Posted by: John Elliott | August 28, 2012

O.Suzuki explores India’s Maruti troubles – and recalls a Japan war crimes tribunal

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NEARLY six weeks after the Suzuki-Maruti car factory near the Indian capital of Delhi was attacked by over 1,000 workers and a senior manager was killed, the company says that it has not yet been able to establish the reason for the sudden and unexpected violence.

Osamu Suzuki (below), the 82-year-old chairman of Japan’s Suzuki Motor Corporation, which controls the Indian company, is currently visiting India and said on Sunday evening that “the cause is not clear to us”. Most chief executives would not be content to admit such a lack of knowledge so long after an outbreak of serious labour unrest, but this is neither a conventional nor stable area………..

…………..Mr Suzuki sought to demonstrate his respect for India and its legal system with the story of Radha Benode Pal, an Indian judge known for his anti-colonial nationalist views and one of eleven jurists on the post-war International Military Tribunal for the Far East who dissented from a guilty verdict for Japan’s top wartime leaders……………

For the full article “Suzuki’s labour troubles in India”, go to The Economist’s Business and Management blog, Schumpeter, by clicking here A routine meeting turned violent

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And for more on modern Japan’s fascination with the strange story of Judge Pal, who drew parallels between Japanese and British colonisation, see this 2007 story in the New York Times – Decades After War Trials, Japan Still Honors a Dissenting Judge .

“All people of Mr Suzuki’s age recall Pal with gratitude as he restored a sense of self esteem in the national psyche badly gored by accusations of acts of barbarity in China and elsewhere,” says Aftab Seth, a former Indian ambassador to Japan  and a professor at Japan’s oldest university of Keio. “Many of those accusations were well grounded in fact, but the average Japanese civilian did not feel responsible in any way”.

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Posted by: John Elliott | August 21, 2012

Assam problems fester since Indira Gandhi had “no plan” in 1983

Thousands flee home to north-east after social media distorts events

Indira Gandhi told me during a Financial Times interview in February 1983 that her government would wait until the situation in Assam cooled down before taking the next step to resolve a crisis in which some 3,000 people had just been killed. There had been controversial state assembly elections in the state and the government had sent in 75,000 troops to control the violence.

The Indian prime minister said that she had “no plan as such” to resolve the crisis. The problems of illegal immigrants from neighbouring Bangladesh dated back to Indian partition in 1947 “and we can’t just wish that away”. Bangladesh should, she added, take back migrants who had entered India when their country was being created (out of Pakistan) in a 1971 war. Beyond that, she said blandly, her Government would wait. (FT February 25, 1983).

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Now nearly 30 years later, the problems of Assam and other north–eastern states remain, and it seems that the Indian government is still waiting until the situation cools down.

But the world is now different, as has been demonstrated in the past few weeks with what is probably been one of the biggest sudden mass migrations since the partition of India and Pakistan in 1947.

Tens of thousands of Assamese and other workers and students from north–eastern India have fled home from Bangalore and other cities in the south of the country because they feared mass attacks in retaliation for communal violence against Bangladeshi Muslim immigrants in the north-east. There have been some individual attacks, but the panic has been spread by reports and pictures faking anti-Muslim atrocities in Assam and nearby states that have been carried by mobile phone text messages and other social networks such as Facebook and Twitter.

There are many lessons to be learned from these events, not least the way that social media can be used to stir up trouble in international as well as local conflicts. India has (controversially) banned bulk text messages for two weeks, closed 250 allegedly offending web pages, and claimed that many of the false messages originated in Pakistan (which perhaps inevitably Pakistan has rejected).

There are also lessons about how increased labour mobility means that communities need to absorb newcomers, as well as about older problems such as the treatment of both ethnic and religious minorities (in this case north-east India’s Muslims) and migrants from neighbouring countries (such as those from Bangladesh). Sadly, political parties often prefer to make capital out of minorities as happened today in Mumbai(where two people were killed in a riot ten days ago). Today part of the chauvinistic Shiv Sena political movement staged a massive anti-immigrants demonstration in the city.

Distant sisters but One India

But perhaps the biggest new lesson for India is that the seven north-eastern states – often known as the seven sisters – can no longer be treated Indira Gandhi-style as a distant delayable problem.

Ever since independence in 1947, the Indian government has regarded armed insurgencies and other uprisings and illegal immigration issues in states such as Assam, Nagaland and Manipur as events that have virtually no impact on the rest of India, located as they are far away on the other side of Bangladesh. That is rather similar to the way that the growing threat from Naxalite (Maoist) rebels in central and eastern India used to be regarded as a distant irritant that did not need Delhi’s urgent attention – something that has been corrected in the last two or there years.

This is yet another example of something I have written about before on this blog – that India can no longer survive as it has in the past by simply turning muddle and adversity into some form of (often inadequate) success, assuming that everything will eventually function adequately. I last wrote about it commenting on last month’s power blackouts and railway disasters.

My theme is that the pace of events and economic development – and now of communications – mean that issues such as the north-east can (to use an English idiom) no longer be swept under the carpet, as they have been for decades. The escalation of the various forms of social media – and economic integration – should help to bind the country together, with the north- east being seen as part of the mainstream. But they can also split India apart, with the people from the north-east feeling so isolated and vulnerable in southern Indian cities that they flee home.

So the north-east has indeed come to Delhi, in a political sense. It has also come as a social and economic phenomena with a vast influx of mostly young, energetic and friendly people who have come to the capital and the southern cities for work, or as students.

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“The staff come from the north-east”, is a remark frequently heard about a restaurant. This is not said in a derogatory way, but as a slightly dismissive description of a people who, looking more Chinese than most Indians, are indeed regarded as internal migrants from a distant part of the country and not as part of the mainstream, even though they have become an important part of these cities’ economies.

Yet when Mary Kom (left), a woman boxer from Manipur, won a bronze medal in the Olympic Games, India celebrated with a fervour that could not have been greater if she had come from Mumbai or Delhi.

As the BBC reported from Assam yesterday, the migrants who have fled home fear reprisals after the very-exaggerated social media reports of clashes in the north-east between indigenous tribals and Muslim settlers. Bengali-speaking Muslims were forced out of their villages after attacks by the indigenous, predominantly Hindu Bodo tribe that have put more than 300,000 refugees in relief camps.

