Wednesday, December 26, 2012

India: Music's new ambassadors

With the death of Ravi Shankar, Indian music lost its most famous ambassador. Here's who will carry the torch.

NEW DELHI, India — When sitar master Ravi Shankar finally succumbed to time last week, Indian music lost its first and most famous ambassador. But a healthy crop of musicians are carrying the torch — straddling pop, indie, Bollywood and classical genres. Here are some names to follow.
Classical music
Zakir Hussain — a former child prodigy who first toured the US in 1970 — has done for the tabla what Shankar did for the sitar. In 1992 and 2009, he collaborated with Mickey Hart, Sikiru Adepoju, and Giovanni Hidalgo on the Grammy-winning “Planet Drum” and “Global Drum Project” albums to introduce the world to Indian classical's curiously melodious drum. In earlier years, Hussain played with John McLaughlin's Shakti — one of the first efforts to fuse the rhythms and melodies of classical Indian ragas with the improvisations of western jazz — touring extensively in the late 1970s. He worked on the soundtracks of Francis Ford Coppola's “Apocalypse Now” and Bernardo Bertolucci's “Little Buddha.” And he's capitalized on the growing crossover audience for Indian films, and films made by the Indian diaspora, with acting cameos and soundtrack work for movies such as Aparna Sen's “Mr. and Mrs. Iyer” and Ismail Merchant's “The Mystic Masseur.”
“Aside from the fact that [Hussain] works magic on the tabla, I think it's his ability to align himself to various styles, various vocabularies of music [that has made him an important ambassador for Indian music],” said Chennai-based cultural critic Nandini Krishnan.
Other heirs to Shankar's legacy include slide guitarist Debashish Bhattacharya, whose “Calcutta Chronicles” was nominated for a Grammy in 2009; classical pianist Anil Srinivasan; and Uppalapu “Mandolin” Srinivas, who plays the mandolin (natch). In addition to “Calcutta Chronicles,” Bhattacharya won over Western fans with “Calcutta Slide-Guitar, Vol. 3.” (2005) and “Mahima” (2003) in collaboration with American guitarist Bob Brozman — both of which made Billboard's World Music Top Ten. Srinivas, who dueled with Miles Davis at the West Berlin Jazz Festival in 1983, has in recent years brought South India's Carnatic music to the global audience by collaborating with McLaughlin's Shakti and artists as wide-ranging as King Crimson's Trey Gunn and Chinese yangqin master Liu Yuening. And Srinivasan has brought his unique merger of classical piano and South Indian Carnatic music to audiences at New York's Lincoln Center, the Sydney Opera House and the National Center for the Traditional Performing Arts in Korea.
In other words, Shankar may be gone, but his legacy is bigger than ever.
“Most of us now are getting an opportunity to perform at mainstream venues as part of festivals,” said Srinivasan. “To a large extent this is something that Uday Shankar and Ravi Shankar created for Indian music.”
“[Second], you have Indian music inveigling itself into many different global music forms, starting with AR Rahman and going all the way down to myriad composers and choreographers and other people,” Srinivasan said.
“Rather than one person or group of people who are ambassadors, you have a lot of different influences and influencers. It's a certain philosophy towards composition that has changed worldwide.”
That brings us to Bollywood, where Grammy-winner A.R. Rahman and music directors like Amit Trivedi have introduced sounds from Indian folk and classical music into love songs and dance tracks and taken advantage of Indian film's growing global popularity to gain a wider audience.
“A music director like Amit Trivedi is different from the genius music directors from the '50s, who created a gorgeous sound but also brought in many of the nuances of Indian classical and light classical music, as it's called in India, into their compositions,” said novelist (and classical Hindustani vocalist) Amit Chaudhuri — whose own “This Is Not Fusion” project has created a minor internet sensation since he began it in 2003.
Trivedi's pathbreaking soundtrack to 2010's “Dev. D” in some ways redefined what Bollywood music could be — albeit in one of a new crop of independent films. Songs like "Emosanal Attyachar,” for instance, blend the raucous music of the brass bands that play Indian weddings with western-style rock influences and wordplay worthy of Bob Dylan.
“The singer used to be central for those older music director,” Chaudhuri said. “Now it seems the singer is just one element in a soundscape that these directors are creating.”
Beyond the Grammy-winning soundtrack to “Slumdog Millionaire” and “Jai Ho,” Rahman has won crossover fans with some of modern Bollywood's most memorable songs (think “Chaiya Chaiya”):
He's also collaborated with artists ranging from Michael Jackson to Andrew Lloyd Webber and Vanessa Mae — making him the top-of-mind choice for Indian music's new ambassador.
“What Rahman is basing his music on is a few [elements] picked up from Indian folk music, a few picked up from classical and a few picked up from Western music,” said Delhi University music professor Deepti Bhalla. “You cannot say it has a classical base or a folk base. It is a mix of everything.”
Still, not everybody is convinced that Bollywood's role as ambassador of Indian music is a good thing.
“The biggest influence on the West, or what the West understands as Indian music, is the sound of Bollywood,” said Krishnan.
“This amuses me, because several Bollywood composers have stolen popular Western tracks. Try 'Dil Mera Churaya Kyon' from Akele Hum Akele Tum and George Michael's 'Last Christmas', or 'Haseena Gori Gori' and Shaggy's 'In the Summertime.'”
Pop, indie and “new” fusion
The post-Shankar era is also bristling with Indian and Indian-origin pop, indie and fusion artists, who transcend borders and boundaries in ways that the sitar master couldn't have dreamed possible when he was teaching George Harrison to play.
In India, artists like singer-songwriter Raghu Dixit of the Raghu Dixit Project are starting to gain an international audience for Indian “indie” music:
while non-Bollywood popstars like Daler Mehndi have caught the ear of international artists such as the UK's Rajinder Singh Rai (aka Panjabi MC) and Jay-Z — making so-called “bhangra nights” a fixture at clubs in London, New York and beyond.
In the UK, indie artists like Talvin Singh and Nitin Sawhney have in recent years popularized a sub-genre of electronica known as “Asian Underground” that incorporates Indian instruments and melodies, whileCornershop's Tjinder and Avtar Singh brought Indian instruments and sampling to Britpop in songs like “Brimful of Asha.”
And the late-blooming US diaspora is now getting into the game, with Brooklyn-based Himanshu Suri and Ashok Kondabolu of Das Racist bringing an Indian vibe to hip hop and Brooklyn-based Rudresh Mahan Thapar and Vijay Iyer combining Indian sounds with Western jazz.
“[The UK's] Arun Ghosh, Vijay Iyer, and Rudresh Mahan Thapar all started out as western-style jazz players and they began to explore their cultural origins,” said Chaudhuri, who counts his own “This Is Not Fusion” as part of the same musical movement.
“It's a move away from the kind of Shakti-idea of fusion, where you had western harmonies and Indian instruments and raga and you brought the two together,” Chaudhuri explained. “This new music was done by people who were not looking at either Western or Eastern music from the outside.”
In other words: Maybe Indian music doesn't really need “ambassadors” any more.

