It’s the Economy, Stupid

India’s inflation hit 11.05% as of Friday 20th June.

It is a massive jolt to the ruling UPA Coalition - seemingly uncontrollable march towards double digit inflation. The Bombay Sensex lost over 500 points on Friday (3.42%). Interest rates are bound to rise in the coming weeks, making home purchases, durables, and cars that much more expensive. Is the India story coming unstuck ?

When I mentioned to a friend about the potential drop in India’s consumption and GDP growth rates, he was not receptive - the hype still has a solid impact on professionals all around, especially those in the retail and banking/finance sectors. Many people still believe that India would move on, despite the credit squeeze and the inflation. While that may be (or is) true, the reality is staring starkly at our faces. Auto, banking, and realty stocks are down badly over the past week or so. Thousands of crores of market cap has disappeared in the past few days. Foreign funds have repatriated huge amounts back from the stock market. Petrol and diesel price rises of last week have contributed to a rise in inflation.

The government is caught between the fire and the frying pan. In fact, the petrol price increase was not as much as was expected, Subsidies still amount to a big part of the price. If only the government removes all subsidies and let the market dictate the price, the pump prices would rise by atleast another 25%, leading to an inflation of, may be 20% overall. There is no point in keeping money in fixed deposits which pay 9% interest when the inflation is crossing 11%. Stock market investment, while still the overall best, is currently not for the faint-hearted. The Senex is indeed marching towards 14,000 - a full 33% below the peak of 21,xxx attained earlier this year.

The fate of any government would hang in balance, and the current Central Government is no exception, despite the astute financial management expertise available between the Prime Minister, Dr Manmohan Singh, and the Finance Minister, Mr P Chidambaram. The elections are due next year, but there is another huge challenge in front of this government, a non-economic one at the outset.

And, that is the Nuclear Pact with the IAEA and the U.S. While a bad economy could unseat a government, bad politics could be worse. The UPA Coalition has the Communist Party as a member (though not in the government per se), and they are stopping the government from signing of the nuclear agreement. Now, this agreement is very critical for India. The dependency on imported oil is 70% for India, and that can only get worse. With oil prices pushing USD 150, and predicted to hit USD 200 over the next 6 to 24 months (according to a recent Goldman Sachs report), things could not get worse for India. Nuclear power is the only option open, though the gestation periods are longer as compared to fossil fuel power plants. India needs nuclear fuel, and that is available from the Nuclear Suppliers Group (NSG) only if India signs IAEA Safeguards Agreement. The U.S. is ready, for the past 6 months, but India is not ready. This could be puzzling for most external observers. Who would say no to the free-market supply of nuclear fuel which could unshackle India from the heavy dependence on oil and coal ?

But, that is the way it is in a fractious coalition, influenced strongly by Communists, though their votes are few in the parliament. They have threatened to vote against their own government if it proceeds with the signing of the nuclear pact. And, the Prime Minister wants to resign if the pact does not see the light of the day. He is not a true politician, so he is able to see the very long-term benefits to India of such a close cooperation agreement with the U.S. and the nuclear watchdog (the IAEA). But India is also full of skeptics, who like American consumer goods but not the heavy stuff like these agreements and pacts which they do not understand in toto.

Well, that is democracy. The commoner is not affected by all this politics. He wants to increase his consumption, and fulfil his desires in a growing, affluent economy. But if the economic growth drops significantly due to the credit impact and interest rates, et al, then he would not hesitate to seek a change in the government. Looks like the day is approaching. Can we blame the commoner and his use of democratic tools at his disposal ?

Have a wonderful weekend,

Cheers,

Vijay Srinivasan
21 June 2008
Mumbai

Commentary on American Politics

It is hard not to take note of what is happening in American Politics.

