India: Stasis or crisis?

Why you should care about the plummeting Droopee.

By Jason Overdorf

GlobalPost - May 24, 2012

COIMBATORE, India — Combating charges of “policy paralysis,” Prime Minister Manmohan Singh raised India's gas prices by the steepest amount ever on Wednesday, in an effort to woo back foreign investors and slow the fall of the plummeting rupee.

But the sudden, bold, and much needed move could well put an end to hopes of a third term for his United Progressive Alliance coalition — and could also lead to a call for early polls.

By hiking the petrol prices charged by India's state-owned oil companies nearly eight rupees per liter — or more than 10 percent — the government will dramatically reduce fuel subsidies, and thus reduce the fiscal deficit. But even though that is exactly the move that economists and investors have demanded to signal that Singh is willing to make the hard choices needed to get India's economy, and the rupee, back on track, he is already facing demands that he reverse the decision from his coalition partners.

This could be the beleaguered prime minister's moment of truth. If he faces down his recalcitrant allies, Singh could once again emerge as the hero of reforms who averted a financial crisis and put India on the path to rapid growth in 1991.

If he caves to political pressure, he could erase any achievements he has made since taking office in 2004 and send India's flagging economy spiraling. Sticking to his guns might bring down the government, forcing snap polls. And rolling back yet another policy would virtually ensure his Congress Party's failure in the next scheduled election.

For now, however briefly, the prime minister appears to have snatched victory from the jaws of defeat.

His most truculent ally, Mamata Banerjee of the West Bengal-based Trinamool Congress, has intimated that she has no plans to withdraw support for the government — despite her howls of protest over the petrol price hike. And though he has also criticized the petrol price hike, Mulayam Singh Yadav, the head of another powerful regional party that is not yet part of the UPA, was seated on the dais at a function celebrating the third anniversary of the coalition's second term on Tuesday, suggesting that Congress Party President Sonia Gandhi may already have secured Yadav's backup if Banerjee does pull out.

Still, the maneuver truly came at the eleventh hour. And it remains to be seen if it will be enough. The rupee continued to slide Thursday, setting a new record low of 56.4 against the dollar in intraday trading after closing at 55.98 the day before.

Meanwhile, unconfirmed reports speculated that a panel of government ministers will meet Friday to discuss a possible hike in diesel and kerosene prices — a move that would be even riskier politically.

How did we get here?

Since the UPA's second term began in 2009, economists and investors have been clamoring for new financial reforms that will reduce India's budget deficit and stimulate its now slowing growth. But corruption allegations that forced Singh to remove his former telecommunications minister and brought tens of thousands of protesters onto the streets weakened his Congress Party's mandate.

As a result, the prime minister was not able to push through any significant financial reforms during his government's two-year, post-election honeymoon period.

Meanwhile, despite concerns about a rising budget deficit, his government passed laws enshrining universal education as a basic right and expanding a government food subsidy to cover three-quarters of the rural population and half of city dwellers — which some estimates say will cost nearly $20 billion.

Singh's “Report to the People” at the UPA anniversary function on Tuesday heralded as achievements four bills aimed at curbing corruption by making the government more efficient and transparent — including one designed to create national- and state-level ombudsmen, which was demanded by anti-corruption activist Anna Hazare last year.

But all four are still far from being passed.

Worse, opposition from Banerjee's Trinamool Congress — a new coalition partner for the UPA in its second term — forced Singh to roll back a move to allow direct investments from big foreign retailers like Walmart through executive fiat in December, killing his only significant attempt at economic reform and sparking accusations of “policy paralysis.”

"Managing the economy has become almost synonymous with managing the coalition,” said Pai Panandiker, president of the RPG Foundation, an independent think tank.

“They [Singh and Congress Party President Sonia Gandhi] are not able to manage the coalition,” Panandiker said, referring to the opposition to economic reforms from Congress Party allies like the Trinamool Congress. “That is why they they cannot manage the economy. That is the crux of the whole problem.”

Government paralysis has already taken a toll. Economic growth dropped below 7 percent last year, India's slowest pace since the 2008 global financial crisis.

Factory output fell by an unexpected 3.5 percent in March. Foreign institutional investors — that is, fund managers in the US and Europe — pulled $140 million out of Indian markets in April, exacerbating a plunge that has seen the rupee plummet more than 10 percent against the dollar since March 1. And though most analysts say it's too soon for comparisons to the balance of payments crisis of 1991, what few measures Singh's government has taken have served only to throw gasoline on the fire.

“The final trigger came with the political outcomes in Greece and in France,” said Shubhata Rao, chief economist at Yes Bank. But the foundation was laid by "the measures introduced in the budget, which weren't really global-investment friendly.”

Breaching an unheard of 56 against the dollar this week, the rupee has been hitting record lows on a daily basis. Some say it could be headed for 60, raising the specter of a vicious cycle and a possible crisis if foreigners abandon Indian markets wholesale. But as recently as this January, when investors were looking forward to a possible rate cut from the central bank and a bold new budget from the finance ministry, it was Asia's best performing currency.

Why did it all go south? Following the disastrous rollback of the move to open the market to retailers like Walmart and Carrefour in December, Indian business leaders and global investors were hoping for an investment-friendly budget in March, if not some measures to reduce the fiscal deficit.

Instead, Finance Minister Pranab Mukherjee formulated new tax rules that made India even less attractive for investors. With the General Anti Avoidance Rule, he sought to tax investments routed through Mauritius and other tax havens — a move that made India a less attractive destination for foreign capital by reducing prospective returns.

