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<b>Moscow Moves to Counter U.S. Power in Central Asia</b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->"Russia would like to reassert itself in the region, and it is using the financial crisis as an opportunity," said Nikolai Zlobin, senior fellow at the World Security Institute, a Washington think tank.

<b>Russian paratroopers are to form the core of the new military force, which is planned to be about 10,000 men. </b>Russian President Dmitry Medvedev said the <b>force will be ready "to rebuff military aggression," fight terrorism, drug trafficking and organized crime, and handle natural and technological disasters</b>.

"These are going to be quite formidable units," Mr. Medvedev said. "According to their combat potential, they must be no weaker than similar forces of the North Atlantic alliance."

When Kyrgyzstan said Tuesday that it intended to shut the base to U.S. troops, Moscow announced that it was extending the country $2 billion in loans plus $150 million in financial aid. That's a tidal wave of cash for Kyrgyzstan, whose budget is barely more than $1 billion, and whose populace has been harried by electric shortages, rising food prices and rampant unemployment.

<b>The Kremlin also is discussing aid packages to Armenia and Belarus, other former satellites hit hard by the financial crisis.</b>

The main U.S. supply route into Afghanistan runs through Pakistan, and militants have mounted a wave of attacks recently designed to prevent goods from entering Afghanistan. This week, militants demolished a key bridge on the route, forcing the U.S. to temporarily halt all shipments through Pakistan.

With Pakistan increasingly tenuous, U.S. officials have had to turn to Russia for help. <b>The U.S. already ships large quantities of fuel through Russia, and senior military officials hope to start sending more supplies</b>

<b>Venezuela behind on payments to oil contractors</b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->CARACAS, Venezuela – Venezuela's state oil company is behind on billions in payments to private oil contractors from Oklahoma to Belarus, some of which have now stopped work, even as <b>President Hugo Chavez funnels more oil revenue to social programs</b><!--QuoteEnd--><!--QuoteEEnd-->

His budget was based on $96-$100 oil price. He had to stop free dole or he will be go-went-gone soon.

A couple of pdfs
The Longer Evolutionary Timetable back Prior to The Stone Age


The Dawn of Agriculture and Small Towns like Jericho, 10,000 Years Ago

By HS Dent
Hillary visit to Japan, it means they will pursue Bill Clinton policy. Keep Euro down or destroy Euro. Popup Japan and South Korea against China. Pakistan against India. Ignore middle east as long as possible.
<!--emo&:argue--><img src='style_emoticons/<#EMO_DIR#>/argue.gif' border='0' style='vertical-align:middle' alt='argue.gif' /><!--endemo--> India will be kept in the loop by the US and Afghanistan, but during Holbrooke's visit, India also made its interests in Afghanistan and its stability very clear. India will officially keep its position of an "interested bystander" watching the unfolding events in this theatre.

India sought and received an assurance from the US that its decisions and policies in this region would not make India a "target". In other words, India doesn't want to be unpleasantly surprised by a set of events that adversely affects Indian interests in Afghanistan.

Lianhe Zaobao, Singapore
<b>Obama’s Realist Foreign Policy is Set in Motion</b>
By Zhang Zhixin

<b>The U.S. Cannot Solve Its Problems Without Russia</b>

<b>Welcome back, US constitution</b>
The Bush terrorism memos released this week reveal a radical expansion of executive power. Obama is right to reject them
08:32 GMT Russian strategic bombers could use Cuban airfields during patrolling missions - Air Force official...
07:57 GMT Chavez offers Venezuelan island to be used by Russian strategic bombers - Russian Air Force official...
'We are prepared to fly there'...

Compilation of Sandhya Jain Articles form Pioneer and Organiser.
<b>Israeli drones attacked Iranian convoys in Sudan</b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Israel used unmanned drones to attack clandestine Iranian convoys in Sudan that were attempting to smuggle rockets into Gaza, Britain's Sunday Times newspaper reported.
The paper said that western diplomats confirmed that Israel attacked the Iranian truck convoys in late January and the first week of February in the remote Sudan desert, just outside the Red Sea town of Port Sudan.