Tuesday, July 17, 2012

India: Food rots as people starve

By Jason Overdorf

(GlobalPost - July 16, 2012)

NEW DELHI, India — Never mind that a fifth of India's population remains undernourished and some 3,000 children die each day from hunger-related causes. By all appearances, India, or at least the Indian government, has too much food.

Last week, after the revelation that millions of tons of improperly stored grain would be ruined by monsoon rains, India lifted a four-year ban on wheat exports and cleared the way for the state-owned Food Corporation of India to send 2 million tons overseas. It also approved the release some 8 million tons of grain into the domestic market.

Shipping grain abroad while millions starve in India has elicited a strong response from critics.

“This is unpardonable. I see no reason why it is happening,” said farm policy analyst Devinder Sharma. “It is because there is no political will to feed the hungry that people are dying, not because there is no food.”

On paper, that hardly seems to be the case. India spends about $14 billion a year, or 1 percent of its gross domestic product, to provide subsidized grain to a third of its people — at least theoretically. Prime Minister Manmohan Singh's administration is considering a move to enshrine the “right to food” in law and double the number of people eligible for subsidized grain.

But everywhere except on paper, the system can seem irretrievably broken. And India's mounting deficit has caused many right-leaning economists to question whether now is the time to spend even more money on a broken system.

Hunger, malnutrition and starvation are different, though related problems, so more calories isn't a cure all – particularly if all those calories come from wheat and rice. But even when everyone knows that people are dying because they have nothing to eat, the government appears incapable of making the welfare system function at its most basic level.

“The shocking thing is that many of these [starvation] cases have been followed up on by the media, many times,” said Ashwin Parulkar, a researcher with the New Delhi-based Center for Equity Studies who recently investigated the government response to starvation cases. “But the simple administrative tasks that are supposed to prevent these things aren't even enforced when these calamities have already happened.”

In rural Jharkhand, for instance, a woman whose husband starved to death two years ago was still waiting for a card certifying her as eligible for subsidized grain. When Parulkar confronted local administrators, they told him they would get her the card. They even gave him a specific date. But even after Parulkar published his findings in a thoughtful, six-part series for the Wall Street Journal's India Real Time blog, the woman still hasn't received it.

They have "no shame in admitting it hasn't been done,” Parulkar said. And "no shame in promising something they know they're not going to do.”

