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Global Financial Crisis:BIG JOLT TO INDIAN FIRMS, INVESTORS, by Shivaji Sarkar,10 October 2008 Print E-mail

Economic Highlights

New Delhi, 10 October 2008

Global Financial Crisis

BIG JOLT TO INDIAN FIRMS, INVESTORS

By Shivaji Sarkar

The global financial crisis has clearly started affecting Indians. According to modest estimates, the quick withdrawal of investment by foreign institutional investors (FIIs) at the Bombay Stock Exchange has cost the investors at least Rs 40,000 crore.  

This raises vital questions about the role of the regulator, SEBI. The FIIs have emerged as ‘fly-by-night operators’ by pushing the market up and down artificially. In both the cases, the profits go to the FIIs and the losses to indigenous investors. Indian IT companies too, are in deep trouble. The collapsed Lehman Brothers used to outsource Rs 700 crore worth of business to the IT giants. In all likelihood, this would impact balance sheets and even lead to job losses.

The Indian companies listed on the US bourses – New York Stock Exchange (NYSE) and Nasdaq, have lost close to $ 10 billion in a fortnight alone. The 16 Indian firms listed there saw their capitalization dip to $ 78.9 billion from $ 88.7 billion. While Infosys witnessed the maximum erosion of $ 2 billion, Wipro shed $1.69 billion, Satyam Computer saw a drop of $938 million and Patni Computers $ 72 million. Besides, outsourcing firms such as Genpact, WNS, EXLService, and Rediff.com dropped between four and 12 per cent.

Both the ICICI Bank and HDFC Bank saw their US market cap plunging by near $ 2 billion. Tata Motors lost $ 489 million and Tata Comm shed $ 266 million. In fact, the ICICI Bank has borrowed funds at very high rates over 300 basis points, leading to anxiety about how it would fund the operational base in a downturn market. This apart Indian firms have started encashing their carbon credits as their prices continue to fall. .

Contrary to official claims, the US turmoil has jolted some other big Indian corporates. According to an official assessment, the crisis has resulted in huge losses to some and raised cost of operations for others. Notwithstanding an official denial, a telecommunication giant has lost foreign exchange of nearly $ 100 million in its deal with Lehman Brothers through the UK’s Barclay Bank. However, it has not yet been reflected in its books.

A realtor firm, reportedly the mega DLF, has been borrowing funds at 35 per cent, keeping officials guessing how any company can do this, as the realty sector has plunged into further crisis. The Indian hotel industry too is jittery about the global crash. The largest tourist inflow is from the UK--16.5 per cent and the US--15.7 per cent. The figures are expected to fall sharply as most of the inflow is for business purposes. The US, for example accounts for 11 per cent business of the Oberoi group and 20 per cent for Leela Palaces.

The crash at the BSE, it is estimated has affected many individuals, whose investments have dipped by 70 to 80 per cent as the Sensex plummeted to around 11,000 mark from a high of 21,000. However, the extent of its impact on the mutual funds, pension funds and financial institutions (FIs) is yet to be estimated. Whatever the Finance Ministry may say, the impact is bound to high.

As is well-known, Mutual funds depend on investment at the stock exchanges. Its investors are a concerned lot, as the mutual fund equity schemes have given negative returns in the past one year-- since the Sensex started falling. A number of shares, such as Sahara Growth, ING Dividend Yield, Birla Sl Asset Allocation, IDFC Imperial and Premier Equity, HDFC Growth, UTI Dividend Yield, DSP Merril Lynch Top 100 equity and HDFC Top 100 have registered 19 to 23 per cent losses. This means that those investing in these funds have lost even on their capital investment. According to modest estimates the mutual fund losses would be at Rs 15,000 crore!

Interestingly, so far the nationalized Indian banks are not known to have logged in any major hit in the present crisis, except possibly in the retail sector, that includes credit card operations. They may have suffered losses in some mutual fund operations, but are yet to come out with a statement. They have, however, taken steps to stem the retail operations, which may save the banks but consumer-based industries would be hit hard. This in turn, would further affect the growth projections.

