Full speech: Prime Minister Manmohan Singh's address to the nation

Full speech: Prime Minister Manmohan Singh's address to the nation
NDTV.com | Updated: September 21, 2012 20:47 IST
Prime Minister Manmohan Singh today addressed the nation, defending the economic reforms which were introduced last week.
Click here for the Video link
Here is the full text of Dr Singh's speech:
My dear brothers and sisters,
I am speaking to you tonight to explain the reasons for some important economic policy decisions the government has recently taken. Some political parties have opposed them. You have a right to know the truth about why we have taken these decisions.
No government likes to impose burdens on the common man. Our Government has been voted to office twice to protect the interests of the aam admi.
At the same time, it is the responsibility of the government to defend the national interest, and protect the long term future of our people. This means that we must ensure that the economy grows rapidly, and that this generates enough productive jobs for the youth of our country. Rapid growth is also necessary to raise the revenues we need to finance our programmes in education, health care, housing and rural employment.
The challenge is that we have to do this at a time when the world economy is experiencing great difficulty. The United States and Europe are struggling to deal with an economic slowdown and financial crisis. Even China is slowing down.
We too have been affected, though I believe we have been able to limit the effect of the global crisis.
We are at a point where we can reverse the slowdown in our growth. We need a revival in investor confidence domestically and globally. The decisions we have taken recently are necessary for this purpose.
Let me begin with the rise in diesel prices and the cap on LPG cylinders.
We import almost 80% of our oil, and oil prices in the world market have increased sharply in the past four years. We did not pass on most of this price rise to you, so that we could protect you from hardship to the maximum extent possible.
As a result, the subsidy on petroleum products has grown enormously. It was Rs. 1 lakh 40 thousand crores last year. If we had not acted, it would have been over Rs. 200,000 crores this year.
Where would the money for this have come from? Money does not grow on trees. If we had not acted, it would have meant a higher fiscal deficit, that is, an unsustainable increase in government expenditure vis-a-vis government income. If unchecked, this would lead to a further steep rise in prices and a loss of confidence in our economy. The prices of essential commodities would rise faster. Both domestic as well as foreign investors would be reluctant to invest in our economy. Interest rates would rise. Our companies would not be able to borrow abroad. Unemployment would increase.
The last time we faced this problem was in 1991. Nobody was willing to lend us even small amounts of money then. We came out of that crisis by taking strong, resolute steps. You can see the positive results of those steps. We are not in that situation today, but we must act before people lose confidence in our economy.
I know what happened in 1991 and I would be failing in my duty as Prime Minister of this great country if I did not take strong preventive action.
The world is not kind to those who do not tackle their own problems. Many European countries are in this position today. They cannot pay their bills and are looking to others for help. They are having to cut wages or pensions to satisfy potential lenders.
I am determined to see that India will not be pushed into that situation. But I can succeed only if I can persuade you to understand why we had to act.
We raised the price of diesel by just Rs. 5 per litre instead of the Rs. 17 that was needed to cut all losses on diesel. Much of diesel is used by big cars and SUVs owned by the rich and by factories and businesses. Should government run large fiscal deficits to subsidise them?
We reduced taxes on petrol by Rs. 5 per litre to prevent a rise in petrol prices. We did this so that the crores of middle class people who drive scooters and motorcycles are not hit further.
On LPG, we put a cap of 6 subsidised cylinders per year. Almost half of our people, who need our help the most, actually use only 6 cylinders or less. We have ensured they are not affected. Others will still get 6 subsidised cylinders, but they must pay a higher price for more.
We did not touch the price of kerosene which is consumed by the poor.
My Dear Brothers and Sisters,
You should know that even after the price increase, the prices of diesel and LPG in India are lower than those in Bangladesh, Nepal, Sri Lanka and Pakistan.
The total subsidy on petroleum products will still be Rs. 160 thousand crores. This is more than what we spend on Health and Education together. We held back from raising prices further because I hoped that oil prices would decline.
Let me now turn to the decision to allow foreign investment in retail trade. Some think it will hurt small traders. This is not true.
Organised, modern retailing is already present in our country and is growing. All our major cities have large retail chains. Our national capital, Delhi, has many new shopping centres. But it has also seen a three-fold increase in small shops in recent years.
In a growing economy, there is enough space for big and small to grow. The fear that small retailers will be wiped out is completely baseless.
We should also remember that the opening of organised retail to foreign investment will benefit our farmers. According to the regulations we have introduced, those who bring FDI have to invest 50% of their money in building new warehouses, cold-storages, and modern transport systems. This will help to ensure that a third of our fruits and vegetables, which at present are wasted because of storage and transit losses, actually reach the consumer. Wastage will go down; prices paid to farmers will go up; and prices paid by consumers will go down.
The growth of organised retail will also create millions of good quality new jobs.
We recognise that some political parties are opposed to this step. That is why State governments have been allowed to decide whether foreign investment in retail can come into their state. But one state should not stop another state from seeking a better life for its farmers, for its youth and for its consumers.
In 1991, when we opened India to foreign investment in manufacturing, many were worried.
But today, Indian companies are competing effectively both at home and abroad, and they are investing around the world. More importantly, foreign companies are creating jobs for our youth -- in Information Technology, in steel, and in the auto industry. I am sure this will happen in retail trade as well.
My Dear Brothers and Sisters,
The UPA Government is the government of the aam aadmi.
In the past 8 years our economy has grown at a record annual rate of 8.2 per cent. We have ensured that poverty has declined much faster, agriculture has grown faster, and rural consumption per person has also grown faster.
We need to do more, and we will do more. But to achieve inclusiveness we need more growth. And we must avoid high fiscal deficits which cause a loss of confidence in our economy.
I promise you that I will do everything necessary to put our country back on the path of high and inclusive growth. But I need your support. Please do not be misled by those who want to confuse you by spreading fear and false information. The same tactics were adopted in 1991. They did not succeed then. They will not succeed now. I have full faith in the wisdom of the people of India.
We have much to do to protect the interests of our nation, and we must do it now. At times, we need to say "No" to the easy option and say "Yes" to the more difficult one. This happens to be one such occasion. The time has come for hard decisions. For this I need your trust, your understanding, and your cooperation.
As Prime Minister of this great country, I appeal to each one of you to strengthen my hands so that we can take our country forward and build a better and more prosperous future for ourselves and for the generations to come.
Jai Hind.
Full speech: Prime Minister Manmohan Singh's address to the nation