While the Republican nomination for the next president went the conservative way, there was a two-fold revolution happening in the Democratic Nomination. First, it was the novelty of the possibility that there could be, after all, a woman president. America has taken too long, in fact, to reach this stage in its political evolution. Sen Hillary Clinton was expected to be the Democratic Nominee for the next president, and that indeed, is a revolution for the U.S. Not so, for several other nations, which have had woman presidents or prime ministers. India, Israel, Sri Lanka, and a host of other nations have had woman leaders. The current Chancellor of Germany is a great example of a powerful woman leader in the Western world itself. So, it is no great story outside the United States. But, in America, yes it is a big story. Given the situation that Sen Clinton was almost destined to win, it was turning out to be a big story.

The other facet of the Democratic Party elections was Sen Barack Obama, the first time a coloured person has achieved the status of even getting recognized as a lead contender in the race for the Democratic nomination. But, Sen Obama did it - he won the votes required for the nomination, and won over an experienced, well-established contender in Sen Clinton. It is indeed the “American” story of the underdog winning ultimately. Great stuff, and difficult to achieve in most countries around the world.

Well, the fight is still not finished. Sen Obama has a tough fight against the GOP nominee, Sen McCain. It could turn out any way - hard to forecast at this point in time.

However, looking from India’s perspective, a Democratic winner for President of the United States could be bad news. It could be bad news for the free market philosophy as well.

India has had great support from President Bush and the Republican Party over the last few years. The U.S. recognized India’s value and commitment to democracy right after 9/11. Finally, America realized that India is one of the few countries in the world worst hit by internal and external terror. It also needed a counter-balance to China in the emerging world order. Even after the Iraq war and the countless scandals involving Iraq and Afghanistan, America was fortunate to have been ranked as the most preferred country by Indians in general. And, this is in a country where American brands and soap operas do not dominate - yet. Overall, the U.S. has had a very positive image in India. I believe that this strong image helped the Indian Government in its move towards better relationship with the world’s most powerful democracy. Ofcourse, there are always other compulsions - geopolitical, military, power, etc., but India’s approach towards America improved dramatically to the extent that both the militaries have conducted a huge number of joint exercises in the past 8 years or so. Confidence has been built up on top of the good will gestures from both sides.

The U.S. has gone to the extent of offering India exemption from its very strong nuclear non-proliferation regulations. India will be the only such country in the entire world. It is India’s fate that we are not able to consummate the nuclear deal due to petty politics, but that again drives home the strength of the noisy Indian politics which cannot be taken hostage without an extensive public debate on the pros and cons. The U.S. is also offering its latest fighter jets in the USD 10B tender for 126 fighter jets by the Indian Air Force. So, finally after 60 years, India and the U.S. are really coming close on a shared platform of values and democratic ideals/credentials.

This would not have happened under a Democratic President, who would not take any risks when it comes to “adjusting” U.S. statutes to accommodate even an “emerging” power like India. On the other hand, Republican Presidents have been more aggressive (both for and against India in the past), and India always knew where it stood when it came to such presidents. With President Bill Clinton, it was never sure - atleast this is my reading.

While I have no personal interest in any party (domestic or American !), it becomes critical for each world citizen to understand the impact of a not-so-good-for-the-rest-of-the-world choice by the American people. An American President exerts enormous influence on the free world, and so it is not appropriate to ignore the elections in America as an internal affair. If not influencing it in any manner, one should atleast have due concern about the outcome.

While “American Dream” fulfilled in the case of Sen Obama sounds too good to be ignored, I think the Democratic Party / Government would become protectionist in nature, in the interest of safeguarding American jobs. It would also take a tough stand on the environment, non-proliferation, flow of dual-use technologies, and surely, the trade policy. There could be some damage to the outsourcing business in India. I do not believe it would take extra care to insure positive growth momentum for the world’s emerging economies - India, China, Brazil and Russia. While China might need less of America, India needs more and more of America. Hence, it may not turn out to be a great news for India if Sen Obama wins the American Presidency. If he does win, which is a distinct possibility, then India should lose no time in establishing quick bridges with the new President and build a strong rapport, earlier than other countries.