In a battle that is basically over land, the Bodos accuse the Muslims of being illegal migrants from Bangladesh, but Nilim Dutta, a political analyst, said that most of Assam’s Muslims had lived there for generations. “Over time, the Bengali migrants prospered, just like immigrant communities all over the world. This created a sense of resentment among the native Assamese communities as they both competed for resources and jobs.”  There is also dissension between long-term Assamese and newer Muslim groups which is being exploited by local politicians.

Next February, it will be 30 years since Indira Gandhi said she was waiting – in an FT interview with Alain Cass, then the Asia editor, and with me (I had just been appointed south Asia correspondent and moved to Delhi a few months later).

Whatever steps have or have not been taken since then, the basic problems clearly remain. But the world is now different, as we have seen in the past few weeks, so surely the waiting game is over.

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Posted by: John Elliott | August 15, 2012

Has India abandoned economic debate?

Has India moved beyond economic debate? Has the domination of economic policy by Sonia and Rahul Gandhi, together with regional members of the governing coalition (notably Mamata Banerjee of West Bengal), become so established that there is now no room for reformers to be heard? Is the government so much under the spell of these forces that India’s leadership has gone back to the 1970s when the private sector profit was frowned on (except when it lines the pockets of politicians)?

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Prime minister Manmohan Singh did not sound like the 1970s in his Independence Day speech this morning (left), when he said that that a “lack of political consensus on many issues” had prevented the creation of an environment for rapid economic growth”.

The time had therefore come “to view issues which affect our development processes as matters of national security,” adding that providers of foreign capital needed to be confident that “there are no barriers to investment in India”.

But sadly the prime minister’s noble exhortations for a better India now carry no weight – he has been making statements like these for years with virtually no impact.

So my questions about India abandoning economic debate in favour of political ambition persist. They reflect conversations I have had with foreign business people here and (a few weeks ago) in the UK, where the growing belief is that the post-1991 “India story” has ended and that there is now no interest among some ministers in private-sector-led economic growth. Some see this in western terms as a debate between left and right wing political groups on the role of the private sector, but I think it has nothing to do with such ideology and is instead firmly based on vote winning and staying in power.

When I was first in India in the mid-1980s, there were vigorous debates about prime minister Rajiv Gandhi’s small reform steps. When I returned in 1995, Manmohan Singh and Montek Singh Ahluwalia, then running the Ministry of Finance as Minister and Secretary, were campaigning vigorously for the economic liberalisation launched four years earlier (even though Manmohan Singh’s patron, prime minister Narasimha Rao, was rapidly losing interest). There was a real debate about what should be done and how investors and industry should respond.

Now Manmohan Singh is rarely heard, apart from this morning’s sort of well-meaning epistle, and Montek Ahluwalia seems no longer to debate the positives of economic reform, but instead deplores the inability to get things done and curb wasteful expenditure on the sort of pro-poor policies pushed by Sonia and Rahul Gandhi.  No-one else is debating reforms – the Commerce Ministry is currently only boasting about how many states might want foreign direct investment in supermarkets, while the finance ministry has failed to argue forcefully for taxation and financial sector reforms, and the defence ministry stays even more silent on the urgent need to involve the private sector in defence production.

Is this because they know that they will get no support from Sonia Gandhi, who seems to have quietly abandoned the reforms agenda pushed in the 1980s by her late husband Rajiv who used to seem to be her policy guru? The Economic Times has revealed this week how she interferes with policy, virtually instructing ministers on policy issues, and how one minister abruptly lost his job after daring to reject her suggestions on tribal affairs legislation. (Aug 21: This Mail Today column looks at what Rajiv Gandhi did and might have done today )

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There are few ministers in this government who are proactively trying to be effective. One of them is Jairam Ramesh, the Minister of Rural Development who, among other things, is trying to bring economic and political development to areas that have been controlled by Naxalite (Maoist) rebel’s.

Earlier this week I heard him talk about a pace-making pilot project he is personally encouraging at Saranda in Jharkhand. Yet when Ramesh was Minister for Environment and Forests (2009-2011) and tried to bring some order to a devastatingly corrupt area of government, he was pilloried by the private sector for blocking their projects, many of which they had of course “bought” illegal environmental clearances.

Palaniappan Chidambaram, the new Finance Minister, has appointed as his chief economic adviser, Raghuram Rajan (right), a former International Monetary Fund chief economist who has been Manmohan Singh’s honorary economic adviser. Rajan has criticised the Gandhis’ favourite and expensive National Rural Employment Guarantee Scheme (NREGS) as “a short-term insurance fix” for dealing with problems of the poor, but added: “If it comes in the way of creating long-term capabilities, and if we think NREGS is the answer to the problem of rural stagnation, we have a problem”.

That seems to run counter to Sonia and Rahul Gandhis’ view so it will be worth watching what Rajan says now he is employed by the government. His job gives him the stature to lead a debate about how the economy should move forward, balancing the needs of the poor with reforms that will lead to economic growth that benefits the poor.

Let’s see if he can prove this article wrong and show that India’s political leadership has not silenced genuine economic debate.

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Posted in India, India corruption, India economic reforms, India environment, India politicians, Jharkhand, Manmohan Singh, Naxalite, Rahul Gandhi | Tags: , , , , , , , , ,

Posted by: John Elliott | July 31, 2012

Creaking India hit by power and railway failures

Power Minister promoted to Home Minister as power cuts hit half of India

Power supplies covering half of India’s 1.2bn population have been cut for up to eleven hours today in the third example since Sunday night of how the country’s under-invested and badly managed infrastructure is creaking its way to near-collapse.

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Ten states in the north have been without power after the national grid failed, apparently because it was overloaded by at least three states drawing down more their authorised share of electricity.

This is said to be the world’s biggest ever power collapse and followed another massive shutdown on Sunday night when power covering a quarter of the population was cut after the state of Uttar Pradesh exceeded its quota.

Also on Sunday night, a fire on an express train killed 32 people. That followed two train collisions and 29 deaths in May.

These shutdowns and disasters are the result of chronic failure of India’s government, which has been in power since 2004, to tackle infrastructure problems that have been building for many years. The failure stems from Manmohan Singh, the prime minister, who has been restricted in what he can do on economic reforms both by Sonia Gandhi, the leader of the Congress Party and the governing coalition, and by coalition partners.

Then there are inefficient and non-performing ministers in charge of key sectors.

One of them is Sushilkumar Shinde (below) who has been responsible for electricity supplies as Minister of Power for three years and this evening has been promoted in a small cabinet reshuffle to be Minister of Home Affairs, despite the failures of the past two days (see last paras below).

