India Country Brief 080613 Basic Political Developments

1. India Country Brief

080613

• Basic Political Developments

• 
  Bharatiya Janata Party is exploring options to maximise its gains in Uttar Pradesh in the coming general election. As of now, the party is in the dumps in the state which sends as many as 80 members to the Lok Sabha.
  

• 
  India today rejected the US charge that it is blocking the Doha Round of trade talks but said the officials of the two countries will intensify their engagement in Geneva to narrow differences on cut in duties on industrial and farm goods."For us, the Doha Round is as important as it is to the United States or any other country. The criticism (of India) is unfair and inaccurate," Commerce and Industry Minister Kamal Nath said at his session with Talk Show host Charlie Rose.
  

• 
  Sri Lankan Foreign Minister Rohitha Bogollagama will arrive here on Sunday on a whirlwind day-long tour for discussions with top Indian leadership on the situation in the island nation. The Sri Lankan Foreign Minister is likely to extend an invitation to the Prime Minister and the External Affairs Minister to attend the 15th SAARC Summit to be held in the island nation from July 27 to August 3.
  

• 
  The Left parties today stepped up their attack on the government, accusing the ruling UPA of adopting a "slack attitude" towards containing inflation which has soared to a seven-year high of 8.75 per cent. The parties, which provide crucial outside support to the Congress-led dispensation, alleged that the government has surrendered itself to market speculators.
  

• National Economic Trends

• Business, Energy or Environmental regulations or discussions

• 
  Even as the Indo-US nuclear deal is gathering dust on the backburner because of stiff opposition from the Left parties, Congress president and chairperson of United Progressive Alliance Sonia Gandhi on Friday underlined the importance of nuclear energy for the country at this juncture. Addressing a Congress-organised farmers' rally in Guwahati on Friday afternoon, the UPA chairman called for the realisation of the importance of nuclear energy in view of the energy crisis faced by the world.
  
• 
  The BJP government in Karnataka today announced that it will unveil a new industrial policy in about three months to give a boost to industrial development in the state and proposed to build the Bangalore-Mumbai industrial corridor.
  

• 
  The Indian IT market is expected to grow by 18 per cent in the year 2008 to reach USD 38 billion, clocking second highest growth rate after China's which is likely to attain a 20 per cent growth and touch USD 138 billion in size, as per the latest research data released by Forrester.
  

• Activity in the Oil and Gas sector (including regulatory)

• 
  ONGC Videsh Ltd and its partners Indian Oil Corp and Oil India Ltd have proposed to invest about 3 billion dollars in bringing to production 12.8 trillion cubic feet (Tcf) of gas reserves they have found in Farsi gas block in Iran in the next 3-4 years.
  

• 
  Reliance Industries will sell gas at $25.20 a barrel, equivalent to one-fifth of the current crude oil price of $135. Chairman Mukesh Ambani, at the annual general meeting on Thursday, told shareholders that the gas from the Krishna-Godavari basin, off the country's eastern coast, would start flowing in the second half of the financial year.
  

• Militant Activity/Terrorism (Particularly in Bangalore, Mumbai, Noida, Chennai, Coimbatore)

• 
  Six civilians were injured in a powerful hand grenade explosion in the north Kashmir town of Baramulla on Friday afternoon.
  

• Labor/Social Unrest

• 
  India's truck fleet will begin an indefinite strike early next month over rising fuel costs and taxes, a union leader said, taking 4 million vehicles off the roads, curbing diesel demand and possibly hitting goods supplies.If the threatened stoppage takes place, Indian drivers will join a series of protests in Asia and Europe after crude oil's record run forced governments and fuel retailers to cut subsidies and raise prices."From July 2, there will be no vehicle on the road. We have taken that decision," said Charan Singh Lohara, president of the All India Motor Transport Congress, which represents both large and small truck operations across the country.
  

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  Full Text Articles

• Basic Political Developments

BJP's UP strategy draws on heavyweights

Fri, Jun 13 09:59 AM

http://in.news.yahoo.com/financialexpress/20080613/r_t_fe_nl_politics/tnl-bjp-s-up-strategy-draws-on-heavyweig-97db1aa.html

After setting into motion the exercise to identify candidates for the forthcoming general elections, the Bharatiya Janata Party is exploring options to maximise its gains in Uttar Pradesh. As of now, the party is in the dumps in the state which sends as many as 80 members to the Lok Sabha.

