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Straight from the Specialists
Hillary Clinton’s farewell visit to Delhi: from prickly estrangement to empathetic divergence
(The views expressed in this column are the author’s own and do not represent those of Reuters)
U.S. Secretary of State Hillary Clinton will rank as the most accomplished, poised and successful woman politician in American history. She has pierced many glass ceilings with tenacity and grace. She almost made it to the White House and future sociologists and historians will be able to more objectively assess the misogyny index that still lurks deep within American society and its relevance in the Obama-Clinton Democratic party tussle. The U.S. demonstrated in late 2008 that it had evolved to a point where it could accept a coloured President but not a woman.
However, South Asia with its distinctive dynasty-cum-family political ethos is more at home with strong woman politicians and the top leadership over the decades includes Indira Gandhi, Benazir Bhutto, Sirimavo Bandaranaike (the world’s first woman prime minister) and her daughter Chandrika to Sheikh Hasina. Thus, South Asia would provide a natural comfort zone for Hillary Clinton who has just completed a whistle-stop visit that took her from Beijing to Dhaka to Kolkata before she arrived in Delhi for high-level meetings with her Indian counterpart on Tuesday.
Clinton is no stranger to India and has visited many parts of the country — both as the U.S. First Lady and now as the Secretary of State. Paradoxically, even though she was not in the political loop at the time, her husband Bill Clinton (the U.S. President in 1993) castigated India for its nuclear profile and heightened the estrangement between the two democracies.
However, to his credit, the same Bill Clinton led the rapprochement with India in March 2000 and this was given a dramatic fillip in the second term of President George Bush in July 2005. Progressively, the bi-lateral relationship moved from prickly estrangement over the nuclear issue to one of greater dialogue, leading to a nascent partnership. Divergences do exist but they have been handled with empathy — till now.
On what has been billed as her farewell visit to Delhi, one of the more contentious divergences looms large — it is presumed in an unintended manner. An Iranian trade delegation arrived in India on the same day that Clinton touched Kolkata (on Sunday) and the symbolism is stark. The U.S. is encouraging Delhi to reduce its hydrocarbon dependence on Iran — as it has with many other nations – and June 28 is the date when Washington DC will impose a range of strictures and penalties on the defaulting nations.
Given its energy vulnerability, Delhi has conveyed its inability to comply with this U.S.-led diktat and has indicated that while it will respect all U.N. resolutions on the subject, it has a divergent perception about how best to deal with the Iranian nuclear nettle. The Indian position on Iran is more in consonance with that of Russia and China and the issue cannot be reduced to a binary “with us-against us” reminiscent of September 2001.
India hiding from its own ‘crap’
By C. Uday Bhaskar
(The views expressed in this column are the author’s own and do not represent those of Reuters)
India, to put it euphemistically, is awash in its own ‘crap’ — a word derived from old Dutch to mean excrement. While accurate to an alarming degree, coming soon after the euphoria over the Agni missile tests, the discomfiture is evident.
Till recently, collective India preferred to do the ostrich act over its own excreta and waste management and stoutly refused to acknowledge that such a situation existed at all — let alone perceiving it as a major national challenge. The Indian ostrich act was to bury the collective head and public discourse into the 3C sand – the staple cricket-cinema-crime combine.
Management of waste — public, private household — was not even quantified in a scientific and systematic manner and hence the problem did not exist. The state and its municipal/civic affiliates responsible for such disposal opted to live in virtual reality and the unwritten media norm was to blank out the crap from the news. Baudrillard’s simulacrum has indeed enveloped India – crap and all.
But the reality that rears its head is that not one India city qualifies to be deemed to have average/acceptable waste disposal capacity — in keeping with the prevailing global standard for water, soil and air pollution.
However, there is a silver lining to this dark and stench-filled cloud, in that there is the emergence of a more scientific and holistic approach to this issue. In a pioneering study, the Delhi-based Centre for Science and Environment (CSE) led by Sunita Narain has released what may be termed the first detailed report that is aptly entitled: ‘Why Excreta Matters’ — as part of the “Citizens’ Seventh Report on the State of India’s Environment”.
