India today: everything you wanted to know about it, besides it’s a bigger democracy than US, and Bollywood is bigger than Hollywood

1. ‘An elephant can run very fast’
India’s boundless ambitions
The United States will attend the Aero India defence show next month, hoping to profit from India’s hunger for military equipment; it wants to make India a counterweight to China. The relationship between China, India and the US is ill-defined; in a region that bristles with weapons, India also will have to contend with Japan and Russia.
By Martine Bulard/Le Monde

AMIT Raina, who is a student at the prestigious Jawaharlal Nehru University (JNU) in New Delhi, said: “An elephant can run very fast.” He inclined his head slightly as he spoke, as many Indians do. His fellow students agreed with him and all were convinced that India would sooner or later resume its place in the world. They were more divided over whether the Indian elephant could overtake the Chinese dragon, yet all dreamed of power.

Indian civilisation once rivalled China and was pre-eminent in Asia; in 1700 it led the world financially ( 1). Yet by 1820 its share of global income had fallen from 22.6% to 15.7%, half that of China (which then followed it into decline). By 1980 India, with 3.4% of global income, and China, with 5%, had been marginalised. China has now shown that a country can bounce back and India wants to catch up as fast as it can.

India has decided to throw in its lot with the United States in a spirit of pragmatism rather than any ideological conviction ( 2). Navtej Singh Sarna, foreign ministry spokesman, in his 1960s Soviet-style office in New Delhi, said carefully: “The US is the dominant superpower, so it is logical that we should seek to develop good relations with it.” This normalisation follows decades of non-alignment spent in the diplomatic shadow of the Soviet Union and resented by the US.

India’s trade with the US rose to almost 11% of the Indian total in 2005-6; trade with Russia, which was formerly its main partner, was only just over 1%.

India wants a lot more. Stunned by the speed with which the economy of China has taken off ( 3), India makes no secret of its desire to utilise its new relationship with the US to attract the investment that it lacks. In 2005 foreign direct investment (FDI) into China rose to $72.4bn; India’s FDI was only $6.6bn, although this may be an underestimate, since not all capital movements are recorded. The Indian government did proudly point out that it received 40% of FDI in information technology in developing countries, while China had only 11%. Even so, an abyss separates them.

Copying China

The government of Prime Minister Manmohan Singh has copied China’s example: among other measures it has set up special, near tax-free economic zones, waived social protection and lowered customs duties. These measures have yielded results. There has been investment in IT services and in cars; in November 2006 Renault announced the construction of an assembly plant. The major supermarkets — Wal-Mart, Tesco, Carrefour — are planning to move in: who cares if the arrival of their vast stores kills local businesses and overwhelms landscapes that have so far been spared the monotonous urbanisation of the West?

“Modernisation” is under way. The US leads the investors, followed by the island tax haven of Mauritius, Britain, Japan and South Korea.

However, political preoccupations rather than economic ambitions drive the Indian government: it wants recognition as an Asian and global superpower. Hence the importance of the deal over civilian nuclear technologies which, following ratification by both sides of the US Congress in 2006, will come into effect early this year, in time for President George Bush’s visit to New Delhi in March.

The embargo introduced in response to India’s widely condemned nuclear tests in 1998 will be lifted, although India still refuses to sign the nuclear non-proliferation treaty on the grounds that it is “discriminatory”; in an assertion of its independence, it denies international inspectors access to more than 33% of its installations. The US and its allies continue to apply this demand to Pakistan, North Korea and Iran.

India will now be able to import sensitive materials and use nuclear power to generate electricity to meet its rapidly expanding energy needs. The prominent diplomat, Shashi Tharoor, the United Nations under-secretary general who campaigned unsuccessfully to succeed Kofi Annan, explained: “There is a more important issue than energy supply: the agreement recognises India as a significant nuclear power in its own right. It marks the recognition of the Indian exception by the US and the official nuclear powers.”

It is self-evident that “India is not a country like any other”; this saying has become a mantra.

After independence in 1947 India’s unique status, epitomised by its policy of non-alignment, made it a moral force that stood out from other third world countries in the process of decolonisation. Now India is beginning to look like a US-approved military power. Some Indians fear that it may be falling into the alignment trap. The prime minister responded by saying: “I am often disappointed by the lack of adequate appreciation in our country, including among our political leaders, of the changing nature of our relationship with the world. Very often we adopt political postures that are based in the past” ( 4).

Although some US senators have deplored the nuclear deal and there has been concern that it “may enhance India’s ability to produce fissile material for weapons” ( 5), it has its supporters in Washington. The Bush administration has already expressed its disapproval of a gas pipeline project with Iran, although this would supply a significant proportion of India’s energy needs and have the enormous diplomatic benefit of forcing India to negotiate with its main enemy, Pakistan, through which the pipeline would pass.

In the words of Edward Luce, a former adviser to Bill Clinton, writing in the Financial Times : “The pipeline would give Islamabad a strong incentive to maintain stability with New Delhi” ( 6). For now, Manmohan Singh is using Iran’s excessive price demands as an excuse to leave the issue unresolved, but this can only be a short-term solution.

Nothing is settled

India must also come to an understanding with China. Either the two giants build a regional understanding that will influence Asian and international politics, or they fight it out, which seems the more likely possibility. Nothing is settled; there are really three parties in the ring, including the US, or four including Japan.

The US was prepared to risk undermining the nuclear non-proliferation treaty in order to encourage India to become a counterweight to China, whose economic, military and diplomatic rise threatens the long-term hegemony of the US in the region. The US also has a problem with some traditional allies — such as South Korea, which has refused to adopt a sufficiently aggressive stance against North Korea. India, wary of its vast neighbour, is happy to cooperate with the Bush administration for now.

China’s prime minister, Wen Jiabao, visited New Delhi in April 2005. Showing an impressive sense of history, he pointed out that for 99.9% of the past 2,200 years the countries had lived in harmony ( 7). The discordant 0.1% was the war of 1962 ( 8), an unexpected defeat that heralded the end of the Nehru era and still rankles in India.

The economist Amartya Sen has suggested that the earliest Sino-Indian relations were initiated by trade rather than Buddhism; after the 1962 war, economic and trading links restored good relations ( 9). Trade remained marginal, at $3bn a year, until 2000; it was expected to reach $22bn in 2006. China sells more than it buys and wants to exploit synergies between the economies to make good its technological deficit. It is pushing for a free-trade agreement that India, which has only 33% of Chinese GDP and is fearful of being flooded by Chinese imports, rejects.

India’s priority is to consolidate its ageing and relatively weak industrial sector. It recognises that it cannot guarantee national development if it continues to rely financially upon the contribution of outsourced call centres, sub-contracted services for English-speaking businesses around the world and IT. Nevertheless, during the visit of the Chinese president, Hu Jintao, in November 2006, it signed 13 agreements to cooperate in finance, agriculture, IT and energy.

Another potential area for detente is energy, with its rapidly increasing demands. The two countries are in competition for energy resources with China well ahead, especially in Africa. At the end of 2005 the China National Petroleum Corporation and India’s Oil and Natural Gas Corporation (ONGC) reached an agreement to invest in the exploitation of Syrian oil reserves. Also in 2006 the Chinese and Indian oil ministers discussed creating a buyers’ cartel to influence prices, a fresh idea that was thwarted when the Indian minister, Mani Shankar Aiyar, was sacked.

The joint declaration that accompanied Hu Jintao’s visit emphasised the need to “encourage collaboration between their enterprises, including through joint exploration and development of hydrocarbon resources in third countries” ( 10 ). The full significance of the declaration emerged in the context of US protests to the Indian government about its investment in Syria. The declaration also announced that “the two sides agree to promote cooperation in the field of nuclear energy, consistent with their respective international commitments”. The terms of the agreement were left vague, unlike the agreement Hu Jintao signed with Pakistan a few days later, yet this was the first official reference to nuclear cooperation ( 11 ). China, while acknowledging India’s agreement with the US, was trying to prevent it from establishing itself as the US’s privileged partner.

An anti-China axis?

Despite these developments, border issues remain unresolved. China continues to claim part of Arunachal Pradesh in northeast India, while India claims Aksai Chin on its northwest frontier: the commission established to settle these disputes has made little progress. China accepted the incorporation of the former Buddhist kingdom of Sikkim into India in 1975. More importantly, India has recognised Chinese sovereignty over Tibet since 2003, although India continues to play host to the Dalai Lama and more than 100,000 Tibetan refugees.

In July 2006 the Nathu La pass in the Himalayas reopened after more than 40 years of closure, restoring a section of the old Silk Road. Traffic still falls far short of the early 20th century, when more than 75% of trade between India and China used the pass, but there are grounds for hope that merchants will slowly displace soldiers.

Even so, India remains suspicious and fearful of encirclement. To the north, China has long offered unconditional support to Pakistan in its conflict with India over Kashmir ( 12 ), and it is now investing in the construction of a deep sea port at Gwadar, on Pakistan’s coast, close to the entrance to the Persian Gulf. To India’s southeast, China is funding Burma’s navy. China claims that it is merely trying to secure sea access in order to guarantee the security of its imports.

India remains unconvinced and has conducted several military exercises with US forces, including some on the Chinese border and in the Indian Ocean, as far east as the vital oil-tanker route through the Strait of Malacca. It is also conducting joint operations with Japan, which has been adopting a more aggressive military posture ( 13 ).

India wants to show off its muscles. The Bush administration wants India to be a rampart against China, a job that most of India’s openly pro-US political elite are happy to take on. Some members of the business community are less enthusiastic. As Shyamal Gupta, a senior executive with the leading Indian manufacturer Tata Sons, insisted: “What we will see is not India against China but India plus China” ( 14 ). Some politicians share this reticence, including Jairam Ramesh, a member of the governing Congress party and a former minister, who has published a sensational book, Making Sense of Chindia .

Nobody, of course, is proposing the construction of a Sino-Indian alliance against the US. Everybody is mindful that Chinese leaders are banking on a close relationship with the US, upon which China is economically dependent. Asia is nevertheless a region where military expenditure has recently soared: China is the world’s second-biggest military spender, Japan the fourth, and India the eighth. So giving real substance to the declared Sino-Indian intention to “explore a new architecture for closer regional cooperation in Asia” has become a priority.

As The Hindu ’s famous columnist Siddarth Varadarajan said: “Asia is too big to be dominated by a single power. China, India and Japan should not even think of controlling the region, whether on their own or with the support of an external power.” Like many progressive intellectuals, Varadarajan advocates more active Indian participation in regional organisations.

Russia sidelined?

Russia, previously a cornerstone of Indian diplomacy, seems to have been sidelined. Joint declarations have been guarded and bilateral relations tepid. Despite the collapse of the early 1990s, trade has resumed, especially in the military sector where it reached $6.5bn in 2005. Professor Anuradha M Chenoy of the School of International Studies at JNU told me: “India is the only country that has a programme of technical and military cooperation with Russia.” Russia sells the most weapons to India, ahead of Israel, with which the previous Hindu nationalist government established close diplomatic relations ( 15 ).

The quest for oil and gas supplies also encourages cooperation with Russia. In 2004 the oil minister, Aiyar, announced: “In the half-century of Indian independence, Russia has guaranteed our territorial integrity, and in the second half-century it may be able to guarantee our energy security. I am talking about the strategic alliance with Russia in energy security, which is becoming for India at least as important as national security” ( 16 ).

This may not be the official position, but the ONGC is involved in the Sakhalin I and II oil and gas fields. For Russia, which has agreed to supply India with 60 tonnes of uranium, energy has become a weapon in its attempt to reassert itself as a leading global player.

As Yu Bin of the International Relations Centre explained it: “The once super military power has now become the super petro-power under Putin, whose mission is to remake Russia as a world power to be respected, if not feared” ( 17 ).

So is the “CIA triangle”, as its detractors call it, of China, India and the US, about to be supplanted by an alliance between China, India and Russia? Not yet. India has decided to join the Shanghai Cooperation Organisation (SCO) as an observer, along with Pakistan and Iran. This body includes four central Asian republics (Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan), plus China and Russia, which are trying to build up its diplomatic muscle in the face of increasing US influence in the region.

India does not yet seem capable of any spectacular strategic initiative. The writer Sunil Khilnani said shrewdly: “We have become enamoured of the idea that we are soon to become a permanent invitee to the perpetual soiree of great powers, and so must dust ourselves off and dress for the part . . . But we need to deliberate over what the role should be, and how we can most effectively achieve it” ( 18 ).

Border issues

India is at present expending much energy in resolving border issues. Although it feels no great pressure to engage in equal relations with smaller neighbours, it did at least join Bangladesh, Bhutan, the Maldives, Nepal, Pakistan and Sri Lanka in setting up the South Asian Association for Regional Cooperation (Saarc) in 1985. Economic cooperation remains marginal (less than 10% of trade) and the struggling organisation is unable to transcend its own conflicts.

The strained relations between India and Pakistan contribute to this. The talks that began over Kashmir in 2004 have made little headway, but some trade has resumed. Discussions were suspended after the July 2006 train bombings in Bombay, which killed 200; India blamed them on Pakistan’s secret services. The talks resumed in October and in December Pakistan’s President Pervez Musharraf announced that, for the first time, Pakistan was ready to abandon its claim to Kashmir if India would do the same. The proposal was welcomed “with interest” by Manmohan Singh. People on both sides of the control line in Kashmir are not holding their breath.

India’s relations with other immediate neighbours are less conflictual, but by no means unproblematic, although an agreement in Nepal in November between government forces and the Maoists could improve the situation. The uncertainties in Bangladesh and continued fighting in Sri Lanka are a problem for India: there are thought to be 20,000 Bangladeshi refugees in India, and 10,000 Sri Lankan Tamils crammed into camps in the southern state of Tamil Nadu. Many are destitute; they fuel the activities of violent groups and serve to justify police abuses.

Poverty feeds the Naxalite (Maoist) movement, particularly in West Bengal, Orissa, Telangana (Andhra Pradesh) and, further north, in the state of Bihar on the frontier with Nepal, where calls for independence are getting louder. According to Singh, this is India’s most serious security problem. Indian borders are porous, but Singh forgets to mention the social causes of friction, especially the disastrous effects of “modernisation” upon rural areas. More than 10,000 farmers killed themselves in 2005, most often by swallowing pesticides, because they could not meet their debts. India exports cereals, yet more than 50% of its children are malnourished; 40% of Indians can neither read nor write (only 10% of Chinese are illiterate). India ranks 126th on the UN Human Development Index, well below China in 81st place.

The few measures that the government has attempted have often been undermined by widescale corruption; neither the government nor the upper classes seem concerned about the divide that separates the majority of Indians from the 60-70 million people (5-6% of the population) who have achieved a standard of living comparable to that in Europe.

