Posted by: John Elliott | August 4, 2016

India at last takes a leap forward on tax reforms

New goods and services tax passed by Rajya Sabha

It has taken 16 years, which is sluggish even by India’s dreadfully slow approach to change, but finally it has happened – late last night the upper house of  India’s parliament passed a constitution (amendment) bill that paves the way for the introduction of an epoch-making tax reform known as the goods and service tax (GST).

The government optimistically hopes to introduce the tax at the start of the next financial year on April 1, merging myriad taxes into one value added measure that will straddle the whole country and abolish different tax regimes run by India’s individual 29 states. There will then be one national tax system for the manufacture, sale and consumption of goods and services, and India will in effect become a single common market.

This is being touted as the single biggest change since India’s major burst of economic reforms in 1991, and it probably is, given its potentially enormous benefits for business efficiency and tax collection. Arun Jaitley (below), the finance minister, says it will add 2% to gdp growth, which is currently just above 7%.

488002-355862-arun-jaitley-3-pti-edited-picmonkeyThe business welcome was well summed up by Chanda Kochhar, ceo of ICICI, a leading private sector bank. She has described it as the “most important reform in indirect taxation in India ever”, which would benefit all parts of the economy. “Consumers will see lower prices in the medium term, businesses will able to operate more efficiently and the government will see a broadening of its tax base along with ease of tax collection”.

One of the biggest benefits will be faster road transport times, which are more than double those of developed economies, partly because trucks have to pay taxes at each state border. Companies’ distribution and warehousing systems will also be simplified. It should also be possible for the government to restrict tax evasion.

Jaitley and Narendra Modi, the Bharatiya Janata Party prime minister, claim this as great victory for the government, and proof that they are bent on economic reforms.

Such a claim is not wrong, but it is biased because both the BJP and the Congress Party deserve equal praise for backing the measure over the past 16 years – and both also need to be strongly condemned for blocking it when the other was in power.

It was Atal Bihari Vajpayee (below) who, as the then BJP prime minister, launched the first GST discussions in 2000 and set up a committee with states’ finance ministers to design the tax and the systems required.

Atal_Bihari_VajpayeeThe BJP however refused to support Manmohan Singh, the Congress prime minister from 2004, when he tried to push the measure with a 2010 target implementation date. It then changed tack when the Modi government was elected two years ago, but that was met by obstruction from Congress, which wanted to build up its credibility in opposition. The Modi style was arrogant, which made co-operation with other parliamentary parties, as well as Congress, virtually impossible

In the past few weeks however, the BJP has improved its political tactics. It won support from almost all regional political parties, which would have left Congress isolated had it not ended its opposition.

Consequently, the bill was unanimously passed last night after nearly eight hours of debate in the Rajya Sabha, where Congress has a majority of the seats. Opposition came only from Tamil Nadu’s AIADMK party MPs who walked out. The bill now needs to be cleared by the Lok Sabha (lower house), which is a certainty given that the BJP has a majority there.

States’ ratification needed

But the bill only paves the way for change. It needs first to be ratified by individual states, which then have to draw up their GST laws, and that will be a substantial task. At least 15 of the states must do this for the measure to be implemented. Most will fall into line, though states such as Tamil Nadu with strong manufacturing industries have reservations because they fear they will lose out, unless they are adequately compensated, by the benefit the value added tax brings to consumer-based states.

All the states, and individual businesses, need to prepare for what is in effect a totally new tax regime. That seems somewhat unlikely to be achieved by the government target date of April 1, even if the legislative process is completed with the central government setting the tax rates. Congress wants the tax capped at 18%.

The Business Standard, a leading Indian newspaper, has said this morning that almost 98% of Indian companies are not ready with the software infrastructure, accounting systems and human resources training that are needed to handle the tax. The indirect tax regime “would require all companies, their suppliers/vendors, retailers, dealers and even shopkeepers/entertainment centres/restaurants to install computers, which could access the centralised GST network so that tax credits can be logged into the system”, it said.

The GST will be collected at each stage of sale or purchase of goods or services and will provide funds for both the central and state governments. Nationally, it will subsume central excise duty, additional excise duty, service tax, countervailing duty, and special additional duty of customs. At the state level, it will absorb state value added tax/sales tax, entertainment tax, central sales tax, octroi (state border tax), purchase tax, luxury tax, and taxes on lottery, betting and gambling.

Government veto

It will be run by a council where the states will have two-thirds of the seats, but the national government will have a veto because, while it will have only a third representation, decisions will need a 75% vote in favour. This strengthens the central government’s overall powers because it will be able to control tax rates in the states, which goes against the general approach of encouraging the states to led development. This could lead to tensions and political clashes.

Critics have suggested that there are some inflationary risks and that states, which have always over-spent in order to improve the political credibility of their ruling parties, will feel even more free to spend recklessly and wait to be baled out by the council and central government.

So while there is much to celebrate today, now that the GST has crossed a major parliamentary hurdle, there is plenty of scope in the future for disagreements and lack of progress.

Successful implementation will test the government’s political leadership and skill in the coming months. That gives Modi an opportunity to prove that he can do what he was elected to do and change the way India is run.

Posted by: John Elliott | July 30, 2016

Theresa May dares to risk upsetting China

New Prime Minister delays Cameron government power project 

LONDON: At last Britain seems to have a prime minister in Theresa May (below) who means business, and is not primarily interested in playing to the gallery like her predecessor, David Cameron, and his Chancellor of the Exchequer henchman, George Osborne, did both at home and abroad.

A Financial Times columnist has reported that Whitehall officials are saying it feels like having a new government rather than just a change of prime minister.

theresa mayThis means that old assumptions about how the government will react and about who matters around town have to be re-calibrated.

People in India, and especially in Delhi (where I live), have been experiencing that with Narendra Modi’s government replacing the Gandhi dynasty two years ago. He has over-turned an established elite and governs on his own terms.

In Britain the change has been dramatically illustrated by May’s unexpected decision on the evening of July 28 to delay final confirmation of an £18bn ($26bn) nuclear power station at Hinkley Point in Somerset that would lead to China having direct involvement in Britain’s electricity supplies.

The plan is for state-owned China General Nuclear Power to provide about a  third of the finance in a joint venture with EDF, a French utility company with UK electric power interests. The UK government would buy electricity for £92.50 per megawatt hour – double the current wholesale price – for 35 years. The European Pressurised Reactor (EPF) technology involved is unproven because two projects in Finland and France have yet to be commissioned and are years behind schedule and far over budget.

China expects, as part of a deal struck by the Cameron-Osborne government, to follow this with its own Hualong technology for two more power projects at Sizewell in Suffolk and Bradwell in Essex.

That breathtakingly irrational gift of control over sizeable chunks of Britain’s electricity supplies (Hinkley would be a significant beginning at 7%) has been aptly dubbed by critics as the most extravagant of Osborne’s and Cameron’s “vanity projects”.


David Cameron (left) and George Osborne in the House of Commons

Another is HS2, a widely-criticised plan for a high speed railway link of dubious financial viability between London and Birmingham, for which Chinese investment has also been desperately sought despite cost estimates as high as £90bn, up from an official 2011 figure of around £50bn. (Other funding for this project has been offered by the controversial Gulf state of Qatar).

There has been extensive debate and concern internationally over the security risk of doing business with China in sensitive areas – most of its current $30bn investments in the UK  are not sensitive though it does have a stake in Thames Water.

The debate has focussed in the past mostly on telecom networks, especially as I noted on this blog in 2012, those made by Huawei for countries such as the US (which has banned it on government contracts), the UK (where BT and others use it extensively) and India where it is well entrenched.

It was argued then (by John Gapper, a leading Financial Times columnist) that it was too late to eliminate Huawei because “the time to declare telecoms a strategic, protected industry like defence, was 20 years ago”.