And he proposed a retrospective amendment to the tax laws that circumvents a recent Supreme Court ruling and will force Vodafone to pay some $3.5 billion in taxes and penalties associated with its 2007 acquisition of Hutch Telecom.

Though implementation of the General Anti Avoidance Rule has been delayed until 2013, the message sent to foreign institutional investors, as well as companies seeking to make acquisitions or other direct investments in India, was that the rules could be rewritten at any time.

Stasis or crisis?

With the most pessimistic analysts predicting that the rupee could fall as low as 60 before Singh's move to hike petrol prices, the danger was growing that stasis would spin into crisis. So far experts agree with the finance minister that it's too early to press “the panic button.” But because perception can be as important as hard economic data in determining the flow of investment, the tipping point is impossible to predict.

“A panic comes when there is a substantial outflow of foreign money — what is called hot money,” said Panandiker. “If foreign institutional investors sell here to take money out, what happens is that there's a crash in the share market, and the money going out will also result in a fall in the value of the rupee.”

The result is a vicious cycle. The more the rupee drops, the riskier investing in India becomes, because the risk of currency depreciation compounds the risk of a drop in share prices.

So at some point, the further the rupee drops, the more money foreign investors pull out of India, and the more money investors pull out, the further the rupee drops. The only thing the central bank can do then is to intervene directly to buy rupees and try to prop up the currency's value to break the cycle. But there's a limit to how much the Reserve Bank of India can spend.

“We are running a high current account deficit, and that situation is not likely to be corrected very soon,” said Dharmakirti Joshi, chief economist at credit ratings agency Crisil, the Indian arm of Standard & Poor's. “If the European problems are contained, we might be able to get financing for our current account deficit. But if the euro zone problems increase, there's an issue of insufficient financing and then again pressure on the rupee.” (A high current account deficit, largely due to a poor balance of trade stemming from high oil prices, was primarily responsible for the economic crisis of 1991.)

The good news — and the reason most analysts remain guardedly optimistic that India can get back on track — is India's central bank has much more in its kitty today than it had in 1991.

Prior to the 1991 balance of payments crisis, which spurred the liberalization of the economy responsible for India's rapid economic growth, the country's forex reserves had dwindled to $1.2 billion, hardly enough to finance three weeks of oil and other imports. Today the central bank has around $290 billion in reserves to play with.

But the bad news is that a substantial dip in those much larger reserves could still have dramatic effects, said Panandiker.

“If it starts unloading the reserves, that can create a kind of panic situation,” Panandiker said. “If the outflow is about $10 billion, then this kind of crisis situation comes.”

According to Crisil's Joshi, the central bank has wisely stuck to the sidelines so far, as intervening and failing could be far worse than letting the rupee find its own bottom. But nobody can predict what might happen in the future.

“It's like going to a doctor. He can tell you that your blood pressure is rising, your sugar levels are dangerous, and you probably are getting clots in your arteries, but he can't tell you exactly when the heart attack will happen,” Joshi said. “With the economy, the parameters are becoming worse, just like the patient I was talking about. When will it translate into a heart attack [like 1991]? I don't think anybody can say.”

One thing is clear, though: It's time for the patient to make some lifestyle changes — which is exactly what Singh has prescribed.

OCCUPY INDIA

(From GlobalPost -- May 2, 2012) Indian anti-corruption activist Anna Hazare and the coterie of supporters now known as “Team Anna” are striving to keep their budding mass movement alive, a year after Hazare's first hunger strike against graft brought tens of thousands of usually apathetic middle class Indians to the streets.

The problem? Anna fatigue, mostly. One guy with a little white cap can only keep television viewers interested for so long, and hunger strikes are notoriously low on vigorous action.

But Team Anna seems to have missed a trick from Eric Hoffer's seminal primer on mass movements: If your movement has a concrete goal, you can be derailed either by achieving it or by failing to make any progress, and it's all too easy to get bogged down in technicalities.

In targeting corruption, Team Anna had a sufficiently amorphous and abstract enemy. But as soon as they outlined their solution — a new law known as the Jan Lokpal Bill, designed to set up a national ombudsman's office — they pretty much sealed the movement's fate.

Before long, Manmohan Singh's Congress-led United Progressive Alliance was pushing a Lokpal Bill of its own. Shouts and slogans gave way to nitpicking comparisons of different pieces of legislation. The halo over Hazare was tarnished by his association with the far Hindu right, and Team Anna itself fractured over whether or not the movement should campaign against the Congress in the recent state elections.

In the latest spat, Hazare has had to drop plans to tour the country with the hugely popular but controversial right-wing yoga guru, Baba Ramdev, and Team Anna is busily denying that the expulsion of a Muslim leader from the core group signals that it's falling apart.

This all begs the question: If nobody turns up for a protest rally, does it actually make a sound? — By Jason Overdorf in New Delhi, India

India: School revolution on the way?

India's Supreme Court upholds law forcing private schools to admit poor students.

By Jason Overdorf
GlobalPost (April 15, 2012)

NEW DELHI, India — In a landmark judgment this week, India's Supreme Court upheld the constitutionality of a law that requires almost all private schools to reserve 25 percent of their seats for poor students.

The decision potentially paves the way for huge changes in primary and secondary school education here.

In a country where a quarter of the population is illiterate and the caste system is still alive and well, the move is lauded by some as an equalizer on par with the decision to desegregate American schools in the 1960s.

“I see this entire process as the beginning of a revolution,” said Ashok Agarwal, a lawyer affiliated with an organization called Social Jurists, who says previously fewer than 1 percent of private schools made a sincere effort to admit poor students.