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He does not bear total responsibility for the grid failures because power supplies are managed by individual states  and form part of an overall energy crisis. Power generation has been seriously hit by coal shortages from badly-run government-owned Coal India that have led to some power stations cutting output and shutting down. Management of coal production has also been disrupted by corrupt mining licences. The basic failure to do more to address the power problems is however down to him.

Then there is Mukul Roy, the Minister for Railways, who spends most of his time working on party affairs in West Bengal, where his regional Trinamool Party is based, and rarely visits his Railways Ministry office in Delhi.

He was appointed in March to replace Dinesh Trivedi, another Trinamool member, who lost his job after he introduced a reformist annual Railway Budget that displeased his party boss, Mamata Banerjee. Trivedi’s plans included a major safety upgrade financed by across-the-board fare increases which have not gone ahead because Banerjee did not approve them.

Such is life with coalition politics – regional party bosses are more interested in their regional interests than the country as a whole, and the prime minister can neither control what such a minister does, nor dismiss him or her. The government has caught what is dubbed “policy paralysis” and economic growth has slumped from almost 10% to not much more than 6%.

Earlier this year, I wrote an article on this blog arguing that India could no longer survive as it has in the past by simply turning muddle and adversity into some form of (often inadequate) success, assuming that everything will eventually function adequately. Reliance on what is known as jugaad – making do and innovating with what’s available rather than looking for new levels of performance and excellence – is a brilliant solution for a deprived and under-developed society, but it is not enough in a country at India’s stage of development (even though it is now, rather belatedly, being picked up by management writers as a new panacea).

India overwhelmed

In the past few years, India’s pace of events has overwhelmed this approach, making it impossible for the country to cope with basic services, projects and development. This was graphically demonstrated with chaotic and corrupt preparations for the 2010 Commonwealth Games, but there are many other examples. The most evident involve public sector infrastructure, ranging from annual monsoon flooding that cripples Mumbai and chaotically inadequate services in Delhi’s satellite city of Gurgaon, to unhealthy water supplies, annual fog delays at Delhi airport, and building collapses – and now the record power shutdowns and rail disaster in the past two days.

Corruption plays a part in each one of these examples, most often with contracts and licences being awarded to undeserving companies that then perform badly. This prevents central and state governments adequately addressing key issues, and leads both the public and private sector to assume that they can buy their way into contracts and out of problems.

On top of that are social issues, including the use of agricultural land for industry which slows the development of both power and mining projects. These issues becoming more crucial and potentially disruptive as the poor see the well off capitalising on India’s economic growth..

Today’s power cuts stretched across India from the borders with Pakistan in the west to Bangladesh and China in the east, and southwards from the Himalayas to the middle of India.That area has a population of over 600m, but many do not have any access to electricity so the actual number of people whose homes lost power could be nearer 350m.

Trains were stranded across the country for up to 12 hours as the cumulative effect of the two shutdowns built up. Delhi’s highly efficient Metro railway closed, and roads were blocked by traffic light failures. Most businesses and many urban private homes have (expensive) generating sets that supply stand-by power, but these failed to keep the country running.

Shinde blamed the system collapse on some states drawing more than their share of electricity from the overstretched grid, and said he had “given instructions that whoever overdraws power will be punished.” Stealing power, whether it is a next-door neighbour’s or an overhead power line is standard practice in India. It is hardly surprising therefore that some states have been taking more than their allotted share from the grid at a time when an unusually  poor monsoon – with a draught in some areas – is increasing power demand. Temperatures rise to over 35 deg C, so there is also heavy demand for air conditioning. Threatening punishment is a typical official reaction when something goes wrong – the railway minister promised an inquiry into the fire, presuming that similarly would silence critics and enable him to return to his party affairs.

Sonia boosts Shinde

Tonight’s small cabinet reshuffle has been triggered by Pranab Mukherjee, the Finance Minister, becoming India’s President last week. Palaniappan Chidambaram, the highly efficient but abrasive Home Minister, has taken his place, returning to a post he held from 2004 to 2008. Chidambaram has strengthened the Home Ministry and the nation’s security since 2008, and it is unlikely that Shinde, who is favoured because he is trusted by Sonia Gandhi, will perform as effectively.

Shinde has been succeeded as Power Minister by Corporate Affairs Minister Veerappa Moily, who, for the time being, will do both jobs – and presumably will not be able to provide the single-minded focus that is desperately needed by the power industry.

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Posted in India, India corruption, India economic reforms, India politicians, Manmohan Singh | Tags: , , , , , , , , , , , , , , ,

Posted by: John Elliott | July 30, 2012

Supreme Court condemns India to the risk of Virtual Tigers

August 29:  The Supreme Court  indicated today that it intends to approve controlled tourism, reversing its previous stand after facing widespread criticism. It extended the ban till its next hearing on September 27 to give time for regulations to be drawn up .______________________________________________________________________

Is it better for a tiger sometimes to feel harassed by hordes of noisy tourists, or be killed by poachers? That is the simple question raised by one of the most ill-advised edicts ever issued by India’s Supreme Court, which last week backed a misguided conservationist lobby and banned all tourism in the core areas of the country’s 40-plus tiger reserves.

It may seem perverse to write about India’s tiger problems instead of about the spectacular opening of the Olympic Games in London three days ago, but there is a link. A spoof television sit com, Twenty Twelve, has been running on the BBC about a mostly incompetent Olympics Deliverance Commission. Faced with the risk of the opening ceremony’s massive firework display triggering the automatic firing of anti-bomber missiles stationed nearby, the commission eventually got something right and hit on the bright idea of using virtual fireworks that are broadcast on television around the world as if they were live – only the audience in the Olympic stadium knows they are not.

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Imagine India being forced to show virtual tigers on big television screens in the middle of national parks because the 1,700 or so that still survive have been decimated. That is the risk if the authorities do not get real about how to save them – and that includes recognising that tourists are useful as a major deterrent to poaching.

The ban has been widely criticised because closing the areas will open them to tiger poachers setting traps, and to “timber mafia” illegally felling trees, without the risk of being spotted by tourists. These groups will bribe their way past under-paid forest guards, having bought-off their bosses up to top bureaucrats and politicians. Select visitors such as leading businessmen will pay their way into the areas for up-market parties, as well as organisers of night-time events. State governments will lose tourism revenues that help to pay for forest guards, and there is also a risk of Naxalite Maoist rebels, who operate in remote forest areas including some parks, expanding their activities.