Well, the time to declare and make nuclear power a protected strategic industry is surely now. China has to be regarded as a potential future enemy by the west, as it already is by several of its Asian neighbours. Hinkley would be operating for around 50 years and no-one – not even Beijing’s leaders – can predict where and what fights China will begin over that timescale.

Currently China is challenging its neighbours in the South China Sea by asserting no-fly zones and by claiming sovereignty over islands and sea lanes and challenging international maritime rules, despite a recent international court ruling in the Hague rejecting its claims. This could lead to confrontations with countries in that area and with the US.

If Hinkley goes ahead with Chinese money, the UK would presumably have to remain a silent spectator instead of backing its allies in such a situation. Would a Cameron-Osborne government have even dared to vote against China at the United Nations?

The investments crystallised into a £30bn wish list when President Xi Jinping made a state visit to the UK last October. He was given a royal welcome and rode down the ceremonial Mall to Buckingham Palace in a gilded carriage with Queen Elizabeth. (Narendra Modi got invited to the palace for lunch a few weeks later but went by car).

Osborne rejected security concerns

Cameron – and Osborne, whom May sacked from the government immediately she became prime minister – had spent years courting Chinese investment. But May, formerly the former home secretary, raised security concerns with cabinet colleagues when the Hinkley decisions were being made.

Two ministers in the Cameron’s Conservative-LibDem coalition government (2010-15) have said that Osborne blocked attempts both to give the British government a “special share” that would restrict China’s ability to act at Hinkley against the UK’s interest and  to introduce security-oriented restrictions on Chinese business visitors’ visas.

May’s chief of staff warned that China would be able “to use their role to build weaknesses into computer systems which will allow them to shut down Britain’s energy production at will”. He also said China would be buying British silence on human rights abuses, which was proved right when Cameron and Osborne duly Kowtowed to Xi.

So it is not really surprising that May stepped in on Thursday evening and got her energy minister to announce a review of the project instead of the expected confirmation.

The timing however was curious – the EDF board had earlier that day voted to go ahead and officials from France and China as well as the UK were about to travel to the site for a celebration ceremony. Even more curious, Philip Hammond, May’s Chancellor of the Exchequer, had said during a visit to China for a G20 meeting a week earlier that “we must make sure the project goes ahead.”

May was presumably concerned primarily about the Chinese angle and also maybe about disagreements in the EDF, as well as about the unproven technology and risk of delays and cost over-runs. The EDF finance director resigned last March, fearing the project would ruin EDF financially, and another director resigned just before the board vote. After those two had gone, the board only approved the project on Thursday by ten votes to seven. One executive is reported to have said that the vote might have gone the other way if May’s intentions had been known.

modi-xi-swing1 - IndianExpressMay has risked upsetting both President Hollande of France and China’s Xi. They will no doubt both understand that, having been in office for just two weeks, May needs time to approve such a massive project for which she will now bear prime ministerial responsibility.

But they will be extremely annoyed if she were to cancel the deal, which could make Xi unwilling to help the UK negotiate a quick post-Brexit bilateral trade deal with China, while Hollande could cause problems in Europe.

Such political considerations however are surely less important than Britain putting its future in a Chinese noose, and on a project of unproven technology and uncertain financial viability. A compromise solution will probably be found – maybe restricting the Chinese involvement in some way.

Narendra Modi might learn something if May takes a tough line. He is split between his inclination to serenade Xi, as he did (above) when the Chinese president visited India in September 2014, and the reality that China blocks India’s advancement internationally, encourages neighbouring Pakistan to cause problems, and hassles India on their common border.

How, one might ask, could Cameron and Osborne ever have decided to trust China with the projects. Did they really think China would treat Britain differently from the rest of the world?

India has lost one of its greatest modern painters with the death yesterday of Syed Haidar Raza, who was 94. He was a leading member of the Bombay-based Progressives Artists’ Group of the late 1940s and 1950s that now dominates the top end of the Indian art market, and his passing marks the gradual closing of a chapter in the country’s post-independence art history.

Other famous members of the group such as V.S. Gaitonde, F.N.Souza, Tyeb Mehta and M.F. Husain have died in the past 15 years, most of them painting continuously till just before their deaths, as did Raza with his familiar canvas works of brightly coloured squares, triangles and circles. 

shraza-saurashtra-lot-224-christies-june-10In June 2010, his massive 79in x 79in acrylic on canvas, Saurashtra (right), painted in 1983, hit a record price for Indian works at a Christie’s London auction.

It was bought for £2.4m ($3.5m, Rs16.4 crore) by Kiran Nadar, a prominent collector for her Delhi museum. In 2014, his La Terre (below) reached Rs8.61 crore at a Saffronart auction in Delhi.

He will be most remembered for his frequent use of the bindu, Sanskrit for dot or point, which represents cosmic power in Hindu tantric philosophy. It also leads to the name bindi for the small mark worn by Hindu women in their forehead 

He once said that, when he was nine, his teacher drew a bindu on a white wall and made him stare at it to check his restlessness. “The bindu awakened a latent energy inside me,” Raza has said. “It is a source of energy a still centre and a point from which everything radiates”.

Raza group IMG_5008

S.H. Raza, Krishen Khanna (behind him) and Ashok Vajpeyi (right) at the January 2016 Vadehra exhibition

His last exhibition, at Delhi’s Vadehra gallery in January this year, was astonishing because it consisted of more than 20 large acrylic on canvas works, and several smaller ones, all of which he had painted and were dated in 2015 (left, and Bindu below).

He came to the opening, frail and in a wheel chair, and I asked him whether he painted every day. “Yes almost,” he replied

I arranged with his friend Ashok Vajpeyi to go to his studio and watch him at work, but he became ill and that sadly never happened. Two artist assistants helped him I was told, as assistants and students have often done for leading artists down the centuries.

They drew the shapes that Raza wanted, and held a palate for him to select the paints with a slightly wavering brush. Large canvases were raised and lowered so he could reach them. The works still had their appeal of dramatic colours, tying together in a theme, though with less sharpness than before.

“He has a particular ability to weave together a canvas with different chromatic sequences all clustered together without injuring each other,” Krishen Khanna, 91, one of the few surviving Progressives told me, standing in the gallery alongside his old friend. “Look at the strong red which doesn’t interfere with the rest of the work,” he said, pointing to a particularly striking painting.

Bindu 2016

Bindu in the Vadehra exhibition of 2015 works

The two men wrote letters to each other from the 1950s that were published in 2013 by the Vadehra and the Raza Foundation.

“We couldn’t just tear them up, it’s bad to destroy such things,” said Khanna. They tell of the struggles of their early years, but are less frequent when the Progressives became standard bearers in the auctions for the boom in Indian art that developed from the early 2000s.

“I feel very lonely now. One by one they have all gone Ara, Raza, Gaitonde, Tyeb,” Khanna said yesterday. “Akbar Padamsee and Ram Kumar are the only others of our group who are now alive. Death has to happen in the course of the time but it does not take away personal sorrow”.

When the boom faded about eight years ago and works by India’s more adventurous contemporary artists fell from popularity and peak prices, paintings by Raza and his Progressive colleagues like Souza, Mehta and Gaitonde have continued to flourish. Their mostly figurative and abstract studies have continued to hit new records for the best works, though there have been some flops, and Raza in particular has sometimes been hit by fakes reaching galleries and auction houses.


S.H.Raza in one of his studios – Art&Style photo

When they started, the Progressives were important because they challenged India’s artistic traditions while also recognising and adopting art styles they saw in Europe and the US, where some, including Souza, went to live.