Shashi Tharoor is one of the few who acknowledge this situation: “We must do something for the other India . . . We must invest in hardware [roads, ports and airports, all in a pitiful state], but also in software, the human beings to whom we must give what they need. It is a question of civilisation.” Wholesale exclusion is the vulnerable point of India, which seeks to present itself as the largest democracy in the world.

Notes:
(1) Angus Maddison, Chinese Economic Performance in the Long Run , OECD, Paris, 1998.
(2) Christophe Jaffrelot, “ India’s new best friend, the US ”, Le Monde diplomatique , English language edition, September 2006.
(3) India has a 1% share of world trade; China 6%.
(4)Speech to the thinktank Indian Council for Research and International Economic Relations, New Delhi, 6 November 2006.
(5) Dafna Linzer, “India nuclear report never done”, Wall Street Journa l, New York, 16 November 2006.
(6) Edward Luce, In Spite of the Gods , LittleBrown, London, 2006.
(7) Jairam Ramesh, Making Sense of Chindia , India Research Press, New Delhi, 2006.
(8) India and China were already in disagreement over Tibet when they clashed on their Himalayan border in October/ November 1962.
(9) Amartya Sen, “ Passage to China ”, New York Review of Books, vol 51, n° 19, 2 December 2004.
(10 ) “ Joint declaration by the Republic of India and the People’s Republic of China ”, New Delhi, 21 November 2006.
(11 ) See Siddharth Varadarajan, “ New Delhi, Beijing talk nuclear for the first time ”, The Hindu , New Delhi, 22 November 2006.
(12 ) See Jean Luc Racine, “ Pakistan: a double game ”, Le Monde diplomatique , English language edition, June 2004.
(13 ) See Emilie Guyonnet, “ Japanese military ambitions ”, Le Monde diplomatique , English language edition, April 2006.
(14 ) Associated Press, 22 November 2006.
(15 ) India needed a source of weapons to replace the collapsed Soviet Union, but also sought to signal an ideological alignment with anti-Muslim overtones.
(16 ) Anuradha M Chenoy, “India and Russia: allies in the international political system”, India’s Foreign Policy , New Delhi, forthcoming.
(17 ) Yu Bin, “Central Asia between Competition and Cooperation”, Foreign Policy in Focus , Washington, 4 December 2006.
(18 ) Sunil Khilnani, “ The mirror asking ”, Outlook , New Delhi, 21 August 2006.


2. India's Quiet Revolution
IN SPITE OF THE GODS: The Strange Rise of Modern India by Edward Luce
Reviewed by Shashi Tharoor/ FOREIGN AFFAIRS


"India," Winston Churchill once barked, "is merely a geographical expression. It is no more a single country than the Equator." Churchill was rarely right about India, but he had a point this time: No other country in the world embraces the extraordinary mixture of ethnic groups, the profusion of mutually incomprehensible languages, the varieties of topography and climate, the diversity of religions and cultural practices, and the sweep from high-tech wealth to grinding rural poverty that India does.

So how does one come to grips with a land of such bewildering contrasts? The paradoxes abound: The world's largest democracy is also the home of the ageless caste system; a land steeped in superstition is a world leader in information technology; the nation of Mahatma Gandhi, the apostle of nonviolence, is convulsed by periodic bloodletting. The country's national motto, emblazoned on its governmental crest, is "Satyameva Jayaté" -- "Truth Alone Triumphs." The question remains, however: whose truth?

Edward Luce, a keenly observant British journalist who headed the Financial Times's bureau in New Delhi at the cusp of the new century, ventures an answer in this insightful and engaging book. His sharp-witted prose brings today's India to life with insight and irreverence. ("If Gandhi had not been cremated," Luce writes, "he would be turning in his grave.") Luce's writing is richly evocative of place and mood, and In Spite of the Gods sparkles with the kind of telling detail that illuminates an anecdote and lifts it above mere reportage. Almost the only thing not worth admiring in this book is its awful title, which suggests a nation struggling against the heavens -- a thesis that has nothing to do with Luce's sophisticated and sympathetic narrative.

Advised early on that in India it is not enough to meet the "right people," Luce travels throughout the country meeting the "wrong people" as well. He explores economic development from the ground up while never losing sight of the big picture (a "modern and booming service sector in a sea of indifferent farmland"); he punctures the myths surrounding India's IT explosion (which he correctly argues will not solve India's fundamental employment problems because it employs only about 1 million of the country's 1.1 billion people); and he depicts the continuing allure of the secure and corruption-laden "government job." Few foreigners have written with as much understanding of the skills and limitations of India's senior government bureaucrats -- of their idealism and inefficiency, of the vested interests that impede growth and progress -- and Luce also captures the extraordinary triumphs of India despite these obstacles.

On my frequent visits home, I discover that India is anything but the unchanging land of cliche. The country is in the grips of dramatic transformations that amount to little short of a revolution -- in politics, economics, society and culture. In politics, the single-party governance of India's early decades has given way to an era of multiparty coalitions. In economics, India has leapt from protectionism to liberalization, albeit with the hesitancy of governments looking over their electoral shoulders. In caste and social relations, India has witnessed convulsive changes. And yet all this change and ferment, which would have rent a lesser country asunder, have been managed through an accommodative and pluralist democracy. Luce tells this story remarkably well.

There is, for instance, a gently sympathetic portrait of Sonia Gandhi, the Italian-born leader of the ruling Congress Party, for whom "the political is very personal." Luce, who is married to an Indian, clearly admires much of India's culture, such as its remarkable novelists, musicians and film-makers: "If world trade were to be conducted purely in cultural products," he writes, "then India would have a thumping annual surplus." He suggests an answer to the famous question of why so few of India's 140 million Muslims, unlike their neighbors in Pakistan, have joined jihadist groups: because of "the political system under which they live," which guarantees them "freedom of speech, expression, worship, and movement."

But Luce is a far from uncritical admirer. He is unsparing on the corruption that infests Indian politics and society, on the ersatz Westernization that has seen sonograms used to facilitate the abortion of female fetuses by parents wanting sons, on the "unimpressive politicians" who run India's "impressive democracy."

Still, no one speaks seriously anymore of the dangers of disintegration that, for years, India was said to be facing. Luce demonstrates that, for all its flaws, India's democratic experiment has worked. The country has seen linguistic clashes, inter-religious riots and sputtering separatism, but democracy has helped to defuse each of these. Even the explosive potential of caste division has been channeled through the ballot box. Most strikingly, the power of electoral numbers has given high office to the lowest of India's low. Who could have imagined that, after 3,000 years of caste discrimination, an "Untouchable" woman would become chief minister of India's most populous state? Yet that has happened twice and looks likely to happen again this year when the northern state of Uttar Pradesh goes to the polls. In 2004, India witnessed an event unprecedented in human history: A nation of more than 1 billion people, after the planet's largest exercise ever in free elections, saw a Catholic political leader (Sonia Gandhi) make way for a Sikh (Manmohan Singh) to be sworn in as prime minister by a Muslim (President Abdul Kalam) -- in a country that is 81 percent Hindu.

Luce is right to list the many problems the country faces: the poor quality of much of its political leadership, the rampant corruption, the criminalization of politics (more than 100 of the 552 members of Parliament's lower house have charges pending against them). The situation in Kashmir festers, provoking periodic crises with Pakistan and leading to fears (mostly exaggerated) of nuclear war on the subcontinent. Luce summarizes these issues crisply and cogently. But I'd like to have read a little more about the strengths of India's vibrant civil society: nongovernmental organizations actively defending human rights, promoting environmentalism, fighting injustice. The country's press is free, lively, irreverent, disdainful of sacred cows. India is the only country in the English-speaking world where the print media are expanding rather than contracting, even as the country supports the world's largest number of all-news TV channels. Disappointingly, Luce tells us nothing of this.

But these are cavils. Luce clearly loves the country he writes about -- an essential attribute for a book like this -- but he is tough-minded as well, and his judgment is invariably sound. "In India," a colleague once told Luce, "things are never as good or as bad as they seem." If you want to understand how that might be, read his wonderful book. ·

(Shashi Tharoor is the author of, among other books, "India: From Midnight to the Millennium and Beyond" and "Nehru: The Invention of India.")


3. A Younger India Is Flexing Its Industrial Brawn -- by KEITH BRADSHER

PUNE, India — India’s economic advancement no longer rests on telephone call centers and computer programmers.

Among villages with thatch-roofed huts and dirt roads on the outskirts of this city in central India, John Deere and LG Electronics have recently built factories turning out tractors and color television sets for sale in India and for export to the United States.

In Hazira, in northwestern India, where some residents still rely on camels to carry traders’ goods, the Essar Group is making steel to be used for ventilation shafts in Philadelphia, high-rise structural beams in Chicago and car engine mountings in Detroit.

For decades, India followed a route to economic development strikingly different from that of countries like Japan, South Korea or China. While its Asian rivals placed their bets on manufacturing and exports, India focused on its domestic economy and grew more slowly with an emphasis on services.

But all that is starting to change.

India’s annual growth in manufacturing output, at 9 percent and accelerating, is close to catching growth in services, at 10 percent. Exports of manufactured goods to the United States are now rising faster in percentage terms than China’s, although from a much smaller base. More than two-thirds of foreign investment in the last year has gone into manufacturing in India, not services.

“Saying we are a back office and China is a factory is a backhanded compliment,” said Kamal Nath, India’s minister of commerce and industry. “It’s not really correct.”

Indeed, in interviews at 18 Indian factories and other businesses in 10 cities and villages scattered across the length and breadth of the nation, the picture that emerges is of a country being driven by advances in manufacturing to a much brisker pace of economic growth.

A prime reason India is now developing into the world’s next big industrial power is that a number of global manufacturers are already looking ahead to a serious demographic squeeze facing China. Because of China’s “one child” policy, family sizes have been shrinking there since the 1980’s, so fewer young people will be available soon for factory labor.

India is not expected to pass China in total population until 2030. But India will have more young workers aged 20 to 24 by 2013; the International Labor Organization predicts that by 2020, India will have 116 million workers in this age bracket to China’s 94 million.

India’s young population will also make it a huge and growing market for years to come, while the engineering skills and English skills of its educated elite will make it competitive across a wide range of industries. So even though India remains a difficult place to do business, several multinationals have been placing big bets on India in hopes of taking advantage of this shifting global dynamic.

General Motors and Motorola are preparing to build plants in western and southern India. Posco of South Korea and Mittal Steel of the Netherlands have each announced plans to erect giant steel mills in eastern India, where Reliance of India will soon construct one of the world’s largest coal-fired power plants.

They are finding India’s labor force well suited to their goals. When LG set out in 2005 to fill 458 assembly line jobs at its factory here at a starting wage of $90 a month, it required that each applicant have at least 15 years of education — usually high school plus technical college.

Seeking a young work force, the company decided that no more than 1 percent of the workers could have had any prior work experience. Despite the limitation, 55,000 young people met its criteria for interviews.

“In the villages there is little income,” said Siddu Matheapattu, 24, in between applying sealant to refrigerator frames. “Here I can earn more.”

By contrast, cities in the export-oriented Guangdong Province in southeastern China raised monthly minimum wages this summer by 18 percent, to $70 to $100 a month, after factories reported that they had one million more jobs than workers to fill them. Factories elsewhere in China face less severe labor shortages, but they also are being forced to raise wages.

As India has deregulated its economy, output has gradually accelerated to a growth rate of 8 percent a year, feeding a national euphoria and a few hopes of someday even beating China’s annual growth of more than 10 percent.

Plenty of obstacles remain, however, notably India’s weak infrastructure. China invests $7 on roads, ports, electricity and other backbones of a modern economy for every dollar spent by India — and it shows. Ports here are struggling to handle rising exports, blackouts are frequent and dirt roads are common even in Bangalore, the center of the country’s sophisticated computer programming industry.

Pervasive corruption has slowed many efforts to fix these problems. India’s labor laws, little changed since they were enacted just after independence in 1947, also continue to discourage companies from hiring workers, by making it very difficult to lay off employees even if a company’s fortunes sour or the economy slows.

Still, a new optimism prevails in India, bordering at times on euphoria.

“The Chinese are very good at copying things, but Indians believe in quality work, we believe in meeting pollution norms,” said S. S. Pathania, the assistant general manager of the Hero Honda motorcycle factory in Gurgaon, 30 miles south of New Delhi. “I think India will pass China very soon.”

An Unexpected Boom In Manufacturing

Sprawling across more than a square mile next to a gray tidal estuary, the scale of the Essar Group’s complex in Hazira is already impressive. Essar has its own port to bring in iron ore and its own large gas-fired power plant for electricity. At the steel mill, giant buckets pour 150 tons of molten metal at a time to form slabs 2 yards wide and up to 10 yards long.

But the complex is just starting to grow. Essar is quintupling steel production and pushing forward a sevenfold increase in power generation, most of it for sale to a national grid desperately short of electricity.

Growth on that scale, especially in industries like steel and power but also in areas like car parts and household appliances, is what India has long lacked. Industrial production accounts for only a fifth of India’s economic output, compared with two-fifths of China’s. But this ratio is starting to rise in India as manufacturing, led by exports, grows faster than agriculture and even some service industries.

Until recently, legislation effectively barred companies with more than 100 employees from competing in many industries. The laws were intended to protect tiny businesses in villages, often employing women and minorities; high tariffs were placed on imports as well.

But a result was hundreds of thousands of businesses too small to be competitive; India lags behind even the impoverished Bangladesh next door in exports of garments, a big creator of jobs for China. The Indian government has responded by narrowing the list of protected industries to 326 categories of goods from 20,000 and has lowered tariffs.

Comparing factories in India to their competitors in China, many of the Indian factories are smaller but some appear more efficient.

India’s stronger financial system demands higher interest rates than China’s state-owned banks, making it costlier to hold the small mountains of components awaiting assembly that are often seen in Chinese factories. The Confederation of Indian Industry, a national trade group, has also been highly successful in pushing companies to adopt the latest Japanese lean manufacturing techniques.

The drawback is that the nation’s manufacturing boom, built on higher-quality goods made under more modern conditions than in China, is not likely to create as many factory jobs as India needs.

The Essar steel mill, for example, has been replacing old, labor-intensive equipment with more modern gear. “We were having it all done manually, but because the customers demand very high quality, we have to do it automatically,” yelled Rajesh Pandita, an Essar manager, over the roar of a house-size machine that was stretching a minivan-size coil of steel back and forth through large rollers until it was little thicker than plastic kitchen wrap.

The Whirlpool factory in Pune uses machines, not people, to fold the steel exteriors of refrigerators. It has some of the highest productivity per worker of any Whirlpool factory in the world, with just 208 line workers producing up to 33,000 refrigerators a month.

Labor laws, however, discourage flexibility. They still ban companies from allowing manufacturing workers to put in more than 54 hours of overtime in a three-month period even if the workers want to earn extra money. Firing workers is extremely difficult.

“Companies think twice, 10 times before they hire new people,” said Sunil Kant Munjal, the chairman of the Hero Group, one of the world’s largest manufacturers of inexpensive motorcycles.