According to a recent survey conducted by Pratham, an NGO, 96.5 percent of Indian children between the ages of 6 and 14 are enrolled in schools.

But with private players charging as much as $200 per month compared to less than a dollar in fees at those run by the government, there are vast differences between the schools they attend.

Though India has more than a million goverment-run schools and only around 250,000 private ones, with rare exceptions only the very poor attend government institutions. The division reinforces a broad socio-economic gap between the haves and have nots. And some argue that the failure to educate the poor threatens to derail India's economic miracle before it really gets rolling.

A recent survey conducted by The Program for International Student Assessment, an Organisation for Economic Co-operation and Development (OECD) unit that tests students' literacy reading, mathematics, and science, for instance, ranked India's 15-year-olds second from the bottom among some 74 countries.

While the 25-percent quota will be difficult to implement — and some argue that it impinges on the rights of the private schools that have previously refused government aid — the move would see some of the nation's wealthiest students sitting side-by-side with the poorest.

The Right to Education Act, passed in 2009, guarantees free and compulsory education for all children between the ages of 6 and 14. Answering a challenge to the act, the court directed all privately run schools to admit at least 25 percent students from socially and economically depressed families beginning this academic year. Only boarding schools and minority institutions that don't receive government aid are exempt.

The right to education act places “an affirmative burden on all stakeholders in our society,” the court wrote on Thursday, in a 2:1 majority judgment upholding the provision.

High cost of reform

The Supreme Court's move is causing tremors. Parents worry that admission to elite private schools will get even tougher. Schools worry about the administrative and financial burden of admitting more poor children.

But even the most optimistic proponents of the right to education law warn that there are still many hurdles ahead.“The judgment removed the uncertainty about the 25 percent, and we now know where it applies and where it doesn't,” said Parth Shah, president of the New Delhi-based NGO, Center for Civil Society. “The hard work of figuring out the design, implementation, monitoring and assessment now has to be done.”

Already, for instance, private schools have argued that the plan to reimburse them only for the amount charged by the dismally failing government schools will expose them to a huge financial burden. Some are threatening to raise fees for paying parents. And nobody has thought too hard yet about the intricacies of integrating children from such dramatically different circumstances – like bringing poor children who only speak Hindi or Tamil into a school where classes are taught in English.

Meanwhile, in Delhi, where the battle is a little older because the state had earlier tied land grants for private schools to an agreement to take on poor students, streetfighters like Social Jurists' Agarwal have already confronted schools that try to game the system.

Because the rules require schools to admit 25 percent poor students only in the first year, for instance, some schools dramatically reduced the total number of first graders they admitted, and then added double or triple the number of full-tuition students in the second year. Others took a more direct approach, simply offering parents of poor children cash — as much as $4,000 — to pull their kids out of class.

Teaching poor kids about McDonalds

“In India, people have the attitude of 'How can my son sit on the same bench as my driver's son?' That's what's scaring me,” said Anouradha Bakshi of Project Why, a non-profit that runs supplementary afterschool education programs for the poor.

To prove that poor children could excel, Bakshi sent eight slum kids to an elite boarding school. But it took more than the money for tuition to ensure they excelled. She first rented a flat and moved the kids in with her, going the extra mile not only to teach them English but also skills that they'd need to fit in — such as how to eat with a knife and fork and find their way around the menu at McDonalds.

“In one of these uber-rich schools where the child has to go back to his slum or his little house in the evening, it's easier said than done,” said Bakshi. “Who's going to help that little child with homework and hold his hand?”

That's a fair point, and implementation has never been India's strong suit. But even a bad experience at a good private school is likely to be better than the grim reality of the government-run alternative — which is why more and more of the poorest Indians already send their kids to grassroots private schools in the slums that cost a few dollars per month.

“In Delhi, for instance, the schools run by muncipality are really in a bad state,” Bakshi said. “There's practically no teaching. The classes are overcrowded. There are schools with no buildings. Those that have buildings have no bathrooms, or no bathrooms for girls, and the teachers are not interested.”

In rural areas, students at government schools are lucky if the teacher even shows up.

Yet with private schools already receiving as many as 1,500 applicants for 25 seats in a class, there's also a chance that desegregating the posh institutions will allow the government to continue to shirk its responsibility to the vast majority of parents and children.

“As usual, laws are made without thinking,” said Bakshi. “It's time that we started thinking about these children longterm, not just jumping up and down and saying now these poor children are going to go to these rich schools. Why is the government putting so much money into private schools?”

School choice advocates like the Center for Civil Society's Shah say that the answer is to empower parents and facilitate the building of more private schools. Through a school voucher system, for instance, the government could help to identify qualifying students and give them power to choose the school where they send their kids — creating a financial incentive for schools to teach the poor.

And by streamlining a system that requires some 36 different licenses to open a school in Delhi and creating incentives for banks to finance education startups, the government can help private players bridge the gap between supply and demand.

“All the things we are talking about how to make businesses easier to open and operate can be applied to schools,” Shah said.

Maybe. But if private schools emerge as the backbone of India's education system, this will be the first country where that has happened.

http://www.globalpost.com/dispatch/news/regions/asia-pacific/india/120413/school-education-supreme-court-poor-students

Nepal's other revolution: Red turns to pink

Thanks (unexpectedly) to Maoist rebels, Nepal is emerging as Asia's pioneer for sexual minority rights.

By Jason Overdorf
GlobalPost - November 9, 2011

KATHMANDU, Nepal — In the quiet courtyard of Dechenling Garden, a Bhutanese restaurant on the fringes of the capital’s bustling backpacker ghetto, Nepal's first openly gay member of parliament sips on a lime soda during a short break in his busy political schedule.