Veteran issues takes centerstage inspite of recession

US Budget Cuts and Veteran's Pensions/ B​enefits- commentry by Lt Gen Harhajan Signh
Friends,
I saw a 40 minutes TV program in USA about the US Budget cuts and Veteran's Pensions/benefits. In this program Pentagon correspondent of a newspaper was the expert and a number of veterans (mostly below officer rank) from US Army/Navy/Air Force/Marine Corps expressed their views and put up suggestions via telephone calls.
There is a debate going on in USA whether in view of the existing financial problems and likely Defence Budget cuts, so called high expenditure on Veteran's pensions/benefits should be reduced and how.
The following points got high lighted during the program-
1. The existing system is some what different in the four Defence Services.
2. The US Navy and the Air Force have requirement for more technical personnel and it is difficult to replace them. They need to be retained for longer periods and incentives for them to continue longer built in.
3. The System of Pensions in the Army and Marine Corps (probably) is that in case an officer/soldier serves for 20 years, he/she gets 50% of his basic salary at retirement as pension for life. If the service is 30 years or more the percentage of pension vis a vis
basic pay goes up to 75%.
4. For service less than 20 years there is no pension.
5. In addition the veterans get life long medical facilities.
6. All participants high lighted that the existing system has been in vogue for a number of years and it will be very difficult to change it, considering the sentiments of the veterans.
7. THE SERVICE CONDITIONS OF THE MILITARY JUST CANNOT BE COMPARED WITH THOSE IN CIVIL GOVERNMENT DEPARTMENTS OR IN BUSINESS.The harsh and dangerous service conditions of especially those in combat arms; the casualties suffered, injuries sustained and psychological trauma experienced require special consideration.

Preparing for a Demographic Dividend

At the World Economic Forum’s fall meeting in New Delhi, five experts discussed the challenges and opportunities India faces as its population becomes increasingly youthful. These include improving the education system, providing better housing, luring capital to support innovation, and implementing policies that will engender confidence in the economy.

