Author: Anshuman Rawat

India’s food bill is nothing but a political move to woo poor in blatant re-election bid

India’s corruption-tainted federal government may just have found a way to resurrect itself in the eyes of the country’s largely poor electorate.

Ahead of the 2014 federal elections, the Congress Party-led United Progressive Alliance government is preparing to introduce a Food Security Bill that seeks to provide cheaper food grain to more than half of India’s population of 1.2 billion people.

The bill promises subsidised food grants for 75% of India’s rural population and 50% of urban households. It also includes free cooked meals to children under 14 years of age and those classified as destitute.

On the face of it, the Food Security Bill seems almost obligatory. Despite India’s economic growth in recent decades, 44% of its children under the age of five are underweight and 65 children die each day of malnutrition. In all, 21% of the population in India, home to the world’s largest number of poor people, are undernourished.

The bill is likely to win the support of all political parties when introduced to parliament later this year, observers say.

“None of the opposition parties can refuse to support a seemingly pro-poor measure openly,” Chintamani Mahapatra, professor of political science at New Delhi’s Jawaharlal Nehru University, told Asia360 News.

But at what cost? India’s economy is already battling a bad year-and-a-half and the government is already operating under a fiscal deficit higher than most Asian countries. Economic growth is expected to come in at 6.5% or lower in the current fiscal year, thanks to a combination of the European debt crisis and India’s own lack of reforms.

Experts suggest that the Food Security Bill could worsen the fiscal bleeding. India’s food subsidy spending would balloon to an estimated 950 billion rupees (US$18 billion) in the first year of the scheme, up from around 673 billion rupees now. The government will also need an investment of 1.1 trillion rupees to boost farm output over the next few years.

India’s fiscal deficit is expected to overshoot the government’s official target of 5.1% of gross domestic product for 2012-13. Economists say that India cannot sustain such a high fiscal deficit for long.

Financial experts say the government can find resources to offset the additional cost burden of the Food Security Bill by cutting down or ending oil price subsidies. But it has been demonstrated umpteen times that the government is unlikely to do that, as it would not go down well with its voters.

“Measures that should have been decided on grounds of economic policies are being worked out on the basis of political calculations,” said Jawaharlal Nehru University’s Mahapatra.

In fact, many believe that it is the emotional appeal of a bill that talks of hunger alleviation that is driving the Congress Party’s move.

The feeling amid political analysts is that when nothing seems to be working in the Congress Party’s favour, even a moderate success in what will be the world’s largest experiment of providing rice and wheat to the poor, could help the party retain power at the 2014 elections.

The accusation that the government is playing politics with hunger also stems from its recent record.

Last December, the government dropped plans to open up the multi-brand retail sector to foreign direct investment (FDI) the moment some of its political allies raised objections, prompting speculation that it may be more concerned with shoring up support than the nation’s progress.

The investment liberalisation plan would have allowed global firms such as Wal-Mart and Carrefour to bring their expertise in supply chain management into the Indian market, where inefficiencies in the downstream segments of the food supply chain are rampant, threatening to undermine self-sufficiency and perpetuate malnutrition.

Inefficiency in the tomato business, for example, results in as much as 20% of tomatoes rotting in transit, while the price for consumers is marked up by as much as 60%, according to a December analysis in the Wall Street Journal Asia. It is likely that the continued government subsidies contained in the Food Security Bill will only lead to further market distortions, the report added.

Flawed economics is not the bill’s only shortcoming. Praful Bidwai, a social science researcher and human rights activist, said that the most deplorable aspect of the Food Security Bill is that it “marks a retreat from the concept of food security and the state’s duty to feed all its citizens”.

The bill particularly failed in its social duty by excluding many pertinent social groups, like truant children, he wrote in a January essay called “The Bill Must Not Pass”. School dropouts were deserving of generous food entitlements because grinding poverty at home was exactly what forced them out of school and into child labour in the first place, he argued.

“A good food security law should have provided for pensions to the aged, who have little or no earnings with which to buy food. The bill fails to do that,” he wrote.