For several years now, India has complained of a so-called “paradox of plenty.” As higher yields have produced more and more rice and wheat, the Food Corporation of India (FCI) has snapped up ever larger amounts to prop up prices for the country's millions of farmers — until all the warehouses were full, and towering stacks of wheat and rice had to be abandoned to rot under the open skies.

But as much as the talk has centered around building more warehouses, or allowing retailers like Walmart into the market to whip the supply chain into shape, the problem was never about plenty, and it was never about storage. The problem was, and is, distribution.

India's food subsidy system was designed for two purposes. FCI buys grain at a so-called “minimum support price” to protect farmers from a crash when the monsoon delivers a bumper harvest. And it is supposed to sell or give away that grain at below market rates to protect the poor from starvation.

But no matter how much grain the government buys, no matter how many tons lie rotting in its possession, and no matter how many people go to bed hungry each night, the amount of grain it disperses to the poor never gets much larger.

“The refusal of the government to let go of these food grains is at the heart of [the problem],” said Biraj Patnaik, principal adviser to the Supreme Court on the proposed right to food law.

Since 2003, the government's “buffer stock” of food grains has rarely been less than double the prescribed norm, according to Kaushik Basu, chief economic adviser to the prime minister, writing in Economic & Political Weekly. Over the same period, as Indians continued to go hungry, wheat prices in India soared. They rose as much as 30 percent higher than international rates in the summer of 2010. Meanwhile time after time the FCI sold off its so-called excess on the international market for less than the price it could have earned at home.

“I see no justification for a hungry nation to be exporting food grains,” said Sharma. “How can you be so criminal in your thought process?”

The usual explanation is corruption. It's not that the government doesn't want to release its stockpiled grain to the poor, the argument runs. But there's little point to the exercise, since as much as 18 percent of rice and 67 percent of wheat intended for the poor is diverted before it reaches the target, according to a frequently cited study. And if that's not bad enough, corrupt traders sell a healthy portion of that diverted grain right back to the FCI for a minimum price — scamming the government into paying a subsidy for the same grain again and again.

But that's not the whole story. Theft of the grain intended for the poor has dropped significantly, according to economist Reetika Khera. And the most marked improvements have been achieved in states that have simultaneously reduced grain prices and expanded the system's coverage, Khera argues, citing moves by Andhra Pradesh and Tamil Nadu to offer rice to everyone at the subsidized price of one rupee per kilogram. In other words, the closer the system comes to a universal subsidy for all, the better it seems to work.

Moreover, corruption isn't the only reason India stockpiles food while its people starve. India's economic liberalization, and the World Trade Organization (WTO), have also played a role, according to Jawaharlal Nehru University's Jayati Ghosh.

Since 1991, when, as finance minister, Manmohan Singh initiated the dismantling of India's planned economy, India has dramatically reduced public investments in agriculture and rural areas. Meanwhile, the WTO-related removal of trade restrictions forced Indian farmers to compete with “highly subsidized large producers in the developed countries, whose average level of subsidy amounted to many times the total domestic cost of production for many crops,” Ghosh wrote in a 2005 background paper for the United Nations' Human Development Report. The result was a “very pronounced” reduction in food grain consumption.

India's economic liberalization also resulted in deep cuts to the public distribution system. On the insistence of the World Bank (which had backed the loans that bailed India out of a financial crisis in 1991), the government scrapped its near universal food grain subsidy in favor of a system that targeted only below poverty line families in 1997.

Since then, millions of people have slipped through the cracks, unable to secure ration cards testifying to their poverty. The effort to separate the absolutely destitute from the very poor has added new complexity to a system already plagued by bureaucratic inefficiency, and, presumably, offered new opportunities for graft.

But the biggest embarrassment has been the government's effort to reduce costs by charging more for grain sold to above-poverty-line families. That effort has backfired miserably.

Between 1997 and 2000, FCI increased grain prices by 80 percent for below-poverty-line families, while the rates that above-poverty-line families had to pay doubled. But the prices were too high for the poor to afford, so the only result was that people bought less grain — and ate less. Instead of selling grain at a loss, the government wasn't selling it at all. The stocks mounted, increasing from some 18 million tons in 1998 to more than 50 million tons in 2003.

Over the past decade, the amount of grain purchased by below-poverty-line families has increased — mostly because states like Andhra Pradesh and Tamil Nadu have expanded coverage and offered additional subsidies over and above the FCI discount. But offtake at the above poverty line rate has remained low, even as market rates soared and states clamored for more, simply because the central government refused to sell, said Ghosh.

As a result, at last count the government had 82 million tons of grain in hand, hoarded for the emergency it never acknowledges has already arrived.

