India yesterday became the first country in the world successfully to complete a space mission to Mars on the first attempt, beating China, which does not yet have a craft in orbit around the planet. It also beat Russia and the US which did not succeed first time, and its cost was only Rs450 crore spent over three years ($74m) compared with the US spending $679m over six years.

photo 1-2Today Narendra Modi, the prime minister launched his “Make in India” campaign at a televised jamboree in Delhi. This is aimed at persuading both foreign and Indian companies to invest in India and thus boost both its unsuccessful manufacturing industry and its exports. Twenty-five sectors have been identified  for social focus.

Abandoning the usual comparison between India as a lumbering elephant and China as a prowling tiger, Modi has chosen a lion (made of engineering cogs) as the logo of the campaign, presumably because his home state of Gujarat is home to India’s only lions.

With these two events, one might think that all is beginning to come right for a country that has lost its way economically in recent years. The timing is good. Modi is about to leave for what promises to be a spectacular five-day visit to the US where he will try to persuade investors and politicians – and world leaders at the United Nations – that India is bring back on track

Sadly it is not so. Just as Mangalyaan, (Mars-craft in Hindi) was entering the Mars orbit, three judges in India’s supreme court cancelled, with effect from March next year, 214 of the 218 coal mining licences that have been issued without open tendering between 1993 and 2011. This endangers India’s power generation industry, its steelworks and other industries, as well as adding to foreign investors serious worries about the risks and uncertainty of doing business here.

All these events link up to illustrate why India’s fudge and fix-it approach policy making and governance, known as jugaad, coupled with a belief that everything will work out ok (chalta hai) have whittled away at the country’s institutions and economic performance to such an extent that Modi won a landslide general election victory four months ago because voters believed he could restore India to its rightful place in the world.

Even though it fails in many industrial areas, India is a world leader in space and rocket technology, manufacturing, and delivery, mainly because the US and other countries stopped it being able to import high technology after its nuclear weapon tests in 1974 and 1998.

This meant that India was on its own so, capitalising on work initiated shortly after independence in 1947 by prime minister Jawaharlal Nehru, scientists and private sector companies produced a series of successes that culminated in yesterday’s Mars achievement. Two companies that have done pioneering work for decades, the Godrej group and Larsen & Toubro, contributed to the Mars mission, as did many smaller companies that have innovated and developed high technology over the years.

photo 5-1The development speed and the  low cost of the Mars probe illustrates how Indian industry is capable of developing the negative skills of jugaad into frugal engineering where the best is made of limited resources at minimal cost.

Contrast that with India’s defence industry, where there has been no ban on imports and where US and other foreign companies have connived with the defence establishment to such an extent that as much as 70% of India’s defence orders have to be bought from abroad – even night vision goggles, radars and guns as well as helicopters, other aircraft, ships and missiles have not generally been manufactured in India to satisfactory standards.

This bureaucratic throttlehold on the growth of manufacturing industry stretches far beyond the defence industries, and Modi’s hopes of reviving the industry will not succeed unless he stops bureaucrats working with foreign suppliers to boost imports at the cost of local companies.

Judicial activism

Governments till now have failed to tackle these and many other failing in the way India works, which has led to an escalation of “judicial activism” that began over 30 years ago, where courts take it on themselves to order governments and other authorities what to do. Initiatives have ranged from protecting bonded labour and enforcing environmental regulations, to ordering Delhi’s buses to be powered by compressed natural gas, and even recently challenging the government’s tardiness in appointing an official leader of the opposition in parliament

This has progressively upset the balance between the executive and the judiciary as the machinery of government has begun to implode, but yesterday’s mining judgment is probably the most damaging and irrational of edicts. It follows a similar but less economically damaging ruling two years ago that cancelled mostly corrupt telecommunications licenses. It stems from a coal scandal during the time of the last government when coal licenses were handed out without proper controls to a wide range of companies in order to speed up coal-fired power generation. But many companies simply sat on the assets and did not start mining, which led to the Supreme Court action.

It would have been understandable if the judges had cancelled licenses where coal mining had not been started, but it has acted retrospectively on 21 years of licenses and is also fining companies Rs 295 per tonne of coal mined. That money will go to the government which now has six months to reorganize the industry and the inefficient Coal India to try to fill the gaps.

The judges no doubt felt they were doing their legal duty, and it is of course the failings of successive governments that have led the supreme court to intervene to such a degree. And it will no doubt continue to do so until the government gets a grip on affairs that it should be running.

Posted by: John Elliott | September 18, 2014

India and China agree deals despite border face-off

modi-xi-swing1 - IndianExpressIndia and China’s leaders have today successfully agreed in Delhi on plans for economic and other co-operation despite over 1,000 troops from each side facing off against each other in Ladakh on the two countries’ disputed border, known as the Line of Actual Control (LAC), 15,000ft up in the Himalayan mountains,

China is to invest $20bn in Indian infrastructure projects over five years, and eight agreements and memorandums of understanding were signed on subjects ranging from China modernising Indian railways and building industrial parks to twinning the commercial capitals of Mumbai and Shanghai and Ahmedabad in Gujarat with Guangzhou in the Chinese province of Guangdong. A five-year economic and trade development plan was also agreed.

The visit was supposed to have been full of friendliness and co-operation. The day that China’s president Xi Jinping arrived was prime minister Narendra Modi’s 64th birthday, and Modi celebrated it by proudly hosting Xi to a carefully choreographed afternoon and evening of serenading and dining (with 150 vegetarian dishes) on the waterfront of the Sabarmati River in Ahmedabad, the biggest city in Gujarat where he was chief minister.

The chemistry between the two leaders, who had previously bonded at a BRICS summit July, was good and Modi’s eyes twinkled when he spoke to Peng Liyuan, Xi’s wife, who is a famous folk singer and former soldier. Later in the visit, Peng got widespread media coverage for relaxed informal meetings with school children

Modi-Xi2 -Peng - PTI - Indian Express

But Modi’s birthday was spoiled not only by Chinese troops massing on the border, which threatened to upset the mood, but also by bad by-election results announced the day before when the Bharatiya Janata Party lost significant regional assembly seats.

