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Economic Highlights
Global Financial Crisis:BIG JOLT TO INDIAN FIRMS, INVESTORS, by Shivaji Sarkar,10 October 2008 |
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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)
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India & Global Financial Crisis:NEEW TO REDRAW GROWTH PLAN, by Shivaji Sarkar,3 October 2008 |
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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)
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Lynching of CEO:FLIGHT OF CAPITAL IN U.P., by Shivaji Sarkar |
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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)
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NREG Scheme Affect:SOCIAL AUDIT MOST CRUCIAL, by T.D. Jagadesan,26 September 2008 |
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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)
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Democracy In Retreat,by Prakash Nanda,September 29, 2008 |
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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.
For the
last few days, mobs of middle class have been hitting the pavements in the
streets of theThai capital Bangkok.
Hundreds of thousands of protesters have massed in the streets, demanding the
resignation of the Prime Minister, Samak Sundaravej, shutting down airports
with their protests, and even laying siege to the main government building. In
fact, they are now occupying the Prime Minister’s office, compelling the
selection of a new Prime Minister by the ruling coalition. But the mob is
unimpressed; they do not want the newly selected prime Minister, Somchai
Wongsawat, either. The result is that the new prime minister has decided to
work from a makeshift temporary PM office at the old airport.
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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