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India Predicts 9.25% Growth Next Year
Bangladesh Garment Making an Eye-opener: Watson
CIA Man on Trial
Foreign Investment Ebbs
Support for Flood Victims
More Food Imports
New Financial Order
100 Fishermen Held

India Predicts 9.25% Growth Next Year

Pranab Mukherjee

India’s finance ministry said economic growth may accelerate to as much as 9.25 percent in the next financial year, the fastest pace since 2008, and signaled a cut in the budget deficit to help slow inflation.

“With continued growth momentum, the prospects for sustaining and deepening the fiscal consolidation process remain bright,” the annual Economic Survey prepared by advisers to Finance Minister Pranab Mukherjee said. “Inflation is clearly the dominant concern.” Mukherjee is due to unveil the budget on Feb. 28 for the year starting April 1.

India needs to narrow the fiscal deficit alongside interest-rate increases to curb inflation that has been “uncomfortably high” this year, the ministry said. The gap in the nation’s finances will be the highest in 2011 among the so-called BRIC economies that include Brazil, Russia, India and China, according to the International Monetary Fund.

“The budget will focus on reducing the fiscal deficit and taming inflation,” said Jay Shankar, chief economist at Religare Capital Markets Ltd. in Mumbai. “The government may unwind the fiscal stimulus announced during the global financial crisis.”

Shankar expects Mukherjee to raise excise and service taxes, both currently at 10 percent, by one percentage point.

India is the world’s fastest-growing major economy after China, according to Bloomberg data. China’s economic growth may be 9 percent this year, the People’s Daily reported on Feb. 25, citing the State Council’s Development Research Center.


Bangladesh Garment Making an Eye-opener: Watson

Emma Watson

“Harry Potter” actress Emma Watson, who unveiled her third and final collection for ethical clothing brand People Tree, revealed that spending time in Bangladesh to watch the clothes being made was an eye-opener for her.

“The design process continued with me trying on each and every piece to get the fits just as I wanted them, and then I visited Bangladesh to see the clothing actually being made and meet the people making it. It was an incredible and life-changing experience — I really wish everyone had the chance to see the difference Fair Trade makes with their own eyes,” femalefirst.co.uk quoted her as saying.

“Fair trade fashion comes from the villages — and provides a real alternative to working in a garment factory and the harsh environment of living in a slum,” she added.

The new collection has a summer festival vibe, featuring floral and check-print tea dresses, denim hot pants and cotton waistcoats.

Watson, who is currently studying at Brown University in Providence, R.I., will next design a range of eco-friendly clothes for fashion label Alberta Ferretti and was recently announced as the new face of Lancome cosmetics.


CIA Man on Trial

A man burns a mock U.S. flag during a rally to protest against U.S. Special Forces officer Raymond Davis in Lahore.

Pakistan Feb. 25 put on trial an American CIA contractor charged with killing two Pakistanis despite U.S. demands for his release, complicating a case that is straining a relationship crucial to ending the war in Afghanistan.

Raymond Davis, a former U.S. Special Forces officer, says he acted in self-defense when he shot the men on a busy street in the eastern city of Lahore last month. He has been charged with double-murder and faces possible execution. Washington says he has diplomatic immunity and must be repatriated.

The killings, and Davis' recently revealed CIA-links, have inflamed anti-U.S. sentiment in Pakistan, where Washington's already-uneasy alliance with the government is seen as hegemony by many ordinary Pakistanis.

Conflicting accounts about the identity of the victims — Davis and a police report indicate they were armed robbers; Pakistani media and some officials portray them as innocent — have also given President Ali Asif Zardari's unpopular government little choice but to go through the courts.

"He should be treated the same way he treated Pakistanis," said Muzammil Mukhtar, a laborer in a factory near the jail. "We should not care about our relations with America. These have never been good."

Davis' trial was held inside Kot Lakhpat jail, where he has been detained since Feb. 11 amid extremely tight security. Protesters have burned effigies of Davis and U.S. flags since details of the killings became public, sparking concerns about his safety.