Confrontations happen frequently on the LAC, mainly stemming from the fact that the line of the current border is not demarcated. A similar confrontation built up just before China’s prime minister visited India last year, but that was solved before he arrived. This time, there have been at least two confrontations and they increased even after Xi had arrived, without Chinese troops withdrawing. While it seems unlikely that Xi personally ordered the Chinese troops to cross what India regards as the border, there is speculation that the People’s Liberation Army decided to flex its muscles and test India’s reaction – and Xi may not have been in a position to stop it. If that is correct, it underlines the PLA’s growing independence.

modi-xi umbrella - Indian ExpressModi had promised before he became prime minister to take a tougher line over border incidents with China and Pakistan, and it seems that India has reacted more aggressively than it has done in the past by moving troops rapidly to the LAC to match and even exceed the number of Chinese troops. He also, inevitably, complained about the Chinese troop activity during talks with Xi both in Ahmedabad and Delhi.

In a prepared media statement after the talks, Modi voiced India’s “serious concern over repeated incidents along the border”, and said peace on the border was essential for “mutual trust and confidence and for realizing the full potential” of the relationship.

“This is an important understanding, which should be strictly observed,” said Modi, using tougher language than is usual. He also suggested reducing the risk of confrontations by demarcating where the existing border runs, while leaving (though Modi did not spell this out) the dispute over a permanent settlement till later.

Xi was the first Chinese president to visit India since 2006 and he sounded constructive in his remarks, though he used the words always deployed by China that the border dispute is something “left over by history”.

Modi saw Xi’s visit as an opportunity to attract China’s capital and technology to help modernise India’s infrastructure and industry. It follows a similar exercise when he visited Japan three weeks ago and obtained investment pledges, and then met the Australian prime minister in Delhi. This is in line with Modi’s pro-active approach to diplomacy, which he will continue in the US at the end of this month. He wants to develop foreign policy far more pro-actively than has done in the past in order to harness other countries’ help in accelerating India’s under-performing economy and industry.

The $20bn figure is much lower than rumours of an unrealistically high figure of $100bn, but it is a massive increase on the $400m that China has invested in the past ten years. The figure offered by Japan was $35bn and the challenge for Modi now is to speed up India’s slow-moving bureaucracy and project approval system to absorb such big investments. There is also serious concern in India about the poor quality of some Chinese power project equipment which, it appears, was not mentioned in the talks.

umb--621x414 - Mint

Xi arrived in India from Sri Lanka and the Maldives where he had been increasing China’s involvement in what used to be seen as a region of India-influence. He unveiled new infrastructure projects in both countries, and talked about them having a role in reviving an “ancient maritime silk road” of trading posts that led to China. In Sri Lanka he inaugurated a China-funded $1.5bn port development in the capital, Colombo, which is billed as the island’s biggest ever foreign investment project. Xi was also to have gone to Pakistan, a long-term China ally, but cancelled to visit because of he political unrest in the capital, Islamabad.

The BJP losses came in by-elections for state assemblies in eight states and followed other less significant defeats in recent weeks. This week’s results were significant because they involved the key northern state of Uttar Pradesh, where the BJP did spectacularly well in the general election but lost eight out of 11 seats to the regional Samajwadi Party. In Modi’s home state of Gujarat, it was defeated by the Congress Party in three out of nine seats.

These results may show some disenchantment with Modi’s national government for not tackling basic problems such as prices. But more importantly they seem to show voters in UP turning against divisive Hindu nationalist anti-Muslim rhetoric orchestrated by Amit Shah, a Modi confidante who has been controversially installed as the party’s national president. It is also significant that Modi was not personally active in the by-election campaigns, which underlines the point that the general election result was more a vote for him personally than for the BJP.

It hasn’t taken much to lift the gloom of Delhi’s elite. Three good months of economic growth plus a booming stock market were capped last night when India’s modern art market came alive with sales totalling Rs38.27 crore ($6.38m) at an auction mounted by Saffronart of Mumbai. Only four of ninety works on offer had to be withdrawn after failing to meet their reserve prices, which is far less than usual in Indian art auctions.

SHRaza SfrnArt Sept '14The Rs38.27 price was just above the total higher estimates for the works, and nearly 50% above the Rs25.74 lower estimates.

The top sale was La Terre (left), a 50in x 29in acrylic on canvas by S.H.Raza, one of India’s leading elderly masters. It sold at a hammer price that matched the top estimate of Rs7 crore hammer price – Rs8.17 crore ($1.31m) including buyer’s premium. A rather dark and gloomy oil on canvas by Jehangir Sabavala titled Flight in Egypt 1 tripled its estimates to sell (including premium) for the artist’s world record price of Rs3 crore ($500,000).

The power elite, as they are known in this city, are supposed to be in the depths of despair now that Narendra Modi has burst into Delhi as prime minister of the new Bharatiya Janata Party, shattering the self-confidence, power and patronage of political and social circles who have swirled around the Nehru-Gandhi led Congress Party for years if not decades.

Tyeb Mehta SfrnArt Sept '14

But last night, many of them were at the Saffronart evening auction in Delhi’s smart Oberoi Hotel as buyers as well as spectators. Unlike such events in the UK and US, drink and snacks were served during the sale in a large room alongside the auction ballroom, and refreshments were brought into the hall for select high-rollers.

The party mood continued after the auction, which was the most successful since Christie’s of London held its first ever auction in India last December in Mumbai with sales totalling Rs96.5 crore ($15.45m).

The next big events on the India art scene are the annual auctions in New York later this month, and then there is an India Week with three auctions being staged in London by Sotheby’s at the beginning of next month. Sotheby’s will span five centuries from Mughal miniatures and the art and rare photographs of imperial India (some lost or hidden for many years) to modern and contemporary works.

Tyeb BluePainting Sotheby's London Oct '14The ‘modern’ highlight will be Blue Painting, (left) a 45in x 35in oil on canvas painted by Tyeb Mehta in 1982, which is being sold by Masanori Fukuoka, a leading Japanese collector, and was unveiled in Delhi two days ago.

A much earlier and unusual small 13in x 7.5in Tyeb Mehta gouache on paper (above), dating from 1954, went last night for a hammer price of Rs82 lakhs, which was more than five times the estimates ($165,000 including buyers’ premium).

The event was the first live auction held in Delhi by Saffronart that has been pioneering on-line auctions for twelve years. It was also the first big auction staged in the city by professional specialists for several years. Only works by moderns such as Raza, M.F.Husain, F.N.Souza and others were included, and there were none in the contemporary category where prices remain low after a slump a few years ago.