“We were not allowed to meet students because it was said we were a foreign influence,” Husain told me in a 2009 interview. The critics “wanted us to paint like the Bengal school” instead of breaking from tradition into new styles

shraza-sfrnart-sept-14 La Terre

La Terre, sold at Saffronart in 2014

Raza was born in 1922 in a remote rural village in Mandla district of Madhya Pradesh, in central India, near what is now Kanha National Park. His father was a forest ranger. After school he studied art in Nagpur, the nearest large city, and then in Mumbai where he had his first show when he was 24 at the Bombay Art Salon.

A 1948 meeting with the famous French photographer Henri Cartier-Bresson when he was 26 changed Raza’s outlook towards art. He showed his paintings to Cartier-Bresson, who said the work lacked construction. “If I hadn’t met Bresson, I would have continued painting white crosses to symbolise resurrection and black crosses for crucifixion,” Raza had said in a 2006 interview with India Today, explaining how he switched to geometrical patterns.

He went to Paris in 1950 on a French government scholarship. There, artists such as Cezanne, Monet and Gauguin fascinated him.

He stayed in Europe for some 60 years, returning from Paris only in 2010, by which time he was the celebrity that India was eager to claim as its own – as has been demonstrated in the past day with tributes from top politicians and across social media.

State governors told not to meddle ‘in any political thicket’

A few hours after Friday night’s bloody military coup failed in Turkey, the failure of a peaceful and far less dramatic unconstitutional coup staged by India’s Bharatiya Janata Party in the state of Arunachal Pradesh was also confirmed.

Located high in the Himalayas, Arunachal is specially sensitive because it is on the border with China, which claims it as its territory, yet the BJP under prime minister Narendra Modi and party president Amit Shah has been encouraging the destabilisation of its state assembly politics since the end of last year.

The army in India (unlike in neighbouring Pakistan and Bangladesh) doesn’t do coups, but central governments do – mostly those run in the past by the Congress Party that staged them for decades in order to oust state-level administrations belonging to rivals.

In place of army officers, it is a state’s governor who controversially manages things by deciding that a state assembly is unstable, usually because its members are being tempted (often with substantial amounts of money) to switch parties. The governor then triggers either a change of government, or recommends suspension of democracy with Delhi taking charge under what is known as president’s rule.

map copy 2

Last week the supreme court blocked the BJP’s ambitions in Arunachal, paving the way yesterday for the restoration of a Congress majority of assembly members. Earlier this year the court blocked the BJP.s similar ambitions in Uttarakhand, which borders Nepal.

During a meeting in Delhi chaired by Modi, chief ministers of various states yesterday took up the lead give by the supreme court and attacked the government for its interference in state-level affairs. One of them criticised governors’ “adventurism”.

Nitesh Kumar, who runs a government of regional parties in Bihar, called for the governors’ role to be abolished.

The supreme court move was a boost for Congress, though the crises in both states might have been averted if Rahul Gandhi, the Congress vice president, had been less aloof and more active and sensitive to churns in the states’ politics.

More importantly, it is a blow for the prestige of the BJP and Narendra Modi, who wants his prime ministerial authority to be as absolute as possible. That was demonstrated earlier this month with a substantial central government reshuffle that promoted ministers who did his and the prime minister’s office direct bidding, and demoted those that did not and also those who had upset Amit Shah. The same applied to the internationally-regarded governor of the Reserve Bank of India, Raghuram Rajan, who is departing.

The court’s rulings have also come at a sensitive time in relations with the judiciary because the government has been trying to gain a say in the appointment of judges in high courts and the supreme court, rather than leaving it basically to seniority.

Ceremonial but meddling

Constitutionally, a state’s governor has a largely ceremonial role that is broadly similar to India’s president and Britain’s monarch. Central governments usually fill these gubernatorial posts with political supporters, usually grateful pensioned-off politicians, bureaucrats and armed service chiefs. They live grand lives of pomp and ritual in a style directly inherited from the British Raj with a large (but frequently faded) “Raj Bhawan”, estates, and liveried servants. Frequently controversial, they meddle in a state’s politics even though they are not supposed to do so.

The most blatant and destructive current example is in Delhi. Here the lieutenant governor (who has more powers than other state governors) has for two years done what is presumed to be Modi’s bidding by undermining the work of the government run by the Aam Aadmi Party. The AAP, led by Arvind Kejriwal, has unnecessarily riled the lieutenant governor, Najeeb Jung, a former bureaucrat, but an official in such a position should surely rise above such provocation.

Former Congress prime minister Indira Gandhi made most frequent use of governors’ coups, which have been staged more than 100 times since India’s independence in 1947. She was as ambitious as Modi to assert absolute control (though her motives partly stemmed from paranoia, which is not a Modi characteristic).


The sensitive Actual Line of Control, as the India-China border is known in  Arunachal, when Chinese troops intruded  more than 20km into Indian territory in 2013 – Indian Express photo

The first occasion I remember was in August 1984 when she tried and ultimately failed to eject the southern state of Andhra Pradesh’s colourful ex-film star chief minister N.T.Rama Rao, head of the regional Telegu Desam. Her action led to weeks of political unrest, Hindu-Muslim riots, and army flag-marches aimed at restoring peace. This hit world headlines because it echoed her State of Emergency actions in the mid-1970s.  A month earlier, she had got the governor of Jammu and Kashmir to replace the chief minister Farooq Abdullah, albeit with another (more pliable) politician from Abdullah’s state-level National Conference party.

The Arunachal story

President’s rule was imposed in Arunachal in January after two months of political machinations that began when Congress assembly members, encouraged by the BJP, rebelled against the Congress chief minister, Nabam Tuki. The state’s governor was deeply involved in the events. A month later, a state government was installed and proved its majority in the assembly. It was led by one of the Congress rebels and supported by BJP assembly members, who together formed a new People’s Party of Arunachal.


Prem Khandu yesterday handing over assembly members’  letters of support to the Arunachal Pradesh governor, Tathagata Roy – photo

Last week, on July 13, the supreme court ruled that the Arunachal governor had acted illegally and unconstitutionally when, under article 356 of the Indian constitution, he interfered in various ways in the state’s politics and successfully advised India’s president in January to dismiss the Congress state government led by Tuki, alleging it was unable to function effectively following the members’ rebellion.

For the first time ever, the court also ordered the reinstatement of Tuki’s dismissed state government. This went further than rulings in earlier decades that stopped president’s rules and sometimes ordered complaints to test their strength on the floor of the assembly.

Yesterday there was a new twist when Tuki resigned, handing over leadership of Congress to Prema Khandu, a colleague, who could pull the Congress’s warring groups together. Khandu, the son of a former chief minister, then took over 44 assembly members to the governor (above) to show that he commanded a majority of the 58-seat assembly, finally ending the coup saga. He is being sworn in today.

Governors’  ground rules

The supreme court also went further on July 13 and, for the first time, laid down ground rules for governors:

“It needs to be asserted as a constitutional determination, that it is not within the realm of the Governor to embroil himself in any political thicket. The Governor must remain aloof from any disagreement, discord, disharmony, discontent or dissension, within individual political parties.

“The activities within a political party, confirming turbulence, or unrest within its ranks, are beyond the concern of the Governor. The Governor must keep clear of any political horse-trading, and even unsavoury political manipulations, irrespective of the degree of their ethical repulsiveness. Who should or should not be a leader of a political party, is a political question, to be dealt with and resolved privately by the political party itself. The Governor cannot, make such issues, a matter of his concern.”

Quaint language there to be sure, but a significant warning shot to Modi, and to future prime ministers, to stop ordering pliant governors to organise coups.

Posted by: John Elliott | July 12, 2016

Cuba braces itself for a second US invasion

Impressions from an eight-day holiday 

The poor in Cuba are very, very poor, but it does not feel like a country blighted by poverty – not, for example, like India, where I live. People have suffered a repressive political regime, with a virtually closed economy, for over 50 years, and the youth have to go abroad if they want the sorts of opportunities that are now available for aspirational Indians at home. 

