Reuters AlertNet Full site
Homepage | Newsdesk | NGO Latest | Crisis briefings | Country profiles | MediaWatch | Jobs | Alerting | Login

NEWSDESK

FACTBOX-Five political risks to watch in India
03 Nov 2009 04:37:04 GMT
 Source: Reuters
NEW DELHI, Nov 3 (Reuters) - Tensions between India and China are in focus this month, with the Dalai Lama visiting the Indian state of Arunachal Pradesh, and another round of talks on a disputed border area set to begin.

Following is a summary of key India risks to watch:

* ECONOMIC REFORM

The government is in a strong position to press forward with an ambitious economic reform agenda, if it has the will. But the 2009/10 budget disappointed those who hoped for swift progress on reforms, and expectations of early progress on foreign direct investment have also proved over-optimistic. [ID:nDEL307483]

Key issues to watch:

-- Markets will be watching for moves to privatise some state firms, relax restrictions on foreign direct investment, ease restrictions on foreign banks, and reform labour laws. The government has also pledged to reform India's tax laws, which markets would regard positively.

TRADE AND PROTECTIONISM

India will play a central role in determining whether the Doha round at the WTO can finally be concluded. The government's strong mandate and relatively secure position may allow it more flexibility in reaching agreement even if this is opposed by some powerful interest groups. But India continues to show an ambivalent attitude towards freer trade. Though New Delhi has pushed ahead with bilateral agreements and favours an ambitious timetable for sealing a Doha deal, it has raised protectionist barriers on some imports this year.

Key issues to watch:

-- Any sign that India -- and the United States -- are more prepared to make concessions. Progress will require compromise on all sides. The next Doha meetings, scheduled for late November, could show how flexible key players are prepared to be.

EXTERNAL SECURITY

Relations with Pakistan have recovered from the depths plumbed in the aftermath of the November militant attack on Mumbai, and India made the important concession in July of delinking the resumption of bilateral talks from Pakistan's progress in cracking down on terrorism. But further militant attacks or confrontations at the border still have the potential to cause a sudden spiralling of tensions. Military conflict remains only a very slim possibility but cannot be ruled out.

Ties between India and China have soured with the resurgence of a long-festering border dispute over the Indian state of Arunachal Pradesh. Reports of border incursions sparked unease. India also balks at Beijing's support for projects in Pakistan-controlled Kashmir and a separate visa policy for Indian Kashmiris, which New Delhi sees as undermining its claim over the region. There is little chance of war between the two countries but further disputes could sour their booming trade relationship.

Key issue to watch:

-- Progress on resuming substantive talks with Pakistan. The meeting of foreign ministers in New York did not lead to any announcement of renewed wide-ranging peace talks, with India still reluctant to make any concessions until more is done in Pakistan to deal with those behind the Mumbai attacks. But any sign of rapprochement will be greeted positively by investors.

-- The Dalai Lama's planned trip to Arunachal Pradesh on Nov. 8 has already raised hackles. Beijing strongly opposed the visit, which it says is part of the exiled Tibetan monk's separatist scheming. India has dug in its heels, calling the Dalai Lama an "honoured guest" whose visit has no political motive. [ID:nHAN462055]

-- The next round of talks over the disputed border with China in mid-November. Years of dialogue on the future of Arunachal Pradesh have made scant progress, but the talks open a window for both sides to diffuse tensions. [ID:nHAN507986]

INTERNAL SECURITY

The risk of violent attacks in India by domestic insurgent groups or foreign militants remains high. Al Qaeda and affiliated groups see India as a key battleground, and Pakistan is likely to remain a haven for militants seeking to launch attacks in India. Indian security forces are also grappling with a Maoist insurgency spreading across large swathes of countryside, much of it rich in minerals.

Key issues to watch:

-- The danger of new attacks. Both Israel and Australia have issued warnings against travel to India, citing intelligence that more attacks may be imminent. Investors have already priced in the threat level in India, as the muted market reaction to the Mumbai attacks showed, but attacks that caused a serious deterioration in relations with Pakistan would be market-negative.

