WASHINGTON — Faced with unusually sharp ideological attacks after its latest bid to stimulate the economy, the Federal Reserve now faces a challenge far removed from the conduct of monetary policy: how to defend itself in a hyperpartisan environment without becoming overtly political.
Caught off guard by accusations from Congressional Republicans, Sarah Palin, Tea Party activists and conservative economists, the central bank and its chairman, Ben S. Bernanke, are pushing back, making their case on substantive grounds but also haltingly adopting the tactics of Washington battle, like strategically placed interviews, behind-the-scenes assuaging of opponents and reaching out to potential allies on Wall Street and Capitol Hill.
The stakes are high. Last week, one House conservative announced legislation to strip the Fed of its mandate to promote jobs and have it focus solely on containing inflation.
The attacks, coupled with criticism from foreign officials, have introduced enough uncertainty into global financial markets to potentially undercut the Fed’s plan to drive down interest rates, which rise or fall as investors anticipate Fed action.
Since the Nov. 3 announcement, Treasury yields have risen as the bond markets seemed to be doing what they normally never dare do: fight the Fed. The yield on the benchmark 10-year Treasury bond, at 2.67 percent on Nov. 3, fell to 2.53 percent on Nov. 5. But then came a reversal that caught traders by surprise. The yield was up to 2.92 percent by Nov. 15, before falling slightly, to 2.80 percent on Monday.
Behind the scenes, Mr. Bernanke has signaled that he is steadfast on the Fed’s plan to buy $600 billion of government securities through June in an unorthodox effort to push down long-term interest rates and spur the anemic recovery. In doing so he is trying to make clear to the markets that the Fed will not reverse course unless there is a compelling reason to do so, like a big increase in inflation expectations or a sharp rise in commodity prices.
Whether the uptick in yields represents genuine market anxiety about the Fed’s inflation-fighting commitments, or the fact that the Fed’s policy has already been effective at accelerating the recovery, the attacks are a distraction and could hurt the Fed’s ability to set policy. “That is certainly the effect of Congressional criticism,” Alan Greenspan, Mr. Bernanke’s predecessor, said.
Mr. Bernanke, who unlike Mr. Greenspan shuns the Washington social circuit, lacks close ties to conservative Republicans, even though he was first appointed by President George W. Bush and served briefly as his top economic adviser.
But lately he has stepped up his outreach, meeting with members of the Senate Banking Committee and explaining the Nov. 3 decision in an opinion-page article and a speech.
But the efforts have only had partial success. After meeting with Mr. Bernanke on Wednesday, Senator Richard C. Shelby of Alabama, the senior Republican on the Banking Committee, said, “The bottom line is that the Fed is attempting to spur job growth because the Obama administration has done so much to inhibit it.”
Fed officials concede that they left an opening for their detractors by timing their latest move — the decision to resume the asset-purchase strategy known as quantitative easing — for the day after the midterm elections. Operating outside the political calendar, the Fed’s policy-making committee had long planned to convene Nov. 2 for two days.
The Fed had signaled its intentions to the markets. Starting in August, when it hinted that the recovery was so weak as to require additional support, stock prices rose and long-term interest rates fell in anticipation of the Fed’s announcement.
But Mr. Bernanke and other top officials, unaccustomed to partisan considerations, did not anticipate the political fallout.
“The fact that immediately after an election which was a historic rejection of American liberalism and the borrowing and the spending and the bailout agenda of the recent past, for the central bank, for the Federal Reserve, to unilaterally announce $600 billion in printed money going into the economy, I think is at odds with the goals of the American people,” said Representative Mike Pence of Indiana, the chairman of the House Republican Conference, which coordinates policy proposals.
Mr. Pence introduced legislation that would strip the Fed of one of its two legally mandated goals — promoting maximum employment — and have it focus on fighting inflation and preserving the value of the dollar.
Mr. Bernanke has relied on two aides, Michelle A. Smith, his chief of staff and spokeswoman, and Linda L. Robertson, a former lobbyist for Enron and Johns Hopkins, to manage his political messaging. Both worked at the Treasury Department during the Clinton administration and have had experience handling crises, though they probably could not have foreseen the intensity of the storm the Fed kicked up.
