Posted by: John Elliott | October 31, 2017

Tata emerges from its crisis a year ago but legal issues remain

Mistry family hit by attempt to make Tata Sons a private company 

Law tribunal hearing on Mistry complaints later this week

A year ago, the august Tata business group was in a crisis that threatened its reverential image and international credibility after Ratan Tata, the 78-year old veteran patriarch, forced the sacking of Cyrus Mistry who had succeeded him when he retired as chairman of the group in 2012.

In that sudden boardroom coup at India’s largest conglomerate, Mr Tata installed himself, with the help of allies on the board, as temporary chairman of Tata Sons, the holding company of the $103bn group.

The move sparked a dramatic and high profile public exchange of vitriolic and damaging allegations and counter-allegations between the two sides about business practices and the group’s alleged failures. Legal action was initiated and has moved slowly, though there is a hearing at the National Company Law Tribunal (NCLT)  later this week – November 3.

Tata Chandrasekaran - EcTCalm has now been restored to the group’s businesses under a new chairman, Natarajan Chandrasekaran, 54, (right) who previously headed Tata Consultancy Services, the group’s supremely successful information technology cash cow.

But, while the business brand of Tata companies has recovered from the crisis of a year ago, much remains the same and, crunching below the surface, is the fall-out from the way that Mr Tata removed Mr Mistry, aged 50.

Mr Tata now seems to many observers to be trying to punish the Mistry family with a legal manoeuvre that would reduce their voting power – the family has a 18.4% equity stake in Tata Sons and is the second largest shareholder after charitable Tata Trusts that have 66%.

The Mumbai business establishment rallied round Mr Tata a year ago with a mixture of loyalty and fear of the damage that the crisis could do to the image both of Mumbai and their own companies.

Mr Mistry was quickly removed from all Tata boards, including Tata Sons. Mr Chandrasekaran was announced as chairman on January 12 this year, and normal business was resumed after he took over a month later.

The Mistry family however started legal proceedings last December against Tata Sons at the NCLT, lodging a  344-page petition that alleged oppression of minority shareholders and mismanagement. It called for an administrator temporarily to take over the group’s affairs. It also lodged appeals at the NCLT, including one against the effective voting rights of its 18.4% stake being reduced to 2.17%, when (at the request of Tata) other investors’ preference shares were included. That 2.17% was below the 10% minimum required to file petitions, so Mistry’s petitions were blocked.


Ratan Tata and Cyrus Mistry in happier days

The tide turned however, at least a little, when the NCLT’s appellate board (NCLAT) in September over-ruled the stake-holding restriction on the Mistry petitions, which has led on to the hearing fixed for November 3.

Criticism of Tata also increased when, a day before that ruling, its annual general meeting on September 21 voted to seek official NCLT approval to convert Tata Sons from being a public limited company into a private limited company, changing its name from Tata Sons Ltd to Tata Sons Private Ltd. It also voted to give preference shareholders permanent voting rights (which they do not currently have) if there was a default in dividend payment for two years.

That would, reports suggest, raise Mr Tata’s voting power from 0.83% to 31.43%, and introduce other minority shareholders, thus restricting the Mistry family’s clout.

There was considerable public criticism of these moves, partly because they seemed contrived to reduce the Mistry power, and partly because the private company change would reduce the governance requirements and potential for public scrutiny at a time when the trend is for increased transparency.

Tata Trusts

The counter view is that the Tata Trusts, headed by Mr Tata, are anxious to ensure that other interests do not change Tata Sons to such an extent that it affects the flow of profits that are essential for their charitable work.

Either way, it appeared a clumsy move at a sensitive time. “By the look of things, the Mistry camp seems reinvigorated by its recent victory and appears charged-up to impose their renewed legal strategy on their corporate opponents,” Satvik Varma, a corporate lawyer, wrote in a newspaper article critically analysing the case.

Meanwhile Chandrasekaran has a difficult role to play at a time when loyalties of individuals at the group’s Bombay House headquarters in Mumbai are not always clear, especially after the recent legal moves.


Natarajan Chandrasekaran with Ratan Tata when he took over as Tata Sons chairman in February 2017

He needs to make the same tough decisions that Mr Mistry was tackling, while acknowledging Mr Tata both as his previous boss and as the powerful patriarchal mentor at the head of the Tata Trusts. He seems to be handling this skilfully, leaving Mr Tata space to shine – for example being the senior Tata figure at the Paris Air Show in June when the group signed up with Lockheed of the US to make F-16 fighter jets in India.

That was in stark contrast to the approach of Mr Mistry and his top advisers who aimed to sideline Mr Tata, asserting their own authority. Since Mr Tata was “convinced that he was irreplaceable”, as a colleague put it to the Financial Times, the showdown a year ago was inevitable.

In a series of media interviews over the past month Mr Chandrasekaran has laid out what he is doing, much of which was started during Cyrus Mistry’s chairmanship. The never-successful loss-making Tata Teleservices business is being taken over by Bharti Telecom  Tata Steel’s debt-ridden European business, including Corus in the UK, is being hived off into a joint venture with ThyssenKrupp. Some reports suggest that even Mr Tata’s favourite project, the unsuccessful Nano, looks like being reincarnated as a possible face-saving small electric car.

Overall, Mr Chandrasekaran wants to simplify the group’s extraordinarily complex company relationships and over-lapping interests – two airline joint ventures with just 15-20 aircraft each for example, and there might be a third if Tata decides to make a privatisation bid for the deeply loss-making Air India, which the group founded in 1932 and ran till it was nationalised in 1953.

Then there are four companies in defence manufacturing, and at least three in information technology.

Fewer companies

“I would like to see ourselves as 5,6,7 groups as opposed to 110 companies. The more we see ourselves as 110 or 120 companies, nothing will be done,” he told The Economic Times in a long interview.  No company, he said, could survive with “hundreds of subsidiaries and joint ventures”

He also needs to tackle loss-makers, especially Tata Motors which is currently kept afloat by its hugely successful Jaguar-Land Rover operation – buying what is called JLR from Ford Motor was one of Mr Tata’s most successful initiatives.

But he let Tata Motors’ Indian operations slide, and saddled them with the Nano car. “Our cost structures are out of whack. Every single car and model is losing money. It’s important to pick up volumes and try to become profitable,” said Mr Chandrasekaran.

Two books

Meanwhile the Tata and Mistry camps both have pending books that will no doubt cause more controversy when they appear.

A biography of Mr Tata is being written by Peter Casey, an Irish born Atlanta-based businessman who runs an executive search agency. He wrote a corporate hagiography, Tata – The World’s Greatest Company that was published by Penguin in 2014, and also backed Mr Tata in the row with Mr Mistry. Penguin Random House India is handling the biography which has yet to appear, though it was expected in the first half of this year and may, according to reports, be awaiting Mr Tata’s clearance.

The Mistry side of the battle is coming from Nirmalya Kumar, a Singapore business professor who was one of Mr Mistry’s closest advisers. He has described it as a “who-dunit on the whole affair” and says it is completed, though a publication date has not yet been fixed. In the past few days, he has been writing on his blog about what happened a year ago.

Clearly, there is a lot of mileage in this story. The best solution would be for Tata and Mistry to make a clean break, with Mistry selling their stake either to Tata or another investor. But, it seems, scores have to be settled before that could happen.


Rex Tillerson visits Delhi and is welcomed, as a “partner”

Increasingly wooed by the US as a buffer and ally against the growing might of China, India’s balancing act in relation to its bigger and more powerful neighbour has come into sharp focus in the past week.

Today, Rex Tillerson, the US secretary of State, has been in Delhi meeting Prime Minister Modi (below) and other top officials. He declared that India and US are “natural allies” standing “shoulder to shoulder against terror” with expanding economic and defence ties. “Terrorists’ safe havens will not be tolerated,” he added, reiterating what he had told Pakistan’s army and government during tough talks yesterday.

This echoed a key speech he made in Washington on October 18 setting out the Trump administration’s heavily pro-India South Asia policy. He was outspokenly critical of China’s “provocative actions in the South China Sea” which, he said,  “directly challenge the international law and norms that the United States and India both stand for”. The US would “not shrink from China’s challenges to the rules-based order”, or when it “subverts the sovereignty of neighbouring countries”.

That indicated support for India against China’s cross-border incursions on the Himalayas and for other countries’ freedom of navigation and maritime borders, though there were no specifics or indication of a realistic US response.

modi-tillersonA day before Tillerson spoke in Washington, China’s President Xi Jinping addressed the Communist Party’s five-yearly Congress in Beijing with a speech that lasted four and a half hours.

Declaring that the nation “now stands tall and firm in the east”, he set out a vision for the middle of the century with China becoming “a global leader in terms of composite national strength and international influence”. Key to that is development of Xi’s multi-billion dollar One Belt One Road economic trading, transport and pipeline corridor between Asia and Europe that India has boycotted.