“It also contains nothing by way of price guarantees for India’s impoverished farmers, over 250,000 of who have committed suicide since 1995, and who are among our most food-insecure people,” he added.

But what really exposes the hollow political move that hides behind the garb of social welfare, critics say, is Clause 51 of the Food Security Bill.

The clause absolves the federal — and also state governments — of any responsibility, including supplying food or paying compensation, in case of “war, flood, drought, fire, cyclone, earthquake or any act of god”.

Aren’t those the precise conditions, critics ask, in which food supply becomes crucial to the survival of many people?

All things considered, critics of the Food Security Bill say it comes across as a poor joke on the concept of food security and hunger alleviation. It neither offers good economics nor fulfills the moral requirement of a government to provide for its people’s fundamental survival needs.

The Food Security Bill, it seems, is all about making expensive promises for political gains.   AR

Myanmar emerges from the ravages of military rule to celebrate democracy

Pro-democracy icon Aung San Suu Kyi hailed a “new era” for Myanmar after her National League for Democracy (NLD) party won a landslide victory in the April 1 parliamentary by-elections.

Myanmar’s election commission confirmed on April 2 that Suu Kyi’s NLD won 40 out of the 45 seats contested, with five yet to be called.

Speaking to a crowd of delirious supporters at the NLD headquarters in Yangon, the 66-year-old Nobel laureate called the victory a “triumph of the people, who have decided that they must be involved in the political process of this country”.

The NLD claimed that Suu Kyi won over 85% of the vote in Kawhmu, a region that was ravaged by Cyclone Nargis in 2008. She received 55,902 votes, compared to 9,172 polled by her nearest rival Soe Min, the ruling Union Solidarity and Development Party (USDP) candidate.

Tin Yi of the Unity and Peace Party (UPP), the third candidate in the fray, received 397 votes, according to the NLD.

Seventeen political parties and 157 candidates, including independents, contested the polls spread across nine states.

Myanmar’s parliament has a total of 662 representatives and the military-backed USDP would control 80% of the seats even after the recent results. The country’s constitution reserves a quarter of the parliamentary seats for the military.

“What is important is not how many seats we have won, although of course we are extremely gratified that we have won so many, but the fact that the people are so enthusiastic about participating in the democratic process,” Suu Kyi told supporters at NLD headquarters on Monday.
“We hope that this will be the beginning of a new era.”

Election irregularities

In the run-up to the elections, the NLD complained of intimidation of its candidates by supporters of the ruling party. Suu Kyi said the poll could not be considered “a genuinely free and fair election”.

Concurrent with the NLD claims, sections of the Myanmar media on polling day reported instances of exclusion of eligible voters from voter lists and the inclusion of children and dead people in the official register.

Other serious allegations revolved around pouring of wax on the NLD portion of ballot papers, thereby leading to votes by NLD supporters becoming invalid.

The direction of the election commission, Win Ko, told Radio Free Asia’s Myanmar service on April 2 that anyone found guilty of fraud would face the punishment of a year in prison — provided proper evidence was uncovered. But he believed that the possibility of massive electoral fraud remained unlikely.

Many independent foreign observers agreed. Malgorzata Wasilewska, a European Union election observer, said that the election process at the roughly dozen polling stations her team visited was “convincing enough”.

Experts suggest that large-scale malpractices could not have been possible as Myanmar President Thein Sein was personally committed to the effectiveness of the by-elections.

“Allowing foreign observers to monitor the by-elections was a part of the Myanmar government’s efforts to show that it was willing to be open and also play fair,” Kyaw San Wai, research analyst at Singapore’s S Rajaratnam School of International Studies (RSIS), told Asia360 News.

One of the main reasons for the ruling USDP to stay clear of deliberate foul-play is that the quasi-civilian government that took power in 2010 needs Suu Kyi to enter the parliament to bolster the government’s legitimacy and spur an easing of western economic sanctions.

Lifting of sanctions?

As soon as the results were announced, President Thein Sein’s chief adviser told The Washington Post newspaper that the elections proved his country is capable of holding fair elections and that it is time for the US government to lift its economic sanctions on the country.

