Friday 5 July 2013

India spurns GCC investment (PO)

M D Nalapat

Friday, July 05, 2013 - It used to be said of the Indian Civil Service during the days when the Union Jack flew all across India that the title was a “triple misnomer”, the ICS being neither Indian, nor civil, nor of any service. The same can be said of India’s intelligence agencies, who daily prove that such an adjective is misleading when applied to them. Indeed, such agencies in India have largely outsourced their decisions to the US and to major EU powers such as the UK and France.

The intelligence services of these powers are skilled in planting information that goes to their own commercial and political benefit, rather than ensure that the national interest of India gets upheld. An example is the flood of (mis) information about two locations on the globe that have the potential to be of immense significance to the economic future of India. These two regions are West Asia, principally the GCC but also including Iraq and Iran, and also East Asia, including China and Taiwan, besides Japan. The latter two, being allied to NATO, are seldom the focus of the disinformation campaign the way the GCC and China are. The intent of such reports is to ensure that the security and intelligence agencies in India work in a manner that feeds into the interests of NATO.

Each time a major investment opportunity rolls up that involves China or the GCC, leaks “from intelligence sources” begin to appear in the media, both print and television, pointing to unspecified “security risks” associated with such investment. Of course, all that the GCC or Chinese investor has to do is to route the money through a NATO-based financial enterprise. Contact with institutions such as Goldman Sachs immediately cleanses investment earlier regarded as suspect. In this way, almost all the investment into India comes from financial entities located within the NATO bloc, thereby fattening their balance sheets and creating a severe vulnerability in India. Each time such agencies sneeze, India catches a severe cold. Obsessed as they are with short-term profits, these entities indulge in speculation on a massive scale, and act in a manner that creates zigzags and instability in both commodities as well as equity markets. The reckless manner in which successive governments in India have handed over control of the economy to external players has resulted in a steady fall in the value of the rupee, to one-tenth the level that it had fifty years ago. This in an economy where imports exceed exports by a wide margin.

Those interested in a bright future for the Indian economy accept that a drive needs to be launched to ensure that investment into India from West Asia as well as East Asia increases manifold from the present pitiful levels. Yet this imperative has thus far been sabotaged by the way in which Indian intelligence agencies, acting on cues provided to them by external agencies whose reports are treated as wholly accurate, act covertly as well as openly to frequently block large-scaleinvestment from either the GCC or some parts of East Asia.

The latest casualty of such negativism has been Etihad Airlines, whose attempt to buy 24% of India’s Jet Airways has been stalled by a slew of allegations, most related to “security”. Certainly carriers from the EU and the US must be heaving a collective sigh of relief at the “Stop” sign shown to the Etihad-Jet deal, for the partnership would have cut sharply into the revenues into and out of India of carriers from France, the UK, the US and Germany, none of whom give airlines based in India the privileges and rights given to their own airlines by governments in India who are much more eager to protect certain overseas interests than to safeguard their own.

An example is the price of natural gas found within Indian offshore fields. It was only after an Indian company entered into a partnership with a NATO-based oil giant that the Manmohan Singh government moved with alacrity to double the price given to the amalgamated company for gas discovered well before the fresh investment came in. In fact, the price offered by the government is even more than the international price, whereas the concessions given to companies to discover gas in offshore Indian fields were meant to ensure that domestic gas remained cheaper than imports. Corporates in India know that the surest way to win the support of Prime Minister Manmohan Singh and his political boss Sonia Gandhi is to enter into a partnership with a NATO-based entity. These are never accused of any “security risk”, which is not surprising, as several of the reports of such “risks” originate from within NATO-based agencies, both official and non-formal (such as NGOs) and get recycled by Indian agencies expert in leaking such titbits of misinformation to friendly mediapersons.

Had those managing the economy of India been independent of external players, the situation faced by the people would not have been as dire as it now is. Prices are rising as fast as the value of the rupee is falling. The natural resources of India have been handed over for derisory prices to a handful of well-connected players with external linkages, almost all of whom have promptly monetized their windfall by selling their stake at a huge profit. Domestic companies are suffering because of high interest rates and a slew of new regulations, most created for the purpose of extracting bribes. Although the stifling control of the central government over the economy was sought to be reduced from 1992 onwards, yet from 2004 (when Sonia-Manmohan took office) there has been a rollback of such reforms. By now, the economy has re-entered the atmosphere of the 1980s,when reforms were few and insignificant, and is retreating towards the 1970s,when the state was supreme and stifled all forms of enterprise.

The “achievement” of Sonia-Manmohan has been the return of India to the miserably low rate of growth (of less than 3%) of the 1950s,the 1960s and the 1970s.The vacillation and policy zigzags seen during the past seven years has resulted in a near-total loss of credibility of the government by private business. Those in charge of Etihad Airlines must be wondering why they decided to put their money in a country as poorly run as India. Hopefully, the coming elections will result in a change such that efficiency and direction returns to the processes of governance. Should that happen, investment from Abu Dhabi (the country which owns Etihad) can reach $200 billion, such is the enormous potential in India for investment from the GCC, a part of the world which is culturally and historically close to India. Add another $300 billion from East Asia, and the picture now presented would become totally different. However, all this remains hypothetical. For now, India remains in effect what it has been for centuries, a colony of more canny players.

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