The five experts are Sudhakar Balakrishnan, CEO of Adecco India, a staffing and human resources services firm based in Bangalore; Thomas Crampton, Asia/Pacific social media strategy director for Ogilvy Public Relations Worldwide, part of WPP PLC; Shobana Kamineni, executive director of new initiatives for the Apollo Hospitals Group, which operates 46 hospitals in India and overseas; Naresh Malhan, managing director of Indian operations for the employment services firm Manpower Services India Private Ltd; and C.K. Prahalad, considered by many to be the world’s number one mangement guru, who unfortunately passed away on April 16, 2010.

The discussion, moderated by Booz & Company Chief Marketing and Knowledge Officer Thomas A. Stewart, took place on November 9, 2009, at the World Economic Forum’s India Economic Summit in New Delhi. Booz and Company is an international management consulting firm.

The Summer 2010 issue of STRATEGY+BUSINESS, the management magazine published by Booz & Company, carries a full account of the illuminating discussion. It’s reproduced below.
Ram Narayanan
US-India Friendship

with Sudhakar Balakrishnan, Thomas Crampton, Shobana Kamineni, Naresh Malhan, and C.K. Prahalad; moderated by Thomas A. Stewart (click here)

Demographics are destiny. Countries with a large and expanding workforce and relatively few people of dependent age (under 15 or over 64) can reap what Harvard School of Public Health demographer David Bloom has called a “demographic dividend.” Young, unencumbered workers spur entrepreneurship and innovation, enabling significant gains in productivity, savings, and capital inflows. As fresh ideas flourish, governments can focus on improving infrastructure and helping to fund such critical technologies as intelligent transportation systems, smart utility grids, and renewable energy. The World Health Organization (WHO) estimates that the demographic dividend can increase a country’s GDP growth by as much as a third.

No country is better poised to take advantage of the demographic dividend than India. In 2020, the average age in India will be only 29 years, compared with 37 in China and the United States, 45 in western Europe, and 48 in Japan. Moreover, 70 percent of Indians will be of working age in 2025, up from 61 percent now. Also by 2025, the proportion of children younger than 15 will fall to 23 percent of India’s total population, from 34 percent today, while the share of people older than 65 will remain around just 5 percent. China’s demographics are not as rosy as India’s, because the government’s policies to limit population growth will have created an abnormally large cohort of people over age 60 by 2040. Other emerging nations, such as Pakistan, Indonesia, and certain countries in Latin America and Africa, will produce much larger workforces in the coming years. But their demographic dividends may be inhibited by political and social instability that impedes efforts to put this young population to productive use; a country with massive numbers of unemployed young people and no constructive economic outlet for their dynamism is headed for trouble.
Preparing for a Demographic Dividend

How Indian Entrepreneurs have circumnavigated Government hurdles to IT Development

The innovation revolution livemint.com The Wall Street Journal
Emerging India has evolved from the world’s back office into a knowledge and innovation hub. In the next decade, expect benefits for not just the nation but the global economy by Vivek Wadhwa
The ability of Indian entrepreneurs to rise above all the hurdles the government and society throw at them. Just as India’s companies install their own power generators to deal with supply problems and purification plants to provide clean water, they have built their own surrogate education system. And herein lies India’s greatest innovation: Its companies have developed the ability to take the output of a weak education system and turn these workers into R&D specialists who can compete in the global arena.

Faced with severe talent shortages, escalating salaries and a lagging education system, Indian industry had to rethink the way it recruited, trained, developed and retained its workforce. It started by adapting the best practices of companies that were outsourcing R&D to India. Then, leading companies in diverse industries started improving on these techniques and methods; refining and integrating them into a unified system.

With the economic slowdown, Indian talent supply has been able to catch up with demand. And Western companies are more desperate than ever to cut costs.

To achieve the 30-40% cost savings that Indian outsourcers can offer, they are now outsourcing their most strategic internal systems. Additionally, thanks to a combination of the recession in the US and that country’s flawed immigration policies, there is a flood of highly educated and skilled talent returning home to India.

They see more opportunity in India than abroad, and want to be near family and friends. They are returning with the latest skills and an understanding of foreign markets.

So the stars are lining up for Indian outsourcing, and this industry is gaining a second wind.

Within a decade, India is likely to become the world’s second-largest R&D centre after the US. Its innovations will likely benefit not only India, but also the world.

