News Wrap


India’s Prime Minister Narendra Modi’s mandate is to lift India’s growth rate and create jobs, for the millions of young men roaming the country-side. War with Pakistan or friction with China would derail that agenda. Mr Modi has not missed the political and diplomatic opportunities by inviting the leaders of the South Asian Association for Regional Co-operation (SAARC) to his oath taking event. The first signal was to resolve the damaging and pointless conflict with Pakistan that has been flaring since the partition of British India in 1947. The Indian regional politicians were given the message that the BJP’s majority restores control of India’s foreign policy to its rightful place in the Union Government. Inviting India’s neighbours to the launch of the new government provided an early boost to the Indian economy by reviving regional trade. Normally, Chief Ministers from India meet one member of the Chinese politburo, on visits to China. Before becoming Prime Minister, on his most recent trip to China, Mr Modi met four. He was also received in the Great Hall of the People, which is unique for a provincial leader.

The new state of Telengana and the remainder of the state of Andhra Pradesh, generally called Seemandhra, share the Telegu language. Telengana has been born of a separate pre-independence political status, as the heart of the Hyderabad princedom. The districts of Rayalseema in the south form the most deprived part of the erstwhile state. Telengana, excluding Hyderabad, suffers from a severe deficit of infrastructure. Foreigners invested only Rs 1658 crore in Telengana excluding Hyderabad, from 1991 to 2010, compared to Rs 5500 crore in coastal Andhra. The new state is 10 percentage points lower in terms of irrigation intensity than coastal Andhra. With the formation of Telengana as the 29th state of India, coastal Andhra might lose out on the business and easy access to large markets like Hyderabad. Telengana would be struggling to access the large ports and gas reserves in the Godavari basin.

Most of the agricultural land in Telengana is rainfed. Though the perennial rivers of Krishna and Godavari pass through it, the water is required to be pumped for irrigation purposes. Leading in cotton and maize, the new state will require copious amounts of water, in a sustained manner. Water woes may plunge the state into a power deficit situation. Telengana would still remain a power starved state, even though it gets an allocation of 53% of all power produced, in the combined state. Till the power purchase agreement lasts, the arrangement of 53:47 distribution of power will continue. Power shortage has forced at least one-third of the steel units in and around Hyderabad to shut down or operate at very low capacities, with the remaining firms too running on life line. There is excessive fluoride in the ground water in Nalgonda district. Migration of labour is a major issue in Mahboobnagar. Telengana region, comprising ten district, is relatively under-developed, barring Hyderabad. The capital and its surrounding municipalities serve as a hub to the pharmaceuticals, information technology, banking and financial services sectors.

Sex Abuse by priests
The United Nations Committee that overseas implementation of the UN Convention Against Torture, has recently maintained that sex abuse by priests should be considered a form of torture. Addressing a delegation from the Holy See, panel members in Geneva has observed that the abuse scandal fell within the treaty definition of ‘cruel, inhuman or degrading treatment’. Earlier the UN committee on the rights of the child had warned that children remained at risk, since the Vatican was continuing to protect guilty priests. Within a decade, the Roman Catholic Church has received a minimum of 4000 complaints. UN experts have suggested that the Vatican had failed to enact laws, severely punishing abuse. The Vatican legal code has allowed abusive priests to escape with disciplinary action. As the Vatican has jurisdiction only over its tiny city state, the Holy See feels that it was up to individual countries to prosecute abusive priests. Pope Francis has set up a Vatican commission on sex abuse, which may not be a substitute for a functioning investigation system.

Russia-China Gas Deal
In the third week of May 2014, an agreement was struck in Shanghai by Russian President Vladimir Putin and Xi Jinping, the Chinese President, clinching a $400 billion gas supply deal that provides Moscow with a crucial new export market. The agreement comes after ten years of negotiation, and strengthens ties between Russia and its eastern neighbour, as Europe attempts to reduce its reliance on Russian supplies, over Russia’s role in the crisis in Ukraine. Beginning in 2018, Russia’s Gazprom will supply China’s National Petroleum Corporation, China’s largest oil company, with up to 38 billion cubic metres of gas a year. There is an agreement on the base price, but some of the conditions are yet to be agreed. The price could be $350-$390 per 100 cubic metres of gas, roughly comparable to the price Gazprom charges its European customers. China now has many more sources of natural gas available to it, than when it started talks on the pipe line agreement, a decade ago. This has strengthened its negotiating position with Gazprom. New investment of $55 billion from Gazprom, would cover a new pipeline to the Chinese border and to develop the huge east Siberian gas fields that will feed it. At least $20 billion of investments will be provided by China.

Platinum miners’ Strike
The mining sector in South Africa has been battered by a six month strike, over salaries and working conditions. The strike has been the longest and costliest in South Africa’s history. Platinum is the sector’s biggest employer. Mining and quarrying output has been shrinking by nearly 25% on an annualized basis, the biggest decrease since 1967, at the height of white rule. The strike has cost the platinum producing companies to lose over $2 billion in lost revenue, and the striking workers losing over $1 billion in wages. Thousands of contracts with suppliers providing goods and services to the mines suspended, has lad to a drop in manufacturing activity by 5%. Mining production has fallen the most in nearly fifty years, as a result of a crippling strike at the world’s top platinum producers. Once the heart of South Africa’s economy, the mining sector is still a key foreign exchange earner. South Africa’s growth risks dropping below 2% for 2014.

Vol. 47, No. 1, Jul 13 - 19, 2014