Thursday, May 24, 2012

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.

Monday, May 21, 2012

India: Drugs ravage Punjab, nation's breadbasket state

With drug-related crimes occurring at ten times the nation's average, locals say police and politicians are complicit in Punjab's narcotics trade.

Jason OverdorfGlobalPost - May 16, 2012

NEW DELHI, India — India's elections are notorious for bribery. But this year's state elections in Punjab drew attention to what locals say is an even more insidious problem. Instead of the usual “booze and blankets,” footsoldiers for various political parties bought votes from the state's poor by offering free opium, heroin, hashish and pills.

“There was a crackdown and huge qualities of heroin, opium, smack and poppy husk were seized,” chief election commissioner S.Y. Quraishi told the Hindustan Times. “It is an extremely serious matter.”

Few locals were surprised. Punjab's border with Pakistan has long made it the primary trafficking route for opium and heroin from Afghanistan. The crushing of the Khalistan separatist movement — here called simply “the Punjab problem” — in the 1990s left behind an alienated and disillusioned generation. And in recent years, the social fabric of this wealthy, breadbasket state has been further stretched by diminishing agricultural returns, as well as rapid urbanization that has sent land prices skyrocketing.

Since the green revolution of the late 1960s sparked its tremendous agricultural boom, Punjab has been one of India's wealthiest states. But the state was also plagued by terrorism and brutal police actions in the 1980s and 90s. Seeking to create a “land of the pure” for their people, militant Sikh separatists led by Jarnail Singh Bhindranwale derailed trains and exploded bombs in crowded markets. Eventually, Prime Minister Indira Gandhi was assassinated by her Sikh bodyguards in retaliation for her decision to send troops into the Golden Temple — Sikhism's most-revered religious site — to root out armed militants who had taken refuge there.

More from GlobalPost: Old problems plague New India

The reaction was swift, beginning with a massive and indiscriminate pogrom against Sikhs after Gandhi's assassination in 1984. And it continued with a ruthless and sustained government campaign against the militants. Human rights organizations say that the crackdown included rape, torture and extrajudicial executions that many believe — while it put an end to the terrorist attacks — caused other social problems that linger today.

“We are very close to Afghanistan and Pakistan, so being a transit area, the transit point has always been Punjab. But now the major part of it is being consumed in Punjab itself,” said Dr. JPS Bhatia, who has run a drug rehabilitation center in Amritsar for the past 20 years.

“All this started after the terrorism problems were over, and there was a lack of rehabilitation for the youth in Punjab. They had nothing else to do and the economy was not doing well at that time. All those youths who were unoccupied, who were not into jobs, and their education was not good, that was the time the addiction problem started in Punjab.”Now, nobody knows how many of the state's young people are addicts. But the problem is bad enough that when a series of newspaper articles misquoted a study conducted by Guru Nanak Dev University sociologist Ranvinder Sandhu that claimed nearly three-quarters of Punjab's 16- to 35-year olds were addicted to drugs, hardly anybody batted an eye.

“As far as the extent of the problem is concerned, no study has been done,” Sandhu said in a telephone interview with GlobalPost. “There are many articles which are misquoting my study, saying that 73.5 percent of youth is hooked to drugs in Punjab. That is wrong. I studied a sample of 600 addicts, and among them I found that the majority were from 16-35 years of age. That is the 73.5 percent.”

More from GlobalPost: Did Hillary Clinton's feel-good visit leave India feeling bad?

The statistics that do exist are not encouraging. According to India's National Crime Records Bureau, the drug-related crime rate in Punjab is nearly 10 times the nationwide average. The state's deputy chief minister revealed earlier this year that Punjab accounted for roughly 60 percent of all the drugs seized in India in 2010-11. During the January state assembly elections alone the Narcotics Control Bureau and Border Security Force seized nearly 120 pounds of heroin intended for smack-addled voters.

