from MacroScope:
India’s central bank battles alone in inflation struggle
What more does India's central bank have to do? Last week data showed March inflation rising to almost 9 percent on an annual basis. More importantly, core inflation is above 7 percent for the first time in 3 years meaning demand-side pressures are rising fast. And that's despite the Reserve Bank of India raising interest rates eight times since last March.
The inflation data comes just after a quarterly HSBC report based on purchasing managers indexes showed that inflation in India seemed impervious to monetary policy tightening.
The truth, is the inflation-fighting central bank has little backup from the government which remains stubbornly in spending mode. Its foot-dragging on reform and foreign investment contributes towards keeping food price inflation high. This year's fiscal deficit target is 4.8 percent of GDP and even this is seen as optimistic.
"What India really needs is to have domestic demand slowing down quite rapidly but the government is not prepared to risk that,"says Claire Dissaux, investment strategist at Millenium Global in London.
The RBI has repeatedly said it shouldn't have to do all the heavy lifting. But lack of support from the government means the central bank will have to put up rates another 100 bps this year, analysts reckon.
Of course India is not alone in this bind though it is the most extreme example of lax fiscal policy being counterbalanced by tight monetary policy. Brazilian interest rates are among the highest in the developing world at 11.75 percent and that is down to loose fiscal policy, a lot of it "quasi-fiscal spending" via the state development bank BNDES, research house Capital Economics says.
Brazil's central bank suggested recently that fiscal tightening of one percent of GDP would have the same impact as 125 bps of interest rate hikes.
Shifting wealth: does the developing world hold the key to building a stronger economy?
The following is a guest post by Angel Gurría, Secretary-General of the Organisation for Economic Co-operation Development. The opinions expressed are his own.
The world’s economic center of gravity is changing. Global GDP growth over the last decade owes more to the developing world than to high-income economies. If these trends continue, by 2030 developing countries will account for nearly 60% of world GDP on a purchasing-power parity basis, according to OECD calculations.
While high-income countries have been languishing in the worst recession since the 1930s, China and India have continued to power ahead. This is not a single stand-alone event, but a sign of an important structural transformation in the global economy, a process we call “shifting wealth.”
The tangible signs of shifting wealth are widespread. In 2009 China became the leading trading partner of Brazil, India and South Africa. The Indian multinational Tata is now the second most active investor in sub-Saharan Africa. Over 40% of the world’s researchers are now based in Asia. And by 2009, developing countries were holding USD 5.4 trillion in foreign currency reserves, nearly twice as much the amount held by rich countries.
Some commentators talk about these new trends with trepidation. But the “rise of the rest” is not a “threat to the west:” overall, the newfound prosperity in the developing world represents an enormous opportunity for citizens in the developing and developed world alike. Improvements in the range and quality of their exports, greater technological dynamism, better prospects for doing business, a larger consumption base – all these factors can create substantial welfare benefits for the world.
Moreover, imagine the consequences if the Asian Giants had followed the industrialised countries into recession? These large developing countries have helped soften the impact of the most serious global recession since the 1930s. Through their trade and investment links they have also mitigated the impact of the crisis on the rest of the developing world. Africa, for instance, is forecast to post growth of 4.5 percent this year – a figure below its pre-crisis level, but far in excess of that of the OECD average.
As world leaders work on the recovery and strengthening of the global economy and financial system, more attention deserves to be paid to South-South linkages, which promise to be one of the main engines of growth over the coming decade. Take trade, for example. Between 1990 and 2008, South-South trade multiplied more than twenty times over, while world trade expanded only four-fold. Yet trade barriers between developing countries are still high.
If the 19th and 20th century models for building an industrial society are followed by the developing world, their success will be even more short lived than that of Europe and the U.S..
from The Great Debate UK:
Pranab Bardhan on the economic rise of China and India
In its May economic outlook, the Organisation of Economic Cooperation and Development projected upward growth outlooks for BRIC countries Brazil, Russia, India and China -- the world's four largest emerging economies.