President Obama, who nominated Mr. Bernanke to a second term, has defended the Fed’s actions in the face of international criticism.
The Fed has taken criticism over the recession and Wall Street bailouts, but in the overhaul this year, it helped defeat proposals to strip away its power to regulate and supervise banks.
Mr. Bernanke, who had thought the worst was behind him, was unsettled by the suddenness of the recent attacks. He has said that the Fed was in a no-win situation; if it had not acted, it would have been criticized for ignoring the painfully slow pace of the recovery.
The situation forms an odd corollary to the early 1980s, when Mr. Greenspan’s predecessor, Paul A. Volcker, sharply raised interest rates, setting off back-to-back recessions in a painful but effective war on inflation.
Liberals attacked Mr. Volcker, a Democrat, as an inflation-fighting zealot who disregarded the plight of the unemployed. Now conservatives are portraying Mr. Bernanke, a Republican, as trying too hard to stimulate growth and underestimating the risk of inflation.
Several veterans of the Bush administration signed an open letter to Mr. Bernanke last week, saying the program should be “reconsidered and discontinued.”
They included John B. Taylor, a former Treasury under secretary, and Douglas Holtz-Eakin, a former Congressional budget director. The letter was the work of a new group, e21: Economic Policies for the 21st Century, led by Christopher Papagianis, a former Bush aide. Its chief supporters include David R. Malpass, who was a Treasury official in the Reagan administration, and Paul E. Singer, a hedge fund manager and prolific Republican donor.
Mr. Bernanke faces at least two years of scrutiny by a Republican-controlled House; the chairman of a subcommittee that oversees the Fed is likely to be Representative Ron Paul of Texas, a libertarian who wants to abolish the central bank.
“The Federal Reserve’s decisions are appropriately debated in the public forum and the Fed should explain and be held accountable for them,” said Donald L. Kohn, who retired this year as the Fed’s vice chairman. “But I have the sense that this is being turned into a partisan issue and that is worrisome to me.”
Mr. Kohn added, “The verbiage has gotten intense and extreme — out of line, in my view, with the decision itself.”
Mr. Greenspan, who recently suggested that the Fed was weakening the dollar, expressed sympathy for his successor. “The Fed in recent years has been facing far greater policy challenges than I, or my colleagues, had to confront during the whole of my tenure,” he said.
Monday, November 22, 2010
India's Microfinance Clampdown May Trigger Failures, World Bank Aide Says
A quarter of Indian microfinance companies may fail after a clampdown last month in their biggest market pared debt payments and curtailed bank financing, said N. Srinivasan, who consults for organizations including the World Bank and the Asian Development Bank.
As many as 60 to 70 of the nation’s 260 microfinance institutions are likely to collapse in coming months as banks halt lending to them to curb risks, Srinivasan said in an interview Nov. 19 in New Delhi. That would have a “devastating effect” on the poorest borrowers in remote regions, he said.
Lending and collections by micro-lenders have ground to a near halt in southern Andhra Pradesh state after the local government introduced new rules in mid-October aimed at protecting borrowers. A slump in microfinance loans may trigger a chain reaction of defaults by borrowers with multiple debts, Srinivasan said.
“Multiple loans help people manage money, like juggling balls,” he said, adding that every poor household in Andhra Pradesh has 9.6 microfinance-loan accounts on average. “What’s happening is that right in the middle of it, you remove a ball. Suddenly there is no ball to throw.”
Andhra Pradesh, the largest market for most micro-lenders, on Oct. 15 capped interest rates that companies can charge and ordered them to collect payments monthly rather than weekly. It also barred them from using coercive measures to force borrowers to repay debt.
Straining Capital
The move led to a slump in micro-lenders’ cash flows, strained capital levels and spooked banks, which account for most of their funding needs. Microfinance companies are seeking 10 billion rupees ($221 million) from banks for a liquidity fund, Vijay Mahajan, head of a lobbying group that represents about 44 micro-lenders, said Nov. 16 in New Delhi.