Outreach workers also say that health problems associated with drug addiction are growing increasingly common, and the social impact of the drug trade is becoming more severe as the problem spreads.

“The HIV rate is very high. Hepatisis C is very common. We have a lot of cyrrhotic liver diseases. And because of the spread of infectious diseases tuberculosis is getting very common. Apart from that, there is crime and lots of psychological problems like depression, suspiciousness and psychotic behavior,” said Dr. Bhatia.

“What I have seen recently is that as the tenure of the addiction period in Punjab is increasing we have worse and worse cases coming up these days. Worse in the sense that the IV drug users now have infectious diseases like HIV/AIDS and tuberculosis, and they have long crime records. Most of the people who were users in the first stage have become peddlers, and they have taken up a life of crime. There is a lot of thefts and robberies, so they have a lot of complicated cases against them.”

Health workers, academics and activists said that part of the reason Punjab has failed so miserably to make a dent in the problem is because — s the use of free drugs to buy votes in the recent elections suggests — politicians, bureaucrats, police and even Narcotics Control Bureau officials from out of state are allegedly on the take, if not directly involved in the business.

More from GlobalPost: Can Ford and GM catch up in India?

“Everybody knows where drugs are being sold,” said Hemant Goswami, a social activist based in Chandigarh. “Even I have a list of at least 50 places where you can go and buy your dose. I don't think if you had an honest team and political commitment at the top level it would be difficult to control it. But then it is giving money to everyone. It's such a big trade. So nobody's interested in taking any action.”

Punjab may indeed have accounted for 60 percent of the drugs confiscated in India last year. But Goswami and other activists said that haul reflects the huge size of the local drug trade, rather than a sincere attempt at interdiction. Moreover, Goswami said that despite a spate of high-profile suspensions, drug seizures and arrests, there has been no serious or sustained government crackdown.

In 2008, Goswami petitioned the Punjab and Haryana High Court to take action against corruption in the Punjab police, arguing that top officials knew of and ignored the involvement of a number of officers in the drug trade. “There was an official admission by the state of Chandigarh that yes, our police officials are involved in the drug mafia,” Goswami said. “Everybody is scratching everybody's back. That's how this drug network is running.”

Though the case has still not been resolved, a number of police officers were suspended based on an investigation by the federal Narcotics Control Board. But not long after that supposed cleanup, the head of the NCB branch in Chandigarh, Saji Mohan, was himself busted in Mumbai with some 25 pounds of heroin and later charged with stealing confiscated narcotics from NCB headquarters, according to the Indian Express. Just a few months after Mohan's arrest, his replacement, SK Sekhri, was also arrested — charged with taking a bribe to quash a narcotics case against a local pharmaceutical company.

“It's a well known fact that there's a nexus between the police, the politicians and others who are benificiaries of this trade,” said Guru Nanak Dev University's Sandhu.

And that means it will take a near-revolution to curb the menace.

Friday, May 11, 2012

Can Ford and GM catch up in India?

With a return to profitability and hot money burning a hole in their pockets, Ford and GM are making waves in India.