Clearly, the present crisis calls for a review of the policy of global integration. The Great Depression in 1929 started with the collapse of the NYSE and the stock prices fell to 20 per cent of their value. At that time, 11,000 of the 25,000 banks in the US went under red. Reduced spending and closures took its toll on the industry--production dropped and unemployment rose by 30 per cent. European countries with strong trade links with the US suffered fuelling unemployment in both Germany and the UK. Economists believe that like the present crisis, the Great Depression too was caused by lack of proper regulation and unreal expectations.

At that time, India fortunately did not suffer much thanks to poor exposure to the international market. However, since the opening up of the economy, it has been hit by two major stock scams and the collapse of the UTI. Recall, that the UTI had lost Rs 64,000 crore some years back. Again, it seems that India has not learnt from the earlier meltdown of the Southeast Asian Tigers, which had started from the realty sector, according to the World Bank.

In all, the world situation looks grim, according to the International Monetary Fund (IMF) warning. In fact, it has also cut its forecast for India’s GDP growth. The Composite Business Optimism Index for India, prepared by global market tracking services, Dun and Bradstreet (D&B), has fallen by a record 28.1 per cent in the past quarter. The index, which indicates the pulse of the business community, has fallen from 193.2 to 138.9 in a year. In fact, it also indicates subdued demand conditions.

Importantly, the situation demands a thorough review of both the economy and policy of integration. The SEBI needs to look at whether FIIs should be allowed such exposures at the stock market, and if so, how are they to be put on a leash? On its part, the RBI needs to look at the external commercial borrowings by Companies. Apparently, its conservative approach has saved most of the banks. As for the finance ministry, it needs to study whether it should further liberalise or take recourse to a conservative mode? Yes, the Indian economy has been hit. How hard, needs to be fathomed. ---INFA

 

(Copyright, India News and Feature Alliance)

India & Global Financial Crisis:NEEW TO REDRAW GROWTH PLAN, by Shivaji Sarkar,3 October 2008 Print E-mail

ECONOMIC HIGHLIGHTS                

3 October 2008, New Delhi

India & Global Financial Crisis

NEEW TO REDRAW GROWTH PLAN

By Shivaji Sarkar

The financial crisis in the US and Europe raises a basic question: what about the viability of the Indian economy. Indications are that New Delhi is going to review its globalisation policy. At least that is the signal that emanates from Prime Minister Manmohan Singh’s observation --that it might singe India. A statement contrary to what his Finance Minister P Chidambaram says.

More so, as the crisis according to the US Treasury Secretary and former chief of Goldman Sachs Paulson is the ‘death of raw capitalism.’ In simple words, raw capitalism means promoting consumerism through the credit card culture, without effective generation of wealth or funds. This had led to heavy imports by the US and generated “export-led growth in Asia”, with China, Japan and partially India being the beneficiaries (now adversaries).

Recall, that during the East Asian crisis, India was not affected because its exposure to that market was the least. However, neither India nor the world for that matter has taken lessons from that crisis. At that time, the World Bank had warned that the collapse was due to an artificial real estate boom in collusion with the banking sector. The US sub-prime mortgage, the beginning, was in fact an extension of the East Asian model at a much higher level of exposure and worse, with no safety of funds.

India had a taste of the above a few years ago, when UTI and private banks like the CRB collapsed. Many others had burnt more than their fingers in the stock market scam. Luckily, that has partially saved the banking sector as of now. Though the exposure and thaw in the real estate sector has hit some Indian banks the extent will be known in the days to come.

A strange but common factor is the collapse of the highest-rated Lehman Bank and AIG in the US and CRB a decade ago in India. This raises a doubt about the main credit raters – Standard and Poor’s and Moody’s. Clearly, most Indian companies and the financial sector depend heavily on their predictions. It is time for a review of that dependence. In fact, a major question the US is asking is: whether their predictions are honest or influenced by the beneficiaries?

