August 31, 2012

INDIA’S ECONOMY CONTINUES TO BE WEAK

Posted by The Himalayan Voice:
[Forecasts for the coming year are less than rosy. "Weak growth is likely to remain a strong overhang on the corporate sector, and in the near-term raises chances of a sovereign downgrade, particularly in the light of the stalemate on the policy front," said Tirthankar Patnaik, the director of institutional research at Religare Capital Markets.]
By Neha Thirani
The Indian gross domestic product report released Friday for the April-June quarter showed that the economy was doing only marginally better than in the previous quarter. Growth was up 5.5 percent during the quarter from a year earlier, the lowest rise in three years, compared with 5.3 percent in the period ended in March, which was the weakest in nine years.
Analysts said high interest rates have dented investment, while the investor outlook continued to remain bleak. "High inflation, wide trade and current account deficits, bloated subsidies and a gaping fiscal deficit have all taken a toll on the real economy, while the rupee has plunged 25 percent since July 2011," said Jyoti Narasimhan, senior principal economist at IHS Global Insight. "The investment environment remains toxic because of corruption scandals, policy inertia and fierce political opposition have stifled progress on reform."
The report showed that the manufacturing output in the April-June quarter rose only 0.2 percent from a year prior, dashing prospects for growth. The growth in agriculture, forestry and fishing was 2.9 percent, while mining and quarrying remained nearly flat at 0.1 percent. The sectors that showed significant growth in the quarter were construction with 10.9 percent growth, financing, insurance, real estate and business services at 10.8 percent and community, social and personal services, which registered a 7.9 percent growth.
Forecasts for the coming year are less than rosy. "Weak growth is likely to remain a strong overhang on the corporate sector, and in the near-term raises chances of a sovereign downgrade, particularly in the light of the stalemate on the policy front," said Tirthankar Patnaik, the director of institutional research at Religare Capital Markets.
A rebound of the economy is expected to be a gradual process. "The pickup in growth was encouraging, but growth still suffers due to external headwinds and supply constraints," said Leif Lybecker Eskesen, chief economist for India and Asean at HSBC Global Research. "We expect a gradual recovery from here on the back of structural reform progress and global economic stabilization, although there is a risk that it could prove more protracted."
All eyes are now on the Reserve Bank of India, the central bank, which meets Sept. 17 to review monetary policy. While there are expectations that a low growth rate would cause the R.B.I. to cut interest rates, just last week the central bank said that lower interest rates alone were not enough to jump-start the investment cycle. "Despite ever-worsening growth data, IHS Global Insight, expects the R.B.I. to wait until October to resume its rate cuts," said Jyoti Narasimhan, senior principal economist at the firm. "We expect only a shallow recovery in manufacturing and investment, and only a mild upturn is expected by year-end."

STIFF SENTENCE FOR FORMER GUJARAT MINISTER

[Ms. Kodnani's conviction and long prison sentence are a blow to Mr. Modi's efforts to distance himself from responsibility for the deaths and could derail his campaign to lead the Bharatiya Janata Party. Since Muslims represent nearly 15 percent of India's population, no political party can afford to alienate them entirely.] 
By Gardiner Harris And Hari Kumar
Ajit Solanki/Associated Press
Former Gujarat minister and a member of India’s main opposition Bharatiya 
Janata Party Maya Kodnani, left, is led by police on her arrival 
at a special court in Ahmedabad, India, Friday, Aug. 31, 2012.
NEW DELHI, India - A top lieutenant of one India's most powerful politicians was sentenced to 28 years in prison Friday for her role in a deadly attack that killed at least 94 people during the 2002 Gujarat riots.
Mayaben Kodnani, a state legislator and former state education minister, was given a 28-year prison term after being convicted of murder, arson and conspiracy. The other 31 defendants were given decades-long prison terms, including one who must remain in prison for the rest of his life.
Ms. Kodnani was a confidant of Narendra Modi, Gujarat's chief minister and a top contender to become the Bharatiya Janata Party's candidate for prime minister in national elections scheduled for 2014. Mr. Modi has long been plagued by accusations that he discouraged police from protecting Muslims during the riots, accusations he has denied.
Ms. Kodnani's conviction and long prison sentence are a blow to Mr. Modi's efforts to distance himself from responsibility for the deaths and could derail his campaign to lead the Bharatiya Janata Party. Since Muslims represent nearly 15 percent of India's population, no political party can afford to alienate them entirely.
The judge in the case, Jyotsnaben Yagnik, said that Ms. Kodnani and Babu Bajrangi, a member of a Hindu hard-line organization, were the key conspirators in the massacre of mostly women and children in the Muslim neighborhood of Naroda Patia.
Akhil Desai, the prosecutor in the case, said that Judge Yagnik intended the long sentences to serve as a warning. "The judge observed that the riots were very brutal and the punishment should be such that such offenses should never occur again," Mr. Desai said.
The Gujarat riots, which claimed the lives of more than 1,000 people, are the first in India's history to be followed by significant prosecutions and convictions. Perhaps because of that response, there has been no communal violence on the scale of the Gujarat riots, although ethnic attacks in Assam in recent months have claimed at least 78 lives.
[The arrest sparked weeks of public protests. Nasheed lost the support of the military and police, and resigned in February. He has since insisted that he was ousted in a coup and his supporters hold daily protests calling for an early election.]

Associated Press in Colombo

Former president ousted in February is charged with illegally 
detaining a senior judge, but court says it has no jurisdiction

A court in the Maldives has refused to try former president Mohamed Nasheed, saying it has no authority to do so, after prosecutors charged him with illegally detaining a senior judge earlier this year.

Deputy prosecutor Hussain Shameem said on Monday that his office had received a letter from the court explaining that it had no jurisdiction because of its location. Prosecutors had filed the case outside the capital in what they said was an attempt to avoid conflict of interest. Shameem said prosecutors were now considering alternatives.
Nasheed, who was charged earlier this month with ordering the judge's secret detention in January, had accused the judge of political favouritism and corruption.
The arrest sparked weeks of public protests. Nasheed lost the support of the military and police, and resigned in February. He has since insisted that he was ousted in a coup and his supporters hold daily protests calling for an early election.

Separately, police said on Monday that they have summoned Nasheed for questioning over a taped telephone conversation with a party official, in which he allegedly instructed her to gather a group of people to attack the police.
Police spokesman Hassaan Haneef said Nasheed had been asked to appear on Thursday.
Nasheed's spokesman Hamid Abdul Ghafoor called the summons an attempt to intimidate Nasheed and accused police of trying to link a recent killing of a policeman to his Maldivian Democratic Party.
"The government is blaming MDP and especially Nasheed for all social disturbances," Ghafoor said. He said Nasheed would honour the summons.
Maldives held its first multiparty election in 2008 in which Nasheed became president.