The convoys had been tracked by agents from Mossad, Israel's overseas intelligence agency, the report added.

The Sudanese government said this week it was investigating the possibility that Israel was behind the deadly air strikes, but so far had found no proof.

Foreign ministry spokesman Ali Sadiq said there were two separate bombing raids against smugglers, killing about 40 people.

The Sunday Times said that had the rockets been delivered to Hamas, the militant Islamic group that controls Gaza, they would have raised the stakes in the conflict with Israel.
<b>N. Korea launches rocket, defying world pressure</b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Liftoff took place at 11:30 a.m. (0230GMT) Sunday from the coastal Musudan-ri launch pad in northeastern North Korea, the South Korean government said. In Washington, the State Department also confirmed the launch.

<b>The rocket flew over Japan and landed in the Pacific Ocean, the Japanese broadcaster NHK said</b>, citing its government.

"Our primary concern is to confirm safety and gather information," Japanese Prime Minister Taro Aso told a news conference at his Tokyo office Sunday
<!--emo&:argue--><img src='style_emoticons/<#EMO_DIR#>/argue.gif' border='0' style='vertical-align:middle' alt='argue.gif' /><!--endemo--> Indian and Brazilian diplomats in particular, already among the world’s best, can advance the IBSA agenda because they share common ideals.

Where does that leave China? Probably wondering why yet another century mooted to be its century has passed it by. That may be good news for domestic reformers in China who can point to democracy as a precondition for international respectability. IBSA leaders are due to meet again in Brazil in October. Those tracking shifts in world affairs should cancel their trips to Beijing and make arrangements to be in Brazil.

<!--emo&:cool--><img src='style_emoticons/<#EMO_DIR#>/specool.gif' border='0' style='vertical-align:middle' alt='specool.gif' /><!--endemo--> Modern technology enables us to vote directly on national issues
-- not just on petty promises and pretty faces, bad candidate A or worse candidate B.
The nations of the world can now move beyond unrepresentative government, become a true democracy
and thus restore its moral leadership among nations.


<!--emo&:ind--><img src='style_emoticons/<#EMO_DIR#>/india.gif' border='0' style='vertical-align:middle' alt='india.gif' /><!--endemo--> Even though the protest over the Bunji dam was lodged with Pakistan, the protest note is also aimed at sending a strong signal to Beijing. The irony of the situation has not been lost on New Delhi which has been reeling under Beijing’s bid to block an ADB loan for an irrigation project in Arunachal Pradesh on the grounds that it is on a disputed territory. As far as India is concerned, the Bunji project is coming up on Indian territory.
We don't have a thread on British, hence posting here?

Recruited by MI5: the name's Mussolini. Benito Mussolini
[url="http://yidwithlid.blogspot.com/2010/02/amnesty-suspends-employee-who-blew.html"]Amnesty International Suspends Employee Who Blew Whistle on Their Embrace of Terrorism[/url]
Quote:On Sunday, Gita Sahgal, head of the gender unit at Amnesty’s international secretariat, shared with the Times of London that Moazzam Begg, a former terrorist, inmate at Guantanamo Bay, and Britain's leading supporter of terrorism has strong ties with Amnesty International.

In an email sent to Amnesty’s top bosses, she suggests the charity has mistakenly allied itself with Begg and his “jihadi” group, Cageprisoners, out of fear of being branded racist and Islamophobic.

Sahgal describes Begg as “Britain’s most famous supporter of the Taliban”. He has championed the rights of jailed Al-Qaeda members and hate preachers, including Anwar al-Awlaki, the alleged spiritual mentor of the Christmas Day Detroit plane bomber.