I may be completely wrong, but I have seen no positive references to India anywhere in his selected speeches that I have read. Whereas, Sen Hillary Clinton does nurture a positive image of India (may be also because of President Bill Clinton, who is involved in various aid initiatives in India). Ofcourse, I know nothing about Sen McCain, except to state that he would most likely continue the Bush Government’s policies. Some of which, have very positively impacted India, and helped both governments to come closer together.

These are views waiting to be disputed and argued against vigorously, I am sure !

Have a great weekend,

Best Regards

Vijay Srinivasan
7th June 2008
Mumbai

Subsidy Compulsions

Last week, the inflation reached 8.1% in India.

At this rate, your money in the bank earns a negative rate of interest after taxes. With oil prices spiralling beyond USD 130 and no end in sight for the food crisis, the situation has become very challenging for a government which has to balance a myriad of interests in the run up to the elections next year.

Oil products are highly subsidised in India for the consumer. It is going to be 2 years since the government last raised pump prices. It is a politically explosive issue, with the Communists pushing for maintenance of prices and more subsidies to the government oil marketing companies which are incurring huge losses. These losses work out to approximately Rs 2,800 crores (USD 700M or SGD 1B) per day. Yes, per day, given that oil constitutes the biggest import of India. The government and political parties are fully aware of the implications - they are well educated on the matter. However, when elections are looming, no one wants to take a risk. Inflation was a major factor for the Congress’ loss at the Karnataka polls recently, where the opposition BJP won the elections, almost a majority in what is known to be a strong Congress State.

Similarly, food could become a critical issue for the government. While there are no protests yet on the streets, the rice prices are rising along with vegetable and pulse prices. There is no clear indication of how a steep rise in prices would be managed by the government, when supplies could become a constraint. India has a food surplus, so things may not deteriorate that badly. However, one cannot discount the fact that shelf prices have already started to affect the urban population which constitutes an important, if not decisive component of any election in India.

There is the free market way of doing things - the very “Western” and “IMF” prescription of just go and match world market prices. But, as we saw in several cases around the world, especially in Indonesia, Philippines and Thailand, the IMF ways do not work on the ground. In populous countries like Indonesia, India, and China, apart from political compulsions, there is the matter of poverty and the ability to pay. One out of every 3 Indians subsists below or at the poverty level in India, which is roughly USD 1 to 2 per day. Food and Kerosene are very critical elements of their consumption, and if the government’s free-market approach determines the prices of these goods, the subsistence of over 300 million Indians would be at serious stake. Just think about it.

One can argue about the wastage in the Public Distribution System in India, the lack of efficiency in the Agricultural Infrastructure and Irrigation Systems, the poor condition of the transportation systems leading to high consumption of oil, etc., However, the fact remains that it would take several years with a concerted plan of action to improve all these things - quite a medium-term effect in the best of times, when a democracy has to grapple with coalition politics.

Poor people would need protection from rising prices faster, hence there is no better way than to subsidise oil and food prices. It is not that only India has to implement subsidies - in the U.S. who has not heard about “food bills” ? While like most “free-market” theorists, I am inclined to adopt market-friendly approaches to almost everything in life, it is difficult and impossible not to be able to forecast the deprivations of the poor people in the society. To do so, in a very “capitalistic” way, would distance oneself from the ground realities, and isolate the economics and make it irrelevant.

Well, this does not mean that the government of the day can’t do more to correct the price imbalances. There is a lot which can be done, and which are not being done in India. One is ofcourse, to reduce the dependence on oil by going the whole hog on Nuclear Power - I have written about this topic in the past. The share of nuclear power in India is miniscule, it should reach atleast 15 to 20% of total power generated in the next 10 to 15 years. And, that is possible only if the subject of power is delinked from petty politics. America has come with open arms to help India, having realised the challenges India faces in the matter of power. But, so far, India has not closed the deal and moved on into a new chapter - this is a matter of serious concern.

