Sunday, 30 August 2015

Stable Pakistan not in India's interest

Stable Pakistan not in India's interest
By Bharat Verma
Issue:  Vol 23.3  Jul-Sep 2008 | Date : 31 Oct , 2014

Indians pose the biggest threat to the union of India. 

The reason is simple. An average Indian does not constitute a nation but is merely an individual. His personal well-being overrides all other considerations including the national interests.

Therefore, many have begun to propagate parting of Kashmir in their write-ups, since it does not belong individually to them. However, imagine the hue and cry if their personal property and family is held hostage by the terrorists. They will sing a different tune!

Many conveniently propose the myth that a stable Pakistan is in India’s interest. This is a false proposition. The truth is that Pakistan is bad news for the Indian Union since 1947-stable or otherwise.

The blame lies with New Delhi. For the past sixty years, instead of consolidating the Union, leaders encouraged divisiveness on the basis of religion and caste for sheer vote bank politics. Instead of unifying its citizenry with good governance and increasing their stakes through prosperity, so that they may serve the cause of the nation with honor, it has treated its citizens with unprecedented shabbiness. 

The result is groups of citizens have risen against the state, mostly for lack of economic progress and denial of justice. Such disgruntled groups are being taken advantage of by the external forces inimical to India.

There can never be unity in diversity. Unity requires a fair amount of uniformity in laws throughout the Union.

That New Delhi is its own enemy became obvious, when it permitted the creation of a pure Islamic State on its borders. This nation-state contradicts every democratic and multi-cultural values dear to India.

Therefore, if New Delhi has not slept a wink since the creation of Pakistan, it has no one except itself to blame!

Islamabad, besides the wars it imposed on New Delhi, extended its so-called Islamic purity to the Kashmir Valley by instigating the locals to carry out ethnic cleansing of the minority communities.

The self-destructive path that Islamabad chose will either splinter the state into many parts or it will wither away-a case of natural progression to its logical conclusion.

Hence, first we created a state with inbuilt characteristic of fundamentalism, and extreme philosophy contrary to our professed beliefs; then the monster in it started ethnic cleansing in the Valley; and engineered demographic changes through Bangladesh in West Bengal, Assam and the Northeast. Saudi Arabia and other Islamic oil-rich countries pitched in with the petro-dollars in support. All in the cause of the illusion called Ummah and establishing the Caliphate!

The Indian leadership for its personal vote-bank gains helped these inimical forces by bringing the IMDT in Assam. Later, it was slammed as illegal by the Supreme Court. Too late – the damage was done, as the Union’s overburdened security forces, grapple with 15 million illegal Bangladesh infiltrators creating mayhem in the society.

Islamabad, Dhaka, and now Kathmandu, spurred on by  Beijing, have united with the singular agenda to unhook the Valley and the Northeast from the Union. In addition, they are instigating the Maoists who control almost forty percent of the Union’s territory, to set up a parallel government, and ultimately, like the Maoists in Nepal, win the elections in pockets of their influence, and impose a regressive authoritarian governments in tune with their own regime. Simple. Brilliant. And yet, New Delhi, instead of consolidating and unifying the Union, continues to divide its citizenry in religious or caste denominations.
In the past sixty years, New Delhi’s muddle-headed policies encouraged separatism.

With China’s one arm, i.e. Pakistan disabled, its expansionist plans will receive a severe jolt.

Instead of ensuring diffusion of secular pan-Indian culture, and integration of the society by encouraging Indians from all over to buy and develop land and industry in the Valley and the Northeast, it imposed restrictions on such settlements. Meanwhile, Pakistan and Bangladesh exported their fundamentalist populations to change the demographic hues in their interest. The ugly separatist face of the agitation in the Valley today is the consequence of the dereliction of the fundamental duty by the Union.

The trend needs to be reversed forcibly by integrating the Valley firmly into the Indian mainstream by creating a secular mix of population through industrialisation.

Many conveniently propose the myth that a stable Pakistan is in India’s interest. This is a false proposition.

The truth is that Pakistan is bad news for the Indian Union since 1947-stable or otherwise.

Pakistan’s breakup will be a major setback to the Jihad Factory, as the core of this is located in Pakistan, and functions with the help of its army and the ISI. This in turn will ease pressures on India and the international community.

It is factually correct that Islamabad has enjoyed brief periods of stability in the span of sixty years of its existence. However, during these phases of stability, it continued to export terrorism, fake currency, narcotics, and indulged in attempts to change demographics on our borders, cultivated sleeper cells and armed groups inside our territory to create an uprising at an appropriate time. Also, it aligned with Beijing and other powers, in a mutually beneficial scheme, to tie-down and ultimately cause a territorial split of the Union.

With Pakistan on the brink of collapse due to massive internal as well as international contradictions, it is matter of time before it ceases to exist.

Multiple benefits will accrue to the Union of India on such demise.

If ever the national interests are defined with clarity and prioritised, the foremost threat to the Union (and for centuries before) materialised on the western periphery, continuously. To defend this key threat to the Union, New Delhi should extend its influence through export of both, soft and hard power towards Central Asia from where invasions have been mounted over centuries.  Cessation of Pakistan as a state facilitates furtherance of this pivotal national objective.