After letting the cat is out of the bag on Sunday, instead of purging its ranks of terrorist connections, Amnesty suspended Gita Sahgal.

She was removed from her post within a few hours of her criticism emerging, and now a bitter war of words is raging between the activist and her employer. Both have angrily defended their position over Mr Begg, 42, a Briton held at Guantanamo for three years until 2005 because of suspected links to al-Qaeda.

Miss Sahgal insists Amnesty, which is the world's biggest human rights organisation, should not be closely associated with Mr Begg because of his role as a figurehead for a campaign group called Cageprisoners.


[url="http://www.telegraphindia.com/1100210/jsp/frontpage/story_12088582.jsp"]Amnesty suspends Nehru kin[/url]

- Row over prisoner released from Guantanamo Bay

Quote:London, Feb. 9: Gita Sahgal, daughter of novelist Nayantara Sahgal and granddaughter of Jawaharlal Nehru’s sister Vijayalakshmi Pandit, has been suspended from her job with Amnesty International in London for blowing the whistle on the human rights organisation.

Sahgal, 53, who has long battled suppression of women by fundamentalists, seems to have paid the price for suggesting that Amnesty has got too close to extremist Islamic groups.

Karan Thapar cousin.
[url="http://www.hindustantimes.com/Big-push-to-acquire-mineral-wealth-abroad/H1-Article1-507874.aspx"]Big push to acquire mineral wealth abroad[/url]
Quote:major overseas shopping drive to ensure secured supply of scarce resources such as crude oil, gas and coal.

India is realising countries such as China have made a headstart in the sweepstakes to control the world’s scarce natural resources market.

The government is putting together a comprehensive policy framework that includes setting up of a dedicated fund and specialised cell to help state-owned companies acquire these strategic resources.

The Prime Minister’s Office, in a meeting last week, decided it is the right time to aggressively acquire raw material resources. “The PMO has asked the Finance Ministry and the Planning Commission to work out the size and structure of the dedicated fund in 30 days,” a senior government official told HT, requesting anonymity.

China is using its $200 billion (Rs 9,20,000 crore) sovereign wealth fund to acquire raw materials abroad. “This (China’s resource drive) is not only to meet its domestic requirement but for controlling the natural resources of the world in the long term,” the official said.

In the last 18 months, China has invested $106 billion (Rs 4,87,000 crore) in acquiring overseas oil and gas fields. In the same period, India has spent $2.5 billion (Rs 11,500 crore).

State-owned companies such as Coal India Ltd, NTPC and Steel Authority of India Ltd are eyeing purchases of coal and metal mines in Australia, Africa, Indonesia, the US and Chile.

But these companies are disadvantaged by cumbersome procedures. To counter this, a centralised nodal cell will be set up empowered with strategic and decision making powers.

Action has begun on the economic diplomacy front as well. The External Affairs Ministry has been asked to work out a strategy for acquisition of such resources, particularly in Africa where these assets are in direct government control.

ONGC Videsh Ltd has so far invested $12.5 billion (Rs 55, 200 crore) in buying oil and gas fields in Russia, Vietnam, Syria, Colombia, Sudan and Venezuela.

Finally, tubelight started blinking. They have to aggressively.
Posting here to show the interconnection between History, Academic Institutions, Nation's wellbeing, Media etc:

Recently in a history group there was a mail on the book written by well known Indian Marxist in a US university.

One Hindu Scholar has written a very good review on that book showing the amount of mistakes in that book and what kind of trash it is. Then a historian from India said we don’t have to take these kinds of anti-Hindu scholars seriously and rebut them. He felt that by reacting to this “nut case (XXX)”, we are providing legitimacy to them which we must resist at all cost.