Hero in Gurgaon, on the southern outskirts of New Delhi, and its archrival, the Lifan Group in Chongqing, a city in western China, produce comparable motorcycles but the similarity ends there. Hero markets heavily to its domestic market, protected from foreign competition by high import tariffs, while Lifan emphasizes exports.

With scant ventilation, Lifan’s factories are filled with diesel exhaust as workers test engines and ride finished bikes at breakneck speed out the doors, zigzagging past co-workers. Hero’s factory in Gurgaon, where Honda holds a minority stake, has far better safety standards and excellent ventilation.

The Lifan factory pays less than $100 a month. The heavily unionized Hero factory pays $150 a month plus bonuses of up to $370 a month; nearly half the workers earn the top bonus, Mr. Pathania said.

Lifan’s labor force is quiescent — would-be organizers of independent labor unions face long jail terms or worse in China. Hero’s workers staged a successful nonviolent protest in 2005 to call for more contract workers to be eligible for the bonuses as well.

Bad Roads and Blackouts Take a Toll on Efficiency

But the biggest question mark hanging over the rise of manufacturing in India lies in whether the country has enough roads, ports and electricity-generating plants to move huge quantities of goods and power the factories that make them.

Captain Abhay Srivastava, an operations manager at India’s busiest port, was on duty on a recent afternoon when a phone call suddenly came in from the docks below. An enormous container ship from Qatar needed to slide 35 feet backward along the privately managed dock at the Nhava Sheva port near Mumbai to allow another large vessel to squeeze into the dock in front of it.

Captain Srivastava grabbed his white hard hat and dashed for the elevator. As soon as he reached the water’s edge, a dozen laborers in orange jumpsuits began straining to arrange a cat’s cradle of heavy, five-inch-thick ropes that would allow the ship to use its powerful winches to pull itself out of the way.

“They are efficient people; they don’t speak a lot,” said Captain Srivastava, who has visited most of the world’s major ports either as a ship captain or for port training exercises. “You go to some places and they just stand around.”

The efficiency of the Nhava Sheva port — it approaches West Coast ports in the United States in the number of containers moved per hour — shows that India is capable of producing world-class facilities.

But big as it is, Nhava Sheva is too small to handle the crush of traffic. John Deere tractors wait in a container at the dock for one to four days before being loaded on a ship.

“If this pace of growth continues, we will see more congestion at the port,” said Raj Kalathur, the managing director and chief executive of Deere’s operations in India.

Similar worries prevail in Chennai, formerly Madras. “Another four or five years, we’ll be choked,” said M. Rafeeque Ahmed, the chairman of the Farida Group, a 9,000-employee shoe manufacturer in Chennai that needs the port for exports.

Infrastructure improvements are particularly important because manufacturing companies are buying more and more components from far-flung suppliers. Making sure all those parts arrive on time requires a reliable transportation system.

“Manufacturing is no longer done all under one roof,” said Victor Fung, the chairman of the Li & Fung Group, a large Hong Kong-based company that buys goods from factories across Asia for sale to retailers and wholesalers in the United States and Europe.

Indian officials are talking about expansion. Planning is under way for new wharves at Nhava Sheva, but the years-long task of construction has not yet started.

China has faced capacity problems, too. A surge in steel production in early 2004 overwhelmed bulk cargo ports. Inflation quintupled in a year, to 5.3 percent, as bottlenecks at ports, highways, railroads and elsewhere in China drove up companies’ costs.

The Chinese response was swift and decisive. The pace of port investment nearly tripled in six months. Work crews labored around the clock to erect more cranes and expand wharves.

The Chinese economy grew at a breathtaking pace of 11.3 percent in the second quarter of 2006, but consumer prices were just 1 percent higher in July than a year earlier.

By contrast, India is struggling with 8 percent inflation this summer as bottlenecks have appeared after three years of 8 percent growth.

Belatedly, India’s roads and ports are improving. Just four years ago, Sona Koyo Steering Systems, an auto parts manufacturer, incurred hefty financing costs to keep a month’s inventory on hand in case deliveries were delayed. Now its factory in Gurgaon makes six deliveries a day to a nearby Maruti car assembly plant; the eight-mile drive takes an hour or more because of traffic jams, but the deliveries get through.

“I’m not going to deny infrastructure is bad,” said Surinder Kapur, Sona’s chairman and managing director. “But a lot of our vendors are around us, a lot of our customers are close to us.”

India is also starting to address chronic power shortages. But it is still a serious problem in northern India, where Mr. Kapur has his steering systems factory. He receives electricity from the national grid just seven or eight hours a day. So the factory has three enormous diesel generators, one bigger than a typical Manhattan living room, operating at four times what an industrial user in the United States usually pays.

Despite such obstacles, India’s manufacturing sector appears poised for further growth. In a country where the national symbol has shifted from government bureaucrats at aging desks to call center operators in cubicles, it looks as if the next icon will be the laptop-toting engineer on a factory floor.

“The old philosophy was, ‘I should work in an office, come in at 10 and leave at 4,’ ” said Nitin Kulkarni, 35, an engineer at the Hazira steel mill. But in recent years, he added, “there has been a revolution.”


4. Gaining Power, Losing Values – by PANKAJ MISHRA/NY Times

PRESIDENT Hu Jintao of China, who arrived in New Delhi on Monday to consolidate ties between the world’s two fastest rising economic powers, can feel comfortable that at least one protester won’t be troubling him.

When China’s prime minister at the time, Zhu Rongji, visited Mumbai in January 2002, Tenzin Tsundue, a young Tibetan, scaled 14 floors of scaffolding to unfurl “Free Tibet” banners outside his five-star hotel. Last year in Bangalore, Mr. Tsundue appeared on the roof of a 200-foot tower just above the building where Wen Jiabao, Mr. Zhu’s successor as prime minister, was meeting Indian scientists. From there he threw pamphlets at bystanders, shouting, “Wen Jiabao, you cannot silence us.”

This year, however, Mr. Tsundue has been silenced, although not by Chinese leaders. Invoking a penal code established by India’s colonial rulers, the Indian police have imposed a travel ban on Mr. Tsundue. He is not allowed outside Dharamsala, the Himalayan town where the Dalai Lama and many of India’s nearly 100,000 Tibetan refugees live. This week he is under constant surveillance by armed police officers.

Pre-emptive arrests of and even police assaults on Tibetan protesters are not new in India. But the government’s gagging of a well-known writer and activist like Mr. Tsundue raises questions about the moral values that India and China, the emerging superpowers of the new century, are likely to embody.

Both countries have mollycoddled Myanmar’s extraordinarily repressive military rulers, which hints that neither is likely to let the human rights of the Burmese get in the way of trade. China’s growing relationship with Sudan suggests that even genocide may not interfere with the supply of raw materials to China’s perennially needy manufacturers.

Upholding business interests above all in its foreign policy, as in its domestic policy, China at least appears to be internally consistent. The gap between image and reality is greater in the case of India, which claims to be the world’s largest democracy, with an educated middle class and a free news media.

And yet fundamental rights to clean water, food and work remain empty abstractions to hundreds of millions of Indians, whose plight rarely impinges on the news media’s obsession with celebrity and consumption. The country’s culture of greed partly explains why a woman is killed by her husband or in-laws every 77 minutes for failing to bring sufficient dowry.

Pundits in India deplore, often gleefully, American excesses in Guantánamo Bay and Abu Ghraib, and the inadequacies of the American news media in the run-up to the war in Iraq. But the Indian news media has yet to carry a single detailed report on the torture and extrajudicial killing of hundreds of civilians in Kashmir over the last decade.

Chinese nationalism is a tamed beast, occasionally unleashed by the Communist leadership to stir up mass protests against Japan and America. But in India, religious nationalists have run wild in the last 10 years, conducting nuclear tests, menacing minorities and threatening Pakistan with all-out war. In 2002, members of a Hindu nationalist government in the state of Gujarat, in western India, instigated and often organized the killing of as many as 1,600 Muslims.

Free markets and regular elections alone do not make a civil society. There remains the task of creating and strengthening institutions — universities, news media, human rights groups — that can focus public attention on the fate of the powerless and oppressed and spread ideas of human dignity, compassion and generosity.

This task is never perfectly realized. But at least in the United States, many liberal institutions have vigorously pursued such goals, even as successive governments have made their pacts with various devils around the world.

For Western nations to criticize Chinese investments in Africa or Indian overtures to Myanmar may seem hypocritical in light of the West’s history of ruthlessly exploiting Africa while appeasing its brutal dictators. But, as La Rochefoucauld pointed out, hypocrisy is the tribute vice pays to virtue.

However tainted in practice, the idea of virtue cannot be discarded in policymaking. By treating it with contempt, the ruling elites of India and China may soon make the world nostalgic for the days when America claimed, deeply hypocritically, its moral leadership.

(Pankaj Mishra is the author of “Temptations of the West: How to Be Modern in India, Pakistan, Tibet and Beyond.)


5. The myth of Chindia
Joined by name but not by nature
From Economist.com

NOT so long ago “hyphenation” was the bane of Indian diplomats' lives. They seethed at the condescension with which the West would talk most easily of their country as one-half of a putative Indo-Pakistani nuclear war. Now that the hyphen has moved eastwards they are much happier. Better to be spliced with China in a notional powerhouse comprising one-third of the world’s people and much of its economic dynamism.

The relationship is starting to transcend hyphenation, at least in name. Analysts talk of “Chindia”. Jairam Ramesh, a junior minister in India’s government, and one of its sharpest thinkers, has written a book on the subject. But the reality lags. Closer integration of China and India is not inevitable, nor is it even certain that both sides should want it.

This week China’s president, Hu Jintao, has been visiting India and talking up the prospects for partnership. Bilateral trade, tiny a few years ago, is likely to reach $20 billion in 2006. India's prime minister, Manmohan Singh, says he wants to see it double again by 2010.

The appealing notion here is that India and China have complementary economies. China, through its burgeoning factories, is the world’s workshop. India, with its fast-growing IT and outsourcing firms, is becoming the world's back office. With Chinese hardware providing the orchestra and Indian software writing the score, surely they can make beautiful music together?

Perhaps. Chinese manufactured goods are appearing in ever-greater numbers in shops in India, as they are everywhere else. Indian software firms are expanding fast into China.

He hopes you can be friends

But Mr Singh does not want India to cede the global market in labour-intensive manufacturing to China. On the contrary, the prime minister advocates a “Chinese model” for India too. Services alone cannot generate the new jobs that India needs—some 70m of them in the next five years. That means building lots more factories and selling lots more goods.

India’s IT firms, for their part, are drawn to China less for its domestic market, which gives them relatively little business, and more by the desire to offer global delivery to their multinational clients. They fear, too, that China may be only a few years behind them in producing its own legions of exportable software engineers.

The current complementarity in Chindian economic ties, such as it is, looks rather old-fashioned, even colonial. India exports raw materials to China, especially iron ore, and imports cheap Chinese manufactures in exchange.

In future, fierce competition is more likely than closer co-operation. Efforts to join forces in a global search for energy security are unlikely to overcome deeply ingrained Indian suspicions of China. The mistrust dates back to India’s humiliating defeat in the India-China war of 1962, and is fed by China's ties to Pakistan. It still impedes trade and investment. Chinese firms find it hard to secure visas for their staff in India, and are excluded from some projects, such as running ports.

China can get twitchy too, especially over border issues. Last week its ambassador in Delhi gave a crude reminder that the hostilities of 40 years ago have been set aside, not resolved. He reasserted bluntly China’s claim to the Indian state of Arunachal Pradesh, which started the 1962 war. It was an odd move to make on the eve of Mr Hu’s visit, supposedly the climax of a “year of friendship”.

The American Senate recently approved a deal that may end India’s spell in nuclear purgatory: it will forgive India, in effect, for having developed a nuclear bomb without signing the international non-proliferation treary. That should give China even more of an incentive to treat India politely. It needs to ensure that India will not take America's side if relations between America and China deteriorate.

Indians are always quick to contrast China’s single-minded pursuit of its own interests with their own messy democratic floundering. But in China's dealings with India it is not clear that either side knows yet where its long-term interests lie.


6. College Education Without Job Prospects -- by ANAND GIRIDHARADAS/NY Times

MUMBAI — The job market for Indian college graduates is split sharply in two. With a robust handshake, a placeless accent and a confident walk, you can get a $300-a-month job with Citibank or Microsoft . With a limp handshake and a thick accent, you might peddle credit cards door to door for $2 a day.

India was once divided chiefly by caste. Today, new criteria are creating a different divide: skills. Those with marketable skills are sought by a new economy of call centers and software houses; those without are ensnared in old, drudgelike jobs.

Unlike birthright, which determines caste, the skills in question are teachable: the ability to communicate crisply in clear English, to work with teams and deliver presentations, to use search engines like Google , to tear apart theories rather than memorize them.

But the chance to learn such skills is still a prerogative reserved, for the most part, for the modern equivalent of India’s upper castes — the few thousand students who graduate each year from academies like the Indian Institutes of Management and the Indian Institutes of Technology. Their alumni, mostly engineers, walk the hallways of Wall Street and Silicon Valley and are stewards for some of the largest companies.

In the shadow of those marquee institutions, most of the 11 million students in India’s 18,000 colleges and universities receive starkly inferior training, heavy on obedience and light on useful job skills.

Students, executives and educators say this two-tier education system is locking millions of people into the bottom berths of the economy, depriving the country of talent and students of the chance to improve their lot. For those who succeed, what counts is the right skills.

“It’s almost literally a matter of life and death for them,” said Kiran Karnik, president of the National Association of Software and Services Companies, a trade body that represents many leading employers. “The same person from the same institution with the same grades, but not having these skills, will either not get employed at all or will probably get a job in a shop or something.”

India is that rare country where it seems to get harder to find a job the more educated you are. In the 2001 census, college graduates had higher unemployment — 17 percent — than middle or high school graduates.

But as graduates complain about a lack of jobs, companies across India see a lack of skilled applicants. The contradiction is explained, experts say, by the poor quality of undergraduate education. India’s thousands of colleges are swallowing millions of new students every year, only to turn out degree holders whom no one wants to hire.

A study published by the software trade group last year concluded that only 10 percent of graduates with nonspecialized degrees were considered employable by leading companies, compared with 25 percent of engineers.

Pratap Bhanu Mehta, a former Harvard professor who recently resigned in frustration from the National Knowledge Commission, which advises the Indian government on overhauling the education system, said, “The real crisis for me is the place where 70 percent of your graduates are students who do basic science, bachelor of arts and bachelor of commerce.”

Bijal Vora, a commerce student at Hinduja College here in Mumbai, formerly Bombay, would welcome a redesign of the system. “We have not done this to become salespeople,” she said.

Hinduja is in one of India’s richest enclaves, but it is a second-tier, little-known school, and so it exemplifies a middling college experience — neither the best nor the worst.