Wildlife tourism should be of course strictly controlled, as it has been increasingly in recent years – in many parks, tourists are already not allowed in some areas and the number of vehicles that can be deployed is limited (usually 50 a day). That has inevitably led to some corruption in vehicle bookings, but it has kept the numbers down and has reduced some of the worst harassment of tigers (see photographs above and near the end). There is also a need to restrict rampant hotel and other luxury construction surrounding core areas because these often block corridors that are essential for tigers and other animals to move from one area to another and link different breeding groups.

In Africa, tourism is used as a tool for conservation and there are several examples of well-regulated tourism, good protection and community-participation. I have seen this at Pilanesberg wildlife park near Pretoria, South Africa, (below) where discreet tourist facilities were strictly controlled and there did not appear to be any encroachment or unauthorised construction in adjacent areas.

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The Supreme Court’s edict is a rare example of bad judgement. For many years, the courts have been handing down instructions for work that should have been done by central, state and municipal governments – ranging from ordering the removal of street garbage to cancelling fraudulent telecom licences in the recent 2G corruption scandal. Their judgements are usually sound, but they sometimes go too far, as critics think they did in cancelling the telecom licences, and as they certainly have done with the tigers.

Often the judgements stem from public interest litigations (PILs) that are filed by lawyers and others with a mixture of motives. In this case, a public information activist, Ajay Dubey, filed a PIL to ban tourism in the Jabalpur High Court in September 2010, asking for implementation of a 2006 amendment to the Wild Life (Protection) Act that stated that tiger reserves are “required to be kept as inviolate”. He argued that the directive meant that all tourism activities should be banned from the core areas of tiger reserves. The issue was further complicated by the fact that  the National Tiger Conservation Authority (NTCA)  had almost all the tiger reserves declared “core/critical tiger habitat” in 2007 to circumvent the 2008 Forest Rights Act that gave preferential access to traditional forest dwellers and tribals.

The Jabalpur Court rejected the PIL and ruled that “tourism is not prohibited in tiger reserves but is permitted subject to normative standards laid down by the NTCA”. It argued that the NTCA had not implied a complete tourism ban when it said that parks should be kept “inviolate for the purposes of tiger conservation”.

Dubey appealed against that judgement (in July last year) to the Supreme Court, which ruled that all states should designate buffer areas. Few states complied so on July 24 (this year) the court made an interim order that all core areas should be closed to tourism. This has led to many states declaring buffer areas in recent weeks, but conservationists argue that such states have breached wildlife and forest laws by ignoring requirements for prior consultation with villages and scientific fixing of buffer boundaries.

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The Ministry of Environment and Forests has recently published eco-tourism guidelines, which include gradually closing sections of the core areas over five years, though there is little agreement in India about what eco-tourism means .

These guidelines are written up and posted on the website of the Centre for Science and Environment whose director general, Sunita Narain, had a role in the drafting. They propose local (undefined) community-based and low-impact tourism that is conservation-oriented and has educational benefits. Tourist facilities will pay a 10% levy from their revenues, and forest dwellers will have special rights.

Wildlife conservation experts say that it would take years longer than the guidelines envisage to implement these plans, especially in the development  of wildlife activity in buffer areas where multiple activities, including villages and agricultural land. Some critics say that the proposals will accentuate and spread conflict between animals and villagers that is already a serious problem in some areas.

The Supreme Court said it would review its interim order’s core area ban at its next hearing on August 22 ( when it extended the ban to August 29 and then to September 27).

It might not matter much if the ban only lasts these few weeks, especially in northern India where many parks are closed during the monsoon. The risk is that it might not be cancelled – and even if it is, the muddled ecotourism guidelines have a long term aim of closing the areas.

It is not impossible however for wildlife conservation to progress alongside regulated tourism, and that has been shown by the official numbers of India’s tigers going up from around 1,400 to 1,700 since a 2008 census when the situation was dire.

But the Supreme Court’s ban is not the way. The judges’ detachment from reality was demonstrated when they said last week that “the tigers are on the edge of extinction” – ignoring the 1,400 to 1,700 increase, which has happened with tourists inside the core areas.

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Posted by: John Elliott | July 9, 2012

‘Time’ mag misses the target in dubbing Manmohan Singh an “under achiever”

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It’s open season for criticising India’s top government ministers. Time too, you might say – why didn’t the attacks start much earlier in the current government which has been failing for most of the time since it was elected in 2009.

Pranab Mukherjee, publicly regarded until a few weeks ago as the veteran politician on whom the government depended for solving its problems, is now billed as a disastrous finance minister who has damaged India’s economic growth and international image. The switch – which is broadly fair – came immediately after he gave up the finance job two weeks ago to stand for election as India’s president.

Time magazine this week has a cover story describing Manmohan Singh, the prime minister, as an “under achiever”. That is being seen as a major attack in image-sensitive India. It has generated condemnation from the Congress Party and massive tv coverage. (It does not have quite the same impact internationally because it is only on the cover of Time’s Asia edition – see pic below – and does not seem to be in the US edition at all – quite a common distinction for Time, Newsweek and Fortune magazine India stories).

Time anyway is a bit late with its article, which has no new material or analysis. Singh, 79, is now being billed in India as the government’s saviour. After being widely criticised as an ineffectual prime minister for a year or so, he is suddenly being lauded as the man who can wreak magic now that he is not fettered by Mukherjee’s political superiority and old-fashioned tax-and-spend protectionism and has himself taken the finance minister’s post.

Time does not always get it right of course. In 2002, it ran a famously unkind article headed Asleep at the Wheel on Atal Bihari Vajpayee, then the Bharatiya Janata Party prime minister. It was a great read and was fair in parts, but Vajpayee went on for another two years and is now regarded as one of India’s best prime ministers because he knew how to pull the political strings both inside his own party and in a coalition, even if he did nap in the afternoons.

Singh deserves some of the criticism because of the government’s lack of success and his own failure to assert himself and speak out about policies. His reputation has always been over-stated because he was not, as he is often billed, the architect of India’s 1991 economic reforms. He was the chief implementer of measures that were substantially prepared before he took office.

More importantly, he was acting under the political guidance and protection of prime minister Narasimha Rao (1991-1996), who the Gandhis like to airbrush out of India’s history (slotting in Singh as the key reformer) because he did not kow tow to the dynasty in the early 1990s.

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Singh is nevertheless a leading economist with a established record as a distinguished public servant, and it is unfair that his reputation should now be sullied when he is the prisoner both of his political boss, Sonia Gandhi, leader of the Congress Party and the governing coalition, and of the coalition’s troublesome regional partners who indulge in corruption and obstructionism for personal and political gain.