The self-destructive path that Islamabad chose will either splinter the state into many parts or it will wither away-a case of natural progression to its logical conclusion. In either case Baluchistan will achieve independence. For New Delhi this opens a window of opportunity to ensure that the Gwadar port does not fall into the hands of the Chinese. In this, there is synergy between the political objectives of the Americans and the Indians. Our existing goodwill in Baluchistan requires intelligent leveraging.

Sindh and most of the non-Punjabi areas of Pakistan will be our new friends.Pakistan’s breakup will be a major setback to the Jihad Factory, as the core of this is located in Pakistan, and functions with the help of its army and the ISI. This in turn will ease pressures on India and the international community.With China’s one arm, i.e. Pakistan disabled, its expansionist plans will receive a severe jolt. Beijing continues to pose primary threat to New Delhi. Even as we continue to engage with it as constructively as possible, we must strive to remove the proxy. At the same time, it is prudent to extend moral support to the people of Tibet to sink Chinese expansionism in the morass of insurgency.For a change, let us do to them what they do to us! The chances of Central Asia getting infected with the Jihadi fervour will recede. Afghanistan will gain fair amount of stability. India’s access to Central Asian energy routes will open up. With disintegration of ISI’s inimical activities of infiltration and pushing of fake currency into India, from Nepal and Bangladesh will cease. Within the Union social harmony will improve enormously. Export of Islamic fundamentalism, with its 360-degree sweep from Islamabad, will vanish. Even a country like Thailand will heave a sigh of relief!

With disintegration of ISI’s inimical activities of infiltration and pushing of fake currency into India, from Nepal and Bangladesh will cease.

Above all, the gathering storm of threat from a united group of authoritarian regimes along our 14,000 km borders, orchestrated and synchronised by Pakistan will dissolve. At the height of the recent disturbances in the Valley, when a general asked me for a suggestion to resolve the issue, I said: “Remove Pakistan. The threat will disappear permanently.”  

Today the collapse of Pakistan as a state is almost certain. All the King’s men cannot save it from itself.Looking ahead, New Delhi should formulate an appropriate strategy for ‘post-Pakistan scenario’ to secure India’s interests in Central Asia.

It is intriguing, therefore, to hear New Delhi mouthing the falsehood that stable Pakistan is in India’s interest. Perpetuation of such illogic for vote-bank politics is harming consolidation and integration of the Union. Short-sighted politicians as usual are overlooking the national interest for the short-term personal gains of few votes!

This article was first published in IDR Jul-Sep 2008 issue, (Vol 23.3).

Pakistan's Fault Line

Pakistan's Fault Line
By Bharat Verma
Issue: Vol 22.1 Jan - Mar 2007 | Date : 09 Jun , 2014

The so-called land of the pure, Pakistan, on its creation in 1947 had approximately 13 percent minorities residing within an Islamic population of 76 million. In its unholy fervour to achieve physical instead of the spiritual purity, the minorities were reduced to 2.5 percent even as the country’s population soared to 156 millions by the year 2000. In any society, it is the minorities that play the crucial role of moderation. Their existence is a safeguard against extreme tendencies.

Pakistan lost the benefit of this natural societal instrument of balance early in its history. Once the minorities, more or less, were out of the way, Pakistan’s Punjabi Sunni population which not only constituted the majority but also controlled the instruments of power in the state, turned to – killing Shias, expelling Ahmadiyas from Islam, denying basic rights to the Balochis, depriving Sind of water resources, and suppressing populations in the Pakistan Occupied Kashmir including Northern Areas.

In its unholy fervour to achieve physical instead of the spiritual purity, the minorities were reduced to 2.5 percent…

Under the clouds of Talibanisation, this became further skewed when the women who constitute nearly half the population were denied education and practically incarcerated in their homes – thus further impairing the societal balance. Simultaneously, Pakistan Army and the ISI persisted with their destructive spree by exporting terrorism to India, SE Asia, Central Asia, EU and America – all in the name of religion! In the comity of nations, one can hardly find a parallel to this inherent self-destructive proclivity.

Pakistan’s Punjabi dominated army in search of the elusive purity and to perpetuate its hold on power structures encourages the majority Punjabi Sunni population in its misadventures. In pursuit of power, the bogey of threat from India was conjured. In schools children were indoctrinated to hate Indians. Therefore, the genesis of the Pakistan’s present Fault Line lies in the diabolically engineered mindset that has created multiple fault lines and which have now coalesced into one deep and divisive fault line running right across the length of the country, threatening its virtual vivisection into two halves.

…the women who constitute nearly half the population were denied education and practically incarcerated in their homes…

The first major setback to Pakistan occurred 24 years after inception when it lost 55% of its population in East Pakistan (now Bangladesh) and almost half of its territory. Religion could not act as effective glue due to the insatiable avarice the Pakistan’s Punjabi Army displayed in its refusal to share legitimate power with the eastern wing. Islamabad conveniently blames New Delhi for this separation but a closer scrutiny of facts reveals otherwise. Between 1947 and 1970, whenever Pakistan chose to attack India, the strategically simple option available to India could have been to annex East Pakistan, which Islamabad was never in a position to defend effectively due to the vast geographical distances and consequently the enormous military logistics involved.

