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A guide to the dynamic economics, politics, and culture of the world's most populous region.

India: S&P cuts growth forecast, despite Singh's new reforms

S&P cut its growth forecast to 5.5% from 6.5% for the financial year ending in March, despite PM's moves to loosen rules on foreign investment.
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A man makes chapatis as an Air India passenger jet flies over the Jari Mari slum in Mumbai, India. (Daniel Berehulak/Getty Images)

Ratings agency Standard & Poor's lowered its growth forecast for the India economy to 5.5 percent from 6.5 percent for the year ending March 31, despite the prime minister's recent moves to attract capital by opening the aviation and retail sectors to greater foreign investment.

According to MoneyControl.com, S&P had cut its outlook on India's sovereign rating of `BBB-' to negative from stable in April, while it has also lowered its growth forecast for China to 7.5 percent.

Prime Minister Manmohan Singh looks poised to take further measures to boost the economy, however, the Times of India reports.

Following moves to allow foreign airlines to invest up to 49 percent in local ventures and to allow multi-brand retailers like Walmart to invest up to 51 percent in local stores, Singh is readying a plan to loosen banking restrictions to allow banks to loan more money to real estate firms -- in a bid to boost the employment-generating construction sector. Educational loans are also reportedly going to get easier, the paper said.

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India: Dead last in nutrition

Save the Children study on nutrition ranks India below everybody but Congo and Yemen -- with which it's tied for dead last.
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An Indian boy feeds his sister at their home in a slum in Hyderabad, on January 10, 2012. Levels of under-nutrition in the country were 'unacceptably high' despite impressive GDP growth, Prime Minister Manmohan Singh said Tuesday and added that the problem of malnutrition was a 'national shame'. (Noah SEELAM/AFP/Getty Images)

India ranks dead last when it comes to providing healthy food for its children, says a new study by Save the Children.

According to India's Deccan Herald newspaper, the study compared commitments and outcomes of 36 countries which together account for 90 per cent of the world’s stunted children.

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India: Regional leader backs Singh, ensuring government's survival

Samajwadi Party leader Mulayam Singh Yadav commits to backing PM's United Progressive Alliance
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Indian Samajwati Party Chief, Mulayam Singh Yadav (C), General Secretary of the Communist Party of India-Marxsit (CPI-M), Prakash Karat (L), and former Prime Minister Devegowda (R) march to parliament during a nationwide strike in New Delhi on September 20, 2012. Opposition parties and trade unions called for shopkeepers, traders and labourers in India to block railway lines and close markets to protest against reforms, designed by Prime Minister Manmohan Singh, to revive India's slowing economy allowing in foreign retail giants such as Walmart and Tesco. (RAVEENDRAN/AFP/Getty Images)

Looks like Indian Prime Minister Manmohan Singh doesn't have anything to worry about, at least for the short term.

As GlobalPost predicted earlier, Singh's United Progressive Alliance (UPA) government is not falling, despite the withdrawal of Mamata Banerjee's Trinamool Congress, because the Samajwadi Party's Mulayam Singh Yadav has stepped in to take her place.

As the Times of India puts it, Yadav's SP, which relies heavily on Muslim votes, will continue to support the UPA because Yadav "does not want to let communal forces [meaning the Hindu nationalist Bharatiya Janata Party (BJP)] to come to power."

Yadav's support alone is enough to give the UPA a slim majority. With the outside support of SP (22 seats) and BSP (21 seats), the coalition will continue to have the backing of over 300 MPs in the 545-member parliament, the paper said. For a simple majority, government needs the support of at least 273 MPs.

Meanwhile, Singh looks set to double down on economic reforms, as GlobalPost reported earlier.

According to the Hindustan Times, on Thursday Singh formally notified a measure that will allow "multi-brand" retailers like Walmart into the market with foreign investment of up to 51 percent in local ventures--defying calls to withdraw the move from West Bengal's Mamata Banerjee, whose Trinamool Congress controls 19 parliamentary seats. Moreover, Singh plans to present additional reforms, such as settling an outstanding tax conflict with Vodafone and raising the cap on foreign investment in the insurance sector, in the near future, the paper said.