The amount of money spent by Indians in building temples and making offerings to gods in one form or the other each year during the past 100 years, should have made each and everyone in India rich and happy far beyond anyone’s wildest dream, assuming God does exist in India. If only a fraction of the effort and thought had gone in to improve the environment, the country would not be in such a dire condition.
The hunt for Hafiz Saeed
(The views expressed in this column are the author’s own and do not represent those of Reuters)
The $10 million bounty placed on Hafiz Saeed by the Americans may have been barely noticed in most capital cities but it definitely had an impact in New Delhi and caused a furore in Islamabad. India and Pakistan are the two countries most concerned with Saeed’s health and activities, although for different reasons.
There is no debate among those who fight insurgencies that targeting their leadership pays disproportionate dividends. With such organisations having no democratic culture, it is the personality of the leader or an individual that guides the organisation’s approach. Eliminating such leaders can create a fair degree of disorientation till the new leadership asserts itself. During this process, there is also the possibility of power struggles, break-ups and feuds leading to fragmentation and polarization within the organisation.
Sustained targeting of the leadership deters the emergence of new leaders, with contenders acutely aware of the possible costs. It also has an immediate impact on the leaders’ movement and media interaction, thereby restricting their influence. Of course, media interactions can be organised in secret locations but they cannot be too safe en masse.
Saeed, suspected of masterminding the 2008 Mumbai attack, did taunt the U.S. in a press conference and challenged the Americans to attack him, knowing that the crowded streets of Karachi provide a shield against a drone attack. But he remains vulnerable to those who could be tempted by the $10 million bounty. Notwithstanding the allegiance to the perverted radical philosophy that the Lashkar-e-Taiba (LeT) or its ilk promote, money is an important motivator for many in the cadres.
India’s response, though very positive, does bring into sharp focus a gaping shortfall in the capabilities of the Indian intelligence agencies. The activities of the LeT and the Jamaat-ud-Dawa (Saeed had raised the former while the latter is but a front organisation for the LeT) are focussed primarily against India. Their prime objective concerns Jammu and Kashmir. It’s only very recently that the LeT has developed the wherewithal to be a threat to western powers, especially their interests in Afghanistan.
With pinpoint targeting and the elimination of leaders being accepted as force multipliers in the war against terror, there has been reason all along for India to develop such capabilities and display it to effect, for it to serve as a deterrent.
Pakistan cannot apprehend and hand over Hafiz Saeed to either India or United States for these reasons:
1. Saeed was a key figure in the former years of Lashkar-e-Taiba (LeT), an organization created in 1990 by Pakistan’s spy agency ISI.
The military establishment in Pakistan, after losing three wars with India, realized that it was not possible to win a conventional war, decided to engage in asymmetrical warfare, employing terrorism as an instrument of state. Saeed, who lost 17 family members during 1947 Partition, was the perfect person to lead the LeT.
2. Saeed is a paid employee of the Pakistan government.
Saeed continues to run Jamaat-ud-Dawa (JuD), a political arm of LeT, as its ‘amir’ (or head). This explains the attempt by the Pakistan government to portray Saeed as a rehabilitated extremist by extolling his role in the de-radicalization program reportedly performed on a ‘pro bono’ basis.
3. Saeed is a hero in Pakistan.
As mastermind of the attack on the Indian parliament in 2001 and Mumbai massacres in 2008, Saeed is an acclaimed soldier of Islam to the masses in Pakistan for his role in the death of over 170 Hindus who are considered to be ‘kafirs’ (non-believers); there are many in Pakistan who believe killing a Hindu is a moral duty. It is not politically possible for the Pakistan government to detain Saeed – the Pakistani masses are willing to protect him – just as they sheltered and protected bin Laden for over 10 years.
4. Saeed is privy to vital information on operatives of LeT in Pakistan and abroad as former head of LeT; he is too vital to the ISI.