A cynic might well suggest that no real change is likely anytime soon. The proposed national food security bill aims to make the food distribution system work better by adding new enforcement mechanisms, as well as setting up soup kitchens, school meal programs and direct cash transfers to complement the existing subsidies.

But despite all the furor about its cost, the new and improved targeted system still relies on the broken method of trying to identify the poor – whose numbers rise and fall much more rapidly than the government can conduct economic surveys. It ignores evidence from the states that suggests universal subsidies work best.

And even after the expansion it will still cover a lot fewer people than the near universal food program India had until the 1990s.

Wednesday, June 06, 2012

India economy: How bad is it?

Stagflation looms for the middle class, but higher prices will hit the poor hardest.

By Jason Overdorf / NEW DELHI
GlobalPost - June 6, 2012

NEW DELHI, India — A 52-year-old handyman who has lived in New Delhi for 30 years, Ram Samujh has seen bad times before. But these days, as India faces an economic slowdown amid double-digit inflation, the future looks especially bleak.

“There's no more cutting back for me,” says Samujh, a soft-spoken, gray-haired man who carefully takes out a pair of rimless reading glasses. “I'm already down to only the absolute necessities.”

“I'm a daily worker,” said Samujh, whose skills give him a leg up on most Indian laborers. “One day I might get three jobs. But then I might go a week without any.”

Over the past three years, as prices for food and other essentials soared, Sadmujh was also able to charge more for odd jobs like installing new electrical outlets, repairing small appliances and fixing clogged drains. But with India's economic growth slowing to a nine-year low of 5.3 percent for the quarter ended March 31 and 6.5 percent for the fiscal year, Samujh's middle-class employers are also beginning to feel the pain — even as economists predict that prices will continue to skyrocket.

“Things are getting very expensive,” said Bharat Singh, who, as a sub-inspector with the Delhi Police, falls smack in the middle of the $4,000-$10,000 income bracket that economists here define as the middle class.

“Vegetable prices have gone up 25 percent. They are going to increase school fees 20 percent next term. We're no longer able to save any money,” Singh said.

“I'm afraid. I'm really afraid. How will I arrange all the things in the coming months, or coming years. I am afraid to see the future.”

How bad is it?

The short answer may well be yes. Or as Ruchir Sharma, head of emerging markets at Morgan Stanley in New York, puts it:
India now has only a 50-50 chance of making it to the ranks of developed nations by 2050.Many middle-class Indians like Singh — who has three sons, two in private schools and one in college — have already eliminated luxuries like going to the movies and adopted simple economies like eating vegetarian five or six days a week. As car owners getting by on relatively modest salaries, the middle class was hit hardest by the government's move to hike petrol prices nearly 10 percent last month. And though India's labor laws protect them from layoffs, they now face ever greater competition for a stagnating number of jobs, hiring freezes and, possibly, wage cuts — prompting a leading national news weekly to ask: “Was it just a mirage then?”

Though 6.5 percent growth no doubt looks pretty good to countries where a full-on recession is looming, India's economy slowed steadily throughout the fiscal year. And the nature of the growth was not too encouraging, either.

“A lot of the income growth is coming from people selling their land,” said Bibek Debroy, an economist at the New Delhi-based Center for Policy Research. “That's part of the India story, for better or for worse. Parts of India are getting urbanized. So I have a plot of land that is valuable, and I sell it off.”

Real estate gains — which don't create jobs — accounted for an unhealthy part of India's economic growth in the fourth quarter, when it slipped to 5.3 percent. Worse still, India needs to grow at nearly twice that rate to keep its head above water. Because of its expanding population, it needs to create about 12 million new jobs a year to employ the young people entering the work force — which might just be possible at a 9 percent clip, according to Debroy.

But even that's only the tip of the iceberg. To lift some 600 million farm laborers out of poverty, or near to it, India needs more than simple industrialization, it needs a complete metamorphosis. And over the past three months, its nascent manufacturing sector contracted instead of growing.

“The question is not whether we're growing faster than the rest,” said Dharmakirti Joshi, chief economist at Crisil, the India arm of the credit agency, Standard & Poor's. “The question is whether we're growing fast enough to solve our problems. Clearly, we are not.”

That means that the only thing trickling down these days is belt-tightening.

“The poor man's wages have risen quite swiftly until last year. That cushioned them against inflation,” Joshi said. “The high growth we saw allowed people to pay more for household services, more for their drivers, more to farm laborers. But can wages keep rising at the same rate if the economy slows to 6 percent? I don't think so.”

On Monday, Crisil lowered its growth forecast for this year to 6.5 percent from 7 percent. And that could well drop further, if the troubles in the euro zone get worse, oil prices climb back up, or India's government continues to falter.

And wages?