NEW DELHI, India — Ten years ago, the performance of American automobile makers in India was so dismal, you could drive for days without seeing a single Ford or General Motors car.
But with hot money burning a hole in their pockets and a return to profitability — April sales were down for both, but each reported growth in the first quarter — both Ford and GM are finally making waves in the world's second-fastest growing car market.
“If you look at how these companies have done in past three or four years, there has been a signficant increase in volumes,” said Pragya Bansal, an automotive industry analyst at Fitch Ratings. Ford Motor Company, for instance, has nearly doubled its market share over the past five years.
The trouble is that both Ford and GM are working from a dismally low base. Both companies virtually ignored India during the 1990s in their headlong pursuit of the joint venture with China's Shanghai Automotive Industry Corp (now known as SAIC) — which GM eventually won. And what little energy Detroit did devote to India was mostly directed at doomed attempts to sell the cars the companies were making elsewhere instead of the cars India wanted.
As a result, Japan's Suzuki took a massive lead through its Maruti-Suzuki joint venture, and upstart Korean car maker Hyundai jumped out to take a market share of more than 20 percent. Ford, in contrast, owns only about 5 percent of the market even after doubling its share on the back of its new success, Fitch Ratings' Bansal said.
A bigger pie, and more pieces
According to the Society of Indian Automobile Manufacturers, Maruti Suzuki India's share of India's passenger car market fell to 48.7 percent in 2011 from 50.1 percent in 2009. Hyundai's market share fell to 18.1 percent from 20.6 percent. And Tata Motors dropped to 12.9 percent from 13.2 percent.
While GM gave back a little ground, too, dropping to 4.4 percent from 4.6 percent, it's still doing better than during the bad old days. And Ford was a big winner with a jump to 4.8 percent from 2.3 percent, thanks to the success of the Figo.

But the real story is sales volumes. India is where the action is. And even as the big players lose share to new entrants, everybody's sales are booming.
Back-to-back production increases of 28 percent in 2010 and 27 percent in 2011 and domestic sales growth of 26 percent and 29 percent have made India the world's second-fastest growing car market, with domestic sales of more than 2.5 million passenger cars in 2011.
Moreover, as other firms follow Hyundai's lead in making India an export hub for small cars, India has surpassed Thailand to become Asia's third largest exporter of passenger cars, behind Japan and South Korea.
More dramatically, Society of Indian Automobile Manufacturers forecasts sales volumes of 5 million vehicles by 2015 and more than 9 million by 2020, and predicts that by 2050 India will have more cars on the road than any other country.
It's no wonder that Ford and GM are stepping up their game.
New models, new focus
After half-hearted failures with the outdated Escort and various Opel models, Ford and GM have over the past five years revamped their India strategies to emulate the industry's most successful players — launching made-for-India hatchbacks, increasing their focus on diesel engines, and cutting prices to the bone. Their success is visible on the roads in Chennai and Delhi, where among the post-2010 models Ford and Chevrolet cars seem to be almost as common as Hyundais.
“I put it down to a strategy that includes us competing successfully in the heart of the market, which is the small car market,” said Nigel Wark, executive director for marketing, sales and service at Ford India. “In fisherman's terms we're now capable of fishing where the fish are.”
Ford's first taste of success came in with the Ikon, a cheap four-door sedan based on the Fiesta model sold in Europe. But its biggest leap forward so far has come from the Figo, a hatchback designed especially for India and other emerging markets that accounted for about three-quarters of the company's sales last year. And it plans to launch at least six new compact models by 2015, including a “compact SUV” called the EcoSport.
GM hit the ground running when it shuttered Opel and introduced its Chevrolet brand, rolling out eight new models since 2003. But its biggest success has come with the launch of its own cheap hatchbacks — the Aveo, Spark and Beat — which have come with an aggressive pricing and merchandizing strategy.
“What Chevy did was gave me about 20,000 rupees [$500] worth of freebies — including an audio system, a security system, a gear lock that's not part of the standard system and other small things like a car cover, black strips and a bunch of stuff,” said Pierre Fitter, a young Indian who recently bought his first car (like many Goans, he has a Western-sounding name). “What really sold me was the free servicing for three years.”
No doubt the American carmakers are dipping into the marketing budget to compete with Hyundai and Maruti-Suzuki. They're also tapping the cheap money flooding US credit markets post-2008 to finance massive expansion plans in India, with billion-dollar investments on the cards for new factories that will dramatically increase manufacturing capacity.
“Because of access to cheaper money they're able to undertake massive expansion,” said Fitch's Bansal. “Ford is investing about $2 billion in emerging economies, of which $1 billion is coming to India only.”

The Futurists: Turning India's farms into factories

Super-bureaucrat Amitabh Kant aims to reverse 60 years of history with the Delhi-Mumbai industrial corridor.