If apprehended, Saeed can provide a plethora of information such as LeT and al-Qaeda links among Pakistani expatriates in United States and Europe – information that can prevent future terrorist attacks, such as the one attempted by Faisal Shahzad in Times Square in May 2010.
However, Saeed, like bin Laden, is venerated in Pakistan – nobody can touch him.
There was a $25 million bounty on bin Laden’s head; there were no takers while bin Laden was in Pakistan. Saeed is supremely confident that there are no takers for the $10 million dollars bounty on his head.
Can BRICS evolve into a power bloc?
(The views expressed in this column are the author’s own and do not represent those of Reuters)
The fourth BRICS meeting held in New Delhi on March 29 did not end with mere rhetoric; it agreed to some substantive mutual arrangements that would promote common interests.
These common interests include intra BRICS trade and investment and to facilitate that, agreement was reached on extending credit facilities in local currencies and multilateral letter of credit. These arrangements will reduce currency risk as also transaction costs and help trade expansion.
There are obvious reasons why trade and investment should be the first issue to be discussed and resolved. For one, trading opportunities with developed countries, including the U.S., EU and Japan are not expanding fast enough because these countries are in recession or moving in and out of it. For another, the BRICS are developing fast, creating expanding opportunities for trade.
There are also significant complementarities between these countries which, if exploited, can expand trade much further. Brazil and Russia have great potential for export of raw materials while China and India have the potential to export manufactures and services. Hence, a change in trade routes can keep growth in BRICS going.
In investment and technology, the conventional flow pattern has undergone considerable change. Investment is no longer one-way traffic from developed to emerging market economies. China and India have made huge investments in the U.S. and EU. The desire for BRICS Development Bank was expressed and may be pursued later to expand investment in developing countries.
Trade and investment opportunities will remain the substantive issues on the agenda at many more meetings in the future. But to become an effective power bloc, the agenda will have to be stretched much beyond that. That appears unlikely at least in the near future because there are internal contradictions within the BRICS that make it difficult to forge an acceptable comprehensive global agenda. Even the EU has not quite succeeded in that respect.
BRICS is a disparate but mutually complimentary Group. The economic and political systems, culture and languages divide them. But, in times to come this will be the Most Influential group that may some day challenge the $ ?
China’s rise and India’s obvious partner (the U.S.)
(The views expressed in this column are the author’s own and do not represent those of Reuters)
The release last week of an Indian think tank report entitled “Non-Alignment 2.0: A Foreign and Strategic Policy for India in the 21st Century” has prompted robust discussion about Indian foreign policy in the age of a rising China.
Indian national security adviser Shiv Shankar Menon provided remarks at the report launch and apparently participated in some of the private discussions in preparation of the report.
U.S. strategic thinkers who are eager to improve ties with India will be disappointed by the report, as it provides few imperatives and recommendations for solidifying a U.S.-India strategic partnership for the 21st century. While the report acknowledges that the U.S. (and China) will be global power centers and that a robust American maritime presence in the Asia-Pacific will help delay the projection of Chinese naval power in the Indian Ocean, it also says that it would be “premature” to conclude that India would benefit from close ties with the U.S.
Demonstrating distrust toward American intentions, the authors highlight that it would be risky for India to rely too heavily on the U.S. since an Indo-U.S. strategic partnership “could become a casualty of any tactical upswing in Sino-American ties.” The report says the American alliance system is in decline and that it is uncertain “how the U.S. might actually respond if China posed a threat to India’s interests.” The report further notes that another potential downside of focusing too much attention on building ties to the U.S. is that it could “prematurely antagonize China.”
Non-Alignment 2.0 spends considerable time addressing India’s competition with China and the threats New Delhi is likely to face from Beijing in years to come. The report states that the “challenge for Indian diplomacy will be to develop a diversified network of relations with several major powers to compel China to exercise restraint in its dealings with India, while simultaneously avoiding relationships that go beyond conveying a certain threat threshold in Chinese perceptions.”