Vivek Wadhwa is executive in residence/adjunct professor at the Pratt School of Engineering at Duke University and a senior research associate with the Labor and Worklife Program at Harvard Law School.
Read the full article on how Government hurdles have been bypassed:
The innovation revolution

For US, India is just a market

Daily Poineer Thursday, June 3, 2010 by Shobori Ganguli
Once feted as a “natural” and “strategic” partner of the United States, India must prepare to reconcile itself to the changed terms of relevance that the Americans have now laid out for this partnership. Even as External Affairs Minister SM Krishna and US Secretary of State Hillary Clinton meet in Washington for the inaugural session of their Strategic Dialogue through this week, media reports and opinion-makers in the US point to an element of mistrust and pessimism that has crept into Indo-US relations of late. This, largely owing to the Obama Administration’s disposition towards China and Pakistan — the former, India’s biggest challenge to the number one position in Asia; the latter, an imploding neighbourhood with a committed anti-India policy.

Indeed, India’s relevance to the US must be re-measured according to President Barack Obama’s priorities which, as things stand today, are somewhat different from those of his predecessor, Mr George W Bush. The first, of course, is Mr Obama’s AfPak policy. Having committed a complete withdrawal of troops from Afghanistan by 2011, Mr Obama envisions a Pakistani role in that country to be played purely to American direction. In this scenario, India seems a stumbling block to Mr Obama as it seeks a legitimate and rightful role in Afghanistan’s reconstruction, as much for strategic depth in the region as to contain Pakistan’s influence in that country. This is clearly not to Mr Obama’s liking as he would ideally wish Pakistan, after all a proxy state, to wield greater influence in Afghanistan once the Americans have technically vacated that theatre. Therefore, any attempt by India to enhance its relevance in Afghanistan would not be a truly welcome step for the US.

Another source of discomfort to Mr Obama, of course, is India’s attempt to paint Pakistan into a corner on the issue of terrorism. While New Delhi has done its share of protesting against Islamabad’s sponsorship of terror in India, Washington has remained largely unimpressed. The official US position is that terrorism is a “shared challenge that the United States, India, Pakistan, other countries have”. Such is Mr Obama’s compulsion to keep Pakistan in good humour on this so-called war against terror that he actually put pressure on India to cede ground after the 26/11 Mumbai terror attack and invite Pakistan for resumed negotiations on all issues, including Kashmir, as Islamabad so pointedly boasted about. Clearly, India is expected to de-prioritise its concerns about Pakistan and maintain peace on its western border only so that the latter is not distracted from its job — that of securing American interests in the AfPak arena.
Read more: For US, India is just a market
Readers Comment
This is the way the US Presidents operate. For Obama and the Democratic Party, the most important thing is his re election.
Also USA is so concerned about the economic, financial and military potential of China. India has made itself not so relevant in the critical schemes of things for the US President. The Americans also know that India is a paper elephant!!!
Pakistan is playing to the US tune and is critical for any stability in Afghanistan. Even though the US Authorities know the double game always played and being played by Pakistan, they need Pakistan.
Good Indo-US relations can help in keeping Pakistan under control. During the cold war US did not trust Indian leadership. Hence agreeing to US requests like starting dialogue with Pakistan is not too big a price to pay. Of course the Indian leadership has to always weigh, how much to go along!!
So India should take care of its own interests. We need tough leadership.
Lt Gen Harbhajan Singh (Retd)

India as a Market: A Times Group Presentation

Esteemed Friends,
Here is a very comprehensive presentation on India click here. Worth seeing, sharing and STORING for reference.
Best wishes.
Lt Gen Harbhajan Singh (Retd)

Presentation on India - Times Group
India and China
Engines of growth China and India continue to expand with positive implications for the global economy. Significantly, while China and India complement each other in many ways, they also compete with each other in many areas. As India's Finance Minister rightly said, "India has often been compared with China...I invite comparison with China."

Rating agency Standard & poor (S&P) has included 8 Indian companies in its annual 'Global Challengers List' of 300 firms, while only 4 Chinese firms were included in the list.

India has ousted Taiwan from the second place in the Asia-Pacific private equity rankings with PE deals worth US$ 2,433 million in the first half of 2007, according to Thomson Financial. China has been ranked fifth with deals worth US$ 678.7 million.