Sonia Gandhi generally escapes criticism by staying largely out of sight. Her son and heir apparent, Rahul, did the same until his disastrous performance in Uttar Pradesh state assembly elections earlier this year that showed the family’s born-to-rule approach to electioneering is losing its sheen.

Criticisms of both mother and son are however beginning to emerge, specifically because they believe that the path to future Congress Party election victories is to channel subsidies and funds to the poor, irrespective of how wasteful that can be, while discouraging growth-oriented economic reforms that might do short-term harm to the pro-poor image. That has meant that the Gandhis and Mukherjee have been broadly on the same page, harking back to the early 1980s when Sonia’s mother in law, Indira Gandhi, was prime minister and Mukherjee was her finance minister.

Because of that bond, along with opposition from coalition partners, Manmohan Singh has had no chance – so the Time magazine article is off-cue, as was relentless criticism of him last year in my old newspaper, The Financial Times. A different character might have tried to break through such logjams but Singh is a deeply withdrawn man with, as India Today aptly points out, an “inability to communicate with friends and negotiate with foes”.

Reformers’ images boosted

Now however the mood has changed and the Gandhis seem to be staying silent while Singh’s image is boosted in the media along with his two main reform-oriented advisers, C.Rangarajan, chairman of his economic advisory council and former governor of the Reserve Bank of India, and Montek Singh Ahluwalia, who runs the Planning Commission and has been at the centre of economic policy-making, and close to Singh, since the 1980s. A month ago, Ahluwalia looked lost and powerless, but now industrialists are beating a path to his and Rangarajan’s offices to push for reforms and project clearances, which is a good signal.

India’s international image has consequentially improved, but this is a fragile recovery. The rupee, which has lost nearly 30% of its value in the past year, picked up a week or so ago but is now slipping slightly. The country’s international business image has taken such a battering that tougher measures are needed than Singh and his supporters can probably manage.

Plans announced by Mukherjee in his February budget retrospectively to tax multi-national takeovers (despite explicit opposition from the prime minister) are being re-examined, and a more business-friendly image is being cultivated.

There is a lot of talk about allowing foreign direct investment (FDI) in supermarkets, though it is unlikely to go ahead and would have little short-term economic impact, and an expected decision by Ikea to bring in furniture stores is being given undue media coverage. Some financial sector reforms might go ahead, plus foreign airline investment in Indian aviation, but that will attract very few airlines. Relaxing FDI limits in defence manufacturing, which would bring in foreign companies, will continue to be blocked by vested interests – along, probably, with higher insurance limits.

But all this is trifling compared with what is needed in the short and medium term to rebuild investment, raise fuel prices, sort out priorities for allowing land to be used for industrial development, solve appalling shortages of coal and power, cut wasteful subsidies and curb financial budget deficits.

These are tough areas for the reinvigorated Singh-Rangarajan-Ahluwalia trio to tackle. But until substantial progress is made, it is India as a whole that is the “under achiever”.

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Posted in India, India economic reforms, India economy, India FDI, India politicians, Manmohan Singh, Nehru-Gandhi dynasty, Rahul Gandhi | Tags: , , , , , , , , , , ,

Posted by: John Elliott | July 2, 2012

Indian private sector gets first big defence industry opportunity

While most Indian media attention has been focussed on Pranab Mukherjee and what the end of his unproductive time as finance minister might mean for economic progress now that prime minister Manmohan Singh has taken over the job, a significant liberalisation move has been made by the usually moribund Defence Ministry.

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A.K.Antony (right), the defence minister, has shied away from as many reforms as he can since he took the job in 2006, slowing down plans that were being backed by his predecessor  – ironically Mukherjee. But ten days ago he allowed a landmark initiative to go ahead on the modernisation of India’s inefficient and often corrupt defence manufacturing industry when the Indian Army invited a private sector group to compete against the public sector for the design and development of an important internet-based advanced technology project, the Tactical Communication Systems (TCS).

The private sector companies involved are Larsen & Toubro (L&T), Tata Power SED and HCL – the first two are specialists in high technology precision engineering and HCL is a leader in information technology. They will compete against Bharat Electronics (BEL), a defence public sector corporation (DPSU).

This is the Indian private sector’s first significant opportunity to show that it has the capability to beat deeply entrenched public sector defence manufacturing companies that often rely on re-assembling imported foreign components as high cost Indian products without any significant gain in technological and manufacturing know-how.

That practice has become widely publicised in recent months following allegations made by General V.K.Singh, who retired as army chief of staff a month ago, that he was offered a bribe to back excessively over-priced Tatra army trucks . These trucks (no link with the Tata group) have been produced for the past 26 years by the public sector Bharat Earth Movers (BEML) with components imported from a foreign company. The army chief alleged that only 60% of the components had been indigenised in the 26 years – even the left-hand drive had not been changed. (The BEML executive chairman has been suspended, and the Ministry of Defence decided ten days ago to end the nominated contract system used, without any competitive tendering, for the Tatra trucks and many other public sector purchases.)

The TCS project, which is provisionally estimated to cost Rs10,000 crore ($2bn), is the first “make” programme under the government’s defence procurement procedure. This is aimed at bringing in private sector companies to develop India’s very limited ability to produce advanced defence equipment. The government will cover 80% of development costs and the remaining 20% will come from the private and public sector companies involved, which have to produce prototypes with at least 30% Indian made components.

Public sector pressure

Eventually, after more than two years of design, development and testing, it is intended that the government will award the production contract to one of the two contenders. At that stage however, if BEL is not winning, there will be intense pressure to give the public sector a significant role.

The US and other countries use the same sort of “make” procedure, and it was included in the government’s defence purchasing procedures in 2006. However the defence establishment has lobbied strenuously against it, especially on the TCS project which BEL wanted so that it could prove itself able to handle advanced internet communications technology. That however would have led to a massive amount of imports, probably without India gaining the technical and development know-how that should be generated by the private sector companies.

India’s manufacturing private sector has proved its international competitiveness in the past decade, especially in the auto industry, and some companies like L&T have been working in high technology space and missile manufacturing for decades. But the defence establishment, which includes the defence ministry, parts of the armed forces, the public sector corporations, foreign suppliers and defence agents, all connived to block private sector development.

Pressure however is growing and the Planning Commission has recently called for Indian companies to be prime contractors for all major contracts under the “make” and similar provisions.