His name is Sunil Babu Pant. A young, maverick politician with dark, wavy hair and a close-trimmed goatee, Pant has already emerged as a leader reminiscent of Harvey Milk in his San Francisco heyday, pushing tiny, conservative Nepal into the forefront of the battle for gay rights.

"Nepal is going through tremendous transformation — politically, socially, economically, legally — so a lot of communities who had no space or voice before have emerged," Pant told GlobalPost.

Thanks, unexpectedly, to a Maoist rebellion and subsequent decade-long civil war, Pant and other activists have already made some big strides — and they're inching closer to making Nepal the first Asian country to legalize gay marriage. But the struggle for the rights of sexual minorities is intensifying here as lawmakers haggle over a new constitution nearly five years after the peace deal that transformed the tiny Himalayan kingdom into a democratic republic in 2007. On one side is a patchwork coalition that supports a more progressive platform, including gay rights, and on the other is a conservative alignment that believes gay marriage would threaten the religious fabric of Nepal's traditional Hindu society.

“A strong attack is going on against Hindu culture, Hindu religion and Hindu society,” said Shankar Pandey, a former legislator and central coordinator of National Religion Awareness Campaign, which urges its followers to adhere to the Hindu way of life. Like many conservatives, Pandey believes that homosexuality is an affront to the country's Hindu heritage.

Strangely, the new social and political space for sexual minorities has sprouted from the seeds of Nepal's attempted Maoist revolution. The Maoists — guerilla fighters who draw their support from the rural poor — were hardly liberals when it came to sexuality. Still, their hard-fought insurgency shook the establishment enough that no one political party has been able to achieve a clear majority in post-war elections, and that has increased the power and influence of small parties and tightly knit constituencies.

But after Nepal's major political parties reached a pivotal agreement to demobilize the former soldiers of the Maoist army Nov. 1 — paving the way for the drafting of a new constitution — it's not yet clear if all of those groups will be able to capitalize on those gains as the period of political turmoil comes to an end.

“It is not liberality, it is just unruliness,” said Pandey. “When there are no rules, no system set, whatever the environment or pressure groups want is what goes.”

In Pandey's view, Pant's entry to the legislature is a perfect example.

The founder of a non-profit advocacy group called the Blue Diamond Society and a gay-oriented travel agency called Pink Mountain Travel & Tours, Pant worked for the rights of gays, lesbians and other sexual minorities at the grassroots level for 11 years before entering electoral politics.

But when rules favoring Nepal's long-established political parties — and the conservative elites of Kathmandu — were suspended for the post-war Constituent Assembly elections, Pant saw a window of opportunity. For the first time, as a concession to the Maoist argument that past elections had not addressed Nepal's ethnic diversity and vast economic inequalities, more than half of the 601 legislators would be chosen through “proportional representation” — which allots seats to parties based on the proportion of votes they receive rather than granting seats only to candidates who win a plurality in their constituencies. Suddenly, there would be a host of new players.

"During the Constituent Assembly election we thought it was a good opportunity to lobby the political parties," Pant said. "We went from party office to party office and said we are a significant population, and if you include our cause in your party manifesto we can vote for your candidates. We took it lightly, just hoping that they would buy that idea."

To Pant's surprise, not only did the Maoist party take him seriously — it led the way in adopting resolutions related to gay rights. Meanwhile, the tiny Communist Party of Nepal-Unified (CPN-U), unrelated to the Maoists, asked him to stand for election himself.

"We had no expectations, no resources, no experience, nothing," he said.

*****

The CPN-U didn't win an assembly seat in the formal election, but the party won enough votes to earn five seats under the rules for proportional representation. And because the party had carefully monitored the districts where it had done well, the tireless work of Pant's team of gay rights activists paid off. The party rewarded him by allotting him a seat in the new assembly.

As it turned out, the CPN-U's most votes came “exactly from those 15 districts where Blue Diamond Society has branches and we did the election campaign," Pant said, explaining his success.

Pant and other activists have already accomplished a great deal for Nepal's sexual minorities —people who identify themselves as gay, lesbian, transgender and intersex (those born with physical characteristics of both genders). With the conservatives' cherished rules in flux, the gay rights lobby succeeded in convincing Nepal's Supreme Court to instruct the new government to repeal age-old laws that made homosexuality a crime in 2007. A year later, the court directed legislators to draft new laws guaranteeing equal rights for sexual minorities and convene a committee to consider the implications of legalizing gay marriage in the new constitution. And this year, the Central Bureau of Statistics officially allowed transgender and intersex citizens to classify themselves as "third gender" for the purposes of the census.

"Previously, people thought [homosexuality] was an unnatural condition," said 25-year-old Durga, a student activist at Tribhuvan University. "But after 2007, people are changing. Now they are able to accept people from the LGBTI community in their villages and even in their families."

But despite progressive court rulings and nascent social transformation, homosexuals and transgenders continue to face discrimination and harassment. Even in Kathmandu, which thanks to higher incomes and the thriving tourist industry is Nepal's most cosmopolitan city, the absence of any real gay scene compels many young men to cruise the local Ratna Park for sexual partners. That leaves them vulnerable to police persecution. And though the police deny the charge, gay activists allege that the authorities have also recently begun "investigating" young men staying together in local hotels, according to Roshan Mahato, the 29-year-old president of the Nepal Sexual and Gender Minorities Student Forum.

“We only take action when these people are seen [engaging in sexual activity] in a public place. If they are doing anything openly,” said Nepal police spokesman Binod Singh. “Otherwise, the police doesn't interfere in their personal activities.”