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India: Walmart is officially legal, but making money could be a long haul

Walmart is still losing money in China, 12 years after it entered the market. In India, conditions are even tougher.
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An Indian labourer sleeps in front of closed shops during a nationwide strike in Bangalore on September 20, 2012. Opposition parties and trade unions called for shopkeepers, traders and labourers in India to block railway lines and close markets to protest against reforms, designed by Prime Minister Manmohan Singh, to revive India's slowing economy allowing in foreign retail giants such as Walmart and Tesco. (Manjunath Kiran/AFP/Getty Images)

With Prime Minister Manmohan Singh officially notifying a measure to allow "multi-brand" retailers like Walmart into the market, the company that killed Main Street is officially legal in India.  But can it actually make money?

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India: PM doubles down on reforms, ally confirms pullout

India's Congress Party aims to push for additional reforms, even as moves to hike diesel prices and allow foreign investment from companies like Walmart is likely to prompt a no-confidence motion.
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Activists shouting anti government slogans in Jammu, India on Sept. 20, 2012. Prime Minister Manmohan Singh faced a crunch day on September 21, 2012, in his bid to drive through economic reforms, with a one-time coalition ally set to formally withdraw support from his beleaguered government. Barring an unexpected last-minute compromise, six ministers from the regional Trinamool party were to resign their posts in New Delhi and its 19 lawmakers will end their uneasy alliance inside the coalition, which came to power in 2009. (STRDEL/AFP/Getty Images)

India's Prime Minister Manmohan Singh looks set to double down on economic reforms, even as he faces a rebellion from a key ally that is likely to result in a no-confidence motion next week.

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India: Why the government is not falling

Singh's Congress will shave some points off recent reforms to make sure it retains power.

Prime Minister Manmohan Singh's United Progressive Alliance government is unlikely to fall, despite a pullout by a key ally that puts the coalition in the minority in parliament, various experts speculate.

Here's why Singh's moves to reboot economic reforms by hiking diesel prices and opening up the "multibrand" retail sector to foreign investment from companies like Walmart are looking savvy. Though both measures have nominally given the opposition a new issue to play with -- resulting in a nationwide general strike Thursday -- the controversy has finally driven corruption allegations related to the coal ministry off the front pages. 

And despite all the sound and fury, it doesn't look like the Congress will have to pay the piper.

The exit of Mamata Banerjee's Trinamool Congress (TMC) leaves Singh short of a majority by 19 seats. But according to the Hindustan Times, in five out of six possible scenarios the government will survive with so-called "outside support" -- from parties that won't join the UPA outright but won't pull them down either.

Virtually the only way that Singh's government will actually fall, triggering a new election, is if not only Banerjee's TMC, but also Mulayam Singh Yadav's Samajwadi Party (SP) and Mayawati Kumari's Bahujan Samaj Party (BSP) actively vote against the coalition continuing in power, rather than abstaining.  (Abstentions lower the bar for a majority, making the support of others more important).

There are various reasons that scenario is unlikely.

(1) The SP and BSP are mortal enemies, contesting for the loyalty of voters in Uttar Pradesh. So for them to join together to pull down Singh's government is improbable. More likely, one will see joining Singh as a chance to gain leverage over the other. The SP, especially, which recently came to power in Uttar Pradesh, can use this opportunity to wrangle some central government largesse for the state, which will in turn pay off in the next campaign.

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India: Key ally withdraws, putting Singh's government at risk

West Bengal's Mamata Banerjee severed ties with India's ruling coalition late Tuesday, raising the specter of early polls.
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The chief Minister of the eastern Indian state of West Bengal and the leader of the political party Trinamool Congress(TMC) Mamata Banerjee gestures during a press conference, in Kolkata on September 19, 2012. India's Prime Minister Manmohan Singh scrambled to save his government after Banerjee , a key coalition partner, quit raising the prospect of early elections and undermining his reform drive. (DIBYANGSHU SARKAR/AFP/Getty Images)

A key ally of Prime Minister Manmohan Singh's Congress Party withdrew from the United Progressive Alliance government late Tuesday, raising the specter of early polls if Singh and company cannot secure support elsewhere.