Between lectures there, dozens of students swarmed around a reporter to complain about their education.

“What the market wants and what the school provides are totally different,” a commerce student, Sohail Kutchi, said.

Kinjal Bhuptani, a final-year student who expects next year to make $2 to $4 a day hawking credit cards, was dejected. “The opportunities we get at this stage are sad,” she said. “We might as well not have studied.”

The students said they were not learning to communicate effectively, even as the essential job skills evolve from pushing papers to answering phones to making presentations. They said their courses offered few chances to work in groups or hold discussions. And in this supposedly English-language college, the professors often used bad grammar and spoke in thick accents.

Across India, half of graduates are not taught in English, effectively barring them from the high-end labor market, said Mohandas Pai, director of human resources at Infosys , a leading outsourcing company. And where English is taught, it is not necessarily the kind employers need.

“Depreciation nikal diya, assets ko less ho gaya.” So went a lesson being given by the accounting professor at Dahanukar College in suburban Mumbai — removing depreciation reduces assets — an example of the widespread use in supposedly English-language colleges of Hinglish, an amalgam of Hindi and English.

A lack of communications skills may be the most obvious shortcoming, but it is not the only one. A deeper problem, specialists say, is a classroom environment that treats students like children even if they are in their mid-20’s. Teaching emphasizes silent note-taking and discipline at the expense of analysis and debate.

“Out! Out! Close the door! Close the door!” a management professor barked at a student who entered his classroom at Hinduja two minutes late. Soon after his departure, the door cracked open again, and the student asked if he could at least take his bag.

The reply: “Out! Out! Who said you could stand here?” A second student, caught whispering, was asked to stand up and cease taking notes.

Then there is the matter of teaching style. At Hinduja and Dahanukar, the mode of instruction at times evokes a re-education camp of some sort. In a marketing class at Hinduja, the professor paced in front, then pressed her chalk to the board.

She drew a tree diagram dividing it into indirect and direct marketing, then divided those into components, and those further into subcomponents. As students frantically took notes, she kept going, and before long she was teaching them that each region of Mumbai would have its own marketing representative: eastern Mumbai, western Mumbai, central Mumbai. There was no discussion, and there was little to discuss.

The professor then led the students in a chant: “What is span of management?”

“Span of management is the number of subordinates a supervisor will manage.” She chanted the refrain four times.

Rote memorization is rife at Indian colleges because students continue to be judged almost solely by exam results. There is scant incentive to widen their horizons — to read books, found clubs or stage plays.

That is not good news for Indian companies, which are hiring these days. Infosys will take on 25,000 people this year from a pool of 1.5 million applicants. The ranks of the rejected are likely to include smart graduates who lack qualities like poise, articulateness and global exposure, Mr. Pai of Infosys said.

And even if rigid teaching ways are changed, experts say the rigidity of Indian households will continue.

“When we are raising our children,” said Sam Pitroda, a Chicago-based entrepreneur who is chairman of the Knowledge Commission and was an adviser to Prime Minister Rajiv Gandhi in the 1980s, “we constantly tell them: ‘Don’t do this, don’t do that. Stand here, stand there.’ It creates a feeling that if there is a boundary, you don’t cross it. You create boxes around people when we need people thinking outside the box.”


7. Is India Emerging as France of Asia?
Warming Sino-Indian relationship tells the US that India is not an unconditional ally
By Alyssa Ayres/YaleGlobal

(Editors Note: The current India visit by China’s President Hu Jintao to celebrate fifty years of relationship between the two countries will be watched closely by India’s newest friend the United States. The two Asian giants have shaken off their frosty relations since their 1962 border war and in the past five years their economic ties have blossomed. But so has the relations between the US and India, shorn of the Cold War baggage and finding convergence of economic and strategic interests. Most importantly, the driving force in the new relationship has been a shift in American perception of China from a strategic partner to a strategic rival. In view of this strategic change, the US may be wary of the Sino-Indian warmth. However, India specialist, Alyssa Ayres argues that it would be a mistake to think of India as a hedge against Chinese dominance because that may not fully translate into reality. Given India’s interest in growing its economy in cooperation with fast-growing China and its historic wariness of US foreign policy and deep differences on Pakistan, the US would be wise to see India as an ally like France which shares its values, but often hews its own course. – YaleGlobal)

PHILADELPHIA: Diplomats and analysts will be watching closely as Chinese President Hu Jintao visits India this week, the first by a Chinese head of state to India in a decade. Few capitals have as much interest in the outcome as Washington. However, those in the US who see India simply as a hedge against China will likely be disappointed—for the two Asian giants have also taken giant strides toward better ties. The US may be better off viewing India as an ally like France—one which shares many values with Americans, but pursues its own course.

This week’s India visit will be a reminder of an important fact to those who focus exclusively on the US-India relationship as an alliance of democracies with shared values and ever closer economic and cultural ties: India and China are enjoying a honeymoon of their own. Long forgotten are the lows of 1998, when then Indian Defense Minister George Fernandes famously called China the country’s “number one threat” and accused it of encircling India with its missiles, navy, and allies Pakistan and Myanmar. For its part, China has modulated its position on Kashmir. Ongoing border talks have led to Chinese recognition of the Himalayan state of Sikkim, absorbed into India in 1975, as part of India—although differences continue on Arunachal Pradesh, an Indian state which China claims. But overall the language describing this relationship has taken a 180-degree turn. After Chinese Premier Wen Jiabao’s 2005 visit to India, the two countries heralded a “strategic and cooperative partnership.”

Underscoring this change is a new robustness in economic ties. As recently as 2001, two-way trade between India and China was a paltry $3.6 billion, but it nearly doubled in 2004, rising 79 percent from the previous year to $13.6 billion dollars. By 2005 the figure reached $18.7 billion, and is expected to top $20 billion in 2006. The India-China Joint Study Group of Comprehensive Trade and Economic Cooperation predicts enormous growth potential because each country’s respective share of the other’s imports is still so small—both under 5%. And both countries anticipate growth in services trade, the sector in which their bilateral trade has grown faster than the sector has in each country. While some Indian commentators raise concerns about Chinese economic influence--underscored by the recent disqualification of Chinese firms from a mobile tender—this remains a mere blip overridden by economic pragmatism. Today’s talks, for example, between Hu Jintao and Indian Prime Minister Manmohan Singh produced a commitment to double trade from current levels to $40 billion by 2010.

In the past year, India and China have forged a new alliance in the energy sector—one in which both India and China require security for exponentially growing domestic demands. Onetime rivals for control of fields in Angola, Nigeria, Kazakhstan, and Ecuador, India and China agreed in January 2006 to cooperate on overseas acquisitions. The agreement grew out of their co-ownership of a Sudanese field and their cooperative bid for fields in Syria. These joint pursuits are knitting together the interests of Asian state-owned oil and gas behemoths ONGC in India, and CNPC and CNOOC in China. With the rapid growth of these economic ties in areas critical to both countries’ development, the India-China relationship has set off on a completely new path. It is this new course that the US, concerned about a worldwide scramble for energy resources, would be watching carefully.

At the same time, India and the US are drawing unmistakably closer - from joint military exercises to an American passion for yoga. A US that once sanctioned India for its nuclear tests now proposes close cooperation on civil nuclear energy. An India that famously evicted Coca-Cola and IBM in the 1970s has become a magnet for companies like GE and Microsoft.

This growing Indo-US warmth marks a complete reversal of past decades. Nominally nonaligned India had a quasi-alliance relationship with the Soviet Union. The US, of course, found a compliant partner against Soviet Communism in Pakistan. India and the US clashed on matters ranging from nonproliferation to human rights to the Nixon administration’s tilt toward Pakistan during the 1971 Bangladesh war. With India’s economy among the most autarkic in Asia, the economic relationship was equally frigid.

However, following India’s nuclear tests in 1998, US President Bill Clinton moved to craft a closer US-India relationship, highlighted by a successful presidential visit in 2000. The Bush administration has taken the relationship further. The president’s fascination with the scale and diversity of India’s democracy is well known. A willingness to rethink international treaties—including those relating to nonproliferation—has also helped clear the way for unprecedented cooperation. India’s opening of its economy has reinforced these trends. The scorching growth of India’s software and IT-enabled services sector has given it a significant role in global business. From a $150 million industry in the early 1990s, the sector now stands to exceed $36 billion in revenues in 2006, two-thirds from exports. India’s knowledge work has linked the country to American business in vital ways. In 2006 it became the fastest growing mobile phone market in the world, and its automobile sector is one of the fastest growing, too.

Perhaps the driving force in the new US-India relationship has been a shift in the perception of China in Washington, its metamorphosis from a strategic partner to a strategic rival. Not surprisingly, the new Indo-US strategic partnership, in particular the civil nuclear deal, has energized debate in the United States about what the nation will “get” in return.

The question becomes more acute when seen against the blossoming China-India economic relationship emerging over the last five years. Of course, a strong trade relationship may not indicate full agreement on security issues—the US-China relationship an apt example—but the great changes taking place within Asia as its two largest powers grow faster, and come closer together, mean that nothing can be assumed. And India’s historic wariness of US foreign policy and deep differences on Pakistan remain. Indeed, the fact that even in a phase of warming ties, the US still cannot satisfy Indian goals on Pakistan keeps at least one major roadblock in place. India-China cooperation on energy security points to others: their joint bid for Syrian fields, for example, was not welcomed in Washington. But most importantly, the emergence of a cooperative aspect to a once purely competitive relationship between the two Asian giants creates new incentives for India. So as India and the US overcome years of estrangement to craft a strategic partnership, it’s worth asking what that partnership will really look like. At the moment a deep alliance, with an extensive convergence of security interests similar to US ties with Japan and South Korea, appears unlikely.

In the context of the many rapid changes taking place in Asia, Americans should step back to recognize that a good US-India relationship will not be one where India complies with every US policy goal. Rather, the tango between Washington and New Delhi will resemble that of another problematic ally, France, a relationship of robust cooperation marked by disagreements and ideological bickering. Understanding, and planning for this kind of relationship will create expectations that can be met successfully.

(Alyssa Ayres is deputy director of the Center for the Advanced Study of India at the University of Pennsylvania and managing editor of the journal India Review. She will be an International Affairs Fellow of the Council on Foreign Relations in 2007.)


8. BETWEEN ANARCHY AND IMPERIALISM
Indian devolution
FEDERAL REFORM -- India is carrying out what may be the world’s greatest experiment in decentralisation. It offers hope for Kashmir, but threatens economic disputes between central government and the federal states.
By Sten Widmalm (Political scientist, Uppsala University) Translated by Phil Holmes

Kashmir is the place in India where federal ambitions have been at their highest, but where political reality has been most marked by central control. According to political scientist Sverker Gustavsson, the aim of federalism is “a working compromise between unity and diversity.” In Jammu & Kashmir (which the federal state is more properly known as in India) this compromise has never been realised. Since Indian independence in 1947 four international wars have been fought there and, since 1989, between 70,000 and 100,000 people have lost their lives in internal clashes in the area.
Embattled Kashmir forms a contrast to the federal ambitions that have actually borne fruit in India. One important reason why the country has held together for almost 60 years is that the Indian government, despite tendencies to central control, has often been to prepared to negotiate with the governments of the federal states. For example, the borders of the federal states were redrawn in the 1950s to take into account linguistic boundaries, and the central government retreated at one time from the demand to make Hindi the national language (which powerful regional nationalists in southern India opposed with force).
For this reason it is not very easy to put together one picture of the model which governs India. A common view is that India, Bharat , like many of the central figures in the country’s mythology, has a dual personality consisting of opposites—central control and federation. But one may nevertheless claim that the trend is that centralism in India now increasingly has to give way to the strains of federalism.

THE INDIAN CONSTITUTION speaks only of “the union,” and the word “federalism” does not occur. On the other hand, the constitution is of such a kind that it can be called federal. In New Delhi power is shared between the government, the supreme court and the upper and lower houses of Parliament. What is more the constitution ensures that power is also shared between the central government and the 28 states which have their own parliaments and governments. 1In practice, each state government is headed by a chief minister, but parallel to the minister there is also a governor appointed by central government. According to the constitution, the central government, or formally the president, has under extraordinary circumstances the possibility of introducing direct rule through the governor. This so-called President’s Rule abrogates the federal components and suspends the powers of the head of government of the federal state and the parliament of the state. Since independence, an impertinent attitude towards the central government has far too often been punished by this constitutional caning.
There are several factors threatening the independence of the federal states vis-à-vis the central government. The federal states have normally enjoyed a considerable degree of autonomy. They can make their own rules, certain kinds of laws and regulations, and determine their own income. The constitution provides the federal states with considerable responsibility for developing human capital and infrastructure, but those taxes they are able to levy do not seem to suffice. The problem is scarcely unique to India. The gap is bridged with the aid of an old and very complex system of transfer of funds, by which resources are distributed from the central government to the federal states. This system functions abysmally; it has in different ways contributed to uneven distribution and has impeded India's development for decades.
In the long term, the system of transfer of funds is also a threat to growth in the country. Several federal states exploit the situation in order to reduce local taxation, which is popular and can increase the chances of re-election. The budget is deliberately exceeded, and there are a few inducements for the federal states to achieve balanced finances. This has, for example, resulted in the increase in the debt of the federal states as a proportion of GDP from 21 per cent to 35 per cent during the period 1998 to 2003. But nor is this solely caused by the governments of the federal states. The central government has to some extent only itself to blame—it hangs on to a large number of areas of taxation, but nevertheless gives the federal states responsibility for more than is covered by their income.
The greatest problem is not necessarily the budget deficit in itself, but that the system is not transparent, and there is a lack of clear principles and aims. Often it has been likened to a financial black hole which both breeds and promotes corruption. For political reasons it is difficult to keep the governing elite away from the gravy train of the transfer system. In brief, the present system is a drag not only on growth but also on India’s federal potential.

INDIA HAS FOR A LONG TIME been burdened by heavy centralist shackles which are difficult to remove. This has arisen out of a combination of ideological motives and the political turbulence of the 1960s and 70s. After independence, India’s constitution was formulated with inspiration from, among others, those of the USA, Ireland and France. The administration was developed on the model the British had left behind. But inspiration was also found in the Soviet Union.
The aim was that the resources of the country would the distributed evenly—but this at the same time built on a model for the state apparatus in which all power gravitated to New Delhi. Even today, despite a comprehensive liberalisation programme, the bureaucracy is characterised by ideas of central control. Five-year plans are still prepared for the country’s economy.
It was, however, not only those illusions harboured by Nehru on a short visit to Moscow in 1927 which caused India to drift into the path of central control. Realistic political factors came to dominate, when Indira Gandhi, at the end of the 1960s, had to take over a divided Congress Party. No one believed that she would survive when the organisational basis of the party went its own way under the designation Congress (O) . Indira had instead to lead something that can best be described as a popular or mass movement. But she became incredibly popular with her slogan about exterminating poverty— garibi hatao —and took 45 per cent of the seats in the parliamentary elections of 1971. Congress (O) and its crestfallen leaders withered away in the wings. But the absence of strong instruments of government through the party organisation, combined with a great distrust of federal state politicians, meant that Indira tried to govern most things from the centre. The President’s Rule clause was misused more and more often. The leader who did not obey was quite simply deposed. The culmination of direct rule came in 1975. Protests and charges of corruption were directed at Indira. She proclaimed a state of emergency that was to last for 18 months, when rights and privileges were abrogated throughout the country. The backlash was catastrophic for her and the party in the following election in 1977. Congress (I) , “I” for Indira, lost, and the new government immediately appointed a commission with the aim of investigating how the most centralist tendencies in India could be neutralised. The results were presented in 1978 in The Report of the Committee on Panchayati Raj Institutions (also known as The Ashok Mehta Committee after the chair of the commission) and this was to be a turning point after which the ideas of federalism were given another chance.