And while Tillerson was jetting on from a visit on Monday to Saudi Arab through Qatar, Afghanistan, Iraq and Pakistan on his way to Delhi, Xi yesterday gained the ranking of China’s most powerful leader since Mao Zedong. That was confirmed when “Xi’s Thoughts on Socialism with Chinese Characteristics for a New Era” were written into the party’s charter.

How India’s Narendra Modi must envy Xi’s power and authority, which now stretches on to the next Congress in 2022 and possibly beyond, even if Xi then formally retires as president. Modi has to face a general election in 2019 but, before that, needs to ensure that his Bharatiya Janata Party wins regional elections including one in his home state of Gujarat – polling, it was announced today, will take place there in the middle of next month with the vote count on December 18.

Xi now has enhanced authority to continue his adventurist policies with his neighbours, including on the border with India. During the summer, the two countries’ armies had a ten-week confrontation with at Doklam, a remote plateau on the their borders with Bhutan. The face-off is officially over, but nothing has been settled and India, which was defeated by China in a brief border war in 1962, expects more incursions in the future.

This adds significance to America’s keenness for a close relationship. While that is useful for India, especially in terms of defence supplies, it also poses problems because it seems to increase the likelihood of aggression from China that openly resents the relationship.

Hesitations of history

India and the US have been drawing closer together since Bill Clinton was US president, but Modi began to pushed it further after he became prime minister in 2014, abandoning what he told the US Congress last year had been the “the hesitations of history”.

But, though he has used the word “allies” once, India prefers the less committed approach of a “strategic partnership”, with Modi embellishing it to the US being an “indispensable partner”. That means that India will not always toe the American line, as Sushma Swaraj, India’s foreign minister, showed in a press conference today when she rejected suggestions that India should close its small embassy in North Korea and end economic links. Such contacts, she said, were internationally useful as avenues open for talks.

“We’ll never have the same relationship with China, a non-democratic society, that we can have with a major democracy,” Tillerson said today, praising the growing triangular alliance with Japan – plus Australia, though it has yet to decide its position.

He also warned that the US was concerned about the threat that extremist groups pose a threat to the “stability and security” of the Pakistan government.

Overhanging the day however was the reality that the credibility of whatever Tillerson said was only a Trump tweet away from being undermined. India – and Pakistan and the other countries he visited – will therefore have taken what he said as the US line for today, with varying prospects of continuity in the future.

Equally, Tillerson was himself constantly aware of being a tweet away from being contradicted by his boss, who he reportedly dubbed a “moron” a few months ago. So he kept as far away as possible from US reporters travelling with him, fearing any off-the-cuff remark might land him in trouble.

Posted by: John Elliott | October 9, 2017

Modi, Shah and Jaitley are losing some of their bounce

Job losses as economic growth slows 

Demonetisation and GST hurt India’s vast informal economy

Narendra Modi’s BJP government is looking defensive and rattled, even jittery. For the first time since it swept to power in 2014 it has lost some the bombast and razzmatazz with which Modi has trumpeted countless development schemes with overly-ambitious targets, party president Amit Shah has allowed the extremes of Hindu nationalism to cause extensive controversy, and finance minister Arun Jaitley has blandly insisted with all the confidence of a leading lawyer that all is well with the economy.

Twice in recent weeks all three politicians, accompanied by other BJP leaders, have grossly over-reacted with media blitzes to what they saw as potential political setbacks. The first was last month after Rahul Gandhi, who is widely expected to become president of the Congress Party within a few weeks, had an unusually good reception for speeches he gave in the US.

The second was after Yashwant Sinha, who was a BJP finance minister at the turn of the century, wrote a newspaper article sharply criticising the government and blaming Jaitley for creating a “mess”.

Yesterday a new potential embarrassment emerged with a story on a prominent news website about the business dealings since the BJP was elected of Jay Amitbhai Shah, Amit Shah’s son. Indicating what could become a challenge to Modi’s claim of running a clean government, Kapil Sibal, a senior lawyer and Congress Party politician, accused those involved of “crony capitalism”. Jay Shah denied the accusations and said he is suing the website,, for Rs100 crores ($15.3m).


Jay Shah (left), Narendra Modi and Amit Shah at Jay Shah’s wedding reception in 2015. Published:  photo credit: BJP

Concern about the economy has arisen because growth has slowed progressively from an annual rate of 7%-8% or more during the last Congress government to 5.7% in the  quarter that ended on June 30. That is high compared to many developed economies’ lower growth rates, but it is not sufficient to tackle India’s poverty and other problems, and it does not fit with Modi’s election promises for the economy. It is the slowest since he was elected, though the Reserve Bank of India does expect it to improve in the coming months.

There are widespread reports of industries contracting and of companies shedding jobs, and of a failure to generate employment for 12m young people coming of age every year. An exporters’ organisation estimates that 40% of 100,000 small and medium sized exporters are facing difficulties.

This has led to the government is being criticised from within its ranks, and not just by Yashwant Sinha, whose article a less sensitive government could have virtually ignored (as could have happened on Rahul Gandhi’s US speech).

Mohan Bhagwat, sarsanghchalak (chief) of the Rashtriya Swayamsevak Sangh (RSS), the BJP’s extreme right wing umbrella body, has warned that “small, medium and handicraft industries, retail or small self-employed businesses, the co-operative sector, and agro and agro-allied sectors should feel the minimum heat” from economic change.

Econ stats

published on economist,com

The RSS has an extensive grass roots organisation, so its criticisms show its concern about the impact on the key BJP vote bank of small traders and other often tiny businesses such as textiles.

Their first hit came from Modi’s sudden demonetisation last November which, without warning, removed 86% of bank notes from circulation. This was followed on July 1 by a new Goods & Services Tax (GST) that was planned by successive governments for many years to unify the country. But Jaitley allowed his finance ministry to introduce it with five complicated tiers ranging from a 0%-28%, which were applied to even the smallest one-man businesses that had previously been outside the tax net.

The demonetisation project was praised by the poor who saw it as an attack on the rich and corrupt (which it did not become). The economic slowdown it generated because of a lack of cash, plus the mishandled GST, is now hitting what is called the unorganised sector that accounts for 90% of employment.

The basic problem is that Modi is expecting India’s slow-moving economy to adapt to new practices faster than is possible and, in so doing, is doing unnecessary harm to those who run their businesses without paperwork, formal reports, and taxation,

“My reckoning is that for a substantial number of SMEs, their margin was tax evasion,” Saurabh Mukherjea, chief executive of Mumbai-based Ambit Capital, told the Financial Times. “As the government steps up forcing people to comply with GST, a lot of small businesses that managed to stay in the shadows will find themselves sucked into the tax net. Either their profitability will be vastly diminished – or it will go away completely.”

Modi’s “early Diwali”

To tackle the problems, Modi set up a new economic advisory council at the end of last month reporting direct to his office, not to Jaitley. Then, following an emergency meeting between Modi, Shah and Jaitley at the end of last week, came a series of moves, notably easing GST tax levels and regulations and cuts in petrol and diesel excise duty. The finance  minister looked less than happy when he made the announcements, but Modi declared triumphantly that Diwali had “come early” – the annual Hindu festival of lights and present-giving is on October 19.

Inevitably major reforms such as GST cause economic disruption, and Modi has shown both with the tax and demonetisation that he does not shy away from such risks.

Ironically, at the same time he is being criticised for only tinkering with the economy in other areas such as state-owned banks and their bad loans, the inefficient and overmanned public sector – and for allowing his ministers to follow his own practice of issuing unrealistic completion targets on reforms such as housing for all, electricity for all, and now railway electrification.

Ministers and bureaucrats are also trying to obfuscate about the economic problems by talking unrealistically about young entrepreneurs and the role of the digital economy. Piyush Goyal, who recently moved from being minister of power to railways, even tried last week to rebut concerns about job cuts by saying “the youth of tomorrow is not looking to be a job seeker alone – he wants to be a job creator”.

bjp-ruling-states-27-1501130308None of this necessarily upsets the BJP’s expected victory at the next general election in 18 months’ time. It is however causing some concern for state assembly elections before then which include Modi’s home state of Gujarat before the end of the year – though opinion polls indicate that the BJP will win there comfortably.

The BJP has been progressively extending its reach across the country with state election victories plus new link ups, for example in Bihar. This puts it in a powerful position when it comes to organising arrangements for the general election.

It is now targeting southern India, where Shah has been embroiled in a battle in Kerala with the CPIM, India’s main communist party, that spilled over into street protests in Delhi today. It is seeking alliances in Tamil Nadu and hopes to win Karnataka from Congress in the middle of next year, as well as holding onto power at the end of next year in Madhya Pradesh and Rajasthan. It is also campaigning to win the small northern state of Himachal Pradesh from Congress at the same time as the Gujarat election.