Importantly, the credit agencies neither took notice of the high-debt factor in the US market nor the greed of the world for money, symbolised by Wall Street. This very greed led to a convoluted financial system derived from buying or trading in credit swap. In turn this led to a bounce in the companies’ balancing sheets when actual finances were clearly shrinking.

Regrettably, India is not free from the system. Many banks dealing in credit cards are very much exposed to it. Besides, it is no secret that with the present high inflation and rising interest rates, the repayments have suffered. But, the market has sought to keep it under wraps.   

It needs to be mentioned that in its latest report, the Reserve Bank has warned: “Credit growth of private sector banks was consistently above the overall credit growth. At times, it also showed wide variations of up to 70 per cent in excess”. Not only does this indicate a grim situation, but it is also marked by high non-performing assets (NPA), a euphemism for losses.

Therefore, it calls for a review of the western credit model, which seemingly “boosts” the economy but at what risk is anybody’s guess. In India, the only saving factor is that credit to GDP ratio was lower than that of developed and many emerging markets. As such, this means the crisis would restrict itself to a small sector, but a vital sector that deals with all the available official money. Thus, interest rate hike is not a solution. Instead, it needs to be lower so as to have the principal amount back into the system. The West had erred on it and India is doing the same by following the so-called global model.

The recent exposure for giants like Tata to the heavy national and international bailing out ventures such as Jaguar, Land Rover and steel companies should be considered a risk to the Indian financial system, which has directly or indirectly funded such operations.

With Europe and the US capacity to buy diminishing, India’s export sector is already facing the pinch. For example, while various car manufacturers were allowed to open their ventures for the dollar-driven market, their exports are not increasing. Hence, it is time to have a re-look at the export-oriented growth model, which has led to negligence in the strengthening of the domestic sector. A high GDP growth is not reflected even in growth pattern.

According to the managing director of Fortune, Andy Serwer, the problem in the US has been no different and is there due to lack of regulation. He is highly critical of the $5-trillion bail-out and terms it as “dumping erring Lehman’s and AIG debt on the taxpayer.”

Apparently, India has to worry on yet another front --exports and outsourcing.  Dependence on other countries to spur the economy has its obvious pitfalls. Integration is fine, but in the Asian context it is dependence on the US and Europe for sustenance! Neither Asia nor India has created a synergy in itself. Exports are falling and becoming less lucrative as the dollar remains at an artificial high.

Nasscom’s prediction about the BPO sector is bound to be off the mark. The $ 64-billion projected earnings (Rs 3 lakh crore), eight per cent of GDP, is not possible. The sector is heavily dependent on the US financial services’ sector, which means that the lucrative contracts for Infosys and Wipro are in danger of drying up. 

The Indian economy itself is hit by high inflation, falling production and demand phenomenon. Both the Planning Commission and the Reserve Bank need to sit together, which they rarely do, to draw up a new economic and growth plan. Indigenous modes have to be tried. It may not be the end of globalization, but it can be remodeled to the concept of Mahatma Gandhi’s swadeshi. No nation can grow unless its own fundamentals are strong with an even pattern of growth. India has to evolve its own economic pattern --- neither capitalist nor socialist. ----INFA

(Copyright, India News & Feature Alliance)

 

Lynching of CEO:FLIGHT OF CAPITAL IN U.P., by Shivaji Sarkar Print E-mail

Economic Highlights

New Delhi, 25 September 2008

Lynching of CEO

FLIGHT OF CAPITAL IN U.P.

By Shivaji Sarkar

 
The lynching of the CEO of Graziano Transmissioni India, L K Choudhary, by workers in Greater Noida brings to the fore a grave sliding scenario in Uttar Pradesh. There is a gradual flight of capital. It reflects the sliding economy not only of the State but also in northern India.