The new rules sent shares of SKS Microfinance Ltd., the largest such lender in the nation, plummeting 47 percent before Chairman Vikram Akula said on Nov. 19 that the firm had received bank funding and didn’t have a cash shortage. The comments helped shares of SKS, more than a quarter of whose loans are in Andhra Pradesh, rally 5.4 percent that day.
Rival Share Microfin Ltd., backed by New Zealand billionaire Christopher Chandler, plans to delay an initial public offering until customers restart payments and state and central governments deal with the current upheaval. Banks need to regain confidence in the companies’ operations, M. Udaia Kumar, its managing director, said in a Nov. 18 interview.
‘Trickle-Down Effect’
“Even if a single MFI defaults, it might have a trickle- down effect on the entire sector,” he said. “Institutions with stronger net worth have a possibility of survival for a period of time.”
Share Microfin, based in Andhra Pradesh’s capital of Hyderabad, had planned to raise 10 billion rupees in early 2011.
Spandana Sphoorty Financial Ltd., India’s second-largest microfinance company, will indefinitely postpone an initial public offer after the clampdown in Andhra Pradesh nearly halted loan payments and disbursals, said founder and Managing Director Padmaja Reddy.
“I don’t think this is the time for us to go to the market,” Reddy said in a telephone interview today. The state accounts for 49 percent of Spandana’s outstanding loans.
Twelve micro-lenders, including SKS Microfinance and Spandana, could see a debt downgrade, Crisil Ltd. said in a note today. The fallout from Andhra Pradesh may permanently impair lenders’ profitability and fund-raising, said Crisil, the Indian arm of Standard & Poor’s.
Nobel Prize
Microfinance, which focuses on loans in poor areas largely shut out from traditional banking services, gained prominence globally when Muhammad Yunus won the Nobel Peace Prize in 2006 for his role in founding Bangladesh’s Grameen Bank. India, where banking services are available in about 5 percent of cities and towns, is the largest market for such credits.
India’s micro-lending has expanded at an average annual rate of 62 percent over the past five years in terms of number of customers, and 88 percent in terms of credit, according to Micro-Credit Ratings International Ltd., a Gurgaon, India-based rating company for the industry.
A shortage of microfinance funding may force borrowers to turn to moneylenders, said Dipak Gupta, executive director of Mumbai-based Kotak Mahindra Bank Ltd. These unauthorized lenders operate outside the formal credit-delivery system and charge usurious interest rates.
‘Back to the Moneylender’
“Money has stopped and a borrower is used to getting that money and circulating it,” he said. “If you don’t create an alternate system or don’t allow the system to rotate, he will go back to the moneylender.”
SKS, whose stakeholders include George Soros, has received 3.67 billion rupees from eight lenders including Axis Bank Ltd. in the past two weeks, Chief Financial Officer Dilli Raj said on Nov. 19 from Hyderabad, where the company is based.
Axis, India’s fourth-largest lender by market value, is awaiting a report by a committee set up by the central bank last month to review concerns about the microfinance industry, CFO Somnath Sengupta said.
The report, due in January, “will be the guiding principles for lending to the sector,” he said in an interview on Nov. 19. “We will continue to be prudent. There is no reason to panic.”
Axis’s loans outstanding to microfinance companies account for about 1 percent of the total, he said.
Still, the industry is bracing for consolidation, said Mahajan, who is also chairman of Hyderabad-based microfinance company Basix Group.
“We could see casualties among small microfinance institutions,” he said.
As many as 60 to 70 of the nation’s 260 microfinance institutions are likely to collapse in coming months as banks halt lending to them to curb risks, Srinivasan said in an interview Nov. 19 in New Delhi. That would have a “devastating effect” on the poorest borrowers in remote regions, he said.
Lending and collections by micro-lenders have ground to a near halt in southern Andhra Pradesh state after the local government introduced new rules in mid-October aimed at protecting borrowers. A slump in microfinance loans may trigger a chain reaction of defaults by borrowers with multiple debts, Srinivasan said.
