News Wrap

India’s growth slump has been accompanied by rising tension between the government and the country’s leading industrialists. There are complaints about growing regulatory confusion in different industries. The government’s ‘policy paralysis’’ is obstructing investment, lowering still further India’s growth trajectory. The recent spate of lobbying by powerful figures in Indian business has achieved little. Certain prominent industrialists are fleeting to invest abroad. Lakshmi Mittal, head of Arcelor-Mittal, the world’s largest steel maker would be unable to deliver any large scale new Indian projects, in the next five years. There are allegations of corruption, and projects being held in limbo by regulatory delays. Indian domestic companies in sectors dependent on regulation seem to be struggling the most. Companies manufacturing consumer goods or pharmaceuticals are more resilient, as they have weaker links to government. Investors have become more cautious after corruption investigations over politically linked business giants. Newly assertive institutions such as the press, the comptroller and auditor general, and the judiciary have started uncovering the massive nexus between the business oligarchy and the politicians and bureaucrats, that built up during the post reforms period of the 1990s. There is scarcely any hope of an investment led recovery due to high interest rates, lack of access to capital and an attitude of risk aversion in government to provide access to resources to even the best connected industrialists. There are efforts for moves to a system, in which all natural resources are openly auctioned at market rates.

‘Stagflation’ has gripped India, as inflation hovers above 7% and growth slackening. There is little room for remedial monetary or fiscal action, as India’s current account deficit is projected to exceed 4% of GDP this year, and budget deficit of 8.4%. In terms of economic growth, India is likely to be outpaced by Asian rivals, such as Indonesia, Thailand etc.

Addiction in Punjab
In villages and cities of Punjab, drug addiction has become a scourge. Refined as heroin or other illegal substances, opium is widely prevalent. In wheat fields and dark corners of decrepit buildings, drug addicts inject themselves, with cocktails of synthetic drugs. Injection of a blend of synthetic drugs delivers a six-hour high. For those too poor to afford heroin, synthetic drugs are popular. Before classes, schoolboys sometimes eat small black balls of opium paste, with tea. Studies indicate that addicts are between the ages of 15 and 35, and many of them are unemployed and frustrated by unfulfilled expectations. About 60% of illicit drugs confiscated in India, are seized in Punjab. Across the state, private drug treatment centers have proliferated. The treatment wards in government hospitals have recorded a sharp increase in patients. During the Feb 2012, state assembly elections in Punjab, more than 50 kgs, or 110 pounds of heroin and hundreds of bottles of bootlegged liquor were seized in raids. Via Punjab, opiates are smuggled into India, from Pakistan and Afghanistan. Between 2005 and 2010, liquor consumption per person in Punjab, increased by 59 percent.

During out Kurds in Iraq
The mutilated body of Wisam Jumai, a Kurdish intelligence officer was discovered in a field in Sadiyah, a small town in north-eastern Iraq, in January 2012. Soon after his family and friends received threatening text messages. Nearly three dozens families have fled their homes and moved to Khanaqin, a city claimed by the Baghdad government, but patrolled by Kurdish forces. Many Kurds from Sadiyah have come to Khanaqin, after being pushed out over property disputes, that can be traced to Sadam Hussein’s policy in the 1970s, of expelling Kurds and resettling Arabs. The Kurds claim that property records that would verify their ownership claims were destroyed. Arabs are now reclaiming homes seized from Kurdish families in the Hussein years. The Kurdish minority in Iraq is being continuously displaced by terrorism and judicial orders. Arabs in the area claim that they are also targets of terrorist attacks. Unlike the Sunnis, the Kurds have their own security forces, oil reserves, ports of entry, and even their own defacto foreign policy, with envoys in other countries. Kurdish leaders are seeking a deal to sell oil to Turkey.

Brutality in Afghanistan
The discovery of burnt copies of the Koran at a US base in Afghanistan triggered furious protests in Feb 2012. Again in March 2012, a US serviceman walked out of his base in Kandahar, southern Afghanistan, and shot dead sixteen civilians, including nine children. The mass murder atrocities widened the mistrust that divides Afghans and their allies. The shooting took place in the Panjawai district, a former Taliban stronghold. There was an influx of US forces in the troops increase of 2010. The Taliban has pledged to help victims’ families to take revenge on the US. US special forces are continuing raids on insurgents sheltering in Pushtun homes.

Saudi Arabia and China

Following nuclear pacts with France, Argentine and South Korea, Saudi Arabia has recently signed a nuclear agreement with China. The deal enhances co-operation between Saudi Arabia and China, in the development and use of atomic energy for peaceful purposes. There will be co-operation in maintenance and development of nuclear power plants and research reactors, manufacturing and supply of nuclear fuel elements. If Saudi Arabia’s current energy consumption grows at 7% a year, then within twenty years the country will burn the equivalent of around two-thirds of its total current crude production capacity of 12.5 million barrels a day. Given Saudi Arabia’s booming population and developing economy, nuclear energy could save more valuable crude for export and help satisfy local demand for power and water. The desert kingdom has plans to spend more than $100 million, in building sixteen nuclear reactors by 2030, to cater to growing domestic energy needs. China has adopted advanced technology from Westinghouse Electric Co, a unit of Toshiba Corp, to develop a domestic version of the company’s AP1000 nuclear reactor.

Vol. 45, No. 3, July 29-August 4, 2012