West Bengal Chief Minister Mamata Banerjee, leader of the Trinamool Congress, withdrew from the coalition after Singh refused to roll back decisions to hike diesel prices by five rupees and allow foreign direct investment of up to 51 percent from "multi-brand" retail companies like Walmart.

Prior to the move, most analysts, including this one, thought Banerjee was bluffing, as she doesn't seem to have a whole lot to gain from early polls. But as right-leaning columnist Kanchan Gupta points out, the unpredictable regional leader appears not only to be severing ties with the Congress, but also laying the groundwork for an alliance with the opposition Bharatiya Janata Party (or a possible "third front").

"There are three important points made by Mamata Banerjee while announcing her break with the Congress and the UPA," Gupta writes.

First, she has for the first time publicly accused the Congress of corruption. “Is FDI-gate meant to suppress Coalgate? Many people are asking this question. We are also asking,” she said, taunting the Prime Minister and the Congress.

Second, she has demanded an explanation as to why “black money is not being brought back” and “why is there no action against benaami property and wealth”. The jibe is obviously directed at the Congress leadership and the Prime Minister. It also identifies her and the Trinamool Congress for the first time with the loose confederation of anti-corruption movements.

Third, she has openly accused the Congress of “politics of blackmail” – or “blackmailing politics” as she called it at the media briefing. “I know the Congress better than anybody else. If they have a problem with me, they will reach out to Mayawati. If there’s a problem with Mayawati, they will reach out to Mulayam Singh Yadav. If there’s a problem with the DMK, they will go to the ADMK… But that game is now over.”

By bring up Coalgate, Banerjee has for the first time allied with the anti-corruption movement that has been berating the Congress for more than a year. By attacking the issue of "black money," she has embraced an issue that has long been a favorite of BJP leaders such as Ram Jethmalani, who has accused the most visible Congress leaders of having illegal funds stashed abroad. And by introducing the idea that the Congress has long played her regional party against other regional parties so as to avoid meeting any of their demands, she has implicitly suggested that she might be open to banding together with those regional players to form a third front.

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India: Protests rage... at Reebok

A random selection of a few more protests "raging" in India
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Indian chairperson from the separatist group Muslim Khawateen Markaz, Yasmeen Raja (C), and her supporters shout anti-US slogans during a protest against an anti-Islam movie in Srinagar on Sept. 17, 2012. A total of 17 people have died in violence linked to the film, including four Americans killed in Benghazi, 11 protesters who died as police battled to defend US missions from mobs in Egypt, Lebanon, Sudan, Tunisia and Yemen, and the two US soldiers in Afghanistan. (ROUF BHAT/AFP/Getty Images)

OK folks, here's more proof that a thousand protesters in India are equal to one lonely guy in America whining in his basement. And evidence that the burning of effigies -- though, yes, it sometimes ends in the burning of people -- isn't an anti-US thing.

First up, "Reebok franchisees hit the streets," according to the Hindustan Times.

"More than 200 franchisee store owners under the banner of two associations--Delhi Reebok Franchisees' Association and Rest of North India Reebok Franchisees' Association--took out a rally and staged a demonstration at Jantar Mantar in New Delhi," the paper writes.

Showing some commitment to bland newspaper prose, HT failed to register any surprise that Jantar Mantar, India's protest central, was unoccupied for the day until the Reebokers showed up. And, of course, nobody remarked on the accidental hilarity of the name "Rest of North India Reebok Franchisees' Association."  Oh well.

But guess what, "The protesters chanted slogans against Reebok and its parent group, Germany's Adidas, and burnt an effigy that sported a Reebok T-shirt and shoes."

(Note: the franchisees' beef is that the company has developed a new business model, and is unloading old merchandise at 50 percent off -- allegedly costing the franchisees big bucks).