Nevertheless, New Delhi absorbed Pakistan’s attacks and localised it to its Western front, never extending the war to the eastern theatre. With millions of refugees pouring into India in 1971, Islamabad made its position in East Pakistan untenable, and India was compelled to initiate positive action. Since occupation of territory was not the motive, Indian Army promptly withdrew after liberating Pakistan’s eastern wing from the miseries and atrocities being perpetrated by the western wing on its own people.

In 1950s, Hans J. Morgenthau, the then Director of Center for the Study of American Foreign Policy at University of Chicago, in his book The New Republic had observed, “Pakistan is not a nation and hardly a state. It has no justification, ethnic origin, language, civilisation or the consciousness of those who make up its population. They have no interest in common except one: fear of Hindu domination.

…explanations like “fear of Hindu domination” and “insecurity” and other excuses as justification are used as psywar tool to disguise Islamabad’s treachery against New Delhi since 1947.

It is to that fear and nothing else that Pakistan poses its existence and thus for survival as an independent state.” During the same period, another American scholar Keith Callard in his book Pakistan – a Political Study commented, “the force behind the establishment of Pakistan was largely the feeling of insecurity.” Both these scholars missed out on some vital aspects that can be attributed to the “fear of Hindu domination” and “insecurity”. First, creation of Pakistan was an Anglo-Saxon mischief to protect their vested strategic interests. Second, the land bestowed to create Pakistan was separated amicably without war. Third, the Western powers, (and China that uses Pakistan as a proxy against India) fuelled these imagined fears that only created the effect of exacerbating latter’s psychological fault line.

Therefore, explanations like “fear of Hindu domination” and “insecurity” and other excuses as justification are used as psywar tool to disguise Islamabad’s treachery against New Delhi since 1947. Indian Political Right does not indulge in ‘export of terrorism’ or ‘suicide bombers’ as an instrument of foreign policy!

After the break-up of Pakistan in 1971, West Pakistan should have emerged as a more cohesive unit – geographically, politically, economically and in orientation. However 33 years hence, nearly 55% of Pakistan’s area is witnessing vicious insurgencies, which if not controlled, could lead to further vivisection of the country. Most of the population in these areas i.e. Waziristan, Balochistan, NWFP, and Northern Areas (Gilgit and Baltistan) in POK has been historically difficult to control and administer.

Indian Political Right does not indulge in ‘export of terrorism’ or ‘suicide bombers as an instrument of foreign policy!

This notwithstanding, ever since Musharraf’s ascension to power, these areas have slipped from peripheral disquiet to intense insurgencies. Normal governance in these areas has collapsed and is being held only by military force. These multiple fault lines as explained subsequently, if not adequately addressed can lead to internal strife and break up of Pakistan.

Waziristan (Federally Administered Tribal Areas)

The population of this area is 3,138,000 that are 2% of Pakistan’s total population. Socio-economic development has been totally lagging in Waziristan. The literacy rate is 17% and only 10% population has access to sanitation. With an area of 27,220 sq km, it constitutes 3% of Pakistan’s total landmass. The area is inhabited by Wazirs (Pathan Tribe).

The Taliban and Al-Qaeda has significant presence and influence in this area. Post 9/11, after reported death of Namangani (Head of Islamic Movement of Uzbekistan), the second-in-command Yuldeshev crossed over with surviving members of IMU into South Waziristan, where he and his Uzbek and Chechen instructors set up training camp for Jihadi terrorists. The Jihadi and Kalishkinov culture in this area is a legacy of the region’s intense involvement in the war against Soviet troops in Afghanistan in the 80’s. Post 9/11, consequent to jettisoning of Taliban by the Pakistan dispensation, the population in Waziristan has been subjected to ground and aerial attacks to flush-out Al-Qaeda and Taliban carders.

…nearly 55% of Pakistan’s area is witnessing vicious insurgencies, which if not controlled, could lead to further vivisection of the country.

There are 80,000 Pak Army personnel deployed in the 13 areas / agencies that make up Waziristan or FATA. The area known for its fiercely independent tribes and Islamic terrorists vehemently resent presence of the Army and its coordinated operations with US troops based in Afghanistan. The enormity of the growing strife in Waziristan can be gauged from the casualty figures. In 2005, 300 civilians and 250 troops were killed, and another 1400 were wounded; while up to March 2006, 121 civilians, 475 terrorists and 71 soldiers have been killed. Reportedly nearly 80% of pro-government tribal leaders have also been eliminated. The Pakistan government has also been using money to buy the allegiance of tribal leaders.

Recently, the corps commander Lt Gen Safdar Hussain has publicly admitted to having paid Rs.32 million (US $ 5,40,000) to some tribal leaders for severing their links with Al-Qaeda and Taliban.


The Balochistan province constitutes 44% (347,190 sq km) of Pakistan’s landmass and has a population of 6.5 million i.e. 4% of Pakistan’s population. Only 70% of Baloch are in Pakistan, the reminder being in Iran and Afghanistan. The Baloch are Hanafi Sunnis and a strong group of Zikri Baloch, having a population of about 7,00,000 inhabit the Makran area, who believe in the 15th century teachings of Madhi – an Islamic Messiah – Nur Pak, have their own prayers and do not fast during Ramzan. Baloch nationalism has been a factor in Pakistan since its existence.

