Saturday 29 September 2018

Supreme Court delivers the oxygen of freedom (Sunday Guardian)

By M D Nalapat 

Governance mechanisms in India should move from the 19th to the 21st century.

Several among the 1.5 million strong legal community in India would have tuned in to the US Senate hearings on the confirmation of Brett Kavanaugh as a Supreme Court justice. Unlike in India, SC judges in that country are appointed for life, and as is the case here as well, wield awesome power. Although relatively immune once in office, the US nomination process takes place in public view, thereby giving an opportunity for the country to understand the personality, character and views of the individual who will soon join the other eight justices on the US Supreme Court. In recent days, the Supreme Court of India has moved towards transparency in its functioning by permitting live streaming of proceedings in specified circumstances. Over not too considerable a period of time, it is hoped that such a throwing open of the Court’s judicial activity to the public will be the rule in cases decided by it and not the exception. Live streaming of every court proceeding in India would substantially improve trust and confidence in the judicial system among the public, to many of which the process seems a twilight zone into which people enter and manage to come out decades later, all too often with fortunes and careers destroyed along the way. This columnist knows two sisters living in Mumbai, who remain enmeshed in litigation involving their property that got initiated four decades ago by an individual claiming kinship, and with the conclusion nowhere in sight. Meanwhile, their inherited property remains frozen and subject to disrepair. There are hundreds of thousands of similar property cases across the country, each blighting lives through a decades-long process of resolution. India must be the only major democracy where an advocate can bequeath a case to first his child and later his grandchild, so long do some court proceedings take. And given the colonial legal structure so tenderly preserved and added on to even by those who ruled the country post-Independence, prison is not the default option, but the only option for a bewildering array of “crimes” that do not count as such in any other major democracy.
It was expected that Narendra Modi would take an axe to such laws once he was sworn in as Prime Minister, but he seems to be saving such action to a second term. Rather than wait for that to happen, the Supreme Court of India has stepped into the hiatus and during the past few days, has shown a commitment to freedom and democracy that needs to be emulated by the other branches of the state. After 2014, there were occasional flashes of Supreme Court activism aimed at colonial laws and practices, such as the removal of a particularly toxic provision of the Mahajan-Chidambaram-Sibal Information Technology Act. During the final weeks of Chief Justice Dipak Misra’s tenure as Chief Justice of India, such edicts have been raining down in monsoonal strength. The odious practice of triple talaq was looked askance at, as also now the barring of women of a certain age from the Sabarimala temple despite forests and wild animals (save some in human form) having long disappeared from the trails leading to that ancient shrine. Sections of India’s largely 19th century criminal code that deal with consensual sexual relations between those of the same gender went into the trashcan, as did provisions mandating prison for those who won over the affections of ladies not entirely in emotional thrall to their husbands. Perhaps the Court may yet toll the funeral bell for that exemplar of colonial intimidation, “criminal” defamation, in a context where the Modi government shows no indication of doing so. Earlier, a relaxation took place in previous judicial commands, such as the barring of liquor sales within “staggering range” of highways. Or indeed the imperative of playing the national anthem before any movie was screened. And now comes the tossing out of an effort to indefinitely delay an SC verdict in the matter of the Ayodhya dispute. This has opened the way for hope that a decision on this very consequential matter could come within two or three months, so that this issue would no longer be available to poison brotherhood (and sisterhood) between two communities that have long been sought to be kept asunder by troublemakers. It may be said of Chief Justice Misra that nothing became him more than the activism displayed during his final lap in office. Hopefully, incoming CJI Ranjan Gogoi, whose dedication and integrity are common knowledge, will take off from where his predecessor leaves the court, which is to ensure that it is the spearhead of the necessary effort to ensure that governance mechanisms in India move from the 19th to the 21st century. This should include the shortening of the time taken for final decision in cases, as well as the doing away with a British-era propensity of regarding jail as the fittest abode for the natives of India. The Supreme Court is not the handmaiden of the government, but the protector of the rights and freedoms of a people living in what is presumed to be a democracy.
Given the dislocation caused by anyone enmeshed in legal processes, not to mention imprisonment, a high bar needs to be set down the line before cases get accepted, with only those of demonstrable prima facie validity getting admitted. Most stay orders need to be avoided, so that verdicts can get delivered within months, rather than decades. Mandatory penalties need to be levied on those who misuse the court process for reasons of harassment and blackmail. Greater and greater volumes of the oxygen of freedom are getting pumped into the public space by recent Court decisions, driving away the carbon dioxide of a colonial legacy kept going by the bureaucracy and its political masters, so as to enable as many as possible to extract as many bribes as a hapless public can afford to pay. In India, the Sibal-Chidambaram duo appear to hold that the individual who is forced to pay a bribe should be given even harsher punishment than the venal politician or official demanding such recompense. Recently, there have been severe dilutions on the ability of investigators to bring to account senior bureaucrats. Such edicts reduce the chances for whistle-blowing and the enforcement of accountability, and should be cast aside by a Supreme Court that is visibly a force for beneficial change in a country whose other institutions and practices often have the opposite effect.

Old-Thought gang sabotaging Modi-Xi Wuhan Accord (Sunday Guardian)

By M D Nalapat 

The post-Wuhan proposal was that President Xi should pay a reciprocal visit to India early next year, before the Lok Sabha campaign accelerates in earnest. However, a lobby in Beijing is opposed to such a timeline, and is pressing for Xi to make a reciprocal visit ‘only after the polls’.