India has an annual defence budget of $40bn, including capital expenditure of $15bn, and is the world’s biggest importer of defence equipment according to a report earlier this year, accounting for 10% of global arms imports between 2007 and 2011. Its defence imports are officially put at 70% of total purchases, but the actual figure is far higher at maybe around 85% if  component imports done by the DPSUs are included.

Antony is not a reformer. He has blocked the designation of about 12 big companies, including Tata, L&T, HCL and Mahindra, as defence “champions” capable of becoming internationally recognised systems integrators. He has apparently been persuaded by small and medium sized companies that they would be left out, whereas they would actually gain as suppliers to the 12. He has also bowed to defence establishment pressure and watered down offset plans that would force foreign suppliers to make up to 40% of their equipment in India.

Much as he may have wanted to, he had little opportunity of reversing procedures that led up to the TCS announcement because it would have caused an uproar, especially from the army that wants to break free from the public sector dominance. The battle is far from over however. The next “make” project in the pipeline is for a futuristic infantry combat vehicle (FICV) where the developers have yet to be named.

The defence public sector will continue to try to block further private sector advances on this and other projects and will often be successful while Antony is defence minister. And the private sector now has to prove that it can deliver to international standards.

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Posted in India, India corruption, India defence industry, India industry, India manufacturing, India public sector

Posted by: John Elliott | June 24, 2012

Can London champagne+goats really help poor Indian widows?

It says something about the way that India and other countries  fail to look after those in need that it has taken an Indian businessman based in London to alert the world to the plight of widows who are cast aside in their thousands by families after their husbands die.

Yesterday Lord (Raj) Loomba was lauded at a reception in Downing Street and a large banquet in the government’s Whitehall Banqueting House for bringing the problem to international attention. Nick Clegg, deputy prime minister and leader of the Liberal Democrats, who hosted the reception, said that Loomba had shone a light on an international problem that had not previously been identified. Loomba became a Lib-Dem peer last year and donated £150,000 to the party a few months ago.

Cilla Black, Cherie Blair, Lord Loomba – and a goat yesterday

Earlier in the day, Cherie Blair, wife of Britain’s former Labour prime minister, and Cilla Black, a famous singer and entertainer, led a group of supporters with 20 goats across London Bridge on a wet and windy walk to draw attention to the widows’ plight.

“For widows in South Asia and across Africa, owning a goat is often a lifeline – providing milk and sometimes meat for an impoverished family,” says Blair, who is president of the Loomba Foundation. “And though the Loomba Foundation hasn’t yet bought goats for widows, it’s certainly considering it”. “The goat is a symbol of wealth and prosperity and often a life-line for many widows in South Asia and across Africa”, says the Foundation website. This of course is mere symbolism, as is the provision of 10,000 sewing machines for widows announced last night, but people on yesterday’s walk told me that they saw it as a way of increasing awareness.

Is India’s social conscience so lacking that it has to be left to an Indian businessman seeking social recognition, and to a goat parade and elite events in Whitehall, to wake up the country to the widows’ plight?

Widows suffer in many parts of the world but the problem is especially serious in India where they are shunned and discriminated against, especially over inheritance, at all levels of society. This reflects a broad negative bias – the discrimination, and abuse and even killings, are on a scale unparalleled in the top 19 economies of the world, according to a recent poll by the Thomson Reuters Foundation.

The treatment of widows is worse in the north and in different areas such as West Bengal, which is among the harshest. Thousands of poor women retreat after their husbands die to ashrams in Vrindavan, a holy Hindu city between Delhi and Agra, and to Varanasi, the sacred Hindu city on the Ganges, where they are frequently treated abominably without adequate shelter and food (see this NDTV video). In 2000, when Deepa Mehta, a well known film maker, planned to record the widows’ plight in Vrindavan and Varanasi, radical political activists who did not want their traditions publicized or criticised drove her out and she made the film three years later in Sri Lanka

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Viewed from London, this is a disgraceful social problem, which is why Loomba was celebrated last night at a level rarely awarded to an individual. Yet the celebration also illustrates how charity work is often undertaken by people looking primarily for self-aggrandisement and recognition, drawing the rich and powerful into often wastefully extravagant elite social gatherings that boost their own images as well as generating funds for causes.

Look at the Loomba Foundation’s website home page and you find only details of yesterday events and a very large picture (left) of Loomba with Cherie Blair standing in front of the Palace of Westminster with Lord Dholakia, a Liberal-Democratic Party deputy leader of which Loomba is a member.

Raj Loomba was born and brought up in Punjab and moved with his family to the UK in 1962 when he was almost 20. He built up a fashion and clothing business (Rinku Fashions), became involved in various charities, and set up the Loomba Foundation in 1997, initially to educate Indian widows’ children. A mild-looking man, he always been controversial, as a 2005 article in the Calcutta Telegraph showed – including a widely reported (and denied) allegation that widows had been left unfed in the heat of Delhi after they had been bussed in for a photo shoot with lunchtime dignitaries at his house in Prithviraj Road.

He has been inspired by his mother, who was widowed at an early age and by 2006 some 3,600 children had been educated in India. The current figure is 3,000, plus more in Africa where Loomba works with Sir Richard Branson’s Virgin Unite charity. Elsewhere the foundation is linked with the Prince of Wales’ Youth Business International helping widows start small businesses.

In 2005, Cherie Blair launched International Widows Day at the House of Lords in London and an international campaign gathered top international names. Then, last December, the United Nations General Assembly adopted a resolution officially recognising 23 June – the anniversary of the day Loomba’s mother became a widow – as International Widows Day.

That is a remarkable achievement, whatever the original motivation. Loomba’s friends have always known that his primary target was to become a member of the House of Lords, which he did in January last year via an earlier CBE. It is that single-minded focus that generates cynical criticism from Indians in both the UK and India because of the effort that has been put into gaining personal recognition.

But what most people at yesterday’s events in London probably did not realise as they sipped champagne is that this is not a problem that can just be addressed directly by government action, especially in India where there is neither the political will nor strong institutions and western-style social conscience to tackle such issues.

The treatment of widows is rooted deep in Indian’s patriarchal society and includes ancient Hindu practices such a sati, where a widow leaps onto a husband’s funeral pyre. It affects all classes from the poorest to the elite – though there are notable exceptions like Sonia Gandhi, leader of the Congress Party, and her mother-in-law Indira Gandhi as well as members of other dynasties where a widow can be a political asset.