The Baloch, who in general had supported the overthrow of Bhutto by Zia-ul-Haq, are up in arms against the central authority under Musharraf. In addition to 1,00,000 Para-military forces, there are nearly 23,000 Pak Army personnel deployed to quell the growing insurgency in Balochistan under the leadership of Nawab Akbar Khan Bugti (ex Provincial Governor). The Baloch have been demanding greater autonomy, more public sector jobs and higher share of revenues. The extremely inhospitable landmass of Balochistan, where subsistence is difficult, is critical for Pakistan’s energy supplies, and its maritime security and trade by way of Gwadar port. Balochistan meets 45 percent of Pakistan’s energy needs.

The Baloch people lament that the Gwadar area has been appropriated by Generals of Pakistan Army, who in turn have sold it to Karachi and Punjabi business magnets at astronomical prices

The Baloch people lament that the Gwadar area has been appropriated by Generals of Pakistan Army, who in turn have sold it to Karachi and Punjabi business magnets at astronomical prices. All the 22 districts of Balochistan are currently impacted by insurgency incurring an estimated cost of Rs. 6 million every month to the Pak establishment, and also resulting in severe gas and power shortages in the country, especially in Punjab.

Gas supplies from Sui, Loti and Pir Koh gas fields have been disrupted. Surface transport has been crippled. Three naval boats have so far been destroyed in Gwadar port. Railways have been compelled to operate only at night. So far, on at least a dozen occasions, railway tracks have been blown and on more than two dozens occasions gas pipelines have been targeted.


North West Frontier Province (NWFP) with an area of 74,521 sq km and a population of approximately 24 million in addition to 3 million Afghan refugees, is a problem in perpetuity because of the Pashtuns, who straddle the Durand Line (2450 Km long Pakistan-Afghanistan border).

The area continues to be infested with fundamentalists and the Jihadis.

The relations between the NWFP and the central government are increasingly becoming tenuous, as the majority of the population is averse to Pakistan’s cooperation with the US against the Taliban and Al-Qaeda. The area continues to be infested with fundamentalists and the Jihadis. In fact, it is the fundamentalist Islamic parties, who call shots in the province and lend all kinds of support to the remnants of Taliban.

POK (Northern Areas)

The Northern Areas comprising Gilgit and Baltistan have an area of 72,496 sq km and a population of 1.5 million, is governed directly by the Central Government in Pakistan. In fact the Northern Areas, which are actually a part of POK, but incorporated in Pakistan, are five times of the area designated as Azad Kashmir.

This area, culturally and linguistically much different from other parts of Pakistan, has been subjected to state backed Sunni terrorism. The composition of the Northern Light Infantry Units is being re-engineered by the central government to make it Sunni dominant.

Pakistan Army is getting over- stretched owing to its commitments in internal security duties and deployment on its borders with India and Afghanistan.

The Pakistan Occupied Kashmir (POK), which witnessed devastating earthquake in which more than 70,000 people lost their lives, demonstrated the administrative apathy of the Central Government in Pakistan with regard to the region. The Pakistan Army unlike the Indian Army was unable to respond to the needs of the people – thus leaving much of the rescue and rehabilitation to 1000 NATO personnel and fundamentalist organisations like JuD.

Punjab & Sind

The situation in the heartland of Pakistan i.e. Punjab and Sind is rapidly deteriorating, given the proliferation of Islamic fundamentalist ideology and their mushrooming activities. Organisations like Jamat-ud-Dawa (JuD), the parent organisation of Lashkar-e-Toiba (LeT) is fast occupying the political space due to absence of legitimate political parties. The reach of the Islamic terrorists in Pakistan’s heartland was evidenced by the car bomb attack near the US Consulate in Karachi before the recent visit of President Bush to the country.

The degeneration of law and order situation in the heartland can also be gauged by the fact that for security reasons, President Musharraf was asked by the US authorities not to receive President Bush at the Chaklala airport.

Predicated on the situation in Pakistan, it can be averred that more than half the country has slipped into anarchy and the remaining may also follow if Islamabad does not carryout a drastic reassessment of its nationhood and statehood.

In fact, Pakistan Army is getting over- stretched owing to its commitments in internal security duties and deployment on its borders with India and Afghanistan. Internally, the anti-India catalyst that sustained Pakistan Army is no longer effective. Even on the Afghanistan border the ISAF and Karzai are fiercely determined to defeat any attempt by Islamabad’s to re-export Taliban.

An external power today does not need to wage a war. It can simply exploit the precarious internal situation by using its intelligence agencies to attain the same objectives by fuelling the dissent through psywar and financial means.

Today the internal instability within Pakistan is fast acquiring proportions which could lead to further break up of the country – all due to sheer myopic policies pursued by its military junta. An external power today does not need to wage a war. It can simply exploit the precarious internal situation by using its intelligence agencies to attain the same objectives by fuelling the dissent through psywar and financial means. Fortunately, Pakistan has to contend with a benign power like India, which in the first instance created the former by magnanimously donating its land. Therefore Islamabad instead of exporting hatred and destruction, should seek positive parity with India and others in terms of improving the quality of life of its citizens in an inclusive manner. Towards this Pakistan must:

Seek positive parity with India i.e. with regard to human development. Negative parity will bleed Pakistan in human and economic terms.
Realise that Pakistani statehood has remained vulnerable due to flawed nation building policies e.g. Punjabi domination that constitute 58% of the total population.
Realise that Army can be a symbol of nationhood and an instrument and not the state itself.
Realise that jihadis are a double-edged weapon and can never get Pakistan its illusive nationhood and statehood.
Realise that by attempting to engineer history, the future is rendered in jeopardy.
Realise that Pakistan has the potential to be a positive role model for other Islamic countries.