The Industry has expressed its displeasure in Gurgaon, Haryana too, following several violent protests. Recall the incident at the Hero Honda factory, which had reached a flashpoint. The situation in UP is clearly worsening. Some years back Daewoo folded up not only because of problems at its Korean headquarters but also because of extortion by a nexus of politicians, local toughs often aided or ignored by both the police and district administration as well as similar violent protests by workers.

The protests have taken a heavy toll on UP’s development during the past seven years of regional party rule. Entrepreneurs and industrialists are concerned about their safety. It certainly has taken a toll on the investment sector. Multinationals have started shunning the State, particularly Noida, home of the present Chief Minister Mayawati.

The major companies that have closed down since 1998 are Nicco, Punjab Fibre, Stalin, Daewoo Motors, Hindo Rubber and Red Tape. Many others have moved shop to other States. Not just this. Small units are also fleeing. Today there are only 300 such units in operation in Noida and Greater Noida, whereas over 2,000 units have either downed their shutters or shifted operational base.

Worse, the trend is not restricted to Noida alone. The situation is similar all over the State. Once thriving Kanpur and Agra are mere replicas of their past. The Ganga and Taj expressways symbolize another lopsided development process. These, says Samajwadi Party leader Amar Singh, are symbol of greed of politicians and not development. Industries that can keep the rulers monetarily happy are thriving, allege some Noida entrepreneurs.

Change of regime in UP does not help much either. Overnight the “toughs” sympathizing with one set of political dispensation shift their loyalty. Those who were sporting the bicycle – Samajwadi insignia till a year back are now riding the elephant – BSP- literally.

Political dispensation too does not mind flexing the muscle on the strength of these “toughs”. They have become the face of UP. They “help” the industry when they start setting up their shop. They oblige them initially so heavily that gradually the industrialists become a pawn in their hands.

Despite the so-called one-window policy of Udyog Bandhu in UP, the labyrinths of power are so tricky that industry also feels happy at the “help” received from the “liaison men”, the way toughs present them at the beginning. They smoothen the process by interacting with bureaucracy, politician and the police.

The leverage they enjoy is utilized for pushing in their men in the new industrial unit. The number of employees that are forced upon an employer is often larger than their requirement. Off the record that is the story almost all employers narrate. They allege they have to employ redundant work force just to keep the politicians, local toughs and the bureaucracy happy.

The industrialists have often complained of their insecurities during the official Udyog Bandhu meet held with the district administration and labour department from time to time. Graziano too had reportedly made such complaints.

The chairman of Gautam Buddha Nagar (Noida and Greater Noida) chapter of Indian Industries Association Jitendra Parikh says the area has turned into a nightmare. The police remains inactive and do not provide security to the establishment or industrialists. If this persists, many MNCs would become victims of violence as was the case with  Daewoo and others.

Importantly, the situation in Noida and Greater Noida also calls for a re-look at labour issues. Much violence, Parikh agrees, is because of dispute in reduction of the workforce. While entrepreneurs are keen on protecting their profit margins, the liberalized economic situation does not ensure a proper compensation or alternative employment to the worker. This often leads to a stressful relationship. Wildcat strikes have almost become a rule in the area.

The statement of Union Labour Minister Oscar Fernandes that Graziano CEO’s lynching is a “warning” to the employers, is itself a telling comment on the critical labour-employer relationship today. It is a different story that Fernandes apologized the next day to the Industry saying he didn’t mean to hurt anyone and was “giving a general view.”

The General Secretary of Greater Noida Industries Association, Aditya Ghildiyal too is concerned about the labour factor. But, he feels the police are extremely lax in providing security and Noida is clearly on the decline, thanks to the apathy of the administration. No foreign investment has come to the State for years and if the situation persists many indigenous ones would too look for safer haven. Similar sentiments have been echoed by other industry bodies such as Association of Greater Noida Industries and Phase Two Industries Association.

Agreeing with the industrialists, a State government official said that “Political masters and their henchmen do not allow the administration to function. Bold and upright officials are shunted out. Have a look at the transfer list. Very few officials can stay here for a long duration”.