By Jason Overdorf
GlobalPost (December 9, 2011)

NEW DELHI, India — Don't bother looking for a bigger dream. Nobody has tried anything this crazy in India since George Everest set out to measure the British colony with trigonometry and a very, very long chain back in 1830.

Over the next 20 years, India will spend $90 billion to lay the foundations for 24 new cities, creating an industrial corridor stretching across the country from Delhi to Mumbai. And, for practically the first time since the 1950s, these new urban centers won't mushroom haphazardly, with roadways and drainage systems crammed in as an afterthought.

Their development will be carefully orchestrated by super-bureaucrat Amitabh Kant — an Indian every bit as ambitious as the Brit who surveyed the height of the world's tallest mountain.

“This in many ways marks a paradigm shift in India's thinking on infrastructure,” Kant said in an interview with GlobalPost. “It marks a paradigm shift in India's thinking on manufacturing. It marks a paradigm shift in India's thinking on urbanization.”

Since Mohandas Gandhi first said that India lives in its villages, this country has shunned big manufacturing and resisted urbanization, pushing farmer cooperatives and cottage industries as an alternative model for development.

As a result, cities have never been planned — at least not anyplace but on paper. Slums have mushroomed as migrants streamed in. And metropolises have morphed into megalopolises.

But if Kant's paradigm shift takes, that's about to change.

India needs 30 years or so of near-10 percent economic growth if it is to bring its massive population out of poverty. Industrialization and urbanization is the only way to do it.

According to Mckinsey & Co., 70 percent of GDP will come from cities by 2030. And Kant — a suave, erudite bureaucrat best known for developing the tourism ministry's “Incredible India” ad campaign — is in the driver's seat.

The lynchpin is a high-capacity railway dedicated to freight transport. Connecting Delhi to Mumbai, the 1500-kilometer, high-speed rail network would convert the cheap labor centers of India's hinterland into viable manufacturing hubs, by slashing the time needed to move goods to India's ports and major metros.

The Futurists: Getting up-close with volcanoes

In the process, the so-called Delhi-Mumbai Industrial Corridor (DMIC) would curb the disastrous, unplanned sprawl of India's two largest cities. It would check the daily migration of hundreds of thousands of destitute farm workers by transforming India from the world's back office into the world's manufacturing hub and creating millions of jobs. And it would solve some of the worst problems of existing Indian cities by providing green energy, clean water and affordable housing.

That is, if it materializes.

“The challenge is that since India has been a very reluctant urbanizer, how can we use good technology to make a quantum jump?” Kant said.

That's putting it mildly. The real trouble is that India is great at making plans, and terrible at executing them.

To anybody who has seen the situation on the ground, the Delhi Development Authority's (DDA) Master Plan 2021 reads like science fiction. And if the DDA's track record on its the master plans of 1962 and 2001 is any indicator, it's not likely to deliver on its new vision unless Mars attacks.

The Futurists: Milk from clothing

Other Indian city planners have proven just as impotent. So what gives Kant hope for this project, which is even bigger, and will depend on the goodwill of no less than seven different states?

Partly, it's blind faith. But there's method to Kant's madness, too.

Today, almost 65 percent of India's freight moves by truck, trundling down potholed, two-lane highways. It can take 12 to 14 days for a shipment from Delhi to reach Mumbai, which makes the cost of logistics ridiculously high. In contrast, his high-capacity train will put goods from the DMIC into India's ports within 24 hours.

At the same time, through the DMIC Development Corporation that Kant heads, the central government will fund and build what he calls the trunk infrastructure of the 24 manufacturing hubs along the railway.

“When that happens, you open up new areas on either side [of the tracks] which can be developed for manufacturing and feed this dedicated freight corridor,” he said.