Then three prominent scholars objected to this “ignoring” and said why Hindus must take put these issues:

Scholar 1:

1) TRAINING: we have too little rather too much competent criticism of the others. This competence takes many years to develop; it needs encouragement and not a flippant dismissal. the skills developed as a solid critic are highly portable and can be deployed later on other targets. If one observes how the Indian youth are being brainwashed on campuses by Marxists-Islamists-crypto Christians, one would learn the merit in such approaches that start with simpler, less prominent targets first. So my first reason to encourage this is that it is a training vehicle both for the scholar doing it as well as for the readers who tend to be rather naive and ignorant most of the time.

2) POWER STRUCTURE/HIERARCHY OF THEIR ARMY: To locate XXX in the big picture, one must understand the whole establishment of institutions that dominate knowledge production, distribution and retailing about civilizations, religions, nations, etc. XXX is a middle ranking officer along with other middle ranking officers like Angana Chatterji, Vijay Prashad and many more I could list. The senior officials like Romila Thapar, Irfan Habib, etc. based in India and several whites and Indians based overseas have many decades of expertise in maturing their collaborations, and networks of influence. They skillfully tap into funding sources, media to promote their books and spread their ideas, school education textbook writers, government policymakers, human rights activists in NGOs, etc. But they rely upon the middle rank to continue the work of producing more brainwashed young scholars. After all, Thapar types are not always active as teachers and even if they are, they know they have limited time ahead. So they groom others like these middle ranks to take over the teaching burden to ensure that the next gen will follow in their ideologies.

XXX has to be studied as it is such folks who will occupy prestigious chairs one day. Already they occupy various committees that make selections: from hiring, to papers selected, to conference attendees invited. When a US University was selecting the replacement of the Chair of Indian History, it was XXX on the selection committee who was championing the hiring of the most radical Marxist Indian historians possible. (This is duty for their version of sangha.) This time around (but probably not in the future) the benefactor was able to intervene and convince the authorities to bend their academic "isolation" and get a person who would be less anti-India. They got such a person - who I am told is somewhat less virulent but still very much into the theory of "foreigners brought everything useful to India". There are more young students today per annum being influenced by these middle rank folks than by the top tier generals of their army. Some of these middle rankers are vying to advance their careers, and for this they need to be seen in a certain light, and they also need to constantly kiss the right asses. It is a career club of sorts. This is not different than the behavior of the diehard religious activists I have observed. The difference is that the club XXX belongs to has control over the institutional mechanisms that are critical to assert power in society - school education, higher education, media, policymaking think tanks, human rights NGOs, and funding mechanisms. Unfortunately, most Hindus I come across are living in some lofty space in the clouds, dismissive of the importance of these institutional mechanisms. They trivialize what they truly don’t even know about.

3) MULTIPLE THEORETICAL FRAMEWORKS: Too many Indian scholars fail to understand the fine distinctions among various kinds of ideologies, and simplistically lump them as "west" or "Christian". The fact is that XXX is very anti-western and anti-white. He champions Ward Churchill, a part Native American, who led the angry anti-white rhetoric, which exaggerated some facts and got denounced. So when it comes to Indian vs. British, XXX will support Indians and hence Hindu. But when it comes to Hindu vs. Muslim issues, he is clearly on the Muslim side. This genre of postcolonialism consists of attacking colonialism, but not replacing it with an indigenous Indian civilization as their foundation, and instead valorizing the Mughal period. You will find this in the work of Sugata Bose even when he is not coauthoring with his Pakistani girlfriend, Ayesha Jalal. XXX is a mild Nehruvian and calls himself a Gandhian although his "Gandhianism" is naive - things like not owning a cell phone as a rejection of modernity but ok to use email. These mixed up folks use symbols, name dropping, who/what they show anger against, what events they attend - all this as a "profile portfolio" to project their intellectual identity within their system. The relationship with postmodernism is paradoxical and contradictory just like postmodernism itself. Western liberals invented postmodernism as a way to reject their past (both the Biblical era and the Enlightenment era that had replaced it). This was supposed to end all power structures of every kind in every discipline and domain. But recently the trend in western academics of theorizing is to reject postmodernism, seeing it as a sort of silly idealism and potentially a dangerous kind. It failed in its goal to deconstruct power (because it got co-opted by the very same power nexuses) and served as a cover for new kinds of power structures. But meanwhile, it is the fashion probe bandwagon of Indians who have downloaded the postmodern thought and turned it into their career ideology. XXX is one of these along with his mentor, Ashis Nandy. So while fighting western hegemony and whiteness (by equating it to modernity, hence the Gandhian symbolism in his portfolio), these Indians enter whiteness through a different and trendier door, namely postmodernism. I call it Postmodernism Whiteness.