ManjitBawa SfrnArt Sept '14All this helped to draw a far wider selection of Delhi’s collectors than many smaller auctions, most of which fail to create a buzz, and then finish with a considerable number of unsold works. Last week less than half the works on offer were sold at an auction (partly to raise funds for a charity) by the Delhi Art Gallery, which has a vast collections and is an active buyer and seller.

A measure of the buzz last night was shown when a small rather evocative 11in x 15in Manjit Bawa pencil and pastel on paper (above) fetched a hammer price of Rs25 lakhs ($41,000), triple the estimates, and also triple the price paid for a very similar work at the Delhi Art Gallery sale.

“People were excited and old collectors came out, with people wanting to feel the market and buy,” says Dinesh Vazarani, Saffronart’s co-founder, and the auctioneer. The question now is how long that will last – the auctions in New York and then at Sotheby’s in London will provide some of the answer.

Posted by: John Elliott | August 31, 2014

Narendra Modi kick starts government in his first 100 days 

Modi Japan rtr44dh7Narendra Modi’s Bharatiya Janata government is now celebrating its first 100 days in power. Modi is now in Japan on his first big international visit as the guest of prime minister Shinzo Abe, who has given him an effusively warm personal welcome reflecting their rapport (left).

Two days ago it was announced that economic growth reached 5.7% for the three months to June, the highest for two years, and a big financial inclusion scheme to open bank accounts for millions of the poor has just been launched. A raft of defence contracts and tenders have been decided, with more Indian private sector involvement than has been allowed before.

This shows that the government is now moving into an action phase, though the economic growth of course was generated before the general election.

There is widely reported gossip about rifts among BJP leaders, and there are also concerns about the BJP’s right wing and its ideological partners pushing a nationalist agenda. This has surfaced most damagingly with suggestions that all Indians are Hindus, which marginalises the identity of minorities, notably Muslims but also others including Christians. Such suggestions do not fit with Modi’s current economic-oriented agenda, though he probably has to allow the right some slack to keep them content.

photo 2-2

There will be a price to pay for the newly energised growth-oriented government that Modi is running. “Dirty growth is inevitable,” a leading Delhi columnist adamantly said to me the other day. Rules restricting coal mining in forest areas are expected to be watered down soon, along with the powers of a National Green Tribunal. The government has also avoided appointing the authorised number of independent members to the National Wildlife Board, though that is being questioned by the Supreme Court. Such developments will gradually unpick environmental protection moves started by the Congress government.

Modi‘s approach is to solve problems and implement decisions, unlike the Nehru-Gandhi dynasty’s leadership of the Congress Party that not only let growth drop by half from its peak of 9-10% in the last five years, but also failed to reduce the official poverty level below 30% in the 67 years since independence when it was mostly in power. The dynasty believed in modulating the impact of social issues rather than solving them, and Rahul Gandhi, the fading heir to the party leadership, even said to friends that, to stay in power, Congress should focus on aid schemes not economic reforms. Modi will continue with schemes, but he will also go for growth and for cleaning up the way that the government functions, including reducing corruption.

De Gaulle or Putin?

Commentators have likened him to Charles de Gaulle, Margaret Thatcher and Vladimir Putin – all autocrats who wreaked change in democracies (albeit a managed one in Russia), plus Jawaharlal Nehru who set India on its independent path in 1947. He has also been compared by one writer to Deng Xiaoping and Lee Kuan Yew, who managed development and social cohesion in China and Singapore.

Such a range of impressive comparisons illustrates the burden that Modi heaped on himself with his presidential style general election campaign, when he made himself the reason to vote BJP, not the party itself. He is an autocrat and is showing not only that he is in charge, but that his ministers and top bureaucrats – who have started working a full day from 9am till into the evening for the first time in years – are watched and monitored.

There have been often-repeated stories in the media about a minister, who was dining in a hotel with a top industrialist, receiving a phone call from Modi who showed he knew the name of the industrialist. Another minister on his way to an international airport in jeans was called and told to go home and smarten up. The names of the cities, hotel, and people change with the repeated-telling, but one story that has caused rifts is Modi allegedly cautioning the son of Rajnath Singh, the former BJP president and now home minister, for talking a bribe. I’ve also heard a story about intelligence officers manning corridors in at least one ministry, watching who visits ministers and officials.

The image of absolute authority was also shown by the way that plans for India’s and Pakistan’s foreign secretaries to meet were suddenly cancelled two weeks ago, and by the sudden cancelling of India’s pledged support (given by the last government) for a World Trade Organisation agreement on trade facilitation. In neither case did Modi seem to care who he was upsetting – including the US and other parties to the WTO agreement.

photo 5

The India-Pakistan move has potentially re-set the terms for talks between the two countries because India is saying that they are strictly bilateral matter and should exclude Kashmir-based separatist organisations that Pakistan has talked to in the past. The message here is that Modi is in favour of improving economic and other links with India’s destabilised neighbour, but not having talks that get nowhere.

Modi’s visit to Japan – which follows his earlier regional trips to Bhutan and Nepal – is focussed on establishing a new bilateral relationship that will lead to deals covering nuclear power equipment, infrastructure investment, education, modern city planning, and defence and other manufacturing. A strategic bond is also being developed to offset the regional ambitions of China. Later in September, Modi will develop his approach to foreign policy when he meets China’s president in Delhi and the Barack Obama in Washington.

It is now clear that Modi will have a significant impact on the way that the central government works, indeed he has already started doing so. His ability to introduce new legislation however is restricted because the BJP and its allies do not have a majority in the Rajya Sabha upper house of parliament. They are unlikely to do so till 2018, according to a forecast by the Washington-based Center for Strategic and International Studies. Rajya Sabha seats are indirectly elected via the states, and the BJP and it allies would have to win six state elections between now and 2018 to achieve a majority, according to the analysis

That does not however stop Modi implementing policies that the last government failed to do and taking wide-ranging initiatives ranging from boosting the manufacturing industry to building highways and establishing effective schemes for the poor like the bank accounts.

This should continue to expand the growth that began under the last government, and bring back foreign investors who, though they are piling record amounts of money into the stock market, have been reluctant to bring in direct industrial and other investments.

It’s a new style of government and Modi is on a roll, though not everyone will like it!