The threat that this essentially conservative, traditional society will backslide on its reforms remains ever present, especially with a new constitution slated to take shape over the next few months. The issue of demobilizing the Maoist army settled, negotiations will now focus on the structure of a new, federalist government. As a result, loyalties will likely solidify around ethnic and regional identities, perhaps robbing smaller minority groups of the influence they have enjoyed during the interim. It is also unlikely the new system will incorporate as much proportional representation as the interim elections.

Even during the negotiations for the new constitution, some roadblocks have have emerged to the Supreme Court's progressive instructions on equal rights for sexual minorities.

In June, for instance, Nepal burst onto the radar of the world's gay community when an American lesbian couple was married in a Hindu ceremony that Pant's Pink Mountain travel agency helped to organize at a local temple. But that same month, the Ministry of Law and Justice submitted an updated penal code that specifically limited marriages to unions between a man and a woman and again defined homosexual acts as "unnatural sex offenses.” Similarly, in July, the Ministry of Foreign Affairs refused to issue a passport to a transgender person, citing a limitation of their software system.

*****

Pant says that despite those bumps in the road, Nepal will not reverse gears. Several legislators immediately objected to the law ministry's proposed recriminalization of homosexuality. Pant believes that indicates the political parties that he convinced to include rights for sexual minorities in their manifestos before the Constituent Assembly elections in 2008 will stay the course in 2012. Moreover, even the National Religion Awareness Campaign's Pandey agrees that sexual minorities' rights should be protected. And he says his insistence that marriage should not be considered among those rights cost him his position with the Nepali Congress.

“We believe everyone must have the right of protection. But where the word of marriage is concerned, that is different,” said Pandey. “Hindus believe marriage is only for procreation, not just for relation. Marriage is for the production or creation. Where there is no creation possible, there marriage cannot be imagined.”

Pant insists that narrow vision of Hinduism — which has no definitive text like the Bible or the Koran — radically oversimplifies the relationship that the religion, and Nepal, have had with sexuality for centuries. During Gaijatra, for instance, young men dress as women as part of a religious procession. Similarly, the Lakhe dance, performed during Indrajatra by masked dancers wearing lavish hairdos and colorful frocks, is “very much a reflection of gender non-conformity.”

“It's a small country, but there's a lot of diversity living in harmony and the indigenous culture has always been much more liberal in terms of rights, expression, sexualities,” Pant said. “Also, the Hinduism, Buddhism and mix of Tantrism has always been pretty liberal in terms of sexuality and gender roles.”

The young legislator is trying to prove that with his travel agency, Pink Mountain. Following the successful public relations effort of Nepal's first lesbian wedding — which generated headlines around the world in June — Pant aims to bring thousands of gay, lesbian and transgender travelers to Nepal by promoting the country as a gay-friendly tourist destination.

Pink Mountain offers a weeklong wedding and honeymoon package — Hindu or Buddhist — for around $10,000, as well as opportunities to do volunteer work related to sexual minorities. And this summer Pant's travel agency endeavored to turn Gaijatra, a traditional Nepali Hindu holiday that involves cross dressing, into “Gay Jatra” — an international gay pride event on Aug. 14. Tourist turnout wasn't so hot, as it happened, but more than 500 local gays and lesbians danced and chanted slogans in Narayanghat, a town about 160 kilometers south of Kathmandu, local press reported, noting that this was the first time that a large number of gay activists have demonstrated for their rights outside the capital.

“He completely screwed our annual Gaijatra festival, which he turned into Gay Jatra. It's actually a festival devoted to families who've lost their near and dear ones over the past year,” said Kunal Tej Bir Lama, a local restaurateur from the gay community. “But it turned into a spectacle of very badly overdressed drag queens.”

Lama worries that Pant's public relations campaigns — while they generate headlines and support from the plethora of international non-profit organizations based in Kathmandu — have made the LGBTI community seem more radical and more exotic than necessary.

“Because of his actions and campaigns, yes, a lot of people are aware of who the gay people are and what they do, but a lot of them also have very, very, very skewed perception of the whole thing,” said Lama said. “They think that most of us are just guys who dress up as girls, who put on a lot of heavy makeup, bad fashion, and basically work as prostitutes.”

Shiva's Rules: Union strikes threaten India Inc.

This year's spate of strikes gives an ominous glimpse into a possible future for Indian manufacturing.

Jason Overdorf
GlobalPost - November 7, 2011

Editor's Note: The Shiva Rules is a year-long GlobalPost reporting series that examines India in the 21st century. In it, correspondents Jason Overdorf and Hanna Ingber Win will examine the sweeping economic, political and cultural changes that are transforming this nascent global power in surprising and sometimes inexplicable ways. To help uncover the complexities of India's uneven rise, The Shiva Rules uses as a loose reporting metaphor Shiva, the popular Hindu deity of destruction and rebirth.

NEW DELHI, India — This autumn, some of India's highest paid industrial workers took to the picket line.

One of the largest and longest running industrial actions to hit the country's manufacturing sector in recent years, the strike by employees at Maruti Suzuki's Haryana automobile factories sent an ominous signal.

In the '60s, '70s and '80s, frequent strikes and lockouts slowed India's industrialization, costing companies millions and causing industry to abandon some states like Kerala and West Bengal altogether.

Now it looks like those days of industrial turmoil may be on the way back. It couldn't have happened to a more important symbol of the new India.

Maruti Suzuki is the showpiece success story of India's post-1991 economic liberalization. One of the country's most respected companies, it ended years-long waiting lists for cars built by Hindustan Motors. And it paved the way for investments by the world's largest car makers by proving that manufacturing in India could be profitable.