THE 1978 REPORT proposed a revitalisation of democratic institutions at and below the level of the federal state, and that India’s old panchayat system would constitute the basis. From the period of the Vedic writings (approx. 1400-400 BC) South Asia’s villages have been governed by sabhas , a kind of assembly, which later came to be called panchayats , which is the term for a council consisting of five individuals. The modern administrative government of India had divided up the federal states into districts, and each district in tehsils or taluks and blocks . But the governing bodies at this level were not democratic. Now, however, the grass roots influence was to increase through the panchayat system. The Report of the Committee on Panchayati Raj Institutions and a number of experiments in increased self-government paved the way for considerable change to the Indian constitution in the mid 1990s. In 1993 two amendments to the constitution came into force: the Constitution (73rd amendment) Act 1992, which regulates popularly elected bodes and the administration of the countryside and the Constitution (74th amendment) Act 1992, which regulates the towns.
The amendments meant that below federal state level, councils and decision-making bodies were established at district, block and village level—a parallel democratic structure to the administration. Nowadays the administrative bodies have to comprise popularly elected representatives. Each federal state must ensure that regular elections are held to all three levels of the panchayat system, and a third of those elected must be women. This system is currently being carried through in India. It is therefore not merely one of the world’s greatest decentralisation reforms, but possibly also the world’s most comprehensive reform based on quotas for women.
But there is no point in pretending that the reforms are going like clockwork. The federal state governments have to struggle with everything from constitutional to practical problems. Certain states play in a division of their own, in which the political elite does not seem to have heard about holding elections at the panchayat level. Others are making serious attempts to carry out the democratic reforms, but it is not always proving to be so easy. The central government in New Delhi and the state governments find it difficult to abandon entrenched positions.
The new rules mean a substantially increased responsibility for the panchayat bodies, but no substantially increased rights to taxation and control over income.
Thus the pattern of the relationship between central and federal state government repeats itself. This infuriates the more ambitious state leaders, as for example Thomas Isaac from Kerala. He is the finance minister in their federal state’s sitting communist government and has been the driving force behind the number of major development programmes, in which support is given to local operators in order to develop agricultural methods, to build roads, schools and health care clinics.
At a conference on Indian federalism in August he made quite a noise, claiming emphatically that all the incentives for a balanced budget are counteracted by central government’s system for transferring funds. He had previously given his support to a new system in which the central government requires that federal states balance their budgets—a kind of fiscal decentralisation as he calls it. But soon Isaac discovered how the system restricts the scope for new investments on the part of the federal state and the opportunities for financing reforms at local level. To make matters worse, the central government cut back state contributions to Kerala, because, according to the statistics, the population there are healthier than elsewhere in the country. Isaac considers the scope for political action and the opportunity for investing in social reforms have slipped through his fingers. Now he has done a U-turn, and he is aiming at a considerable budget deficit for the federal state, even if this risks driving up inflation.
But despite these challenges we can also see beneficial results from the reforms. Over the last seven years I have been working on a project to evaluate the Panchayati Raj-reforms in two very different federal states: Madhya Pradesh, in the heart of India, and Kerala in the South West. 2Madhya Pradesh has a for long time been poor and wretched, but during the 1990s the state government invested considerable resources in educational reforms with the help of the Panchayati Raj systems institutions. Kerala has for a long time been famous as the best developed state, if one focuses on life expectancy. It also has the most literate population, and infant mortality is low. Hindus, Muslims and Christians live together without any great conflicts, and the state has succeeded best in achieving equality between the sexes. It was here that Isaac and his colleagues invested in a number of different development objects during the 1990s with the help of the Panchayati Raj system.
An interesting result of the study is that a good third of the population in both of these states considers that they have gained greater political influence as a result of the decentralisation reforms as well as greater autonomy. In Kerala this was the case for men and women to roughly the same extent, while the men in impoverished Madhya Pradesh considered that they had benefited more from the changes than women. In both states the participants in our study thought that the distance between those in power and the citizens had diminished. So, despite the comprehensive socio-economic differences between the states, the decentralisation reforms have achieved relative success. What is more, a larger study, involving several federal states in India and conducted by Esther Duflo and Raghabendra Chattopadhyay, shows that those panchayats with a woman as chair or president provide services prioritised by women to a greater extent than men. 3In most other democracies in the world, in particular in the West, countries are struggling with a democratic deficit, but in India the principles of decentralisation and federalism have succeeded in reducing the democratic deficit. Democracy in India is now developing from the bottom-up, and this is a healthy sign from the perspective of the federalist, and presumably unique in a global perspective. 4

A FURTHER MAJOR spoke in the wheel of a more rapid development and intensification of Indian federalism is the number of separatist conflicts, which have plagued the country for a long time and which have together claimed more than 100,000 lives. During the 1980s it was the conflict in the Punjab, and for the last 18 years it has been the conflict in the federal state of Jammu & Kashmir. Even in the north-eastern states there is still seething discontent which now and then gives rise to serious confrontations between the army, security forces and separatists. These conflicts, in combination with tense relations with Pakistan, have meant that the central government in Delhi has not wanted to hand over power to the federal states. The unwillingness to share power is a result of several factors, but an important aspect is quite simply that they do not dare trust the political authorities in the different regions—they consider that greater autonomy would play into the hands of the enemies of the union.
But there are bright spots even here. The Punjab conflict has not been a serious problem for many years. The relationship with Pakistan is now calmer than for a long time. In August I visited the Foreign Ministry in Islamabad. Several senior officials looked surprisingly positively on the opportunities of continuing the relaxation of tension vis-à-vis India. This, despite the fact that the Prime Minister of India had already pointed to groups in Pakistan as being responsible for the “7/11 attacks” in Mumbai. And in Jammu & Kashmir it is calmer now than since the outbreak of the conflict proper in 1989.
In August the Institute of Social Sciences in New Delhi organised India’s largest powwow for a long time focusing on federalism in Jammu & Kashmir. Against considerable odds the conference on Indian federalism at work was held in August this year with a mixed attendance of several hundred leading politicians, bureaucrats, jurists and academics. The participants came from India, Pakistan, South Africa, the USA and Sweden.
We are in the summer capital of Srinagar, in the middle of the beautiful Kashmir Valley at the heart of the Kashmiri separatist movement. Here long debates are going on about federalism and the future status of Kashmir. Almost everyone I speak to (and who do not advocate that Kashmir should belong to Pakistan, or that Kashmir should form an independent state) see a realisation of the ideas of federalism as a possible solution to the conflict. But federalism has to be carried through in a process that begins in Srinagar.
It is Saturday evening and the conference is beginning to draw to an end. I hitch a lift to the hotel with one of the conference participants who rides a 500 cc Royal Enfield—a grandiloquent motorcycle originally designed in Britain, but since the 1950s manufactured in India. It is a mild and starlit summer evening, the moon reflecting in Dal Lake to our right, and it is easy to forget the Kashmir conflict as we putter off with the help of the friendly four-stroke engine. The Kashmir conflict is still going on—“incidents” and clashes occur every day. But, nevertheless the violence is now at a much lower level, if I compare it with the visits I made in the 1990s. The last time I was in Srinagar and returned home “late”—i.e. after nine o’clock in the evening, it was with the help of a rickshaw after a visit to Shujaat Bukhari. Then one had to be careful of being stopped along the road, whether it was by the army or by separatists. At the conference I met Shujaat again—he has abandoned his typewriter at one of the local newspapers in Srinagar and now writes for the nationwide and well-respected newspaper The Hindu . He has written more than most people about the Kashmir conflict, and has on the number of occasions risked his life. On one occasion, not so long ago, he was kidnapped by separatists. He was bundled into a rickshaw by two men who drove him to a place outside the city. Shujaat was thrown out and kicked. One of the men levelled a pistol at his head and pulled the trigger. The weapon clicked and the man fled the scene. Nevertheless, Shujaat continues to report, and he always keeps a cool head. He confirms my impressions: despite the fact that there is violence almost every day in the state, it has nevertheless diminished.

THE STUDENTS FROM the university still include many hot heads. It is perhaps among the young that discontent with the situation in Jammu & Kashmir is greatest—many of them want an independent state. If one goes down towards Lal Chowk, Red Square, and the bazaars, then there is a different atmosphere. People look you in the eyes, and here and there people shout out, wondering who you are and where you are from. This is not what it was like when the conflict was at its height in the 90s. Then people passed quickly by on the street with lowered gaze. There were soldiers everywhere with their helmets always on, and everyone was nervous. Now you see soldiers hanging about, without their helmets, and instead of fingering their rifles nervously, some of them take time to smoke a cigarette leaning for a while against a wall. The sun is shining in the square, there is brisk trading and, if what it says in the papers is correct, no one died in the Kashmir conflict on this Saturday. I think people here have had a taste of more normal life, and if the Indian government plays its cards right, shows restraint in its military interventions, then the new situation in Kashmir will create the prerequisites for dialogue and a continued de-escalation of the violence.
There is still no simple solution to the Kashmir question which can be put down in print—but there are prerequisites for peaceful solutions. For India, real federalism may be the answer. Because Kashmir contains a tragic paradox. If we can agree to call India a federal state, then it is an asymmetrical construction. The federal state Jammu & Kashmir has a special status in the constitution. Article 370 of the Indian constitution has since the 1950s formally given the federal state of Jammu & Kashmir a higher degree of autonomy than other federal states.
But it is also here that de facto democracy and autonomy has existed, if one compare it with the whole of India. Kashmir is the clearest example of how India has been, to say the least, unwilling or tentative in incorporating the spirit of the constitution in practice.
But despite everything the Indian nation and its federal project putters on—not unlike an Enfield motorcycle–it builds on ideas imported from the West, but now they have taken on their own form. It develops on its own terms, and it is struggling through very difficult terrain—but still onwards.

Footnotes:
1. Apart from this there are six so-called Union Territories which have a less independent relationship with central government.
2. The project has been financed by the Faculty of Social Science at Uppsala University, Sarec (the Swedish International Development Corporation Agency’s department for research support) and by means of a research assistant post financed by the Swedish Research Council.
3. Esther Duflo and Raghabendra Chattopadhyay, “Women as Policy Makers: Evidence from a randomized policy experiment in India”, Econometrica , vol. 72, No. 5 (September, 2004) pp. 1409–1443.
4. In certain areas of the federalism debate, the circumstances in central and federal state government alone are treated. However, autonomy and self-government at a local level, under the federal states, can be just as important in order to understand a country's federal character. This has been discussed by political scientists Michael Burgess and Alain G. Gagnon and, focusing on Russia, by Mattias Sigfridsson.


9. The Anatomy of a Tiger
India High and Low
By P. SAINATH/Counterpunch

Your child will be served "food from many traditions including Indian, Continental, Mexican and Chinese. Meals are carefully planned by expert dieticians and only premium quality mineral water, juice and organically cultivated fruit, vegetables and eggs are served." That's from the website of one of New Delhi's fancier schools.

And who could resist the offer? Here's a school that will turn your kid into a global citizen who can dine with the best of them. Not into some clod who can't tell a pasta from pav bhaji .

Note the reassuring insertion of `organic' for those possessed of a social conscience. The jargon, at least, is from the right menu. Though I wonder if the dieticians are based at those Delhi five-star hotels that have actually catered meals for this kind of school for a while. The options are a bit more limited though, for the millions of Indian children who simply do not go to school at all. Or for those who do and still fail to get a decent mid-day meal. Quite a few grown ups would, however, gladly go back to school for the menus on offer in some of the capital's tonier institutions

Then there's the famous Mumbai school now in the news for creating a VVIP enclosure for the richest of parents at its annual celebrations. Given that the school is already an enclave of the privileged, this means cordoning off the super elite from the merely wealthy. (Is this brand segmentation?). How flush you are with funds will decide your place in the parental pecking order at the big school event.

For many children, there's no place to go at all. We have more children out of school and more people who cannot write or read than any other nation. There are more places of religious worship in India than schools. That is: 2.4 million places of worship to 2.1 million schools, colleges and all kinds of hospitals together. That's what an analysis of census household data by Dr. S.L. Rao threw up a while ago.

The school scene captures a larger truth. For the top five per cent of the population, the benchmarks are Europe, the United States, Japan, Australia. For the bottom 40 per cent, the benchmarks can be found in sub-Saharan Africa. Nearer home, Sri Lanka has done much better than us in schooling its children. Yet, as Jean Dreze writes: "many development experts in India would be surprised and interested to learn that private schools have been banned in Sri Lanka since the 1960s."

The crass inequality on display in our schools runs across all spheres of India's brave new world.

India now ranks 8th in the world in the number of billionaires. But it clocks in at 127th in human development. Our 27 billionaires, Forbes assures us, are the second richest in the planet. Their combined net worth is bettered only by those of the U.S. As for Japan, Australia, Europe, et al , our dads are richer than their dads.

It's a fine snapshot of an engineered inequality. It is worth knowing, too, that the other new entrant to the top ten hits of the billionaires list is Russia. An economy where more and more luxury cars sell each year, even as infant mortality and other indicators have worsened. The country saw lower birth rates and higher death rates in the 1990s. As more than one report points out, a boy born in Russia today is unlikely to cross the age of 60.

It's nice to know our billionaires are doing so well. And that our CEOs are earning more than they ever did. But an ILO report, "Labour & Social Trends in Asia and the Pacific 2006," suggests that others may not be having it so good. It says labor productivity in India shot up 84 per cent between 1990 and 2002. But real wages in manufacturing fell 22 per cent in the same period. It sees this as "an indication of deterioration in the incomes and livelihoods of workers. Despite the increasing efficiency of their labour."
Sure, we have this crouching tiger economy. But life expectancy here is less than it is in Bolivia, Honduras or Tajikistan. Things are booming. But per capita GDP, as the UNDP's Human Development Report shows us, ranks below that of Nicaragua, Indonesia or Guatemala. Our growth rate is the envy of many. But the rate of decline of child deaths actually slowed down in the 1990s. "India alone," points out the HDR, "accounts for 2.5 million child deaths" each year. Many of which need never occur if we put in just a modest effort to end them.