The report recommends building up India’s naval capabilities to ensure it remains dominant in the Indian Ocean region, investing in infrastructure development in the border areas, and preparing for asymmetric responses to any possible Chinese aggression regarding their border disputes.
We shouldn’t be talking about Spiritual Wealth when countries are sharpening their tools and positioning themselves aggressively. India has to be self-reliant in weaponry, build infrastructure along the borders in a strategic way. Diplomacy and coercion have to go hand-in-hand to realize our objective of deterring neighbors.
US-India relationship basically depends on US-China relation.
A very disciplined approach is required by India to set the right perception for neighbors and for the world.
Jai Hind.
International workers and social security regulations in India
(The views expressed in this column are the author’s own and do not represent those of Reuters)
The movement of employees across countries has been a growing trend in recent years with increasing multinational presence of companies.
Planning taxation or social security compliances in more than one country, triggered by the presence of cross-border employees, has been a constant challenge for companies.
Social security (primarily provident fund and pension) was not mandatory for cross-border employees coming into India until 2008.
The concept of International worker (IW) was introduced in India for the first time in October 2008 and social security contributions were made mandatory for IWs in India.
A foreign national (non-Indian passport holder) coming to India will qualify as an IW if he or she is coming to work in an establishment covered by Indian social security provisions.
An Indian national will qualify as an IW if he/she has worked or is going to work in a country with which India has a Social Security Agreement (SSA) and is eligible to avail its benefits.
Dollar shock for Indian hedge funds
(The views expressed in this column are the author’s own and do not represent those of Reuters)
2011 has been an annus horribilis for Indian hedge funds. All hedge funds, with one exception, are currently in the red — the Eurekahedge Indian Hedge Fund Index was down 16.9 pct as of end-October and early reports suggest that things went from bad to worse in November.
After witnessing two years of strong returns, Indian hedge funds started their 2011 campaign with two months of negative returns. It should be noted, however, that despite these losses, they managed to beat the market by significant margins.
For the first half of the year Indian hedge funds were able to hold their own in an adverse investment environment marked by high volatility and declining investor risk appetites. The average Indian hedge fund outperformed the market and by July-end 2011, the Eurekahedge Indian Hedge Fund Index was down only 5 pct while the market had declined by more than twice that much — the BSE Sensex was down 11.3 pct July year-to-date.
What came next proved to undo all the capital preservation that the managers had achieved — in August and September, Indian funds lost more than 14 pct on average due to sharp declines in the exchange rate of the rupee versus the dollar. As the Indian rupee depreciated 12 pct from 44 rupees per dollar to more than49 rupees per dollar, the NAVs (net asset value) of Indian hedge funds declined sharply.
In addition, market declines of 9.6 pct over the same period further exacerbated the situation.
To put things in perspective, most Indian hedge funds — more than 90 pct — have the dollar as their base currency, since they source the vast majority of their capital from overseas investors. As such, when hedge funds invest in the local Indian market, they face significant currency risk by converting dollars into rupees. However, their reporting is still done in the dollar, which means that by the end of each month, in addition to factoring in the returns from their investments, they also have to factor in the loss or gain posted by the rupee against the dollar during the month.
Everyone got hit by the dollar flight, one would think that hedgies would have handled the situation better. But still a very nicely explained piece.
In wake of Mumbai attacks, Pakistan could help save dialogue with India
(The views expressed in this column are the authors’ own and do not represent those of Reuters)
India’s financial capital, Mumbai, experienced yet another terrorist attack that initial estimates say killed at least 20.
Terrorists detonated improvised explosive devices (IEDs) in three separate locations of the city almost simultaneously. The first two blasts occurred at around 6:55 p.m., one in a jewelry market and one in a business district in southern Mumbai. The third blast occurred around 7:05 p.m. in a crowded neighbourhood in central Mumbai.
This is the most significant terrorist attack in India since the three-day Mumbai shooting attacks in November 2008 that killed nearly 170. There was an attack on a German bakery in Pune, India, in February 2010 that killed nine. But since then, India had gone almost 18 months without experiencing a major terrorist attack.