Indian companies account for 10.5 per cent of the total syndicated loans by BRIC nations, with borrowings of about US$ 8.28 billion till June 2007. This is higher than China's 7.9 per cent or over US$ 6 billion.

More than 100 Chinese pharmaceutical manufacturers have lined up major India expansion plans via joint ventures, strategic alliances, research collaborations and wholly-owned subsidiaries.

China's automobiles market is double that of India, India leads in terms of exports: China's auto exports -- 340,000 units in 2006 -- were less than half of India's total vehicle export tally of 970,620 units (including two and three wheelers).

India and China have signed a memorandum of understanding (MoU) allowing oil and gas companies of the two countries to engage in mutually beneficial cooperation in acquiring hydrocarbon assets in third world countries without undercutting each other.

The Asia-Pacific region is set for a technology boom with China and India leading the pack in terms of information technology: China is expected to account for 32 per cent of the region's technology market in 2007, India makes up 23 per cent, according to International Data Corp.

India and China have emerged as the preferred destinations for global retail majors increasingly looking to spread their businesses across the world according to a report titled, '2007 Global Powers of Retailing' by international consultancy firm Deloitte Touche Tohmatsu.

India and China's jewellery market will grow to equal the US market by 2015: in the global scenario, China has 8.9 per cent market share and India 8.3 per cent.

Driven by high trading volumes for equities and good presence of global banking and financial services firms, Mumbai has secured a place in the world's top ten financial flow hubs list, beating Hong Kong and Beijing in China, according to a survey compiled by Mastercard Worldwide.

Despite massive Government support and huge visibility on the global arena, China's software offshoring market has not taken off as expected and still has a long way to become a potential alternative to India, technology research firm Forrester said in a report released in May 2007.

GSM operators in India serve 300 per cent more subscribers per mega hertz (MHz) than operators in China, a criterion that reflects growth of a telecom network. Using the same benchmark period of 12 years of existence, Indian GSM operators served 3.36 million subscribers per Mhz by December 2006, while China had served 0.85 million subscribers by December 1999. China had introduced mobile services seven years before India.

India topped the global chart for total amount raised through American depository receipts (ADRs) beating China and Taiwan. In 2006, India raised funds worth US$ 2.09 billion while China collected US$ 2.18 billion and Taiwan US$ 1.47 billion through this route.
India as a Market: The Times Group slideshow presentation

China 'overtakes Germany as world's largest exporter'

Customs officials said China had come through a weak trading period. China's exports rose 17.7% in December, state media has reported, suggesting the country has overtaken Germany as the world's largest exporter.

The rise, compared to a year earlier, breaks a 13-month decline in trade as a result of the global downturn. Xinhua said total exports for 2009 were $1.2tn (£7.5tn), but that total foreign trade over the year was down 13.9%. Correspondents say the figures will lead to new demands from China's competitors that it devalue the yuan.

Last year saw a continuing decrease in China's trade as the global economic downturn led to a fall in demand for its products.

But in the last few weeks of the year, there was a far greater rise than forecasters had expected, with foreign exports reaching $130.7bn, up 17.7% on the previous December.

China's General Administration of Customs (GAC) said exports overall in the year were $1.2tn, down 16% from in 2008, while imports were 11.2% down from a year earlier at $1.01tn.

The politically sensitive total trade surplus was down 34.2% to $196.1bn, a fall of almost a third.

The figures suggests China will surpass Germany's export total for the whole of 2009, although this will not be confirmed until Germany's full-year data is published in February.
China 'overtakes Germany as world's largest exporter'

India's Export Performance
Indian Exporters Witness Worst of Times in 2009
NEW DELHI - India’s exports were swept into rough seas in 2009 owing to a sharp contraction in demand from Western consumers, whose household budget cuts to survive recession killed millions of jobs and eroded growth in emerging economies.

Exporters bled all through the year, with their woes peaking in May when consignments dropped 40 per cent, the most in 13 years, but hope appeared by way of 18.3 per cent growth in exports in November.

The year also saw unveiling of five-year Foreign Trade Policy that sought to incentivise exports to new markets - ones that haven’t been hit as hard by recession as the West.

