The US President George Bush and Indian Prime Minister Manmohan Singh made history by resuscitating the civilian nuclear deal that most people thought dead. In a surprising move, Bush said that he would lobby the Congress to get India an exemption so the US will allow the flow of technology and nuclear fuel without India signing the nuclear non-proliferation treaty (NPT). The NPT is a containment mechanism created by non-nuclear weapons states (NWS) so they can keep those without nuclear weapons that way into perpetuity. Although the NPT required the gradual nuclear disarmament, the destruction of weapons with the nuclear haves has been slow. India held out because it said that the NPT is discriminatory. Israel held out because it did not want its nuclear research to be inspected by the International Atomic Energy Agency (IAEA); many say that Israel already possesses a nuclear weapon and it is this ambiguity that gives it security. Pakistan held out because India did. The Indo-US civilian nuclear deal is seen as a mechanism by the US to bring the same conditions and controls of the NPT on India but without requiring it to sign one. India had been arguing that it will not bring fast breeder reactors (FBRs) into the deal and open them for inspection because of its military (plutonium weapons program) and technology strategic value. The second argument is more important to India because FBRs if successful will enable India produce energy using Thorium, a resource that only India has; the net result is that India may be able to become self-sufficient in energy and also export this technology. The Global Nuclear Energy Partnership was brought in as an alternative by the US where it will legitimize the existence of the nuclear supplier group (NSG), the 5 acknowledged NWS, and the nuclear recipient states. Bush highlighted this aspect when he suddenly called India a nuclear recipient state and not a state “with advanced nuclear technology.” So, the great news for India is that it will be allowed access US (and all other NWSs’) nuclear technology and fuel without constraints on its FBR program. For US, it is the start of a partnership with the largest democracy, with one of the fastest growing economies, and useful counter weight to China. While the fine print on the deal still needs analysis, the visit so far will generate an upswing in the relations. There are many more hurdles along the way—the Government’s communists and myopic allies and the political extremists in the US Congress. The other hurdles include those within the NSG like China who are opposed to India getting special treatment and want its ally Pakistan to get a sweetheart deal even if it is an acknowledged proliferator. Then, there are the nuclear ayatollahs in the US who wants nuclear isolation of India at all costs. If Bush can clear the hurdles on these fronts and India can convince the Bharatiya Janata Party on intellectual grounds to support the deal, it does not have to get the communist support. The communist parties in India oppose the deal because it is with the US and argue that Iran should get the same treatment that India is offered. Most Indian analysts believe that the Indian communist parties do not have a clear grasp on issues that face the country.

Editorial: Hamas's victory in Palestinian Territories

A National Council of Applied Economic Research (NCAER) study said that increased tourists in India are producing 38.6 million jobs--half of them indirect. The tourism sector now accounts of 8.27% of the total number of jobs. Any growth in tourism clearly needs massive investments in infrastructure such as airports, ports, roads, hotels, and roads. Strangely, the recently announced budget did not address this sector.

Petroleum Minister Murli Deora introduced a new Petroleum and Natural Gas Regulatory Board Bill in the Rajya Sabha (Upper House of the Parliament) to create a new regulator of downstream petroleum and natural gas investments. This bill will cover refining, processing, storage, transportation, distribution, marketing, and sale of petroleum and natural gas products. Deora said that the bill draws from a Parliamentary Committee recommendation and that he has included 47 of the 49 of them. The Parliamentary Committee had strongly recommended a regulator, which will manage a strict code of conduct in companies. These will include pipeline access code, concept of contract carriers, service obligations of city or local gas distributors, and methodology for transportation tariffs. The former National Democratic Alliance (NDA) Government had conceptualized and introduced a bill called the Petroleum Regulatory Board Bill. This bill is repackaged by the United Progressive Alliance (UPA) to include natural gas.

The Indian stock market responded very positively to the budget and all the good sound bites from the US President George Bush and Prime Minister Manmohan Singh. The Sensex peaked to a lifetime high of 10,706 but wound down by the end of the day with still a lifetime high of 10,626. Analysts say that profit taking brought the levels down but many just a few stocks took the market higher over what some say irrational exuberance. Bharathi Televentures, ONGC (already overpriced), Tata Power, HDFC Bank, Tata Motors, ITC (highly overpriced), Tata Steel, and Maruti took the market high. Lower taxes for smaller cars, promised investments in energy and infrastructure, and tax exemption on longer term fixed deposits did the trick for these companies.

A day after Pakistani troops claimed to have killed 40 al Qaeda terrorists a suicide bomber attacked a site close to the US Consulate in Karachi killing 4 people including a US diplomat. No group has taken responsibility but al Qaeda is suspected to have committed this crime to embarrass the Pakistan Pervez Musharraf Government just ahead of the US President George Bush’s visit later this week.