-- India plans to launch a large scale offensive against the Maoists soon -- a key test of the government's ability to tackle the insurgency and unlock potential investment in rebel-occupied territory. [ID:nDEL261855]

MONETARY POLICY DISAGREEMENTS

India's central bank has maintained an accommodative monetary policy to help the country weather the global economic crisis, but a conflict may be brewing between the bank and the government about the appropriate timing of a policy tightening. The central bank has shown increasing concern about inflation, while the government insists policy should continue to focus on growth. [ID:nDEL293565]

Key issues to watch:

-- Comments by leading officials. The central bank governor and key ministers have weighed in to the argument in public several times. Markets will be watching for signs of further disagreement or emerging compromise.

(Compiled by Andrew Marshall and Alistair Scrutton)


AlertNet news is provided by
Email this article       Send comments

NGO latest

•  Pakistan: Mass displacement in Waziristan causing humanitarian crisis
Merlin - UK

•  Bianca Jagger, the mining company and the Indian PM
ActionAid

•  Pakistan: targeting civilians is the ultimate denial of humanitarian law
ICRC - Switzerland

•  UMCOR Hotline for October 27, 2009
UMCOR - USA

•  ACT Rapid Response Payment: Increased Internal Displacement, South Waziristan, Pakistan
ACT - Switzerland

MORE >>

Latest news

•  FACTBOX-Five political risks to watch in India

•  FACTBOX-Five political risks to watch in New Zealand

•  FACTBOX-Five political risks to watch for Taiwan

•  China launches "strike hard" crackdown in restive west

•  China's Wen tells EU to stick to current climate pact

MORE >>

AlertNet news is provided by

Background information

Facts & figures
India China Pakistan Monaco

Related articles

Breaking stories
 FACTBOX-Five political risks to watch in India (1 minute ago)

FACTBOX-Five political risks to watch in New Zealand (1 minute ago)

AlertNet insight
 UN cuts expat staff in NW Pakistan after attacks (1 minute ago)

Aid agency news feed
 Pakistan: Mass displacement in Waziristan causing humanitarian crisis (1 minute ago)

Blogs
 Pakistan: Inconvenient Truths (1 minute ago)

Maps
 Typhoon Parma (1 minute ago)


Del.icio.us Del.icio.us  |   Digg Digg  |   NewsVine NewsVine  |   Reddit Reddit   
Thumb for /thefacts/imagerepository/RTRPICT/2009-11-02T103200Z_01_ISL08_RTRIDSP_2_PAKISTAN-VIOLENCE-WAZIRISTAN_mainimage.jpg|/thenews/pictures/ISL08.htm
Thumb for /thefacts/imagerepository/RTRPICT/2009-11-02T103036Z_01_ISL07_RTRIDSP_2_PAKISTAN-VIOLENCE-WAZIRISTAN_mainimage.jpg|/thenews/pictures/ISL07.htm
Thumb for /thefacts/imagerepository/RTRPICT/2009-11-02T102627Z_01_ISL09_RTRIDSP_2_PAKISTAN-VIOLENCE-WAZIRISTAN_mainimage.jpg|/thenews/pictures/ISL09.htm
Thumb for /thefacts/imagerepository/RTRPICT/2009-11-02T102156Z_01_ISL06_RTRIDSP_2_PAKISTAN-VIOLENCE-WAZIRISTAN_mainimage.jpg|/thenews/pictures/ISL06.htm
Thumb for /thefacts/imagerepository/RTRPICT/2009-11-02T095505Z_01_SRI03_RTRIDSP_2_KASHMIR_mainimage.jpg|/thenews/pictures/SRI03.htm

A father and his son, fleeing a military offensive in South Waziristan, waits for handouts outside a distribution point for internally displaced persons (IDPs) in Dera Ismail Khan, located in Pakistan's ...


More pictures | Galleries
Disclaimers |  Copyright |  Privacy |  Contact Us |  Feedback |  About Us |  RSS XML

Last updated:Tue Nov 3 04:39:15 2009