“Multiple loans help people manage money, like juggling balls,” he said, adding that every poor household in Andhra Pradesh has 9.6 microfinance-loan accounts on average. “What’s happening is that right in the middle of it, you remove a ball. Suddenly there is no ball to throw.”
Andhra Pradesh, the largest market for most micro-lenders, on Oct. 15 capped interest rates that companies can charge and ordered them to collect payments monthly rather than weekly. It also barred them from using coercive measures to force borrowers to repay debt.
Straining Capital
The move led to a slump in micro-lenders’ cash flows, strained capital levels and spooked banks, which account for most of their funding needs. Microfinance companies are seeking 10 billion rupees ($221 million) from banks for a liquidity fund, Vijay Mahajan, head of a lobbying group that represents about 44 micro-lenders, said Nov. 16 in New Delhi.
The new rules sent shares of SKS Microfinance Ltd., the largest such lender in the nation, plummeting 47 percent before Chairman Vikram Akula said on Nov. 19 that the firm had received bank funding and didn’t have a cash shortage. The comments helped shares of SKS, more than a quarter of whose loans are in Andhra Pradesh, rally 5.4 percent that day.
Rival Share Microfin Ltd., backed by New Zealand billionaire Christopher Chandler, plans to delay an initial public offering until customers restart payments and state and central governments deal with the current upheaval. Banks need to regain confidence in the companies’ operations, M. Udaia Kumar, its managing director, said in a Nov. 18 interview.
‘Trickle-Down Effect’
“Even if a single MFI defaults, it might have a trickle- down effect on the entire sector,” he said. “Institutions with stronger net worth have a possibility of survival for a period of time.”
Share Microfin, based in Andhra Pradesh’s capital of Hyderabad, had planned to raise 10 billion rupees in early 2011.
Spandana Sphoorty Financial Ltd., India’s second-largest microfinance company, will indefinitely postpone an initial public offer after the clampdown in Andhra Pradesh nearly halted loan payments and disbursals, said founder and Managing Director Padmaja Reddy.
“I don’t think this is the time for us to go to the market,” Reddy said in a telephone interview today. The state accounts for 49 percent of Spandana’s outstanding loans.
Twelve micro-lenders, including SKS Microfinance and Spandana, could see a debt downgrade, Crisil Ltd. said in a note today. The fallout from Andhra Pradesh may permanently impair lenders’ profitability and fund-raising, said Crisil, the Indian arm of Standard & Poor’s.
Nobel Prize
Microfinance, which focuses on loans in poor areas largely shut out from traditional banking services, gained prominence globally when Muhammad Yunus won the Nobel Peace Prize in 2006 for his role in founding Bangladesh’s Grameen Bank. India, where banking services are available in about 5 percent of cities and towns, is the largest market for such credits.
India’s micro-lending has expanded at an average annual rate of 62 percent over the past five years in terms of number of customers, and 88 percent in terms of credit, according to Micro-Credit Ratings International Ltd., a Gurgaon, India-based rating company for the industry.
A shortage of microfinance funding may force borrowers to turn to moneylenders, said Dipak Gupta, executive director of Mumbai-based Kotak Mahindra Bank Ltd. These unauthorized lenders operate outside the formal credit-delivery system and charge usurious interest rates.
‘Back to the Moneylender’
“Money has stopped and a borrower is used to getting that money and circulating it,” he said. “If you don’t create an alternate system or don’t allow the system to rotate, he will go back to the moneylender.”
SKS, whose stakeholders include George Soros, has received 3.67 billion rupees from eight lenders including Axis Bank Ltd. in the past two weeks, Chief Financial Officer Dilli Raj said on Nov. 19 from Hyderabad, where the company is based.
Axis, India’s fourth-largest lender by market value, is awaiting a report by a committee set up by the central bank last month to review concerns about the microfinance industry, CFO Somnath Sengupta said.
The report, due in January, “will be the guiding principles for lending to the sector,” he said in an interview on Nov. 19. “We will continue to be prudent. There is no reason to panic.”
Axis’s loans outstanding to microfinance companies account for about 1 percent of the total, he said.
Still, the industry is bracing for consolidation, said Mahajan, who is also chairman of Hyderabad-based microfinance company Basix Group.