Narendra Modi has yet to show that his government can make a significant difference to the way that India is run and performs, but this morning he impressed critics as well as supporters with his first Independence Day speech as prime minister from the ramparts of Delhi’s majestic Red Fort.

Breaking with tradition, he ad-libbed his hour-long speech in Hindi with minimal notes, and was not protected by the bullet-proof screens that have cocooned prime ministers at this event for more than 20 years.

MODI RED FORT - BBC

That left Modi free to deploy his impressive free-wheeling oratory and speak directly to the thousands of people (including school-children who he chatted to later) gathered at the Red Fort, and others watching television. This was in stark contrast to the monotonous detached delivery of most previous prime ministers, especially Manmohan Singh who made the speech ten times

Modi’s key policy announcement was the expected closure of the Planning Commission, which has become an out-dated top-down hangover from the days of India’s controlled economy. It is to be replaced by a new, less aloof, and reforms-oriented organisation that co-operates with the states.

Other initiatives included providing bank accounts and insurance for the poor, plus a campaign for cleanliness, and separate school toilets for girls within a year. People “might not appreciate my talking about dirt and toilets from the Red Fort,” said Modi, who went on to condemn the country’s widespread rapes and appeal for parents to rein in their sons.

He appealed for India’s youth to avoid the divisive and often violent effects of the caste system, and of communal and sectarian divisions, and proposed “a ten years moratorium to get a society free of all these tensions”.

He also tried to inspire moves to boost India’s slow-developing manufacturing industry and urged foreign companies to “come and Make in India”, with “Made in India becoming a synonym of excellence”. He dreamed of “ electronic digital India” uniting the country in the way that the railway system has helped to do in the past.

And he referred to changes in the government’s work culture, which he has been trying to transform. He had been “appalled by the discord and disunity among various Government departments”.

Shopping list

This was a grand shopping list and was delivered in a style that seemed more like an election campaign speech than a programme for action. It dealt with the government’s key issues of protection of women and development of the economy, but it was little different from the last Congress government’s policies and lacked details on delivery. Modi’s challenge now is to satisfy the massive hopes and expectations that he has generated with firm action.

Each one of the points he raised are central to what is wrong with the way that India functions – from the filth and dirt and lack of respect for women that repel tourists and worries investors, to the caste and communal divisions that lead to mass violence (notably in the state of Uttar Pradesh in recent weeks). Manufacturing industry lags behind foreign competitors, especially China but also other Asian economies, and government departments fail to provide effective administration.

So far, in the twelve weeks since he became prime minister, Modi has been most effective in improving the time-keeping of bureaucrats and smartening up government offices, and in setting a new approach to foreign policy. After years of working from their homes in the mornings, or just turning up to office late, ministers and bureaucrats now arrive around 9am, and there are countless stories of mazes of ancient files and office clutter being cleaned up.

In foreign policy, Modi has broken new ground by visiting the small neighbouring countries of Nepal (the first prime minister to do so for 17 years) and Bhutan, both of which are buffer states with China. All the neighbouring countries’ leaders attended his swearing in, and at the end of this month he will visit Japan that is emerging as a leading economic and diplomatic partner.

Making visits however is easy, and the government will now have to find ways to improve day-to-day relations and economic development in Nepal, and also offset Chinese influence there and in Bhutan. Elsewhere among the neighbours, there is little sign yet of improved relations, and on the broader foreign front India has upset the US and other countries by blocking an international trade treaty at the World Trade Organisation.

Environmental worries

At home, Modi has begun moves to raise the limits for much needed foreign investment in defence manufacturing and insurance, and has begun to change out-dated labour laws. He has also cleared some blockages for construction of infrastructure and other projects, though this has led to risky and controversial jettisoning of environmental protection arrangements. Environmental clearances have been rushed through, and a key environmental advisory body, the National Board for Wildlife, has been revamped with members more committed to development than environmental protection.

Modi won his landslide general election victory however because people expected more dramatic and fundamental improvements in the way the country is run, with government departments becoming more efficient, police becoming less indifferent and brutal, and the railways and other services becoming more effective and responsive to people’s needs.

That is an impossible task for one man so, to deliver what is expected, Modi needs to motivate those around him. He said at the Red Fort that he was speaking “not as Pradhan Mantri but as Pradhan Sewak” – as the first servant, not the prime minister. That was a part of the populist appeal that he likes to portray along with a powerful image. His challenge is to use both to deliver.

 

Posted by: John Elliott | July 20, 2014

Modi and Jaitley have yet to make their mark

The current disillusionment with India’s new government is not surprising given the images built up in the past by prime minister Narendra Modi and finance minister Arun Jaitley. Modi, a powerful regional politician, blasted his way to power in a presidential style campaign with the theme that he alone could save India from its declining economic record and international image. Jaitley, a highly rated lawyer, spent years getting increasingly angry on television programmes and elsewhere as he barked and bit his way into the Congress-led coalition’s failings as if he knew what ought to have been done.

.

.

Inevitably, neither man (pictured left) has lived up to the implicit promises of their self-confident performances before and during the general election campaign.

Jaitley produced a drab Budget speech on July 10 that one leading commentator, Swaminathan Aiyar, dubbed (referring to the last finance minister) a “Chidambaram budget with saffron lipstick”. I thought that a bit unfair on Paliannapen Chidambaram, who did manage to put some vision and inspiration into his speeches, even if he wasn’t able to deliver the visions afterwards.

Despite taking a firm line on government administration issues where he is trying to introduce efficiency, Modi has yet to display the sure touch on policy that his reputation indicated. Indeed, it looks as if he had underestimated the difficult if not impossible task of transferring his Gujarat chief minister style to the far more complex national and international arena of New Delhi. It is of course far too early to make sweeping judgements, but so far he has failed to deliver on his Obama-style “Yes we can” message, to which he added “Yes we will do” last August.

I’ve been out of India since just before Budget Day and these views are culled from people I have met and talked to in Washington DC as the budget was being delivered, and in the UK, as well as reading the India news and comment. In the policy think tanks around Washington’s Dupont Circle, analysts thought the Budget good in parts, but were understandably disappointed that Jaitley did not take a clear stand on subsidies and against a damaging policy of retrospective corporate taxation pursued by the last government (initially over a Vodafone take-over deal and then affecting other companies).