Strong growth in those economies is helping to pull other countries out of recession, the OECD said. The Paris-based organisation projects that China’s GDP growth will exceed 11 percent for 2010, and anticipates that India's real GDP growth will be 8.3 percent. Russia's GDP growth is expected to be 5.5 percent, and Brazil's is projected at 6.5 percent. By comparison, the OECD projects that the Euro area will see 1.5 percent real GDP growth, while the UK will see a 2.2 percent growth.
The "BRIC" acronym was created by Goldman Sachs economist Jim O'Neill in 2001 to mark a shift of economic power from the West. In June 2009, the BRIC leaders met in Yekaterinburg, Russia, for a summit, which was seen as the beginning of a geopolitical alliance, although their economies are very different: Brazil's economy is based on agriculture; Russia's on energy exports; India's on services and China's on manufacturing. At that time, the BRIC countries accounted for 40 percent of the world's population and about 15 percent of its economy.
In a new book titled "Awakening Giants, Feet of Clay: Assessing the Economic rise of China and India", Pranab Bardhan, a professor of economics at the University of California, Berkeley, dissects some generally accepted beliefs about the economies of China and India -- arguing that they are oversimplified -- to provide a new perspective on what to expect from the two countries in the future.
He examines the impact of economic growth on politics, people and the environment within China and India.
Bardhan spoke to Reuters about his book at his office at the London School of Economics where he is serving as BP Centennial Professor for 2010 and 2011. Watch the video here:
from The Great Debate UK:
Second time lucky for Biocon’s Kiran Mazumdar-Shaw
Setting up Biocon, Asia's largest biotechnology firm, was not a straightforward task for the woman who is now India's wealthiest businesswoman.
Kiran Mazumdar-Shaw chose the biotechnology sector as a fallback position after she realised at the age of 25 that India was not ready to accept a woman master brewer.
But abandoning her dream career of following in her father's footsteps did not mean she swept to success without any trouble.
"In 1978, there were very, very few women in the business world in India -- we were considered very high risk from a financial security point of view," she told Reuters during an interview in London.
"It took a very long time to build the organization and company," the chairman and managing director of Biocon explained. "I had to face very many hurdles along the way."
Mazumdar-Shaw's father had been chief master brewer and managing director of United Breweries in India, and he encouraged her to supplement a degree she earned from Bangalore University with master brewer qualifications from Ballarat Institute of Advanced Education, now University of Ballarat in Australia.
The discrimination she faced when she tried to work in the field in India led her to transfer her skills in fermentation science to producing enzymes, and she set up a joint venture in 1978 with an Irish biotech firm in a small garage in Bangalore with an investment of $250.
from The Great Debate UK:
Vikas Pota on ten business icons in India
Amid jitters about uncertainty in the financial markets over the past 16 months, many investors have continued to look toward the BRIC countries -- Brazil, Russia, India and China, which by 2050 are expected to be wealthier than most current major economic powers.
In all four countries, GDP has more than doubled since 1998, and in China and India it has trebled.
The Confederation of Indian Industry, a non-profit non-governmental, industry-led organisation, estimates India's GDP growth rate at 6.1 per cent in 2009-10.
With those facts in mind, Vikas Pota, managing director of public affairs firm Saffron Chase, wrote "India Inc.", a book about 10 global success stories he parallels with such powerful businessmen as Microsoft's Bill Gates, News Corp's Rupert Murdoch and Berkshire Hathaway's Warren Buffett.
"The fact that the domestic Indian market is growing proves to be a major boon and safety net for Indian companies like Tata, who face the severe consequences of the slowdown in other parts of the world while their home market sees expansion," Pota writes.
Among his subjects are key players in such firms as ICICI Bank, Biocon, Eros International, Infosys Technologies, Bharat Forge, HCL Technologies and Tata Consultancy Services.
"I included questions on their early days, their perspectives on what it takes to succeed, whether their Indian heritage played any role in their thinking or business achievements, and how those who lead family-owned businesses, members of what has been termed the 'lucky sperm club,' view their successes in years to come," Pota explained to Reuters at his book launch in London.