Lobbies influenced by external interests (principally Pakistan, but some developed countries as well) are working on overdrive to sabotage the non-formal Wuhan Accord reached between Indian Prime Minister Narendra Modi and Chinese President Xi Jinping on 27-28 April at Wuhan, China. Wuhan was planned to be followed up by a meeting in India of the two statesmen early next year, so that the “1 plus 1 Apex” format between Delhi and Beijing becomes a staple of bilateral diplomacy between the two most populous countries on the planet. Now that China has emerged as the second superpower, moving closer each year to becoming the globe’s biggest economy, the Modi government is engaged in a complex balancing of relations between itself as well as both the Trump and Xi administrations. Ideally, Indian diplomacy should ensure both a strong defence and security relationship with Washington, while at the same time entering into a robust commercial relationship with Beijing, on the assumption that tensions between the two superpowers would at no stage be permitted to end in actual military conflict between the two sides, as last happened during the 1950-53 Korean War. Another war between the two biggest (and extensively interlinked) economies on the planet would create a geopolitical nightmare for the international community, while inflicting permanent damage to both the countries involved. However, the relationship between the US and China will remain fractious for a considerable period of time. In Beijing, key policymakers say privately that the “Trump trade war” is less about imports and exports than it is a bid to reduce the annual rate of growth of the Chinese economy to 5% or less, a level that may exacerbate social tensions that weaken the “Mandate of Heaven” (or acceptance by the people) of Chinese Communist Party (CCP) rule that was first initiated in 1949 by CCP Chairman Mao Zedong on his comprehensive military defeat of KMT supremo Chiang Kai-shek. Such tensions are believed to be worked out by planners in Washington to weaken both the hold of the CCP on the country as well as the control exercised by President Xi Jinping over the different components of the CCP, which in effect is the agency ruling this vast country.
According to this analysis, the “Trump trade war” is just an initial salvo in what could be a long campaign designed to weaken the Chinese economy. Even if the Republican Party does poorly in the 6 November mid-term elections to the US Senate and the House of Representatives, President Donald Trump will only “double down rather than lower the intensity of his mercantile assault” on Chinese exports to the US. The present trade war between Washington and Beijing is expected to be followed by other steps designed to keep Chinese policymakers off balance, and “will continue for a long time, including beyond the term of the current US President”. This being the case, President Xi is working out a series of measures designed to reduce the impact of hostile US moves and to cushion their impact on the population. Inter alia, this involves boosting domestic consumption and scientific and industrial self-sufficiency, as well as the creation of financial and commercial supply chains that are independent of the present US-dominated global supply chains. US sanctions on Iran have provided an opportunity to the Chinese and their Russian allies to test new financial networks that do not intersect with those of the US, and which avoid the use of the US dollar in transactions and accounting. The anticipated prospect is therefore of a long-term increase in US-China tensions, reversing the entente between them that got formed after the 1972 meeting between US President Richard M. Nixon and CCP Chairman Mao Zedong. This has made India much more important as a commercial and if possible a strategic partner of China.
President Xi has been engaged in a process of replacing “Old Thought” with “New Minds”, and several of those who have begun advising the CCP on India are in their 40s, with some even in the 30s. These geopolitical planners do not have baggage from the past that weighs down analysis of relations with India, and which slows down both responses as well as policy initiatives directed towards Delhi. The Wuhan meeting indicated the will of both Prime Minister Modi as well as President Xi Jinping to leap over established paradigms in an effort to create a new framework for bilateral relations between a country that will soon be the world’s biggest economy and its neighbour, which is on course to becoming the third largest on the globe, behind the US but ahead of every other country barring front-ranker China. However, within the Chinese establishment (as well as in India), there exist influential lobbies that continue to peddle nostrums that have clearly been shown by historical experience to be counter-productive. An example is the post-Wuhan proposal that President Xi pay a reciprocal visit to India early next year, ideally during February 2019, before the Lok Sabha campaign accelerates in earnest. However, a lobby within the Ministry of Foreign Affairs (MoFA) in Beijing is opposed to such a timeline, and is pressing for Xi to make a reciprocal visit “only after the polls”. Their argument is that the outcome of such polls is uncertain, so it would be best to make the visit only after the result gets declared and the post-poll government settles down. Such a view ignores the need to institutionalise the Wuhan process by ensuring visits that are independent of political changes, if any. A second Modi-Xi summit early next year would assist in ensuring that the “1 plus 1 Apex” format gets established as a permanent feature of relations between China and India, while a delay till after the Lok Sabha polls take place may result in an indefinite postponement of such a reciprocal visit, thereby diluting the gains of the Wuhan summit.
An example of “Old Thought” in Beijing on Sino-Indian relations is the effort by some elements in both the Foreign and Defence ministries in Beijing to continue the policy of blocking India’s accession to the Nuclear Suppliers Group (NSG), the next meeting of which is scheduled towards the close of November, and which is almost certain to include in the agenda the admission of India into the NSG. The “New Thinkers” in Beijing understand the importance of this issue to future relations, and are in favour of China supporting both Pakistan as well as India as members, leaving it to the rest of the group to decide on whether one or both should get admitted. This would change the present dynamic, which is a Chinese veto on the entry of India unless Pakistan gets admitted as well, something the Chinese side knows is impossible in the present circumstances of control of that country by its nuke-rattling military. A fresh Chinese veto over India’s entry into the NSG in the November 2018 meeting can be expected to have severe repercussions on other fields, such as trade and commerce. While the “Old Thought” in Beijing believes that Indian policymakers will erect a firewall between “difficult issues” (such as the border or NSG) and other matters such as trade, the “New Thinkers” are aware that such a separation is unrealistic, and that Delhi regards Beijing’s support on NSG membership of immense significance in accepting that Beijing sees India as an “equal partner” rather than as a “lesser country” than China.
Chinese business groups are looking to India to make up expected losses caused as a consequence of restrictions placed on their US operations. Digital India has become a near-monopoly of US tech giants such as Google, Facebook and Microsoft. 90% of the advertising revenue from India in that internet sector goes to Google, with an additional 5% accruing to Facebook, with the rest having to be shared by dozens of other (mostly domestic) players. Only Chinese tech players have the scale to seriously compete with their US counterparts, and should they be permitted the same freedom of access as US companies have been given in India by successive governments, they would cut into the monopoly now enjoyed by US West Coast tech giants in a market that is already home to much if not most of Facebook users, with Google and Microsoft as well seeing their overall numbers (and valuation) significantly boosted by operations in India, at the cost of paying taxes that are relatively insignificant. Such ease of access would be opposed by several security experts in India, who however see no problem in the country being almost wholly at the mercy of US tech giants. The present situation within our country is that Google may already have the power to discredit almost any public figure in India, while Facebook could conceivably create difficult situations on streets in cities across the country, so powerful is their reach and credibility.
Another sector where India could benefit from China is tourism. Should, for example, a Buddhist circuit get established in India by Chinese investors the way the Japanese have already done with such success, the number of Chinese visitors to India could rise significantly, given that over a hundred million Chinese go outside their country for visits each year. A third is infrastructure. While the China-Pakistan Economic Corridor (which was strongly endorsed by both the Foreign as well as the Defence Ministries in the Peoples Republic of China) is proving to be a loss-maker with intended benefits yet to be reaped, a China-India corridor would be certain to generate surpluses, given the rate of growth of the Indian economy despite the prevalence of conservative fiscal and monetary policies designed to increase short term collections and bureaucratic control rather than promoting long-term growth in the manner experienced by China since the 1980s.
“Old Thought” on India in Beijing continues to regard any settlement of the boundary question with hesitation, and are advising that such matters be pushed away into the distant future. However, the “New Thinkers” are aware that a lack of progress on the boundary issue could affect even commercial ties. In such a context, the Indian side is known to be proposing that at least the “Middle Sector” of the Sino-Indian boundary get demarcated as evidence of progress. Added to Chinese acceptance of India as a member of the NSG, a boundary settlement in the Middle Sector would give a major boost to relations between Beijing and Delhi. However, this is being opposed by the “Old Thought” lobby, which incidentally has very close links with GHQ Rawalpindi. This lobby sees the Pakistan military as the guarantor of Chinese interests in Pakistan, which is why Chief of Army Staff Qamar Javed Bajwa was given a talking to after coming to Beijing following suggestions by the Imran Khan government that work on the CPEC needed to go through a “pause” of at least a year. Business groups in Karachi have been complaining that CPEC contracts have been grabbed by Lahore business groups close to Nawaz Sharif as well as GHQ Rawalpindi. General Bajwa is learnt to have promised that Prime Minister Imran Khan would ensure that work on the CPEC proceeds uninterrupted, of course at great cost to the Chinese exchequer.
A worry for the Chinese side comes from reports that elements in the US and the UK are working on installing a small child from Tibet or nearby provinces as the XV Dalai Lama of Tibet with headquarters in Dharamsala, should the present Dalai Lama ascend to another dimension. While the Himachal town has been converted into the effective headquarters of the XIV Dalai Lama after his moving to India in 1959, the settling there of a claimed successor would in effect make Dharamsala not the refuge of the present Dalai Lama but the effective headquarters of any successor not recognised by Beijing. As it is likely that a successor would get discovered in Tibet who may take up residence in the Potala Palace, this would create a situation of tension that is likely to have long-term consequences on Sino-Indian ties, in the manner that the 1959 decision of Prime Minister Jawaharlal Nehru to give asylum to the present Dalai Lama has done. These are matters that can be resolved only in the context of a warming of relations between Delhi and Beijing and in a substantial increase in the trust level between the two sides. These were the outcomes sought by President Xi and Prime Minister Modi at Wuhan, but there remains a considerable distance before this new era in Sino-Indian relations becomes a reality.
The “New Thinkers” regard India as a country ranking along with Russia, Japan and the US in the top tier of Chinese interests and concerns, and it is clear that President Xi shares such a view. However, this ranking of India as being among the top priorities for China is opposed by those clinging on to “Old Thought”. To them, India is in effect a US satellite, and needs to be kept off balance through deft diplomacy in South Asia. The “New Thinkers”, in contrast, look towards greater imports from India as well as greater investment into India as being factors that would promote trust and closeness in Sino-Indian relations. Some are even considering the option of looking to bring tens of thousands of Knowledge Industry personnel from India to help Chinese entities compete with US global giants. At present, while several hundred thousand such “brain workers” work in the US or for US companies, only a few hundred are active in China. Both Xi as well as Modi are expected to meet later this year at Buenos Aires for the G 20 summit, where both trade as well as other matters are certain to be discussed among two of the Big Four global leaders (the others being Presidents Putin and Trump). The rewards of close ties are obvious. What is still uncertain is whether “Old Thought” (and not only in China but in India) will allow the two leaders to bypass past disagreements and enter into a synergistic relationship. China will be looking to sensitivity on matters such as Dharamsala, while India will regard another Chinese rebuff at the NSG as evidence that “Old Thought” still prevails over “New Thinkers” within the circle of policymakers close to Xi. Clearing the way to join NSG and Xi paying a Wuhan-style visit to India early next year would, on the other hand, help ensure that Sino-Indian relations transit from rough weather to smooth.