In the UK, there is uncertainty about how new the Modi approach will turn out, while prime minister David Cameron is busy fawning on the leadership of both China and India. To placate Beijing, he is failing to honour pledges he has given in the past to defend democratic development in Hong Kong, which is now under attack from Beijing, and he has this past week gained publicity by promoting an Indian-origin declared right-wing Modi supporter as a Treasury minister.

I’ve been asked more about the treatment of women, rape and the caste system than I have about economic performance. “Can Mr Modi change that?” people want to know, referring to the non-economic subjects – including the use of child and slave labour in brickfields that BBC correspondent Humphrey Hawksley has been publicising on television.

Of course Modi can’t change everything, though the ten-year time frame that he has said he needs as prime minister should lead to a revamping of India’s police forces and legal system, plus education, so that police and judges do their jobs on time and education weans people away from the worst excesses of the caste system and persecution of the poor.

‘A lot of red ink’

To return to the budget, Chaitanya Kalbag, a former senior Reuters editor, neatly summarised the lack of new thinking when he wrote a few days ago: “So far, Modi and Jaitley have meekly accepted a string of programmes and targets set by the [previous Congress-led] United Progressive Alliance government.  If India was a failing corporation, the new CEO and CFO seem to be content to inherit a balance sheet smudged by a lot of red ink.  We hoped for big-bang reforms.  Instead, subsidies continue apace.  The National Rural Employment Guarantee Scheme sails on, leaks and all.  The new government says it is committed to food security – there is no attempt to trim the swingeing UPA pledge to give two-thirds of our population cheap rice and wheat. Jaitley has ‘accepted’ the challenge set by his predecessor of an almost impossible fiscal deficit target of 4.1 per cent of GDP this year”.

Swapan Dasgupta, a self-declared staunch Modi admirer, has similarly questioned Jaitley’s decision not to ditch the last government’s over-optimistic figures on the economy, writing: “There are things that just don’t add up. Jaitley may have preserved the honour of his Finance Ministry by not rubbishing the entire past, but what sort of signal has it sent to the bureaucracy that will oversee the big changes Modi contemplates? Continuity has its pitfalls and the most obvious one is that the Modi dispensation is in serious danger of being led by the nose by a bureaucracy that is most at ease with perpetuating the status quo through control. Certainly the main body of the Budget speech conveyed the unmistakable impression of having been penned by someone who was completely impervious to its political rationale and made the seamless transition from UPA to NDA.”

Dasgupta seemed to be suggesting that Jaitley had accepted the views of his finance ministry bureaucrats’ and said that Modi’s efforts to motivate and directly drive senior bureaucrats, Gujarat-style, would not work until “babudom grasps the reality of political change”. At present, he says, “there is no indication of such a realisation”, and the Indian bureaucracy still thinks the achche din [good days] has been never-ending”.

.

.

On the positive side Jaitley did indicate a new focus on economic growth, with the prospect of urgently needed agricultural and taxation reforms.

The few details he announced included an increase in foreign direct investment limits in defence equipment manufacturing and insurance companies from 26% to 49%, and a boost for government spending on highways. He also repeated an announcement made more than once by the last government that FDI in insurance companies, which needs parliamentary approval (unlike defence and other areas), would be raised from 26% to 49%.

Analysts in Washington were disappointed that the defence figure had not been raised to 51% because that would have allowed US and other companies such as Boeing, Lockheed and Raytheon to have a majority share in India-based companies.

The 49% limit was welcomed by most Indian’s private sector defence manufacturers because they understandably want to have a chance to develop Indian capability if the defence industry is at last to be opened to private sector involvement.

Meanwhile, Modi seems to be more willing to be tougher and more abrasive on the Bharatiya Janata Party’s Hindu nationalist interests and causes than on economic policy and sorting out the way that India is run.

In Budget week, he appointed Amit Shah (above), his controversially tough and apparently ruthless political henchman as president of the BJP, despite an on-going criminal investigation into Shah’s alleged involvement in Gujarat police killings and phone tapping. Shah has been close to Modi since they were both teenagers in the Rashtriya Swayamsevak Sangh (RSS), which lays down doctrine and played a large part in the recent election campaign by providing thousands of volunteers.

There have also been moves to have a new look at India’s history and rewrite education books, as the last BJP-led government did in the early 2000s, along with other initiatives aimed at adjusting India’s approach to culture so that it fits with Hindu nationalist views.

It’s easier of course to do these things than it is to reform the way that India and its economy is run. The government however won its overwhelming general election victory because people want economic and other changes, not because they are devoted fans or followers of the BJP’s long-term nationalist ambitions.

This article on is AsiaSentinel.com – http://www.asiasentinel.com/politics/india-modi-jaitley-slow-off-mark/

In a society ridden with crony capitalism and crony politics, businessmen and politicians inevitably try to stop people writing books that reveal their goings-on. But there is a limit to how much disruption they can achieve

This has has been shown by the recent publication of three books that uncover many of the secrets of the showy but shadowy Sahara Group run by the idiosyncratic and reclusive Subrata Roy (now in jail), the intrigues, spats and influencing of Reliance companies, run by the Ambani brothers, over natural gas pricing, and the fixes and fudges of Air India, especially when Praful Patel, a suave and wealthy Maharashtra politician, was aviation minister in the last government.

Roy took legal action that delayed publication of the book, by Jaico of Mumbai, about him and his Sahara company for several months, while the Ambanis have been complaining and threatening noisily but have not yet taken firm action to have the privately-published book about them and India’s “gas wars” banned. Patel got the Air India book withdrawn by Bloomsbury India, but the author is now publishing it himself.

Such disputes are good for sales – the Sahara book has gone into a reprint after an initial run of 15,000 copies, while Gas Wars has sold 4,000 hard and paperbacks. The (semi) joke doing the rounds is that the Ambanis are trying to obliterate the book buying up all the copies, but it’s not possible to do that to e-books of which 1,000 have been sold.

Sahara’s mysteries

Subrata Roy, the founder of the secretive but publicity conscious Sahara India Parivar group took out a Rs200 crore ($32m) injunction last December that delayed publication of Sahara: The Untold Story by Tamal Bandyopadhyay, an editor of the Mint business newspaper.

.

.

Roy was jailed four months ago on an (unconnected) contempt of court case, and seems to have decided that he was fighting for his survival on too many fronts. He agreed last month that the book should be published, along with a curiously worded disclaimer, which appears on both the cover flap and the first two pages, saying that it “is based on a particular notion, wrong perceptions supported by limited and skewed information. Hence, it does not reflect the true and complete picture”.