Practically everyone, including government employees, doctors and university professors, have desperately low levels of pay, but offsetting that in terms of poverty are free health services and education. Some poverty is visible as one travels through rural areas and towns (see Santa Clara street scene below), as is the lack of organised agriculture.

IMG_1129 copy

After an all-too-brief eight day holiday, I came away last month wanting to go again to this welcoming and friendly country. In the towns, many with old squares and streets of distinguished-looking buildings and gaily painted houses, there are cafes and music seemingly everywhere, a sea of colour, and a calm that comes from a lack of traffic.

I was not however visiting as a journalist, and did not have wide ranging interviews, so these notes are the quick impressions of a tourist.

 Don’t say “Cuba” at Miami immigration!

“How long will you be here and where are you going on to?”, the US immigration officer asked me when I arrived in Miami for a Kellogg School of Management innovation network (KIN) conference before going on to nearby Havana. 


Che Guevara sculture in Havana

“Five days, and on to Cuba”, I replied. “To where?” he asked rather sternly. “Cuba,” I repeated, unthinking. He asked me again, rather more threateningly, still holding my passport and completed immigration pass in his hand.

“Oh,” I said, nervously smiling, “sorry, the Caymans, Grand Cayman” (my onward transit airport). That generated a rather grim condescending smile, and my papers.

Such it seems, is the ambivalence of officials in Florida to their socialist neighbour that the US boycotted and shunned for over 50 years till diplomatic relations were restored last July. Links were severed in 1961, the year that Cuba repelled in just three days a botched CIA-sponsored paramilitary invasion at the Bay of Pigs on the south side of the island.

That was followed in 1962 by the Cuban missile crisis, when the risk of a nuclear war between the US and the Soviet Union was averted in a deal that sealed both Cuba’s independence and the US blockade.


The towering Soviet 1980s vintage Russian embassy

All of that can lead soft lefties to feel empathy for revolutionaries, celebrating the Bay of Pigs fiasco in a museum by the sea at Giron.

One can instinctively criticise a country that could blockade an island for so long, and also condemn the Cuban Americans who fled, mostly to Florida when Fidel Castro took over, and whose political influence in Washington kept the island isolated.

Another reminder is the mausoleum at Santa Clara of Che Guevara who, with Castro and others, led revolutionaries in 1959 to victory against General Fulgencio Batista, the country’s dictator.

 A second invasion

Now Cuba is readying for a second invasion when direct scheduled flights start from America in September – six US airlines led by American and Jet-Blue have been approved by Washington for up to 20 flights a day to Havana plus more to other cities (in addition to current charter flights). That is being welcomed because of the economic activity it will generate – but older people fear a cultural take-over, especially of the young.


Mixed signals as Castro grabs Obama’s arm, apparently deflecting an attempt to hug him

“It’s important that our kids realise that one nation’s trade embargo kept us down all these years and no-one should ever be allowed to forget that,” a middle aged university lecturer told us, avoiding mentioning America with the caution that everyone showed when mentioning political subjects.

That led us into a discussion about President Obama’s recent visit to Havana (above) where he faced a tough press conference  with President Raúl Castro, 85-year old younger brother of Fidel, the former prime minister and president. Raúl made it clear that there were limits to how far the government would respond to US pressure to soften the current regime.

“Raúl and Fidel are standing up to them but the risk is that, when they go, the Americans will gobble the place up,” said our friend. 

 Go before it’s spoiled”

People assumed we were going to Cuba “before it gets spoiled”. And so we were, just in time before the direct US flights, but not early enough.


Reflection of the Plaza Vieja in  Lacoste shop window

Even though it was the wet humid season, there were plenty of other tourists around, as there have been increasingly for a couple of decades from Canada, Spain and elsewhere in Europe. Some came while we were there from an American cruise ship that had made its first visit for decades a few weeks earlier.

A few designer and western brand shops (left and lower down) have already opened in the cobbled streets and squares of old Havana with luxury goods that are far beyond the reach of even middle class professionals who earn just $4.5 a week.

Chanel staged its annual glittering fashion show with an exclusive invited audience on the grand Paeso del Prado in central Havana two months ago. Adding to the glamour, the Rolling Stones turned up in March for an open event that was more in the Cuban egalitarian traditions of the last half century.

We were however in time to stay in Havana’s grand old Hotel Santa Isabel (below) overlooking the famous Plaza de Armas before America’s Starwood hotel group takes over the management.


The Isabel is one of several properties Starwood has said it will be running for one of the military-owned companies that control much of the island’s tourism – its Sheraton brand name has just gone up on a modern hotel close to the city’s seafront. Cuba has dozens of stylish old hotels, many in need of varying degrees of refurbishment. Foreign groups such as Melia from Spain are already there, especially at beach resorts, having been allowed in since the 1990s.

stonegate-mastercard*750xx617-347-0-23Another indication of growing American links is a bank credit card for Cuba (left), with both countries’  flags, that is being issued by Florida-based Stonegate Bank for US citizens to use for withdrawing cash. We carried British pounds and a few US dollars that were easily exchanged in banks – my Indian government press card was, amazingly, accepted as proof of identity when I wasn’t carrying my passport. Some hotels (we were told only the military-owned ones) accept European credit cards and there are a few ATM machines.

 You don’t need Coke

So how much will Cuba change? Its attraction is that it mixes being a relic of the past with some modernity, and with splendid beaches as well as the old towns. “Everyone wants to come to Cuba before the Americans change it,” said one of our guides. “You don’t come here for McDonalds or Coke”. 

And indeed you don’t need to. The local cola brands are fine. The food can be monotonous – endless tuna and cheese sandwiches at lunchtime, helped down maybe with mojito or rum and coke, and tough beef and pork in the evening. But one can work round that, especially with lamb, chicken and the occasional pasta. There are some excellent not so expensive restaurants serving a mix of local and international food – I had one of the best rogan josh dishes ever at the Sol y Son courtyard restaurant attached to a stylish old house in the popular tourist town of Trinidad.

IMG_1155There’s money to be made from the expected flush of tourism and the insides of old buildings are being torn out and rebuilt. Old Havana, as the cobbled area of the capital is known, has dozens of building sites but, so far, most keep their imposing exteriors (right).

Brightly coloured old Cadillacs, Pontiacs and other bulging American iconic limousines (below) have been refurbished and polished for tourists – at least one limo trip round Havana is a must.

But there are problems…

Behind the stylish old facades and the hotels and cafes doing increasing business all is however not well. Cuba’s is a crippled economy that stumbles on with support from unstable Venezuela and other countries. China has inevitably stepped in and seems to have supplied most of the modern coaches and buses one sees on the roads as well as cars. 

There is virtually no manufacturing industry, not even of bicycles, apart from bright yellow bubble-shaped plastic mini-taxis known as CoCos. Agriculture is held back by a lack of mechanisation and modern seeds and fertilisers. The countryside is littered with closed sugar factories, hit by the American trade embargo and inefficient operation. Amazingly for such a literate country, and with a rich countryside, exports are limited to tobacco, including the world famous cigars, and nickel plus some citrus and sugar that is far below the potential.


There have been some reforms since Raúl Castro took over from Fidel in 2008, opening up areas such as some farms, taxis and cafes to the private sector, but even that is haphazard – we heard that private fruit and vegetable sellers had suddenly disappeared from the streets a few weeks before our visit because that reform had been cancelled, apparently because of rising prices.

Stories of heavy and persistent government control even include Airbnb having to register with the government before it could advertise rooms to let. If it hadn’t done so, I was told, its internet access would have been blocked and people would have been told not to offer rooms. Now guests’ passport details have to be sent to the local immigration office.


