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Saturday, February 25, 2006

India News Summary



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Business and Economy
  • The Railways Minister Lalu Prasad Yadav presented the Railway budget for 2006 with no phenomenal changes but without negative or glittery changes. The expectation was low and the lack of negative and glittery proposal like mud cups led to some cheer because Yadav's propensity to creating economic damage is high.  He announced the introduction of 55 new trains, no changes in passenger fares or freight charges, and a competitive discount of 10-18% on first and second-class A/C classes. He said that the Railways will allow private container trains before March 2006 but it is not clear whether these will be chartered freight trains from Railways or private operators on railway tracks. If it is the latter, it is not clear how the Yadav plans to deal with safety, protocol, and parking issues. Another plan is to make 200 trains super-fast. Again, it is not clear if this means just getting high capacity engines or laying new tracks; all railways tracks are over-subscribed and existing super-fast trains always run late because of traffic issues. Hence, it is not clear how making trains super-fast will really help without solving new tracks, animal control fencing, and cross-traffic management issues. Government's communist allies were incensed by Yadav's plans to outsource station maintenance, cleaning, and ticketing; these are issues that the Indian Railways has been incapable of handling. The communists have threatened to vote against the budget if these proposals are not dropped. The only significant and far-reaching proposal is the proposal to create a USD 4.5 billion dedicated freight corridor. The Railways itself is in good financial position netting USD 2.5 billion from USD 50 million in 2001, a freight volume of 668 million tons (from 600 million tons), and an operating ratio of 84.3% from 90.8% the previous year.

  • Apart from the controversial 0% duty import of 500,000 tons of wheat, the Government is expected to import an additional 1.5-2 million tons (mt) this year. It is not clear why there is a shortfall in the quantity in stock. Production from Punjab and Uttar Pradesh is expected to be lower by 10-20% were lower because of drought and hot weather. This is surprising because almost the entire nation got what was close to a 100-year rain. The Government says that food consumption patterns have changed with a higher demand for high-value cereals products and more consumption of wheat in the South. However, it is silent on rain patterns, water storage levels, changing agricultural patterns where more land is being used for cash crops like sugar cane, changing weather patterns, and problems with storage. The Government has also not answered why the wheat stocks in the public distribution system (PDS) dropped from 7.3 mt in February 2005 to 5mt a year later. In April 2006, the stocks are expected to plummet to 1.7mt, 2mt below the Government target of 4mt; this will be the lowest wheat stock level in 20 years. The PDS stocks, managed by the Food Corporation of India, are required for the poorest families who cannot afford to buy wheat from the open market.

Democracy, Politics and Judiciary

  • Mumbai session’s court accorded 9 accused in the "Best Bakery case" with life sentences and acquitted 8 others for lack of evidence. Four others with non-bailable warrants are still at large. After the Godhra incident where scores Hindu passengers were mercilessly burnt in an organized fashion by a Muslim village, riots in Ahmedabad by Hindu mobs targeted Muslims. Many activists accuse that this was a pogrom sponsored by Gujarat Chief Minister Narendra Modi. Mobs attacked Muslims, businesses, and civilians in an organized and brutal fashion. The case was moved out of Gujarat to Maharashtra as victims and activists say that they cannot get justice in Gujarat. The 17 dealt with the court, were accused of being in this mob. Specifically, they were accused of unlawful mob assembly, mischief by fire, causing grievous hurt, and using dangerous weapons. Of the 9, 5 had additional charges of damage to property, arson, dacoity, wrongful confinement, and criminal trespass. The "Best Bakery case" has been mired with controversy after the prosecution's star witness, Zahira Sheikh, turned hostile against her sponsor human rights activist and journalist Teesta Setalvad. Most certainly, this case will go on appeal as the judge pointed out that the police failed to provide incontrovertible evidence of special part played by any of them. This incident was also part of a written debate between then President Narayanan and Prime Minister Vajpayee. Narayanan may have breached Constitutional statues when he outed this secret dialogue and selectively quoting some of the contents. The Nanavati Commission examining the riots try to summon those documents but the Government refuses to divulge the letters seeking Constitutional privilege stating that the contents of the letter may seriously damage social structure.

Environment, Health and Education

  • With the story of bird flu off the front pages of newspapers, eclipsed by budget information, large poultry manufacturers are planning to initiate a campaign that will revive their business. The broiler poultry business in India is estimated at USD 2.4 billion with a production of 30 million broilers per week. Initial estimates of losses were 20-25% countrywide and up to 85% in Maharashtra. With Government giving a feel good message on containment of bird flu, the sales in Maharashtra has already started picking up. The question that still remains to be answered is the root cause of the outbreak and what has been done by the Government to prevent a relapse. In Europe, Africa, and most parts of Asia, the spread is through migration whereas in South East Asia and China it is due to bad poultry conditions. Meanwhile, Cipla and Ranbaxy have offered to produce a generic version of Roche's tamiflu leading to a debate of whether this will mean a patent infringement. The Indian companies deny patent infringement claiming that Roche does not have a patent in India. The Indian Pharmaceutical Alliance disagrees with this assertion saying that under India's new patent law, Roche's global patenting will enjoy the same rights in India and licensing is necessary mechanism to avoid infringement.