One proposal said to have been discussed with party's prime ministerial candidate L K Advani entails dividing the state into six "clusters" and putting political heavyweights like Murli Manohar Joshi, Kalyan Singh, Kalraj Mishra, Maneka Gandhi and Yogi Adityanath in charge of each. Party general secretary Arun Jaitley, who played a key role in crafting the Karnataka win, may be asked to coordinate.
"When general elections are increasingly becoming an aggregate of local elections, it's important to have a national perspective. This arrangement will also ensure micromanagment of the elections besides imparting a national perspective to the campaign," said a source. State BJP organising secretary Nagendra met Advani recently to discuss the proposal.
The proposal defines a cluster (comprising 10 to 14 Lok Sabha seats) as having "common caste groups or communities". This will help in combining the Lok Sabha campaign with local and primordial concerns. Leaders identified with caste groups may be asked to focus on clusters where they wield considerable influence or where their caste constitute a majority.
The western UP cluster, with 15 seats, is dominated by the Jats. The two clusters in the east with 26 seats have Thakurs, Bhumihars and Muslims as dominant groups. The Bundelkhand cluster has Lodhis, Dalits and Kurmis, while the one around Farukahabad has Yadavs and Lodhis as dominant communities.
The RSS has divided the state into six zones - Gorakhpur, Kashi (eastern UP), Avadh, Kanpur, Braj and Pashcim (western UP), a classification that has been used by the BJP in the past as well. The party had deputed heavyweights from outside in all six zones in the last Assembly elections, but results showed that the arrangement didn't help. "We must have heavyweights identified with the local milieu. They should be able to match caste / regional aspirations with a national perspective," said a leader.
Another proposal is a tie-up with Ajit Singh's Rashtriya Lok Dal which wields considerable influence in western UP. While Ajit Singh, talking to The Indian Express on Thursday, denied the possibility of any such deal, one of his deputies confirmed that talks were on and the party had identified a "list of seats".
The BJP's Mission Delhi would come a cropper if it fails to improve its tally in UP. Party leader Kalyan Singh had recently said unless the party wins "25-30 states" in the state, "it can forget about its onward march to Delhi".

India rejects US charge of being Doha Round spoilsport

http://www.ptinews.com/pti/ptisite.nsf/$All/BB9F7607FFFA790965257467003FD201?OpenDocument

Washington, June 13 (PTI) India today rejected the US charge that it is blocking the Doha Round of trade talks but said the officials of the two countries will intensify their engagement in Geneva to narrow differences on cut in duties on industrial and farm goods.

"For us, the Doha Round is as important as it is to the United States or any other country. The criticism (of India) is unfair and inaccurate," Commerce and Industry Minister Kamal Nath said at his session with Talk Show host Charlie Rose.
Nath met US Trade Representative Susan Schwab yesterday and discussed ways to move forward in the multilateral trade negotiations which have not achieved any breakthrough since the launch of the Doha Round in 2001.
Nath and Schwab agreed for more active engagement at the official level in Geneva, the headquarters of the World Trade Organisation.
"They agreed that every effort should be made to conclude the Doha Round as expeditiously as possible. To this end, senior officials of the two countries would intensify their engagement at Geneva over the coming weeks to narrow the differences and to build on convergences," an Indian Embassy release said.
A senior US official had earlier this week blamed India for wrecking the trade talks by "working behind the scenes".
At the US Chamber of Commerce meeting, Nath said he was optimistic about success of the Doha Round. "This Round is about respecting each other's sensitivities," he remarked.
He said sensitivities of different countries need to be harmonised. "No country can get everything, but no country is going to give everything away," he added. PTI
Lankan Foreign Minister to visit India

New Delhi | Friday, Jun 13 2008 IST

http://news.webindia123.com/news/articles/India/20080613/973402.html
Sri Lankan Foreign Minister Rohitha Bogollagama will arrive here on Sunday on a whirlwind day-long tour for discussions with top Indian leadership on the situation in the island nation, The Sri Lankan Foreign Minister, who arrives at 2100 hrs on Sunday, will have discussions with Prime Minister Manmohan Singh and External Affairs Minister Pranab Mukherjee on Monday. He will depart the same evening at 1845 hrs, the External Affairs Ministry announced here today.
The Sri Lankan Foreign Minister is likely to extend an invitation to the Prime Minister and the External Affairs Minister to attend the 15th SAARC Summit to be held in the island nation from July 27 to August 3. The summit will be presided over by Dr Manmohan Singh before handing over the chair to Sri Lankan President Mahinda Rajapaksa. Sources said Mr Bogollagama will also brief the Indian leaders on the need for constant vigilance against LTTE movements. Defence Minister A K Antony has said any deterioration in the security situation in Sri Lanka would have an adverse impact on peace and security within India. ''New Delhi is keeping a close watch on the security situation in Sri Lanka,'' Mr Antony said while addressing the Unified Commanders Conference here on June 10. India recently agreed to provide high quality seeds to Sri Lanka.
The assurance was given to Mr Bogollagama by Agriculture Minister Sharad Pawar on the sidelines of the High Level Conference on World Food Security, convened by the Food and Agriculture Organisation (FAO) in Rome on June 3. The Indian delegation to this summit was led by Mr Pawar and the Sri Lankan delegation by President Mahinda Rajapaksa. Both the delegations agreed to consider suitable options to address the phenomenon of soaring prices of staple commodities, particularly rice in the South Asian region. The two countries acknowledge the vital need for a Food Bank in the SAARC region.