“We could see casualties among small microfinance institutions,” he said.
Asia Stocks Decline on Concern Ireland's Debt Crisis May Spread in Europe
Asian stocks fell amid speculation Europe’s sovereign-debt crisis may spread after Moody’s Investors Service said a bailout of Ireland may pose a “credit negative” for the country.
Hyundai Motor Co., which surpassed Toyota Motor Corp. as the largest Asian carmaker in Europe this year, dropped 2.5 percent in Seoul. BHP Billiton Ltd., the world’s biggest mining company, lost 0.6 percent in Sydney as copper slid in New York yesterday. Telstra Corp Ltd., Australia’s No.1 telephone company, climbed 1.9 percent after JPMorgan Chase & Co. boosted its stock rating to “overweight,” saying investors are underestimating the potential for share-price gains.
There’s concern “Ireland’s troubles could spill over into other smaller European Union countries, while the collapse of the Irish government just reinforces the political realities,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $135 billion. “Markets are also worried that China’s attempts to slow the economy and control inflation could weigh on commodity demand.”
The MSCI Asia Pacific excluding Japan Index slipped 0.3 percent to 463.46 as of 9:04 a.m. in Hong Kong. Japanese markets are closed for a holiday. The MSCI Asian gauge has risen 12 percent this year through yesterday on speculation growth in corporate profits will weather Europe’s debt crisis, Chinese steps to curb property-price inflation and concern about the pace of the U.S. economic rebound.
Australia’s S&P/ASX 200 Index dropped 0.4 percent and New Zealand’s NZX 50 Index declined 0.6 percent. South Korea’s Kospi Index slipped 0.3 percent.
Ireland Bailout
Futures on the U.S. Standard & Poor’s 500 Index fell 0.3 percent. U.S. stocks fell in New York yesterday, ending a three- day gain in the S&P 500, amid speculation the Irish bailout will fail to stem Europe’s debt crisis and as federal agents raided hedge funds to probe insider trading. The S&P 500 lost 0.2 percent to 1,197.84 as of 4 p.m. in New York. The Dow Jones Industrial Average slipped 24.97 points, or 0.2 percent, to 11,178.58.
Moody’s Investors Service said the bailout, which Goldman Sachs Group Inc. estimates may total 95 billion euros ($129 billion), may increase Ireland’s debt burden and pose a “credit negative” for the country, the second euro nation to need a rescue as the cost of saving the Irish banks made it vulnerable to a rerun of the Greek debt crisis that destabilized the currency.
The euro fell and Irish bonds pared their advance after Moody’s Investors Service said a “multi-notch” downgrade in Ireland’s Aa2 credit rating was “most likely” because the aid would increase the country’s debt burden.
Government to Resign
The rescue package failed to damp speculation that Portugal and Spain would follow Ireland in tapping the fund set up by the European Union and International Monetary Fund after the Greece rescue.
Irish Prime Minister Brian Cowen said his government will resign after passing the country’s budget, responding to calls from the Green Party for January elections amid voter discontent at his handling of the crisis.
“The admission by the Irish that they need financial aid is not unexpected, and nor is the negative stance taken by ratings agencies,” said Angus Gluskie, who manages about $350 million at White Funds Management Pty. in Sydney. “Attention has now turned to Spain and Portugal and investors may fret about risks for those countries until a satisfactory level of assurance about their financial outlook can be convincingly given.”
Crude fell for a second day in New York yesterday on speculation Europe’s debt crisis will spread, hindering economic growth and reducing fuel demand. Oil dropped 0.3 percent to settle at $81.74 a barrel on the New York Mercantile Exchange. Copper futures for March delivery sank 2.1 percent to $3.76 a pound at 10:55 a.m. in New York.
Hyundai Motor Co., which surpassed Toyota Motor Corp. as the largest Asian carmaker in Europe this year, dropped 2.5 percent in Seoul. BHP Billiton Ltd., the world’s biggest mining company, lost 0.6 percent in Sydney as copper slid in New York yesterday. Telstra Corp Ltd., Australia’s No.1 telephone company, climbed 1.9 percent after JPMorgan Chase & Co. boosted its stock rating to “overweight,” saying investors are underestimating the potential for share-price gains.