But nothing is certain in politics and Modi and Shah urgently need to stem the currently growing evidence that the prime minister has not delivered on his 2014 election promises to create jobs with economic growth while transforming the way the country operates.

Posted by: John Elliott | September 24, 2017

Jaipur lit fest spreads its ‘joie de vivre’ to America

Boulder Colorado success last weekend after an evening in New York

  “What an industry these lit fests spawn,” a friend emailed when I told him last weekend that I was at JLF Boulder, JLF being the shortened name for India’s internationally famous Jaipur Literature Festival that has sprung up in London, Melbourne and New York as well as Boulder, Colorado. 

I initially resisted the thought that such fun-oriented literary and mostly free extravaganzas could be termed an industry but, on reflection, maybe they are. Though they are not driven by the publishing industry (that’s done at book fairs), they are part of the creative industries and JLF, like Britain’s famous Hay Festival, is becoming an increasingly recognisable international brand.

The branding is vitally important because JLF depends on sponsorship for 85% or 90% of its funding and therefore for each location’s survival. The primary title-named sponsor is now India’s Zee television and entertainment group, but many other companies are need to help finance individual platforms and sessions.

Get High Boulder

appropriate wording – possession of marijuana is legal in Colorado

There must of course to be something special to make a brand successful and in the case of the JLF it is primarily the wide range of authors and speakers from different parts of the world, different languages, ethnic groups and religions, all milling together on the stage and with audiences.

“We are recognised in the area of arts and literature bringing together the Orient and Occident and we try to make that the experience,” says Sanjoy Roy, managing director of Delhi-based Teamwork Arts that produces the events,

But the buzz which is at the heart of the Jaipur festival and erupted at Boulder comes from  more than that. 

“JLF still somehow has the feel of a bunch of friends holding a party rather than the more worthy feel of some of the other festivals,” says British author William Dalrymple, one of the festivals’ two co-directors. 

“That is why the best writers usually accept our invitations, if they are not deep in a book: because they know they will have a good time, be beautifully looked after, and meet other top flight writers”. (He added “and probably end up dancing with them,” because there are music sessions at the end of a day’s literary events). 


William Dalrymple, Namita Gokhale and Sanjoy Roy

Dalrymple also says that the programming “is the best in the business”. He does that in constructive tension with Namita Gokhale, an Indian author. “I think there is a genuine joie de vivre about in the Jaipur team that manages to turn up the voltage wherever we pitch our tent,” he says.

 Gokhale focuses primarily on writers and speakers in Hindi and other Indian and South Asian languages as well as international languages, while Dalrymple attracts names from around the world. Together they provide a linguistic and ethnic mix on a scale that is not seen in other festivals.

 “It is one of the few festivals curated by two writers who bring a wide range of interests and sensibilities,” says Gokhale.

There is a strong emphasis on freedom of expression, which regularly infuriates extremists of various hues. 

Xiaolu Guo, a Chinese novelist and filmmaker, underlined that in 2014 when she said, during a Who Rules the World debate, that China could learn from the way that “everyone here is equal, everyone has the right to listen and to get information”. If China allowed that, she said, it would be a better country.

JLF tends to go where it is asked, rather than seeking destinations. It was invited to New York for the first time on September 10 by the Museum of Modern Art to stage an evening event titled “Patriot Games: Contextualizing Nationalism”. In London, it started four years ago as part of a South Asian festival on the South Bank and in May moved to the British Library. Audiences inevitably have a strong Indian and South Asian base but the reach is far wider to other nationalities. 

Visitors from Boulder who first went to Jaipur a few years ago asked Roy to bring the festival to their city. “We were attracted by the brilliant, accomplished, gifted writers who discuss their books….and the community of readers who come to the festival”, says Jules Levinson, a leading Buddhist studies academic.

The Boulder festival was spread over three days and featured more than 60 authors and other speakers from as far afield as South Korea, Australia, the UK, Mexico and Columbia as well as India and the US. Among the most famous was Anne Waldman, an American poet, Alberto Ruy-Sanchez, a Mexican poet and writer, and Akhil Sharma, an Indian author living in New York.

Presler session IMG_2395

Larry Pressler (centre) and Shashi Tharoor (right) on nuclear Pakistan

Books ranged from reporting the horrors of North Korea and sexual abuse in the American Catholic church to a thriller centred on the Everest mountain and Beat generation poetry.

In a session that I moderated (right), former US senator Larry Pressler rued the failure of his once-famous Pressler Amendment to stop Pakistan developing nuclear bombs.

Two top Indian diplomats talked about their double life as prolific authors. Vikas Sarup, High Commissioner to Canada, told the story of Q&A, the novel that became the highly successful Slumdog Millionaire film. Navtej Sarna, ambassador in the US, talked with me about his nine books, many centred around his home state of Punjab and his Sikh heritage and religion.

The lit fest in Jaipur began in 2006 in the grounds of the Jaipur’s Diggi Palace hotel, a charmingly faded pile built in the 1860s as a grand town house for a rural ruler. In 2008 it came under Teamwork, which has Ambit Pragma of Mumbai as its primary investor.

Since 2006, 115 lit fests have cascaded across India and the rest of South Asia, starting with Galle in Sri Lanka and including Karachi and Lahore in Pakistan, Kathmandu in Nepal, Thimphu in Bhutan, and Dhaka in Bangladesh.  Writers with new books to peddle often tour the circuit, taking in India’s Delhi, Calcutta, Chennai, Hyderabad, Bangalore, Goa and Mumbai in addition to Jaipur and more in the Himalayan foothills at Kasauli and Shimla.

Hundreds of thousands

The number of people attending Jaipur mushroomed from a few hundred in the early years to 27,000 in 2010, and 255,000 in 2015 (that’s the footfall count including repeat visitors). In January this year, there was an astonishing total of 400,000 footfalls over the five days with 80,000 registered visitors. 

It is free and open to all, though there is an option to become a delegate with access to authors’ lounges and various meals and events for between Rs6,000 ($92.5, £58.5) a day and Rs22,000 for the five days.   

It is the free aspect which is vital to Jaipur’s image and success with the general public, including hordes of school children, mixing with an eclectic selection of Indian and international writers and other public figures. There are complaints every year that it is too crowded but few people really mind the crush, which comes with the event’s success.

“Whether you want to hear about the provision of toilets and treatment of excreta in India or the life and times of a transgender, or listen to one of Britain most famous comedian personalities or a pressured Indian bureaucrat defending his patch, or how the US has caused chaos in the Middle East ousting established regimes, the Jaipur Literature Festival was the place to be last weekend,” I wrote on this blog last year

Margaret Atwood, the veteran Canadian writer, had opened the festival, saying “we become writers because we love to read”, and “the writer’s ‘other half’ is the reader”. She was followed by famous names such as novelists Colm Tóibín, Marlon James and David Grossman, and writer and television personality Stephen Fry.

Even in the early years there were top names. In 2010 there was a Nobel laureate as well as Booker and Pulitzer prize winners among the famous names that included Wole Soyinka, Roberto Calasso, Hanif Kureshi, Niall Ferguson, Roddy Doyle, Anne Enright, Tina Brown, Claire Tomalin, and Michael Frayn.  

JLF’s international reach has a benefit for India. Navtej Sarna described it in London last year as “the single most important part of our soft power”. In Boulder he said, “India is now known as a ‘literary destination’ and the Jaipur Literature Festival is the reason for it.” 

So whether it is or is not an industry, JLF is an international phenomena that has developed haphazardly over the years with the breadth of India’s culture as its springboard. 

That’s the basis for a successful brand that has no immediate plans for further expansion, though it has had approaches from Iceland to Canada and the Far East including Venice, Oslo, South Africa and Singapore.

New ministers – railways, defence, commerce, rivers, power, housing

Narendra Modi has today carried out his most significant government reshuffle since becoming India’s prime minister three years ago with ministerial moves that strengthen three top posts while at the same time balancing the political interests of different states and illustrating the limited talent available at senior levels.

The headline-grabbing appointment is that of Nirmala Sitharaman, 58, who has been a low-key commerce and industry minister of state since 2014, to be India’s first full-time woman defence minister – the post was held twice by Indira Gandhi when she was prime minister in 1975 and the early 1980s.

Reshuffle Sept 3 '17

Ministers at the Swearing In Ceremony by India’s president

Some observers thought Sitharaman might be dropped from the government, but instead she was promoted to the cabinet and then announced as defence minister, which makes her a member of the top-level cabinet committee on security. She succeeds Arun Jaitley, the finance minister, who has been looking after defence since March when Manohar Parrikar, the previous minister, resigned to become chief minister of Goa.

The three appointments that should strengthen the government include Piyush Goyal, 53, who has been a successful power and renewable energy minister, to be railways minister, succeeding Suresh Prabhu, 64, who replaces Sitharaman at commerce and industry.