Reacting somewhat favourably to the plea, the same newspaper reported an unnamed senior US administration official as saying that “there are tangible moments that demand a tangible response to support ongoing reform”.

Observers suggest the possibilities include a lifting of travel bans to the US against Myanmar officials; the nomination, at long last, of a US ambassador to Myanmar; the lifting of some minor sanctions by presidential order; and even some military exchanges. Leaders at the ASEAN summit in Cambodia also reacted favourably to the election process and called for the lifting of international sanctions. No official announcement was made however on the issue.

“If it goes well [after the elections], it will probably lead to further engagement [of Myanmar] with outside nations, particularly the West,” Joshua Kurlantzick, Fellow for Southeast Asia at the Council on Foreign Relations (CFR), told Asia360 News.

A complete lifting of western sanctions is not expected until the authorities release all political prisoners and address the ethnic violence insurgencies that have for decades caused insurgent conflicts against the central government.

Myanmar has surprised its critics over the past year with a string of reforms such as the release of hundreds of political prisoners. But ethnic conflicts and alleged rights abuses remain concerns for the West.

The future

As a lawmaker and opposition leader in parliament, Suu Kyi would have an unprecedented voice in the legislative process. But with less than 10% of seats in parliament, her party would hardly be in a position to bring about the constitutional changes she seeks.

“We now need to see how Suu Kyi functions as a parliamentarian, as many people expect her to work miracles overnight. The transition from activist to parliamentarian has its set of challenges. If the NLD works adroitly and reaches out to the other parties, and also the military, it will be able to hit way above its weight at the parliament,” said Kyaw of Singapore’s RSIS.

To achieve that, however, Suu Kyi will need to influence not just those parliamentarians in the opposition that participated in the 2008 elections that the NLD had boycotted, but also those belonging to the ruling USDP. That would mean that she would have to work with the military in some way.

Despite fears that Suu Kyi risks legitimising a regime she has opposed for decades, NLD supporters see Suu Kyi’s presence in the parliament as the best chance in many decades for the country to take a turn for the good.

“Suu Kyi’s entry into the parliament would strengthen the democratic change within and outside parliament. It would benefit from the current climate of change in the country in its bid to bring about irreversible systemic reforms,” Soe Myrint, senior journalist and a prominent Myanmarese voice, told Asia360 News.

But experts warn that those are complicated matters that will require time to resolve.

“The real danger of the by-elections is the overblown expectations many in the west have cast on them,” David Scott Mathieson, an expert on Myanmar for Human Rights Watch, told Associated Press news agency on April 2.

“The hard work really does start afterward […] constitutional reform, legal reform, tackling systemic corruption, sustainable economic development, continued human rights challenges […] will take many years,” he said.

For the moment, most people in Myanmar are celebrating a victory that marks a major milestone in the Southeast Asian nation ravaged by decades of ruthless military rule.

The joy is even greater for the triumph of a woman who became the world’s most prominent prisoner of conscience.   AR

Rahul Gandhi succumbs to divisive, caste-based electioneering in Uttar Pradesh, in the long, hard climb towards India’s top post

(20 January 2012) — Rahul Gandhi, the fifth-generation guardian of one of the longest running political dynasties in the modern world, and more importantly, the man whom many in India see as the nation’s future prime minister, has become the first Gandhi to publicly exploit India’s social arithmetic for electoral gains.

Putting into practice an idea that is contrary to his stated vision of a contemporary, progressive India, he is asking the 110 million voters in the northern Indian state of Uttar Pradesh (UP) to vote for his party’s candidates in the upcoming February-March 2012 elections on the basis of the castes and sub-castes that they represent.

That is not all. He is also appealing to the religious sentiments of UP’s largely poor and religiously-sensitive electorate by supporting a proposal to include a 4.5% sub-quota for minorities in the existing quota of reservation for Other Backward Classes (OBC). Reservation in India is a form of affirmative government action and the minorities are largely Muslims, who form 18% of UP’s population and can influence about 100 of the 403 electoral seats.

In the process, he has abandoned his oft-repeated promise of inducting only the youth and clean grassroot workers of his party the Congress, and given away tickets to those who can win seats in the forthcoming elections.