Roy is an extraordinary character, apparently employing 600,000 agents to draw savings from millions of the poor for a myriad of financial schemes. He penalises them mercilessly when they fall short on payments and dodges regulators who try to investigate. He invests in massive real estate dreams (claiming a 36,000 acre land bank) and has created and sold a loss-making airline.

He has owned and lost a cricket team, was till recently the official sponsor of the Indian cricket team, and has a share in a Formula One racing team (he invested to help the financially ailing Vijay Mallya of Kingfisher fame).

He owns two hotels abroad, including the famous though faded Grosvenor House on London’s Park Lane, a couple of minutes walk from Mayfair’s Grosvenor Square and nearby streets favoured as fashionable addresses by India’s wealthy. He bought the hotel in 2010 for £470m mysteriously sourced funds.

Roy lives and works in a closely guarded gated compound called Sahara Shaher that contains replicas of world famous buildings and covers an incredible 270 acres in the centre of Lucknow, the capital city of Uttar Pradesh where his political power has been based. He mixes with film stars and powerful politicians of varying shades of respectability, many of whom, it is widely rumoured, invest their money anonymously in his schemes.

Yet oddly the rich and powerful, who ostentatiously partied with him for years, have not managed to rescue him from exasperated and humiliated Supreme Court judges and financial regulators who have eventually trapped him and put him in jail over an alleged Rs24,000 crore ($4bn) bond scam.

For years, regulators have been trying to tie down where his money really comes from – is he caring for the poor or cheating them, or is he mainly laundering money for the rich?

In his book, Bandyopadhyay writes: “Roy, the guardian angel of the group, whose feet are touched by everybody in the Parivar, is an entrepreneur who wants to reach out to a million lives, and who feels claustrophobic in regulations. So, the clash with the regulators is inevitable. But when one regulator slams the door, Roy opens another. This play has been on since 1978 when Sahara was set up”.

Bandyopadhyay asks whether the “poor people actually keep their money with him or are they a front for others?” At the Delhi book launch, he wondered whether “investors really do exist” since none had complained about their treatment, yet Roy had claimed he had repaid 147m investors, which if true amounted to an astonishing “one in nine of all Indians”.

The Ambanis’ Gas Wars

Gas Wars – Crony Capitalism and the Ambanis by Paranjoy Guha Thakurta (below), a prominent business and economics journalist, and two colleagues, was published privately by Thakurta in April and is now for sale on the internet as well as in bookshops. The launch event in Delhi became an occasion for wide-ranging attacks on crony capitalism.

.

.

Reliance Industries (RIL), run by Mukesh Ambani, India’s richest man knew about the book but, says Thakurta, had not tried to stop him publishing it.

However it quickly threatened to sue for Rs100cr (about $16m), serving legal notices alleging defamation on the authors, the book distributors (including Amazon and Flipkart), plus some reviewers and, according to Thakurta, even a young woman who forwarded electronic invitations for the launch event.

That may seem draconian but it is mild compared with what Reliance Industries did in 1998 under Mukesh’s father, Dhirubhai Ambani, when it forced Harper Collins India to withdraw publication of a book, called The Polyester Prince that had been separately published in Australia. The ban pushed the price of hard copies on the net up to more than ten times the original sale price (even now $200-300 and £200-300 is quoted on Amazon.com and co.uk sites), but it was reissued four years ago by Roli Books of Delhi, slightly amended and the family stayed silent. (read the story here).

Thakurta’s book must therefore be regarded by the Ambanis as more threatening than the reissued Prince. It explores RIL’s natural gas finds at the KG-D6 oil and gas field in India’s Krishna-Godavari Basin and a very public row over delivery prices to a power project run by Mukesh’s younger brother Anil’s separate company. It quotes how the India’s Comptroller and Auditor General (CAG) alleged the petroleum ministry “designed contracts and tailored rules” to favour RIL, which was thus able to recoup “excessive capital expenditure” and reduce payments to the government.

There are two detailed scoops in the book, which reveal details not previously published involving two of the main players. One is a long interview with Subir Raha, a former chairman of ONGC, India’s leading public sector gas exploration company, and Mani Shankar Aiyar, a Congress politician renowned for his “clean” reputation who was for a time the petroleum minister. Aiyar and another minister were removed from the petroleum ministry because, it was widely reported at the time, they had not been toeing the Reliance line. The anti-corruption Aam Aadmi Party also attacked Reliance and Ambani last year and started court cases.

Reliance of course denies all the allegations and last week launched on the internet a 56-page presentation and promotional video – a Flame of Truth eBook titled “India Has Never Been Here Before – Facts You Didn’t Know About KG-D6”.

The Ambani family has good connections in all political parties. Thakurta’s book tells the story of how it managed the environment (a neat and often used euphemism) with the Congress-led government of the last ten years. Mukesh is known to be a keen supporter of Narendra Modi, the new Bharatiya Janata Party prime minister, and they both come from Gujarat, but he must now be wondering how to manage with a prime minister who might not be as willing as Congress to appear to be favouring one company – however true or not that may have been.

The government last week adjourned for three months a decision on doubling natural gas prices that would inevitably benefit RIL. Commenting on this at a recent Mumbai Press Club meeting on the book, Aiyar wondered why Modi had kept responsibility for the petroleum ministry and therefore oil pricing, and is reported to have added: “Since we have only one company in the private sector, the ministry of oil pricing has effectively become the ‘ministry of Reliance affairs.”

Praful Patel and Air India

The Descent of Air India, by Jitender Bhargava, a former executive director and pr chief of the airline, was published last October. Patel said it contained “baseless allegations” about him and in November his lawyers brought a criminal defamation case in the Mumbai courts against Bloomsbury India and Bhargava. In January, Bloomsbury apologised, withdrew the book from sale, and agreed to destroy its remaining stocks, though Bhargava is selling ebooks on the internet and plans to publish a hard copy himself soon.

.

.

Patel, who is presumably no longer wielding so much power and patronage at the centre of politics following after the recent general election, does not seem to have tried to stop Bhargava’s sales.

Patel was aviation minister from 2004 to 2010 and then heavy industries minister. His time dealing with aviation was especially controversial because of deals for airport projects and for aircraft purchases and other happenings at Air India, the national carrier, whose finances and viability were declining while well-connected private sector airlines (and airports) bloomed. I once described him on my blog as the “Government’s top Teflon Man”.