  • Editorial : Regulate Ship Breaking Business
Terrorism, Defense, Security and Science & Technology
  • Saudi Arabian security forces seemed to have foiled an attempt by terrorists to disrupt oil supply by bombing the world's largest processing facility at Abqaiq in the Shia majority eastern province. A former CIA field officer described the facility as the "most spectacular target in the Saudi oil system" because it handles 2/3 of Saudi oil output and most of it is export through the Gulf. Oil prices jumped by USD 1.22 a barrel as any terrorist success will seriously affect oil supply in the world, as Saudi Arabia is the world's largest exporter of oil. 

Hot Topics
Featured Analyses
National Rural Employment Guarantee Scheme : Making Panchayat Raj Institutions Effective
The Bill on National Rural Employment Guarantee Scheme seeks to provide guaranteed employment to one member of every rural household for at least 100 days a year for a minimum wage of Rs.60 per day. <?xml:namespace prefix = u1 /> Out of 260 million poor people in the country, about 200 million poor people are in rural areas. People in 45% rural India do not get work for six months in a year. 
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South Indian Inscriptions
Ancient Indian dynasties documented their administration, significant developments, grants, and milestones as inscriptions in temples. The Archaeological Survey of India (ASI) has documented these inscriptions from 1886. These pages contain inscriptions from Pallava, Chola, Pandya, Western Chalukya, Eastern Chalukya, Rashtrakuta, Hoyasala, Vijayanagara, Vishnukundin, Kakatiya, Reddi, Vaidumba, Chinda, Eastern Ganga, Gajapathi, Kalchurya, Qutb-Shahi of Golkonda, and Moghul,  dynasties.
  • A local court in Uttar Pradesh ordered the police to register a case against senior Samajwadi Party Cabinet minister Yaqoob Qureshi for placing a bounty on cartoonists who displayed Prophet Mohammed in distasteful manner. Qureshi thinks that there is only one cartoonist who caricatured the Prophet and does not realize that the cartoons were the outcome of a call by the Danish newspaper. He called for the killing of the "cartoonist" saying that the killer will be awarded Rs. 510 million. The court was responding to a petition by a local resident who says that the police refused to accept his First Information Report (FIR) to arrest Qureshi. The petitioner rightly pleads that Qureshi, as a Constitutional office holder has violated his oath to uphold the Constitution by seeking to incite violence. Qureshi has violated several Indian laws and if convicted will be imprisoned for 7-25 years or get the death penalty if someone actually kills a cartoonist. A Shariah court in UP has also issued a fatwa, a religious decree, saying that they will pay enormous amount of money and also religious pardon if someone should kill "the cartoonist." An unknown group calling itself the Hindu Law Board lampooned Qureshi with a similar exorbitant offer but has opened itself to the same accusations as Qureshi. Experts say that Qureshi move is well calculated with an eye on upcoming elections seeking to gain supremacy over Muslim politics perhaps with the sanction of UP Chief Minister and party boss Maulayam Singh Yadav.
  • Bangladesh is planning to buy 16 fighter planes from China to augment its 65- fighter plane and 39-helicopter air force. Specific details about the planes or their configuration in the USD 94 million-order was not available. China is Bangladesh's largest arms supplier.

  • The Sri Lankan Government (SLG) and the Liberation Tigers of Tamil Eelam (LTTE) concluded Norway facilitated direct talks in Geneva agreeing to 4 action items and promised to meet again in April. Both parties agreed to "respect and uphold" the ceasefire and will take "all necessary measures to ensure that there will be no intimidation, acts of violence, abductions, or killings." Individually, the LTTE promised that it would ensure that there will no acts of violence against Sri Lankan security forces or police. The SLG promised to disarm all groups that are no military, police, or other than security forces; this is an obvious reference to the "paramilitaries" that the LTTE wanted SLG to disarm. SLG has denied the existence of these groups but its agreeing to disarm them confirms their existence. Similarly, the LTTE's agreement to desist from violence against security forces only confirms that they were engaged in these activities. Overall, the outcome has been positive and will help the decimated Sri Lankan economy to recover. The LTTE said the agreement was a "diplomatic victory" while the SLG said it was happy with the progress. The LTTE has linked the implementation of these four items as a pre-condition to the April talks.

  • Russian Rosatom Atomic Energy Agency chief Sergei Kiriyenko left for Iran to further the discussions in Moscow just a few days ago to negotiate a peaceful end to the Iran nuclear program standoff. The new deal between Russia and Iran is speculated to go beyond the much-touted joint venture to enrich uranium on Russian soil. There are reports that Russia is actively considering a time frame for which Iran will be disallowed from enrichment so it can convince the world of its peaceful intentions. In order to make this option sweet for Iran, Russia is proposing to build 5-15 nuclear reactors like the one it already has at Bushehr, sell advanced anti-missile and weapons to boost its sense of security. Under consideration is Russia's long range S-300 air defense systems which will augment its short range battery of 30 Tor-M1 missiles that it will shortly get from Russia. All these sweeteners are offered under the assumption that Iran will stop uranium enrichment.

  • Editorial: The Nepal Stalemate
  • Politically embattled Philippine President Arroyo proclaimed a state of emergency saying that a section of the armed forces tried to perform a coup d'état. Top leaders of the military and police backed up her accusation and action. She accused the leaders of Scout Rangers, Marines, two elite military units, and a police commando group called Special Action Force of plotting to overthrow her democratically elected Government. Arroyo claims that the right and left groups have formed "a tactical alliance" to overturn her victory in 2004.

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