Goyal, who keeps responsibility for coal (which depends on the railways for transport), will probably prove to be tougher than Prabhu in tackling the entrenched railways establishment. Prabhu offered to resign two weeks ago after a spate of railway accidents and will bring a new policy approach to commerce and industry. The third appointment is Nitin Gadkari, 60, who has added water resources and reviving the River Ganga to his highways and shipping portfolio.

India Prime Minister Narendra Modi greet

Narendra Modi at the Swearing In

The relatively limited talent pool hat Modi can call on to fill senior ministers’ jobs is illustrated by the appointment of four senior public officials without any political experience to be ministers of state, three of them with independent charge reporting direct to the prime minister. They all became active Bharatiya Janata Party members after retiring from public service and have been chosen because of their administrative ability and experience, not necessarily because of their past specialties.

This is graphically illustrated by Hardeep Singh Puri, 65, a former top diplomat known for his tough style, who retired as ambassador to the United Nations. He has become housing and urban development minister and will be tackling – on a steep learning curve – an acute shortage of viable homes and uncontrolled expansion of towns and cities.

A former home secretary, Raj Kumar Singh, 64, succeeds Goyal as minister for power and renewable energy and will be continuing his reforms, while a former Delhi Development Authority commissioner, Alphons Kannanthanam, 64, known as “demolition man” after clearing 15,000 illegal structures, is becoming minister of state for tourism, electronics and information technology. Satya Pal Singh, 61, previously a Mumbai police commissioner famed as a “top crime buster cop” has gone to the human resources and water resources ministries.


Nirmala Sitharaman and Piyush Goyal

These moves come a few days after doubt has been cast on the success of one of Modi’s most high profile and dramatic initiatives – the sudden demonetisation of 86% of the country’s bank notes last November. The Reserve Bank of India has reported that 99% of the cancelled high value bank notes were deposited in banks. This undermines government claims that a third of the high value notes would be removed from the economy because holders of black money would not dare to try to bank them.

Economic growth has fallen to 5.7%, which is more than 2% below the figure a year ago and the lowest since 2014. It was hit by demonetisation and has also been affected by the introduction in July of a long-awaited goods and services tax which, while a much-needed reform, is far more complex and difficult to implement that was originally intended.

Such results sometimes lead to speculation that Arun Jaitley, who was responsible for demonetisation and the new sales tax, would be moved, but he remains at the finance ministry and is the most senior cabinet minister, sharing influence as a Modi adviser with Amit Shah, the party president.

The reshuffle was triggered by Prabhu offering to resign and being told by Modi “to wait” after three passenger trains derailed in the past two weeks, two of them in the space of just five days killing at least 20 passengers and injuring more than 200.

All were clearly failures of railways management – on one there was no warning of rail track works, while another happened when a truck overturned on the tracks. Since 2012, 60% of rail accidents have been caused by mistakes or the negligence of railway staff, according to a study by NITI Aayog, the government’s planning commission.

Suresh PrabhuManaging the railways that carry 23m passengers and 3m tonnes of freight every day on 66,000kms of tracks is a highly complex task, which is made worse by tensions and collusion between the various parts of the establishment that includes the ministry and a railways board.

Prabhu (above), who was the ninth railways minister in as many years, began in the three years he held the post to modernise many of the operations but some commentators say he was not tough enough with those involved.

Sitharaman faces an equally tough task at the defence ministry, where she has no prior experience (nor did her two predecessors in the past three years). The most urgent job is re-equipping the grossly under-prepared armed forces at a time when tensions are high with China and Pakistan.

This includes speeding up the award of new defence contracts, especially with Indian companies, which links with Modi’s well-marketed but under-performing Make in India campaign launched by her old ministry. Jaitley seems likely to be monitoring and encouraging this work, while Modi’s national security adviser and the cabinet security committee play a key role on the country’s defence.

Commentators have suggested that Sitharaman was given the post partly to raise the BJP’s profile and acceptability in Tamil Nadu, which is her home state in southern India where the party is not yet strong. Such regional considerations also affected the reshuffle elsewhere with the appointment of two new ministers from Uttar Pradesh and Bihar, which are key targets for the BJP in the 2019 general election.

So, as always, politics rather than ability plays a role in the selection of ministers, as it does in any democracy. But today’s appointments also show that Modi is trying to strengthen the effectiveness of his ministers and government for work that urgently needs to be done before 2019.

Posted by: John Elliott | August 25, 2017

70 years on, an outpouring of people’s stories on Partition

The British legacy – seven decades of unrest and border fighting

The history of the tortuous creation of India and Pakistan as separate countries 70 years ago has been written and recorded on a massive scale in the past two or three weeks on British television, along with other media on the Indian subcontinent as well as the UK and internationally.

The writers and speakers have not for the most part been politicians or historians, but ordinary people of all ages who have been telling their personal stories for the first time in public, stories about one of the cruellest and most vicious events in modern history, and how it affected them and their families.

The surge of coverage in the past few weeks is important because it is filling in gaps of history that has led to decades of fighting between what are now two nuclear powers. It is a history of countless tales of horror, suffering, death and unbelievable ethnic cleansing from an ageing generation, whose tales should not be forgotten any more than the horrors of the second world war’s holocaust.

This widespread focus on the Partition of Pakistan from India has side-lined the actual independence of two countries, whose 70th anniversary came on August 15. It has also side-lined what has happened since then to them (and Bangladesh, which separated from Pakistan in 1971). Ceylon, now Sri Lanka, that became independent six months later has been scarcely mentioned.

Mass migration

Estimates of the largest mass migration in history vary between 200,000 and over 1m for the number of people who died as 15m-17m Muslims, Hindus and Sikhs struggled across the border that was not formally fixed till the day after August 15. As many as 100,000 women are believed to have been abducted, raped, sometimes sold into prostitution or forcibly married, according to Urvashi Butalia, a Delhi-based Indian writer who is updating a book, The Other Side of Silence: Voices from the Partition of India.

The Partition generation, now in their 70s and older, who suffered and survived, have not generally been prepared before to open up painful memories, in the same way that troops returning from battlefields bottle up their experiences of death and destruction. Now, with the distance of 70 years, they feel able to pour out their memories and, according to many accounts, are keen to do so.

At the same time, there is a new generation of their grandchildren who want to know their families’ histories and ask questions of their parents and grandparents that they have never wanted or been allowed to explore before. It is not part of British schools’  history curriculum.

Flow India A Brush with Life 2

Schoolchildren look at paintings of Partition by Satish Gujral in Delhi

“It’s often said that memory jumps a generation, so that could explain why younger people are becoming more interested in the stories of their grandparents,” says Butalia, adding that opening up is not something sudden. “It’s been happening for the last few years, I think it’s just that anniversaries become ways to talk about these things.”

This has been specially evident from many of the television interviews and radio coverage that has swamped the BBC in recent weeks. Many of both countries’ diasporas have influential positions in the media, academia and elsewhere. International interest in India has grown in recent years as it has emerged as an increasingly successful but far from efficient economy and as a controversial society.

In India too there has been a focus on the subject. A series of articles looking at “the weeks and months when entire geographies and histories changed forever”on the news website even includes one on how “food cultures” were changed.

I became aware of this opening-up trend in February last year at a Delhi exhibition, A Brush with Life , showing works by Satish Gujral, now 91, a prominent Indian artist. The paintings included his little known but harrowing depictions of Partition (above). At a discussion during the exhibition, he talked emotionally about how, age 20, he had stayed on in Lahore to help his father evacuate refugees before leaving and saw “murder, rape, and other brutality”.

The next focus came with the opening of a Partition museum in the Indian city of Amritsar in Punjab, a state that was split in two and suffered some of the worst cruelty

BBC Radio - Partition Voices

BBC Radio – Partition Voices

And then I arrived in London a few weeks ago, readying myself to write a 70th anniversary piece on this blog and found the BBC’s saturation coverage of Partition. This link illustrates  how much (but not all) that the British broadcaster has done, ranging from reportage to interviews and historical flashbacks and including radio discussions and a radio dramatisation in seven parts of Midnight’s Children by Salman Rushdie , who was among those interviewed.

The BBC press office has not answered my questions about the total number of programmes that were aired, the number of viewers and listeners, and how co-ordinated it all was. Many tv viewers and radio listeners must have been turned off by the welter of coverage, but I have also met people in the UK with no India links who have drawn in by the stories they have been hearing and have wanted to know more.

“My father broke his silence after nearly 70 years to speak about what happened to him during the partition of British India. Seventy years. A lifetime,” says Kavita Puri, a journalist who travelled widely in Britain collecting BBC stories. Her father, a Hindu, has never been back to the place of his birth in Lahore, Pakistan, but he specially wanted to talk to her about was how Muslim neighbours there saved his family’s life.