It is too early to determine who is responsible for the attacks, but Indian authorities are pointing to the possibility of the Indian Mujahideen (IM), a homegrown outfit with links to the Pakistan-based Lashkar-e-Tayyiba (LeT).
The strength of the links of these bombings to the LeT will determine how India responds. If investigators determine that LeT members played a crucial role in the planning and implementation of the attacks, the Indian leadership will be compelled to again break off recently resumed talks with Islamabad.
If, on the other hand, investigations show that the IM carried out these bombings largely on its own, there will be less pressure on Indian leaders to immediately withdraw from the Indo–Pakistani dialogue.
Will higher interest rates lower growth?
(The views expressed in this column are the author’s own and do not represent those of Reuters)
The Reserve Bank of India (RBI) increased the repo rate by 50 bps on May 3 and there was an outburst of opinions that the rate of GDP growth will drop. The consensus seemed to be that it would drop to 8 pct, a 100 bps less than what we had been used to. Of course, May 3 was the first time in two years that the RBI raised the repo rate by a hefty 50 bps. In the earlier eight installments, the increase was only 25 bps.
Nevertheless, cumulatively that adds up to 200 bps. That had no impact on inflation and no impact on growth. Why should the additional 25 bps cause so much anxiety?
Most opinions did not contain explanations. It is relevant to ask why should an increase in repo rate hit GDP growth. How does the higher rate impact major sectors of the economy? How long does it take for the full impact to work itself out? These questions remain unanswered except for the assumed trade-off between inflation and growth.
The repo rate raises the cost for commercial banks of borrowing from the RBI. That in turn raises the cost of lending by commercial banks to their creditors with an effect on other interest rates, mainly short term.
The two classes of borrowers that are important are home buyers and industry.
Banks have been quick to increase the BPLR on loans for purchase of homes. Since investment in homes is a long-term investment, an increase in interest rates makes considerable difference to the monthly installment. Would that affect demand for homes?
March 2011 earnings preview: Another solid quarter
(The views expressed in this column are the author’s own and do not represent those of Reuters) March 2011 retrospective in summary
- MSCI India outperformed the global indices for the first time in March 2011. In March, India emerged as the second best-performing market (after Korea) in the world. Although, year-to-date and on a six-month basis, India’s ranking is still among the bottom five (at 17th position) in emerging markets.
- Mid-caps and small-caps underperformed the Sensex for the fifth month in a row.
- Telecoms and consumer staples were the best- and worst-performing sectors, respectively.
- FIIs turned buyers of stocks. Domestic mutual funds remained buyers for the fourth consecutive month even as insurances companies turned sellers of stocks.
- Breadth gained 20 percent during the month.
- Volatility reached its highest level since Nov 2009.
FY 2011 thus far: key highlights
- For the first three quarters of FY2011, Sensex and broad market (for 1,717 companies) earnings grew at 23 percent and 22 percent year-on-year respectively.
- Industrials and telecom have reported the strongest and weakest earnings growth so far, respectively.
- More than one-half of the companies have beaten expectations during the last two quarters.
- The global earnings of Sensex companies in FY2011 grew by 48 percent year-on-year, while the domestic earnings for the index companies grew by 8 percent year-on-year during the period.
Quarter ended March 2011 earnings expectations
- Sensex companies are likely to grow 17 percent year-on-year during the quarter ended Mar 2011.
- Excluding the telecom sector, Sensex growth is likely to be 26 percent year-on-year.
- The biggest contributors to Sensex earnings growth are expected to be ONGC, Tata Motors, Reliance Industries, and Tata Steel (in that order).
- The largest negative contributors to Sensex earnings growth are expected to be Bharti and RCOM.
- Industrials and telecom are likely to continue to report the strongest and weakest earnings growth, respectively.
- The narrow market beat the broad market earnings growth in the previous quarter, and this should continue for the quarter-ended March 2011.