It is a well-known fact that a large number of Islamic countries are bestowed with extraordinary oil wealth that drives the world economy. If the jehad factory of Pakistan and other Islamic fundamentalist institutions had used this wealth to educate, modernise their societies and improved the quality of human resources in the early eighties, at the dawn of the 21st century, it would have emerged as a modern, powerful and positive entity in the world arena without firing a single shot!

Pakistan’s establishment therefore must realise that its possible vivisection, due to its flawed policies, may deal a fatal blow to the very Islamic cause, that it purports to countenance and guide.
© Copyright 2015 Indian Defence Review

Friday, 28 August 2015

Raghuram Rajan’s Common Man Theory on Inflation

Raghuram Rajan’s Common Man Theory on InflationBy

Reserve Bank of India Governor Raghuram Rajan listens to a question during an industry event in Mumbai, India, August 20, 2015. Danish Siddiqui/Reuters

India’s inflation has eased in recent months but not as far as the man or woman on the street is concerned, and that poses a challenge, Raghuram Rajan, governor of the country’s central bank said Monday.

Mr. Rajan, who is on leave from his position as a finance professor at the Booth School of Business in Chicago, donned his metaphorical mortar board on Monday to explain to a room full of bankers and executives in Mumbai why he hasn’t been in a rush to cut interest rates.

One key reason: the public doesn’t believe that inflation has fallen and is not convinced that when it does, it will stay down, the Reserve Bank of India governor said.

If consumers believe that inflation will remain high, they tend to save and not buy goods and services, thus tempering demand in the economy. Meanwhile, if manufacturers believe that the cost of their raw materials could inflate, they are likely to price their products at a higher rate.

Mr. Rajan noted that India’s average inflation was more than 9% between 2006 and 2013. The perception of the “Aam Aadmi,” or common man is that inflation will remain high even though in July, consumer prices rose by only 3.78%, the lowest pace of growth in eight months.

“The longer we had high inflation, the more the public’s expectations of inflation became entrenched at high numbers,” said Mr. Rajan. He said that for expectations to come down, India needs a long period of low inflation.

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The RBI needs to earn the public’s trust, he continued, that it will act against future inflationary threats. To build its credibility on this front, Mr. Rajan said the central bank is creating a framework that targets inflation.

He also addressed demands from industry that the RBI should cut interest rates again, which many believe will boost growth. The theory goes that if the benchmark interest rate was lowered by one percentage point, and banks pass on the lower rates to borrowers, then demand and consequently economic growth will likely pick up and stocks could jump.

But, Mr. Rajan said, cutting rates works only in the short term. If there aren’t enough goods and services to provide for the higher demand, then the lack of supply can cause inflation to spike sharply, forcing the central bank to raise rates again, he said.

“The boom and bust will not be good for the economy, and average growth may be lower than if the cut had not taken place,” he said. “That is why modern economics also says there is no long run trade-off between growth and inflation,” said Mr. Rajan.

Besides, he said that central banks shouldn’t be trying to boost the stock market by cutting rates. “We do not have to look too far beyond our borders to see the consequences of such boosterism,” said Mr. Rajan. China’s Shanghai Composite Index fell 8.5% Monday, as investors worried that the country’s economy could slow down sharply.

Mr. Rajan said demands for a cut in interest rates each time new data showed inflation is lower, overlook the fact that it can take several months for the effect of a change to be felt. “So in deciding policy today, we need to predict how inflation will look approximately a year ahead,” rather than reacting to recent inflation data, he said.

“Rate cuts should not be seen as goodies that the RBI gives out stingily after much public pleading. Instead, what is important is sustained low inflation,” said Mr. Rajan.

The central bank governor said his remarks should not be taken as an indication of what the RBI may or may not do at its next monetary policy meeting. He said that whether it cuts interest rates or not will depend on various factors, including the outcome of the monsoon rains, which can impact India’s food prices.

Wednesday, 26 August 2015

India & the Chinese Economic Slowdown

See four charts that show how the China-led selloff is affecting India. 

Bad news from China has sparked a firestorm in the developing countries that feed its vast industrial machine, leaving a swath of economies with few good ways to escape a crunch.

But countries that have reduced their external vulnerability have fared at least slightly better in the latest rout. India’s currency shed a quarter of its value over a few months in 2013 after the Federal Reserve hinted it might reduce its monthly bond purchases. At the time, India relied heavily on foreign capital to fund imports.

But since then, it has built up foreign-currency reserves and narrowed the trade deficit. Prime Minister Narendra Modi has championed India as an attractive hub for low-cost manufacturing.

The rupee still slid on Monday, though, closing down 5.5% since the start of the year. India’s benchmark stock index dropped 5.9%, to its lowest level in a year.

“As far as India is concerned,” Finance Minister Arun Jaitley said in New Delhi, “our response at this stage is very clear: We have to strengthen our own economy.”

On Tuesday, Indian shares began to recover as investors started to buy stocks at lower levels after Monday’s fall. The S&P BSE Sensex was up 1.2% and the National Stock Exchange’s Nifty index rose 1.4% on Tuesday morning.