That means Kant's team will lay out and build the roadways, drainage and sewers for the new cities, setting the framework before real-estate developers can lumber in and convert everything into residential high rises, as happened with many of India's ballyhooed Special Economic Zones.

It also means that the toughest pieces of the puzzle — low-cost housing, for instance — will be bought, paid for, and built by the central government before the industrial boom begins.

To make it happen, India has partnered with Japan to build the freight line, tapped the expertise of some of the world's biggest infrastructure, technology and architecture companies to plan the cities and sought funding and advice from international agencies.

“The important thing is to bring in a big vision, in terms of taking detailed designing and engineering to another level, and then ensuring that the project is implemented according to that detailed design,” said Kant.

Consider the first phase. By 2018, the freight line will be in place and the first seven manufacturing cities will be developed. Today, they don't even have names. They're still known as mouthfuls like Dadri-Noida-Ghaziabad and Pithampur-Dhar-Mhow, reflecting how they will merge smaller existing cities into large industrial metropolises.

But the plans already detail early-bird projects for items like a 1,000-acre integrated logistics hub in Greater Noida, outside New Delhi, an exhibition and convention center near Manesar, in Haryana, and an “aerotropolis” comprising a cargo terminal, warehouses and other facilities near Neemrana, in Rajasthan.

Map overlays depict a “Knowledge City” reminiscent of North Carolina's Research Triangle in the midst of farmland along the Delhi-Jaipur highway and skill development centers to provide technical training in places like provincial Madhya Pradesh.

Aquifer recharge systems and desalination plants, gas-fired power plants and solar-energy farms are slated for the deserts of Gujarat and Rajasthan. And so-called “smart communities” — utilizing urban planning and green technology to reduce the environmental impact of cities — have been drawn up for key locations along the corridor.

Science fiction? Maybe. Or maybe it's India's version of “If you build it, they will come.”

Analysis: Did Hillary Clinton's feel-good visit leave India feeling bad?