Law and order has never been the State’s forte for over a decade now. The ruling regional parties have mastered the art of extortion. Every new scheme announced means a new way to fill up their party and personal coffers. It also means favouring some close confidantes, particularly among the Industry. Samajwadi Party had done it and the BSP is doing it now. And by now the industry knows well that the prescription for survival is in developing close ties with the ruling class. Performance depends neither on capability nor on market but how happy they manage to keep the ruling class!

“There are only two ways. Either swim with the rut or shift. Many have opted for the latter”, sums up an industrialist. Clearly, there is need for a review at the central level of investment climate by including hitherto the ignored factor of political influence. If it is not done, the NCR that has been emerging as a hub of activity may become a cluster of the biggest ghost townships. Uttar Pradesh symbolizes a malaise that is afflicting other upcoming industrial areas.---INFA

 (Copyright, India News and Feature Alliance)

 

NREG Scheme Affect:SOCIAL AUDIT MOST CRUCIAL, by T.D. Jagadesan,26 September 2008 Print E-mail

Open Forum

New Delhi, 26 September 2008

NREG Scheme Affect

SOCIAL AUDIT MOST CRUCIAL

By T.D. Jagadesan

The critics notwithstanding, the two-year-old National Rural Employment Guarantee Act (NREGA) has widely been acknowledged as a pioneering legislation. However, it is seen essentially as a wage employment programme. The NREGA is indeed the first tangible commitment to the poor that they can expect to earn a living wage without loss of dignity, and demand this as a right.

It so happens that the guarantee of 100 days of employment is possibly the most important feature of the Act. Never before has there been an initiative of this nature and magnitude in development history. Direct benefits from wages have been of enormous importance to poor households.

However, the National Rural Employment Guarantee (NREG) scheme is much more, and its potential is truly phenomenal. The unique character of the NREGA lies in the remarkable opportunities it opens to transform the development scenario in the country. This is beginning to be revealed in the two years that it has been in operation. The irony is that this is yet to be recognized or understood even in Government. Will the promise then, be fulfilled?

Perhaps for the first time in a government programme, transparency and accountability was seen to be possible as a participatory process. This is the direct outcome of social audits, the conduct of which has been mandated not only in the Right to Information (RTI) Act, but also in the NREGA itself. Such social audits have thrown up incredible instances where corrupt officials in village after village have returned the money which they misappropriated.

Further, partnerships between the administration and the community have worked and were found to have been feasible. Officials, NGOs, village groups and wage labourers have got together in several States to ensure the effective implementation of the programme – a big change from the feudal and mai baap syndrome which continued to persist after the British left. This brings us closer to the objective of decentralized governance.

An encouraging development also is that it has actually been possible to locate, and associate “partners” in most, or at any rate, in many districts. In fact, several groups, NGOs and activists have found in the NREGA a vehicle for meaningful interventions – to facilitate the coming together of the rural poor to organize themselves for wage employment. This has enhanced the capacities of community organizations and NGOs to work with government in development schemes.

A particular significance of the NREG scheme is that many of the assets created under the programme can directly benefit the poor. This is because the Act specifies that individual works are permitted, but only for the benefit of households below the poverty line and from the scheduled caste and tribe communities. Just as the horticulture revolution under the Employment Guarantee Scheme of Maharashtra benefited the better off farmers in the 1990s, so also the NREG scheme can make possible a productivity revolution on the lands of the poor.

Perhaps the most important of all, and of lasting impact, is that a process for the empowerment of the poor is emerging around the NREGA. This process has commenced in several parts of the country where poor households have been able to assert themselves and demand the payment of the minimum wage, bargain for higher wages, seek and obtain the unemployment allowance from a reluctant and unwilling administration.