I am so glad to know that my country is growing so fast and at such astounding speed. But please do not overlook our poor people. Please provide enough for them. Thanks
from The Great Debate UK:
Where schooling is sabotaged
- Kennji Kizuka was a consultant to the children’s rights division of Human Rights Watch and conducted research for their new report, Sabotaged Schooling: Naxalite Attacks and Police Occupation of Schools in India’s Bihar and Jharkhand States. The opinions expressed are his own. -
Late in the evening of November 29, 2008, a group of guerrilla fighters entered the remote village of Dwarika in the Indian state of Jharkhand and detonated improvised bombs inside the village’s only school. Doors blew apart, desks and chairs splintered, and portions of the classroom walls crumbled. No longer suitable or safe for learning, the school closed.
When I visited Dwarika in June of this year, local residents attributed the attack to the “Naxalites”—the term used in India to refer to Maoist-oriented insurgent groups who seek to overthrow the Indian state and establish a new social order to protect oppressed and marginalized people. They wage their armed struggle by attacking police, assassinating politicians, extorting businesses, and targeting government infrastructure – trains, roads, and schools.
Although I visited Dwarika more than six months after the attack, the village had yet to receive government support to rebuild the school that had served 250 children. Families with the means had sent their children outside the village to study. But residents told us that many parents were too poor to enroll their children elsewhere. For these already disadvantaged students, the chance to learn lay in ruins, along with the school.
Two weeks ago, exactly one year after the Dwarika bombing, Naxalite forces destroyed another school in Jharkhand, in the village of Bhavwar. In just the last month Naxalites have attacked at least 16 schools there and in the neighboring state of Bihar. One would expect these bombings to draw international attention, but outside of India few people have heard of the Naxalites. Even within the country, there is little recognition–including among government officials–of the extent to which the conflict disrupts the education of tens of thousands of students.
But it is not just the Naxalites who are sabotaging education. Government security forces are too.
As I was leaving Dwarika, a contingent from the Central Reserve Police Force was setting up camp in the wrecked buildings and grounds of the school. In areas of Bihar and Jharkhand affected by Naxalite violence, government security forces have taken over dozens of primary, middle, and high schools to conduct counter-insurgency operations.
from The Great Debate UK:
After 25 years impact of Bhopal leak lingers
Controversy still surrounds one of the world's worst industrial accidents 25 years after an estimated 8,000 people died in the immediate aftermath of a toxic gas leak in Bhopal, India.
At around midnight on December 3, 1984, a leak at a Union Carbide plant of methyl isocyanate gas -- a chemical compound used to make a pesticide marketed as Sevin -- led to about 50,000 people being treated for severe injuries to their eyes, lungs, and kidneys.
An estimated 15,000 to 25,000 may have later died from exposure to the gas.
Union Carbide, now part of Dow Chemical, settled a lawsuit in 1989 by paying $470 million in compensation to the Indian government. In return, the government agreed to drop criminal charges against the company.
"Union Carbide worked diligently to provide immediate and continuing aid to the victims and set up a process to resolve their claims -- all of which were settled 18 years ago at the explicit direction and with the approval of the Supreme Court of India," a statement on the Union Carbide website says, adding that in 1998 the Indian state government of Madhya Pradesh took over full responsibility for the site.
A 1999 study found that the area around the plant site was still contaminated with toxic chemicals. Bhopal residents continue to contend with the effects of the disaster, which include health problems and contaminated groundwater.
The Bhopal Medical Appeal, launched in 1994 and based in Brighton, UK, argues that survivors have not yet received meaningful medical aid.
To have set up such a plant in a thickly populated area amounts to callousness on the part of those concerned and even a Conspiracy in Bio-weapon testing and Depopulation.In this context it should be mentioned,that there are reports,that that HIV Aids Virus has been used,in South India and Africa, as a Bio-weapon with the same intent.The plague that broke out in Surat, Gujarat, India,in the middle 90s of the last Century,for a few but deadly days,seems to be part of the Trilogy.Now two Nuclear plants are to be set up in India,and the concerned US Businesses are unwilling to sign clauses pertaining to future accidents,whereas France and Russia,have done so.
from Pakistan: Now or Never?:
India and Pakistan: the missing piece in the Afghan jigsaw
One year ago, I asked whether then President-elect Barack Obama's plans for Afghanistan still made sense after the Mumbai attacks torpedoed hopes of a regional settlement involving Pakistan and India. The argument, much touted during Obama's election campaign, was that a peace deal with India would convince Pakistan to turn decisively on Islamist militants, thereby bolstering the United States flagging campaign in Afghanistan.