“There's no point in asking for more money now, because nobody will give it,” Samujh said. “It's better to concentrate on keeping my clients happy.”

What's next?

India's business leaders have called for stimulus measures, beginning with an interest-rate cut. And economists like Crisil's Joshi have predicted that some such moves are in the offing — such as fatter tax breaks for export- and labor-intensive industries, and a deep cut to interest rates if growth continues to lag below 6.5 percent.

But it will take more than rearranging the deck chairs to stop the ship from sinking.

“Reform is a generic word,” said Joshi. “You can't ignore the governance and execution aspect of things, which has led to some pessimissm about India right now.”

The conventional wisdom is that India's economic woes stem from “policy paralysis,” a catchphrase that refers to the current government's failure to push through business-friendly economic reforms like loosening the rules on foreign investment for big retailers like Walmart. And, indeed, as the caretaker of a weak coalition government, Prime Minister Manmohan Singh hasn't achieved any big bang reforms, like deregulating fuel prices or selling off beleaguered Air India to end a depressing cycle of multibillion dollar bailouts.

The recent move to hike petrol prices may signal that the economist PM is now ready to rock. And Joshi points out that every Indian government has typically taken a “firefighting approach” to the business of running the country.

“I would not lose hope completely,” Joshi said. “Now there is enough fire, so I would expect some action.”

But the paralysis runs much deeper than policy. And, ironically, the root of the problem may not lie with Singh's recalcitrant partners in the United Progressive Alliance (UPA) — who stopped him from throwing open the doors to Walmart. It may have originated with the very same middle-class Indians who are now complaining the loudest about the slowdown.

The reason? It was the normally apathetic middle class that first fueled the anti-corruption campaign led by social activist Anna Hazare, which brought tens of thousands of Indians onto the streets last summer. Now, as the mass movement takes on the character of a witch hunt, the calls for blood just keep getting louder. And the fear of being targeted in a Central Bureau of Investigation probe has brought the already sluggish bureaucracy grinding to a halt.

Here's why.

Leaving corruption aside for a moment, India normally functions less by policy than by edict. Sure, there's a law at the root of every government activity. But it translates into action only when, say, the minister of education or rural development issues instructions to the secretaries and joint secretaries who actually make things happen.

By “moving a file,” the bureaucrats clear the actual projects, choose the contractors, and so on. In the current climate of fear, however, these bureaucrats are demanding their instructions in writing, and their ministers are afraid to comply, say insiders.

“The damn problem is not coalition politics and FDI in retail and petroleum product prices,” said Debroy. “The issue is that no one takes decisions, full stop.”

Thursday, May 24, 2012

India: Stasis or crisis?

Why you should care about the plummeting Droopee.

By Jason Overdorf

GlobalPost - May 24, 2012

COIMBATORE, India — Combating charges of “policy paralysis,” Prime Minister Manmohan Singh raised India's gas prices by the steepest amount ever on Wednesday, in an effort to woo back foreign investors and slow the fall of the plummeting rupee.

But the sudden, bold, and much needed move could well put an end to hopes of a third term for his United Progressive Alliance coalition — and could also lead to a call for early polls.

By hiking the petrol prices charged by India's state-owned oil companies nearly eight rupees per liter — or more than 10 percent — the government will dramatically reduce fuel subsidies, and thus reduce the fiscal deficit. But even though that is exactly the move that economists and investors have demanded to signal that Singh is willing to make the hard choices needed to get India's economy, and the rupee, back on track, he is already facing demands that he reverse the decision from his coalition partners.

This could be the beleaguered prime minister's moment of truth. If he faces down his recalcitrant allies, Singh could once again emerge as the hero of reforms who averted a financial crisis and put India on the path to rapid growth in 1991.

If he caves to political pressure, he could erase any achievements he has made since taking office in 2004 and send India's flagging economy spiraling. Sticking to his guns might bring down the government, forcing snap polls. And rolling back yet another policy would virtually ensure his Congress Party's failure in the next scheduled election.

For now, however briefly, the prime minister appears to have snatched victory from the jaws of defeat.

His most truculent ally, Mamata Banerjee of the West Bengal-based Trinamool Congress, has intimated that she has no plans to withdraw support for the government — despite her howls of protest over the petrol price hike. And though he has also criticized the petrol price hike, Mulayam Singh Yadav, the head of another powerful regional party that is not yet part of the UPA, was seated on the dais at a function celebrating the third anniversary of the coalition's second term on Tuesday, suggesting that Congress Party President Sonia Gandhi may already have secured Yadav's backup if Banerjee does pull out.

Still, the maneuver truly came at the eleventh hour. And it remains to be seen if it will be enough. The rupee continued to slide Thursday, setting a new record low of 56.4 against the dollar in intraday trading after closing at 55.98 the day before.