Government needs to also look at (a) increasing the pump prices of petrol/diesel, while keeping the kerosene price stable ; (b) impose a cess on automobile purchases ; (c) implement car pooling atleast in the metros ; (d) impose severe penalty on oil and food hoarders ; (e) drastically reduce the customs and excise duties on petroleum products ; (f) immediately investigate the leakages in the public distribution system ; and, (g) engage in a public communication exercise to advocate the criticality of reducing oil consumption.

Food has to be subsidised for the poor, there is no question about it, atleast for the next 6 months. All crises pass away eventually, so one could only hope that this crisis would also do so, and do so quickly. In the meantime, it is better to relook at socialist economics, for a change, after some 15 years !

Have a great weekend,

Cheers,

Vijay Srinivasan
31 May 2008
Mumabi

Handling Terrorism in India

This month saw the terror attacks in Jaipur, the much visited city of India, also known as the “Pink City”. It is the capital of Rajasthan State. The intent of the attack seems to be focused on scaring off the foreign tourists who throng this part of India. But now just after 10 days of the attack, things seemed to have returned to normal.

However, the normalcy is misleading. In the last decade or so, there have been close to around 50 terrorist attacks on Indian soil, and everytime, things appear to have been forgotten. Hundreds of people have died, but the impact is simply forgotten. This state of affairs is just deplorable.

How can a proud nation like India tolerate such indignities on its soil, hurting its very fabric of civil society ? And, how can it move on, without taking corrective actions which sting current and future terrorists and their plans ?

The argument that India is resilient, and moves on without much effect whatsoever, is just hogwash.

Further, it does give citizens a feeling of helplessness to counter any untoward attacks in future - they eventually give up on Government. This should not be the case. Citizens should demand action, and get the Government of the day to act decisively and vigourously.

That happened in the United States post 9/11. This is a case study of an assertive and determined Government (I would not like to comment on the party itself !), which went about in a methodical fashion to (a) formulate a decisive response plan for thwarting future terror attacks on American soil ; (b) communicate to its Citizens that there would be curbs on their personal liberties which they have cherished over the years, to defend the nation as a whole.

The Department of Homeland Security was established as a result.

The result is there for all to see - there has not been a single known attack on U.S. soil after 9/11. If that is not proof of the work done by the Government, what else is ? Governments need to protect their citizens. Period.

But the political wranglings and appeasement techniques used in India have only resulted in a series of terror attacks over the years. There is apparently no coordination between central and state intelligence agencies. There is no vigourous Governmental response to terror attacks. In a nutshell, the Indian response to such attacks can only be termed as “feeble”.

Coming from Singapore, where there is a very high degree of coordination amongst Government agencies, this is indeed shocking. One can dismiss Singapore as too small to be compared with a vast nation like India. What about the United States, which is roughly 2.5 times the size of India in terms of land area ?

I am also shocked with the apparent nonchalance of the educated people around. They do not seem to mind as long as they get to enjoy the day - I mean, TODAY ! Such an indifference, and short-sightedness, would not help the Government. Politics looms large in a democracy like India, wherein the immediate compulsions are to satisfy or forecast the desires of the electorate.

This is just unfortunate, and does not give confidence that a solid foundation is being laid on the ground to fight the terrorists. They will gain confidence instead to launch new attacks on a weak state. That would lead to more losses of innocent lives, which is despicable. Government cannot do anything about the loss of lives.

Look at United States, Israel, and Singapore. See how they manage and handle terrorism. I am sure that there are many attacks which are not consummated due to the planned responses of the intelligence agencies of such determined countries. That means lots of lives are getting saved on a continuous basis, even without the knowledge of the common man on the street ! Isn’t that the way to go forward in India as well ?