Exporters have been heavily dependent on the traditional markets of the US and Europe -almost contributing one-third to their kitty. India’s exports in the last fiscal of 2008-09 were $185 billion, according to revised official data.

Engineering goods, textiles and textiles products, gems and jewelery and petroleum products fill the major portion of the country’s export basket and most of it is destined to the western markets of the US and Europe. All these sectors which account significantly for 80 million employment in the export units were hit badly. However, the pace of decline in some of the segments seemed arrested since August after peaking in May. Their troubles started since October 2008.

According to a recent presentation by Commerce Secretary Rahul Khullar, the decline in exports has “mellowed down”. Commerce and Industry Minister Anand Sharma is hopeful of better future for the segment. Allaying concerns of law-makers, Sharma said he expects the situation to improve in the next few months. For the fiscal 2010-11, he would bet on 15 per cent growth. Joshi of IIFT, said going forward by June, 2010, “situation will be somewhat optimistic”.
Source : indiajournal.com
Indian Exporters Witness Worst of Times in 2009
Comments: The commerce and Industry Ministry should be wound up for its very poor performance and replaced by the Chinese Model if we intend to compete with China in the World Market.

India- China: Enduring Links

Balancing India and China
Among the most encouraging recent developments in India China Economy and India-China ties is the rapid increase in bilateral trade. A few years ago, India Inc had a fear of being swamped by Chinese imports. Today, India enjoys a positive balance of trade with China. But major industry players in India feel there is no need to give the Chinese a free ride into the domestic market so early. This is particularly, when India and China have been directly competing across several product categories. And that too, when both the applied and bound import tariffs are higher in India compared with China. Indian industry's ambivalence over the proposed Indo-China FTA stems from concerns over previous FTAs signed by the government. There's a feeling that some of these FTAs were signed in haste, and without adequate homework. Result: There has been confusion about the country of origin issue as well as the items to be put in the early harvest lists.
Balancing India and China

Competition will Continue
Energy has been a source of both cooperation and competition between China and India in recent years. They are two of the world's fastest growing energy consumers, with China importing about 40 percent of its energy needs and India 70 percent. China has consistently outbid India in the fight for energy sources. These bidding wars have inflated prices for energy assets, prompting the two sides to agree to joint bidding in third countries. To this end, they signed a "Memorandum for Enhancing Cooperation in the Field of Oil and Natural Gas" in January.

Their energy competition is also reflected in their assertions of naval power. As India reaches into the Malacca Straits, Beijing is creating a "string of pearls" surrounding India by developing strategic port facilities in Sittwe (Burma), Chittagong (Bangladesh), and Gwadar (Pakistan) to protect sea lanes and ensure uninterrupted energy supplies. India is wary of China's efforts to engage its South Asian neighbors in military and economic matters. Some Indian analysts believe that China is pursuing a two-pronged strategy of lulling India into complacency with greater economic interaction while taking steps to encircle India and undermine its security.
Competition will Continue
Related Reading:
India-China Relations: The Way Forward by Nirupama Rao

Tailpiece: Essential difference between China and India
In China the criminals are made citizens and in India citizens are made criminals. India badly needs Electoral and Police Reforms, else catching up with China is impossible!

Balancing Military Spending and Economic Crisis

Indian policy and military decision makers are facing a real quandary. On the one hand the country’s economy is suffering greatly, as consumer markets across the world shrink - a direct challenge to the double digit growth of Indian defense budgets over the last decade; on the other hand, perceived and real vulnerability to external and internal threats, both conventional and asymmetric, appear to be growing rapidly. Indian defense officials complain that the country’s chief potential rivals, Pakistan and China are spending about 4% of their GDP on defense, while India’s defense budget rises to a mere 2% of the country’s GDP. With that in mind, India’s defense budget is set to rise to about $40 billion next year (about 3% of GDP), bucking economic trends and no doubt raising eyebrows and maybe even real protest. India’s weapons imports have also seen a huge growth spur over the last decade, and are set to grow even more in the coming years, reaching more than $10 billion in 2012.