There’s concern “Ireland’s troubles could spill over into other smaller European Union countries, while the collapse of the Irish government just reinforces the political realities,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $135 billion. “Markets are also worried that China’s attempts to slow the economy and control inflation could weigh on commodity demand.”
The MSCI Asia Pacific excluding Japan Index slipped 0.3 percent to 463.46 as of 9:04 a.m. in Hong Kong. Japanese markets are closed for a holiday. The MSCI Asian gauge has risen 12 percent this year through yesterday on speculation growth in corporate profits will weather Europe’s debt crisis, Chinese steps to curb property-price inflation and concern about the pace of the U.S. economic rebound.
Australia’s S&P/ASX 200 Index dropped 0.4 percent and New Zealand’s NZX 50 Index declined 0.6 percent. South Korea’s Kospi Index slipped 0.3 percent.
Ireland Bailout
Futures on the U.S. Standard & Poor’s 500 Index fell 0.3 percent. U.S. stocks fell in New York yesterday, ending a three- day gain in the S&P 500, amid speculation the Irish bailout will fail to stem Europe’s debt crisis and as federal agents raided hedge funds to probe insider trading. The S&P 500 lost 0.2 percent to 1,197.84 as of 4 p.m. in New York. The Dow Jones Industrial Average slipped 24.97 points, or 0.2 percent, to 11,178.58.
Moody’s Investors Service said the bailout, which Goldman Sachs Group Inc. estimates may total 95 billion euros ($129 billion), may increase Ireland’s debt burden and pose a “credit negative” for the country, the second euro nation to need a rescue as the cost of saving the Irish banks made it vulnerable to a rerun of the Greek debt crisis that destabilized the currency.
The euro fell and Irish bonds pared their advance after Moody’s Investors Service said a “multi-notch” downgrade in Ireland’s Aa2 credit rating was “most likely” because the aid would increase the country’s debt burden.
Government to Resign
The rescue package failed to damp speculation that Portugal and Spain would follow Ireland in tapping the fund set up by the European Union and International Monetary Fund after the Greece rescue.
Irish Prime Minister Brian Cowen said his government will resign after passing the country’s budget, responding to calls from the Green Party for January elections amid voter discontent at his handling of the crisis.
“The admission by the Irish that they need financial aid is not unexpected, and nor is the negative stance taken by ratings agencies,” said Angus Gluskie, who manages about $350 million at White Funds Management Pty. in Sydney. “Attention has now turned to Spain and Portugal and investors may fret about risks for those countries until a satisfactory level of assurance about their financial outlook can be convincingly given.”
Crude fell for a second day in New York yesterday on speculation Europe’s debt crisis will spread, hindering economic growth and reducing fuel demand. Oil dropped 0.3 percent to settle at $81.74 a barrel on the New York Mercantile Exchange. Copper futures for March delivery sank 2.1 percent to $3.76 a pound at 10:55 a.m. in New York.
Graft claims stall Delhi legislative agenda
India’s winter session of parliament, like the monsoon session before it, held great expectations. Debates were due on mining legislation, the capital raising capability of banks and international accountancy standards.
Instead, this month’s winter session ground to a halt barely hours after it started. Allegations of gross corruption in the telecoms ministry have brought parliamentary business to a standstill. For the past seven days the debating chamber of the world’s largest democracy has been filled with the cries of protesting MPs.
Controversy over the undervaluation of 2G licences awarded in 2008 has sullied Indian’s reputation only days after Barack Obama, US president, described Asia’s third largest economy as no longer emerging but “emerged”.
This latest scandal adds to previous concerns over the Commonwealth Games and land deals by the military that have spurred introspection about the state of governance by Sonia Gandhi, the president of the Congress party, and across the political spectrum. Mrs Gandhi complained that higher economic growth had brought a “shrunken moral universe”.
The furore poses grave dangers to Manmohan Singh, the prime minister. On Tuesday a legal representative will answer questions on his behalf at the Supreme Court about the handling of telecoms regulation.