U.S. Consul General Carmela A. Conroy attended the trial, but reporters and families of other prisoners were not allowed inside.


Foreign Investment Ebbs

A McDonalds outlet in Jalandhar.

India’s economy is growing at nearly 9 percent a year and a growing consumer class buys cellphones, cars and homes. Yet foreign businesses and investors, once increasingly eager to tap that stunning growth, have started looking elsewhere, according to a report in The New York Times.

Foreign direct investment in India fell more than 31 percent, to $24 billion, in 2010 even as investors flocked to developing nations as a group.

And in the last two months, foreign investors took $1.4 billion out of the Indian stock market, helping drive the country’s Nifty 50 stock index down 17 percent from the record high it set in early November.

The decline in foreign investment highlights the challenges outsiders still face in India, two decades after policy makers started opening up the country to the world. For Indian leaders, the drop in outside money could make it harder to achieve the faster and broader economic growth that they need to create jobs and pull hundreds of millions of India’s 1.1 billion people out of poverty.

While inefficiency and bureaucracy are nothing new in India, analysts and executives say foreign investors have lately been spooked by a highly publicized government corruption scandal over the awarding of wireless communications licenses. Another reason for thinking twice is a corporate tax battle between Indian officials and the British company Vodafone now before India’s Supreme Court.

Meanwhile, the inflation rate — 8.2 percent and rising — seems beyond the control of India’s central bank and has done nothing to reassure foreign investors.


Support for Flood Victims

Villagers rush to board a small rescue boat north of Dadu, Pakistan, in 2010. Pakistan must spend millions of dollars on rebuilding areas devastated by last summer's floods, a top United Nations disaster official.

Pakistan must spend millions of dollars now on rebuilding areas devastated by last summer's floods to avoid massive future loss of life and jobs, a top United Nations disaster official said.

Catastrophic monsoon rains that swept through the country in July and August killed thousands, affected 20 million people, destroyed 1.7 million homes and damaged 5.4 million acres of arable land, experts have said.

The floods hit five years after a 7.6-magnitude earthquake in northern Pakistan killed more than 73,000 people and left about 3.5 million homeless.

Officials have previously accused the much-maligned government of failing to properly manage cash funds, hampering relief efforts for flood victims.

The country is at continued risk of natural and man-made disasters and must spend and work now to prevent future damage, Margareta Wahlstrom, UN Special envoy for disaster risk reduction, told journalists in Islamabad.

"Pakistan cannot afford to risk its future and lives of its people by being ill-prepared," said Wahlstrom, during a five-day visit to Pakistan hosted by international aid agency Oxfam.

Political will is needed to halt the disaster spiral, she added.

The UN said that despite some government help, flood victims were relying mostly on their families and communities for help.

"Ultimately, however, it is the government’s responsibility to protect its people. Government leadership is needed to implement disaster risk reduction strategies and the role of the international community is to support it," a UN statement said.


More Food Imports

Bangladesh, South Asia’s biggest rice buyer, is in talks with India to buy grains on a regular basis to bolster food security as governments seek to avoid a repeat of the unrest that broke out when prices last soared.

A long-term agreement will protect Bangladesh from possible defaults by private traders, who sometimes fail to meet their commitments if prices gain, Muhammad Abdur Razzaque, the nation’s food minister, said in an interview. “Rice prices rose this year in our country; people are suffering as they have limited income,” Razzaque said by phone from Dhaka.

Bangladesh’s plan underscores a drive by governments to strengthen their reserves to help manage the impact of food prices that advanced to a record last month, beating the jump in 2008 that spawned riots from Haiti to Egypt. This year’s surge has driven millions into extreme poverty, according to the World Bank, and contributed to unrest in the Middle East and Africa.

“When we go for international tenders and prices suddenly rise, private suppliers sometimes fail to fulfill their commitments,” Razzaque said. “They don’t supply us and put us in trouble. It has happened.”