Friday 28 September 2018

Rahul Gandhi goes into attack mode (Pakistan Observer)

Geopolitical Notes From India
M D Nalapat

WHETHER it recently be in Malaysia or the Maldives, the electorate in several Asian democracies has the capacity to spring surprises on strong leaders who believed that they were unbeatable. It is the hope of a repeat in Delhi of the shock defeat of reigning strongmen in Kuala Lumpur and Male that is fuelling the campaign of Congress President Rahul Gandhi. He is on overdrive to ensure the defeat of Prime Minister Narendra Modi in the May 2019 election to the Lok Sabha (Lower House of Parliament). In 2014, the BJP led by Modi coasted to a majority in the national election, the first time a single party secured a majority since 1984. The Congress Party collapsed to its lowest-ever tally in the Lok Sabha, a figure too low to even enable the party to cross the 10% threshold needed to qualify for the status of Leader of the Opposition, a post that remains vacant to this day owing to the unwillingness of enough of the opposition parties to combine together to choose one amongst their number to fill the slot.
The Congress Party does not want to hand the mantle of leadership over to any other opposition party, while the latter are wary of sanctifying the Congress Party as the leader of the opposition alliance through giving it enough support for the Congress Party leader in the Lower House (the mild-mannered and popular Mallikarjun Kharge) to take over as the official Leader of the Opposition. Upon taking office, Prime Minister Modi was given a blank (policy) page to write on. During the campaign, some economists in the BJP (such as former Harvard academic Subramanian Swamy) had called for reducing the rate of personal income-tax to zero and it was, therefore, widely believed that such taxes would at the least be sharply lowered, if not abolished altogether. However, once in power, Modi turned to the same group of foreign-trained economists that had been a mainstay of the economic policies framed by Prime Minister Manmohan Singh. An economist who had called for harsh sanctions on the pharmaceutical industry in India (so as to ensure higher profits to giant US and European drug companies) was made the Economic Advisor to the Finance Ministry.
Another academic was taken away from a teaching job in the US and put in charge of the Planning Commission, renamed Niti Aayog. Raghuram Rajan, a fervent believer in the Milton Friedman Chicago School doctrine of making the common citizen suffer in underdeveloped economies so as to ensure greater control and riches to multinationals and their agents, was continued as Governor of the Reserve Bank of India (RBI). Not surprisingly, he fashioned central bank policies that condemned tens of millions to poverty through shrinking of liquidity and raising of interest rates. For a long time, the RBI regarded any rate of growth close to double digits as symptoms of “overheating”, and worked assiduously to slow down growth through restrictive policies. However, although wreaking significant damage to the economy through his monetary policies, during the close of his term, the then RBI Governor Raghuram Rajan finally turned his attention to the widespread practice of cronies of politicians and officials of ensuring that huge amounts of loans were given, especially by government-owned banks, to such favourites. Such attention was paid only at the close of his term and not at the beginning.
That Rajan is close to former Finance Minister Chidambaram is no secret, and it was therefore understandable that he did not raise the matter of “crony lending” by commercial banks during the period when Chidambaram was the Finance Minister and ensured that officials indebted to him were given prime jobs within the government. Almost all such favourites of Chidambaram have been continued by the new Prime Minister, Narendra Modi, and several of them have, in fact, been given promotion even while they keep in close touch with their former masters. Modi indicated to voters that he would back not simply lower taxes but reduce the complex web of red tape that chokes enterprise and initiative in India. Those who have brilliant ideas for knowledge start-ups soon get drained of momentum in the quicksand of bureaucracy that India remains afflicted by. A few escape to countries such as the US or Singapore and make good on their promise, while many abandon their dreams because of regulatory nightmares.
Unless government procedures get simplified and sharply reduced in number, there is no way that enough jobs will get created to look after the futures of the 11-13 million young people who enter the job market each year. Modi himself assured the public that he would ensure “Minimum Government” once in office, a vow yet to be kept. From the very day he took charge as Prime Minister on May 26,2014, the decision by Modi to retain Manmohan Singh-era favourites in his official team and Vajpayee holdovers in his ministerial ranks created a twin handicap for him as well as the BJP that is becoming apparent enough to those around the Prime Minister. These worthies “see no problem, hear no problem and speak no problem”, which is why they facilitated even such measures as removal of 86% of the country’s currency without ensuring that the liquidity on which the economy depends was preserved. In the 2019 Lower House poll, the way Prime Minister Modi is handling the economy will be crucial in determining the vote. A large number of those who voted for BJP in 2014 did so because of their expectation that Modi will ensure administrative reforms designed to clean up and speed up governance in the country. Clearly the Prime Minister is scheduling such reforms only in a second term and not during his first five years in office.
The danger is that there is a rising chance that Modi will follow the example of Atal Behari Vajpayee. In the months before the 2004 Lok Sabha election, the effective head of the government (Brajesh Mishra,the Principal Secretary to the Prime Minister) was spending most of his time working out policies and deciding which people to reward and whom to punish once the BJP won the polls. As it happened, Vajpayee lost and the Congress Party came to power for two terms. Only Modi can defeat Modi, by making mistakes in policies and personnel. And judging by the mood across the country, this seems to be taking place. As a consequence, Congress President Rahul Gandhi ( who is showing himself to be far more competent than his mother and predecessor, Sonia Gandhi) is looking for a repeat of 2004. The aim is to ensure that the BJP tally falls below 200, a level which would make it difficult for the party to gather enough support to form another government with Modi remaining the Prime Minister. In recent months, Rahul Gandhi has emerged as an aggressive and effective campaigner, seeking to “do a Modi” on Modi by painting the Prime Minister as being less than honest. In coming months, it is expected that the charges against the BJP will rise in volume and number. Rahul Gandhi is on attack mode, and as military strategists know that is often the most effective way to get the better of an opponent who is forced to go reactive and defensive in the face of daily verbal thrusts.

Sunday 23 September 2018

US-China trade war catalyses new world order (Sunday Guardian)

By M D Nalapat 

Trump’s tactics rely on tariffs on all Chinese exports to the US. Should that fail, China will seek to reduce the near-monopoly of the US dollar on global trade.

BEIJING: The mood is sombre in the giant capital city of the world’s second-biggest economy, and it is not because of the smog that is visible in the skies. Since the close of the 1970s, there has been a usually unspoken agreement between Washington and Beijing that the two need to work together where global economics is concerned, even if not always in the politics. This has helped both countries, and it would be difficult to point to one or the other as the primary beneficiary. True, China has for long exported much more to the United States than it has bought from it, but a goodly part of that surplus has gone into US treasuries, assisting the Federal Reserve to keep domestic interest rates down and consequently, business prospects higher. In contrast to countries welcoming fast growth, the Reserve Bank of India since the days of C. Rangarajan (as Governor) has followed the Gandhian dictum that to grow rich is evil and that poverty is a blessing. Hence, whenever the RBI saw the economy doing better than it was comfortable with (which was a smidgen above the Nehru rate of growth, i.e. 3%), the Board of Directors would watch in approval as the Governor and his deputies raised interest rates and reduced liquidity. Indeed, fortunately for China, neither Deng Xiaoping nor Chinese bankers saw the steady double digit rise in that country’s GDP as being a source of worry. Instead, they stoked the flames which fed the engine of growth, ensuring that within a generation more than 600 million Chinese were lifted out of poverty. Had Yaga Reddy or Subba Rao or Raghuram Rajan or Rangarajan of the RBI been in charge of the monetary levers of China during that period, it is certain that to this day, China’s GDP would not be much above India’s, which was the same as China’s in the 1970s, but which is now nearly five times smaller. Although the top tier of the RBI grows breathless with awe in the presence of US or European central bankers, they accept with alacrity the advice of such bankers to keep “irrational exuberance” in India down by raising interest rates and choking liquidity. Modest 9% growth in India is regarded as “irrational” by monetary agencies in prosperous countries. The present RBI Governor, Urjit Patel, seems on course to do more than any predecessor to slow down the Indian economy, through restrictive policies following in their wake, having already ensured his place in monetary history by the way he handled (together with the then Revenue Secretary) the 2016 demonetisation of 86% of the nation’s stock of currency at four hours’ notice.
President Trump’s tactics are similar to those adopted by Businessperson Trump, which is to seek to shock, cajole and when needed bully the other side into quickly raising the white flag of surrender. A man who has seen several bankruptcies, Trump is not afraid of disaster, having an innate belief in his capacity to overcome them. It is clear that the objective of his stance on China is to ensure that for decades to come, the US will continue to be the top economy on the globe, and not get overtaken by China. Forcing down the growth rate of China to below 5% could create tensions, affecting the hold of the Chinese Communist Party (CCP) over the loyalty of the 1.3 billion people of China, who have over recent decades become far more demanding of economic progress than was the case during the era of Mao Zedong. Each Chinese leader is judged by his (so far there has never been a “her”) success in ensuring the rapid growth that is the main plank of the regime’s appeal to its people, and should this falter, the expectation in Trumpworld is that the hold of CCP General Secretary Xi Jinping would get diluted enough to enable challengers to emerge and possibly succeed. The “trade war” is actually an attempt at regime change through economic means, exactly as is being attempted in the case of Russia and Venezuela, two other countries whose leaders are not popular within the Washington power elite. But what if the white flag does not get speedily raised by the other side? Trump’s tactics rely on the first charge, in his case tariffs on all Chinese exports to the US. Should that fail to secure the concessions he seeks, there is no Plan B, which means that the target country will implement its own Plan A, which is to seek to reduce the near-monopoly of the US dollar on global trade and financial settlements. President Trump’s ace is not the present condition of US industry and commerce, but the legacy of post-1945 dominance by his country and the financial and other instruments of that dominance. The 2008 financial collapse showed the dangers of Asia, Africa and South America relying on institutions within the US and the EU for carrying on their trade. Ten years on, the rest of the world is much better able to devise alternative systems for payments and for commodity flows than the channels controlled by the US and its post-1945 Atlanticist allies, and the 2018 trade war launched by the US on China will hasten such a process.
Xi Jinping has no option but to soldier on, for to blink now would be to court a fresh round of hostilities before the middle of next year. A Chinese concession today will only whet the appetite in Washington for further concessions tomorrow, followed by surrender the day after. This is a lesson that Kim Jong Un has learnt well, which is why it would be equal folly to expect North Korea to sacrifice its nuclear and missile capacity on the basis of assurances that have a reliable history of being serially broken. Although the trade war may bring pain for China (and for the US) for about two years, by the close of that period, Xi Jinping (who will become more, rather than less popular within China if he is seen as standing up to Trump, rather than conceding) is likely to succeed in ensuring that workable substitute financial and global supply chains get formed, including in cyberspace, so as to bypass those controlled by the US. The 2018 US trade war on China is the herald of tectonic shifts in the global balance of economic power.