Meanwhile, unconfirmed reports speculated that a panel of government ministers will meet Friday to discuss a possible hike in diesel and kerosene prices — a move that would be even riskier politically.

How did we get here?

Since the UPA's second term began in 2009, economists and investors have been clamoring for new financial reforms that will reduce India's budget deficit and stimulate its now slowing growth. But corruption allegations that forced Singh to remove his former telecommunications minister and brought tens of thousands of protesters onto the streets weakened his Congress Party's mandate.

As a result, the prime minister was not able to push through any significant financial reforms during his government's two-year, post-election honeymoon period.

Meanwhile, despite concerns about a rising budget deficit, his government passed laws enshrining universal education as a basic right and expanding a government food subsidy to cover three-quarters of the rural population and half of city dwellers — which some estimates say will cost nearly $20 billion.

Singh's “Report to the People” at the UPA anniversary function on Tuesday heralded as achievements four bills aimed at curbing corruption by making the government more efficient and transparent — including one designed to create national- and state-level ombudsmen, which was demanded by anti-corruption activist Anna Hazare last year.

But all four are still far from being passed.

Worse, opposition from Banerjee's Trinamool Congress — a new coalition partner for the UPA in its second term — forced Singh to roll back a move to allow direct investments from big foreign retailers like Walmart through executive fiat in December, killing his only significant attempt at economic reform and sparking accusations of “policy paralysis.”

"Managing the economy has become almost synonymous with managing the coalition,” said Pai Panandiker, president of the RPG Foundation, an independent think tank.

“They [Singh and Congress Party President Sonia Gandhi] are not able to manage the coalition,” Panandiker said, referring to the opposition to economic reforms from Congress Party allies like the Trinamool Congress. “That is why they they cannot manage the economy. That is the crux of the whole problem.”

Government paralysis has already taken a toll. Economic growth dropped below 7 percent last year, India's slowest pace since the 2008 global financial crisis.

Factory output fell by an unexpected 3.5 percent in March. Foreign institutional investors — that is, fund managers in the US and Europe — pulled $140 million out of Indian markets in April, exacerbating a plunge that has seen the rupee plummet more than 10 percent against the dollar since March 1. And though most analysts say it's too soon for comparisons to the balance of payments crisis of 1991, what few measures Singh's government has taken have served only to throw gasoline on the fire.

“The final trigger came with the political outcomes in Greece and in France,” said Shubhata Rao, chief economist at Yes Bank. But the foundation was laid by "the measures introduced in the budget, which weren't really global-investment friendly.”

Breaching an unheard of 56 against the dollar this week, the rupee has been hitting record lows on a daily basis. Some say it could be headed for 60, raising the specter of a vicious cycle and a possible crisis if foreigners abandon Indian markets wholesale. But as recently as this January, when investors were looking forward to a possible rate cut from the central bank and a bold new budget from the finance ministry, it was Asia's best performing currency.

Why did it all go south? Following the disastrous rollback of the move to open the market to retailers like Walmart and Carrefour in December, Indian business leaders and global investors were hoping for an investment-friendly budget in March, if not some measures to reduce the fiscal deficit.

Instead, Finance Minister Pranab Mukherjee formulated new tax rules that made India even less attractive for investors. With the General Anti Avoidance Rule, he sought to tax investments routed through Mauritius and other tax havens — a move that made India a less attractive destination for foreign capital by reducing prospective returns.

And he proposed a retrospective amendment to the tax laws that circumvents a recent Supreme Court ruling and will force Vodafone to pay some $3.5 billion in taxes and penalties associated with its 2007 acquisition of Hutch Telecom.

Though implementation of the General Anti Avoidance Rule has been delayed until 2013, the message sent to foreign institutional investors, as well as companies seeking to make acquisitions or other direct investments in India, was that the rules could be rewritten at any time.

Stasis or crisis?

With the most pessimistic analysts predicting that the rupee could fall as low as 60 before Singh's move to hike petrol prices, the danger was growing that stasis would spin into crisis. So far experts agree with the finance minister that it's too early to press “the panic button.” But because perception can be as important as hard economic data in determining the flow of investment, the tipping point is impossible to predict.

“A panic comes when there is a substantial outflow of foreign money — what is called hot money,” said Panandiker. “If foreign institutional investors sell here to take money out, what happens is that there's a crash in the share market, and the money going out will also result in a fall in the value of the rupee.”

The result is a vicious cycle. The more the rupee drops, the riskier investing in India becomes, because the risk of currency depreciation compounds the risk of a drop in share prices.

So at some point, the further the rupee drops, the more money foreign investors pull out of India, and the more money investors pull out, the further the rupee drops. The only thing the central bank can do then is to intervene directly to buy rupees and try to prop up the currency's value to break the cycle. But there's a limit to how much the Reserve Bank of India can spend.