Disappointing as it may be from a moral perspective, political analysts are seeing this as the coming-of-age of Rahul Gandhi, the politician.

Mission 2012

It has been eight years since Rahul formally entered politics in 2004. The forthcoming UP elections are seen as not just a referendum on his organisational abilities, but also a barometer of his political ideology. More importantly, the UP election results will show whether the Gandhi scion is ready to lead his party in the 2014 federal elections, and the nation after that.

The state of 200 million not only forms 20% of India’s population, but also sends the most number of representatives, 80, to the Indian parliament. A handsome victory in UP, coupled with victories in a few more states — out of a total of 29 Indian states — can almost guarantee a party the pole position in national politics.

The Congress once ruled virtually uncontested in UP but bowed out in the December 1989 elections with a mere 94 seats, well below the majority mark. In the last election in 2007, Congress won just 22 seats. With the party losing ground in other states too, the need to re-establish a good base in UP has magnified, leading Rahul to formulate Mission 2012: The rebuilding of Congress in UP.

Not even the most ardent of Congress supporters are talking of forming a government in a state that has rebuffed the party for 22 years. But a sense of revival is running through the organisation due to Rahul’s aggressive campaigning and, more importantly, his shrewd caste-oriented tactic.

Verities of UP Politics

“Frankly, the only reality in Uttar Pradesh politics is whether your caste arithmetic is right or wrong. If the Congress wants to make a breakthrough and emerge as a party in reckoning both in 2012 and 2014, it has to talk this language, whether the national media likes it or not,” a Rahul aide in UP told weekly news magazine Tehelka on January 15.

And Congress is walking the talk, with 80 of its 325 candidates announced so far belonging to the OBC as well as the MBC, the so-called most backward of the OBC. Billboards at Rahul’s public meetings carry images of heroes and iconic figures of specific MBC groups. He also mentions these castes by name.

He is also making sure that he does not walk alone. In the western part of UP, Congress party has tied up with Rashtriya Lok Dal. The party is led by Ajit Singh, whose father Charan Singh led the first OBC opposition to Congress in UP in the late 1960s. This eventually reduced Congress to rubble in the state by the 1990s. Rahul is attempting to reverse this entire course. In the central and eastern parts of the state, Rahul has also forged similar caste-conscious alliances.

But Congress is not alone in the social engineering bid.

The ruling Bahujan Samaj Party (BSP) and the Samajwadi Party (SP), the likely winner of the election going by most opinion polls, are running campaigns focused on consolidating their core, caste-defined constituencies. Bharatiya Janata Party (BJP), India’s principal opposition party at the national level, is also trying to put together the perfect caste bouquet for the UP election. These imply that caste will continue to decide electoral fortunes in many parts of India for some time — and that Rahul has made the correct strategic choice.

The Stakes

In the event of less-than-spectacular success in the UP elections, Rahul will remain his party’s best bet for the prime ministerial post in 2014. But a good showing would almost certainly entrench his claim to the nation’s top post.

The question is, at what cost?

By playing on social divides for electoral gains, Rahul is demolishing the idea of a progressive and inspirational India that his great-grandfather Jawaharlal Nehru had hoped for, and sullying the Nehru-Gandhi identity associated with it. This is an identity that has allowed Congress to claim the higher ground over all parties through India’s modern history.

With the ageing prime minister unlikely to seek a third term, and Sonia Gandhi, the supreme leader of the ruling coalition, reportedly suffering from a debilitating illness, the nation’s leadership transition looks set to be decided by caste arithmetic in the dusty lanes of UP.

It is two steps back for Indian politics, and a crying shame for the Gandhis.

The freefall in the rupee has been arrested but don’t expect a full recovery this year

(20 January 2012) — The worst is over for the rupee after India’s central bank injected more than US$4 billion over three months in late 2011 to arrest the currency’s freefall, which was triggered by global risk aversion as investors started to pull funds out of India.

The Reserve Bank of India sold US$2.9 billion in November alone, the month that saw the rupee tumbling nearly 7%, its worst fall in 16 years, to hit a record low of 52.40 rupees to the dollar.