The rupee also recovered slightly, trading at 66.43 against the dollar, compared to Monday’s close of 66.64.

Why India Stands to Benefit From China Slowdown and Global Reaction 

India’s economy has been insulated from the turmoil in emerging markets by a long-standing handicap: It isn’t an export powerhouse.

For years, growth in India has been fueled more by domestic demand—not, as in China, by manufacturing goods for sale abroad.

Now India’s resilient consumer spending is an advantage as demand decelerates almost everywhere else. It is luring companies to produce in India and, the government hopes, can help spark a belated industrial revolution in the country of 1.2 billion.

Jayant Sinha, India’s minister of state for finance, said this week the Chinese slowdown and its world-wide fallout could provide a chance for India to “take the baton of global growth.”

Mumbai’s benchmark stock index ended Wednesday down 1.2%, having slid 8.5% in total since the People’s Bank of China moved to devalue the yuan on Aug. 11. The rupee has lost 3.4% since then.

India hasn’t been rattled as badly as Brazil, Russia or South Africa. Its international reserves are ample, and it isn’t highly dependent on foreign capital to fund imports.

India saw more than 6% shaved off the value of its stock market Monday and its currency fell to a near two-year low as a global selloff in stocks sped up.

The rout, prompted by the accelerating selloff in Chinese shares, produced the steepest one-week decline in years for many major markets.

But India and its currency are better braced for the storm than most others in the neighborhood and certainly than in 2013, when talk of an end to easy-money policies in the U.S. prompted a slide in the rupee against the dollar, making it one of the worst-hit currencies, while stocks too fell by over 8% in August 2013.

India is now in a stronger position in terms of international trade and has more foreign currency reserves. Here are four charts that show how Indian shares and the rupee have performed in recent weeks during what has become dubbed by some on social media as the #GreatFallofChina.

The Wall Street Journal
The more than 6% fall of India’s benchmark S&P BSE Sensex index on Monday, mirrored declines in global markets. The index has been choppy in recent weeks, as subdued corporate earnings offset cheer from a strengthening economic recovery. But Indian authorities quickly sought to calm local investors during the slide. “I wish to reassure the markets that our macro-economic factors are under control as the economy is in a much better position relative many other economies,” Reserve Bank of India Governor Raghuram Rajan said on Monday.
The Wall Street Journal
The rupee has weakened a little over 4% to 66.63 rupees against the U.S. dollar since the yuan devaluation on Aug. 11. But it’s still well short of its all-time low of 68.80 reached in August 2013, when emerging markets slumped in reaction to the possible tightening in the Federal Reserve’s monetary stance. Back then, India’s current account deficit stood at a record 4.8% of gross domestic product while foreign exchange reserves were at about $280 billion. 

Now, the deficit has shrunk to 0.2% of GDP, while reserves stand at $354 billion — near an all-time high — providing the country’s central bank with enough firepower to intervene in the currency market and stabilize any sharp fall in the rupee if necessary.
The Wall Street Journal
The rupee is among the Asian currencies to have stood up best against the U.S. dollar over the past few months as foreign investors pulled out of risky markets and the U.S. economy slowly recovered. 

The Indian currency has fallen 4.3% against the dollar since May 25. By comparison, the Indonesian rupee has fallen 6%, the Korean won has declined 8.5% while the Malaysian ringgit has slumped 14.8% against the dollar during the period.

Analysts believe India has been sheltered because it has a comparatively smaller trade with China and so less to worry about following the yuan devaluation. In addition, an improving domestic economy is also helping shield India from global headwinds.
The Wall Street Journal
The rupee has also performed well against most Asian currencies, barring the yuan, reflecting its reduced vulnerability to external shocks. For example, it has gained over 12% against the Malaysian ringgit and 4.4% against the Korean won since May 25. 

“I have not the least doubt that this turbulence is transient and temporary,” Finance Minister Arun Jaitley said on Monday. “Our domestic indicators are extremely positive and therefore I have no doubt that once these transient trends are over, markets particularly in India will settle down.”

Indian Industries Set to Shine as the World Slumps

The meltdown in China is rattling markets across the globe and India is no exception.

The massive selloff of stocks, currencies and commodities has triggered concerns that the world is headed for a repeat of the financial crisis of 2008 and 2009.

However the Indian economy has always been out of sync with other markets and analysts say that could be a good thing in tough times like these. In fact the tumult actually holds a few blessings in disguise for some Indian industries.

This story from The Wall Street Journal explains how India could actually end up being helped by its idiosyncrasies.
Here are five sectors that could benefit from the worldwide worries.

1 Consumer goods
The fall in commodity prices will bring down the raw-material expenses for consumer goods companies while domestic demand for their products will likely remain firm, says Anand Shah, chief investment officer at BNP Paribas Asset Management India Pvt. Ltd. Nomura shortlists Hindustan Unilever and Asian Paints as its top picks. It says an improving macro environment and lower input prices will drive strong profit growth for these companies.

2 Banking
Investors in India hope the country’s central bank will follow China’s lead by cutting interest rates to boost the domestic economy. A Reserve Bank of India rate cut looks possible before the September monetary-policy meeting, says U.R. Bhat , managing director at Dalton Capital Advisors, a Mumbai money management firm. Banks are likely to be one of the biggest beneficiaries of a cut as lending growth will pick-up and their bad loan ratios will come down.