“We are running a high current account deficit, and that situation is not likely to be corrected very soon,” said Dharmakirti Joshi, chief economist at credit ratings agency Crisil, the Indian arm of Standard & Poor's. “If the European problems are contained, we might be able to get financing for our current account deficit. But if the euro zone problems increase, there's an issue of insufficient financing and then again pressure on the rupee.” (A high current account deficit, largely due to a poor balance of trade stemming from high oil prices, was primarily responsible for the economic crisis of 1991.)

The good news — and the reason most analysts remain guardedly optimistic that India can get back on track — is India's central bank has much more in its kitty today than it had in 1991.

Prior to the 1991 balance of payments crisis, which spurred the liberalization of the economy responsible for India's rapid economic growth, the country's forex reserves had dwindled to $1.2 billion, hardly enough to finance three weeks of oil and other imports. Today the central bank has around $290 billion in reserves to play with.

But the bad news is that a substantial dip in those much larger reserves could still have dramatic effects, said Panandiker.

“If it starts unloading the reserves, that can create a kind of panic situation,” Panandiker said. “If the outflow is about $10 billion, then this kind of crisis situation comes.”

According to Crisil's Joshi, the central bank has wisely stuck to the sidelines so far, as intervening and failing could be far worse than letting the rupee find its own bottom. But nobody can predict what might happen in the future.

“It's like going to a doctor. He can tell you that your blood pressure is rising, your sugar levels are dangerous, and you probably are getting clots in your arteries, but he can't tell you exactly when the heart attack will happen,” Joshi said. “With the economy, the parameters are becoming worse, just like the patient I was talking about. When will it translate into a heart attack [like 1991]? I don't think anybody can say.”

One thing is clear, though: It's time for the patient to make some lifestyle changes — which is exactly what Singh has prescribed.

Tuesday, May 01, 2012


(From GlobalPost -- May 2, 2012) Indian anti-corruption activist Anna Hazare and the coterie of supporters now known as “Team Anna” are striving to keep their budding mass movement alive, a year after Hazare's first hunger strike against graft brought tens of thousands of usually apathetic middle class Indians to the streets.

The problem? Anna fatigue, mostly. One guy with a little white cap can only keep television viewers interested for so long, and hunger strikes are notoriously low on vigorous action.

But Team Anna seems to have missed a trick from Eric Hoffer's seminal primer on mass movements: If your movement has a concrete goal, you can be derailed either by achieving it or by failing to make any progress, and it's all too easy to get bogged down in technicalities.

In targeting corruption, Team Anna had a sufficiently amorphous and abstract enemy. But as soon as they outlined their solution — a new law known as the Jan Lokpal Bill, designed to set up a national ombudsman's office — they pretty much sealed the movement's fate.

Before long, Manmohan Singh's Congress-led United Progressive Alliance was pushing a Lokpal Bill of its own. Shouts and slogans gave way to nitpicking comparisons of different pieces of legislation. The halo over Hazare was tarnished by his association with the far Hindu right, and Team Anna itself fractured over whether or not the movement should campaign against the Congress in the recent state elections.

In the latest spat, Hazare has had to drop plans to tour the country with the hugely popular but controversial right-wing yoga guru, Baba Ramdev, and Team Anna is busily denying that the expulsion of a Muslim leader from the core group signals that it's falling apart.

This all begs the question: If nobody turns up for a protest rally, does it actually make a sound? — By Jason Overdorf in New Delhi, India

Sunday, April 15, 2012

India: School revolution on the way?

India's Supreme Court upholds law forcing private schools to admit poor students.

By Jason Overdorf
GlobalPost (April 15, 2012)

NEW DELHI, India — In a landmark judgment this week, India's Supreme Court upheld the constitutionality of a law that requires almost all private schools to reserve 25 percent of their seats for poor students.

The decision potentially paves the way for huge changes in primary and secondary school education here.

In a country where a quarter of the population is illiterate and the caste system is still alive and well, the move is lauded by some as an equalizer on par with the decision to desegregate American schools in the 1960s.

“I see this entire process as the beginning of a revolution,” said Ashok Agarwal, a lawyer affiliated with an organization called Social Jurists, who says previously fewer than 1 percent of private schools made a sincere effort to admit poor students.

According to a recent survey conducted by Pratham, an NGO, 96.5 percent of Indian children between the ages of 6 and 14 are enrolled in schools.

But with private players charging as much as $200 per month compared to less than a dollar in fees at those run by the government, there are vast differences between the schools they attend.