Friday 21 September 2018

2020 US elections crucial for Taiwan (Pakistan Observer)

Geopolitical Notes From India
M D Nalapat

THE picturesque island of Taiwan, formerly Formosa, became the refuge of the KMT armies that were defeated by Mao Zedong in 1949. Generalissimo Chiang Kai-Shek arrived with several hundred thousand soldiers, intending to use the territory as a base from which to win back the Chinese mainland from the Chinese Communist Party. The KMT leader hoped that the US would use its navy and air force to assist him in such an operation, but after the Korean war ended in stalemate in 1953, the US leadership had lost what little appetite it had for a war with China. At the same time, the Peoples Liberation Army lacked the airpower and sea crossing facilities needed to invade the well-defended island. Although a few exchanges of artillery took place, overall there was an uneasy peace between the Peoples Republic of China (PRC) and the Republic of China, now comprising only of Taiwan and a few small islands in its possession.
The only way a serious attack could have been mounted on China would have been if the US and the USSR joined hands against the PRC. This was suggested by Moscow to Washington more than once during the period when Leonid Brezhnev was General Secretary of the Communist Party of the Soviet Union, but hatred for the USSR was far greater within the US establishment than dislike of China. Which is why it was not a surprise that by 1973, the US and China openly came together against the USSR. That partnership was consumnated under Mao Zedong and Richard Nixon, and from then onwards, the security of China was assured. The Chinese remember their friends in a way some other cultures do not, and after Nixon resigned in disgrace as US President, Mao sent an aircraft to Los Angeles in 1976 to bring the former President of the US to China, where he was given a welcome as elaborate as would have been the case had he still been Head of State of the world’s most powerful country. Mao wanted to make the point that he remembered his friends even when their luck had soured. Nixon wanted Henry Kissinger to accompany him, but the canny scholar declined, even though he had taken for himself the credit for the momentous US-China rapprochement that he had initially opposed when the idea was first suggested by Nixon.
In 2018, Taiwan is a fully functional democracy, with elections that are untainted by fraud, and which has twice witnessed changes in regime from the Chiang-era Kuomintang (KMT) to its rival,the Democratic Progressive Party (DPP). Two years ago, the Presidential election was won by Tsai Ing-wen, a steely DPP backer steeped in the western liberal tradition of society. Over the two years of her rule, Taiwan has moved much closer to the US than was the case during any period after the 1960s. Should Tsai win a second term and thereby get a further four years in office beyond the two more that she has in her current term, it is clear that the US and Taiwan will become as close security partners as was the case until the US-China rapprochement of the 1970s. Quietly and efficiently, Taiwan’s elected Head of State is ensuring a closer and closer fit with the democracies, including India. Over the past year alone, there has been a significant jump in Taiwanese investment in India.
Till recently, few companies in this First World economy wished to come to India, as they were happy in China, where there is over $ 400 billion of Taiwanese investment in terms of market value. The private companies headquartered in Taipei,Kaohsiung and other cities had the advantage of close commercial links between the US and China, despite the superficial differences. Bill Clinton as well as George W Bush and Barack Obama deepened US engagement with China, the last even talking of a G-2 ( the US and China) as the duo that would provide leadership to the globe. However, the closer China has come to the US in economic size, the less the appetite within Washington for a G-2. Instead, during the final couple of years of the Obama administration, Defense Secretary Ashton Carter began work on a series of alliances (mostly informal) that had China as the focus.
Military relations with India in particular grew substantially during this period, after Narendra Modi took over as PM in 2014. With Donald J Trump taking over as President in 2016, that alliance has become stronger at the same time as US-Taiwan and Taiwan-India ties have multiplied. However, for Taiwanese companies, it is becoming patent that it is no longer possible to run along with the US as well as with China, so far as commercial ties are concerned. Several Taiwanese companies have been adversey affected by the Trump administration because of their linkages with China. Unlike in the past, when it was possible to do robust business with both the US and China, the time is approaching when Taiwanese companies will need to choose between the US and China. Those predominantly operating in either country are rapidly losing their welcome in the other. A consequence is that some Taiwanese companies are shifting from China to countries such as Malaysia,Indonesia,Vietnam and India.
Unfortunately for Taiwan, the teaching of English was given a low priority by successive administrations, with the result that only a small percentage of the population speaks that language. However, in an effort to further distinguish Taiwan from the Chinese mainland, Prime Minister William Lai (who makes no secret of his view that Taiwan is a wholly independent country and not a province of China as Beijing regards it) has broad-based the teaching of English, so that within twenty years, three-fourths of the population will speak the international link language. The Blue (KMT) camp seeks closer ties with China while the Green (DPP) activists want to reduce the existing links with the world’s second-largest economy. The 2020 Presidential elections will be crucial for the future of the strategically important island.
A second term for the DPP would ensure that the process of synchronisation with the US as well as with the European Union and major Asian democracies such as Japan and India would reach a level that would make a reversal of the process difficult if not impossible. A KMT victory would give the Chinese another chance to deepen their ties with Taiwan such that in a few more years time, there would be what may be called a “de facto unification” of the PRC and the RoC (Taiwan). People to people as well as commercial links would grow to such an extent that it would be as easy to cross the Taiwan straits as it is to move from India to Nepal or vice versa. The US and China have massive stakes in the 2020 elections, of course on opposing sides.

Monday 17 September 2018

Sleeping SEBI and the need to jail 10,15 of the most corrupt in Finance scams (PGurus)

Sleeping SEBI seems to not want to act on any excesses committed by a privileged group of people (including some VVIPs such as P Chidambaram) who seem to be invincible. India can grow much faster if it has a transparent financial market and allows free and fair competition. 

Saturday 15 September 2018

Kill the Rupee Plot: UPA regime officials responsible - Government Sources (NewsX)

After coming under fire over the falling prices of the rupee, Prime Minister Narendra Modi has decided to take matters in his own hand. After holding economic review meet with the top govt officials, including the Finance Minister & Secy. Now the PM will take direct charge of measures that are needed to bring back growth in the Indian economy. This, as Sunday Guardian exposed a plot by some to deliberately bring down the value of the Indian rupee by creating speculations in the market that the Indian rupee is in a free fall. Sources tell us that these are in same group which had indulged in 2013 for deliberately shorting the rupee. The intent of this group is allegedly to ensure that the rupee falls as low as 100 Rs to a dollar. 

PM Modi has miles to go before 2022 (Sunday Guardian)


It was expected that the Modi government would during its term rectify some of the injustices done to the majority community during the Sonia-Manmohan decade.