India’s Hindu nationalist opposition Bharatiya Janata party has struggled to find a chink in Mr Singh’s armour for six years. Now its leaders sense they have found one. A man known for his personal integrity and technocratic abilities may inevitably be tarnished by what Arun Jaitley, a BJP leader, describes as one of independent India’s most corrupt cabinets.
The goings-on at the telecoms ministry were widely suspected, if not publicly proclaimed. Indian coalition governments operate by allotting revenue-generating portfolios – such as telecoms, steel, railways and power – to electoral allies as a reward for loyalty. In the world’s fastest-growing mobile telephony market, the portfolio is a prize one.
The release of an official report last week that estimated India’s exchequer could have lost $40bn from corruption and incompetence has turned embarrassment into open outcry.
The citing of “serious irregularities” by the report triggered the resignation of Andimuthu Raja, the minister.
His scalp is not enough for the baying opposition. It wants a cross-party investigation to unearth the full horrors of what some describe as one of the biggest incidences of corruption in India’s post-independence history.
When Mr Obama addressed the Indian parliament earlier this month he told legislators their country needed to hold itself to a higher standard if it was to be a global power. .
Few analysts suspected that Mr Obama, who spoke of greater censure of Burma and Iran, might have referred to the substance of Indian democracy itself, and that within days India’s dirty linen would be hanging out for all to see.
Mr Singh, regarded as one of the G20s most competent leaders, has tried to place India’s misdemeanours in a wider context.
“We have to deal effectively with the threats of corruption and crony capitalism, not only in India but all over the world,” he says.
Mr Singh has also lamented that the opportunity to pass new laws to improve the lives of Indians is being lost. He has appealed to the opposition not to jam valuable legislating sessions, and address “differences” in debate rather than by open protest.
“There should be no doubt in anybody’s mind that if any wrong thing has been done by anybody, he or she will be brought to book,” Mr Singh says.
Kapil Sibal, the education minister now deployed to plug the gaps in the telecoms ministry, uses a cricketing analogy to describe the current breakdown. He says the opposition has run off with the stumps, preventing resumption of play.
An ambitious legislative programme that the Congress party’s victory in June 2009 made possible has yet to make it out of the pavilion. A government beset by national ignominy ensures it stays there.
beyondbrics: Mumbai new airport: end of old saga
..................................................
Tamil Nadu’s leaders show clout
M. Karunanidhi, a former Tamil screenplay writer and wheelchair-bound octogenarian chief minister of India’s southern Tamil Nadu state, makes only rare visits to India’s capital New Delhi, writes Amy Kazmin.
But for the past 15 years, the patriarch of the 60-year-old DMK party has wielded plenty of influence in India’s capital thanks to his party’s control of a clutch of parliamentary seats that help national parties form a coalition.
This clout allowed Mr Karunanidhi to install Andimuthu Raja, a little-known but politically reliable small-town lawyer, as telecommunications minister in 2007, reigning over the fast-growing mobile phone market in the current Congress-led administration.
Mr Raja was forced to resign last week, accused by the comptroller and auditor-general of India of causing $40bn in losses to the national coffers by awarding mobile phone licences on a “first-come, first-served” basis – at throwaway prices – rather than through an auction. Yet Congress will not be able to escape Tamil Nadu’s political barons quite so easily.
Neither Congress nor its Hindu nationalist opposition Bharatiya Janata party have a strong presence in Tamil Nadu. Instead, the state’s colourful politics are dominated by Mr Karunanidhi and his scions – including a son called M.K. Stalin – and his bitter rival J. Jayalalitha, the former Tamil film star.
Instead, this month’s winter session ground to a halt barely hours after it started. Allegations of gross corruption in the telecoms ministry have brought parliamentary business to a standstill. For the past seven days the debating chamber of the world’s largest democracy has been filled with the cries of protesting MPs.
Controversy over the undervaluation of 2G licences awarded in 2008 has sullied Indian’s reputation only days after Barack Obama, US president, described Asia’s third largest economy as no longer emerging but “emerged”.