The joint venture, in which Suzuki Motor Corp. owns a 54 percent stake, became the largest contributor to its Japanese parent's bottom line in 2009.

This fall's strike, which resulted in a wider-than-expected 60 percent plunge in Maruti's profits for the second quarter, suggested the company — and India — may be entering a new era.

“It's everybody's dream to work for a multinational company like Maruti Suzuki,” said 25-year-old Pradeep Singh, vice president of a new, independent union that workers at the company's Manesar plant fought to establish this fall. “But once you get hired and see the reality, it's a big disappointment.”

Singh is typical of India’s disgruntled union laborers. He has achieved what might be described as the Indian dream. His father, a farmer, ekes out a living from an acre or so of land. But Singh left the fields behind and effectively broke into the middle class with his job at Maruti.

He normally earns about $300 a month — nearly three times the national average income. Like many of today's workers, however, Singh has higher aspirations. Now, along with around 30 other union leaders, he’s under suspension for his activities during the strike, convinced fighting is the only way to get India Inc. to share its growing prosperity with the work force.

“Maruti is No. 1 when it comes to profit,” Singh said. “But when it comes to salary, it's around seventh or eighth.”

India's large corporations have faced 10 major strikes in the last three years, and things may well get worse before they get better. This year alone, there have been strikes and protests at Coal India, Bosch India, Air India, Comstar, Ceat Tyres, Volvo Buses and at textile factories in Punjab, according to Outlook Business.

“If the management does not learn to deal with the sensitive dimension of labor and their circumstances, I am afraid these kinds of things may increase,” said Kuriakose Mamkootam, a professor at Ambedkar University who has written extensively about industrial relations in India.

“There is already what I would call a hidden, unexpressed sense of grief and violence amongst the people.”

That tension stems partly from the gradual dismantling of India's socialist economic policies begun by then-Finance Minister Manmohan Singh in 1991. But successive governments' reluctance to swallow the bitter pill and reform some of the country's tougher labor laws has also contributed to the friction.

Prior to 1991, national unions helped put in place tough labor laws.

One such law forces firms with 100 or more employees to seek government approval before they can fire workers or close down. Labor laws also prevent companies from reassigning workers to different tasks, so there is no way for companies to adjust to changes in the market.

As a result, the official employees of companies like Maruti have it pretty good.

But because of those very same laws, those official employees make up a very small fraction of the work force.

Knowing they can't fire or reassign workers, India's large companies simply don't hire them. Instead, they outsource work to the so-called “unorganized sector,” which comprises companies with fewer than 100 employees. Or they employ contract workers through middlemen.

As a result, only 7 percent of India's 400 million laborers are employed by firms large enough to be compelled to follow the rules. The rest toil in grim sweatshops, often for less than the national minimum wage.

Efforts at reversing course have already been painful.

Since 1991, governments have increasingly looked the other way as even the largest firms assigned a greater portion of the workload to contract laborers whom they could not only hire and fire more easily, but also pay less.

“An in-between community is being created that can neither get a job, nor continue in agriculture, and they are being used as an army of reserve labor by capitalists to keep wage levels and other rights of the workers at a low point,” said Tapan Sen, general secretary of the Communist Party-affiliated Center of Indian Trade Unions (CITU).

For instance, the official Maruti employees were angered by company payment policies. Only about half of their ostensibly generous salary is guaranteed, workers say. The other half is a “production performance reward” that can be slashed by as much as 20 percent every time a worker takes a day off. Moreover, showing up a minute late in the morning — or from the seven minute break you get between 7 a.m. and noon — will cost you half a day's pay, the union alleges.

“In any manufacturing company, especially in assembly line operations, discipline on timings in shopfloor is crucial to the overall process. There are well-organized breaks for lunch, tea etc for every worker,” a Maruti Suzuki spokesman said, via email.

Base salary cannot be reduced for employees who miss work, and workers who lose their production performance reward can get it refunded if their attendance improves within three months, he added.

Those are not the only footnotes to the Indian dream, though.

Nearly half of the employees at Maruti's Manesar plant weren't “regular workers” at all, though they showed up every day, too, and performed much the same work. So while 1,000-odd regular workers like Pradeep Singh could hope to earn about $300 a month if they didn't miss any days, 1,200 contract workers could only earn about $120, said Satvir Singh, who heads CITU in Haryana.

“Salaries at Maruti Suzuki are the industry best for permanent workers and higher than stipulated wages by state government for contract workers,” Maruti's spokesman said.

Similar conditions prevail at companies like Honda Motorcycle and Scooter India, Nokia and Voltas, according to Outlook Business. It may not be coincidence that all of those firms have recently faced strikes.

“The only common thread is the issue of contract labor,” said Rajiv Kumar, secretary general of the Federation of Indian Chambers of Commerce and Industry. “That is quite clearly spreading all over the country.”

Now, though, the government looks set to double down.

On Oct. 25, just days after Maruti's striking workers returned to work, India's cabinet approved a landmark manufacturing policy. Designed to create 100 million new jobs, it aims to boost the manufacturing sector's output to 25 percent of GDP by 2022 from the current 16 percent — where it has stagnated since 1980.

But the new plan won't deliver the key reforms to improve infrastructure, facilitate land acquisition and ease labor laws that industry maintains are necessary. Instead, it simply calls for the creation of seven or so islands — mammoth industrial parks known as National Investment and Manufacturing Zones — where the usual rules won't apply.