Prime Minister Narendra Damodardas Modi has asked the electorate to give him time “till 2022” in order to complete the tasks he had promised during the 2014 Lok Sabha campaign to fulfil. The coming elections will show whether enough voters are willing to cut enough slack for him to ensure a second term. The chemistry of the 2019 campaign will be very different from 2014, hence any effort by the BJP to repeat the arguments of that contest may prove unproductive. In particular, given the fact that no UPA VVIP has been prosecuted for the misdeeds claimed by the BJP to have been committed against them, an anti-corruption plank may backfire, as seems to be happening now. The three-fourths reduction in the Lok Sabha tally of the Congress party was caused by voter revulsion at the perception of pervasive graft during the UPA as also the skewed notion of “secularism” of the Manmohan Singh government, which—especially under Home Ministers Sushilkumar Shinde and Chidambaram—regarded manifestations of religious or exclusivist sentiment as “communal” only when originating from those who were Hindu. Fanatics in other numerically large communities in India were given a free pass, and although some of the self-declared leaders of these communities were frankly communal, and indeed preached religious supremacy, regarding only their particular faith (or its variant) as consequential and the rest as dross, such elements were coddled and encouraged, as long as they were not Hindu. Should the BJP cross the safe margin of 230 seats in 2019, it will not be because of the issue of development, but because of the continuing apprehension amongst several within the Hindu community that decades of second-class citizenship will return, should the Congress Party and others wedded to “Nehruvian secularism” reclaim the portals of governance.
Hindu backing for the Narendra Modi government would come despite very little being done during 2014-2018 to rectify some of the injustices done to elements of the majority community during the Sonia-Manmohan decade, such as the placing of responsibility by the RTE for the education of the underprivileged only on schools run by Hindus, rather than on all citizens of India. The consequence, whether intended or not, is to make it much more difficult for Hindus to run schools than is the case with Muslims or Christians. During their centuries of dominance, the Mughal Empire reduced the number of Hindu places of worship substantially, a process that got delayed in the Kashmir valley, where widespread destruction of Hindu places of worship had to wait till the 1990s. The British Raj wisely avoided direct control over mosques while building magnificent churches across India. The colonial masters took control of numerous Hindu temples, whether large, medium or in the case of some, small. The British expropriated almost all temple lands and assets in the process. It was expected that the Modi government would during its present term ensure a rectification of this historical injustice, but this seems to be among the many steps that may need to wait till the promised year of 2022 for fulfilment. And as for an issue that rests at the core of historical fault lines that saw an overtly religious state break away from secular India in 1947, this columnist has long been clear that only a historical act of grace on the part of India’s large and vibrant Muslim community would ensure that efforts at creating flames of communal hatred within the Hindu community fail in future. This is the transfer of just three sites, the Ram Janmabhumi, the Krishna Janmasthan and the Varanasi temple, all three of which existed but were taken down subsequently.
Society is a living organism, and it is far from being a done deal that India will in a brief while get transformed into the third biggest economy on the globe. A liberal culture that celebrates diversity, that assures freedom in matters of diet, dress, beliefs, speech and lifestyle, is essential within the country. As is the spread among the general population of the international link language (English) in an interconnected world where opportunities may be almost as plentiful abroad as at home. Those who seek to impose curbs on such freedoms are obstacles to the future of India, while believing themselves to be saviours. On another point, a supreme act of gracious benevolence (a quality repeatedly mentioned in the Quran) on the part of the Muslim community with respect to the three sites mentioned earlier would block into insignificance any effort to create the deadly hatreds causing communal carnage. It was expected that the Supreme Court of India would by this time render a final verdict on the Ram Janmabhumi case, but such hopes are declining by the day. If not courts or governments, the vibrant Muslim community in India needs to take the lead in ensuring that a gesture of surpassing nobility be made by one community to another in a land that is the home of both. There have been newspaper reports that Ayatollah Ali Sistani of Iraq has declared that the Shia Wakf Board should not hand over the land claimed to be in its possession at Ayodhya, “as the mosque belongs to the Almighty”. Such reports seem improbable, for as the Ayatollah knows, not just mosques but the entire universe belongs to the Almighty. Any reading of the Quran would show the beneficence and compassion that suffuses its words, and it is precisely such a spirit and not exclusivism and anger that is needed to ensure that India achieve the social cohesion and stability essential for sustained double digit growth. A Ram Janmabhumi complex and a Krishna Janmasthan would open their doors to all, welcoming not just citizens of India but every human being on the planet, the way other great locations of reverence do, including the Sabarimala temple in Kerala. Hopefully this will happen by 2022.
Hopefully, so will other requisites for development, such as lower taxes and regulations. As well as a GST that has a single low rate, excludes any unit that has a turnover below US$1 million, and which is simple to file returns in. The Prime Minister announced in 2014 that he would “trust the ordinary citizen”, for instance, by doing away with the attestation by a gazetted officer of several documents. That message, of the primacy of civil society in a democracy, will hopefully become the norm by 2022 rather than continue to be an exception.

PM Modi takes direct charge of economic measures to avert crisis (Sunday Guardian)

By M D Nalapat 

Agencies can easily determine what brokerage firms and other financial agencies are involved in the ongoing operation to ‘short’ the rupee, especially through Singapore, Dubai, London and New York.

