Nationwide Strike Hits India’s Teeming Cities.doc

Nationwide Strike Hits Indias Teeming CitiesSeptember 20, 2012 TimeIndia is in tumult after the government passed reforms that cut certain subsidies and loosened up controls on foreign investment entering the country, paving the way for big multi-brand retail chains like Walmart entering the market. Allies have threatened to abandon Indian Prime Minister Manmohan Singhs ruling coalition, while opposition parties and activists took part in a nationwide strike against the reforms on Sept. 20 that saw protests and arrests in many of Indias major metropolises.With Key Ally Poised to Exit, Can Indias Government Survive?Last weeks economic reforms, which included plans to allow big retail chains like Walmart into India, may now collapse the government and force early electionsBy Krista Mahr | September 19, 2012 TimeIndias embattled government descended into deeper uncertainty on Wednesday after a key ally announced plans to pull out of the coalition, potentially leaving the ruling United Progressive Allianceof which Indian Prime Minister Manmohan Singhs Congress party is the prime moverin a parliamentary minority. Trinamool Congress (TMC) leader Mamata Banerjee announced the news on television on Tuesday night, citing fierce objections to last weeks spate of economic reforms, including a hike in diesel prices, a cap on how much subsidized cooking gas is made available to the public, and easing the way for multi-brand foreign retailers like Walmart and the U.K.s Tesco to set up in IndiaIt was a masterful piece of prime-time theater that sent the UPA leadership into a huddle today. It also thrust Banerjee, a fiery populist who has been getting some unflattering press for her strong reactions to criticism in recent months, back into the center of the action. Last year, the mercurial chief minister of West Bengal dominated the political landscape when she first threatened to leave the coalition in response to the proposed economic reforms, which would have loosened controls on foreign direct investment (FDI). In that instance, Congress leaders backed down, much to the dismay of observers abroad. But months later, faced with increasingly gloomy economic projections and mounting pressure to shake free of what its critics call a state of policy paralysis, they evidently made a calculated risk that they would survive TMCs withdrawal, and pressed ahead.Congress did take one small conciliatory step on Wednesday, stating that Congress-led states would bump the cooking gas quota from last weeks announced six cylinders of subsidized cooking gas per year per household to nine. Its a far cry from the 12 cylinder quota that TMC has demanded, and Banerjee has also said that a hold on the FDI reforms and a near rollback in the diesel hike would be needed to keep her party in the fold. Congress has made no signs it will budge on either point, but there are still 48 hours of negotiations to go before Banerjee and her 19 lawmakers are gone. “Officially the government is not saying, We are rolling back,” says Paranjoy Guha Thakurta, a political analyst in New Delhi. “But this is a clear indication that whatever Banerjee has done has had an impact.”How far the UPA needs to bend to survive is the question. If TMC does pull out on Friday as expected, UPA will no longer hold a majority of seats in Parliament. Other parties have offered to lend their support to the government so it can survive a vote of confidence ahead of the next general elections, which are scheduled for 2014. At this point, early polls are a “distinct possibility,” says Guha Thakurta. But, he says, “predicting politics in India is like trying to guess the price of oil.”Meanwhile, Banerjee, the main opposition party and right-leaning Bharatiya Janata Party (BJP) and other left-leaning parties have joined their voices in saying the UPA did not have the mandate to approve last weeks host of reforms. “Congress party leaders have taken all the decisions despite the fact that the Congress is not the majority government,” Mamata Banerjee told reporters on Wednesday, according to F. “They have taken the decisions unilaterally.”That kind of discord will make it hard if not impossible for the government to push through future reforms backed by its main economic strategists, including Singh, a former finance minister in the early 1990s. At this point, the three measures Banerjee wants to axe are still in play. But the sense of optimism they created in business circles after their announcement on Friday is already fading. Easing the way for more FDI in India was “a mood changer,” said R.V. Kanoria, president of the Federation of Indian Chambers of Commerce and Industry (FICCI) at a press briefing today. But that mood will change again and fast if it is followed only by more instability. “Were naturally concerned that gridlock will prevent further reforms,” Kanoria said.Some industry-friendly measures the group has been advocating require parliamentary approval, including changes to Indias pension fund that could free up cash flow for investment in infrastructure. That has already been stalled, and it seems even more unlikely to move forward now. The so-called “monsoon session” of Parliament that recently adjourned was among the most contentious and unproductive since the UPA was re-elected in 2009. Only a handful of bills were passed, and the MPs days of deliberation convulsed into shouting matches. The coalition wasnt enjoying particularly good health before this weeks upset. It may very well survive the upheaval, but governing on life support is not going to win a lot of votes when elections do come around.How the Entry of Walmart and Big Retail Chains Will Change IndiaThe Indian governments decision to open up its retail sector will have far-reaching consequences for its billion-plus populationBy Jyoti Thottam | September 18, 2012 TimeHas Manmohan Singh got his mojo back? The Indian Prime Minister has recently suffered the indignity of being called “overwhelmed and out of steam” in the Indian magazine Caravan; a “dithering, ineffectual bureaucrat” by the Washington Post;and an “underachiever” on the cover of TIME.And yet, there he was on Sept. 14, boldly pushing a major economic reform that would open up Indias vast retail market to greater participation by foreign companies. Singh tried the same move last fall, only to be shouted down by populists within his coalition, who threatened to bring down the government, claiming that the measure would threaten the livelihood of small shopkeepers. Unable to make his case, Singh backed down. This time, he all but dared them to call his bluff. Whos dithering now?What looks like boldness is actually a deft finesse from a leader who has rarely been comfortable playing the role of politician. By leaving the implementation of this new reform up to the countrys states, Singh avoids having to push too hard while still getting credit for taking a proreform, progrowth stance that plays well with the foreign investors who have cooled on India.Its a canny move. States with big urban centers and enough middle-class consumers to actually shop at foreign retail outlets are likely to move forward on retail reform. Poorer, less urbanized states and those where Indias traders and merchant castes are politically powerful can opt out. So far, the two most vocal critics of the new measure are ideological opposites Mamata Banerjee, a left-leaning populist, and Narendra Modi, a right-wing Hindu nationalist who styles himself as a business-friendly reformer. The rest of Indias ambitious chief ministers will end up competing with one another for a limited pool of big-ticket investment, creating an incentive to implement the reforms quickly.Once the reforms take hold, India could see some profound changes. India lacks the infrastructure like refrigeration and warehousing that most big retailers are used to, so Walmart, Carrefour, Tesco, et al. would have to build it themselves. That would benefit the entire retail-supply chain in India, decreasing spoilage and reducing time to market. To take advantage of economies of scale, those retailers will also as Walmart does now on a limited scale deal directly with farmers.Dont be fooled: these big-box stores will not suddenly replace Indias mom-and-pop stores by undercutting their prices. Thats the experience of retail in the U.S.: the small retailers that once served the middle classes could not match Walmarts much lower prices. The Indian retail market is different. Yes, they may be locally owned, but those small retailers keep their prices low because they use only the cheapest possible casual labor and invest next to nothing in their stores. Prices cannot get any lower; in In