As a staff editorial from India's Economic Times suggested, it is a “fine example of a policy for the sake of a policy.”

Or maybe it is something worse.

According to union leaders and industry representatives alike, successive governments moves to work around strict labor laws have played an important role in souring relations between labor and management.

In the controversial Special Economic Zones set up to encourage export-related industries, for example, companies misused their gated properties to fence out unions and violate labor laws, says CITU's Sen.

Similarly, new government sympathy for industry and a reduction in the number of labor inspectors to one for every 200 factories has weakened the enforcement of laws related to wages and working conditions, says Krishna Shekhar Lal Das, an industrial relations expert at the Institute for Integrated Learning in Management.

But at the same time, India's failure to reform its labor laws altogether has had disastrous consequences. On the one hand, the tough rules continue to prevent the manufacturing sector from growing, because India's tiny sweatshops can't compete with China's mammoth factories. Yet, on the other, by fighting to keep laws on the books that don't apply to most workers, the trade unions have ensured that for most of the poor neither wages nor working conditions can improve.

“They are working for a labor aristocracy, because their interests are tied to them,” Kumar said. “The real poor in this country cannot afford to be unionized.”

Nepal: Formal closure to civil war

The Himalayan nation has reached a deal that essentially demobilizes the former rebel army.

By Jason Overdorf
GlobalPost - November 2, 2011

NEW DELHI, India — Nepal may have eliminated the single largest obstacle standing in the way of a resolution to the country's decade-long civil war.

But there are plenty of obstacles remaining.

After five long years of negotiations following the end of the conflict, the Himalayan nation's major political parties settled on a deal late Tuesday that paves the way for the final dissolution of the rebel army.

The deal will see the former Maoist soldiers, who fought government forces from 1996 to 2006, integrated into the national army — or sent home with a fat severance check.

Many tout the move as a step in the right direction, given that the deal essentially demobilizes the nearly 20,000 former rebels.

But with that stumbling block out of the way, next comes the nitty-gritty work of making a new government. Ironing out the details and drafting a constitution are surely going to remain contentious. The deal is likely going to take much longer than the month the political parties have allocated.

Nepal's civil war was started by the Maoist Communist Party in 1996, with the aim of overthrowing the monarchy and establishing a "People's Republic of Nepal." It ended with a peace deal 2006, which has since been monitored by the United Nations.

An estimated 15,000 people were killed during the conflict, and more than 100,000 displaced.

"We have concluded yet another chapter of the peace process. The main task now is to implement this," Prachanda, the leader of the Maoists, told reporters after signing the agreement Tuesday.

Under the deal, Nepal's main political parties — which include the Maoists and the Nepali Congress, among others — agreed to integrate as much as one-third of some 19,600 former Maoist soldiers into the country's official security forces, Reuters reported. The other two-thirds will receive a rehabilitation package including education, vocational training and financial aid of up to $11,500 to start a new life.

The former soldiers who are included in the national army will be restricted to non-combat operations, such as the construction of development projects, emergency-rescue operations and patrolling forests.

“This is really a major breakthrough,” said Prashant Jha, a Kathmandu-based political commentator.

“For the first time there's a formal agreement on the details of the peace process. Now the key challenge is implementing the agreement that has been signed.”

Indeed, the deal eliminated the most contentious issue of the peace process, which has made little headway since the shooting stopped five years ago.

“With the future of the combatants out of the way, there's no obstacle to moving ahead on the constitution,” said Anagha Neelakantan, senior analyst for the International Crisis Group in Nepal.

No obstacle, that is, but politics.

Although Nepal's various political factions have been discussing the drafting of a new constitution for several years — as United Nations deadlines whooshed by — there is still no formal agreement on the most essential questions about what form the country's new government will take.

And because these actors include erstwhile monarchists and Maoist revolutionaries, not to mention a long list of ethnic groups competing for the country's scant resources, ironing out a deal won't happen overnight. Or, most likely, even within the month proposed in Tuesday night's agreement, according to Neelakantan.

For example, there is a broad consensus that Nepal's former unitary government will be scrapped in favor of a federalist structure to help address the vast inequality between the central Kathmandu Valley and poorer areas of the country — a major reason the Maoists first took up arms.

But there is no such agreement on how power will be shared between the central and state governments, on what grounds the states will be formed, or even how many states the tiny, mountainous country will eventually have.

“For any state that has historically been centrally administered to move to a federal model is a challenge,” said the political commentator, Jha. “What complicates it in Nepal is that this is a very diverse country, with many different ethnicities and many minority groups.”

That makes for tough questions, such as whether states should be formed along ethnic lines or named for ethnic groups.

But at least some of the framers of the new constitution hope to address longstanding grievances regarding social and economic inequalities related to ethnicity, caste and region with leveling measures called “preferential rights” that may prove even more contentious.

“Restructuring of the state into federal units will potentially be a hard negotiation, but the parties are still closer than they were a year ago,” said Neelakantan. “This is the start of formal closure on the war. That's the really important thing.”

India: burgeoning fast-food paradise

Across Indian cities, mushrooming malls are driving a revolution in the fast-food business.

By Jason Overdorf
GlobalPost - October 25, 2011

NEW DELHI, India — At the DLF Place mall in the upscale South Delhi neighborhood of Saket, shoppers and employees sit more or less side-by-side in a new “desi” food court, digging into traditional Indian dishes ranging from biryani to dosas to seekh kebabs.

There's something for everybody — at many tables three generations are sitting down together. But that's not the reason these traditional upstarts have succeeded in storming what was once the bastion of western brands like McDonald's and Pizza Hut.