Browbeating India on Iran undermines talk of 'strategic partnership.'
NEW DELHI, India – Washington's feel-good mission to India this week was long on browbeating and short on substance, analysts here say, signaling that America has yet to understand its supposed strategic partner.
Landing first in Kolkata, US Secretary of State Hillary Clinton came to India with a substantive agenda. She acknowledged the importance of regional leaders to Prime Minister Manmohan Singh's coalition government by meeting with West Bengal Chief Minister Mamata Banerjee — the biggest impediment to opening India's multibrand retail sector to investments from foreign companies like Walmart — in Kolkata Monday.
Then, she moved on to meet Singh and Congress Party President Sonia Gandhi, as well as Foreign Minister SM Krishna, in New Delhi later in the week.
But whatever groundwork for cooperation Clinton might have laid in her private meetings with these leaders in advance of next month's strategic dialogue in Washington was undermined by her public speeches browbeating India on Iran and mouthing the same old platitudes on Pakistan, Indian policy experts say.
“She's overplaying her hand on Iran,” said Kanwal Sibal, former Indian foreign secretary. “Knowing the complexities in India and the political sensitivities involved, for her to publicly pressure India to reduce its oil purchases from Iran, I don't think it sits well with the larger political establishment in New Delhi. I don't think she's winning any arguments in favor of her case. On the contrary, she's causing a degree of resentment.”
From the outset, Clinton's visit was awkwardly timed. Apparently designed to encourage India to further reduce its oil imports from Iran, in compliance with US sanctions, it coincided with the visit of a trade delegation from Tehran.
“It is too difficult to tell at the moment” if she was able to establish any common ground, according to Sumit Ganguly, political science professor and Indian cultures expert at Indiana University. “Also, India may have trouble trying to reduce its dependence [on Iranian oil] too drastically.”
Other observers are pessimistic.
Already, India's oil imports from Iran plunged 34 percent in April, as Indian refiners are expected to cut volumes from Iran by more than 20 percent this year. However, India is reluctant to rely too fully on oil from Saudi Arabia, which is a staunch supporter of Pakistan.Despite its public rejection of US sanctions on Iranian oil, India has been quietly reducing its imports, and has negotiated a deal to make half of its purchases in Indian rupees — which Tehran can only spend on goods made in India.
By using the bully pulpit to make her case (and speak over Indian heads to poll-bound Americans), Clinton may therefore have alienated a government that was already convinced and taking action, some argue.
In Kolkata, for instance, Clinton “played up” Tehran's alleged involvement in the attempted assassination of an Israeli diplomat in New Delhi this February, asserting that Iran is a terrorist state. Meanwhile, she went no further than to repeat Washington's usual formulations on Pakistan — that Islamabad “should do more” to ensure that terrorists don't use the country as a launchpad, Sibal said.
“From our point of view, Pakistan has been involved in terrorism for years and years and years, and there's this terrible thing that happened in Mumbai. But Pakistan is not declared a terrorist state ... The United States doesn't even talk politically of Pakistan as a terrorist state,” Sibal said. “In this background, based on this one-off incident, to tell us that Iran is a terrorist state, I don't think is going to win her points.”
Indian and American interests converge more today than ever before. Washington would like New Delhi to become a stronger player in the region to offset some of Beijing's growing power. America's ongoing pivot toward the Pacific coincides with India's "Look East" policy aimed at broadening its trade and influence in Southeast Asia. And America's historical alliance with Pakistan is now barely limping onward as a marriage of convenience.
But that doesn't mean that the Indian and American agendas converge on every point.
In proceeding directly to India from her visit to China, for instance, Clinton underscored Washington's position that it views both countries as of equal importance. Yet amid support for India's move into Southeast Asia, the US also continues to entertain China's ambitions in India's backyard.
And whatever avowals Washington is willing to make privately about the desire to balance China with another rising power, when it comes to issues like the dispute over the borders of Kashmir and Arunachal Pradesh, America wisely retains a studied silence.
“If things turn hot with China, we can't really rely on the US to back us,” said Rajiv Sikri, a former Indian ambassador to the US. “So how can India be burning its boats with China, or Iran, or any other country? The US attitude in moments of crisis will be determined by US national interests which may or may not coincide with India's.”
In a nutshell, that's why Indian policymakers are reluctant to give up the country's historical stance of “non-alignment” and stake the country's future on a full-fledged alliance with the US.
But perhaps more importantly for Clinton's visit, for any Indian leader to publicly kowtow to American dictates in India's neighborhood — however desirable the intended outcomes may be — would be tantamount to political suicide. So while Clinton spoke as though her administration is the only one with an upcoming election to worry about, her interlocutors in India's Congress Party forged full speed ahead to push new trade agreements with Tehran across town.
It was as clear a sign as any that Washington is still somewhat in denial about the nature of this strategic partnership.
“India will never be in the kind of position that Japan or some of the other allies are,” said Sikri. “The US is not offering the kind of security umbrella to India that it does to these countries, and it never will. Nor will the Indians accept it, I think. Nor is it a feasible proposition. So for the US to expect India to accept blindly whatever the Americans say is extremely naive.”
According to Indiana University's Ganguly, India's move to boost trade ties with Iran in the midst of Clinton's visit sent a “very bad” signal in that context, suggesting that New Delhi's response to American policies will continue to be a kneejerk no to preserve a “hackneyed” idea of India's strategic autonomy.
But insiders from India's foreign policy establishment like former ambassador Sikri argue that India's “feisty” response to US pressure on Iran marked a maturation of the strategic partnership, rather than its decay.
“There is a genuine friendship with the United States, a desire for closer ties, through trade, commerce, people-to-people relationships, which makes for a very deep, across the board Indo-US partnership,” Sikri said. “Even when government-to-government relations are not the best, these sustain it. We can have a dialogue with the US that enables us to have a candid exchange of views without derailing the relationship.”