The November dollar sale was a massive increase from the US$845 million and US$943 million sold in September and October respectively, according to the central bank’s latest bulletin on January 12. This was also the highest quantum of sales in 32 months.

The significant intervention by the central bank is contrary to popular belief that it was following a hands-off approach. Experts close to the bank believe that the intervention had actually become necessary.

“Ideally the market forces should drive the exchange rate and there should be minimum interference (from either the the central bank or the government). However, when the exchange rate reaches a juncture where it starts causing distortions to the general economy, it should be addressed,” Madan Sabnavis, chief economist at Credit Analysis & Research Limited, India’s second-largest credit rating agency, told Asia360 News.

That juncture arrived in 2011 when the rupee, the worst-performing Asian currency, lost more than the 19% of its value against the US dollar between August and November. The loss was equivalent to the rupee’s total depreciation in the 2008-9 global financial meltdown.

On top of selling dollars, the central bank put in place measures to monitor the daily positions of banks and the purpose for which they were buying currencies. To curb speculation, it curtailed by as much as 75% the overnight limits for banks, which is the maximum amount of currency positions that can be carried over to the next trading day. The authority also banned the cancellation and rebooking of forward contracts, which allows the purchase and sale of an asset at a specified future time at an agreed price.

Within three weeks over October-November 2011, India’s foreign exchange reserves fell by US$12 billion, the steepest drop since the Lehman Brothers collapse in 2008. The massive depletion was a fifth of the $65 billion that India lost during the entire 2008-9 financial crisis.

“Rupee woes began with the eurozone crisis causing a dollar liquidity squeeze in the Indian markets both on the debt and equity capital markets. During this time, importers stayed uncovered on future dollar payables while exporters stayed fully covered on future receivables; thus setting the market in a heavily dollar oversold position. It was one-way street with excessive dollar demand and very limited supply,” Moses Harding, head of economic and market research at IndusInd Bank told Asia360 News.

The Indian economy was also beset by low growth, high inflation, tight liquidity, high interest rates, high fiscal deficit, and a big trade gap.

“It is difficult to defend currency weakness when the investment inflow into debt/equity capital account is not adequate to bridge the current account gap. In a way, India was exposed of its dependence on external liquidity to ensure exchange rate stability,” Harding said.

The mass pull-out of funds from India left the country’s foreign institutional investor inflow at almost zero in net terms for 2011, against nearly US$30 billion annually in the past.

To push foreign investment, the Indian government decided in November to raise foreign investment limits by $5 billion each for government and corporate bonds, to reach $15 billion and $20 billion respectively. The window for the raised limits ended on January 13.

Improved market sentiment this year has helped the rupee recover somewhat. A furious bout of trading in the final hours of January 13 sent the Indian currency to a five-week high of 51.29 rupees to US$1, ending the day at 51.53 to the dollar. The general improvement in global risk sentiment contributed to the dollar inflow in January, as did steps by the Indian government in December to re-invigorate the economy. The government liberalised the single-brand retail sector (a similar decision on multi-brand retail had to be put on the backburner amid political furore) and deregulated the interest rate on non-resident bank deposits.

However, many experts believe that the rupee may not make a full recovery in 2012 to return to the pre-fall levels of July 2011.

“Rupee fundamentals continue to stay weak. The economic dynamics has shifted from moderate growth and high inflation to low growth and moderate inflation. The resultant shift of monetary stance from anti-inflation to pro-growth will add to pressure on rupee,” Harding said.

The case against Iran for attacks on Israel’s foreign interests is far from air-tight, as inconsistencies come to light

An Israeli embassy car carrying the wife of a defence attaché was targeted in a terror attack in New Delhi on February 13. On the same day, in the Georgian capital Tbilisi, police defused an explosive device attached to a vehicle belonging to a citizen working for the Israeli embassy. And a day later, three blasts rocked Bangkok.

It was in the Thai capital that suspicions became clearer. Two Iranians were arrested for plotting to attack Israeli diplomats stationed there.