Some of the city's most famous restaurants are represented here — some of them a century old — transformed by smart uniforms, cheery signage and shining show kitchens to look every bit as clean, efficient and modern as their multinational competitors. Welcome to the future of Indian fast food.

“[Quick Service Restaurants or] QSRs are quite successful in India,” said Arun Chanda, founder of New Delhi-based Mint Hospitality Consultancy. “Over the last five years, a lot of Indian companies have started getting into the franchising model and expanding into different cities.”

Credit marketers at DLF for inducing popular brands like Karim's, Nizam's, Moti Mahal, Nathu's Sweets, Rajdhani and Sagar Ratna — which had already launched multiple sit-down restaurants around New Delhi — to experiment with nascent fast-food franchises.

But the revolution is already underway across the country, as global chains seek to woo a broader cross-section of customers by incorporating traditional spices and ingredients into their menus. And local upstarts have begun to attract deep-pocketed financiers in the bid to build nationwide fast-food chains of their own.

“Even people who are into the five-star hotel business are thinking of getting into the QSR concept,” said Chanda.

According to Euromonitor and market-research firm RNCOS, India's $13 billion fast-food market is already growing 25-30 percent a year, and global players like Domino's, McDonald's and Yum Brands (KFC and Pizza Hut) are pushing into second- and third-tier cities.

Hardcastle Restaurants, development licensee for McDonald's in India, is planning a massive expansion, doubling its India stores over the next three years with an investment of $100 million. Meanwhile, Yum Brands plans to open 1,000 outlets — half of them KFC restaurants — on its way to $1 billion in revenue from India over the next four years.

Other multinationals like Burger King, Cinnabon, Dunkin Donuts, and Starbucks are not far behind — with stores already on the ground or aggressive launch plans underway.

With 60 percent of the Indian population currently under 30, it's no mystery why.

Call it irrational exuberance if you want, but this summer Indian investors judged Jubilant Foodworks — which owns the franchise rights to Domino's and Dunkin Donuts in India and sold about $150 million worth of pizzas last year — to be nearly as valuable as the U.S.-based parent company.

“We've now been in India for over 15 years, and we've actually seen the change right before our eyes,” said Amit Jatia, vice chairman of McDonald’s India. "The market is changing very significantly. People are eating out far more often than before, and I think the availability of international QSR brands has brought about that change.”

But as the success of DLF's “desi food court” suggest, the future of fast food in India isn't about pizza and burgers.

In deference to Indian religious sentiments, McDonald's doesn't even offer its signature Big Mac here, or any other beef or pork products. Instead, it offers the Chicken Maharaja Mac and items like the McAloo Tikki burger (a mashup of potatoes and peas, deep-fried and served in a bun), the McVeggie and the Paneer Salsa Wrap — along with the Filet-O-Fish, McChicken sandwich and Chicken McNuggets.

Similarly, Domino's and Pizza Hut don't offer any beef toppings, and offer a wide range of pizzas that incorporate traditional Indian ingredients and spices, such as the Domino's Keema Do Pyazza pizza, with onions, spicy minced goat meat and jalapenos, or Pizza Hut's Kadai Paneer pizza, with onions, green pepper, paprika, coriander and tofu-like unaged farmer's cheese. Food industry experts say these flavors are here to stay.

“We believe that we must respect the local culture. Therefore, around the globe we do products that are relevant for the local consumer,” said Jatia. “But we want uniquely McDonald's products. For example, we don't anticipate making a McDosa, but we have a Spicy Paneer burger. That has resonated very well with the Indian consumer. I feel that for global brands, a blend of local and international is the way forward.”

At the same time, Indian entrepreneurs are cracking the fast-food franchise model.

“We wanted to get the fundamentals right before we started expanding,” said Kiran Nadkari the CEO of Kaati Zone, a Bangalore-based chain. “Once you've got the back-end in place, you can expand rapidly. But during those early stages there's not much investment capital. So, for example, I bootstrapped for three years, from 2004 to 2007.”

Now, though, homegrown fast-food companies are expanding rapidly, and some are beginning to attract funding from venture-capital and private-equity firms. For instance, Kaati Zone — which sells Kolkata-style kathi rolls (spiced goat, chicken or vegetarian fillings wrapped in fried flatbread) — plans to add 80-plus new outlets to its 17 existing stores by 2013, with venture capital financing from Accel India, Draper Investment Company and Erasmic Ventures.

Mumbai-based Jumbo King — a 43-store franchise business that offers Maharashtra's famous vada pav (spicy, deepfried mashed potato on a bun) — plans to open 250 outlets this year. And Sagar Ratna — a 25-year-old South Indian food chain which bridges sit-down restaurants and fast-food outlets — recently sold a controlling stake in the company to New York-based India Equity Partners for $36 million. It plans to add 200 outlets to its 70 existing restaurants over the next three or four years.

“Even Jubilant took 15 years between when they started and their IPO,” said Nadkari. “Now, the valuation of Jubilant [which this summer nearly matched that of NYSE-listed Domino's Pizza Inc.] is showing investors that anything that's touching Indian consumers is hot, and they can get extraordinary returns from this.”

That makes India a burgeoning fast-food paradise — where you can get a six-course Rajasthani “thali,” or set meal, in 5 minutes flat, and then dash up the stairs or across the street to top it off with a McFlurry.

But it also means that someday soon, if all goes well, you just might be seeing some of these brands — or at least these flavors — at a shopping mall or street corner near you.

“We already export some of our products to the Middle East,” said Jatia. “We've done a lot of innovation work in vegetarian products, and there's a lot of interest across the McDonald's countries.”