As I wrote at the time, it had always been an ambitious plan to convince India and Pakistan to put behind them 60 years of bitter struggle over Kashmir as part of a regional solution to many complex problems in Afghanistan. Had the Mumbai attacks pushed it out of reach? And if so, what was the fall-back plan?
One year on, there is as yet still no sign of a fall-back plan for Afghanistan and the tense relationship between India and Pakistan remains the elusive piece of the jigsaw.
After some attempts at peace-making which culminated in a meeting between the leaders of India and Pakistan in Sharm el-Sheikh in Egypt in July, and despite Prime Minister Manmohan Singh's own determination to try to repair relations, the two countries have descended into mutual recrimination.
India accuses Pakistan of failing to take enough action against the Lashkar-e-Taiba militant group it blames for Mumbai and which analysts believe is still in a position to launch fresh attacks, and refuses to reopen formal peace talks broken off after the three-day assault. Pakistan has put seven men on trial over the attacks but has refused to arrest the group's founder Hafiz Saeed nor, analysts say, to dismantle the infrastructure of an organisation whose original role was to fight India in Kashmir. It says it wants to resume talks with India.
As a result of the deadlock, both countries remain bitter rivals for influence in Afghanistan; while Pakistan, fighting its own battle against Islamist militants who have turned against the state, is seen as reluctant to move more troops from its eastern border with India to press home a military campaign against the Pakistani Taliban in its tribal areas. India in turn remains vulnerable to another Mumbai-style attack which could trigger Indian retaliation against Pakistan, running a risk of escalation between the two nuclear-armed countries.
"Now India and Pakistan are both playing for broke. Pakistan says it will support a U.S. regional strategy that does not include India, while India is talking about a regional alliance with Iran and Russia that excludes Pakistan. Both positions -- throwbacks to the 1990s, when neighboring states fuelled opposing sides in Afghanistan's civil war -- are non-starters as far as helping the U.S.-NATO alliance bring peace to Afghanistan," writes Pakistani journalist Ahmed Rashid in the Washington Post.
Nikhil,Slightly off topic, but since you mention it, that Maulana Azad interview has been challenged over at Pak Tea House:http://pakteahouse.wordpress.com/2 009/12/01/the-man-who-forged-an-intervie w-shorish-kashmiris-maulana-azad-hoax/
from Afghan Journal:
Keeping India out of Afghanistan
Indian Prime Minister Manmohan Singh is in the United States for the first official state visit by any foreign leader since President Barack Obama took office this year. While the atmospherics are right, and the two leaders probably won't be looking as stilted as Obama and China's President Hu Jintao appeared to be during Obama's trip last week (for the Indians are rarely short on conversation), there is a sense of unease.
And much of it has to do with AFPAK - the war in Afghanistan and Pakistan which is very nearly at the top of Obama's foreign policy agenda and one that some fear may eventually consume the rest of his presidency. America's ally Pakistan worries about India's expanding assistance and links to Afghanistan, seeing it as part of a strategy to encircle it from the rear. Ordinarily, Pakistani noises wouldn't bother India as much, but for signs that the Obama administration has begun to adopt those concerns as its own in its desperate search for a solution, as Fareed Zakaria writes in Newsweek.
And that is producing a "perverse view" of the region, he says adding it was a bit strange that India was being criticised for its influence in Afghanistan. India is the hegemon in South Asia, with a GDP 100 times that of Afghanistan and it was only natural that as Afghanistan opened itself up following the ouster of the Taliban in 2001, its cuisine, movies and money would flow into the country. The whole criticism about India, Zakaria says, is a little bit like saying the United States has had growing influence in Mexico over the last few decades and should be penalised for it.