3 Autos
Automobile manufacturers are in a sweet spot as lower oil prices and interest rates make it less expensive to buy and drive cars. Meanwhile, falling commodity prices will boost profit margins by lowering costs, says Nomura. It picks Mahindra & Mahindra as its favorite auto company.

4 Exports
Both technology and drug exporters have been outperforming recently as a weak rupee makes them more competitive abroad and lifts the rupee value of the dollars they earn. The rupee hit a near two-year low this week following weakness in other regional currencies after the devaluation of Chinese yuan.

5 Fuel retailers
Indian fuel retailers often have to shoulder losses to sell some fuels, including cooking gas and kerosene, at government-set prices. As the prices of these commodities fall with oil, companies like Indian Oil, Bharat Petroleum Corp. and Hindustan Petroleum Corp. can start to make money on these subsidized fuels.

Tuesday, 25 August 2015

Raghuram Rajan: Rate cuts not ‘goodies’ to be doled out after ‘public pleading’

RBI Guv Raghuram Rajan: Rate cuts not ‘goodies’ to be doled out after ‘public pleading’

RBI Governor Raghuram Rajan today made it loud and clear that it’s low inflation that will decide future rate cuts and these should not be seen as “goodies” doled out after “public pleading”.

The comments from Raghuram Rajan assume significance as RBI has been facing growing calls from the government and the industry for further rate cuts, although it has already lowered its policy rate thrice by 0.25 per cent each so far in 2015.

“Rate cuts should not be seen as goodies that RBI gives out stingily after much public pleading. Rate cuts are a natural consequence (of low inflation) that RBI has no hesitancy in delivering,” Rajan told a banking summit here.

Blaming leading central banks’ booster doses as the main reason behind the turmoil in global markets, Rajan said RBI is ready to deploy forex reserves to stem the market volatility amid the bloodbath, but warned against the consequences of such “monetary boosterism”.

He was quick to warn that the markets should not be looking at RBI as their cheerleader.

Recalling his past speeches wherein he had said the RBI is not a “cheerleader” for the economy and the markets, he said a central bank should not seen as elevating market sentiment unduly by delivering booster shots.

“I did not mean that RBI does not want to do its utmost to see the economy do well. Far from it! What I meant is that it is not the role of the central bank to elevate sentiment unduly, to deliver booster shots to the stock market so that it can soar for a while, only to collapse when reality hits. We do not have to look too far beyond our borders to see the consequences of such boosterism.”

After three rate cuts, Rajan kept the policy rate on hold at 7.25 percent at August 4 policy meet, but left the door open to easing if the inflation remains under control and banks swiftly lower their lending rates.

Explaining his position further on inflation management, Rajan said the only way to tackle the problem of price rise is to get inflation of all kinds (CPI and WPI) down as so long as the divergence between inflation in traded goods and non-traded services is large, “the problem will not go away”.
Copyright © 2015 - The Indian Express ltd. All Rights Reserved

Sunday, 23 August 2015

Religion in China

This fascinating map shows the new religious breakdown in China
major religions in chinaFenggang Yang/Reuters
This map shows the new religious make up of China.
China has historically followed ancient religions like Buddhism and Taoism for about 2,000 years, according to China's State Council. But a a recent map published by Reuters shows that the country's belief systems have become increasingly diverse.
The map, based on information from Professor Fanggang Yang, the director of the Center on Religion and Chinese Society at Purdue University, shows that China's monotheistic religions, including Islam and Christianity, are beginning to occupy a considerable amount of the country. Though Buddhism continues to occupy the majority of the south and south west regions, Protestant and Catholic followers have begun to occupy China's eastern regions, while western regions like Xinjiang and Gansu are predominately Muslim.
"Protestant Christianity has been the fastest growing religion in China," Yang writes in his essay, When Will China Become The World's Largest Christian Country? Though the estimates are varied, The Economist puts 100 million Christians in China as of last year.
According to the Council on Foreign Relations, that number could reach 160 million as early as 2025.
Despite anti-church sentiments, Yang expects growth as well.
"If the growth continues at the rate of 7 percent," Yang wrote, "Christians could be 32.5 percent of the Chinese population by 2040, and 66.7 percent by 2050."
Christianity in China_Final
Eleanor Albert, Julia Ro/Council on Foreign Relations
Christians are projected to reach 160 million in China.
This increase in Christianity has also lead to increased tension between Christians and Chinese Communist Party, Yang said.
According to the map, Chinese authorities in Huzhou removed a cross from a church despite the month long protesting efforts to protect their religious symbol. This is only one of the 1,200 crosses that have been removed in China "for the sake of safety and beauty" since late 2013, The Guardian reported.
Catholic leaders protested the removals, reported The Guardian, by disseminating an open letter to China's Christian population in late July.
Officials however believe that the major consensus favors the cross removal. "Generally speaking, the church staff and people are very supportive [of the removals]" an official from Zhejiang's ethnic and religious affairs bureau told Global Times - China's state-run newspaper.
The Uighurs, a mostly Muslim indigenous population in China, has also faced tension in Xinjiang. According to the BBC, the Uighurs and China's officials have had a long history of violence and restrictions. Last year, the Xinjiang government placed a ban on fasting during Ramadan, a holy month for practicing Muslims.