There are basic mercenary motivations. Women are often bullied out of inheriting land, which passes down the male line in order to limit the fragmentation of land holdings through successive generations. There have been social movements to correct this and make helping widows a noble social act, but that is not a general approach.

What is needed is a change of attitude at all levels of society in India so that widows have automatic rights of inheritance and are empowered to make new lives and remarry. I doubt whether marking an International Widows’ Day by walking goats, feasting in Downing Street, and providing sewing machines will have much impact on that.

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Posted in India, India British relations, India health, India UK, Nehru-Gandhi dynasty | Tags: , , , , , , , , , , , , , , ,

Posted by: John Elliott | June 15, 2012

Andhra Pradesh political corruption hits Sonia Gandhi and Congress

If Y.S.Jaganmohan Reddy (below), a young regional politician in southern India, had not tried to become the Congress chief minister of Andhra Pradesh state immediately after his father Y.S.Rajasekhara Reddy (YSR), who held that job, was killed in a helicopter crash in September 2009, he almost certainly would not be in jail now accused of massive corruption. And if the Congress Party had handled his succession bid more adeptly, it would not have suffered the drubbing from Jaganmohan’s new breakaway party that was announced in state assembly election results today.

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Or to put it another way, if Sonia Gandhi, leader of Congress and of India’s governing coalition, had handled the ambitions of Jaganmohan (generally known as Jagan) more astutely, given the material benefits Congress had received from YSR’s and his son’s activities – and if she had not let the ensuing crisis exacerbate demands for Andhra to be split into two states – she might not be facing yet another regional crisis today.

It might seem idle to focus on the events in one state when the steady decline of India’s political and economic affairs, which I have been tracking on this blog for three years or more, has now reached a new tipping point with worsening economic news and chaotic presidential politicking. I am doing so however because the story of Andhra mirrors the story of India’s declining governance and economic prospects under the current government and Congress leadership.

India’s government failings have become so serious that I wondered why Mamata Banerjee, the mischievous West Bengal chief minister and a partner in the coalition, did not go further two days ago when she proposed prime minister Manmohan Singh as a candidate for India’s presidency, thus hinting he should be ousted from the prime minister’s job. Her suggestion of course was rejected by the Congress Party, which announced today it is backing finance minister Pranab Mukherjee for the post. But why not, I wondered hypothetically, suggest that Sonia Gandhi should become president and maybe Manmohan Singh vice president – wouldn’t that have directed Banerjee’s criticisms where they ought to have been targeted?

But to return to Andhra. Here is a state that five to ten years ago was a focal point of India’s booming information technology industry and a symbol of the new India that saw itself growing into a world super-power alongside China. Now it is a symbol of India in decline because of its all-consuming corruption based on political-corporate cronyism, with dynastic ambitions based on personal greed, and the lauding of companies that grow fat on fraudulent land and other deals. Significantly, that personal greed has opened up the corrupt dealings of the embryo YSR-Jagan dynasty. It has also exposed how India’s government manipulates the Criminal Investigation Bureau (CBI), which has focussed on investigating Jagan ever since he became a serious political problem for the Congress Party nationally.

It is hard to believe that 39-year old Jagan’s jailing (below), which was ordered on May 28 for two weeks (later extended to June 25), was not intended to remove him, as it did, from canvassing in the run-up to the elections that took place on Wednesday. As a Business Standard editorial put it on May 31,  “while Mr Reddy may certainly turn out to be guilty, that the CBI has woken up to the strength of the case against him just as his party is in a position to threaten the Congress politically will strike many as further proof that India’s premier investigative agency can no longer even pretend to independence”.

Such are the ways of politics and corruption in India that those who stay loyal to their political chiefs and allies rarely go to prison, whereas trouble makers suddenly find their misdeeds, that had been condoned in the past, being splashed across the newspapers and the police knocking on their door.

Deservedly then, Congress has done appallingly in the results today for 18 state assembly seats and one Lok Sabha constituency where by-elections were caused by the resignations or disqualification of pro-Jagan Congress members. Jagan’s breakaway YSR Congress Party has won 14 of the assembly seats, and the Lok Sabha seat – albeit after voters were bribed with massive amounts of cash, jewellery and other gifts that helped swell the turnout to an astonishingly high total of around 80%.

The result upsets the stability of the current state Congress government and projects Jagan as the possible chief minister after the next state polls due in 2014. Jagan’s jailing probably boosted anti-Congress sympathy votes in his favour instead of preventing him from winning over the electorate, illustrating how badly Congress handles its affairs regionally as well as nationally.

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Jagan was jailed after the CBI launched a disproportionate assets case and alleged that he had taken bribes totalling Rs1,172cr (approx $250m) in a series of deals during YSR’s time as chief minister from 2004 till his death.

A skilful regional politician, YSR had worked during his five years as chief minister for the state’s overall development and the rural poor, building an unassailable regional power base and combining that with loyalty to the Gandhi family. This was despite widespread allegations of significant family corruption involving him and Jagan with infrastructure contracts and land allocations in deals done that, reports suggested, were linked to payments to the Congress Party.

Sonia Gandhi and her fellow national party leaders appear to have done nothing to stop these activities, thus mirroring allegations now faced by prime minister Manmohan Singh that he knew about bribery in India’s 2G telecommunications scandal, and most recently, in allegations of massive coal industry corruption, yet did nothing to stop it.

Gandhi and Singh were so committed to YSR that they flew to Andhra for his funeral. There they received Jagan’s succession claim, which was immediately backed by politicians and businessmen who wanted YSR’s son to become chief minister to protect and continue the late chief minister’s deals. Sonia Gandhi resisted the claim, understandably thinking that Jagan was not the right candidate. This sparked a regional political crisis that eventually led to Jagan splitting Andhra’s Congress party and to the corruption investigations against him and other politicians and businessmen.

Jagan had built up media, cement and mining companies with the help of his father, whose corporate links included Satyam, a top software company that crashed in 2008 in a fraud scandal which began to open the lid on Andhra’s crony capitalism. YSR changed the pattern of traditional corruption where politicians and bureaucrats take bribes in return for favours. Instead, he secured the loyalty of supporters by providing business opportunities and land allocations in state irrigation and highway projects, real estate activities, special economic zones, and other schemes, in which the politicians then invested. Instead of just taking kickbacks, he, his family and political associates, became stakeholders – and the beneficiaries allegedly channelled funds into Sakshi, a newspaper business run by Jagan.