So XXX's internal contradictions stem from wanting to believe that postmodernism is truly beyond civilizational grand narratives just because it says so and also because a few Indians have been admitted in as "theorists" such as Gaytri Spivak and Homi Bhabha (Harvard Humanities Dept and not the great Physicist). My point here is that folks who critique these kinds of books should be encouraged to go even deeper into their examination of people like XXX, because once you open the door to enter into their minds; there is no reason to stop after a simple analysis. Once you go deeper, their whole system of thinking and its history and relationships with power gets revealed. (People are also working on a book on this history of whiteness and its morphing into postmodern theories, which locates the "White Indians.")

4) BLINDNESS: A frequent topic of my arguments has been on assertions that "Indology is dead" and that "we won," which sends the implicit message that now "we can go home and relax". I have pointed out that the term Indology got replaced by South Asian studies; the empire that studied India most intensely has transferred from London to Washington; the CONCLUSIONS of what was once Indology have spread like a metastasized cancer into many other fields like religion, anthropology, history, political science, human rights, etc. This stealth Indology is far more dangerous because its mechanisms for spreading are hidden under various disciplines. See any textbook or even a modern western Sanskrit thesis and you see the signature of Aryan invasion/migration theories all over. The same ideological postures exist far more dangerously today. So it’s wrong to discourage whatever little energy we have in terms of mounting a counter discourse. Let them not finish us off so easily due to our own foolishness.

What goes unchallenged turns cancerous. If already cancerous it metastasizes and starts to spread. If its already metastasized it spreads faster unchallenged. So no matter what stage a given tumor might be in, it needs to be confronted and challenged. Even when the challenge seems feeble, it will give fodder to other challengers. In places like amazon.com such negative (but intelligent) remarks do dissuade usage of the books by the vast segment of undecided, the vacillators, the folks who want to be fair, etc. but who are simply uninformed. It’s like a parliament that consists of members who are 100% from one party, but suddenly a dissenting voice appears. This voice cannot overrule the power structure, but its ability to make the system self conscious does have an effect. There are bound to be those who start to be less blatant in their bias just because someone is watching.

Scholar 2:

Not just the book of XXX, even in Wendy Doniger's new book, one can see how the power structures discussed by Scholar 1 below play out. If you see the bibliography of her chapters, she has largely referred to people of 'her school'; Marxist historians; and other partners in 'the good fight' (to use her phrase). It is all about creating and leveraging alliances. She is no fool, or else she would not be today where she is right now.

A quick look at the Worldcat shows that already more than 300 libraries in the US and Europe have purchased her book. If that books goes unchallenged, you can be assured that it will be used as an 'introductory text on Hinduism' very soon. There is an Indian reprint for a mere Rs 500 available already. The urban Hindus who know nothing about our heritage will lap all that she drools. We all know what will happen then.

If nothing, our opposition to such books raises the stakes and discourages at least some potential Hindu baiters from writing such nonsense in future. And the controversy generated is a great way to enlighten our own people about the true foundations of our Dharma.