With the popularity of the Bharatiya Janata Party in danger of getting battered by economic storms, Prime Minister Narendra Modi has taken direct charge of measures needing to be taken to remove volatility and generate growth in the Indian economy. This has been welcomed by the overwhelming majority of Central officials, who are honest and dedicated to the public welfare. They say that intervention by the PM has taken place just in time. Despite improving economic fundamentals warranting a much stronger rupee, India’s currency has been the worst performing in Asia. Officials (some now retired) who had revealed in 2013 that a secretive cabal headed by a prominent member of the then government was deliberately “shorting” (i.e. bringing down the value of) the rupee, say that the same group is once again active in currency markets. Their intent is to ensure that the rupee falls to as low as Rs 100 to a US dollar by this December, an objective that they are well on the way to achieving. The well-resourced cabal is being assisted by the mechanism of “Exchange Traded Currency Futures” that was strengthened during the UPA period and inexplicably has been allowed to continue even after 26 May 2014. Because they enjoy close ties and credibility with key channels within the business press, it has been easy for this group to spread (through the media) an expectation amongst the public that the rupee is in “free fall”. Those officials who have declined to join the gravy train of the cabal warn that “the sooner exchange-based currency futures get restricted in India, the better for the stability of the rupee”. They say that the ten years of the UPA period were marked by policies “deliberately designed to make it a cakewalk for global fund managers to make hot money out of markets in India”, and that “too many such policies are still being continued” by North Block, “mainly because the key officials responsible then are still in important positions now”. It ought not to be impossible for investigative agencies to determine exactly what brokerage firms and other financial agencies are involved in the ongoing operation to “short” the rupee, especially through Singapore, Dubai, London and New York, even though these centres are outside the reach of the Reserve Bank of India. Not that the RBI seems in any rush to do anything about the matter. Thus far, the RBI leadership has not even been making reassuring statements about the currency.
At the same time, “a carefully coordinated volley of op-eds and statements is being generated that are designed to pretend that the rupee is overvalued” even at the present bargain basement rates. A publicly-funded economic think-tank based in Delhi has been at the hub of efforts to generate a herd mentality that would panic currency markets into fleeing the rupee. That even such disruptive mechanisms as derivative trading have not been stopped or sharply regulated thus far is a testimony to the reach of the “Short the Rupee” cabal within elements of the official machinery in both North Block in Delhi as well as Mint Road in Mumbai. An example of manipulation of perceptions about policies and policymakers is the effort to claim that the 2008 global financial crisis bypassed India “because of sound management during 2008-09”. The reality is that the high proportion of cash in asset purchases in India provided a valuation cushion for institutional lenders, hence the absence of a “sub-prime crisis” in this country. Later, gargantuan volumes of cash were recklessly directed to favoured segments in the name of “fiscal stimulus”, and it is scant wonder that such ailments as bank NPAs began to fester during that period. Skilful management of perceptions has enabled the Insider Vulture Cabal to ensure that several of its most toxic policies continue to operate to the present. As an example, the currency of a country is as much an essential commodity as foodstuffs and other material that are not permitted to be traded on the futures market, in view of the volatility and windfall hot money profits that such operations would generate. It may be remembered that speculator and regime change specialist George Soros was responsible for single-handedly bringing down the value of the British pound through a sophisticated and comprehensive operation involving short selling on the same lines as has been happening recently to the rupee. Another target of Soros was the Malaysian ringgit. Although corroboration in the form of tangible evidence is difficult to come by, officials anxious about the ongoing effort to slaughter the value of the rupee in the currency markets claim that the Soros organisation (which has numerous overt and covert tentacles in India) is “active in bringing down the value of the rupee so as not only to make profits but punish India for continuing to trade with Iran”. Interestingly, Soros himself has been the victim of false reports linking him to the Iranian regime, when he is in fact among its most potent opponents.
The blind spot in regulatory and monitoring mechanisms in India is the close informal connection between international operators and those responsible for fiscal and monetary policy in India. While the authorities go after small players, major depredators escape. Vijay Mallya transferred much of the loans taken by him to accounts abroad through a private bank with deep connections even within the present establishment. However, this and similar “respectable” institutions have escaped scrutiny so far, perhaps because of the “services” they render to those still well connected even after the 2014 election victory of the BJP. Officials alarmed at the inaction against rogue elements say that continuous monitoring of the robustness of settlement of exchange traded futures in currency is essential. If the trading is not robust, the market may face difficulties through concerted action by speculators who have “insider” knowledge of the manner in which India’s fiscal and monetary authorities will act in situations of strain and volatility. Several officials may themselves function as agents of such cabals, skewing policy responses in order to ensure windfall profits for their hidden benefactors. Unfortunately, in the trusting atmosphere of the higher bureaucracy in India, even in bent members of their own tribe, such saboteurs of the public interest go unpunished and usually undetected, especially because they are present in the regulatory and oversight departments and agencies as well. The record of the CBI, ED, DRI and other agencies in discovering—much less checking—widespread malpractice in false invoicing of imports and exports is dismal, while as yet the BJP-led government has not taken action even against those VVIPs who openly assisted Vijay Mallya and others in their money transfers out of India. Presumably such action is another of the lengthy list awaiting 2022.
Another problem area are the NDF (non deliverable forward) markets operating in Singapore and Dubai. These markets are used by some with Indian passports (including the many with a secret second passport) who have international operations. These take positions in the forex market in India and simultaneously take a counter position in an NDF market. This mechanism is being used now to short the rupee, according to honest officials alarmed at the situation. It may be remembered that a former Union Minister for Finance took the initiative in destroying an Indian-owned commodity exchange that had branches in Dubai and Singapore, a process of destruction that continues to the present through officials loyal to the former minister who remain in high positions or are regularly consulted by the present government despite their close linkages with a former minister known for generating immense profits through market manipulation.
Prime Minister Narendra Modi has handed back control of the Finance Ministry to Arun Jaitley, who has a 20-hour per day job on his hands to ensure a return to correct rupee values and the ending of uncertainty and volatility caused by operators intent on shorting the rupee and creating headwinds for the economy. In a situation where the RBI leadership (whose record in managing liquidity during the 2016 demonetisation left much to be desired) seems to have lost its voice in the crisis, those who have placed their faith in the rupee and in the management skills of Prime Minister Modi are looking for visible and energetic leadership from the Prime Minister through the Union Ministry of Finance. What is required is to be steady in its macro management and not give an impression of indecision or inaction. Although the lira, real, rand and peso are getting tanked as part of emerging market crisis, both the geopolitical as well as the geo-economic situation facing India is far more favourable, especially in view of Prime Minister Modi’s success in balancing India’s relationship with the two feuding superpowers, China and the US. Both North Block as well as the RBI have enough in their toolkits to get out of any speculator-induced crisis. Steps could include depressing imports and tapping the patriotic community of NRI for the purchase of bonds as in 2013. An amnesty scheme for those nationals still having undeclared assets abroad could be introduced with rates of taxation that are reasonable rather than prohibitive as formerly. “The PM has to deliver solutions that are out of the box”, a senior official said, “and especially avoid the policy box recommended by international financial institutions to fill their own coffers at the expense of producers and consumers in our country”. Unfortunately, several officials seem to be in awe of such institutions, and push for policies beneficial only to them rather than to domestic players, and both Prime Minister Modi as well as his trusted Finance Minister, Arun Jaitley, will need to ensure that such elements be stopped from driving policy in North Block and the RBI.
A potent example of official inaction is the co-location scandal. Through lack of sufficient follow-up by SEBI, the ED and the CBI, it would appear that those responsible for the “co-location” imbroglio in the National Stock Exchange will escape without significant (if any) penalties. The time limit for sanctioning prosecution against former officials associated with the imbroglio (and known to be close to a prominent politician) falls due on 20 September, with no movement so far to give the green light. Key players are still holding on to their positions, some even after their names have formed part of charge-sheets. The public stand of many of them is, not surprisingly in view of their links and interests, in the direction of a weaker rupee. However, the reality is that the rupee is inherently strong, and can be defended with ease merely by effective tweaks in policy than by expending US dollars in its defence. What is needed is to build confidence in the market that the Government of India will not stand supine but will work towards a stable and fair value for the precious rupee. Concerning co-location, there are reports that lease lines and server racks are still connected between select brokers and an exchange, but thus far, the investigative agencies seem to be unwilling to look into such complaints, for reasons that are not clear. However, these may perhaps become clear a few years later, when complaints get filed about the lack of effective action of ED, CBI and SEBI. Inaction in the face of manipulation of markets by a well-funded and influential cabal led by a prominent politician whose identity and activities are known to every agency, but who (together with his co-conspirators) seems to be beyond accountability.
The derivative market, which continues to be given a free run despite the risks of such a lack of action, is several times the size of the actual market, and the effort of the cabal is to ensure a global run on the rupee that would result in a sustained tanking of its value. This would severely affect the economy just when the 2019 Lok Sabha elections are around the corner. In macro terms, there are no reasons why this should be so, especially in view of the cordial relations that exist between the teams led by President Donald J. Trump and Prime Minister Modi, as well as the new bonhomie with China after the Wuhan summit between Xi Jinping and Modi. Officials supportive of measures to clean up the rot within the regulatory system say that it would be “child’s play to identify and take action against short-sellers” of the rupee, and to “warn global speculative financial enterprises that their India operations would be impacted by any measures taken to worsen the situation relating to the Indian currency” in global markets. Overall, the health of the economy is good and is improving. What is needed is a proper mix of policies designed to protect the economy from “hot” money ravages and from those determined to derail India’s success story. The financial world is in particular looking to the Prime Minister and to the Union Finance Minister, Arun Jaitley for reassurance and vigorous action to ensure that the Indian rupee as well as the economy in general be protected from the speculative insider cabal that has long been adept at misusing the system for gain amounting to billions of US dollars annually.

Friday 14 September 2018

With Prof M D Nalapat on Kashmir Local polls and why NaMo should hold them on time (PGurus)

The J and K government must fix the voter rolls and hold the Panchayat Polls and the Municipal polls on time and not allow the valley parties to set the agenda, says Prof. M D Nalapat. 

Outdated policies hurt India’s economy (Pakistan Observer)

Geopolitical Notes From India
M D Nalapat

THERE is a hunger for faster economic growth in India, especially among the young. During 1990, the political atmosphere in India became toxic as a consequence of the (“upper caste”) Prime Minister,Viswanath Pratap Singh, adorning the garb of saviour of the “backward” castes by pressing for the implementation of the Mandal Commission report. This report, as also regional variants such as the Havanur Commission report in Karnataka, sought to give increased representation to the “backward” castes in Hindu society at the expense of the “forwards”. Such measures ignored the fact that for close to a millenium, almost all of India was under the control of first the Mughals and subsequently the British, neither of whom could differentiate between “forwards” and “backwards” in Hindu society. In the case of India, although economic progress has been high by international standards, yet in the context of India’s potential, it is still far too low. While China needs a minimum of around 6% growth to remain stable, India needs to reach above 9 % for the same result. A lower rate of growth would not be sufficient to ensure that the population of the country be satisfied that their potential is being tapped and to their own benefit. Hence the cheering at the 7-8% growth now being registered by the economy is premature.
But for the chokehold of the colonial bureaucracy over the economy, India would have crossed into stable double digit growth in the 1980s the way China did. While Prime Minister Rajiv Gandhi favoured a liberal policy towards industry and commerce, he was unable to make his team of officials go along, with the consequence that reforms were slow during his time. The exception was in telecom, a sector where Rajiv roped in an expert from the US, Satyen Pitroda, to assist. The bearded tech wizard was given backing by Rajiv Gandhi against his own bureaucracy, and as a consequence, superintended a telecom revolution in India, drastically bringing down delays in long-distance telephone calls and expanding communcations coverage. Had other segments of the bureaucracy been provided with outside leadership of the calibre of Satyen Pitroda, India would have equalled the speed the Chinese economy was achieving under Deng Xiaoping. However, that was not to be. Later, under Prime Minister P V Narasimha Rao, economic reforms were started, although these were far from the fullscope measures undertaken by China. Despite their partial nature,the Rao reforms ensured a doubling of the rate of economic growth, so much so that despite a disappointing raft of subsequent policies, India is on course to be the world’s third largest economy well within two decades. It was expected that Narendra Modi would emerge as India’s Deng Xiaoping when he took charge as Prime Minister on May 26,2014. However, the new Head of Government decided to adopt a conservative approach to the economy, choosing a well-known Delhi insider as Union Minister of Finance. A senior lawyer and BJP politician, Arun Jaitley has friends across the political spectrum, and his appointment reassured those close to the previous government who were worried about being their being targeted by the incoming administration. Now in its fifth year, the Modi government has thus far abstained from taking action against any of the Congress and allied leaders whom it accused of making billions of dollars during 2004-2014, the decade of undiluted rule by Congress President Sonia Gandhi.
Both fiscal as well as monetary policy have been textbook examples of conservative economics designed to ensure that those holding dollars feel reassured even if at the expense of those placing their trust in the long humble but now humiliated rupee. It must be said to Prime Minister Modi’s credit that despite the political damage such a cautious policy of maximising government revenue is doing to his political support base, he has stood firm and has fully backed Jaitley, refusing to replace the Finance Minister despite such lapses from health as vital organs needing to be substituted with transplants and inability to stay outside sterile zones for any length of time. The friendship and loyalty PM Modi has shown to his close friend and confidante Arun Jaitley is in contrast to the way in which so many at the higher echelons of the BJP abandoned their mentor and benefactor L K Advani when it became obvious by mid-2012 that the energetic and always pleasant nonagenarian politician from Sindh would not be the top voice in the BJP for much longer. Almost the entire Advani loyalist brigade overnight became Modi loyalists, a bond likely to endure as long as Modi remains PM.
Narendra Modi gained popularity across India because of the belief that he would be a “Wirstshaftwuenderkind”. A leader who would substantially increase the annual rate of economic growth and generate a minimum of 10 million actual jobs ( as opposed to make-work jobs such as cooking and selling junk food on the street). However, thus far the annual rate of growth of the economy has been lower than that witnessed during the Sonia-Manmohan decade, despite the policy errors made during that period. When he announced demonetization on 8 November 2016, Modi asked for a three months grace period before the miracles promised by supporters of the measure came to pass. These wonders have yet to dawn, 23 months later. Now the hardworking PM is asking his voter for time till 2022 to fulfil the promises made by him in 2014. So far, the PM has gone along with a cautious, conservative, Wall Street-oriented policy of the government (including concessions on IPR that make it more difficult for Indian generic drug manufacturers to compete against US and EU pharma giants that price their drugs beyond the reach of 95% of the planet’s population.
The BJP is hoping that enough voters will agree to the call for an extension of the time given for Modi to make good on his 2014 electoral promises as would enable the BJP to return to power in 2019 for a fresh 5-year term. Had Modi focussed on sending VVIP crooks to jail the way Xi Jinping and Mahathir Mohammad have been doing, had he followed the innovative style of Lee Kuan Yew and Deng Xiaoping in his policies, and had important symbols such as work on the Ram Temple at Ayodhya got started, the BJP would certainly have secured a handsome majority next year. But absent such achievements, it is difficult for the BJP to ensure that the 2014 result gets repeated in 2019. Too little fresh water has gone under the bridge.