We're moving fast towards new landmarks. We could soon have 100,000 dollar millionaires. And India may have emerged the 15th biggest donor to the World Food Program last year. But since the time we began that journey we also added more newly hungry people than the rest of the world put together. It even saw a period when hunger rose in India and fell in Ethiopia. That's what UN FAO data show us. We also exported grain to Europe at prices we denied our own hungry people. And we subsidizrfed that grain - which went to feed cattle on that continent.

Farm incomes have collapsed. And poor rural families, as Dr. Utsa Patnaik has pointed out, are consuming 100 kg of grain less annually than they did just a few years ago. Meanwhile, National Sample Survey data tell us that the number of farm households in debt has nearly doubled in the years of the `reforms.' The government of India admits to a figure of more than 112,000 farm suicides in the past decade. Mostly driven by debt. In some districts, such suicides have almost doubled every year in the past five.

There's pride in the press over the rise of `medical tourism.' But more than a fifth of our own people no longer seek health care of any kind. They just can't afford it. We're proud of being the `fourth largest' cyber nation in the world. Never mind that the numbers this claim is based on are suspect. Never mind, too, that we'd tend to be the `fourth largest' anything in the world. Or that if we did have 50 million users, it would still not be something to email home about. The message, though, is clear: India Shining is back with bells on. What's crucial is that there is no attempt to address this inequality. We strive only to enhance it. In the framework we now have, almost each and every policy deepens the divide. Even the few good measures tend to be drowned in this.

Meanwhile, those urging us to adopt the `Chinese model' are not keeping up with events in that nation. China is not so gung ho any more about the `Shanghai' model. The country is also waking up to huge income gaps and social tensions. Large swathes of rural China have done pretty badly. Inequality is now a key issue. The Wall Street Journal found that courts in China had received 3.97 million petitions and complaints in 2003. Many of these linked to such tensions. The next year, the government issued a "Decree No. 1" aimed at tackling the rural-urban income gap. A year later, this had not worked.

By October last year, the Chinese were seeking to limit the damage. Interest-free farm loans were just one step. Free education for large numbers of rural students was another. There was an effort to bring back health care for sections of rural people who had lost it. Farmers will get more subsidies.

This year, China plans new laws that curb sweatshops. If brought in, these laws would also give labor unions powers they did not have before in foreign companies. Even before they are passed, foreign corporations are squealing in protest. This move of the Chinese is also driven by concerns of growing unrest and rising tensions. Whether all these measures work or not - for the divide is truly huge - there is at least a sense of something having gone wrong.

Here, we proceed with righteous cause. The inequality we so strongly pursue breeds its own mindset. It's the one we now entrench in our elite schools. The students of some of which are ferried back and forth in air-conditioned buses. Shangri La and sub-Saharan Africa (or worse) in one nation. Until the bills start coming in.

(P. Sainath is the rural affairs editor of The Hindu (where this piece initially ran) and the author of Everybody Loves a Good Drought. He can be reached at: psainath@vsnl.com)


10. India's Path to Greatness – by Martin Walker

When the U.S. Air Force sent its proud F-15 fighter pilots against the Indian Air Force in the Cope India war games two years ago, it received a shock. The American pilots found themselves technologically outmatched by nimbler warplanes; tactically outsmarted by the Indian mix of high, low, and converging attack waves; and outfought by the Indians, whose highly trained pilots average more than 180 flying hours a year—roughly the same as their U.S. and Israeli counterparts and slightly more than those of NATO allies such as France and Germany. U.S. general Hal Hornburg said that the results of the exercise, against Indian pilots flying Russian-built Sukhoi Su-30 and French Mirage 2000 fighters, were “a wake-up call.” According to testimony in a House Appropriations Defense Subcommittee hearing, the U.S. F-15s were defeated more than 90 percent of the time in direct combat exercises against the Indians.

But beyond the evidence of India’s military expertise and its possession of state-of-the-art fighter aircraft, the real significance of the Cope India war games is that they demonstrated the extent of the cooperation between the Indian and U.S. militaries. Their mountain troops now train together in the Himalayas and Alaska, and their special forces mount joint exercises in jungle and underwater warfare. Their aircraft carrier task forces have conducted exercises in the Indian Ocean, and joint antipiracy and antisubmarine drills are routine. Indian and U.S. forces are working together with an intimacy once reserved for the closest NATO allies. The goal—that the militaries of the two countries be able to operate in lockstep—would have been inconceivable in the Cold War era, when India, with its Soviet-supplied military, was seen as a virtual client of Moscow.

The foundation of this new relationship was laid before George W. Bush took office in the White House. In the spring of 1999, Bush, then governor of Texas, was briefed for the first time by the team of foreign-policy advisers that became known as the Vulcans, after the Roman god of fire and iron. Bush began with the frank admission that he knew little about foreign policy. The Vulcans, led by Condoleezza Rice—later to be his national security adviser and then secretary of state—delivered a broad-brush survey of the world, its problems, and its prospects, and recommended muscular American leadership in cool-headed pursuit of American interests. When the group finished, Bush had one question: What about India? Another Vulcan team member who was present, future ambassador to India Robert Blackwill, recalled asking Bush why he was so interested in India: “He immediately responded, ‘A billion people in a functioning democracy. Isn’t that something? Isn’t that something? ’”

Bush’s curiosity had been stirred by a number of Indian supporters living and prospering in Texas, including some businessmen who helped build the state’s high-tech corridor, dubbed Silicon Canyon. One of those businessmen was Durga Agrawal, born in Lakhanpur, a central Indian village without water or electricity, who had earned a master’s degree at the University of Houston and stayed on to found a highly successful company called Piping Technology & Products and to raise more than $100,000 for the Bush presidential campaign in the local Indian community. After Bush became president, Agrawal was invited to the White House as a guest at the banquet for visiting Indian prime minister Manmohan Singh, where Bush introduced him as “my good friend from Texas.”

Bush’s question to his Vulcans prompted Rice to include a highly significant paragraph in her January 2000 Foreign Affairs essay “Promoting the National Interest,” which was widely studied as the blueprint for a Bush administration foreign policy. She contended that China should be regarded as “a strategic competitor, not the ‘strategic partner’ the Clinton administration once called it,” and suggested that America should redirect its focus. The United States “should pay closer attention to India’s role in the regional balance. There is a strong tendency conceptually to connect India with Pakistan and to think only of Kashmir or the nuclear competition between the two states. But India is an element in China’s calculation, and it should be in America’s, too. India is not a great power yet, but it has the potential to emerge as one.”

The intervening September 11 terrorist attacks and the Iraq war perhaps explain why it took five years for the Bush administration to act formally on that calculus. But on a March 2005 visit to India, Rice told Prime Minister Singh that part of the United States’ foreign policy was to “help India become a major world power in the 21st century.” At a later briefing, U.S. ambassador to India David Mulford described the vision behind a broader strategic relationship with India that would foster cooperation on a number of fronts. “The U.S.-India relationship is based on our shared common values. We are multiethnic democracies committed to the rule of law and freedom of speech and religion,” Mulford said, adding that “there is no fundamental conflict or disagreement between the United States and India on any important regional or global issue.”

AJuly 2005 visit by Prime Minister Singh to Washington, and President Bush’s trip this year to New Delhi, along with detailed negotiations for nuclear, military, economic, and technological cooperation, have institutionalized that relationship. But, as former deputy secretary of state Strobe Talbott said of his own earlier path-breaking negotiations with foreign minister Jaswant Singh, “What took us so long?”

The short answer is the Cold War. American officials were uncomprehending and resentful of India’s determination to stay neutral as a founder and pillar of the Non-Aligned Movement. By contrast, Pakistan swiftly decided to become an American ally and to buy American weapons. In response, India bought Soviet weapons. Pakistan, with whom India has fought three wars since the two countries simultaneously became independent from Britain in 1947, was also a close ally of China, so the Sino-Soviet split gave Soviet diplomats a strong incentive to cement their ties with India, deepening American suspicions.

India’s explosion of a nuclear device (not a weapon, Indira Gandhi’s government insisted) in 1974 exposed India to various restrictions in obtaining nuclear supplies under the Nuclear Non-Proliferation Treaty, and to some other mildly punitive but symbolic U.S. legislation. After India’s full-scale nuclear weapons tests in 1998 (swiftly followed by rather less impressive tests by Pakistan), the Clinton administration sought engagement through the Talbott-Singh talks and Bill Clinton’s own highly successful visit to India. When Pakistan-backed militants crossed Kashmir’s mountains into the Indian-controlled area of Kargil, Clinton’s intervention prevented the incursion from escalating into a full-scale war. The Bush administration had to launch another panicked round of diplomacy in early 2002, after an attack on the Indian parliament by Kashmiri terrorists with apparent Pakistani connections. At one critical point, then–U.S. deputy secretary of state Richard Armitage asked his staff, “Who thinks they’re heading for nuclear war?” and everyone except for Armitage reportedly raised a hand. One senior British official who was involved recalls it as the nearest thing to nuclear war since the 1962 Cuban Missile Crisis.

Perhaps these brushes with disaster served as an awful warning to India. Or perhaps its successful market-style economic reforms in the 1990s, along with the palpable weakness of its old friends in Moscow, gave the country’s leaders the spur and the self-confidence to rethink India’s foreign policy. But there was a further goad: India’s nervousness at the rapid growth of its Asian neighbor, China, by whom it had been humiliated in a brief border war in 1962. In May 1998, at the time of India’s nuclear tests, Indian defense minister George Fernandes claimed that China was exploiting Pakistan, Burma, and Tibet in order to “encircle” India. “China has provided Pakistan with both missile as well as nuclear know-how,” Fernandes said, adding, “China has its nuclear weapons stockpiled in Tibet right along our borders.” He concluded that China was India’s most severe threat, and that while India had pledged “no first use” of nuclear weapons, the Indian nuclear arsenal would be targeted appropriately.

With Pakistan to the west and China to the north and east, India has long feared encirclement. Despite soothing diplomatic statements, China has sharpened these fears with an assertive new presence in the Indian Ocean, beginning in the late 1990s with an electronic listening post in Myanmar’s Coco Islands. In 2001, China agreed to help Pakistan build a new port and naval base at Gwadar, close to the Iranian border and the Persian Gulf. China has also pitched in to build a road network from the new port to the Karakoram Highway, a feat of engineering that connects China and Pakistan through the Himalayas. The Gwadar naval base planned to India’s west is matched by another to the east, where Chinese engineers are building a similar facility on Myanmar’s Arakan coast, connected by a new road and rail link through Myanmar to China’s Yunnan Province. China is also helping Cambodia build a rail link to the sea, and in Thailand, it is proposing to help fund a $20 billion canal across the Kra Isthmus, which would allow ships to bypass the Strait of Malacca. A recent Pentagon report described these new bases as China’s “string of pearls” to secure the sea routes to the vital oil fields of the Persian Gulf.

In a number of off-the-record conversations in New Delhi on the eve of Bush’s visit earlier this year, including extremely rare meetings with senior officials of the secretive Research and Analysis Wing, Indian security and military figures stressed their profound concern at these developments. The degree of alarm is evident in India’s recent flurry of arms purchases, including a $3.5 billion deal to buy six Scorpene “stealth” submarines from France along with the technology to build more. The Scorpene will augment India’s existing submarine fleet of 16 vessels, mainly Soviet-built Kilo and Foxtrot attack submarines. India was the world’s biggest customer for arms last year, and more deals for advanced aircraft are in the works, which seem likely to include U.S.-made F-16 and F-18 warplanes, even as India builds its own family of nuclear-capable Agni missiles, the latest version of which is designed to reach Shanghai. With almost 1.4 million troops, India’s armed forces are already roughly the same size as those of the United States, and they are increasingly well trained and well armed. India is so far the only Asian country with an aircraft carrier, which can deploy British-built Sea Harrier fighters, vertical-takeoff jets like those used by the U.S. Marines.

The alarm over China’s rise is plain in India’s military and policy debates. An article last year by the Indian Defense Ministry’s Bhartendu Kumar Singh in the journal Peace and Conflict , published by the New Delhi-based Institute of Peace and Conflict Studies, is typical. Singh speculated that China’s military buildup might be explained in part by Taiwan, but that its long-term goal could be to ensure Chinese dominance of the Asia-Pacific region. While Singh doubted that this challenge would result in an all-out war between China and India, India was bound “to feel the effects of Chinese military confidence. . . . Is India prepared? It can wage and win a war against Pakistan under every circumstance, but it is not sure about holding out against China.”

The irony and the danger is that China has similar reasons to feel encircled. The United States has established new military bases in Central Asia since 9/11, adding to existing outposts in Japan and South Korea, and it is expanding its existing facilities at Guam to include a base for submarines and long-range stealth bombers. Now Beijing nervously watches the warming strategic partnership between Washington and New Delhi. Moreover, China’s construction of the “string of pearls” reflects its own deep concern about the security of its oil supplies. Its tankers must pass through the Indian Ocean, and China’s new pipeline from the Kazakh oil and gas fields of Central Asia will lie within easy cruise missile or air strike distance of India.

The tension between these two rising powers is underscored by their rivalry for essential energy resources. “India, panicked over future oil supply, went after international oil assets competing directly with China,” India Daily reported last year when Subir Raha, chairman of India’s Oil and Natural Gas Corporation, announced that the company was buying a fifth of Iran’s giant Yadavaran oil field and was in the market to buy assets of Yukos, the Russian energy giant. The Indian company had already invested nearly $2 billion to buy a share of the Sakhalin-1 field in Siberia, run by ExxonMobil. India, which imports more than two-thirds of its oil, has since signed a $40 billion deal with Iran to import liquefied natural gas and join in developing three Iranian oil fields.

Energy geopolitics can promote harmony as well as rivalry. Pakistan and Turkmenistan have signed a memorandum of understanding on a multibillion-dollar gas pipeline through Afghanistan that could eventually end as a “Peace Pipeline” in India, in what would be a major breakthrough in Indo-Pakistani relations. Former Indian petroleum minister Mani Shankar Aiyar, a strong advocate for the pipeline, says, “Almost everywhere in the world where an Indian goes in quest of energy, chances are that he will run into a Chinese engaged in the same hunt.” Aiyar proposed that India, China, Japan, and South Korea establish a system of cooperative access to energy supplies. His subsequent demotion to minister for youth and sport was widely perceived in India as reflecting U.S. pressure against the Iran oil deal.