People were willing to answer endless questions about the problems and about the new relationship with the US. They talked about pay for occupations like teachers and university professors being so appallingly low that many either emigrate or, with increased tourism, waste their talents as tourist guides. 

There is a dreadful lack of food, with strict minimal rationing, though the tiny amounts that are available can be bought at reasonable prices in the domestic national peso currency. Those who are able to lead reasonably comfortable lives do so because they have relatives abroad who help with clothes and provisions and also help finance access to the convertible peso (CUC) used by tourists, which is linked to the US dollar and is worth 25 times the local currency.

It’s not for me as a tourist to do an analyst’s job on such problems, but do go there, quickly. And tip generously – the people you’ll meet need it!

Posted by: John Elliott | July 6, 2016

Modi reshuffles with some gains and some surprises 

Finance professional Jayant Sinha demoted from finance ministry to aviation

Narendra Modi’s long-awaited cabinet reshuffle was implemented last night with some gains in terms of government efficiency and some surprises. Overall, Modi’s supremacy has been underlined, working in tandem with Amit Shah, the Bharatiya Janata Party’s hardline Hindu nationalist president.

The most surprising and, it seems, self-defeating change is a demotion for Jayant Sinha, minister of state (number two) at the finance ministry to a similar spot at the aviation ministry. His only failing appears to be having as his father a former BJP finance and foreign minister, Yashwant Sinha, who has been an outspoken Modi critic, most recently over setbacks on foreign policy.

Smriti Irani-An equally unexpected but constructive demotion hit Smriti Irani (left), the accident-prone and excessively combative minister for human resources (HRD and including education), who has been shunted off to the textiles ministry.

Other moves shift some under-performing ministers and reduce the responsibilities of others, mostly resulting from a rare in-depth examination of ministers’ effectiveness ordered by Modi.

Arun Jaitley, the over-worked minister of finance and corporate affairs, has lost his responsibility for the information and broadcasting ministry, which has gone to Venkaiah Naidu, a veteran BJP politician and till now the minister for parliamentary affairs. Jaitley has been given two ministers of state to replace Jayant Sinha but, without Sinha’s expertise, there will be more onus on him to spend more of his time managing economic policy and assessing proposals from the ministry’s bureaucrats.

It is difficult to see what Sinha (below) can achieve as number two at the aviation ministry, which presides over the entrenched airline (notably perpetually loss-making inefficient Air India) and airports establishment, and is far from a happening part of government.

A Harvard educated former New York fund manager and McKinsey consultant, he brought unusual professional depth to the finance ministry, where he spearheaded some initiatives and was highly regarded by foreign investors.Jayant Sinha

That is not a cv that fits easily with Modi and the BJP’s Sangh Parivar.

Unlike Raghuram Rajan, who is about to leave the Reserve Bank of India governorship after just one three-year term, he has not however paraded his professional credentials and has stayed strictly within his brief. (Rajan upset Modi and the Sangh Parivar with outspoken remarks that clashed with the government line. He recently announced his return to Chicago University when it became clear the government would not confirm him for a second term).

Unless there is some special task that Sinha is to perform at aviation, the only reason for his move therefore seems to be his father’s repeated criticisms of the Modi regime.

Irani’s move is long overdue because she has been a constant embarrassment to the government, most recently over her handling of the unnecessarily explosive student unrest at Delhi’s Jawaharlal Nehru and other universities. She has also clashed with Modi’s policy makers on various issues .

A former famous television actress and model, she has had Modi as her patron. He protected her for two years after he unexpectedly gave the high profile HRD ministry following the 2014 general election. She immediately hit the headlines, mishandling whether or not she had got a university degree (she hadn’t).

javadekar-16-1463399666Her successor is Prakash Javadekar (right), the minister of state in charge of environment, forests and climate change since 2014. He has been promoted to the cabinet having, with relatively little controversy, boosted infrastructure development by reducing the effectiveness of environmental protection laws and regulations in line with Modi’s wishes.

The government is now working on a new education policy that will include “saffronising” curriculums along Hindu nationalist lines. With Irani in charge, this would have made controversial headlines at every step. Javadekar will handle it more effectively with less bombast.

Among other ministers whose responsibilities have been reduced or changed, Ravi Shankar Prasad has lost the telecommunications ministry. He was not regarded as a success in some areas and took an unnecessarily combative approach with foreign investors. He has however regained the law and justice ministry where he was the minister earlier, which will please him since he is a lawyer. He also retains responsibility for electronics and information technology.

At the communications ministry, Prasad is succeeded by Manoj Sinha (no relation to Jayant and Yashwant), previously number two at the railways ministry. Sinha will be responsible for a key auction of telecoms spectrum and for pushing the behind-schedule Bharat Net project spreading internet to rural areas, which is central to Modi’s Digital India programme.

Javadekar is succeeded at environment by Anil Dave, a new minister who is involved in conservation work on the famous Narmada river and also has experience on water resources and climate change.

Other appointments include M.J.Akbar, a journalist, editor, author and a former Congress MP (1989-91). He has been a BJP spokesman and is now a minister of state in the external affairs ministry.

Modi Shah - Mail Today

Amit Shah worked closely with Modi (together, above) on the changes. He interviewed many of those involved earlier this week, a job normally performed by a prime minister, which underlines his central role.

Overall, 19 MPs joined the government in what is Modi’s second ministerial expansion and reshuffle since the general election. While the changes in ministerial responsibilities appear to have been mostly based on merit, the choice of the new ministers has stemmed mainly from electoral politics,. A number of dalit and other backward caste leaders have been given ministerial positions in order to demonstrate to voters that the BJP government does not just care for upper castes and the well-off.

This is significant since key elections take place next year in various states, notably Uttar Pradesh (UP) and also including Punjab and Gujarat. Both the BJP and Congress are now gearing up for the UP polls which as a key test of ~Modi and the government’s popularity.

  • The Congress Party is now considering whether Priyanka Gandhi, the charismatic daughter of party leader Sonia and sister of Rahul, the less-than-effective deputy leader, should play a leading role in the UP campaign. That could mark her entry into mainstream politics. Rahul is currently holiday at an unknown foreign destination, and a decision might be made when he returns. Curiously, the party is also reported to be considering fielding Sheila Dikshit, 78-year old former chief minister of Delhi, as its chief ministerial candidate for UP.


Lessons for leaders in Europe and elsewhere including India

In the early hours of this morning (India time), when Britain’s Brexit referendum results began to indicate a vote to leave the European Union, it quickly became clear from BBC television’s regional reports that the vote was more a protest against the political establishment than against Europe itself.

The first significant “Leave” results came from the north-east of England where jobs are scarce, Tata’s steelworks have been facing closure, and dissatisfaction with London-based political leaders is rife. The trend then continued across the country with voters blaming Europe for all their economic and social problems. Only Scotland and London (plus a few nearby areas), along with part of Northern Ireland. provided solid support for Britain staying a member.

map cameron3_0

The results: yellow areas to Remain, blue to Leave – map, The Independent

Europe is in shock this morning because a negative vote had not been expected by the financial markets nor, it seems by bureaucrats in Brussels at the EC’s headquarters.

It took six hours after the first votes showed that an exit result was possible around midnight (UK time) for the final result to come through – with 17,410,742 (51.9%) voting to leave and 16,141,241 (48.1%) to remain.

Fears about mass immigration, and the economy,were the most major issues, especially immigration. But if it is correct that this was overall an anti-establishment vote,  especially by older people – and it certainly seems to have been so – then there are lessons for other countries’ leaders because such dissatisfaction and a feeling of being left-behind by economic globalisation is not limited to the UK.