India should formulate a plan very quickly, and set up the equivalent of Homeland Security Dept with powers which are nationally applicable. No questions asked. The results only should matter. The sooner this is done, better it is for all Indian Citizens.

Let us hope the Honourable Dr Manmohan Singh’s Government sees the rationale (I am sure it does) in establishing a coordinated national response system to completely and totally thwart any kind of terrorist attacks on Indian soil. I am sure that India can do this quite well, and rather quickly, if the political compulsions are laid to rest. Forever. For the safety of Indians.

Have a wonderful and peaceful weekend,

Cheers,

Vijay Srinivasan
24h May 2008
Mumbai

Rice’s Rice

I am sure that the readers are following the debate around the rising food prices and inflation. Rice has become a global discussion point around any table talk, including the United Nations. The matter of rice scarcity and prices has even warranted a special cover story in the Time magazine (”Asia’s Rice Crisis”, issue dated 21 April 2008).

While I am not an economist or a political scientist, it is intriguing to note how politicians and governments, apart from aid agencies and the United Nations, handle the matter under inflationary pressures. Media is no less a culprit, sensationalizing the headlines with unintentional taglines attributed to heads of state.

Stating that due to economic advancement, Indians and Chinese are demanding better nutrition and more food, is the ultimate hogwash one would have heard ! This is notwithstanding the fact that India is a net exporter of rice !! And, to just assume that so far Indians and Chinese have not been eating rice in enough quantities, and the sudden increase in rice prices is due to their urgent demand for more rice, or even better quality rice, is simply ludicrous and does not reflect intelligent analysis of the situation.

No wonder politicians of all ilk are jumping up and down at the United States, and the unfortunate, though largely unintentional statements made by the Secretary of State, Condoleeza Rice, and President George W Bush. But, politics is just politics - not much meat, or rice in it !

One has to scan the horizons towards the east to figure out what is going on really.

Rice prices are going up not because India imposed export taxes on Basmati rice, but more because South East Asian countries, led by Thailand, are entering into a cartel to rake in the benefits of higher demand, much like what OPEC has been doing with increasing oil prices. It is not the right thing to do, but there are few exporters of rice in the world, and Thailand is the biggest of them all. It could set the prices in the market.

Since there is no evidence of rising rice (average median-quality rice) prices in the Indian market, the Government of India could help the world by increasing rice exports without any undue taxes. Rice is the staple food of three-fourths of the world population, and the matter should necessitate an urgent get-together of the world’s rice-consuming countries to demand equitable pricing till the crisis is over. Alternative use of arable land for bio-fuels need to be relooked at. There are many reasons why food prices are rising, and it would not be right for the developed nations to get into fist fights with developing countries on what they perceive to be increased consumption - which anyway, is none of anyone’s business, to start with.

Time to meet, put the intelligent unemotional heads together, and thrash out an amicable solution for the benefit of the masses.

Cheers

Vijay Srinivasan
4th May 2008
Mumbai

The Wily Dictator

It is not a least bit surprising that Pakistan declared emergency rule, actually a martial law yesterday. Nobody could have missed it coming, not the least the U.S. Government which always has had a ringside view of what’s going on in Pakistan, and what exactly is going to happen as well.

It is ironic that what is happening in Pakistan, while not good for its citizens and the country as such, is apparently good for the U.S., and may be even for India. This has been the case since 1999 when the general captured power in a bloodless coup from a democratically elected government. It is clear that the general brings stability to the region though not as effective lately as he was after 9/11. While he is driven by his perceived need for stability of Pakistan as a whole, it is also very evident that he is not convinced of the effectiveness of democracy in a country which is largely feudalistic in nature and riven by factionalism. Combined with the fundamentalist agendas of several leading factions and religious fanatics, it is not difficult to see what the general saw before declaring martial law.