Surprised? You shouldn't be. As I wrote yesterday for GlobalPost, India is Protest Nation.

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India: Singh's bet on reforms pays stock market dividends

A decision to hike diesel prices and open up to retailers like Walmart could be politically costly, but for the Indian economy it looks like it's already paying off.

Battling an impression of "policy paralysis" for months, Indian Prime Minister Manmohan Singh pulled two big economic reforms out of his turban on Friday, prompting an immediate threat from one of his allies to pull down the government and force early polls.

For Singh's Congress Party, it's a politically risky move, as Business Standard and others have explained -- though in some quarters it's a "political masterstroke" that has changed Singh from a "ineffectual ditherer" (WashPo) and "underachiever" (Time) to a “courageous reformer," reports Firstpost.in.

One of the reforms, a five rupee hike in the price of diesel designed to cut the deficit by reducing the subsidy the government pays to state-owned oil companies, promises to be deeply unpopular with the middle class and threatens to increase inflation that at higher than 7 percent is already smiting India's poor.

The other -- a move to allow 51 percent foreign direct investment in so-called "multi-brand retail," which will allow stores like Walmart into the market, and 49 percent foreign direct investment in the aviation sector -- has prompted claims from opposition parties and even some of his allies that he is selling out workers in thousands upon thousands of mom and pop "kirana" stores. (Read more about that here).

The last time Singh tried such maneuvers, he was forced to hedge. When he increased petrol prices in May, nationwide protests forced him to accept a partial rollback -- as well as tax cuts and other moves by state governments to reduce the bite.

And when he initially loosened the rules of FDI in retail by cabinet fiat back in November, a threat that Mamata Banerjee, of the Trinamool Congress, would pull down the government by withdrawing from the United Progressive Alliance forced him to put the plan on ice.

Insiders told me in May that the policy paralysis would come to a natural end as the elections -- scheduled for 2014 -- draw nearer. The reason? Campaigns are uncertain and costly affairs, while being part of the government allows Singh's allies to mint money (okay, not literally). If the only difference is a few months, and it's altogether possible that you won't be in any better position after snap polls, there's no upside to pulling down the government. And for every day that passes, the downside for Singh's Congress Party grows smaller.

That's the biggest reason that Singh's latest wave of reforms will probably stick, according to Business Standard. 

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India: Government crushes nuclear protests

Nuclear projects in India can only be thrust on unwilling citizens at gunpoint, writes activist Praful Bidwai

In the wake of police firing that killed one of the many Indians protesting against the Kudankulam nuclear power plant in Tamil Nadu, activist Praful Bidwai lays it into the government that not long back was hailed for its groundbreaking civilian nuclear agreement with George W. Bush.

"The repression, including lethal firing, unleashed on peaceful protesters against the Kudankulam nuclear plant on Monday, on top of FIRs over many months charging thousands with sedition, makes two things clear. Nuclear projects in India can only be thrust on unwilling citizens at gunpoint. [And] as the jalsatyagraha (water civil disobedience) shows, people will resist them tenaciously, because they are aware of their hazards," Bidwai writes in India's Hindustan Times newspaper.

As GlobalPost reported last year, a massive nuclear project planned for Jaitapur, Maharashtra, has also faced large protests.

Casual readers and the government dismisses these protests as the work of ignorant villagers and eco-radical agitators (as demonstrated by the claim that the opposition can be traced to various "foreign-funded" NGOs).

But Bidwai points out that every single nuclear project India has planned has spurred committed resistance:

"That's true of every nuclear project, whether Jaitapur (Maharashtra), Gorakhpur (Haryana), Mithi-Virdi (Gujarat), Kovvada (Andhra Pradesh), Haripur (West Bengal), Chutka (Madhya Pradesh) or Banswada (Rajasthan). For instance, at Gorakhpur, there has been a daily dharna against four proposed reactors for two years, unbeknownst to Delhi, which lies in their potential radiation-fallout zone," he writes.

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