There have been sometimes angry debates and articles arguing about who was to blame for such a catastrophe. Many Indians and Pakistanis resent that they are portrayed as rioting killers, without sufficient blame being attached to the British for rushing the handover and the designation of the disputed Line of Control between the two countries in Kashmir.

Exous Krishen Khanna - Saffronart photo

Exodus by Krishen Khanna, a leading Indian artist, now 92, who crossed from Lahore at Partition

“That night ought to have been a moment of great joy for the people of the subcontinent”, says Shelina Janmohamed, a London-based Muslim writer and author of Love in a Headscarf. Speaking on BBC2 Newsnight, she said to loud applause that people talked as if it was the “problem of the colonised that made it all go wrong, when the seeds of this terrible man-made disaster was in the way that independence was granted”.

That man-made disaster and the way independence was granted has led to repeated fighting on the Line of Control for 70 years, with three wars and one near-war. Militants and terrorists have been injected with help from Pakistan’s ISI secret service and army to ferment unrest and killings in Indian Punjab in the 1980s and in Kashmir since then.

One can blame the Pakistan army for the militancy, which enhances its dominant role in the country, and one can also blame India for human rights atrocities in the Kashmir valley and for not trying harder to find solutions – solutions that are much more difficult now that China is stepping up its support for Pakistan.


But maybe there had to be wider knowledge and understanding about how it all began 70 years ago before both countries could shed what Barkha Dutt, an Indian tv journalist and author, whose parents crossed over from Pakistan, describes as “our wariness of truthfully memorializing Partition”. That created “a permanent dysfunction between our nations”. In Pakistan, she says, “lamenting or questioning Partition challenges the very basis of the country’s existence” while, in India, ”we don’t want our proud dawn of independence to be eclipsed by its long shadows”.

Mark Tully, a veteran BBC journalist who has lived in India most of his life, travelled from the north of the country to the south, testing views on Partition. He found that people wanted to “close the chapter, end the bitterness and restore relations with Pakistan…. as two nations but one people”.

It would be good if the leaders in both countries acted on that, pressured by the younger generations who have heard and talked about personal histories over the past few weeks. Sadly, that seems unlikely now that China is playing a growing role in Pakistan’s economic and regional life, using the country as a pawn in its wish to contain India.

Posted by: John Elliott | August 20, 2017

India at 40 – my 1987 anniversary article

Nehru’s cry for “work and work and work”

“ ‘I want work and work and work. I want achievement. I want men who work as crusaders’, says a poster quoting an independence dream of Mr Jawaharlal Nehru, India’s first Prime Minister, above the dirty sluggish luggage conveyors at the unwelcoming Bombay airport”.

That was the introduction to an an article I wrote for the Financial Times on August 15, 1987, which I have just found in my computer. When I wrote last weekend about India’s 70th anniversary of independence, I said it was the third time that I had written an article marking a decade’s progress, the earlier ones being in 1997 and 2007. It was actually the fourth because this was my first.

In 1987, having been the FT‘s South Asia correspondent for four years, I vented the frustrations of a somewhat younger journalist about the failures and setbacks of a country that had so much potential yet was so self-destructive in what it achieved.

My views haven’t changed significantly down the years. There have of course been enormous changes and improvements, but much of the article sounds alarmingly familiar today.

I had just flown back to India from the UK, arriving at the old Bombay airport. I still remember standing waiting for my luggage and, looking up, seeing Nehru’s quotation (from a 1954 speech) and realising it would provide a graphic introductory paragraph for an anniversary article I was about to write.

I quoted Faiz Ahmed Faiz, a radical Pakistani poet, who answered the euphoria of Nehru’s “midnight hour” with a poem that declared “This is not the dawn we yearned for”. I wrote that “forty years on it is tempting to believe that Faiz’s gloom rather than Nehru’s hope is still valid”.

As I often did before writing a major article, I interviewed Manmohan Singh, later to be prime minister. He was then running the Planning Commission, having earlier been Reserve Bank of India governor. He talked about the “inherent good sense” of the Indian people holding the country together, but warned of an ‘identity crisis” brought about by economic development and education.

The full article is below:

Forty Years On – August 15, 1987

‘I want work and work and work.  I want achievement.  I want men who work as crusaders,” so says a poster quoting an independence dream of Mr Jawaharlal Nehru, India’s first Prime Minister, above the dirty sluggish luggage conveyors at the unwelcoming Bombay airport.

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Nearby, a tourist corporation official in his chair chats on the telephone, blocking the efforts of a ground stewardess to help hot and weary passengers.  It takes five customs officials to clear one person’s baggage and a sequence of 12 officials, police and hangers-on to hire a taxi.

Where is Nehru’s work ethic?  Where are his dreams of a new egalitarian, economic and social order in the world’s largest democracy?  Lost, maybe, in a tortuous, destructive mixture of bureaucratic corruption and inefficiency, caste pride and an over-riding fear of unemployment in a grossly over-populated country where status matters more than compassion.

Forty years ago today India became independent after 180 years of British rule, preceded by a couple of hundred years of rule by the Mughals.  “At the stroke of the midnight hour, when the world sleeps, India will awake to life and freedom,” proclaimed Nehru, hailing his people’s “tryst with destiny.”

Mahatma Gandhi, the leader of the freedom struggle, refused to join the celebrations.  He was praying because he had lost a crucial argument for a united India and the country had been arbitrarily – and perhaps unnecessarily – partitioned.  Pakistan (then including Bangladesh) had become a separate independent country the day before, setting the tone for lingering border, ethnic and linguistic divisions and battles.

Britain’s handover of power is widely seen as a model, not always followed in other countries’ colonies, but as many as 500,000 people are estimated to have been killed [Aug 20, 2017 edit: – estimates now go up to 1m] in appalling massacres when some 13m [ditto 15m-17m] people struggled across the many borders to live in Hindu-dominated India or Moslem Pakistan.

Faiz Ahmed Faiz, a radical Pakistani poet, answered the euphoria of Nehru’s “midnight hour” with a poem which declared “This is not the dawn we yearned for.”

Forty years on it is tempting to believe that Faiz’s gloom rather than Nehru’s hope is still valid.  It often seems as if the Indian sub-continent (including Ceylon – now Sri Lanka – which became independent six months later) is in constant self-destructive turmoil and political instability, rejecting work ethics and egalitarian policies and spurning the Mahatma’s creed of peace and non-violence.

In Sri Lanka last month a Sinhalese sailor in a guard of honour tried to wound and maybe kill Rajiv Gandhi, the Prime Minister of India , whose mother, Indira, was assassinated by Sikh security guards nearly three years ago.  Gandhi was trying to help end the island’s Tamil ethnic conflict which has claimed more than 6,000 lives in the past four years.

In Pakistan, which has yet to settle down to a stable form of government after years of military intervention and rule, car bomb blasts last month killed more than 60 people in Karachi.  In Bangladesh the military ruler, President Ershad, has been facing riots and the risk of a coup.

In India , the Sikhs’ Punjab crisis that led to Mrs Gandhi’s death remains unsolved, turning New Delhi into a suspicious city full of scruffy gun-toting security guards.  In other parts of India , Hindu Moslem riots have worsened dramatically and even the Gurkhas, loyal soldiers of the army of India as well as the British empire, have their own Sikh or Tamil style insurgency among the Darjeeling tea gardens of West Bengal.  And Gandhi’s stumbling political performance is putting at risk the future of the Nehru dynasty, started by his grandfather and continued by his mother.

Turbulent events

But these turbulent events, which some people believe mean India is on the brink of breaking up, overshadow a basic underlying stability which is not yet so apparent in Pakistan or Bangladesh, and which has been shaken in Sri Lanka during the past decade. India has had steady, if slow economic and social progress on a strong and durable democratic base.

MMS at PlC?“The tensions should not be underestimated, but predictions of India ceasing to be a nation have been wrongly made before and will be proved wrong again – the inherent good sense of the people ensures that,” says Dr Manmohan Singh, former Governor of the Reserve Bank of India and head of the Planning Commission, who this weekend moves from Delhi to Geneva to run the Non-Aligned Movement’s new South Commission.

“Economically and socially, small homogenous developing countries with less political democracy elsewhere in Asia move faster.  But some price has to be paid for political democracy, and the Indian experiment of developing economic and social policies with the consent of the people is unique.  I think it is the best,” he adds.

Those policies started with the job of combining into a single nation 360 kingdoms and provinces, many of them tiny, with a diverse population of 350 m.  Many observers overplay the numbers game, but the enormity of the statistics in the world’s second most populous nation cannot be overstated.  That 350m figure had more than doubled to 765m by 1985 and could now be as high as 800m.