This latest scandal adds to previous concerns over the Commonwealth Games and land deals by the military that have spurred introspection about the state of governance by Sonia Gandhi, the president of the Congress party, and across the political spectrum. Mrs Gandhi complained that higher economic growth had brought a “shrunken moral universe”.
The furore poses grave dangers to Manmohan Singh, the prime minister. On Tuesday a legal representative will answer questions on his behalf at the Supreme Court about the handling of telecoms regulation.
India’s Hindu nationalist opposition Bharatiya Janata party has struggled to find a chink in Mr Singh’s armour for six years. Now its leaders sense they have found one. A man known for his personal integrity and technocratic abilities may inevitably be tarnished by what Arun Jaitley, a BJP leader, describes as one of independent India’s most corrupt cabinets.
The goings-on at the telecoms ministry were widely suspected, if not publicly proclaimed. Indian coalition governments operate by allotting revenue-generating portfolios – such as telecoms, steel, railways and power – to electoral allies as a reward for loyalty. In the world’s fastest-growing mobile telephony market, the portfolio is a prize one.
The release of an official report last week that estimated India’s exchequer could have lost $40bn from corruption and incompetence has turned embarrassment into open outcry.
The citing of “serious irregularities” by the report triggered the resignation of Andimuthu Raja, the minister.
His scalp is not enough for the baying opposition. It wants a cross-party investigation to unearth the full horrors of what some describe as one of the biggest incidences of corruption in India’s post-independence history.
When Mr Obama addressed the Indian parliament earlier this month he told legislators their country needed to hold itself to a higher standard if it was to be a global power. .
Few analysts suspected that Mr Obama, who spoke of greater censure of Burma and Iran, might have referred to the substance of Indian democracy itself, and that within days India’s dirty linen would be hanging out for all to see.
Mr Singh, regarded as one of the G20s most competent leaders, has tried to place India’s misdemeanours in a wider context.
“We have to deal effectively with the threats of corruption and crony capitalism, not only in India but all over the world,” he says.
Mr Singh has also lamented that the opportunity to pass new laws to improve the lives of Indians is being lost. He has appealed to the opposition not to jam valuable legislating sessions, and address “differences” in debate rather than by open protest.
“There should be no doubt in anybody’s mind that if any wrong thing has been done by anybody, he or she will be brought to book,” Mr Singh says.
Kapil Sibal, the education minister now deployed to plug the gaps in the telecoms ministry, uses a cricketing analogy to describe the current breakdown. He says the opposition has run off with the stumps, preventing resumption of play.
An ambitious legislative programme that the Congress party’s victory in June 2009 made possible has yet to make it out of the pavilion. A government beset by national ignominy ensures it stays there.
beyondbrics: Mumbai new airport: end of old saga
..................................................
Tamil Nadu’s leaders show clout
M. Karunanidhi, a former Tamil screenplay writer and wheelchair-bound octogenarian chief minister of India’s southern Tamil Nadu state, makes only rare visits to India’s capital New Delhi, writes Amy Kazmin.
But for the past 15 years, the patriarch of the 60-year-old DMK party has wielded plenty of influence in India’s capital thanks to his party’s control of a clutch of parliamentary seats that help national parties form a coalition.
This clout allowed Mr Karunanidhi to install Andimuthu Raja, a little-known but politically reliable small-town lawyer, as telecommunications minister in 2007, reigning over the fast-growing mobile phone market in the current Congress-led administration.
Mr Raja was forced to resign last week, accused by the comptroller and auditor-general of India of causing $40bn in losses to the national coffers by awarding mobile phone licences on a “first-come, first-served” basis – at throwaway prices – rather than through an auction. Yet Congress will not be able to escape Tamil Nadu’s political barons quite so easily.
Neither Congress nor its Hindu nationalist opposition Bharatiya Janata party have a strong presence in Tamil Nadu. Instead, the state’s colourful politics are dominated by Mr Karunanidhi and his scions – including a son called M.K. Stalin – and his bitter rival J. Jayalalitha, the former Tamil film star.
Subscribe to:
Posts (Atom)
Posts