Indian security officials already see themselves fated to play central roles in what Aaron Friedberg, a Princeton scholar now on the White House national security staff, has called “the struggle for mastery in Asia.” That phrase was the title of an essay he published in the neoconservative monthly Commentary when Bush was first elected. Friedberg’s central message was that over the next several decades the United States would likely find itself engaged in an “open and intense geopolitical rivalry” with China. “The combination of growing Chinese power, China’s effort to expand its influence, and the unwillingness of the United States to entirely give way before it are the necessary preconditions of a ‘struggle for mastery, ’” he wrote, adding that hostilities or a military confrontation could be slow to develop or could occur as a result of a “single catalytic event, such as a showdown over Taiwan.”

The strategic and energy concerns of the United States, China, and India will be difficult to manage. But Pakistan, Russia, Japan, and North and South Korea all factor into the extraordinarily complex equation of Asian security. (India maintains that Pakistan’s missile technology came from China and North Korea.) And through Pakistan and the terrorist attacks from militants in Kashmir, India also feels itself threatened by Islamic extremism, a matter of grave concern for a country whose population of just over one billion includes 145 million Muslims.

It is in this context that the nuclear dimension of the Bush administration’s embrace of India has aroused so much controversy. The administration seeks to steer India into “compliance” with the Non-Proliferation Treaty and the International Atomic Energy Agency (IAEA) system while leaving India’s nuclear weapons reactors out of the international control regime. This stance has been challenged by critics in the United States for driving a coach and horses through the Non-Proliferation Treaty just as international support for diplomatic pressure on Iran depends on strict compliance with it.

Under the deal, India will separate its civilian from its military nuclear programs, but it has until 2014 to complete this division. New Delhi will declare 14 of an expected total of 22 nuclear reactors to be for civilian use and place them under IAEA controls. But India has managed to keep its new fast-breeder reactors out of the control system, which means that there will be no nuclear fuel shortages to constrain the future manufacture and development of nuclear weapons. Moreover, be_cause India will reserve the right to determine which parts of its nuclear program will be subject to IAEA controls and which will not, it will be able to shield its own nuclear research labs from the IAEA system. New Delhi has also reinterpreted the U.S. insistence that the deal be made “in perpetuity” by making this conditional on continued supplies of enriched uranium, of which India is desperately short, to fuel its reactors.

The main concession India made was cosmetic. It agreed not to be formally included, in the eyes of the United States and the IAEA, in the category of the five recognized nuclear weapons states (the United States, Russia, Britain, France, and China). The deal is still the subject of hard bargaining in the U.S. Congress, where it has yet to be ratified, despite intense pressure from the Bush administration. But if, as expected, the agreement succeeds, India will become a special case, with a free hand to augment its nuclear weapons systems, and to develop its nuclear power stations with full access to the fuel and technology monopolized by the 45-nation Nuclear Suppliers Group. And India will secure all this with the blessing of the IAEA, thus negating the efforts of the international community since the 1970s to constrain India’s nuclear ambitions by putting sanctions on its access to nuclear fuel and technology.

In India, the agreement has come in for criticism for wedding the country to U.S. strategic interests, to the detriment of India’s relations with China and Iran. The policy is also viewed by some Indians as a lever to steadily increase international control over India’s nuclear assets, and to make it more dependent on the United States as the prime supplier of nuclear fuel.

India long saw itself as neutral and nonaligned, endowed by Gandhi’s nonviolent legacy with a singular innocence of such geopolitical games. It has been thrust with remarkable speed into a prominent strategic role that matches its new economic robustness. But its ability to sustain military power and buy advanced weaponry will clearly depend on its economic growth, which began in earnest 15 years after China launched its own economic reforms. While India 30 years ago enjoyed a slightly higher per capita income than China, today it has an annual per capita income (at purchasing power parity) of $3,300, not quite half of China’s level of $6,800, and less than one-tenth of the $41,800 level of the United States.

India is now playing the tortoise to China’s hare, not only in its rate of growth but also because the Indian and Chinese economies are two very different creatures. China has become the world’s low-cost manufacturing center, making and assembling components that are often designed or developed elsewhere, and relying heavily on foreign investment. India’s boom, by contrast, has so far been largely based on services and software, and it has been self-financing, with about a tenth of China’s level of foreign direct investment. Still, it has produced an Indian middle class—usually defined by the ability to buy a private car—of some 300 million people, a number greater than the entire population of the United States.

One central reason why India has not enjoyed a Chinese-style boom led by manufacturing is the dismal state of so much of the country’s infrastructure. Its ports, railroads, highways, electricity supplies, and grid systems are aged and ramshackle, and traffic jams and power outages are routine, reinforcing each other when the traffic lights blink out. Critical segments of the economy—such as the container transport system, which allows easy shipping of freight by land, sea, and air—have been state monopolies, subject to the usual debilitating problems of the breed. Arriving foreigners receive a startling introduction to the bustle and backwardness of India before they ever reach a hotel. On my most recent trip to New Delhi and Jaipur, the maddening endemic traffic jams included bicycles, flimsy three-wheeled rickshaws, and somnolent cows, whose excrement was swiftly scooped up by hordes of small children and patted into flat, plate-shaped discs, which are dried in the sun and sold for fuel. So to the usual tourist dangers of stomach upsets from eating local foods is added the prospect of respiratory infection from breathing air suffused with fecal matter.

Yet there is no denying the furious commercial energy of a country that is currently signing up five million new mobile phone subscribers each month. Competition has come to the container industry, the airports are being privatized despite labor union opposition, and new highways are being built. The gas and electricity grids are slated for reform next. India has its high-tech centers of Bangalore and Hyderabad, as well as a few new towns such as Gurgaon, just outside Delhi, with a modern automaking plant, high-rise shopping malls, and telemarketing centers. But it can boast nothing like the jaw-dropping array of new skyscrapers that zigzag the skylines of modern Shanghai and Guangdong.

Still, some of the smart money is on the tortoise. The global consultancy firm PwC (still better known by its old name, Price Waterhouse Coopers) produced a report this year forecasting that India would have the fastest growth among all the major economies over the next 50 years, averaging 7.6 percent annually in dollar terms. In 50 years’ time, the Indian and U.S. economies would be roughly equivalent in size. The report also suggested that by 2050 the existing economies of the G-7 group of advanced industrial nations (the United States, Britain, France, Germany, Italy, Japan, and Canada) would be overtaken by the E-7 emergent economies of China, India, Brazil, Russia, Indonesia, Mexico, and Turkey.

The most significant difference between India and China, however, may be how their respective demographic trends and political systems shape their futures. The Chinese leadership is already coming to regret its nearly
30-year-old policy of permitting most couples to have only one child. Now China is rapidly aging and heading for a pensions crisis, as an entire generation of only children grapples with the problem of helping to support two parents and four grandparents. A recent DeutscheBank survey on China’s pension challenge predicted, “China is going to get old before it gets rich.” The policy has also created a serious gender disparity. The ability to predict the sex of a fetus in a country limited to one child per family has led to a situation in which 120 boys are born for every 100 girls, and President Hu Jintao last year asked a task force of scientists and officials to address the tricky problems posed by an excess of single men. India has a similar sex disparity problem in certain regions, notably those where Sikhs are numerous, but overall, with half of its population below the age of 25, it boasts a far healthier demographic profile.

The contest between the Indian tortoise and the Chinese hare has a political dimension as well. India is a democracy, without an equivalent of China’s ruling Communist Party. Its elections, provincial governments, and free news media give the country great social resilience. China’s breakneck economic growth and social disruption seem likely to have potent consequences as its new middle class finds a political voice.

The Chinese Communist Party is becoming less ideological and far more technocratic in its orientation, but it still can manipulate the most authoritarian levers of state power in aggressive pursuit of economic and strategic goals. Indians are stuck with their messy but comfortable democracy. Montek Singh Ahluwalia, an Oxford-educated economist who is deputy chairman of the national planning commission, says, “The biggest thing about India is that it’s a very participative, very pluralistic, open democracy where even if the top 1,000 people technocratically came to the conclusion something is good, it has to be mediated into a political consensus. And I’m being realistic. I don’t think it’s going to be that easy to put in place everything that from a technocratic point of view everybody knows needs to be done.”

In short, India’s pluralism could be to China’s advantage, although given the track record of bureaucratic technocrats from Moscow to Japan in wasting massive resources to pursue the wrong goals, it may not be that simple. But India has its own special asset, recognized by the American presidential candidate George W. Bush and suggested by the celebrated prediction a century ago by Otto von Bismarck that “the most important fact of the 20th century will be that the English and the Americans speak the same language.” The most important factor in the 21st century may well be that Americans and Indians (and perhaps Britons and Australians and Microsoft employees and global businesspeople) all speak English. This is not simply a matter of a shared language, although that is important; it also encompasses those other aspects of the common heritage that include free speech and free press, trial by jury and an independent judiciary, private property, and individual as well as human rights. While retaining its rich and historic cultures, India is thoroughly familiar with these core values and determinants of the American civic system. And as a religiously tolerant, multi_ethnic democracy with commercial, legal, and educational systems developed during the British Raj, India is—like the English language itself—familiar and reassuring to Americans.

A decisive factor in the short term may be India’s importance to the United States in the strategic and cultural campaign now being waged against Islamic extremism. This will be a struggle much deeper and longer than the mainly military effort the Bush administration calls GWOT (Global War on Terrorism), as currently being fought in Afghanistan and Iraq. India, itself a regular target, has been from the beginning a firm partner in the war on terrorism, instantly offering flyover and landing rights to U.S. aircraft engaged in the war against the Taliban. But with its 145 million Muslims, India risks becoming embroiled in the tumult now shaking so much of the Islamic world as the faithful try simultaneously to grapple with the cultural, theological, economic, and social revolutions now under way.

Facing the additional problem of militant Hindu nationalism, India has no choice but to stand in the front line against Islamic extremism. India is the great geographic obstruction to an Islamic arc that would stretch from Morocco across Africa and the Middle East all the way to Malaysia, Indonesia, and into the Philippines. Pakistan and Bangladesh are deeply uncomfortable neighbors for India, being Muslim, poor, the scenes of concerted jihadist campaigns, and worrisomely close to becoming failed states. But there is another arc, which stretches from Japan and South Korea through China and the increasingly prosperous countries of the Association of Southeast Asian Nations to India. This swath of rising prosperity and economic growth now includes three billion people—half the world’s population. It is easy to foresee wretched outliers such as North Korea, Myanmar, Bangladesh, and Pakistan being swept up in the wake of this boom, should it continue, but for that to happen, Asia needs stability, peace, and a cessation of arms races.

It is an open question whether the burgeoning new strategic friendship of India and the United States will help this process or derail it. It could do both, deterring China from adventurism or bullying its neighbors, and stabilizing the strategic environment while India and China manage a joint and peaceful rise to wealth and status. But at the same time, the new U.S.-Indian accord could help spur a new nuclear arms race in Asia, where Russia, China, India, Pakistan, and probably North Korea already have the bomb, and Japan, South Korea, and Taiwan have the technological capability to build it quickly. One wild card is already being played that could bring this about: the prospect of Japan and India sharing in American antimissile technology. If India gains the ability to shoot down incoming missiles, this threatens to negate the deterrent that Pakistan and China thought they possessed against India, with potentially destabilizing results.

Even though India’s prospects now look brighter than they have for a generation, the country faces some sobering challenges, including the accelerating pace of expectations among its own people and their understandable demand that the new wealth be shared quickly, that the poorest villages get schools and electricity. Almost half the population still lives in rural hamlets, and only 44 percent of these rural residents have electricity. Enemies of globalization populate the Indian Left and sit in the current coalition government. India must grapple with the familiar difficulties of Hindu nationalism, inadequate infrastructure, and a large Muslim population, as well as environmental crisis, deep rural poverty, and the caste system.

India finds itself in a delicate position. It must manage and maintain its relationship with China while accommodating American strategists who are relying on its support to keep Asia on the rails of democratic globalization. Americans also regard India as insurance against China’s domination of Asia to the exclusion of the United States. India, on the other hand, wants freedom of action and does not want to serve merely as a tool of American influence.

“We want the United States to remain as the main stabilizer in Asia and the balance against China until such time as India can manage the job on its own,” an influential security adviser to the Indian government said recently, very much on background. What will happen once India believes it can do this alone? I asked. “Well, then we shall see,” he replied. “By then it will be a different Asia, probably a different China, and possibly a different America. It will certainly be a different world, dominated by the Indian, Chinese, and American superpowers.”

(Martin Walker is the editor of United Press International and a senior scholar at the Wilson Center. His most recent books are America Reborn: A Twentieth-Century Narrative in Twenty-Six Lives and the novel The Caves of Périgord)


11. In India, the Golden Age of Television Is Now -- by VIKAS BAJAJ/NY Times

MUMBAI, India -- GHANSHYAM P. SHAH, an 82-year-old widower, spends up to eight hours a day in front of his television watching prayer services, soap operas and financial news. But one afternoon last December, he was completely disconnected from his favorite pastime — and visibly unsettled — because his new digital set-top box was not working.

“I’ll become really agitated if I can’t watch,” Mr. Shah said as Rumy M. Bhagat, the owner of a small cable company, gave up and plugged the wire directly into the television until he could return with another box. The image was no longer digital, but that did not matter to Mr. Shah, a retired gold and silver dealer, whose face lit up as CNBC India reported that the price of gold was up in afternoon trading.

Mr. Bhagat explained that some set-top boxes, which had been sitting in warehouses for months in advance of a government-mandated change to digital television, had proved a weak match for the heat and humidity of Mumbai. “Sometimes we have teething problems,” he said.

Growing pains like these are common throughout India’s booming television industry. Deregulation and new technology have combined to produce an explosion of new offerings. Before the early 1990s, a single government broadcaster provided a handful of channels. Now a crowded field of domestic and global media companies, including the News Corporation ,Sony Entertainment and Walt Disney , offer hundreds of channels.

Indian films, especially the flashy musicals and dramas of Bollywood, have grabbed plenty of attention in the West. But the country’s lesser-known television business is more than twice as big, with an estimated $3.4 billion in revenue in 2005, according to PricewaterhouseCoopers. It is also starting to exert greater cultural influence.

Television ownership is growing fast here, and it has plenty more room to expand. There are roughly 105 million homes with televisions in India, up from 88 million in 2000. The current number of television households is about the same as in the United States, though for India that amounts to only about half of the country’s households, compared with 98 percent in the United States.

Advertising spending on Indian television increased by 21 percent a year, on average, from 1995 to 2005, when it reached $1.6 billion, according to ZenithOptimedia, which tracks advertising globally. Double-digit growth rates are expected to continue for years.

Such numbers are very tempting to companies like the News Corporation, Disney, Time Warner and Viacom , which are losing viewers and advertisers in their core Western markets. (In addition to the domestic market, Indian television is also delivered via satellite and cable to the global South Asian diaspora.)

The pace of change in India is supercharged because the country is catching up to, and in some cases leapfrogging, developments that took decades to play out elsewhere.

“Everything that happened in the rest of the world in 10 years, is happening here in two years,” said Vikram Kaushik, the chief executive of Tata Sky, a satellite-TV company that is jointly owned by the News Corporation and the Tata Group, the Indian industrial conglomerate.