Wheat, corn, soybeans and palm oil have surged in the past year on increased demand and supply disruptions, driving the Food & Agriculture Organization’s World Food Price Index to an all-time high in January. The jump has boosted inflation, adding to the case for higher interest rates worldwide as central banks also contend with rising oil prices spurred by a revolt in Libya.

Higher commodity prices are “leading to riots, demonstrations and political instability,” Nouriel Roubini, the New York University professor who predicted the financial crisis, said last month. Costlier food “can topple regimes,” he said.


New Financial Order

Mahinda Rajapaksa

The president of Sri Lanka has called for a new financial order to prevent future world financial crises.

President Mahinda Rajapaksa said the industry had been mainly focusing on regulating institutions since the 2008 downturn.

But he said the emphasis needed to move to managing economies that had a global impact.

President Rajapaksa singled out the U.S. as needing to act with more global responsibility.

He accused Washington of injecting "massive quantities of new money" which would have a "massive negative impact on the world."

Addressing a regional summit of bank governors in Colombo, Rajapaksa said the world had learned individual and common lessons from the crisis which had shaken the very foundations of the global financial structure.

There was therefore a need for a new financial order, and a model that would better equip the world to face similar crises in the future, he added.

President Rajapaksa commended financial communities for deciding to regulate and supervise the financial institutions which were considered "too big to fail."

But he added that "by the same token, it is also necessary for the worldwide financial community to focus upon the management of economies that have a global impact, and therefore have become 'too big to fail'."


100 Fishermen Held

Sri Lanka arrested 112 Indian fishermen accused of poaching off the island's north, officials said, stoking tensions between the two countries over the narrow strip of sea dividing them.

Local fishermen seized the Indians and handed them over to the local police, the force's spokesman Prishantha Jayakody said.

"There is a total of 112 Indian fishermen in police custody," Jayakody said

A magistrate in the northern peninsula of Jaffna ordered the men should be held in judicial custody until the end of the month pending police investigations, a court official said by telephone.

The mass arrest came as tension rose along the murky waters of the Palk Strait separating the South Asian neighbors, with the killing last month of two Indian fishermen.

Indian authorities accused Sri Lanka's navy of gunning down the Indians while Colombo flatly denied its navy fired at the intruding fishermen.

Last month, Indian Foreign Secretary Nirupama Rao visited Colombo to discuss attacks against Indian fishermen along the Palk Strait and the two sides agreed to revive a "joint working group" to address the issues of fishermen.

Sri Lankan fishermen were barred from operating along the Palk Strait for decades when troops battled Tamil Tiger rebels, but after the ethnic war ended in May 2009 with the crushing of the guerrillas, fishing has been allowed.

This has led to increased clashes between fishermen from the two countries competing for the prawn-rich fishing grounds.


Click here to read the Current Issue in PDF Format

Corruption At Large:
India Calls for Action
2010 would have gone down in the history of modern India as the year of scams, but 2011 appears not too different either. It is time for the ball to roll towards wiping out corruption, writes Priyanka Bhardwaj.

Urban Challenge:
Berkeley in India
UC Berkeley Faculty will be in New Delhi for a symposium on the 21st-century Indian city, writes Ashok Bardhan.

Mumbai Lessons:
Harvard Case Study
Twelve employees were killed inside the Taj Hotel during the 26/11 Mumbai attacks. The Harvard Business School is studying the staff’s selfless service, writes Siddharth Srivastava.

EDITORIAL: Battling Corruption
NEWS DIARY: February
U.S.-INDIA TRADE: Gary Locke Visits India
CULTURE: Maximum India: Kennedy Center Fest
SYMPOSIUM: Remembering Agyeya
PHILANTHROPY: Mijwan Fashion Show
TOURISM: Destination Goa
AUTO REVIEW: 2011 Subaru Forester
RECIPE: Vegetable Rogan Josh
BOLLYWOOD: Review: Patiala House
TAMIL CINEMA: Review: Nadunisi Naaygal
BOLLYWOOD: Interview: Akshay Kumar
COMMUNITY: News in Brief

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