The World Bank predicts a population of just under 1bn for the year 2,000, after which India might overtake China, already just over 1bn if its birth control campaigns do not improve.  Population control is one of India’s most important failures.  Another is the lack of universal education.  Literacy has risen from only 16 to 36 per cent, affecting economic growth and holding back development for lower castes and minority groups.

The early introduction of nationalisation and bureaucratic controls, partly inspired by British socialist policies and Russian attitudes to the development of heavy industry, contributed to decades of industrial inefficiency and losses of export markets.  This is still hitting the economy, although the policies of Mr Gandhi, plus a growing affluence which partly stems from a green revolution starting in the 1970s, have led to changes in recent years.  But deep-seated problems remain.

Social changes

Social changes such as land reforms and the ending of the Maharaja system led to new local and regional political interests emerging by the time of Nehru’s death in 1964 which upset the national consensus.  By the early 1970s Mrs Gandhi was asserting national authority and was not being tolerant of social and electoral diversity just as diversity was demanding attention.  “A lot of our difficulties have come from this problem” says Mr Pran Chopra, an Indian journalist who applies a similar argument to over-rigidity on economic policies which bred widespread corruption.

But above all this, the country’s greatest asset is its cohesion.  The Indian people were, and are, bound together by five centuries of imperial rule, by their ancient 2,000 year old civilisation with its dominant Hindu religion, and by their restrictive caste system which pervades all aspects of life, combining some of the taboos of apartheid with the snobbery of the British class system.

Cohesion has been helped by a variety of legacies from the British, including an established civil service which works, even though it has failed effectively to develop from a regulatory and tax collecting bureaucracy into positive policy development.  There is also a strong, well-regulated and non-political army; an established judiciary; and a free (though sometimes subdued) press.

Against this, the country is divided by distinct differences between the Aryans of the north and the Dravidians of the south, and by a patchwork of ethnic and cultural differences of 15 main languages, 1,650 dialects, and four main minority religious groups – Moslems, Sikhs, Christians and Buddhists.  There are tens of thousands of tribal people, many of them Christian, in the far north east of India , while others live pagan lives in remote primeval forests.  In central India tribal women wearing ornate saris and jewellery work on modern power stations and other construction sites.

There are 100m Untouchables (or Children of God, as Mahatma Gandhi called the bottom of the caste pile) who daily rub shoulders with blatant wealth and high technology.

At the top is the elite, old and new, but a smaller group than the 100m untouchables.  They include educated, cultured public servants and academics concerned for their country and its people, and a new generation, including technologically aware industrialists, anxious to build a better India .

Chasing prestige

There are self-seeking politicians, chasing power for the prestige and wealth it will bring in a corrupt and status-conscious society, and they have scant interest in public policies.  Older businessmen and their families thrive on the bureaucratic controls, corruption and protected economy, which have bedevilled the country’s development.

Finally there is perhaps the most dangerous group of all, the new rich middle classes, who either flaunt their wealth with garish lifestyles in the big cities, sparking new resentment among the poor, or who form the base of ethnic and religious extremist groups because they cannot find other ways of expressing themselves in an inflexible social and political system.

The social tensions and ethnic and linguistic ambitions are exacerbated by uneven economic development and the strains of an exodus from villages to urban areas.

This boils over in various ways.  It can lead to riots like the recent Hindu-Moslem clashes in the north Indian city of Meerut, where over 120 people have died; or ethnic and linguistic movements such as the Gurkhas; or it can turn into the violent extremism and seemingly unstoppable religious and political terrorism of the Sikhs.

No one is sure why there has been a sudden bunching of troubles in the past four or five years.  The most plausible explanation is that it has taken much of the 40 year span since independence for a number of factors to come together.  These include the fading of the unifying force of the independence struggle; the failure of the Nehru-Gandhi Congress Party, which has ruled for all but three of the four decades, to remain a unifying force, when regional demands are increasing; and the emergence of significant economic development, which sharpens disparities.

Mr Pai Pananadikar, director of Delhi’s Centre for Policy Studies, argues that “what seems to prove the instability of India is really a process of political evolution and social change.” He sees demands for linguistically-based states not as a disaster but as an integrating process.

Partition’s conflict

India’s Moslem-Hindu conflict has become steadily worse since the Partition massacres.  The poorer and less well educated Moslems were left behind in India.  So for decades they were dominated by Hindus.  Uneven economic development has made some of them feel more vulnerable, while others have become less willing to be downtrodden.

Hindus, hitherto dominant, resist changes in the social and economic structure.  Clashes and riots break out, fanned by local extremists and politicians.  These Hindu-Moslem tensions usually occur in urban areas, but in the villages and rural areas there are similar problems between different castes, especially the landless and the smallholders.

“A lot of our uneducated electorate are easily aroused on religious, ethnic, caste and similar issues,” said Dr Manmohan Singh.  “This is an age in which the identity crisis has acquired new meaning because of economic development and education.”

But despite these problems, India has emerged as a significant world power and a leader of the non-aligned movement, carefully balancing its relationships with the superpowers.  It tilts towards the Soviet Union and is deeply suspicious of the US which has taken over Britain’s role as suspect colonial power.

As its current peace-keeping activities in Sri Lanka show, it has ambitions to dominate its subcontinent where it constantly fears there are moves (mainly US-inspired) to destabilise its own internal unity.  It has fought four wars with its neighbours, winning three against Pakistan and losing against China.

Its foreign relationships with most countries, apart from the Soviet Union, are heavily influenced by pervasive national characteristics.  “There is a distrust of the external world, a Fortress India feeling that everyone is out to get you.”

This seems to stem partly from India’s pride at having eventually won independence, and partly from over-sensitivity about the country’s shortcomings – including more than a third of the people living below the poverty line.  Potential helpers are suspected of being over critical or would-be colonisers.

The history of the past 40 years shows India has reason to be less sensitive and more self-confident.  With skilful political leadership, which at present is sometimes lacking, it has enough cohesion and resilience to ride its internal crises and to develop at its own pace.  Given that, it should successfully continue to confound and infuriate its critics and charm and impress its friends.

Copyright 1987 The Financial Times Limited;   Financial Times (London, England); August 15, 1987, Saturday;

Posted by: John Elliott | August 14, 2017

India at 70 – hastening slowly

Nationalism looms in a chaotic democracy

It’s an easy cop out when talking about India to say everything and the opposite are true and correct. That has never been more so than when assessing the country’s performance in the 70 years since it became independent on August 15, 1947.

Put simply, India is a huge success, tackling dire poverty, ethnic social religious and cultural divisions, building a strong private sector, developing infrastructure, excelling in research such as space and rockets technology, and breeding a new young and aspirational youth, all within a successful though turbulent and noisy parliamentary democracy.

It is also a dismal failure because it has done all those things far too slowly, encumbered by lethargy and a failure to grapple with challenges together with increasingly corrupt politicians, bureaucrats, judges, and police fed by greedy business people, criminals and members of the general public. Intolerance and ethnic and religious tensions, never far below the surface, are increasing.

Falling behind

Year by year, despite substantial successes, it falls more and more behind its regional rival and potential enemy China. It has been acting tough with its larger neighbour for the past two months in a military confrontation on the Himalayan border, but it has been increasingly losing out in terms of economic and infrastructure development, manufacturing competitiveness, defence preparedness, regional influence and international clout.

Economic growth is around 7%, but it should be far more. Between 20% and 30% of the 1.3bn population are illiterate and live below the poverty line, and far more are badly fed with inadequate education, sanitation and health facilities and a serious lack of jobs for the 12m young people coming of age every year.

This is the fourth time I have written a decade’s assessment. In 1987 I aired in the Financial Times the frustrations of an observer who felt so much more could be achieved. [This para inserted Aug 20, ’17]

In 1997 I said that “Indians seem unsure what there is to celebrate”. There was a “belated realisation of how far development has lagged behind the rest of Asia, plus despair with the decrepit state of the country’s corrupt politics”. The economic reforms of 1991 had sputtered to a virtual halt and their effect had not by then fed through the economy –  the major impact emerged in the following decade. I.K.Gujral, prime minister of a short-lived coalition government, said that India was “almost standing on the threshold of greatness”.

Nehru '47In 2007, I recorded a marked change with a headline on this blog (then on Fortune magazine’s website) saying “A Nehru dream comes true”. That referred to the hopes of Jawaharlal Nehru who, as prime minister, heralded in India’s independence 70 years ago tonight (left).

I noted that the country’s overall self-confidence and its economic performance were being transformed. In the previous four or five years, “a spirit of can-do” had inspired businesspeople – big and small, ranging from names like Ratan Tata, Mukesh Ambani, Azim Premji and the Infosys founders to small niche players – who invested, managed, delivered, and grew both at home and abroad.

Many problems, especially social, were however little improved: “Vast proportions of the country’s 1.1 billion people are undernourished and hungry, as well as poorly educated and illiterate. Blighted by a lack of drinking water and proper sanitation, many are plagued with poorly-treated ill health”.