In the 1990s, media companies seized on new opportunities in India after the government, which had controlled broadcasting for nearly 50 years, began releasing its grip. The first big changes in Indian television came in the early part of that decade, when cable operators used satellite dishes, illegal but tolerated at the time, to give subscribers access to news on CNN, as well as American soap operas and movies. Viewers could also watch Indian movies and music on Zee TV, then a fledgling joint venture between the News Corporation and an Indian entrepreneur.

Previously, India’s ruling elite had a dual and somewhat contradictory view of broadcasting. On the one hand, politicians considered it too powerful a force to be left to the private sector, especially in the years after independence in 1947, when the nation’s unity and secularism were considered vulnerable. On the other hand, television was seen as too frivolous to merit much investment at a time when politicians were focused on turning India into an industrial power.

Those attitudes began to change after a financial crisis in the early ’90s forced the Indian government to devalue its currency, the rupee, and to start relinquishing its tight control over the economy. Then, in 1995, the country’s highest court declared the government’s monopoly over broadcasting unconstitutional.

When it did yield, India went further in deregulating television than it did in other sectors of the economy. It also gave up far more control when compared with China, the country against which it is most often measured. Foreign media companies can fully own entertainment networks here; they cannot in China. (India does, however, limit foreign ownership to 26 percent of television news channels and newspapers.)

THE open environment attracted the News Corporation, which entered the market in 1993 by acquiring Star TV. Star has the highest-rated shows among the private networks in Hindi-speaking parts of the country. Sony started its flagship channel here in 1995 and now has seven channels; the company owns about 61 percent of the business, with Indian investors owning the rest. The biggest Indian broadcasters are Zee and Sun TV, which dominates ratings in non-Hindi-speaking southern India.

Still, Doordarshan, the public broadcaster, remains the most widely available network, especially in rural areas, where a majority of the population lives.

To keep up with changing times, Doordarshan has retooled its programming, adding genres like soap operas and musical contests to a lineup that is still dominated by more high-minded — and what some critics would call staid — cultural programming. It has also started a satellite-TV service that has no subscription fees but also does not include the most popular private channels.

Star has been one of the few consistently profitable businesses in Indian television. Although the News Corporation does not disclose financial details of its operations here, Merrill Lynch estimates that Star accounts for 3 percent of the company’s total operating income, or about $116 million in the 2006 fiscal year.

Zee, which started by offering a few hours of programming a day, now has more than two dozen channels; it started a satellite-TV service, DishTV, in 2004. “We offered an alternative to a broadcaster, Doordarshan, from which urban audiences felt disconnected,” said Ashish Kaul, a senior vice president at Zee. “You cannot blame Doordarshan; it had a national obligation.”

About 60 percent of the nation’s television households subscribe to the cable or satellite services that carry private channels. Though Indians theoretically have dozens of channels to choose from, a handful dominate the ratings and earn most of the profits. A fragmented cable business is straining to reshape itself in response to new regulations and competition from satellite television services.

The transition to digital cable, meanwhile, has so far occurred only in parts of India’s four most populous cities. The changeover has been troubled by technical problems, weak enforcement of a Jan. 1 deadline and a shortage of set-top boxes.

At the same time, the newest technology operates alongside the often stark economic and social realities of India. Black-and-white televisions still account for an estimated 40 percent of all TV’s in use, and about 56 percent of rural households do not have electricity, according to India’s 2001 census. And because most homes in India that have a television have just one set, watching TV can be a communal activity that brings together the entire family, and often the neighbors, too.

Perhaps the most striking of the changes in Indian television is what is starting to show up on the screen.

“Dhoom Machaoo Dhoom” (Hindi for “Let’s have a blast”) is a Disney show aimed at teenagers, and it might look at home on the Disney Channel in the United States. It is about four teenage girls, one of them from New York, who want to start a band so they can represent their school in a talent contest. They face a number of challenges, including an arrogant classmate who is determined to derail their plans.

But the show, which went on the air last month, has an Indian twist. Priyanka, the New Yorker who has returned to her family’s native land, wants the girls to perform a song they have created, rather than using a tune from a popular Bollywood movie, as the local norms dictate. In one episode, Kajal, played by Sriti Jha, complains that Priyanka doesn’t understand India. “Only Bollywood works here,” she insists.

The girls do not dwell on the issue, but it is an important consideration for television executives and media companies here. Indian television has a strong partnership with the film industry, whose stars appear on its shows as guests, contestants and hosts. Movies and music videos from Bollywood remain staples on television here.

Yet in the last decade television has attained influence over the popular culture that is starting to rival that of the film business. And whereas filmmakers have traditionally worked in close-knit networks that operate in a single language, media companies have been exploiting the large and growing capacity of cable and satellite networks to cheaply develop customized channels and shows for different parts of the country. Zee, for instance, operates several regional-language entertainment and news channels.

“We have a vibrant TV industry,” said Rama Bijapurkar, a business consultant whose clients include Disney and who also writes a column for The Economic Times. “When talking about the hinterland, TV is what Bollywood would like to be.”

Nachiket Pantvaidya, an executive director at Disney’s Indian operations, predicted that “Dhoom” would be a breakthrough for Indian television because it was one of the few shows produced for teenagers, and specifically for girls. He said that more than 90 percent of what Indian youths watch on TV are family dramas and other shows created for their parents.

“This is a story of kids who are trying to do something out of the ordinary,” Mr. Pantvaidya said. “Nobody makes TV for the real world. This kind of TV is rare.”

Ms. Jha, the 20-year-old who plays one of the girls on “Dhoom,” added: “This can’t be compared to the whole lot of family serials. This is much more real and close to the lives of kids.”

“Dhoom” is Disney’s sophomore effort at producing TV shows in India — its first, “Vicky Aur Vetaal,” was based on an Indian myth about a prince and a genie-like figure. The company sees television as the first step in a broader India strategy that includes films, merchandising and possibly a theme park. Last year, Disney spent $44.5 million to acquire a 15 percent stake in UTV , a production company based in Mumbai, and to buy Hungama, a television channel of children’s programming created by UTV.

“We decided early on that this had to be driven locally,” said Gary Marsh, president of entertainment for Disney Channel Worldwide in Burbank, Calif. “If we were to truly become a global company, we had to let our regional organizations create their own programming.” India was the first country where the company developed local Disney Channel shows, something it is now doing in Britain and Japan, too.

Many of Disney’s competitors have built their businesses on a similar strategy. Time Warner, which operates the Pogo and Cartoon Network channels here, is offering an Indian version of “Sesame Street” called “Galli Galli Sim Sim.” The show uses some material from the popular American show, but it is set on an Indian streetscape and is anchored by four local Muppets. A large orange-and-red lion named Boombah replaces Big Bird.

Television executives say the ventures by Disney and others aimed at youths and various niche markets are a welcome break from the way business has been done in India. A handful of channels — which carry soap operas, reality shows, music shows and important cricket tournaments — receive the bulk of the advertising. Yet entrepreneurs continue spending millions of dollars starting copycat networks. India has more than 40 cable news channels, for example.

“Here it is, we have 200 channels of the same stuff, and people are saying let’s do more of it,” said Sameer Nair, chief executive of Star Entertainment, a News Corporation subsidiary. “That will churn and change.” (In an indication that competition is intensifying, Mr. Nair announced last month that he would be leaving Star in March. According to news reports, he will be helping a rival Indian-owned TV company start a new entertainment channel.)

AS media executives try to introduce innovative programming, exactly what can go on the air in India remains fluid. There is no overt censorship of television content, but most media companies say they aggressively police themselves to avoid running afoul of political and cultural mores.

Several movie channels were forced to go off the air for more than a week last summer when a court in Mumbai ruled in favor of a schoolteacher who had argued that films that had been rated for adult viewing only in their cinematic release could not be shown on television without being edited and recertified for a wider audience.

In some ways, television fare in India today is far more adventurous than it was even five years ago. A recent adaptation of “Big Brother,” known here as “Bigg Boss,” for instance, has stirred the pot by showing minor celebrities behaving badly. Though it may seem insignificant, the show has let viewers see famous people as human beings, said Kunal Dasgupta, who heads Sony’s Indian television operations, which broadcasts the show.

Still, Mr. Dasgupta knows that social customs evolve slowly here. He said he was considering “with kid gloves” a proposal from an Italian company to help produce a miniseries that would be based loosely on the life of Sonia Gandhi , the Italian-born leader of India’s ruling Congress Party who is the widow of the former prime minister, Rajiv Gandhi.

The proposal calls for an Indian cast, but the series would take an “Italian perspective,” Mr. Dasgupta said. “I find it very exciting and challenging,” he said. “At the same time, knowing our own media, we could be ripped apart.” He said he was “trying to see if we can get people who are really in power to accept that if we do such a thing it will be O.K.”

The fact that he is even considering such a proposal is a sign of how far television has come in India. And as the country continues to experience major economic and social changes, the shape of Indian television is likely to keep evolving.


12. India and Three "Emerging Democracies" -- by J. Sri Raman/truthout

In an unbeatable illustration of double irony, President George W. Bush is pushing through the much-discussed US-India nuclear deal, not only as a non-proliferation measure but also as a blow for democracy. Enough has been said about the Indian establishment's pious anti-proliferation protestations. It is time to talk of its pro-democracy tasks immediately ahead.

The less-informed may wonder how India 's nuclear development is linked with the cause of democracy. Along with the statement on the envisaged deal issued by Bush and Prime Minister Manmohan Singh on July 18, 2005 , however, came the announcement of a US-India Global Democracy Initiative. A State Department fact sheet of the same date stressed the resolve of Washington and New Delhi to help "emerging democracies."

By that phrase, the Bush administration may have meant countries like Iraq, where its crusade for democracy is camouflaged as aggression and occupation. To South Asians, however, it is likely to suggest the struggles for democracy in three of India 's neighbors. Millions in Nepal, Bhutan and Burma are waiting for support from India for movements for a more basic democracy than Bush and Singh had in mind.

In Nepal, a US-India initiative could have been disastrous for democracy. US Ambassador to Nepal James Francis Moriarty is no stranger to these columns, and we have frequently taken note of his unusual diplomacy, designed less to promote democracy than to prevent the acceptance of the Maoists in mainstream politics. Moriarty's threat to end US assistance to Nepal if the Communist Party of Nepal (Maoist), or CPN(M), were allowed to enter a ruling coalition, however, failed to stop the democracy movement from forging ahead. The process is still incomplete, but pacts have been concluded between the ruling Seven-Party Alliance and the CPN(M) about the management of army and rebel arms, and a coalition interim government to conduct elections to a constituent assembly.

If Moriarty was obviously unhappy at the end of Nepal's unpopular monarchy last May, New Delhi also greeted the news with grave concern. Overthrown King Gyanendra had strong family and feudal links in India, and the Singh government had sent a scion of the Kashmir royal house, Karan Singh, to Kathmandu in a vain bid to save the threatened crown.

The mandarins of India, however, have modified their approach to the Nepal issue since May, mainly under pressure from the Left, which extends conditional support to the Singh government. The Left seems to have sold the government the idea that the Nepalese Maoists' abandonment of armed struggle will influence their Indian counterparts active in several pockets of the country.

Popular skepticism about India's future role, however, persists in Nepal. Not a few share the fear that moves for preserving monarchy in a diminished form have India's support, though the majority, including the Maoists, prefer the abolition of the institution. Top Maoist leader Prachanda (aka Pushpa Kumar Dahal) said the other day that India must not "retreat" from its support for the peace process. "If India retreats now," he added, "and there is an attempt to compromise with monarchy, it would be going against the wishes of the people who want a democratic republic."

New Delhi has responded by airing surprise over Prachanda's recent statement, in response to questions, about "autonomy and self-determination" for Kashmir and the insurgency-prone northeast India. There should really be no surprise since this is an old stand of the Maoists. Official India also prefers to ignore the fact that the CPN(M) has taken a similar stand in relation to China's Tibet problem.

Apprehensions about New Delhi's role may not be allayed by a massive petroleum scarcity that hit the Kathmandu Valley today. This follows a hefty 20-percent cut in supplies from Nepal's only fuel supplier, the public-sector Indian Oil Corporation, to the Nepal Oil Corporation, the only authorized importer of petro-products. Not many in Nepal may readily believe that the cut was only due to non-payment of dues by the cash-strapped Nepalese company.

Even as uncertainty grips Nepal again, the cry of democracy is being raised in next-door Bhutan. Here, 50-year-old King Jigme Singye Wangchuck, who has ruled the tiny kingdom almost since his adolescence, announced his abdication and the enthronement of Crown Prince Jigme Kesar Namgyel. Many political observers saw the proclamation, issued on the eve of Bhutan's National Day (December 17), as a ploy to meet the country's pro-democracy movement that had received a shot in the arm from developments in Nepal.

The assurance from the 26-year-old, Oxford-educated new ruler that he would work toward a democracy in Bhutan testifies to new apprehensions in Thimphu, capital of the minuscule Buddhist kingdom. The promise has failed to enthuse the pro-democracy camp, which feels it has not received a fair international hearing for its complaints about human rights abuses in Bhutan over the years.

Particularly aggrieved are the several hundred Bhutanese of Nepalese origin, evicted in the early nineties for protesting "discrimination" and demanding "introduction of democracy." Refugees in Nepal now, they want to return to Bhutan and vote in the promised elections of 2008. They made a concerted effort on December 17 to enter Bhutan from Nepal as well as India and were beaten back by the Bhutanese and Indian police.

Given the close relations between India's successive rulers and Bhutan's royal family, New Delhi will have to do more than produce the Bush certificate to prove its commitment to democracy to the Bhutanese people.

Better known is the saga of Burma's struggle for democracy, and so should be the story of India's growing indifference to it. Last May, which witnessed the overthrow of a hated monarchy in Nepal, Burma's military junta yet again extended the detention under house arrest of indomitable pro-democracy leader Aung San Suu Kyi. The 61-year-old Suu Kyi has spent 10 of the last 16 years under house arrest. Her travails have not ended since her National League for Democracy won a landslide victory in a general election in 1990 and the junta decided to punish her for the people's verdict.

No strong protest against the extension of her detention, despite an appeal from United Nations Secretary General Kofi Annan, has emanated from New Delhi. Burma's campaigners for democracy now plead with India to at least deny the junta cooperation in economic and technological fields. Hopes rose in this regard on December 3, when Bangladesh decided to defer its support for the three-nation natural gas pipeline running through its country from Burma to India. India's response, however, has only been to appoint Brussels-based company Suz Tractebel to recommend alternative routes for a gas pipeline from Burma to India, bypassing Bangladesh.

The chances of a bold democracy initiative in India's backyard by the parties to the nuclear deal would seem to be rather bleak.

[A freelance journalist and a peace activist of India, J. Sri Raman is the author of Flashpoint (Common Courage Press, USA).]