-- (UNI) -- 13DI17.xml

• National Economic Trends

Left parties step up attack on UPA's economic policies

Fri, Jun 13 02:53 PM

http://in.news.yahoo.com/pti/20080613/r_t_pti_nl_politics/tnl-left-parties-step-up-attack-on-upa-s-6adc8fa.htmlNew Delhi, Jun 13 (PTI) The Left parties today stepped up their attack on the government, accusing the ruling UPA of adopting a "slack attitude" towards containing inflation which has soared to a seven-year high of 8.75 per cent. The parties, which provide crucial outside support to the Congress-led dispensation, alleged that the government has surrendered itself to market speculators.
Amid fears that inflation may cross double digit mark in the coming days, CPI(M) senior leader Nilotpal Basu said the country's economic scenario was "very, very critical" and that only a paradigm shift in policies would help. "The price rise is primarily due to weakening of the public distribution system and policies regarding to food economy.
The government is dancing to the tunes of market speculators and public stock brokers," Basu told PTI. "We don't think the government is taking earnest steps to control the situation. There are only half-hearted and incomplete measures," he said.
Basu, a CPI(M) Central Committee member, said the "neo-liberal" economic policies pursued by the government was the cause for the present economic crisis. He said the government has "failed" to make it clear that the rising oil prices in the international market was due to speculative trade by global traders and did not adopt any measure to check it.
Attacking BJP, he said, the opposition party was only making "hollow statements" on the issue and they were pursuing the same economic policies as that of the Congress. CPI National Secretary D Raja said rising inflation was a cause of "serious concern" and the government's "so-called" fiscals measures have not provided any relief.
PTI.

• Business, Energy or Environmental regulations or discussions

Sonia bats for nuclear energy

K Anurag in Guwahati

http://www.rediff.com/news/2008/jun/13sonia.htm

June 13, 2008 15:26 IST

Even as the Indo-US nuclear deal is gathering dust on the backburner because of stiff opposition from the Left parties, Congress president and chairperson of United Progressive Alliance Sonia Gandhi [Images] on Friday underlined the importance of nuclear energy for the country at this juncture.
Addressing a Congress-organised farmers' rally in Guwahati on Friday afternoon, the UPA chairman called for the realisation of the importance of nuclear energy in view of the energy crisis faced by the world.
"Nuclear energy has gained much importance in view of steeping crude oil prices in the world," she said while launching an attack on opposition political parties for trying to gain political mileage out of escalating prices precipitated by rising crude oil prices in the global market.
"The biggest challenge before the country today is inflation and escalating prices that are fallouts of the steep increase in crude oil prices. The prices of petroleum and diesel in our country are still much cheaper than that in our neighbouring countries and many other parts of the world. The government is facing tremendous pressure in its efforts to shield people from the real impact of the global crude oil price rise," the UPA chairman said.
She reiterated the UPA government's committed to improving the economic conditions of the farmers, who she termed the pride of the nation.
She said the Rs 70,000 crore loan waiver granted for the farmers by the government in the last Budget would go a long way in providing relief to farmers of the country.
Sonia said the Bharatiya Janata Party and its allies in the National Democratic Alliance had no right to crticise the UPA government's farmers-oriented policies as the previous NDA government virtually did nothing for farmers.
She underlined the need for rapid rural electrification and the popularisation of pisciculture and dairy for rapid economic development of farmers in the country.
Karnataka mulls on new industrial policy & industrial corridor
Bangalore, June 13 (PTI) The BJP government in Karnataka today announced that it will unveil a new industrial policy in about three months to give a boost to industrial development in the state and proposed to build the Bangalore-Mumbai industrial corridor.

The government has taken up a feasibility study on the Bangalore-Mumbai Industrial Corridor on the lines of Bangalore-Chennai corridor proposed by the Centre, State's Minister for Major and Medium Industries Murugesh Rudrappa Nirani told a press conference here.