On the face of it, the three incidents seem to establish a straightforward case of a well-organised international plot by Tehran against its bitter enemy, Israel. Many suspect it was a boastful tit-for-tat campaign designed to rattle Tel Aviv for allegedly assassinating Tehran’s nuclear scientists on its own soil.

But a closer inspection of the incidents produces more questions than answers.

If the perpetrators were indeed state-backed operatives, why were they so inept? The New Delhi bomb was stuck on the opposite side to the petrol tank; the car explosives in the Tbilisi case were detected by their intended victim before they went off; and the Bangkok assailants blew up their house accidentally with the explosives meant for their mission.

“The attacks in India, Georgia and Thailand have all been highly amateurish,” Will Hartley, an analyst with the US-based private intelligence service IHS Jane’s, told Bloomberg on February 15.

The New Delhi attack car bomb no doubt resembled the method used — allegedly by Israeli intelligence agency Mossad — to kill Iranian nuclear scientists in recent months. A copycat bombing may have been Tehran’s attempt to demonstrate that it could not only match Israel in the deadly game but even expand the playground.

But throwing that theory up in the air is the fact that the attack took place in India, a nation with which Iran has had historically amicable relations. The two countries are also currently in delicate negotiations to establish a payment method for oil, in an attempt to circumvent American sanctions against Iran’s energy sector.

Also, India is one of the very few nations that has the requisite diplomatic clout to facilitate a rapprochement between Iran and the West. Tehran can ill-afford to lose a friend like that in exchange for the life of an Israeli diplomat.

These inconsistencies reduce the likelihood that it was a series of assassination plots sponsored by Tehran, at least in New Delhi. Authorities in India too seem to be in no rush to arrive at any conclusions. New Delhi police spokesman Rajan Bhagat said at a news conference a day after the attack, “We don’t yet have the evidence to point the finger at anybody. We are exploring all possibilities.”

One of those other possibilities could be the that of an international terrorist organisation acting independently.

While this is somewhat improbable in the India case, since groups like Hezbollah which are sympathetic to Iran do not have a known operational presence in the country, it is a stronger likelihood in the Bangkok incident.

Maria Ressa, author-in-residence at the International Center for Political Violence and Terrorism Research in Singapore, told Asia360 News  that “Hezbollah has been present in Southeast Asia for a long time now. The group, in the past, has hatched plans to hit the Israeli and the American interests, especially the embassies, in Singapore and Thailand. There were even many arrests related to the cause.”

In January this year, Thai police detained a Lebanese-Swedish man, Atris Hussein, for his alleged links with Hezbollah militants. Hussein led authorities to a stockroom, just outside Bangkok, filled with more than 4,000 kilograms of urea fertilizer and many gallons of liquid ammonium nitrate, which experts said were the “initial chemical materials [for producing] bombs”.

But the shoddy execution of the recent attacks, especially in Thailand, has also left many security experts questioning the involvement of a highly trained organisation like Hezbollah in the attacks, never mind a state-backed group.

Like the India authorities, Thai police declined to make any link between the February 14 explosions and the January arrest of Atris Hussein.

Hezbollah itself has denied having any role in the incidents. In an age when terror groups fall over each to claim credit for an act of terror anywhere in the world, the denial by Hezbollah is telling.

The remaining possibilities include fringe groups exploiting the lax security apparatus in the region to carry out the attacks for their own, as yet unknown, agendas.

Some believe that it is quite possible that the complete picture may never emerge and that Iran and Israel would forever keep blaming each other for the incidents.

But whoever was responsible for the current chain of violence, the perception that Iran is behind the mayhem has “undoubtedly exacerbated the already mounting tensions surrounding Iran’s nuclear program, and international efforts to curtail it,” said Will Hartley, head of the Terrorism & Insurgency Center at IHS Jane’s in London.

Israel is insisting that India help sponsor a resolution against Iran in the United Nations Security Council condemning the attack on its diplomats in New Delhi, as well as the incidents in Tblisi and Bangkok.

But it is way too early at the moment to connect the dots; and establish the spread of the Iran-Israel conflict to lands far away from their borders.