A very important point that is made below is that all these Hindu and India baiters train ARMIES of students every year. I personally met a lady whose son attended a class by Vinay Lal (a Marxist in UCLA). Initially, he was taken aback but soon, he started agreeing to what Lal said. Lals and Donigers lead their students through a tunneling of vision phenomenon and unless we break this spell, they will not see the truth. One only needs to go to ANY Indian gathering comprising of the normal crowd (not just the Sangh followers) and you will be shocked how much the average Indian has been brainwashed. So we cannot live in this fantasy world and say that people like XXX do not matter. Yes, they do. And unfortunately, they probably matter more than us right now. So we have a good task cut out for us for our lifetimes.

As the Shringeri Shankaracharya once said to me - If Lord Vishnu Himself leaves his state of eternal Kaivalya and incarnates to fight evil, is it not our duty too to fight what is wrong tooth and nail?

Scholar 3:

I understand and sympathize with your interpretation of XXX political motivations, but I do believe there is somewhat more to this story. It is important to recognize that he and his ilk have come to regard Islam as being in the forefront of anti-imperialism, particularly Israeli-American, in which they regard 'Hindu India' complicit. Of course the notion of Hindu India is an absurdity unless one is willing to accept the most visceral Pakistani-Bangladeshi commentary on the nature of India, itself rooted in 19th century sub continental Islamic sectarianism. Interestingly, XXX and his academic kin are unwilling to make direct criticism of 'Islamic regimes' (because they rarely criticize anything Islamic) that the Jihadis, with who they are in sympathy, oppose. But most glaringly, they absolutely refuse to recognize the brutal imperialist agenda of Islamic Jihadis themselves. And even more shockingly, XXX and most Leftist supporters of supposed Islamic resistance to Western imperialism ignore any atrocities Muslim Jihadis commit against innocent non Muslims or indeed Muslims (e.g. the callous killings of Shias in Pakistan by Saudi-inspired Sunnis). Thus Taslima's banishment from Kolkata/India elicited no protest (though one major Leftist writer, Mahasweta-devi, denounced the communists for it) nor the routine kidnapping, rape and the forced marriage of Hindu girls in Bangladesh and various parts of Pakistan.

It is pertinent to note that the Anglo-American war against militant Islamic groups is of very recent origin, indeed less than a decade old. Earlier these murderous Islamist Islamists were very much part of the Western arsenal against Arab nationalism, the USSR (until the early 1990s and later in Chechnya because of its near monopoly of oil pipelines to the West) and other assorted regimes, like India disliked by the West. Indian Leftists have always been part of this political dispensation though its implications were not rendered explicit and barely recognized by protagonists of Hindutva, who have never had the intellectual equipment to see beyond their noses. It is important to recall that this political dispensation was also pro-Chinese and therefore willing partners of their Western ally, the USA, which, incidentally, renewed the integrity of China's nuclear defenses in the mid-1970s (to avert a possible preemptive Soviet nuclear strike) and

then helped Pakistan emerge as a nuclear power and exporter of weapons technology (all the evidence now public). These three parties, Indian Leftists, China and the US, also came together to support the genocide in Bangladesh in 1971.

Indian Leftist access to academic positions in US and British universities has been significantly predicated on the intercession of foreign policy and intelligence agencies (and their academic levies within universities) determined to undermine Indian political legitimacy (they cursed Nehru and Indira Gandhi much more venomously than any Hindutva target) through a non stop critique of all its 'devilish works', thereby validating Pakistani claims of victimhood. The likes of Sugata Bose (with and without Ayesha Jalal) his brother at the LSE (persistent critic of Indian policy in Kashmir) and cousin Sharmila at Oxford (denies the Pakistani army committed mass rape in East Pakistan in 1971) issue a constant patter of delegitimizing against India. I have just read a piece by Professor Dipesh Chakravarty, colleague of the two Chicago University harridans, Doniger and Nussbaum, cynically denouncing Indian nationalist historical writing by insinuating a Hindutva pedigree for it. Nowhere does he cite the implied specifics of distortion by them except to name Romila Thapar and Sumit Sarkar (a genuine low life himself) as some sort of irrefutable evidential iconography to supposedly clinch the argument; he only emerges as a low life as well as a result, which a Chicago chair in the heart of the imperialist monster cannot obviate!