Bhargava writes about what he describes euphemistically as Patel’s political interference “on acquisition or leasing of aircraft, purchase of merchandise, appointments, giving out free air tickets and upgrades, and on promotions, transfers, and postings of employees”. These decisions were taken, he says, “without any thought for the airline’s future”. For whatever reason, foreign airlines were given far greater access to India’s airports than was justified by customer demand, which damaged Air India’s ability to generate revenues.

The story isn’t over yet. There has been a case in Canadian courts alleging bribes were paid to Indian officials on a biometric identification system. Bhargava’s book gives details, adding Patel’s denials, but the courts, which were impressed by evidence of money trails, have now convicted a Canadian company official for paying bribes. That has led to calls in India for fresh official investigations into the Biometrics case and other allegations in Bhargava’s book. The Supreme Court is expected to rule on that later this month, unless the CBI files an FIR (first investigation report) against Patel first.

All the people in these stories are accustomed to wielding power and patronage at the centre of government. But a new era has begun and none of them can be sure how things will develop with a prime minister whose general election mandate included cleaning up corruption.

Narendra Modi yesterday made his first major speech in English since becoming prime minister – a day after I pointed out on this blog, and in a Times of India column, that he spoke it fluently in a 2001 television debate, and wondered why he rarely does so now. He was addressing scientists after the successful launch of five foreign satellites on an Indian launch vehicle in  Andhra Pradesh.

I’m not suggesting any direct link. Narendra Modi’s reason for speaking English yesterday was almost certainly that the event took place in a part of southern India where Telugu is the regjonal language.

Modi English teleprompter - June 30 '14

 

That he did so, however, was significant because it was a very public tacit acceptance by the prime minister that English is the common language that binds India together  – people totalling nearly 60% of the population list languages other than Hindi as their mother tongue.

Many will of course also speak Hindi, but many do not, and Modi’s government caused an uproar at the end of May, just after it had been elected, when the Home Ministry asked government departments to use Hindi on social media platforms.

That suited the Hindu nationalist dreams of Rajnath Singh, the home minister, who comes from the Hindi-speaking state of Uttar Pradesh, but it infuriated leading regional politicians, especially from southern India, who Modi needs as allies. The government quickly backtracked and said it was only referring to Hindi states and was not excluding English.

Modi’s speech was fluent, helped by a teleprompter (above), and the flow was more relaxed than when he read a speech at his Vibrant Gujarat conference in January last year. It will now be interesting to see whether he speaks in Hindi or English (maybe a mix of both as he did yesterday) at international events such as the United Nations later this year.

His speech attracted some criticism from journalists. Nilanjan Mukhopadhyay, who has written a book on Modi, described it in The Economic Times this morning as a “most laboured effort in public speaking”, with Modi “groping for words the moment he begins speaking in English”. That is neither fair nor accurate, though Modi did speak more slowly than he does in Hindi and his eyes were often focussed on the teleprompters

The Times of India got it right, reporting that the speech “confirmed that he is quite comfortable with English when he wants to use the language and his preference to speak in Hindi, even during bilaterals with foreign leaders, is deliberate”.

That surely is main point – India’s new prime minister is most comfortable, personally and politically in Hindi (and his home state’s Gujarati), but is fluent in English.

Posted by: John Elliott | June 29, 2014

The challenge of Mr Modi

I am running below a piece that I wrote in 2002 for a column in India’s Business Standard newspaper, where I suggested that Narendra Modi had the makings of India’s next big leader – and spoke good English. This links with my post today on this blog (click here) and a Times of India article today.

Bystander column July 26 2002

The challenge of Mr Modi

 By John Elliott

I was away in London during April and missed the horrific detail of a lot of Gujarat’s riots and killings. But when I got back and read the newspapers, it seemed to me that – like it or not – India had, in Narendra Modi, a new potential national leader. Unlike most politicians, the Gujarat chief minister was arguing passionately for what he believed in, not for some short-term personal gain far removed from policy, but out of conviction. He was a strong public speaker and was standing his ground and presenting his case with rare confidence and élan – and, whether one liked it or not, he had a commanding presence (some call it ego). To a bystander, he looked like a logical heir for L.K.Advani.

Friends and contacts told me I was wrong. How could a man who had presided over such ghastly bloody carnage ever win popular respect and a wide following? Weren’t Gujarat’s people tiring of the violence and wasn’t he in fact already finished, just waiting to be edged out of his job? The BJP, I was told, could not survive as a national party of government if he became one of its top leaders because it would be shunned by coalition partners. So Mr Modi had no future and, I was assured, was likely to be sent away to some remote corner of the RSS offices in Nagpur.

I visited Gujarat at the end of May and there I heard the same sort of message. Mr Modi, I was told, was being cold-shouldered by ministers in the state government, was lying low, and would soon to be out of office and the political limelight. One of the state’s senior ministers who, according to newspaper reports, had been responsible for leading some of the savage attacks, even came to my hotel room to tell me that he had been maligned and was innocent – and that Mr Modi was an egocentric self-publicist who had used the Godhra aftermath to build his personal political platform but was now isolated and about to go.

Modi BigFight Sept '01I have only met Mr Modi once – before he went to Gujarat as chief minister – when we shouted at each other (as, it seems, one is expected to do) on Star TV’s Big Fight programme. He wouldn’t stop bellowing out his single-minded message in decibels that the sound system fortunately muted for television viewers, and I was trying to ask a question – all of which got lost in a fade-out for adverts. At the end of the programme, we laughed and he asked if he’d spoken enough in English (regrettably I do not speak Hindi) for me to know what he was on about. He hadn’t, but that didn’t matter because it was obvious anyway – strident Hinduvta and, in the context of the programme’s subject, anti-Muslim rhetoric. I came away with the impression of a driven and (sometimes) charming politician – a potent mixture for a political leader.

Now Mr Modi has made his pitch by calling on Gujarat’s electorate to endorse his management of the state during the carnage and return him to power. He has dared the Election Commission to let him have early polls in Gujarat so that he can cash in on his (widely deplored) leadership – and pre-empt a Congress revival under its new state chief, Shankersinh Vaghela, who combines both local roots and inside knowledge of how the BJP works. This is a politically understandable move, but it is also a gamble for a man whose potential as a national leader would probably be dashed if he loses.