I argued on this blog last September that the emergence of Narendra Modi as prime minister of India, Jeremy Corbyn as the British Labour Party’s leader, and Donald Trump in the US, to name but a few, reflected voters’ disenchantment with the way that their predecessors had run broadly consensus politics supported by finance, business and other establishments controlled by vested interests.

Today’s result means Hilary Clinton needs to worry because populist support for Trump stems from a desire for a new type of president – though of course Trump might well continue with such outrageous behaviour that he makes himself un-electable.

In India there is a lesson for Modi about the need to deliver what the electorate expect. He won a landslide election victory two years ago for his Hindu-nationalist Bharatiya Janata Party on the platform of economic growth, jobs, and efficient government. That was a revolt against rule by the Gandhi dynasty’s Congress Party, and it brought in someone who had not been part of the Delhi political elite. But Modi is perceived so far as having failed to be different enough.


David Cameron announcing his decision to resign this morning – photo The Independent

A new political force, the Aam Aadmi Party that is headed by anti-corruption campaigner Arvind Kejriwal, now runs the Delhi state government and has shown a new approach. It has ambitions to expand into other states, presenting a fresh challenge to existing parties.

Two UK political leaders bear most responsibility for the turmoil created in the past hours and for the uncertainty that now faces the UK and, indeed, the whole of the EU because there are calls in other countries such as France, Italy and the Netherlands for referendums.

One is David Cameron, the prime minister. He gambled with the referendum solely to sort out his Conservative Party’s internal problems with long-standing EU dissidents. He negotiated an inadequate package of minor changes with the EU and then campaigned for EU membership to continue, stressing reasons for not leaving rather than the advantages of remaining. He thus lost in a vote that need never have taken place.

He also called a Scottish referendum last year believing that would settle, once and for all, demands in Scotland for independence, which it has not done

There are now likely to be calls for a fresh referendum in Scotland, which voted heavily yesterday in favour of EU membership, and that could take the country out of the United Kingdom.


The United Kingdom’s union flag lies on the ground, symbolically  washed away by heavy rains yesterday – Reuters photo

Cameron has announced today that he will resign by the time of the Conservative Party annual conference in October so that a new prime minister can lead two years of negotiations on Britain’s withdrawal. He will be leaving the United Kingdom in its worst crisis since the second world war.

The other political leader primarily responsible for the result is Jeremy Corbyn whose Labour Party is in favour of remaining in the EC. But he failed to lead and generate a coherent campaign to mobilise the vote of the party’s members, proving himself incapable of effective political leadership.

In 1973 I became what is now known as a Eurosceptic when I went for The Financial Times to Brussels for a European Economic Community briefing on plans for a directive on works councils. We were told what Britain would have to implement (no mention of discussion or debate) by two senior German and French bureaucrats with all the arrogance that has helped to make the EU so unpopular.

I came away anti-EEC, and that has coloured my views on the dysfunctional institution ever since (even though the works councils directive never happened). But, as an FT columnist wrote two days ago, “the case for Britain to leave the EU just does not stack up”. I would therefore have been voting Remain yesterday if I had a vote.

Sadly not enough people did vote Remain because Europe became a proxy for everything that they felt was wrong with the way that Britain has been run for years. The Economist reported that  at Leave events around the country there was “smouldering anger about the establishment, broadly defined: the banks (especially Goldman Sachs), the Bank of England, the business leaders, the universities, the ‘experts'”.

This indicates that Leave voters dream of a new beginning with Brexit somehow leading to them having a new measure of control over how they are governed.

That of course is a fallacy because the new leadership of the Conservative Party that emerges this summer will be from the same elite establishment that they were voting against yesterday. The front runner to succeed Cameron is Boris Johnson, former mayor of London and leader of the Brexit campaign – they both went to the elite Eton College school, and to Oxford University at the same time  where they belonged to the same exclusive all-male Bullingdon drinking club.

It is difficult to see what has been gained, or could be gained, by Britain leaving the EU, except for two years, or maybe far more, of dire political and economic uncertainty that could have been avoided.

bhupen-khakhar-19941LONDON: June is usually the  month when London auctions of modern Indian art hit the headlines with dramatic million-pound sales, but this year they have been unremarkable and have been overshadowed by the opening at London’s Tate Modern gallery of a fascinating retrospective exhibition, called You Can’t Please All, of figurative works by Bhupen Khakhar (right), a provocative Indian artist who died in 2003.

Khakhar is less well known than names such as V.S.Gaitonde, Tyeb Mehta, M.F.Husain, F.N.Souza, and Amrita Sher-Gil who dominate the auctions, but he is regarded highly by other Indian artists for his iconic, pioneering narrative paintings. He tells stories with humour depicting ordinary middle class life in the late 20th century, especially in his Gujarati home city of Baroda – but not always so ordinary because Khakhar was gay in a country where homosexuality was (and still is) illegal, and male nude figures appear frequently in his works.

“In the late 1960s, he was the first Indian artist to combine traditional art, Indian popular culture, and Western pop art,” says a foreword to the exhibition’s catalogue. He “turned the cultural establishment on its head” with portraits of hairdressers and tailors, and with “sad, angry affectionate pictures” of middle-class life.

ID_67 TC

Man Leaving (Going Abroad) 1970, Courtesy Tap Collection, copyright Estate of Bhupen Khakhar

In the 1980s, he was courageously the first homosexual Indian artist to come out. The exhibition graphically illustrates that period as well as his later problems with cataracts in his eyes, which led to a blurry brushwork (masking some suggestive same-sex scenes), and then to his struggle with prostate cancer from 1998.

Some of the most appealing however are early quirky studies such as Man Leaving (Going Abroad) (above) painted in 1970, and others depicting a watchmaker  and a tiger chasing and mounting a stag (both below) and strike pickets at a factory gate. Khakhar’s inspiration is said to have come from a wide range of sources varying from pre-Renaissance painters to the India’s colonial Company style, and from post-Impressionists like Henri Rousseau to West Bengal’s 19th century Kalighat style.


Tiger and Stag 1970 Estate of Bhupen Khakhar/NGMA, New Delhi, copyright Estate of Bhupen Khakhar

His works have appeared in a few earlier exhibitions internationally, including one at the original Tate Gallery in 1982 along with five other Indian painters including Rabindranath Tagore and Jamini Roy, and at the Tate Modern along with others in 2001. Such shows help to boost sales, as has happened for example with Gaitonde after a notable exhibition in New York’s Gugggenheim Museum in 2014.

Both Christie’s and Saffronart auction houses have managed to include Khakars in their sales over the past month. A small 24in x 24in overtly gay oil on canvas, At New Jersey (below), went at Christie’s for £134,500 ($197,715) including buyers’ premium, which was more than double the $87,500 that it fetched at Christie’s in 2014 .

bhupen_khakhar_at_new_jersey_d5995289hThere have been questions about whether the paintings – done between 13 and 50 years ago – fit the Tate Modern’s ultra contemporary image. Nada Raza, the exhibition’s co-curator with Chris Dercon (till recently the gallery’s director), points out that the Tate Modern shows art from 1900, and argues that the definition of modernism needs to be expanded when it is applied outside the US and Europe because the experience of modern life, and artistic and cultural responses, can be vastly different. Artists elsewhere resist and change the forms and rules of modern art to reflect their own experiences, often in relation to colonial or imperial powers – and that is what Khakhar did.

Some UK critics do not agree. Both The Guardian and its associated Sunday newspaper, The Observer, have slammed Khakhar and his paintings at the Tate as “incredibility unimpressive”, a “waste of space”, “uneven, garrulous, puzzling, opaque” and, having “no fluency or touch with the brush, he moves the paint around with laborious difficulty”. Those rather mindless reviews have been rightly criticised by art curator and critic, Geeta Kapur along with others including Salman Rushdie, for whom Khakhar illustrated two books.