Surely, this is not good for the democratic development of Pakistan which would now increasingly slide back into extremism that even the general population would support since they would now lose confidence that democracy would ever succeed in Pakistan. I had hopes when Mr Shauqat Aziz, the Prime Minister of Pakistan, was appointed. He was a successful Citibanker, and I thought that he would fix the general and ease him out using corporate warfare techniques. President Musharraf proved to be too wily for that, or Aziz bought into his vision for the future of Pakistan. Foreign investment poured in and the stock market was booming, but politicking and factionalism have always been the bane of the violent political scene of Pakistan.

India and even the U.S. are maintaining a studious silence, apart from mouthing some inanities. The U.S. government is selfish when it comes to defending its interests, and I am absolutely sure that it would continue to fund the dictator and his plans. There are many secret ways to fund and defy the U.S. Congress, and everything can be justified in the “Global War on Terror”. After all, U.S. has always declared that Pakistan is a “key ally” in the war on terror, and it cannot go back on that statement. Any stoppage of funding would ensure that Pakistan goes slow on the terror fight, which would be a threat.

From the Indian perspective, there is no one better than President Musharraf to rule Pakistan, ironically the same general who caused the embarrassing war of Kargil, in which hundreds of Indian armymen lost their lives and the surprise element caught the Indians totally unprepared. It appears very strange that India likes to deal only with Musharraf, but India constantly worries about the stability quotient in the region, and would not be in a position to deal with a fundamentalist president or prime minister who chooses to go back in time and history, rather than work out the future. The good outcome of the Kargil war was the enhanced cooperation with Israel and increased defence spending by the Indian government. However, something strange happened in the aftermath - there was pressure by the Americans towards a detente, and the general turned positive on India’s demands to stop infiltration by extremist elements across the Actual Line of Control. Ofcourse, the Israeli fencing helped enormously in the process.

Over the past couple of years, there have been many positive noises between India and Pakistan, and there was a possibility that the general would give up his uniform and would become a democratically elected president. That would have eased the conscience of both the Indians and the Americans.

Now, this slide into anarchy which started yesterday, is actually not good for anyone even in the short term. The United Nations should condemn the development, and the U.S. government should allow that - atleast it would be a proxy to what the U.S. State Department would have liked to state publicly apart from the mild noises made by the Secretary of State who has increasingly become ineffective. And, India should send a message to the general to follow the Indian democratic model which works even amidst chaos all around the country. Given that basically the peoples are the same between the two countries, the only issue is apparently the religious extremism and fundamentalism spawned by the Taliban. India often is at the receiving end of terrorist attacks, but has learnt to take quick actions in following through with the leads, and has further taken actions to stop future attacks on its soil. While on the overall scorecard India comes short on its speed of reaction, and proactive planning, the system is resilient enough to survive and adapt itself to the new demanding environment. Brute force is not the solution, as Americans are learning in a very costly manner both in Afghanistan and Iraq. Counter infiltration is one way, convincing the general population is another way. Both do not work for the Americans as is evident from the situation in Iraq - trust of the local population is key to rapproachement and building a mutually beneficial solution.

I do hope that phones have not stopped ringing in Islamabad though it is a Sunday.

Cheers

Vijay Srinivasan
4th November 2007
Mumbai

Religious Mishap

It was a happening week in India last week - rarely it is otherwise.

The Government of India contested the existence of Ram, a mythological God in Indian ancient mythology, in the Supreme Court of India ! This was in relation to the narrow canal between the South-Eastern corner of India and Sri Lanka in the sea dividing the two countries, which was proposed to be deepened to allow passage of bigger ships. The Archaelogical Survey of India was challenged to choose between geography/geology and mythology. Being a scientific body it chose the former.

In Ramayana, the ancient mythological story loved by millions of kids and adults, Ram is the central figure. Hanuman, the monkey God, builds a bridge across the sea from the India side to the Sri Lanka side, to send an army of monkeys to help save Sita, Ram’s wife, from her forced captivity on the island by Ravana, the ten-headed king of Ceylon.