The proposed corridor would establish connectivity from Bangalore to Belgaum covering 11 district headquarters and 20 towns, he said.
To achieve its target of making Karnataka a leading industrialised state comparable with others and also to enhance the level of investments, the government proposed to develop industries along 100 to 150 kms on both sides of the proposed corridor, said engineering and Management graduate Nirani and who himself manages three sugar plants.
"Being an industrialist myself, I know the problems of investors. I want to create an investor-friendly climate in the state," Nirani said.
A new industrial policy would be announced in about three months, he said adding that modifications would be carried out to the existing policy of 2006-11. Industrial policies of Maharashtra, Andhra Pradesh, Gujarat, Tamil Nadu and Rajasthan would be studied before framing the new policy, Nirani said. PTI
Indian IT market to grow by 18 percent

http://www.hinduonnet.com/thehindu/holnus/006200806131759.htm

Bangalore (PTI): The Indian IT market is expected to grow by 18 per cent in the year 2008 to reach USD 38 billion, clocking second highest growth rate after China's which is likely to attain a 20 per cent growth and touch USD 138 billion in size, as per the latest research data released by Forrester.

The report by the reseach firm calls this double-digit growth as a welcome news for technology vendors - who see slackness in the US and European markets, and advises them to now recognise India as a consumer of IT than just a supplier.
The report - the State Of A-PAC Enterprise Technology Adoption: 2008, gives highlights of data collected from 777 companies in the Asia Pacific region via Forrester's Enterprise Technology Adoption Survery (Asia Pacific, Q4 2007).
These 777 companies were of the 1000-plus employee size from countries such as Australia, New Zealand, India, Korea, Singapore, Japan and China.
Forrester's Sr Analyst - Jonathan Brown, who authored the report, said: "the IT sector has long looked to India for top-drawer technology talent.But India is poised to become an increasingly important market for technology vendors as its population comes of age (half of India's population today is under 20), its rural areas become increasingly developed, and its engagement with the US increases".
"It's time the tech vendors no longer treat India as merely a skilled talent pool but also as a lucrative market in its own right", he said.

• Activity in the Oil and Gas sector (including regulatory)

OVL consortium proposes to invest $3 billion in Iran gas block

http://www.hinduonnet.com/thehindu/holnus/006200806131762.htm

New Delhi (PTI): ONGC Videsh Ltd and its partners Indian Oil Corp and Oil India Ltd have proposed to invest about 3 billion dollars in bringing to production 12.8 trillion cubic feet (Tcf) of gas reserves they have found in Farsi gas block in Iran in the next 3-4 years.

The consortium had submitted a commerciality report of the gas find, with in-place reserves reported at up to 21.68 Tcf, in December and is awaiting a decision from the Iranian authorities to go ahead with the development, a senior IOC official said.
"We see recoverable reserves at 12.8 Tcf," he said. "Typically, Iran may take 1-2 years to decide on awarding the development but we are hopeful it may be done soon in case of Farsi."
OVL, the overseas arm of state-run ONGC, IOC and OIL have a service contract for the Farsi block where they will be reimbursed 35 per cent plus 90-million-dollar investment they made during the exploration phase.
The service contract for exploration expires this month. If the consortium gets the developmental rights, they will be paid a 15 per cent rate of return over and above the investments they make.
"The oil and gas will belong to National Iranian Oil Co (NIOC) and it is they that will do the marketing of it. We have no say in that," the official said.
In the commercial viability report to NIOC, OVL - the operator of the field - has said the least gas volume was 9.48 Tcf and the high-case estimate was 21.68 Tcf after independent studies by Fugro Robertson Ltd of the UK and ONGC's Institute of Reservoir Studies.
The official said the block also has oil reserves that may be around 1 billion barrels in size. "We will submit commerciality report of the oil find in a months time."
RIL to sell KG basin gas at 1/5th price: Mukesh