You Can’t Please All 1981,  Tate, copyright Bhupen Khakhar

But The Observer does maybe strike a chord when it says that the exhibition fails “to give sufficient context for viewers who have no knowledge of India in the 1960s and 70s”. There are the usual notices on the theme of each room and individual works, and a neat pocket-size pamphlet that everyone is given, but more explanation could help visitors meet the challenge of understanding and appreciating what they are viewing, as I discovered when talking to Nada Raza. There is a splendid hard-backed catalogue with very informative essays, but that does not cater for everyone.

Perhaps the most important work in the exhibition is You Can’t Please All (above), which gives the exhibition its title. This 5ft9in x 5ft9in oil on canvas illustrates how Khakhar was “both voyeur and participant” because the artist has said that he is the naked man leaning on the balcony and it was interpreted as marking his coming out. He is watching a street scene based on an adaptation of an Aesop’s fable about a man, his son and a donkey – the man mounts and dismounts from the donkey, trying to please passers-by who make comments, but eventually the donkey dies.

Janata Watch Repairing 2953

Janata Watch Repairing 1972  Vivan Sundaram and Geeta Kapur, copyright Estate of Bhupen Khakhar

Khakhar was born in Bombay (Mumbai) in 1934 and qualified as an accountant, which Nada Raza says pleased his mother who hoped he would climb the heights of the city’s business districts.

Instead, though continuing to work as an accountant, he went to Baroda to study painting in 1962 where he was taught and influenced by artists such as Gulam Mohammed Sheikh and K.G.Subramanian.

In 1976 he came to the UK (via the then USSR and Yugoslavia), and again in 1979 as an artist in residence at the Bath Academy of Art. He found Britain alienating because of the lives of working class people and lists, in notes that are displayed at the Tate, “total distrust for foreigners” as an Englishman’s qualities . Writing about winter, he says: “You are not allowed to smile during this season, which lasts for ten months of the year. If you are sensible, then try to look as grumpy as possible. English people appreciate sulk”.

Bhupen chair - NGMA - IMG_5182The exhibition is sponsored by Deutsche Bank which will be taking it to Germany later. It is also financially supported by Delhi’s Kiran Nadar Museum of Art.

The National Gallery of Modern Art in Delhi has a current exhibition of the Khakhar works that it has in its collection – including this painted chair, which neatly illustrates the range of the artist’s work, and humour.

  • ** Visiting the Tate Modern also enables one to look at the stylish Switch House extension (rising on the right behind the end of the old power station in the picture below) that was opened last week. This is a significant contribution to London architecture because of the way, after plans for the external cladding were changed from glass to specially designed brickwork, the structure blends with the gallery’s original brick power station and contrasts with nearby glass-clad buildings.
    Tate Modern's Switch House ©Iwan Baan -

    copyright Iwan Baan –

    also see this review

An urgently needed cabinet reshuffle is being planned by Narendra Modi and his Bharatiya Janata Party henchman, Amit Shah, as the Indian prime minister enters the third year of his time in office.

He has not achieved nearly as much as he should have done in the two years since he was sworn in on May 26, 2014, and he needs to install more effective ministers and top bureaucrats in order to implement the many schemes he has announced and pledges he has made.


Modi and Modi at Madame Tussauds waxworks in London

Reshuffles are often rumoured, but the gossip is frequently spread by people trying to affect the outcome, and they often do not happen. This one however does seem to be in the works because Shah, the BJP president, said in a press conference at the party’s Delhi headquarters today that the “cabinet reshuffle will happen soon. The date is not yet fixed”.

Changes are needed because, till now, Modi and his government have failed to deliver his general election promise of introducing what he calls “achche din” or good times, which means providing jobs, security, and a cleaner more effective government. What has been achieved has too often been overshadowed by extreme anti-Muslim and intolerant Hindu nationalism that Modi has not done enough to curb.

His relations with the media are poor, and he tries not to expose himself to detailed questions. This week he has given an interview to the editor-in-chief of the Wall Street Journal, where he claimed that he has “undertaken the maximum reforms in the last two years”, exceeding anything that had been done before. But interviews (see the transcript here) at the level of editor-in-chief rarely involve close questioning, so Modi had the easy ride that he wanted.

There has been some speculation that Arun Jaitley, the minister of finance and company affairs, as well as information which makes him the main government spokesman, will be moved or at least shed some of his work. Along with Shah, he is the prime minister’s closest ally, but he clearly has too many jobs to be able to focus in depth, even though, as a top lawyer, he is well used to mastering a variety of briefs quickly. Critics say that  the country could do with a hands-on economics oriented finance minister able to over-ride top finance ministry bureaucrats who seem to have led Jaitley into some traps, especially on taxation.

A stronger minister of commerce – Nirmala Sitharaman currently holds the job as a minister of state – would also help trade negotiations and implementation of industrial policy that is focussed around Modi’s key Make in India manufacturing and jobs-oriented campaign.

Some successful Ministers

Ministers regarded as being specially successful on economic subjects include Piyush Goyal in charge of coal, power and renewable energy, Nitin Gadkari on roads, highways, ports (though his hype often obscures real achievements), and Suresh Prabhu at railways (though his plans have yet to yield many results).

Some observers include Manohar Parrikar, the defence minister, in the successful list, though he has failed so far to cut through the deeply entrenched defence establishment and fully introduce new policies and place major contracts. He sometimes seems distracted by BJP politics in Goa, where he was previously chief minister.

This is a key area for Make in India because the government can directly influence development of the job-creating manufacturing industry by placing urgently needed defence orders, which tie foreign suppliers to Indian partners, but progress has been lamentably slow.

Make in India has gained an amazingly successful brand image since it was launched in September 2014. Scarcely any foreign government official or business delegation dares to come to India without paying it lip service, while in the media it generates easy instant headlines.

Make in India lionIt has led to relaxation and removal of old restrictions on doing business that will gradually yield benefits, but it has failed so far to deliver much in terms of foreign direct investment (FDI) in manufacturing industry, and there is little evidence of jobs being created.

Extravagant claims have been made by Modi and other leading ministers and officials about the campaign’s impact, some alleging it has generated FDI growth of over 40%. A Business Standard analysis however has argued that the real figure is far lower and, I would add, cannot be attributed in any significant way to the campaign because of the lead time on projects.

In a way, the campaign symbolises both the success and shortcomings of Modi’s first two years. He was also a strong brand when he was sworn as the leader that India needed to revamp the way the country is run and revive the economy.

But neither he nor his pet campaign have delivered what was expected, both failing especially to revive India’s job market that needs to absorb 1m new entrants every month – that’s more than the population of Belgium or Greece every year.

The question now is whether he can drive through change, with programmes and reforms that could transform the way that India is run, by the time of the next general election in 2019. So far, there have been far too many high profile announcements with few tangible results, typified by the billions of dollar unrealised projects that Modi has announced during high profile foreign trips to some 30 countries (the total last November was over £80bn).

The focus does not now need to be on conventional economic reforms like a long-delayed goods and services tax, nor land acquisition and labour laws that the government has failed to introduce and now says should be introduced by individual states. The time for the services tax was in Modi’s first year in office, when he failed to move fast enough. He then ran into trouble in the Rajya Sabha upper house of parliament, where the BJP does not have a majority, and failed to manage the politics deftly enough to win support from other parties.

Swachch BharatHe has managed to have bills passed in areas like coal mining, insurance, real estate, and bankruptcy, and has adopted the previous government’s highly successful Aadhaar electronic identity scheme that opens up a wide range of facilities, especially for the poor. He has also managed to reduce corruption, though mostly only at the top levels of the central government.

More important now are programmes that could actually change the way that India works. In addition to Make in India, they include financial inclusion, Digital India for what is described as a “digitally empowered society and knowledge economy”, Swachh Bharat that includes Clean India and provision of toilets, and Skill India and Start-up India that are aimed at providing jobs and encouraging young entrepreneurs. Others include a mis-named plan for Smart Cities that mostly involves providing basic services and amenities that are regarded as automatic in developed countries.