Thursday 13 September 2018

War of ‘witnesses’ erupt, Gandhi’s helped Mallya, says BJP; Vijay Mallya smiling in London? (NewsX)

Vijay Mallya during the hearing of his extradition case in the UK came out and claimed that he met Finance Minister Jaitley before leaving India. FM Jaitley through a blog and later in a soundbyte slammed Mallya for making factually false statements and misrepresenting the truth. After FM Jaitley's rebuttal, Mallya rushed to cover up and claimed that his met Jaitley and other leaders in the central hall of the parliament and not in an officially scheduled meet. Rahul Gandhi, on the other hand, has demanded an independent probe into the matter and has sought resignation from Finance Minister Arun Jaitley. Meanwhile, judge hearing Vijay Mallya's case in London has reserved verdict for December 10th. 

Tuesday 11 September 2018

In conversation with Prof. Nalapat on the visit of Mahinda Rajapaksa to India (PGurus)

In conversation with Prof. Nalapat on the visit of Mahinda Rajapaksa, the ex-President of Sri Lanka. M D Nalapat wonders if Narendra Modi would take a page out of Rajapaksa's book and eliminate terrorism from Kashmir... A must watch! 

Saturday 8 September 2018

Insider Vulture Cabal operating with impunity (Sunday Guardian)

By M D Nalapat 

GST should be reduced on exports and made applicable on petroproducts.

There was a time when the Indian rupee was supreme within the neighbourhood. Whether it be in the Middle East or in Southeast Asia, the rupee was freely exchangeable and indeed prized. It had almost the same value as a US dollar. But this changed brief years after the Union Jack got replaced by the Tricolour above the former Viceregal Palace. Since then, the rupee has fallen in value relative to the US dollar and other “hard” currencies in proportion to the rise of undeclared foreign currency deposits abroad by citizens of India and their alien nominees. Those having huge dollar hoards must be drooling in delight over the free fall of Asia’s worst performing currency of 2018, the Indian rupee. Their holdings in US dollars will now fetch many more rupees than was the case as little as six months ago. As has taken place with monotonous regularity since Soviet planning was forcibly imposed on India’s economy in the 1950s, those who were patriotic enough to rely only on rupees for their wealth and not (secret hoards of) US dollars or British pounds have been cheated of their effective wealth to the benefit of the officials, businesspersons and politicians who regularly send money back to foreign banking havens through often overground hawala routes run by individuals who mingle every week with the highest in the RBI and in North Block. It is not the small dealer in the battered rupee who is a systemic danger to the economy, although the 8 November 2016 demonetisation of 86% of the country’s currency was aimed only at him. It is the merchant banker and fund manager expert in transforming the profits of under-invoicing, over-invoicing, insider trading on select exchanges and other malpractices into billion dollar hoards in foreign banks who has, for long, been the conduit for VVIPs and VIPs who cheat the poor of India of billions of dollars and thereby add to their foreign bank balances. Regulatory and investigative agencies in India have for long known about a small group of stockbrokers, businesspersons, senior officials and financial analysts led by a former Union Cabinet Minister. This cabal subverted the markets to make profits at the expense of the retail investor and public financial institutions such as the LIC and the nationalised banks. SEBI and other agencies have claimed that they are “investigating” such unconscionable misdeeds as the co-location scandal discovered in a stock exchange. Yet they have chosen for this task people who are themselves close to the very individuals they are supposed to investigate. The CBI and ED have deputed police officers unaware of how market fixing works to the case, when these agencies should by now have developed a cadre of officers fluent in tracing market shenanigans and financial fraud. Unless the agencies see to it that those guilty of insider trading and illegal speculation are identified and prosecuted, rather than allowed to escape as at present, India’s stock market regulators will become an object of global ridicule.
India is being cheated through a tainted and rigged system. As an example, an analysis could have been made of the price of coal imported into India and that paid by other global consumers of coal from the same supplier. If the price to the Indian purchaser is much higher, something is wrong. Is it an accident that domestic production of coal (a natural resource that this country has in abundance) is unsatisfactory even while imports are shooting up at prices that seem to arouse zero attention in the DRI or the ED? Somewhere in the future, those responsible for the lack of action in the rampant under-invoicing of exports and over-invoicing of imports need to be held accountable, for it is such malpractices that are assisting the group of speculators who are busy shorting the Indian rupee, aiming for the fall of the currency to Rs 100 to a US dollar by the close of the year. When a responsible policymaker comes on television and pleads helplessness (“The causes are global, not domestic”), and when the RBI maintains the silence of the graveyard over the induced tumbling of the value of the rupee, the short-sellers involved get confidence that their steady battering of the rupee will succeed in the same way such anti-people speculation did in 2013 till exposed by The Sunday Guardian. This earlier short-selling was carried out by the same cabal of operators who are now draining the country of economic health in order to enrich themselves. Acting in the manner of a sphinx statue is not what was expected of the RBI, which should work for the benefit of those holding rupees rather than serve international fund managers who revel in making dollar profits at the expense of the rupee. Interestingly, the recent changes sought by SEBI in foreign funds seem to do little to ensure transparency over sources of cash, but in effect block those of Indian ethnicity from managing such funds. White or yellow is kosher but brown not! However, efforts at creating an artificial panic, such as by public warnings that as much as $75 billion could exit the stock market following SEBI’s diktat, indicate the need to examine the records of those generating such fears and their association with those inside and outside the country who are working to create an economic meltdown before the 2019 polls. As yet, however, the agencies that should be undertaking such activity seem to be ineffective. The Insider Vulture Cabal continues to operate in freedom, including several in high positions. Indeed, many even write articles or make statements promoting the very policies that would boost their profits.
Rather than seek to create confidence in a strong rupee, the words and actions of our supine policymakers generate a belief that the Rs 100 per US dollar mark before 2019 is inevitable, and that the slide will continue even beyond that. Prime Minister Narendra Modi needs to take personal charge of a campaign to rescue the rupee from the (till now) immune-from-action Vulture Cabal. GST should be reduced on exports and made applicable immediately on petroproducts. There needs to be a search for trading partners who would accept payment in rupees, including Iran. Should that country make available oil through rupee payments, oil imports from Tehran should rise and not decline. Incentives need to be enhanced for the Information Technology industry that is resident in India, including startups, together with fresh export incentives in general. Strong action needs to be taken against over-invoicing and under-invoicing. RBI and North Block officials chummy with global fund managers and their Indian agents need to be monitored, especially their official words and actions, or lack of them. The Union Government must not adopt a posture of helplessness, as this would only help the gang of speculators led by a former Union Cabinet Minister. The Insider Vulture Cabal is busily engaged in plucking at the flesh of the economy, so as to leave behind only a skeleton by the time the 2019 Lok Sabha elections take place.