Coimbatore - New Start up Capital

Move over Bangalore, Coimbatore is the new start up capital

The silicon valley of India, Bangalore is too noisy and and perhaps even over-hyped. We aren't saying this, but the start ups based out of that region allege as much. So, what are they doing about the situation? A few of them are quietly shifting their base from Bangalore to Coimbatore to avoid the hullaballoo of the state capital and focus on quality. Some of them include Dhruv Kumar of online medical advice platform, iCliniq who shifted to Coimbatore 3 years ago after his 2 year stint in Bangalore.

"I wanted to be out of all the noise and focus on building a quality product," said Kumar. "There are events all the time and the place is flooded with funding stories. Those days, we thought we were a tech startup and did not focus enough on the health and business side."

A much-focussed development and the wait for the product to mature have been rewarding for him. iCliniq now has more than 1,000 doctors on its platform and they have so far addressed tens of thousands of health issues. It gets a large portion of revenue from the US and Europe.

"Entrepreneurs are celebrated in Coimbatore," the 27-year-old told ET, cheerfully. The cotton-growing region saw its first industries in ginning and moved on to make garments, machinery, automobile and many ancillary products. It is often called the 'Manchester of South India', drawing comparison with the first industrial city.

Several young entrepreneurs like Kumar, who started up in Bengaluru are shifting to Coimbatore. Do-PartTime, a part-time job discovery portal, is another example and one of the reasons for the shift was talent retention. "Every company has a dynamic workforce, which frequently shifts, and a static workforce with loyalty. In a place like Coimbatore, the teams stick around," said Kumar.

Coimbatore has pleasant weather conditions like Bengaluru and is seeing its fair share of startup activity. The Coimbatore chapter of The Indus Entrepreneurs (TiE), a non-profit consortium that promotes entrepreneurship, has identified 47 active startups.

One of the catalysts for them is the educational institutions in the region that have helped establish a sound technical ecosystem, TiE-Coimbatore President Selvakumar said.

There are five incubation centres in and around the city, almost all of them set up by a technical education institution. PSG STEP, the incubation arm of PSG Institute of Technology, was established in 1998, much before any other college, including IIM Ahmedabad, did so.

The centre incubates startups in IT, electronics and mechanical streams from Coimbatore. NanoTechnolgy was added to the list recently.

Thursday, 20 August 2015

TIANJIN explosion


 | August 13, 2015 |


According to the latest report from Xinhua, following the series of enormous explosions at an industrial area in Tianjin, at least 44 people were dead including 12 firefighters, with at least 520 injured, 66 of which in critical condition.
According to an AFP reporter at the scene there was shattered glass up to three kilometres (two miles) from the blast site, after a shipment of explosives detonated in a warehouse, raining debris on the city and starting huge fires. As the Tweet at the bottom of this article shows, the heat was so intense it melted hub caps.
For obvious reasons the local authorities are keeping complete silence on the question of what toxins may have been released after the explosion.
As we first showed yesterday, images showed a monumental blast soaring into the air, walls of flame enveloping buildings, ranks of burned-out cars, and shipping containers scattered like children’s building blocks.
“The fireball was huge, maybe as much as 100 metres tall,” said 27-year-old Huang Shiting, who lives close to the site. “I heard the first explosion and everyone went outside, then there was a series of more explosions, windows shattered and a lot of people who were inside were hurt and came running out, bleeding.”
Reports say that the blast was so powerful it created a mushroom cloud and triggered an earthquake that was felt up to six miles away.
AFP further reports that paramedics stretchered the wounded into the city’s hospitals as doctors bandaged up victims, many of them covered in blood after the impact of the explosion was felt for several kilometres, even being picked up by a Japanese weather satellite.
The magnitude of the first explosion was the equivalent of detonating three tonnes of TNT, the China Earthquake Networks Centre said on its verified Weibo account, followed by a second blast equal to 21 tonnes.Police took into custody the head of the company involved, Tianjin Dongjiang Port Rui Hai International Logistics, local authorities said. Communist Party newspaper the People’s Daily said in a social media post that there were people trapped by the fire, but CCTV said efforts to put out the blaze had been suspended as it was not clear what dangerous items remained in the storage facility.


Which brings up the question of just what toxic pollutants are currently floating in the air:according to China Youth Daily, the possibility of there being cyanide at the accident site in Tianjin cannot be ruled out.
Complete and utter devastation around the massive blast area.
The newspaper quoted Doctor Wu Chunping’s saying that the commodities stored at the explosive warehouse include hazardous chemicals such as sodium cyanide and toluene diisocyanate which can penetrate into human bodies through the skin and cause poisoning. Dr. Wu suggested preventive measures be taken. People should better wear gas masks so as not to expose their mouths and skin, he said.Wu explained that a single hazardous chemical explosion can be relatively easily targeted, while the situation in the Tianjin accident on Wednesday is different and more difficult to handle because it involved many varieties of hazardous chemicals.
In addition, a variety of hazardous chemicals will interact after the explosion to form more stable and more complex compounds and produce other toxic substances that fill the air and are difficult to dispel. Therefore, the follow-up work must include physical protection, Dr. Wu said.
For obvious reasons the local authorities are keeping complete silence on the question of what toxins may have been released after the explosion.
Toxic fumes detected in 500 meter radius from Tianjin blast area — RT News