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Archive for April, 2011|Monthly archive page

Jane Mat Do Yaron!!- Present day politics and opportunities for activists

In Uncategorized on April 1, 2011 at 12:38 pm

Five states going to elections in April-May, while the ruling UPA alliance led by Congress party is under attack for high prices and graft scandals, but these polls should not be seen as a mini-referendum on Prime Minister Manmohan Singh’s government.

Political situation is tricky and challenging for those who are working on bringing in policy changes as apparently are major decisions are almost put on hold but at the same time it is also right time for the bureaucracy-corporate-politician nexus to push their vested interests without coming into notice.

This unclear and uneasy situation has its own advantages and disadvantages for activists and people working on socio-economic environmental issues.

Here is a summary of political risks to watch in India:

State elections

Five states go to polls beginning April 4

Congress party hopes a good showing will ease the pressure the opposition has piled on it. Local political factors give Congress and its allies an edge, but elections are unpredictable and an upset could weaken the ruling coalition.

Political uncertainty has already helped as government failed to introduce Biotechnology regulatory bill in spite of declaring the same in presidential address. At the same time a quite approval by cabinet id predicted anytime and chances of making it a big political issue looks grim with inflation, corruption ruling the front pages of all leading news papers (along with ICC World Cup of course).

Analysts see Congress and its allies winning in communist-ruled West Bengal and Kerala on an anti-incumbency wave. They may also retain power in northeastern Assam due to a fractured opposition.

They have a fighting chance of retaining power in Tamil Nadu and Pondicherry, given the effectiveness of populist measures such as free television sets and cheap grains.

The five states jointly send 116 lawmakers to the 545-strong lower house of parliament and the elections, the first of several state polls over the next few years, are an early test ahead of national polls in 2014.

Corruption

Singh’s second term as prime minister has been deeply tarnished by a series of corruption cases, which have diverted the government’s attention from policy making.

Long-term investors have so far shrugged off the scandals as part of the risks in an emerging economy, but the worries have weighed on the Mumbai stock market which has underperformed peers. This political scenario along with media debates on issues like nuclear energy, coal mines etc. clearly sets the a wrong tone for investors and we can hope for at least temporary delay in finalization of investment deals and this activists and environmentalist some time to gear up for big battle ahead and also to revisit strategies.

The latest embarrassment to the government came from a WikiLeaks cable that suggested his government survived a trust vote in 2008 by bribing lawmakers to vote in his favour.

Police will on April 2 charge former telecoms minister A. Raja with taking bribes to favour two telecoms firms when mobile phone licenses were issued in 2008, an episode that may have caused a loss of $39 billion to the exchequer.

Progress on moves to curb corruption; investigations into the several graft cases and questioning of officials and businessmen and court proceedings in the cases is worth watching closely. With Supreme Court directly monitoring the probe, chances of more senior political leaders going behind bars are looking very bright.

Inflation

India is still unable to get a grip on high prices despite eight rate hikes since last March. Few expect inflation to ease quickly, raising the risk of heightened public anger against the government.

Prolonged high prices will only increase the possibility the government will slip into costly populist measures and slow down on “economic reforms”.

Wholesale price inflation , the main gauge of prices in India, unexpectedly quickened to 8.31% in February. The RBI lifted its end-March inflation target by 1 percentage point to 8 percent.

The RBI, which is comfortable with inflation around 5%, has said it will do everything possible to contain inflation.

Analysts expect further rounds of rate hikes this year. The risk is that too-tight monetary policy could affect “growth” in Asia’s third largest economy.

What to watch: Statements from officials, advisers and central bankers on inflation and policy responses, government data, including weekly food inflation, headline inflation and industrial output, which will provide a gauge of the impact of policy action, domestic protests over high prices. higher crude prices will mean a larger subsidy bill as well as greater inflationary pressures.

Regulatory risk

Investors are keenly watching the telecoms ministry as it considers revoking several mobile phone licences, and the decision could raise questions about the reliability of government contracts in India.

An decision for firms could affect foreign investment into India, especially in the telecoms market which is the world’s second-largest and fastest growing. This will be an opportunity to highlight investment risks and getting the investments delayed on anti-sustainable development projects that are already facing huge public anger and protest.
High end political drama, last minute policy push favoring corporates and public unrest are going to be the order of the day for a long time to come.

For those who want to bring in positive policy changes or halt the negative ones, this is the time to learn few tricks from sachin tendulkar, wait for week balls to score runs, build your inning and ensure a victory for the cause.

One thins is sure that current Political situation will definitely give rise to good opportunities, right opportunities and also perfect opportunities to bring in/halt policy changes, the motto should be “Jane Mat do Yaron!!”

(Info Source- moneycontrol.com- Key risks to watch in India)