These schemes help to bring focus to what the government wants to achieve but they need far more drive than they have been getting to ensure that individual states take up the challenge and that, for example, there is water and chemicals for toilets, electricity and internet for computer installations, and that financial inclusion involves active banking by the poor.

India is a slow-moving and complex society and is resistant to change. Modi said when he was elected that he needed ten years to transform India, but the electorate will expect evidence of change in three years’ time – and that is why a ministerial reshuffle is needed.

Posted by: John Elliott | May 24, 2016

Dodgy donors dog the lit fest circuit

When the organisers of the Jaipur Literature Festival arrived at London’s Festival Hall on the banks of the Thames for a day of bookish discussions and debates on May 21, they were worried about how far protesters opposed to Vedanta Resources, their extremely controversial lead corporate sponsor, would go in order to cripple the event.

20ARTBEATBRITISH-master768Two days earlier, protesters from Greenpeace had climbed pillars (left) that form the façade of the impregnable-looking British Museum and forced the first day of a big summer exhibition temporarily to close because BP was the sponsor.

As it turned out, there were few protestors at what is known as JLF SouthBank, the London spin-off from India’s highly successful annual festival in the Rajasthan city of Jaipur that attracts many tens of thousands of visitors every January and had 330,000 footfalls earlier this year.

There were only 20 or 30 demonstrators and they showed neither Greenpeace’s ingenuity and skill, nor a willingness to demonstrate calmly and engage in a debate on the issues. If they had done so, they would have found that a large number of people attending the festival agreed with their opposition to Vedanta, but did not see that as a reason to boycott a stimulating literary day.

“Angry, ugly and destructive”

They shouted and screamed and stormed into the main hall waving placards in the middle of discussions that they hoped but failed to halt. “Their cause was ok but behaviour (I was there) was angry, ugly and destructive – they rejected offers to debate issues, saying that would mean getting involved”, I commented on Facebook and Twitter.

Eventually their efforts fizzled out, thanks to quiet and patient police persuasion that steered them and their aggression outside the building.

That might have been the end of the story, but discussion has continued in the social media and in India, mainly because Vedanta, a London-based Indian-controlled mining, metals and oil and gas company, is regarded as possibly the worst of a very bad bunch of Indian and foreign miners. They care little for the social and environmental disruption that they cause, and they try to smother both the effects and the protests with heavily publicised social programmes and international public relations exercises such as sponsoring cultural festivals.


Foil Vedanta’s call to protest

This raises some important issues about the sources of financial sponsorships for such events, the access that protesters should have, and whether literary and other figures should fall into line and withdraw from a festival, depriving a large number of people (some 650 at JLF SouthBank) of hearing from them. Sponsors rarely have much influence – at JLF a company chairman might get a spot in one of the discussions, but little more.

There should also be questions about the campaign. There is no doubt that Vedanta, and its founder chairman Anil Agarwal (below), have been accused, and in some cases found guilty, of all sorts of environmental irregularities (which of course they deny).

But there should be questions about the financial and other backing that such a protest campaign receives. There have for many years been suspicions that international aluminum producers finance non-governmental and other organisations to mobilise local people and block the mining of low-cost Indian bauxite that would disrupt markets with prices maybe 50% below international levels.

Such ideas can easily be dismissed as unreal conspiracy theories, but I don’t think they are necessarily unreal. The power and reach of the anti-Vedanta campaign is incredible – the Church of England even sold a £3.8m equity stake in the company in 2010 in response to the campaign.

This is not to suggest that Saturday’s demonstrators were being misled, but they probably had little idea of who was funding Foil Vedanta, which led the protests and has been in operation since 2011.

The focal point of the complaints is Vedanta’s $1.7bn plans for open-cast bauxite mining (with a nearby aluminium plant) on an Odisha (Orissa) mountain at Niyamgiri that the local Dongria Kondh tribe regard as sacred and part of their heritage and source of livelihood. The project was stopped by India’s last Congress government after a vote by people living in the area, but there are now attempts to reopen the issue, presumably because the current Narendra Modi-led government will be more sympathetic to the company.

The Foil Vedanta campaign is far wider however than Niyamgiri, accusing the company of “destroying lives and devastating the land” elsewhere in India and in Sri Lanka, Ireland, Zambia, Liberia, South Africa and elsewhere.

Anil Agarwal Chairman Vedanta (AA)In accepting Vedanta as the named top sponsor of JLF SouthBank, Sanjoy Roy, who runs Teamwork Arts, a successful and respected Delhi-based production company that organises festivals in India and abroad, clearly made a mistake. He failed to inform the festival’s two co-directors, Namita Gokhale and William Dalrymple, both well-known authors, that he was turning what had been Vedanta’s more informal support and lesser role as a donor into high-profile sponsorship. He must have known that they would oppose the move.

Roy did this in order to cover the costs of the event, which he has told me amounted to about £100,000 of which 60% came from Vedanta and far less controversial sources including the highly respected Aga Khan Foundation, India’s Tata group’s Taj Hotels, and Apeejay, an Indian group that includes a chain of bookshops. He has built up Teamwork over more than 20 years but had to divest a stake to financial backers to offset growing losses on the main Jaipur festival. This means he is under increased pressure to balance the books, and that has led the festival into some controversial associations.

Tata Steel, which has a mixed reputation environmentally and is criticised for 12 tribal people being killed during demonstrations at a steelworks site in Orissa in 2006, became a sponsor of the main Jaipur festival a few years ago and withdrew after facing some criticism.

The sponsor of the main event in January this year was Zee TV, a leading Indian tv channel, which led to JLF being drawn into a controversy when Zee was accused of tampering with a video film during student unrest at Delhi’s Jawaharlal Nehru University earlier this year.

There have been many other worthy supporters including the Getty Foundation and Harvard Humanities Center, and Dalrymple has said that “we have to try harder to find sponsors who don’t create division and dissension.”

There is of course a long history of sponsorships running into trouble, as Nilanjana Roy, an author and columnist, has reported in India’s Business Standard. In 2002, Germaine Greer and Jim Crace pulled out of the UK’s famous Hay-on-Wye literary festival. They were protesting against sponsorship by Nestle, seemingly an uncontroversial company, because of a powdered baby milk formula it was marketing in Africa.

In 2006, writers called for a cultural boycott of Israel in solidarity with Palestinian writers, teachers and film-makers, and this March over 100 writers called on the PEN American Centre to refuse support from the Israeli embassy for its annual World Voices festival.

And back in India, Vedanta and another much-criticised part of the Jindal family group has supported the Kalinga lit fest in Orissa, but protests are expected this year.

Hopefully JLF and Vedanta will now part ways because neither is good for the other – JLF provides the protestors with high publicity in their fight against the company, while the Vedanta label threatens to damage JLF which is becoming something of a national asset that needs protection.

Referring to diplomatic relations with the UK, Navtej Sarna, India’s new High Commissioner in London, described JLF SouthBank as “the single most important part of our soft power” when he opened the event.

Ideally there would be something like the UK’s Lottery Fund to provide support but, failing that, the Jaipur Literary Festival in Jaipur and London – and another spin off in the American city of Boulder – needs to be run by an independent not-for-profit trust that could hire Teamwork as the production company and impose strict sponsorship rules.

Unless something like that is arranged, one of India’s most astonishing and successful institutions will inevitably sometimes fall foul of critics who wish it no good and are envious of its success, and others who cash in on its urgent need for funds for their own purposes.

Hopefully, in future, the critics will be more constructive and open to debate than the crowd that failed to shut down JLF SouthBank last weekend.

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