Clearly, the employment guarantee has initiated changes which are qualitatively different from any of the past; these could define a new paradigm in development. They have of course, not been widespread, and the impact also has been varied and uneven. However, this is just the second year and even so a difference is being made. The challenge now is how best to proceed to achieve the promise of the NREGA.

The social audit has emerged as perhaps the most powerful instrument for transparency and accountability in government programmes; it needs to be conducted everywhere. Regrettably, recently the Deputy Chairman of the Planning Commission Montek Singh Ahluwalia was reported to have said that the NREG scheme has failed in virtually half the country and that it has not delivered jobs to those who need them the most.

According to statistics available with the Commission the scheme has failed miserably in Orissa, Bihar, West Bengal, Uttar Pradesh, Maharashtra and even Modi’s Gujarat — States that account for roughly 250 Lok Sabha seats. The reason: fudging of the numbers of beneficiaries. However, the report cards were relatively better in BJP-ruled States such as Chhattisgarh, Rajasthan and Madhya Pradesh.

So far only one State, Andhra Pradesh, has been pro-active and has taken the social audit initiative to mobilize the State machinery. Specifically, the administration has been made responsible to obtain the records of the scheme.

A similar path should be followed by all States; otherwise, as has happened in Rajasthan and elsewhere, the social audit process will be resisted and could even be neutralized. There was resistance, initially in Andhra Pradesh as well, because, on several occasions, the administration itself was exposed. However, since the initiative had come from Government, there was no confrontation or obstruction by the officials.

Andhra Pradesh, however, has been an exception, and no State seems willing to act on the social audit provision. It is perhaps not realistic to expect other States to issue similar instructions, and a directive from the Union Government will be necessary. Further, the release of funds could be linked with the performance of States in the conduct of social audit. Such conditions for release are not uncommon. Simple and effective.. ---INFA

 (Copyright, India News and Feature Alliance)

 

 

Democracy In Retreat,by Prakash Nanda,September 29, 2008 Print E-mail

Events & Issues

New Delhi, September 29, 2008

Democracy In Retreat

By Prakash Nanda

It is said that democracy is not the best form of government, yet there is no better way of governing than democracy. But, of late, in country after country, particularly those which had gained democracy after years of authoritarian or dictatorial rule, democratic movements are in retreat. And the surprising culprit in all these cases happens to be the middle class.

Let us see some of these cases.

The anti-government demonstrators, calling themselves the People's Alliance for Democracy, were lashing out at the former Samak Sundaravej, who they claimed was a tyrant and had violated a range of laws. In truth, however, they were not battling for democracy. They only wanted Samak, who was democratically elected, to step down. In addition, they now demand that the democratic system based on the rule of majority is not proper since by getting the votes of “illiterate and poor in the countryside”, the ruling party is hurting “the national interests”, which, in turn, are best defined and defended by the city-based middle class. The Thai protestors now want “selection” rather than “election” of the political leadership. And who are these protestors? They are Bangkok’s prosperous businessmen, academics, journalists and erstwhile “pro-democracy activists”. 

After being hailed as a democratic success story in the 1990s, Thailand has only gone backward. Rather than settling problems through compromise, Bangkok residents repeatedly take to the streets when things don't go their way. Instead of pushing for freedom, much of the Thai media and civil society has gone mute, or simply battles against elected governments. With so many crises, the Thai military now either steps in, as it did in 2006, or hovers in the wings, threatening to intervene.

But then, Thailand is not a unique case.  In 2007, the number of countries with declining freedoms exceeded those with advancing freedoms by nearly four to one, according to a recent report by Freedom House, an organization that monitors global democracy trends.

And the villains, surprisingly enough, are the same people who supposedly make democracy possible: the middle class. Traditional theories of democratization, such as those of Harvard professor Samuel Huntington, predict a story of middle class heroics: As a country develops a true middle class, these urban, educated citizens insist on more rights in order to protect their economic and social interests. Eventually, as the size of the middle class grows, those demands become so overwhelming that democracy is inevitable.