With the economic crisis set to continue for at least another year, and with countries around the world getting used to the idea that the impact of this crisis will continue to effect their economies for several years to come, it is reasonable to assume that defense budgets will stagnate, if not shrink over the next several years, unless the economic crisis slides into a military crisis, in which case all bets are off. Either way, it seems like all of us, proponents and opponents of military spending are doomed to live the Chinese proverb: “May You Live in Interesting Times”.
Read the full article at:
Balancing Military Spending and Economic Crisis
Related Reading
‘Global meltdown not to impact India’s military modernisation’
Antony hopes for hike in 2009-10 defence budget

“Fall” is different this year

IT is during “Fall” that we have been visiting America and are able to savour the “fall colours” for which this country is famous. Manhattan offers beautiful walks, not only in the Central Park but along Park Avenue, Fifth Avenue, Lexington Avenue etc.

Central Park is a riot of colour and along various Avenues it is the spectre of well-appointed stores with latest in clothes, jewellery and assortment of items for the rich and the famous. From Gucci to Cartier to Brioni, to Louis Vuitton or you name it, they are all there, though at a huge price, whereas Lexington Avenue offers more modest shopping.

But this year we have been late in coming, and colours in the Central Park have lost their myriad hues and wear a drab wintry look. However, there is “fall” of a different kind. It is the “fall” in the economy.

All those stores for the rich and others for not so rich are shorn of customers and wear a deserted look. Many have put up notices for discounted sales, while some others are simply down and out and ripe for outright closure and great picking.

The newspapers make gloomy reading with layoffs in thousands by the day: Industry after industry seems to be going under. No one appears to know how all this came about. There is a recall to the Great Depression of 1929 and we learn that Bernanke, Chairman Federal Reserve Bank of America is an authority on the Great Depression and will surely fix the economy.

They say that perhaps “sub-prime lending,” in housing is the villain. But Greenspan, the previous Chairman of Federal Reserve Bank, was an authority on housing finance. So also were a bunch of CEOs, each an expert in his field, drawing fat salaries and millions in bonuses, whose companies have gone bust.

America too has the largest number of Nobel Laureates in economics. But now
we are told the economics is not a precise science. No two economists agree
on any one economic issue. The debate often turns to free capitalism versus
controlled economy.

The motor car industry is on the brink of collapse and is in dire need of resuscitation in the form of bridge loan (whatever it means) of 25 million dollars. Oil prices had shot through the roof and the great American gas guzzlers had lost their attraction and now when the oil prices have come down there is no credit available and there is little money in the wallets.

Law makers are not enthused with this fat demand of 25 million dollars. So uncertainty prevails as it does in most other areas. Auto manufacturers should have been working on fuel-efficient vehicles rather than on gas guzzlers. is the refrain .

Much hope is being pinned on the President elect, Mr Barack Obama, and his team. But the new Presidency is still many weeks away and much more “fall” may occur. Nor does the President elect have a magic wand to restore sanity and economic order in a jiffy.

The way Roosevelt handled the 1929 depression is now the subject of much study. But no two situations are ever exactly alike, so we wait out for the current financial turmoil to run its course.

Even if we are late for the “fall colours” this year, the Fall is there, though of a different type where the colours are missing but it does offer great bargains and is a shopper’s paradise. All you need is a fist full of dollars!

Lt Gen Harwant Singh (Retd)
“Fall” is different this year

Indian Economy Stripped of its Wealth

$1.4 trillion Indian ‘black’ money in Swiss banksDespite condemning black money, non-resident Indians have only helped to increase it. According to Aman Agarwal, professor of finance at the Indian Institute of Finance, New Delhi, the total amount of black money globally is estimated between $2.1 and 2.5 trillion. This is roughly about seven percent of the world’s GDP.

Indians have stashed away- hold your breath - no less than $1.4 trillion in black money in Swiss banks, according to a Swiss Banking Report quoted by Naman Sood. Indians are trailed by Russians at $470 billion, Britons at $390 billion, Ukrainians at $100 billion and Chinese at $96 billion. This means that Indians have more black money than the four largest depositors that follow them.

Black money in India has been variously estimated by economists between five and 48 percent of the economy. Economist Shanker Acharya estimated it at 20 percent of the GDP while Arun Kumar put the figure at 40 percent. Who keeps their illegal cash abroad? Politicians, businessmen, babus and criminals. With the liberalisation of the foreign exchange rules, businessmen have fewer reasons to keep their ill gotten gains abroad.