No one this time is using a Nehru headline in a positive sense, despite the many advances made in the last decade. The trumpets are blasting out the new India of the Bharatiya Janata Party (BJP) led by the Hindu nationalist prime minister Narendra Modi and by Amit Shah, the tough party president. Together they are more interested in celebrating the 75th anniversary in 2022 after they have won (as it seems they will) the next general election in 2019.

They and their platoons of followers crave a Hindu dominated society that replaces Nehru’s secularism and turns Muslims, Christians and others into the second class minorities than many increasingly feel they have already become.

hamid-ansari_650x400_81441081765Hamid Ansari, a veteran diplomat and government official (left), talked tellingly when he retired recently as India’s vice president about how “a feeling of unease, a sense of insecurity is creeping in” among Muslims.

Their “ambience of acceptance” was under threat and there were “enhanced apprehensions of insecurity amongst segments of our citizen body, particularly Dalits, Muslims and Christians”. No-one had any doubt about his target – Modi, Shah and their followers.

India is a harsher society than it was ten years ago with rabid nationalism, violence and vigilantism adding to cruel policing and ruthless regional politicians – many encouraged by the existence of a BJP government that shuns the softer secular approach of less fundamentalist political parties.

Maybe these contrasts and contradictions are inevitable in a society that has undergone India’s massive social and economic changes of the past 26 years. The 1991 reforms have gradually transformed the face of much of India, hastened by cascading access to television, the internet and social media. There is an arrogance of success among the new rich, and feelings of bitterness and anger among those left behind.

But if one is to pick a target to blame it should not be Modi and the BJP but the Gandhi family dynasty and its Congress Party that, having successfully led India into independence and beyond, has failed in the past 15 years to adapt to the aspirations of a changing India.

The Gandhis cling to power at the top of the party with a born-to-rule style that is no longer appropriate, preventing other politicians emerging to lead anti-BJP parties. Jairam Ramesh, an outspoken Congress politician, said recently that “the sultanate has gone but we behave as if we were sultans still”.

Modi an enigma

In all this, Modi is an enigma because he talks as if he is determined to build a strong and efficient India of which he can be nationalistically proud. Reforms have included efforts to curb corruption, a strengthened national identity system (Aadhaar), and the implementation  of a long-planned national goods and services tax.

Yet he is also pulled into supporting or at least condoning the more extreme Hinduisation approach of the Rashtriya Swayamsevak Sangh (RSS), the BJP’s extreme right wing umbrella body, and its allied extreme organisations.

Modi Aug 15 '16As India enters its 71st year of independence tomorrow, Modi is expected to talk about the target for 2022 in his annual prime ministerial speech (pictured left, last year) from the ramparts of the Red Fort in Old Delhi.

“Let us pledge to free India from poverty, dirt, corruption, terrorism, casteism, communalism and create a ‘New India’ of our dreams by 2022”, he said in a recent speech that has been backed up with front-page government advertisements in leading newspapers headed Sankalp se Siddhi (pledge to achieve).

These are ambitious goals that have been on earlier governments’ agendas to little effect. Modi was elected in 2014 to implement developmental change and he has personally launched and driven countless campaigns that include his Swachh Bharat (Clean India Movement). The government claims that the number of people defecating in the open has dropped from 550m to 320m, even though many newly installed toilets do not have water or sewerage facilities. That is significant in a country where 100,000 children die each year from diarrhoea related diseases.

At the same time as examples of such developmental success are emerging, there also the glimmerings of the government softening its authoritarian line, presumably in order to quell criticism ahead of the 2019 general election.

One example is the appointment last week of  Prasoon Joshi, a liberal screenwriter and poet, and the ceo in India of the McCann Erickson international advertising group, to head the Central Board of Film Certification (CBFC). He has replaced Pahlaj Nihalani, a strong BJP and Modi supporter who was a controversially tough and insensitive censor, even shortening kissing scenes in a James Bond film.

Joshi’s appointment looks like a tactical move rather than a policy change, and 230m fewer people defecating in the open is a only a small change measured against India’s enormous needs for development.

But the first shows how India’s strident democracy does have an effect on governments, and the second shows that Modi recognises the need for action.

India’s future over the next decade depends on how this balances out.

Will Modi and Shah’s Hindu nationalism be constrained by the need to operate within a parliamentary democracy, or will their likely victory in 2019 make their nationalism increasingly dictatorial and disruptive? And how successful will Modi’s government be at making India work?

Put another way, thanks to the failure of the Gandhis and Congress, India’s future development depends on the drive that will be given by Modi and the increasing number of BJP state governments. The price for that is the BJP’s Hindu nationalism.

The hope therefore has to be that India’s diverse democracy, which inserts its own unpredictable checks and balances, will somehow keep that in check.

Nitish Kumar remains Bihar chief minister of a stronger government

Lalu Prasad Yadav’s nepotism loses his party its government role

Narendra Modi and Amit Shah have won yet another victory in their drive for the pan-India political domination of their Hindu-nationalist Bharatiya Janata Party with a coup in the desperately poor state of Bihar, where Nitish Kumar, the chief minister and head of a regional party, dramatically resigned last night.

In a carefully orchestrated series of events spanning just 15 hours, Kumar was sworn in again this morning as chief minister at the head of a new coalition government in partnership with the BJP instead of a former dynasty-dominated and corrupt partner that lost its government role last night.

Coming four months after the BJP swept to power in Uttar Pradesh and three other states, the coup upsets and probably demolishes the dreams of the Congress and regional parties to mount some form of effective joint opposition against the BJP for the 2019 general election.

This makes it even more likely that Modi will win a second five-year term as prime minister, and it underlines again the political ineffectiveness of Congress’s Gandhi family – Rahul, the hapless heir apparent to the party leadership, and his mother Sonia.

Today Rahul Gandhi has lamely said he had known for three months that Kumar was planning the move.


Sonia Gandhi, Nitish Kumar (centre) and Lalu Prasad Yadav when they were together

The coup also enables Modi and Shah to bury the ignominy of their crushing defeat in the state’s last assembly election in November 2015, when a mahagathbandhan (grand alliance) headed by Kumar, who had already been chief minister for ten years, won 178 seats in the 243-seat assembly against only 58 for the BJP’s alliance.

Irrespective of the apprehensions that many in India have about the growing clout of Modi and Shah and their often-intolerant Hindu nationalist followers, Bihar has today got the government that it should have had in November 2015.

Kumar now has the BJP to help him drive economic and social development that Bihar desperately needs. He has been unable to do that with his main mahagathbandhan partner, the dynastic nepotism-ridden Rashtriya Janata Dal (RJD) led by Lalu Prasad Yadav, a former chief minister convicted of massive corruption, that won more seats than Kumar’s Janata Dal United (JDU) in 2015.

Kumar first became chief  minister in 2005 in coalition with the BJP, replacing Yadav’s RJD that had been in power for 15 years and had focussed on caste empowerment instead of economic development. Yadav’s uneducated wife Rabri had held the chief minister’s post for nine years after corruption charges led to Yadav being banned from office, as he still is.

Kumar made rapid progress on economic and other policies including law and order. Roads were transformed, as I saw on a visit to the state during the 2015 state assembly election campaign. Electric power came for 12 hours or more a day to over 36,000 of the state’s 40,000 villages, and attendance at schools improved dramatically

But in 2013 Kumar ended the alliance with the BJP because at the time he opposed the emergence of Narendra Modi as the party’s Hindu nationalist prime ministerial candidate and joined up with the Yadav’s JDU for the 2015 election.

By then, the state arguably needed the BJP’s drive for private sector business and entrepreneurship, which Kumar had not pushed alongside his other achievements.

That is why the coming together today of Kumar’s party and the BJP in the new state government could produce what the state needs, providing the focus is on economic and business development and not the BJP’s more socially divisive Hinduisation. The deputy chief minister is Sushil Kumar Modi (no relation to the prime minister), who is strong on development and worked with Kumar in earlier years.

The Kumar-Yadav alliance ran into trouble soon after the 2015 election victory because of the Yadav family’s long running corruption and Lalu Prasad Yadav’s insistence that his totally inexperienced 26-year old younger son, Tejashwi, should became deputy chief minister.

Lalu Prasad with Tejaswi

Tejashwi Yadav (left) with his father Lalu

Investment in education and health infrastructure declined, the law and order situation worsened (as was inevitable with the Yadavs in government), and Kumar’s unexpected introduction of liquor prohibition diverted attention from development.

Tejashwi Yadav is accused of being involved in a land-for-hotels scandal, along with other corruption allegations involving his family, including his father and mother. Earlier this month the Central Bureau of Investigation raided the family’s homes and other properties in Patna, Bihar’s capital, and other cities.