The CPM and its Muslim vote bank are very important explanatory variables too because the communists understood that without Muslims votes they were nothing in West Bengal and Kerala, the only bases of their political power in India. They ensured through myriad party institutions that the Leftist intelligentsia understood this stark reality. As a result, the pro-communist 'intelligentsia' eschewed all questioning of Islam and provided the cultural and intellectual rationale for the victimhood of Muslims and the portrayal of an alleged converse fascism of Brahminnical Hinduism. From Romila Thapar and the two JNU Patnaiks to Amiya Bagchi and Joya Chatterji and countless other acolytes, never has a word of criticism been uttered against Islam. And the non CPM Leftist Indian intelligentsia was intellectually overawed and also depended on the party mandarins, holding crucial academic and bureaucratic offices, for their own careers. And a whole climate of anti-Hindu propaganda took root in which a Leftist identity by became the norm for a large number of university students. And evangelical Christians also supported this insidious campaign (just look at the newer Christian evangelical websites) because doing down Hindus was their first port of call.

But bear in mind that Hindus across the board (including of late Baba Ramdev and Sir Sri) confronted by an implacable Islam have sought to accommodate. Gandhi was only an extreme version of the phenomenon, which is shared even by the RSS, judging by its forlorn efforts to reach some sort of reconciliation with it. R.K. Ohri judges this cowardly Hindu impulse as a product of fear due to prolonged subjugation and constant brutal punishment, floggings, torture and painful deaths.
<img src='http://www.india-forum.com/forums/public/style_emoticons/<#EMO_DIR#>/ohmy.gif' class='bbc_emoticon' alt=':o' /> AMSTERDAM: The Dutch coalition government collapsed on Saturday over whether to extend the country's military mission in Afghanistan, leaving uncertain the future of its 1,600 soldiers fighting there.

Prime Minister Jan Peter Balkenende announced that the second largest party in his three-party alliance is quitting, in a breakdown of trust in what had always been an uneasy partnership. http://timesofindia.indiatimes.com/world...596857.cms
India's elephant charges on through the economic crisis

By Martin Wolf

Published: March 3 2010 02:00 | Last updated: March 3 2010 02:00

Crisis? What crisis? Indian policymakers are not asking such a complacent question. But India has had a "good crisis". Now its task is to unwind the exceptional support given to the economy and push through the reforms needed to sustain fast and inclusive growth.

When Pranab Mukherjee, the finance minister, presented his budget last week he noted that a year ago, India confronted a double challenge: the global crisis, and a poor monsoon. Now, "I can say with confidence that we have weathered these crises well." As the Indian government's Economic Survey put it: "A variety of stimulus packages were put in place in the second half of 2008-09, in the Interim Budget 2009-2010 and, again, three months later, in the main Budget 2009-2010. By the second quarter the economy showed signs of turning; and now, close to the end of the year, India seems to be rapidly returning to the buoyant years preceding 2008." In the 2008-09 financial year, India's gross domestic product expanded by 6.7 per cent. This year it is forecast to grow by 7.2 per cent. If the Indian economy has succeeded in surviving this test with so little damage, even cautious analysts must be more optimistic about the future.

Stimulus has its costs. The central government's fiscal deficit expanded from 2.6 per cent of GDP in 2007-08 to a provisional figure of 5.9 per cent in 2009-09 and an estimate of 6.5 per cent for this year. If one includes the states, the deficit jumped from 4 per cent of GDP in 2007-08, to 8.5 per cent in 2008-09 and a forecast of 9.7 per cent this year. India's nominal GDP grew at an average rate of 14 per cent between 2004-05 and 2009-10. That makes deficits of 10 per cent of GDP quite sustainable. I wish that were equally true of the UK.