The deals spilled over into mining scandals in the neighbouring state of Karnataka. Earlier this month the Andhra government, which is trying to clean its image, cancelled a deal with Brahmani Steels, owned by a former Karnataka state minister and iron ore businessman who is being investigated by the CBI for illegal iron ore mining. YSR’s government allocated Brahmani around 14,700 acres for a steel project and airport along with extensive iron ore mine leases that have not been started. The government is also expected to cancel a major port project in known as Vanpic where 24,000 acres were allocated in return for investments in Jagan businesses.

If YSR had not been killed in the 2009 helicopter crash, it is reasonable to assume that these projects and the corruption and kickbacks would be continuing today, with a grateful Congress Party nationally valuing its firm and valuable friend. No doubt there would have been more corruption allegations and some deals might have come unstuck, but the current crisis would not have built up – and Jagan would not be in jail.

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Posted in Andhra Pradesh, India corporate governance, India corruption, India politics | Tags: , , , , , , , , , , , , , ,

Posted by: John Elliott | June 12, 2012

Christie’s lifts Sotheby’s-led gloom on Indian art market

LONDON: Congratulations tinged with relief was the message being given by dealers and collectors at the end of Christie’s South Asian modern art auction here yesterday to the event’s main organizers, Hugo Weihe and Yamini Mehta.

Congratulations because, given the current climate of declining sales, the auction of some 112 lots had done well realising £4.1m ($6.38m) including buyers’ premium, with only about 15 lots not sold. Relief because the art market can now push aside a disastrous sale at Sotheby’s last Thursday.

Exceeding its own poor results in London last year, Sotheby’s produced sales of only £546,800 on June 8, which totalled just 26% of the total £2.1m low estimates. Out of 88 lots offered, 51 failed to find buyers.

Bonhams, which is a much smaller player in this market, scored a day earlier with sales of £1.1m, and only 21 unsold lots out of 71. It also established its own record price for an Indian work.

Christie’s achieved a 72% market share against its two competitors with its auction, where buying seemed to be dominated by telephone and internet bidders with only a handful of buyers in the auction room.

Its top sale was a magnificent Tyeb Mehta depiction of Mahishasura (above), based on a Hindu legend of a demon-king and a she-buffalo producing a son. It went for its lowest estimate of £1.2m (£1.38m – $2.15m with buyer’s premium) to a buyer named in the sales list as an “Asian Institution” but actually, I understand, leading collector Kiran Nadar for her Delhi (Noida) art museum.

That was a satisfactory result and it continued Christie’s domination of the artist’s work at auctions since he died in 2009. It showed that Mehta, who was less prolific than most other members of India’s Progressive Group of painters, is maintaining good prices, though it was far short of both the £1.8m bid that had been hoped for, and Mehta’s record £1.97m (including premium) achieved at the same auction last year.

After the last round of Indian art’s international auctions in March, ArtTactic, an analysis firm, said the market was experiencing another season of decline, with $10.4m total sales down 9% from last September and 27% below March last year. That followed a steady decline in the previous two years after the collapse of  a 2006-08 boom. It does not seem to have changed in the past few days with the three auction houses’ sales totalling £5.74m ($8.88m).

The auctions have coincided with the death a year ago of M.F.Husain, the doyen and probably the most prolific of India’s Progressives. His works produce mixed results because of their vast number and because they vary widely in quality, especially in later years. Several fail to find buyers in most auctions. At Christie’s yesterday, the highest priced Husain, Cinq Sens, depicting an iconic horse and male nude painted in 1958, failed to find a buyer with a top bid of £280,000 on an estimate of £400,000-500,000. Three others also failed, but a colourful rural group from the 1960s (above) was among six that sold and went for a £78,000 bid (£94,850 – $147,492 with premium).

Cinq Sens’ problem may have been that it was coming back to the market just two years after it was sold at Sotheby’s in New York for $782,000 (approx £480,000), which experts say is too quick for the current market unless prices are lowered.

Sotheby’s had the same problem last week with another Indian modern master, F.N.Souza, when it offered a stunning Woman with Mirror and Flowers (right) on an estimate of £180,000-220,000 that was roughly the same as Christie’s failed to achieve two years ago. Sotheby’s also failed to find buyers for its other two top priced works, one by Husain and the other a £300,000-400,000 work by Sayed Haidar Raza.

The Raza was priced unrealistically high, and was a rare failure for the veteran artist who has been celebrating his 90th birthday this year with good auction results and several exhibitions, one of which is on this month at the Grosvenor Vadehra Gallery in London.

Eleven Raza’s sold in Christie’s yesterday, though some went below estimates, as did others in the auction, suggesting that sellers might have been advised to lower their expectations after the Sotheby’s debacle. The top Raza went for £400,000 (£481,250 – $748,344 with premium) to a buyer who also bought a smaller work (bottom) for $70,000.

The most dramatic was Crucifixion (above) from Raza’s early days before he focused on abstract shapes. It far exceeded a £40,000-60,000 estimate and was sold on a £85,000 bid (£103,250 – $160,554 with premium) to Kiran Nadar who bought the Tyeb Mehta.

Bonhams’ star sale was Vespers by Jehangir Sabavala, (left), a 48in x 36in oil on canvas, which had been estimated at £100,000-150,000 but led to competitive bidding by two buyers. It went for £210,000 (£253,650 with premium) – a world record for an Indian work at Bonhams.

The contemporary art market has been hit far more severely than the moderns in the past three years with auction prices for some artists such as Subodh Gupta dropping by as much as 80%.

Anders Petterson of Art Tactic warns that, with contemporary artists from other regional markets such as China, Southeast Asia and Middle East maintaining or increasing their auction presence since 2008, Indian contemporary artists “risk losing their voice in the international art auction market”. He says that the “diminishing market share for Indian contemporary art has created a vicious circle, affecting the perception of Indian contemporary artists and their position in the global market”.

That has led auctions to focus on the Progressives at the top end of the price ranges and on other modern figurative and abstract artists. The lesson of the latest auctions is that top prices are only achievable for quality works. However, persuading collectors to offer works for sale when prices are not generally good is difficult, and successful auctions need the wide-ranging contacts and tracking skills that Christie’s clearly has, along with Bonhams especially for Pakistani art.

Some dealers say Sotheby’s has better works at better prices lined up for New York’s November auctions. Meanwhile, the next tests of the market will be a Mumbai-based Saffronart on-line auction on June 19-20, with works estimated up to $700,000, and an auction focussed on south India art by Osian’s, a Mumbai and Delhi-based auction house, in Mumbai on June 21.

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