• Buoyed by Indo-US and Indo-French trade and economic treaties and pledges to double trade, Foreign Institutional Investors (FII) pumped in USD 2.8 billion last two months compared to USD 10 billion last year. The Sensex index of Indian stock market reached highest ever levels. Analysts agree that prospects for Indian businesses are spectacular but massive investments are required in infrastructure, energy, and power generation. Furthermore, economic reforms stalled by threats from communist allies of the Government need acceleration, fiscal discipline abandoned because of non-planned expenditure needs to be instituted, and current account deficits need to be curtailed. The upcoming elections in summer will determine the course of the economy. Victories by communist or myopic regional parties will not only slowdown economic growth but may threaten the survival of the Federal Government. If these threats are managed or removed, Indian economy is positioned for unprecedented growth.

Democracy, Politics and Judiciary

• The Gujarat High Court (GHC) restrained the Federal United Progressive Alliance (UPA) Government from tabling the controversial Justice Banerjee report that judged the 2002 tragedy in Godhra as an "accident." The GHC said it would have to hear a petition from a relative of a survivor challenging the findings of this maligned commission before making this report official. There is Constitutional ambiguity on which Commission has the right answer. The Railways Minister Lalu Prasad Yadav in a controversial fashion and with a questionable charter appointed the Banerjee Commission. The Federal Government appointed Justice Nanavati to investigate the incident with a broad charter. It is unclear what the GHC will hear and how will it control the report.

• Responding to public outrage across the nation, the Delhi Police announced that it will start an inquiry into determining who, what, and how "mistakes in the probe" in the murder of Jessica Lall. Eight years ago, a former Federal Minister’s son, inebriated and incensed at not being served alcohol, was accused of shooting the model and barmaid before scores of witnesses. Three years after the incident, Inspector K.K. Paul, the present Delhi Police Commissioner, had filed a report noting irregularities in the investigation. He charged that “unknown persons” had removed the cartridges used to kill Lall and switched them with bogus ones; forged police diaries to cause confusion; inserted conflicting evidence to create reasonable doubt; tampered and removed evidence from the scene of the crime; and insufficient efforts made to recover the murder weapon. Two key witnesses who were near Lall deposed against the accused Manu Sharma but turned hostile at a later stage claiming that the police extracted statements from them. The new investigation will focus on investigating officers, witnesses, and forensic officials who may have compromised the investigation. The country was stupefied when all the accused were acquitted for insufficient evidence and Sharma leaving the court in a Government vehicle. The judge who delivered the verdict was coincidentally promoted to the High Court. A public interest litigation (PIL) challenging this promotion implying judicial malice was squashed by the Supreme Court by an angry bench which castigated the advocated to have faith in judicial promotional process. The PIL is a reflection of widespread social cynicism of judicial and investigative processes in the country, which is partial to the famous and powerful often literally letting them get away with murder. Interestingly, a recent case of a wife of a Congress party leader well known in social circles was shot in public about 100 feet from the Superintend of Police in Lucknow. The two absconding youth accused of attempted murder were inebriated and has close links with the Uttar Pradesh mafia tied to the Samajwadi Party. Many fear that they too may get away because the Samajwadi Party is in power in Uttar Pradesh and is known for its criminal and careless attitude towards law enforcement especially when it comes to protecting its party interests.

• Defense Minister Pranab Mukherjee will be visiting China to enhance Indo-Sino relations and specifically nascent defense co-operation and strategic dialogue between the two nations. China recently announced a 14.7% hike in its defense budget that brings it up to USD 35 billion. China does not reveal the true defense budget but only states operational figures without capital expenses. Indian and Chinese militaries have agreed to engage in more confidence building measures to keep the border called the Line of Actual Control incidence free.

• The Indian Space Research Organization (ISRO) has approached leading US aerospace companies like Boeing to set up joint ventures in manufacturing satellites and other space systems and products. Encouraged by the Indo-US civil nuclear deal, the ISRO has encouraged US companies to leverage cost advantages in India. ISRO was targeted by US laws after the May 1998 nuclear tests and denied dual use technologies. With changed Government positions, ISRO wants to position itself not only as a leading space organization with indigenous technologies but also as a leading contract manufacturer of satellite, launch vehicles, and related sub-systems market.

• In an interview to CNN, Pakistan President Pervez Musharraf conceded that evaluation of his country's nuclear needs is different from those of India's. He also encouraged analysts in Pakistan not to look at it in an "Indo-centric" perspective. Putting up a brave face, Musharraf claimed that they did not need much from the US on nuclear technology and all they needed was nuclear energy. He also said that the issue of disgraced Pakistani scientist A.Q. Khan did not feature in his conversation with US President George Bush as there is a parallel conversation on interrogation in a mutually acceptable methodology to meet mutual concerns. 

• India and Pakistan will meet July 21-22 to review the third round of composite dialogue process (CDP) of the joint commission. Meetings by the Foreign Secretaries of both countries will precede this. Joint study groups will also meet to discuss economic and trade cooperation, Tulbul navigation project, Siachen demilitarization, Sir Creek issue, terrorism and drug trafficking ahead of this meeting. The two countries have successfully completed two rounds of CDP meeting and the third round started January 2006 where “new ideas” on peace, security, and Jammu & Kashmir were discussed.