Nevertheless, continuation of such deficits is undesirable. First, much of the spending - particularly on fertiliser, food and petroleum subsidies - is poorly targeted. Second, the public sector's savings collapsed from 5 per cent of GDP in 2007-08 to 1.4 per cent in 2008-09. This needs to be reversed.

Before the crisis the country's gross savings rate had hit 36 per cent of GDP (see chart). Given the country's attractions to long-term foreign capital, that would allow an investment rate of close to 40 per cent of GDP. Such a high rate of investment could deliver 10 per cent growth. It might deliver even more: since India's output per head (at purchasing power parity) is roughly a fifteenth of that of the US, the potential for fast growth is huge.

The extent of the optimism became evident during a week spent in India last month. Among the highlights was a conference on a book of essays in honour of Montek Singh Ahluwalia, deputy chairman of the planning commission and, after Manmohan Singh, prime minister, India's most influential economic policymaker of the last two decades (and a friend of mine for 39 years).*

I was struck by the upbeat tone of the essay on "macroeconomic performance and policies, 2000-8" by Shankar Acharya, a former chief economic adviser to the Indian government. Dr Acharya is the most sober of competent analysts of the Indian economy. Indeed, the book gives a strong sense of the confidence of the technocratic elite in India's performance and prospects. Similar confidence is palpable among the business elite. This confidence makes this a radically different India from the one I knew when I was the senior divisional economist for India, at the World Bank, in the mid-1970s. The emergence of an elite consensus on where the country is going is clear to any regular visitor. When entering the commerce ministry, bastion of opponents of open markets in the 1970s, I was struck by a poster describing India as the "world's largest free-market democracy".

Another feature is the belief that the pragmatism of India's policies, particularly over global finance and the balance of payments, had proved correct. Those in charge of a vast country with so many vulnerable people are rightly wary of making their economy hostage to the sociopathic tendencies of the financial sector. This was the theme of an essay by Rakesh Mohan, former deputy governor of the Reserve Bank of India.

Yet caution cannot be inertia. Dr Acharya's list of needed reforms rightly includes "infrastructure, agriculture, labour laws, banking, energy, education and retail trade". Fortunately, a country as big as India could sustain fast growth even if the external environment remained less friendly than before. But that would make lifting internal obstacles to growth even more urgent.

The external environment also matters, in at least three respects. First, India has followed China in becoming far more open to trade. Indeed, India's ratio of trade in goods and non-factor services to GDP in 2008 was where China's was in 2003 (see chart). Second, India depends on access to foreign raw materials, particularly energy. So energy price shocks would be very destabilising. Finally, India needs peace.

India and China are both ancient civilisations. But China's ancient state has a powerful legitimacy. India's state is young. Politics are a permanent negotiation. Democracy is not, as some argue, an obstacle to India's progress, but a necessary condition for its existence as a state. For all the frustrations and failures, the political system is workable.

As a chapter in the Economic Survey on the "Micro-foundations of Growth" argues, even "India's unpardonably large bureaucratic costs are like a valuable resource buried under the ground". So much could be achieved if the state got out of the way. I have little difficulty in imagining that India can sustain growth of close to 10 per cent a year for a long time. Under conservative assumptions, the Indian economy would be bigger than the UK's, in market prices, in a decade and bigger than Japan's in two. I argue in a chapter on "India in the World" that India is following China as a "premature superpower", by which I mean a country with low living standards, but a huge economy.

Exhausted by the burden of its pretensions, the UK should soon offer its seat on the security council of the United Nations to its former colony. Its condition would be that France does the same in favour of the European Union. Whether or not such enlightened statesmanship is forthcoming (presumably not), we are moving into the age of continental superpowers. Asia will be home to not one, but two, of them.

*Shankar Acharya and Rakesh Mohan, India's Economy, Oxford University Press, New Delhi, 2010.


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