Though India has more than a million goverment-run schools and only around 250,000 private ones, with rare exceptions only the very poor attend government institutions. The division reinforces a broad socio-economic gap between the haves and have nots. And some argue that the failure to educate the poor threatens to derail India's economic miracle before it really gets rolling.

A recent survey conducted by The Program for International Student Assessment, an Organisation for Economic Co-operation and Development (OECD) unit that tests students' literacy reading, mathematics, and science, for instance, ranked India's 15-year-olds second from the bottom among some 74 countries.

While the 25-percent quota will be difficult to implement — and some argue that it impinges on the rights of the private schools that have previously refused government aid — the move would see some of the nation's wealthiest students sitting side-by-side with the poorest.

The Right to Education Act, passed in 2009, guarantees free and compulsory education for all children between the ages of 6 and 14. Answering a challenge to the act, the court directed all privately run schools to admit at least 25 percent students from socially and economically depressed families beginning this academic year. Only boarding schools and minority institutions that don't receive government aid are exempt.

The right to education act places “an affirmative burden on all stakeholders in our society,” the court wrote on Thursday, in a 2:1 majority judgment upholding the provision.

High cost of reform

The Supreme Court's move is causing tremors. Parents worry that admission to elite private schools will get even tougher. Schools worry about the administrative and financial burden of admitting more poor children.

But even the most optimistic proponents of the right to education law warn that there are still many hurdles ahead.“The judgment removed the uncertainty about the 25 percent, and we now know where it applies and where it doesn't,” said Parth Shah, president of the New Delhi-based NGO, Center for Civil Society. “The hard work of figuring out the design, implementation, monitoring and assessment now has to be done.”

Already, for instance, private schools have argued that the plan to reimburse them only for the amount charged by the dismally failing government schools will expose them to a huge financial burden. Some are threatening to raise fees for paying parents. And nobody has thought too hard yet about the intricacies of integrating children from such dramatically different circumstances – like bringing poor children who only speak Hindi or Tamil into a school where classes are taught in English.

Meanwhile, in Delhi, where the battle is a little older because the state had earlier tied land grants for private schools to an agreement to take on poor students, streetfighters like Social Jurists' Agarwal have already confronted schools that try to game the system.

Because the rules require schools to admit 25 percent poor students only in the first year, for instance, some schools dramatically reduced the total number of first graders they admitted, and then added double or triple the number of full-tuition students in the second year. Others took a more direct approach, simply offering parents of poor children cash — as much as $4,000 — to pull their kids out of class.

Teaching poor kids about McDonalds

“In India, people have the attitude of 'How can my son sit on the same bench as my driver's son?' That's what's scaring me,” said Anouradha Bakshi of Project Why, a non-profit that runs supplementary afterschool education programs for the poor.

To prove that poor children could excel, Bakshi sent eight slum kids to an elite boarding school. But it took more than the money for tuition to ensure they excelled. She first rented a flat and moved the kids in with her, going the extra mile not only to teach them English but also skills that they'd need to fit in — such as how to eat with a knife and fork and find their way around the menu at McDonalds.

“In one of these uber-rich schools where the child has to go back to his slum or his little house in the evening, it's easier said than done,” said Bakshi. “Who's going to help that little child with homework and hold his hand?”

That's a fair point, and implementation has never been India's strong suit. But even a bad experience at a good private school is likely to be better than the grim reality of the government-run alternative — which is why more and more of the poorest Indians already send their kids to grassroots private schools in the slums that cost a few dollars per month.

“In Delhi, for instance, the schools run by muncipality are really in a bad state,” Bakshi said. “There's practically no teaching. The classes are overcrowded. There are schools with no buildings. Those that have buildings have no bathrooms, or no bathrooms for girls, and the teachers are not interested.”

In rural areas, students at government schools are lucky if the teacher even shows up.

Yet with private schools already receiving as many as 1,500 applicants for 25 seats in a class, there's also a chance that desegregating the posh institutions will allow the government to continue to shirk its responsibility to the vast majority of parents and children.

“As usual, laws are made without thinking,” said Bakshi. “It's time that we started thinking about these children longterm, not just jumping up and down and saying now these poor children are going to go to these rich schools. Why is the government putting so much money into private schools?”

School choice advocates like the Center for Civil Society's Shah say that the answer is to empower parents and facilitate the building of more private schools. Through a school voucher system, for instance, the government could help to identify qualifying students and give them power to choose the school where they send their kids — creating a financial incentive for schools to teach the poor.

And by streamlining a system that requires some 36 different licenses to open a school in Delhi and creating incentives for banks to finance education startups, the government can help private players bridge the gap between supply and demand.

“All the things we are talking about how to make businesses easier to open and operate can be applied to schools,” Shah said.

Maybe. But if private schools emerge as the backbone of India's education system, this will be the first country where that has happened.