This indicated that the Modi government was using CBI investigations against the Yadavs, as it has been doing elsewhere against other political opponents – in this case to encourage Kumar to split from the family.

Another course would have been for Kumar to sack Tejashwi, but that would have created an uncertain political crisis. Resigning, as he did last night with the BJP primed to step in as his ally, was a much swifter way out of the problem.

The coup however seems to mark the end of Kumar’s ambition to move back into national politics (between 1998 and 2001 he was a railways and agriculture minister in a BJP-led government ) and become prime minister. But the failure of the opposition alliance to come together nationally, and the Gandhi family’s failure to back his ascendancy, made that unlikely.

In Bihar, he might have found himself pushed aside by Tejashwi Yadav and his father before the next assembly polls in 2020.

Falling into the open hands of Narendra Modi and Amit Shah therefore must have seemed to Kumar to be the best option, even though he is being widely criticised for reversing his earlier split from Modi’s BJP.  Significantly, he backed Modi’s controversial demonetisation project last November, and more recently supported the BJP’s candidate for the post of India’s president.

Ultimately, it is all to do with politics, not what is best for the people of Bihar, some 70% of whom are below the poverty line.

The good news is that Bihar now has a better government in place than it had yesterday morning.

Posted by: John Elliott | July 10, 2017

China India standoff raises memories of 1962 war

China wants to build a road at a strategic point in the Himalayas

For the past three weeks it has sometimes seemed, from India media reports and aggressive statements coming out of Beijing, that there has been a distinct possibility of a Himalayan border war breaking out between the two countries high, 55 years after India suffered a humiliating military defeat in the area at the hands of its larger Asian neighbour in 1962.

Modi-Xi HamburgIt is unlikely to happen because neither side wants a war, but the long confrontation has been closer in physical terms and noisier in the media than in the past – at least until China’s president Xi Jinping and India’s prime minister Narendra Modi met, smiled, and chatted (left) while attending a regional meeting at the G20 assembly in Hamburg last Friday (July 7).

That is not to underplay the importance of what has been happening on the 2,500 mile long undemarcated border in a face-off over Chinese road construction that has also for the first time drawn the tiny kingdom of Bhutan into the two nuclear powers’ border disputes.

The Chinese media has played a major role in raising the tempo and yesterday The Global Times, an outspokenly outspoken government-link newspaper even went to the extent of suggesting that India’s role in the border issue with Bhutan would justify another country interfering in its northern region of Kashmir.

China, led by the increasingly powerful and assertive Xi, is in a belligerent mood and is trying to extend its reach and power in areas such as the South and East China Seas as well as in the Himalayas, while also underlining its sovereignty of Hong Kong that it regained from British rule 20 years ago on June 30 1997.

Speaking on the day of the anniversary, a Beijing foreign ministry spokesman said that the UK that had no role in the future of its former territory, even though the 1984 Sino-British Joint Declaration that led to the 1997 handover gave it a monitoring role for 50 years. The spokesman said that, as “a historical document”, the joint declaration “no longer has any practical significance”. It was not at all binding for Beijing’s management over Hong Kong.

1962 “historical lessons”

Similarly slapping down India, a China’s People Liberation Army spokesman on June 29 implicitly alluded to the 1962 defeat when he said that India should learn from “historical lessons”. He was responding to India’s army chief saying his troops were ready for a “two-and-a-half-front war”, referring to China, Pakistan and internal security.

Britain has regularly failed effectively to monitor developments in Hong Kong, and there are doubts about India’s war-readiness, but it was a sign of China’s increased assertiveness that, in the space of two days, the UK should be publicly told it had no role and that India should be reminded so openly about its 1962 defeat.

India has however resisted latest China’s territorial ambitions, despite the aggressive noises from Beijing. Perhaps Modi has heard that Barack Obama, America’s former president, once said of China: “You have to be pretty firm with them, because they will push as hard as they can until they meet resistance”.

Nathu La Pass, in Sikkim, AP file photo

The border at the Nathu La Pass in Sikkim – AP file photo

In the Himalayas, China’s army has been steadily moving into Bhutan territory with tracks and roads for several years, but has met with virtually no resistance. The current crisis has arisen because its road construction has entered the specially sensitive Doklam plateau (below) that Bhutan claims as its territory but which China also claims as part of Donglang region.

The location on the China-Bhutan-India trijunction is separate from the main areas disputed by India and China, but is it critically important because the Doklam plateau overlooks China’s Chumbi Valley, a strategically important ‘v’ shaped area of Tibet located between the Indian state of Sikkim to the west and Bhutan to the east. The 9,500 ft high valley juts down towards a strip of Indian territory called the Siliguri Corridor (dubbed the “chicken’s neck”), which is the only land route from the main land mass of India to its north-eastern states.

chumbi mapThe closer China gets to the Siliguri Corridor down the Chumbi Valley, the  better equipped it would be in a war to try to cut India off from the north eastern states and invade Arunachal Pradesh, which it claims, while also making land grabs on other states and on Bhutan.

Building the road would give it a distinct strategic advantage, as Shivshankar Menon, India’s former national security adviser, has told .

Because of the sensitivity, Bhutan objected and India confronted the Chinese troops and blocked construction work. That brought the opposing army troops face to face and provoked a complaint from local Chinese army commanders early in June that India had invaded its territory.

China chose to publicise the clash and complain to Delhi just as Modi was about to meet President Donald Trump for the first time in Washington on June 26. This led observers to suggest that China had timed the move as a warning to India of what could happen if it continued to grow closer to the US. China is unhappy with a more aggressive stance adopted by Modi in recent months, which has included a boycott of its trans-national One Belt One Road infrastructure and trade initiative.

Bhutan’s objections were unusual because the country, sandwiched between China and India, generally stays quiet. But on June 29 its ambassador in New Delhi delivered a formal demarche to China at its embassy – they are located five minutes drive from each other in Delhi’s Chanakyapuri diplomatic area.

“Recently, the Chinese army started construction of a road towards Bhutanese Army camp at Zomphlri in Doklam area which is in violation of an agreement between the two countries”, Vetsop Namgyel, Bhutan’s ambassador, told India’s main news agency.

“Peace and tranquility”

He was referring to a written agreement with China that that there should be “peace and tranquility” till their disputed border was agreed. That is complicated because it involves reconciling disputes about the relevance of historic documents and agreements going back more than a century to a time when Bhutan had not even decided where it thought its borders lay. An 1890 agreement with Britain gave China sovereignty over Donglang, which was subsequently claimed by Bhutan.

India used to run Bhutan’s foreign affairs, but is now only consulted. The relationship is close however, as was shown by India’s response. Bhutan does not have diplomatic relations with China and has been resisting demands from Beijing to open them, though it does have regular but inconclusive meetings on the 470km border.

From conversations I had on my last visit to Bhutan two years ago, it was clear that there is considerable resentment about India’s sometimes overbearing interference in Bhutan’s affairs, along with a growing demand for formal relations with Beijing, which would weaken India’s role.

Hamburg atmosphere

There was excited media coverage about how Xi and Modi would not meet while they were in Hamburg, and that this would show that relations between the two countries were at a new and dangerously low point.

In fact, neither side was ready for formal talks because no solution was in sight and a formal meeting would have been useless or maybe even counter-productive. As a Chinese spokesman put it, the “atmosphere” was “not right”.

The informal meeting between Xi and Modi does however appear to have gone well with the two leaders apparently praising each others economic and anti-terrorist successes, while avoiding, at least as far as diplomatic briefings have revealed, anything about the standoff in the mountains.

Lobsang-Sangay-CTAThat has softened the mood, at least in the capitals. It is too early to predict how the situation will be solved, though it could be done with all sides agreeing to withdraw pending talks between China and Bhutan. Meanwhile, on the same day that Xi and Modi met, China issued a safety advisory to its citizens living in India to pay close attention to the security, which may have been part of the loud diplomatic onslaught before the leaders met.

Coincidentally, India, Japan and the US begin annual naval exercises in the Indian Ocean today (July 10), bringing together three countries concerned about China’s expansionary ambitions.

India’s relations with China now look like becoming even more fractious because the head of the India-based Tibetan government-in-exile, Lobsang Sangay, on July 5 unfurled the Tibetan national flag on the shores of Pang Gong lake in Ladakh (above). The lake spans the border between India and China’s Tibetan region at a height of over 14,000ft. This is the first time the independent Tibet flag has been unfurled there it is certain to anger China, which tolerates India hosting the government in exile along with the Dalai Lama, providing neither engages in political or diplomatic activity.

Relations between China and India have always been complicated, both before and after the 1962 war, but China’s growing territorial and international ambitions add new dimensions that are likely to lead to more crises.

No shot has been fired on the border for 40 years, though there are frequent confrontations. That is in striking contrast to the regular firing on India’s Pakistan line of control, but it underlines how serious would be if shooting begins.


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