I was just wondering about the foolishness of the government officials in contesting the existence of Ram (a la God Himself) in a Court of Law. Though a secular nation, India has a population with 87% Hindus. It is clearly an affront to them, or atleast to many of them, if their faith itself is being challenged in a court by the government of the day ! It turned out to be a no-gainer for the government of course, which hurriedly withdrew its affidavit from the court. It realised the folly of pushing the envelope too much, though it might have contained factually correct information.

Secularism is ofcourse an important and critical tenet of India’s own existence and survival over the past 6 decades after independence from the British. The many governments which came and went over these decades pandered to the religious minorities’ wishes, so as to preserve their majority in the parliament by the split votes management technique. Nothing wrong with that ofcourse, but the religious majority developed certain firewalls to defend their interests.

Without going into politics too much, I just wanted to make one observation - whenever religion mixes with politics, the results have been disastrous for any nation. One sees it in the middle east all the time. Politics when emboldened by religious fanatics, fans the fires of destruction in civil society. However, it would not be prudent for any ruling government to facilitate such fanatics by making foolhardy attempts like taking a Hindu God to Court ! Again, such things happen only in democracies, but that does not take away the foolishness of the whole episode which has captured the imagination of political parties around the country.

Time wasted, which could have been used gainfully in economic development.

Here’s wishing you all “Happy Ganesh Chathurthi” an important Hindu festival celebrating Ganesh, the elephant God who removes hurdles from one’s life.

Cheers

Vijay Srinivasan
15 Sep 2007
Mumbai

Bush Sense

Some folks are not going to be happy with me on this post.

I was not happy to see Republicans lose control of both the House and the Senate in the recent Elections in the U.S.

Not that I am aligned one way or another - after all, I am least bothered with the politics of another country. I am neither interested nor involved even in my own native or adopted countries’ politics. Except that it is always very interesting to see the impact on the electorate of political scandals.

However, in the U.S., people went against the incumbents because they have grown weary of the Iraqi War and President Bush’s policies, apart from a final dose of reprehensible scandal involving a leading senator.

I think the American people have probably done the right thing, given the circumstances. However, it is just a strong message to President Bush. I do not think that President Bush should change his longstanding policies - the mark of a leader is his steadfastness in his beliefs. If President Bush does indeed change his policies now, under pressure from the Congress, he would not be leaving any legacy in American Politics, and will be doing a strong disfavour to the Republican Party and future Republican Presidents.

President Bush believes in God. He also believes in India.

This was the first President ever of the United States to publicly identify his religious leanings and the impact of the same on his policy-making. This was also the first President ever to become a true friend of India.

Democrats for all their history and political ideology, never saw the promise and potential of India. President Bush and the Republican Party did. They realised the futility of economic and political sanctions on the World’s largest democracty. They saw the future of the economic might of India. They finally understood that India’s insatiable hunger for energy can only be met by legally sanctioned nuclear power.

Democrats will now try to undo this legacy, wherein Americans and Indians have come together to such an extent that the U.S. Army now trains in India - which was unthinkable even a decade ago. Whatever be the party which takes charge at the Centre in India, it would now focus on the Indo - U.S. friendship. Had this happened couple of decades ago, India would have become a more dynamic nation by now - it would have already reached the U.N. Security Council as a permanent member.

I am only afraid that the serious gains that have been achieved over the past 3 years will go nowhere with the new Congress. A strong protectionist lobby might yet gain control, and try stopping migration of jobs to India in the IT/BPO sector. One hopes that wisdom would prevail on democrats who should realise that there is no stopping India. Except for minor roadblocks which India will surely overcome.

The only hope is that President Bush would not waver from his strong commitments to God and India ! And, to his policies and beliefs which have kept him going these past 6 years.

Let us see how the new American Congress behaves from January 2007.

Have a great week folks.

Best Regards

Vijay Srinivasan
12 November 2006
Mumbai