But what about Pakistan's concerns, a country that was dismembered in the last full-scale war with India in 1971 with the creation of Bangladesh. The last thing it would want is a hostile regime in Afghanistan on its western flank on top of the Indian army, the world's third largest, massed on the eastern front, not to mention the Islamist militants whom it once nurtured turning on the State itself.
Pakistan army chief General Ashfaq Kayani told the U.S. National Security Adviser General Jim Jones earlier his month that Indian presence in Kabul would hurt the war objectives.
And what about the Afghans themselves ? The India-Pakistan rivalry is probably a sideshow in the broader battle between a resurgent Taliban and the foreign forces, but perhaps one they can do without.
Sharafat:
@The trouble in South Asia is called India. While Gandhi was preaching non-violence, ……………”
Sharafat: Have you ever heard “A little knowledge is a dangerous thing”? This applies perfectly to you.
Ignoring the irrelevant parts of your breathless rant, I will comment what is relevant to the blog:
@The bottom line is that India is an aggressive and expansionist power, that is why it is present in Afghsnistan. There will be no peace in South Asia unless India is confined to its legitimate borders – not the ones it seeks.”
–If you consider India’s presence in Afghanistan as “aggressive and expansionist”, why this is not applicable to Pakistan that in fact was involved at military/spy agency/diplomatic (with Taliban if one call that diplomacy), training Jihadis against Afghans (Non-Pashthun Afghans in Northern Areas) and against India/Kashmir? India’s involvement is at non-military/Afgnaistan rebuilding in nature and India has spent more than 1 billion $ out of pocket for that. India is rebuilding Afghanistan, instead of destroying the country like Pak-installed govt Taliban did under Pakistan’s watch.
If Pakistan’s wings are clipped by Indian presence in Afghanistan, it will be done.
Change the climate narrative
– Nancy Birdsall is the president of the Center for Global Development. Arvind Subramanian is a senior fellow at the Center and at the Peterson Institute for International Economics and a regular columnist for the Business Standard, India’s leading business newspaper. The views expressed are their own. –
Efforts to cut emissions of the heat-trapping gases are gridlocked over a misunderstanding about what is fair. This misunderstanding is hindering climate change legislation in Congress and threatens to torpedo international negotiations in Copenhagen next month.
We propose a new way of thinking about climate fairness that focuses not on emissions cuts but on meeting developing countries’ energy needs in a climate-friendly manner. This simple narrative can provide a framework for U.S. legislation and open the way for international collaborative efforts to avert climate catastrophe.
At present, many people in the United States focus on the large and growing emissions of the developing world, especially China, which in absolute terms is now the world’s largest source of greenhouse gases, and India, which is growing fast and like China relies heavily on coal. They argue that it would be unfair to force emissions cuts at home without similar cuts in developing countries. A recent poll found that 60% of Americans believe that in any climate agreement China should cut its emissions the most.
It is true that developing countries already account for roughly half of all greenhouse gas emissions, and that their large populations and rapid economic growth are boosting emissions fast enough to create a planetary crisis by 2050-even if today’s rich countries had never existed.
But meanwhile a quarter of humanity — including millions in China and India — live without any electricity, and one-in-three people on the planet rely on straw, brush, charcoal and animal dung for their cooking needs. The resulting indoor air pollution kills 1.5 million people a year — about 4,000 per day — mostly children. Power for small businesses, irrigation networks, clinics and schools is sorely lacking.
Developing countries point to these unmet energy needs and to large disparities in per capita emissions to argue that the rich world must move first. They note that the 20 tons of CO2 that Americans emit annually is five times the world average, well above both China (5 tons per capita) and India (below 2 tons per capita).
Casper in order to exercise logic one must first be able to comprehend what they read. I stated CO2 has increased 20 percent. 300 ppm in 1960 to 370 ppm currently. Oxygen on Earth is currently around 19 percent at sea level and steadily decreasing. The higher the elevation, the lower the oxygen. Thinner air. Fifteen or sixteen percent oxygen content are the limits for large mammals generally though not always.You are correct that humanity has burned up the planet and that the time for debate has passed. I am not so sure that the people of my country have the stomach to do what is required.