BS Reporter in Mumbai

http://www.rediff.com/money/2008/jun/13reliance.htm

June 13, 2008 11:48 IST

Reliance Industries [Get Quote] will sell gas at $25.20 a barrel, equivalent to one-fifth of the current crude oil price of $135.
Chairman Mukesh Ambani, at the annual general meeting on Thursday, told shareholders that the gas from the Krishna-Godavari basin, off the country's eastern coast, would start flowing in the second half of the financial year.
The fuel from the KG basin will prune Rs 114,000 crore (Rs 1,140 billion) from the country's import bill. The price of $4.2 per million British thermal unit (mBtu) approved by the government for selling gas implies potential savings of about Rs 85,000 crore (Rs 850 billion) for consumers, said Ambani.
Ambani's statement on gas pricing comes even as the government is considering a revision of the floor price of $4.2 mBtu that was approved in September 2007.
The floor price is benchmarked against the crude price of $60 a barrel. When compared with the current crude price of $135 a barrel, the floor price is very low. According to industry analysts, the government fears that the price would reduce the value of its profit-share considerably.
About 80 installation vessels have been operating in the basin over the past five months to produce gas. About 90 per cent of the on-shore terminal facility and production infrastructure work has been completed. Gas from KG D6 reservoirs will be transported through the East-West pipeline system.
The company plans produce 80 million cubic meters of gas a day from the basin. Six additional deep-water rigs will be contracted for exploration very soon, said Ambani.
Along with targeting more acquisitions in the polyester space, RIL will try new initiatives in the alternative energy, rural retail and the overseas petroleum retail businesses. The company is working out biofuel and solar energy programmes as natural extensions of its conventional energy portfolio.
"Reliance Retail will create several rural business hubs for the organised retail initiative. These will be centres of aggregation for farm produce. It will engage in the supply of quality farm inputs and provision of products and services to rural consumers," said Ambani.
The company, which has closed down its fuel retail operations and asking for a level playing field to compete with public sector retailers, has begun retailing fuel in African countries, including Tanzania, Uganda and Kenya, through the recently acquired Gulf Africa Petroleum Corporation.
Completion of the second refinery in Jamnagar will increase processing capacity of the group to 1.24 million barrels per day, equivalent to about 2 per cent of global capacity. The refinery will be completed in the second half of this financial year, said Ambani.
In 2007-08, RIL made eight discoveries across major offshore basins in India.

• Militant Activity/Terrorism (Particularly in Bangalore, Mumbai, Noida, Chennai, Coimbatore)

Six hurt in J&K grenade blast

Mukhtar Ahmad in Srinagar

http://www.rediff.com/news/2008/jun/13jk.htm

June 13, 2008 16:19 IST

Six civilians were injured in a powerful hand grenade explosion in the north Kashmir town of Baramulla on Friday afternoon.
Police said the militants were targeting the local police station but the grenade exploded on the roadside injuring the civilians.
The injured were rushed to the local hospital and the area was cordoned off and searches were being conducted to nab the militants.

• Labor/Social Unrest

Indian truckers call strike as fuel, taxes hurt

Thu, Jun 12 04:18 PM

By Himangshu Watts

http://in.news.yahoo.com/reuters_ids_new/20080612/r_t_rtrs_nl_general/tnl-indian-truckers-call-strike-as-fuel-223dd93.html

NEW DELHI (Reuters) - India's truck fleet will begin an indefinite strike early next month over rising fuel costs and taxes, a union leader said, taking 4 million vehicles off the roads, curbing diesel demand and possibly hitting goods supplies.
If the threatened stoppage takes place, Indian drivers will join a series of protests in Asia and Europe after crude oil's record run forced governments and fuel retailers to cut subsidies and raise prices.
"From July 2, there will be no vehicle on the road. We have taken that decision," said Charan Singh Lohara, president of the All India Motor Transport Congress, which represents both large and small truck operations across the country.
A similar week-long strike in August 2004 pulled monthly diesel sales down 9.3 percent from a year earlier, while annual growth in industrial output slowed to 7.9 percent from 8.4 percent in the previous month as the strike disrupted shipments.
Lohara said union members would protest against recent increases in diesel prices, as well as hikes in road tolls and high taxes.
"If we raise our charges, we will lose customers to the railways. If we don't, we will make a loss," Lohara told Reuters.
He said the majority of the nearly 4 million trucks which would grind to a halt were long-distance cargo carriers that consume about 100 litres of diesel a day.
The Indian government raised the retail price of petrol and diesel by about 10 percent this month but most states cut local taxes to soften the impact on consumers.
Protests and strikes called by political opponents of the government broke out across the country but soon ran out of steam.
S.P. Singh, senior fellow at the Indian Foundation of Transport Research and Training, said cargo freight rates had gone up 10-15 percent after the government raised fuel prices.
But he said the increase was much more than what was required to offset the higher cost of diesel.
"The diesel price hike is not the core issue in flaring up inflation. It is the high-handed action of transporters that is raising costs," he said.
Low state-set prices of petrol, diesel, cooking gas and kerosene have encouraged higher demand in Asia's third-largest oil consumer, where domestic sales rose 7 percent in 2007/08, the fastest growth in eight years, analysts say.