But now, it appears, the middle class in some nations has turned into an antidemocratic force. Young democracy, with weak institutions, often brings to power, at first, elected leaders who actually don't care that much about upholding democracy. As these demagogues tear down the very reforms the middle classes built, those same middle classes turn against the leaders, and then against the system itself, bringing democracy to collapse.

This is a process now being repeated in Africa, Asia, and parts of Latin America, regions that once seemed destined to become the third and fourth waves of global democratization, following the original Western democracies and the second wave in southern Europe and several other regions. The pattern has become so noticeable - repeated in Venezuela, Russia, Bangladesh, and other states - that one must even wonder about democracy's future itself.

The 1990s were a good time for the cause of democracy. In Latin nations like Chile and Argentina, the urban middle class battled decades of dictatorship, ultimately prevailing in the 1990s. In South Korea, Indonesia, and Taiwan, urban middle class students often led the protests that, ultimately, drew in broader participation and helped bring down dictatorships. Once established in power, these middle classes transformed the Asian nations, so that, in Indonesia, for example, reformers quickly insisted upon laws that increased federalism, devolving power in a society ruled for years by an opaque autocrat.

But what the middle class did not anticipate was that after acquiring power, the democratically elected rulers turned autocrats. The shining examples are Zimbabwe’s Robert Mugabe and Venezuela’s Hugo Chavez. . The likes of Mugabe and Chavez use their electoral power to muzzle opposition and violate established norms and rules. In Rwanda, President Paul Kagame has amassed so much power that, in its most recent annual report on the country, Human Rights Watch warned of a litany of abuses, including "harsh official repression," disappearances, and unexplained political killings.

In Nigeria, supposed reformer Olusegun Obasanjo, elected after years of military coups, used his time in his office to attempt to change the constitution to give him more terms, and then to install a man in power loyal to him. So, too, in Central Asia, where even Kyrgyzstan, once the region's democratic hope, has turned increasingly authoritarian. . In Cambodia, where long-serving Prime Minister Hun Sen has used elections as a winner-take-all proposition, essentially wiping out all opposition, the few powerful opponents left are now only the noisy NGOs monitoring graft and human rights.

Most dangerously, in Russia, where weak democracy in the 1990s built few checks and balances, Vladimir Putin has utilized a blend of populism and nationalism to essentially install himself as an elected dictator. And unlike many of these other nations, Russia can serve as an example; as a powerful, relatively rich authoritarian state under Putin, it has funded NGOs across Central Asia, most of which in theory are designed to promote democracy, but whose true function is to help established rulers push back against democrats in those nations.

It is against this background that the middle classes are becoming restless. With a leader in power they hate, or their confidence in democracy undermined by the graft or tyranny of some of their own elected leaders, members of the middle class sometimes turn against the very project they shed sweat and blood for. In country after country, many in the middle class have been surprised to discover that a vote could actually empower groups they do not trust. And once the elected populists start pushing the middle class around, it is natural to wonder whether maybe democracy wasn't such a great idea.

Of course, in some cases elections bring to power populists who genuinely respect democracy - or leaders who, despite their problems, don't actually spark a middle class revolt, perhaps because they are also delivering staggering economic growth, like Putin. But where these “elected autocrats” do not deliver, problems arise. That is why nearer home, we witnessed how people in Pakistan and Bangladesh welcomed the rule of Army following the disastrous performances of Benazir Bhutto, Nawaz Sharif, and the two Begums of Bangladesh – Sheikh Hasina and Khalida Zia. Of course, the army rule, whether directly or indirectly, has never improved the situations in these two countries.  But that is a different story.

What, then, are the lessons for India? With corruptions rising, politicians increasingly resorting to vote-bank politics (in the name of caste and religion) and condoning terrorism and casteism, no wonder  many middle class people will not mind another “emergency” in India. That, of course, is a horrible thing to think; but then sometimes one cannot avoid such a thought.—(INFA)

(Copyright, India News and & Feature Alliance)

 

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