Friday 7 September 2018

India must gain from US alliance (Pakistan Observer)

Geopolitical Notes From India
M D Nalapat

THE problem in doing a deal with the US is that each wing of the government, and sometimes even a scatter of individuals, each have their own wish list for the country making the deal. Like different carriages in a train, each such agency wants the locomotive ( ie the agreement between the US and a country) to pull its own compartment, so that finally the “train” becomes very long and difficult to pull. Only during moments of crises (as with Pakistan after the Soviet invasion of Afghanistan in 1979) or decisive leadership by a US President ( as with Richard Nixon’s outreach to Mao Zedong in 1972) does the US bureaucracy step aside and allow the locomotive of cooperation between the US and a prospective ally to move forward at high speed. In the case of India, while President George W Bush mildly and President Barack Obama strongly (both during their second terms) ensured that static from the babel of bureaucracies that nest in Washington got temporarily stilled.
Even in their case, efforts were made to impose unacceptable conditions on the India-US nuclear deal in 2005 even after Bush and Manmohan Singh announced it, with the result that years were lost before a final agreement was worked out and submitted to the IAEA. Even during Barack Obama’s second term, Clinton loyalists within the administration slowed down Indo-US military cooperation despite efforts by Defence Secretary Ashton Carter to fast-track the three foundation agreements, signing of which is needed for close technical and other collaboration between the US and Indian militaries. Even during Narendra Modi’s tenure, only one of the three (that relating to logistics) has been signed. Another, on communications security, may finally escape in the next few days from the ditch into which the powerful international arms lobby active in Delhi sought to confine it. The third, on geospatial matters, is as yet not fully negotiated, although it is expected that it will get signed before the year ends. Should this take place, India and the US will be partners in mutual defence.
However, once again the US bureaucracy, while simultaneously and not very secretly seeking the overthrow of President Trump, is seeking to load conditions on an India-US partnership that ought never to be accepted by any government in Delhi. These include the peremptory “request” made by John Bolton and Nikki Haley to reduce petroleum purchases from Iran to zero. Private refiners may already have done so out of fear of US financial sanctions on their businesses. Some of them are reported to be buying crude oil on the spot market because of the self-created shortfall created by abstaining from purchase of Iranian petroproducts. Some claim that such “spot buying” is the cause of the painful increase in petrol and diesel prices in India, especially since the beginning of the year. Given that Iran is willing to accept a goodly share of the payments for its petroproducts in rupees rather than in hard currency, hopefully state refiners will continue to source much of their purchases from Iran. Also, the price of petrol and diesel by the state refiners should be less than that of private refiners, as the latter are into the spot market and the former hopefully are not. The loss of profits to private refiners may cause them to gain some courage and defy the unreasonable demand that the Government of India should allow the economy to be weakened to pander to the Iran phobia of US policymakers.
This columnist is wholly in favour of a robust defence and security relationship between India and the US. But this must not be at the cost of compromising vital interests. Iran is a partner of long standing, and is through Chabahar port the land and sea gateway for India to Central Asia and Afghanistan. At a time when effort has to be concentrated on assisting Crown Prince Mohammad bin Salman and others active in the battle against Wahabbism, it is an act of folly to open a second front by seeking the subjugation of Shia regimes in Iran and Yemen. Already Syria, Libya, Afghanistan and Iraq have seen the initiation of meltdowns as a consequence of US-EU policies, as also those countries that were either too weak or too foolish to ignore bad advice.
Among the many efforts being made by the US-EU on India is to ensure that through tweaking of Intellectual Property Rights laws, Indian pharma companies are either absorbed into foreign giants or close up shop. Millions across the world are dying every year because of the havoc caused by the policies being pursued across both sides of the Atlantic to fill the bank balances of those controlling giant pharma companies within the NATO bloc. As yet, neither the UN Human Rights Commission or the International Court of Justice has even noticed this silent murder of underprivileged through denying them recourse to affordable medicines. It is expected that Prime Minister Modi will stand firm and source even more petroproducts from Iran than has been the case thus far, exactly as China is doing. If India is to be a strong defence partner of the US, the country must have a strong economy. This means buying oil from the cheapest sources, even if these be countries that Clinton and Bush-era zealots in Trump administration are seeking to weaken and destroy in manner that has happened with Libya and Syria.

Wednesday 5 September 2018

In conversation with Prof M D Nalapat on India, US and Pak roles (PGurus)

Prof Nalapat talks about the reason for selection of Imran Khan as Pak PM. Also dwells on missed opportunities for India be it flying 2 squadrons to Kurdistan in 2003 (this would have permanently solved India's crude oil problem) or turning down the US request for boots on the ground in Afghanistan. Nalapat urges India to sign the remaining 2 US agreements ASAP. Also discussed is the balancing act India can do with US and China to mutual benefit. 

Tuesday 4 September 2018

Fuel price touches new high in metro cities; put petrol under GST, finish war? - Nation at 9 (NewsX)

The prices of petrol and diesel has reached a new high with Mumbai paying the maximum among the four metros. While petrol costs 86.72 a litre, diesel is priced at 75.74 a litre. In Delhi, the petrol price has been risen to a record 79. 31 a litre, while diesel price has been increased to 71.34 a litre. Rising fuel fuel prices have become a major cause of concern for common man as the government policies are not able to prevent fuel price hike.

Saturday 1 September 2018

SC affirms individual liberty (Sunday Guardian)


The bugle has been sounded and the proclamation read out by very civil, left-liberal individuals that India in 2018 has returned to the dark days of the Emergency of 1975-1977. The uproar is over the arrest of a few activists by the police because of their alleged links with Maoist insurgents, and for their alleged involvement in a plan to assassinate the Prime Minister. The Congress, the only political party to have actually imposed an Emergency, is outraged at the curbing of civil liberties by a very “dictatorial” government of Narendra Modi. In the process, it seems to have forgotten that the Congress-led UPA government during its 2004-2014 stint in power arrested some of these same activists—and many more—apart from mounting stringent action against NGOs it alleged were front organisations of the Maoists. Such a memory lapse may or may not be a deliberate strategy at a time when the Congress is cutting its cords with the past and reinventing itself under its new India-born president, a process that apparently includes taking itself out of the 1984 riots. But then such memory lapses are common among all political parties, whether they be in power or in Opposition, and are accepted as an intrinsic part of the way politics is “played” in India. The problem here is much larger in nature—that matters of national security are becoming the “happy” hunting ground of politicians and activists; that Indian polity is getting so deeply divided into “left” and right” that the breach seems irreparable; that the security and law and order machinery is being unable to think ahead and pre-emptively act where it comes across situations judged inimical to the interests of the nation. More often than not, the police are failing to follow procedure and perform due diligence to build water-tight cases, thus giving scope to opponents to paint them as a vindictive force pursuing “soft targets”.
Maoism was India’s gravest internal security challenge according to Dr Manmohan Singh, when he was Prime Minister. It continues to be the same with Narendra Modi as Prime Minister. It was in Manmohan Singh’s time that “Operation Green Hunt” was launched and the Salwa Judum came into existence. But what was missing in Manmohan Singh’s time was the virulence with which activists have banded together at present to vociferously paint the current dispensation as a threat to civil liberties, as a fascist regime. The current uproar is in keeping with the narrative that left-liberal groups in India have been trying to build assiduously over the last four years, ever since the Modi government has come to power. It’s a different matter that their ferocity is also accompanied by an unwillingness to give space to any alternate world view, or give a chance to someone outside their “comfort zone” to be at the helm of affairs. This becomes starkly apparent when they speak out in unison if the civil liberties of their interest groups are affected, but go completely silent when someone from the opposite end of the spectrum gets affected, for instance, when persons belonging to the “right” are persecuted in states such as Kerala and Bengal. Moreover, when these civil society members relate the Rafale deal with the arrest of the activists, as Arundhati Roy and others are doing, they, perhaps unwittingly, act as force multipliers of the principal Opposition party, which has been trying to pin down the government on the deal. In the process, they dilute their claim of neutrality and objectivity at the altar of partisan politics. As for their claim of evidence being concocted about an assassination attempt on the Prime Minister, such conclusions are best left for the courts to draw.
There is no denying that the police in India have often been found to be boasting of much more than they can deliver as evidence. So it is incumbent on the police and the agencies to provide clinching evidence to take their case forward. Lest they forget, the procedure followed by the police in making the arrests has already come for questioning in court. In fact, Indian law and order and other security agencies have often failed to build fool-proof cases because of the lackadaisical attitude of investigating officers or their inability to withstand political pressure coming from across party lines. Their reputation will take a further hit, and the government will be embarrassed apart from coming under severe criticism, if the police are unable to prove the specific charges made, and not talk in generalities of the arrested activists being Maoist front-men and women. In general, civil rights should be upheld and liberty assured, save in exceptional cases. In such a context, the Supreme Court decision to ensure only house arrest for the five charged with grave crimes by the Pune police is laudable. Indeed, such a form of incarceration should be more widely resorted to rather than clog the jails. And in such circumstances, having police personnel live inside a residence is an invasion of privacy and property rights, the same rights that the “Left” doctrine rejects in countries ruled by them. As to whether the five sought to be arrested are in that exceptional band or are innocent, only the courts can decide.