to engage with and has to a certain extent managed to enhance and diversify ties with all the major powers, be it Russia, the United States or for that matter China. The Foreign Minister’s visit to China was deemed a success, although no grand breakthrough was made. Despite the initial hiccups with the Obama administration, India-US relations has caught up with full gusto and the good rapport between the Manmohan Singh and the US President Obama could only take the relationship forward.

India has differences with the US over the handling of the Afghanistan conflict but New Delhi’s close ties with the Karzai government do not seem to be jeopardized by any measure. The Afghan President has time and again made efforts to show his reliance and conviction on India as a responsible power in the region.

India-Pakistan: As for India’s stormy relations with neighbouring Pakistan, the 26/11 terror attacks cast a shadow. During the press meet Prime Minister Singh said “trust deficit” between India and Pakistan was the “biggest problem” coming in the way of any improvement in bilateral relations. “It has been my effort to try to reduce the gap between our two countries without surrendering or affecting our vital national interest,” he told reporters. India has realized that shutting the doors of diplomacy and engagement, more so with the civilian government of Pakistan has not paid dividends and as such, a good initiation has been made at the SAARC summit in Thimpu, where he met his Pakistani counterpart.  

PM Singh cautiously expressed hope at the major diplomatic efforts underway to bridge the trust deficit between India and Pakistan. The nature of the conflict between India and Pakistan is rooted in our common past. The issues are complicated and often inter-linked, one failure often snowballing to hurt composite relations.

The trajectory of India-Pakistan relations can be compared to a messy divorce wherein the couple has a lot of issues to be settled. Any effort to reconcile the differences between will be frustrating often, but it is imperative to keep channels of communication open. A cautious foot has been put forward in by India toward the resumption of meaningful talks between the two nations and fingers are crossed as we wait and watch the developments in India-Pakistan relationship, something that has nearly overshadowed all other issues and almost defines the politics of the region.

India and the AfPak strategy: The tensions and the divergences between India-Pakistan also extend to their roles in the long-drawn Afghanistan conflict. India’s activities in Afghanistan have been a constant source of irritation for the Pakistani establishment, insecure and suspicious that increasing Indian influence might be inimical to its own influence in the region.

The nightmarish rise of the Taliban yet again as a viable political force in the future of Afghanistan should not be good news for India, or for that matter any other country in the region. But, the Pakistani military and intelligence having been actively involved in the creation of the Taliban at the first instance see this ultra-conservative Islamist group as a favourable force to Pakistan’s interests.

The course of events has not been encouraging there with the Taliban confident of driving the NATO forces to war fatigue. Besides, plans being hatched among international players to collude with the so called “Good Taliban” do not sound very promising either.  At present, India’s soft power is evident in the volume of assistance given towards the reconstruction of the war-torn country, resulting in India having to suffer some serious casualties in recent times. President Hamid Karzai’s short stopover in New Delhi en-route to the SAARC summit in Thimpu served as a vindication of India’s soft power influence and encouraged New Delhi to continue its humanitarian activities in Afghanistan provided the safety and security of Indian lives is taken into serious consideration.

Though the politics in Afghanistan is complex and entails a lot of roadblocks in fashioning an effective measure to bring some semblance of normalcy, New Delhi’s caution against power-sharing with brute Taliban need to be taken into account, and the dependence on Pakistani military and intelligence should be adequately evaluated.

India-US: As for India-US relations, it has been a story of some hiccups but a satisfying picture in its entirety. India and the US experienced a thaw in their relations during the closing years of the Clinton Administration, significantly taken forward during the Bush Administration. President Obama’s succession brought some concerns in the Indian diplomatic circles, with highlight accorded to non-proliferation goals. Moreover, the Obama Administration went to the extent of hinting at a prospective Chinese role in the Indian subcontinent. 

But, efforts made to dispel the misunderstandings have yielded results. After much negative speculations, Secretary of State Hillary Clinton’s India visit managed to infuse a lot of positive energy. Besides signing official agreements, Secretary Clinton engaged in public diplomacy meeting people from across wide areas of interests.

Then, the icing on the cake came in the form of the State welcome given to Prime Minister Manmohan Singh at the White House and the extra mile that President Obama walked to dispel the fears and misconceptions on the Indian side. The recent US-Pakistan Strategic Dialogue raised many an eyebrow in the Indian strategic circles. But, the Obama administration has made concerted efforts to cultivate increasing ties with New Delhi and appeared to be in no mood to jeopardize this intense and diverse relationship. During the dialogue, the US was categorical that the India-Pakistan issues need to be resolved bilaterally.

India-China: Foreign Minister S.M. Krishna recently concluded an official visit to China that has been termed successful from both sides. The high-level trip, as expected, raised a number of vital issues in Sino-Indian relations and managed to keep the competitive nature and unnecessary rhetoric minimal. One of the highlights of the visit was China and India agreeing to set up a top level hotline between the two prime ministers, in an otherwise fractious relationship marred by differences over the boundary dispute, on the Dalai Lama and a host of other issues.

As India and China celebrate the 60^th anniversary of the establishment of diplomatic relations, recent developments and cooperation are being seen as a reminder that the neighbours despite the seeming competition have no alternative but to cooperate with each other. At the same time, India and China seem to be hardly moving ahead in matters of crucial security interests, be it the protracted boundary issue or China’s response to India’s bid for a permanent seat at the UN Security Council. But keeping in mind the historical contour of India-China ties and the suspicions and insecurity that pervades this relationship, it is best to expect incremental and no revolutionary changes. ---INFA

(Copyright, India News and Feature Alliance)