"Let us bring back our money," says M.R. Venkatesh, an NRI in the US. "It is one of the biggest loots witnessed by mankind - the loot of the ’aam aadmi’ (common man) since 1947 by his brethren occupying public offices. What is even more depressing is that this ill-gotten wealth of ours has been stashed away abroad into secret bank accounts located in some of the world’s best known tax havens. And to that extent, the Indian economy has been stripped of its wealth."

But how have the NRIs contributed to increasing the quantum of black money? In an exclusive interview, Agarwal said Indian workers in Arab countries cannot transfer money back home due to local laws. So ’hawala’ is the only route -- by handing cash to local ’agents’ for delivery to their families in India. The other method is buying gold and bringing it to India. No wonder huge gold markets or ’souks’ have come up in these countries. Due to the bulk of gold for higher amounts, NRIs bring in diamonds.

NRIs in Eastern Africa faced tight exchange control regulations until mid-1990s so they sent their cash to Britain and the US as ’a lifeboat’. They deposited it in banks or purchased properties with this money. NRIs from Britain used the ’hawala’ route to send money to their families for a better exchange rate and less hassles with banks for their relatives.

Agarwal adds that some NRIs in the US transferred money by ’hawala’ 10 years ago after India’s nuclear tests at Pokhran because they feared that they may be pressurised to leave the US.

After 9/11, a new element of financing terrorist operations has crept in -- black money transfers, in addition to financing drugs. Terror groups are using ’wire money transfer’ channels and credit cards to send money for terror strikes in India. So the Indian government set up the Financial Intelligence Unit - India (FIU-IND) in 2004 for receiving, processing, analysing and disseminating information relating to suspect financial transactions.

All banks and finance companies are bound every month to inform FIU-IND about all cash transactions of over Rs1 million and its equivalent in foreign currencies; all cash transactions below Rs1 million and its equivalent in foreign currencies; all cash transactions in forged or counterfeit currency notes and all suspicious transactions.

This unit has unearthed an impressive number of underhand dealings as detailed in its annual report and has been granted more powers to track down more. Now Indian outlets of foreign wire transfer services and casinos have also been ordered to report their transactions every month.

Banks and finance companies now implement strict rules to identify everyone who operates or opens an account with them. This concept, ’Know Your Customer’, has been advocated by Agarwal for some time. He has also devised a CD-ROM Principle for India’s Black Money where C stands for pay Cash Carry Certificates; D for Delays, Deficiencies and Denial of certificate; and ROM for Rest on Mat as cases are never taken up and gather dust!

Comments Agarwal, "Unfortunately, the least respect for law and the maximum violation of law is the order of the day by some people in authority - as they are charged with the responsibility of enforcing laws on mafia groups, gangs, and/or nexus of the two. The former enjoys the constitutional security and the later is outside the framework of the law. A common man does not question either of them."

Both Indians and NRIs are equal partners in this crime.
Black money in Swiss Banks

Comment: Has the Finance Minister devised any means to identify black money in foreign banks or he too is victim of this malady? If new transparency laws being mandated by SWISS Banks become a reality then alone we will know who is launderinng money. Frequent Indian fliers to Switzerland is another indicator of who is who in the black money business. FM has no money for the Defence Forces and ESM (OROP), but nearly 30 percent of GDP is black money. A parallel economy used for the Gold Rush, Drugs, Smuggling, Terrorist Activities, Corrupt IAS babus stashing money abroad, financing criminal activities, Politicians becoming richer, benami transactions and so forth. $1.4 trillion works out to about Rs56 trillion which is Rs56,000,000,000,000. This a is staggering amount of Rs56,000,00 crores. If each one below the poverty line in India is given a share of the loot, the poorest of the poor would receive Rs 2 lakhs ($5000) as one time bounty. Who says India is poor?

Gore Aims High on Renewable Energy Goal for United States

Former Vice President and Nobel laureate Al Gore outlined a bold climate goal for the nation Thursday, challenging the US to create every kilowatt of electricity through renewable energy sources within 10 years.

"Our dangerous over-reliance on carbon-based fuels is at the core of all three of these challenges -- the economic, environmental and national security crises," Gore saidin his speech in Washington. "We're borrowing money from China to buy oil from the Persian Gulf to burn it in ways that destroy the planet. Every bit of that's got to change."
Gore Aims High on Renewable Energy Goal for US