Significantly Mr Modi has been backed by Mr Advani who, speaking in the Rajya Sabha on Wednesday, even praised his performance as chief minister during the riots. The BJP is arguing that democratic elections will clear the air and enable the state to move on with a newly elected assembly. But that ignores the risk that early polls will stir up simmering communal tensions at a time when there are still unresolved issues – such as who set fire to the train in Godhra that killed 58 Hindu pilgrims and started the violence. In addition, at least 12,000 Muslims who lost their homes are still in refugee camps and thousands of others have not returned home. That itself would lead to potential unrest as well as denying many of the people a vote.

Understandably, the risk of such violence – and human rights violations in Kashmir as well as Gujarat – is causing concern abroad, especially in the US and UK where politicians have to reflect the views of their increasingly significant Indian communities. India will therefore be watched closely in the coming month, especially if it appears that the timing of elections in Gujarat supports the motives of politicians like Mr Modi, whose stance strikes horror in the minds of people across the world. The question that will be asked is whether this election will produce a new potential national leader – and whether that will indicate the future of the BJP and of India.

end

In September 2001, I met Narendra Modi on a Big Fight tv programme just after the 9/11 terror attacks in the US. I was struck by his powerful presence, his conviction, and even some tolerance when he talked about “my Muslim friends” and urged them to denounce terrorism. He even showed a sense of humour after the programme had finished.

The following July, five months after the Godhra riots that sullied his reputation, I wrote a column in the Business Standard suggesting that “India had in Narendra Modi a new potential national leader”, whose rise could “indicate the future of the BJP and of India”. I am running that 2002 column – The Challenge of Mr Modi –  as a separate post on this blog today (click here to access it).

Below is a column that appears in today’s edition of The Times of India and tells the story and context of that 2001 Big Fight tv programme. (The headline picks up the title of an internationally successful 2012 Bollywood comedy about an Indian house-wife who learns English to cope with a family wedding in the US – the reverse, in a way, of what Modi is doing by hiding his English!)

A little English Vinglish, and some humour

Prime minister Narendra Modi is much more fluent in English than most people assume. He rarely speaks the language in public or in private meetings, and seems to be encouraging his cabinet to make Hindi the language of ministerial discourse. “He’s not comfortable in English unless he is making a prepared speech”, his supporters often say.

Modi BigFight Sept '01Yet 12 years ago, three days after the 9/11 terrorist attacks in the US, he was adlibbing confidently and powerfully in English for a recording (right) of what was then Star TV’s Big Fight television programme during a sensitive and often-heated debate on the question “is Islam the now driving force of terrorism”.

He was also not averse to being shouted at, even by a foreign journalist, as I discovered asking questions alongside Rajdeep Sardesai, the anchor (now viewable on YouTube here)

Modi presented his arguments in a powerful and passionate but reasoned way, and the event triggered a line of thought that here was a man with all the potential needed to become India’s next big leader. At the time, he was a Bharatiya Janata Party national secretary, but was sent back to his home state of Gujarat three weeks later to be chief minister. The Godhra riots happened the following February, putting him out of most people’s reckoning as an acceptable chief minister, let alone a national politician.

There was a lot of shouting in the television studio. “He wouldn’t stop bellowing out his single-minded message in decibels that the sound system fortunately muted for television viewers, and I was trying to ask a question – all of which got lost in a fade-out for adverts,” I wrote in a column a few months after the show. “At the end of the programme, we laughed and he asked if he’d spoken enough in English (regrettably I do not speak Hindi) for me to know what he was on about”. He hadn’t because his opening remarks were all in Hindi and he only broke into rather fluent but rather heavily accented English later. He gave the impression of a driven and (sometimes) charming politician – a potent mixture for the political leader that he duly became.

He acknowledged in his opening remarks that Islam had “many good aspects” but said, accusingly, that “when one community says that my community is different from yours, it is higher than yours, and that until you take refuge in mine you cannot get Moksha [liberation or salvation], you cannot get Allah, you cannot get Jesus – then conflict starts”. Hinduism taught Ekam Sat, Viprah Bodha Badhanti (truth is one, says God in different ways), and there would be no conflict if it was accepted that “all religions are the same”. But, he added, “when one says your religion is hopeless and mine is better, then hatred starts, and later when that hatred gets linked into society, terror starts”. Since the 14th century, Islam had aimed to “put its flag in the whole world and the situation today is the result of that”.

That led to a noisy clash with Dr Rafiq Zakaria, an elderly Islamic scholar and Congress politician, who tried to tone down the inference to Islamic terrorism and argued that the religion’s texts contained the language of peace. G Parthasarathy, a former Indian high commissioner to Pakistan, had suggested that terrorists came from Islamic countries in a “crescent of crisis” stretching from Pakistan to Algeria. Eventually Modi called on his “Muslim friends” – a noteworthy phrase – to “understand that terrorism has damaged Islam like anything,” and that they needed to “come out against the terrorist”.

Modi openg speech VibGuj Jan '13Modi’s performance then and later seemed to suggest a new potential national leader, irrespective of whether or not one accepted his message.

Unlike most politicians, he argued passionately and powerfully for what he believed in, not for some short-term personal gain far removed from policy, but out of conviction. He was a strong public speaker and was standing his ground, presenting his case with rare confidence and élan. Whether one liked it or not, he had a commanding presence. To a bystander, he looked like a logical heir for L K Advani.

That was not a popular view. How could a man who had presided over the Godhra carnage ever win popular respect and a wide following, people asked? Weren’t Guajarati’s tiring of the violence and wasn’t Modi already finished, just waiting to be edged out of his job in imminent assembly elections? The BJP, people said, could not survive as a national party of government if he became one of its top leaders because it would be shunned by coalition partners. So he had no future and was likely to be sent away to some remote corner of the RSS offices in Nagpur.

Modi won the assembly election and has not looked back – and his English sounded more polished in a long speech that he delivered (above) at the start of his Vibrant Gujarat conference in January last year (on YouTube here)

The question now is whether the potential national leader of the early 2000s can manage the complexities of governing India. Public acceptance of English, more mention of “Muslim friends”, plus laughter – all evident at Star TV in 2001 – might help.

Older Posts »

Categories

Follow

Get every new post delivered to your Inbox.

Join 2,202 other followers

%d bloggers like this: