Subsidy not a boon for economy.

(My Reply to Kunjan)

Hi Kunjan,
Let me shall try to answer few questions raised.

Let me make all of you clear that most of the companies invest in
charitable acts to get the tax exemtions. They can show any amount to
the govt as an investment and also for the goodwill of the company. If
investing in charitable act is in company's marketing preference then i
have no question. Once i happen to read about an company producing
"Mecca Cola" a product like coca cola and anounced the ten percent of
its annual profit to be used in providing homes to the displaced
palestines. The company had record sales of about 40% of the sales of
coco-cola in France and similar good results in many arab countries.
This is a smarter marketing more than a valuatic act.
TATA and Birla are having many business houses and they need fame in the
market for their products to sale. They expend very less in
advertisements than their competitors and still stand in market. The
way they do business is not with charity but "Corporate Social
Responsibility" and this is not an help but an marketing act.

How many of you are aware but its a truth than TATAs pay less then their
competitors now. TCS pays mere 12k per month (on hand) for the fresh
engineers which is far below other players. Most of the people join TCS
just to be linked to TATAs.

Regarding subsidy and the energy efficieny I have an interesting
historical facts. Let us share.
Once in 1970's there was energy crises throughout the world due to the
rapid economic development and fuel prices were rising. Saudia Arabia
is also blamed to make that price rise by decreasing the supply of fuel
to the market. Whatever might have caused that, the effects were far
more interesting than mere price hike.

Here are the actions taken by the govts and their effect:
1. UK subsidised the fuel cost.
The effect was that more and more fund was needed for subsidisation.
This made their companies in benefit but socail sector costs were to be
cut. The companies never cared about the energy cost as they were
getting at cheaper cost so were enjoying their rise.

2. Germany subsidised partly far less than UK and invested heavily in
alternative sources of energy like wind mills and small hydro power.
The effect almost the same as UK.

3. US declared an aggressive R&D for increasing fuel efficiency and
decreasing fuel dependency and invested more on nuclear energy leaving
market play its role.

4. Japan implemented import tax on petroleum products further increasing
the fuel costs. All economists were saying that in next 10 yrs Japanese
will crumble, people were againsting the move but govt didnt move back.
The companies started doing tehir own research to decrease the fuel
dependency.

The result is the Japanese and American economic imperialism of 80s and
90s. The energy efficieny in India is only 10% of that of Japan now.
What might have caused this?? The subsidy. And this shows where we are
haeding towards with subsidy.

Cheers.

Kunjan on my article on "Charity"

After reading the mail of bhupe i did not understand few points given by him
and moreover it arises the shortest question "How?".

Firstly, as he says "I dont believe in helping others. Help gives an instant
relief but it brings two big evils with it, first the expectation of getting
more and second the dependence.". Bhupe gave the examples of charity. The
explanation of growing India due to tata,birla IIT's,IIM's,etc etc... But
there r many children who r able to complete their education due the helps
offered by the charities.I say,these children may go to the IIT's and IIM's
afterwards and frame india's future. R u saying this bcoz we r fortunate
enough that our parents were able to provide us education???


Secondly about the subsidies given by inidian govt on LPG and kerosine.. he
says "Every yr's petro and food subsidy together is enough to build a
nuclear power station and think of us getting electricity getting as low as
50p per unit, how competitive then our industry would
be? ". Again we r thinking it that way becoz we need electricity. But what
about those who r not able to fulfill their basic needs. Can u think that it
would be very hard for them to even cook food if govt does not give
subsidies on kerosine.How can india progress by ignoring the poor people
which form the large part of the country. As far as LPG is concerned,people
are switching to LPG due to its low cost and handiness. This has greatly
reduced in use of "Fossil fuels" in the country.Thats i think is a rite step
foreward..........



The next point given by bhupe is a bit rediculous.. He says "Next part the
money others are using for their marketing products is being wasted by these
companies on charity. They will loose to their competitors and finally
fall.". This is not the way business is done. Birla has opened so many
charities for long, but it did not fall. bilra is not a fool to open so many
charities and helping organisations..


Hope I find the answer of these questions....

Charity - the weakness.

(This i had written in reply to my friend's proposal for starting Charitable work)

I dont believe in helping others, cooperation is a different thing
altogether. Help gives an instant relief but it brings two big evils
with it, first the expectation of getting more and second the
dependence. Sometimes earlier I used to think of equal society and the
commodity distribution, but later I found the biggest target of the
nation should be to make people optimistic and give them hope. People
may enjoy immense wealth, some may live in poverty but what makes one
happy is the hope that tomorrow will be better. More to that is
self-dependency, and believe in self that he can do better tomorrow.

I have seen many charity organisations help. I dont say they are doing
wrong but the output they are getting is not the best possible output.
They try their best to get best of what they can, i really appreciate
that, but wouldnot that be better had they been very successful in
their life materially. Dont call me selfish here, you can call me
selfish after reading next few paras if you really feel the same.

India is getting better and better day by day. What is making it better?
Is it the help that charity organisations are giving? is it the aid that
foreign govts are providing? is it the loans that friendly countries are
giving? or is it the subsidy that Indian govt is giving to support the
poor? None of these. India is transforming just because of the success
of engineers of premiere institutes like IITs, leadership by the
managers of IIMs, the competitive business environment grown by the
positive economic policies and because of the success stories of huge
indian business houses like TATA, BIRLA, Relience, Bharti, Infosys,
Wipro etc. This has created "Brand India" in the World. By which
foreigners believe in India and the Indians, and invest in India. And
most importantly every child sees people growing around him, getting
glamorous life style, and tries to get that. In that course he reads
well, tries hard to reach there and finally ends up becoming another
legend of the country. The best one man can do in his life is to do
gain as much he can, name, fame, ecstacy etc etc. This makes the people
more optimistic. And optimism makes one happy.

Protectionism and help degrades the social structure. I have an example
from Switzerland. Swiss govt subsidises agro products. That is the only
protected part of Swiss economy and now it has become only the black
spot of that economy. Every part other than that is going very fine but
farmers are slowing loosing and crying for more subsidies.
India has subsidised Kerosene adn LPG gas heavily and is wasting lot of
money on that. Every yr's petro and food subsidy together is enough to
build a nuclear power station and think of us getting electricity
getting as low as 50p per unit, how competitive then our industry would
be? How much we could save by this? The savings would then be invested
and economy will grow in other sectors too. The huge money that goes
foreign to buy petro products could then be built for irrigation
project in the country to support farmers. But nothing of this will
happen as we believe in help, the instant help and we tend to ignore
economics behind it.
Consider a situation, TATAs and BIRLAs helping poor by running a charity
organisation. The more they focus there they will ahve less time for
business is one part. Next part the money others are using for their
marketing products is being wasted by these companies on charity. They
will loose to their competitors and finally fall. When they fall they
will not remain so finally the charity house will close altogether.

Its a global average that for any work govt wastes 3 times more
resources than what private players could have done the same work. How
come this happens? This is due to the corruption that comes with
protectionism. Any charity organisation is run by the people and any
person can get corrupt at anytiime. In such activities where he is not
in a competition of loosing to his competitors, he may get into those
activities more easily than anyone. Further he has a cover of being
social worker which is a good mask for them.

In the Human Values book published by Vivekananda Nidhi, there is a good
sentence for the person to lead.

"Everything exist, because I exist."

Feel this sentence and give a deep thought. You may feel this sentence
as a materialistic view but Value specialists see it otherwise.
Everthing for you is there only when you are there. So you are the core
of it.

Think this .....

"I exist, because everything exist."

You may feel this as an spiritual thought and leading. Giving more
importance to the society. But this is not. This is undermining self
and this shows low confidence in self and dependency on others.

Charity begins at self. When we are enriched with more knowledge, power
and wealth then it will spread to the environment. This is what the
first sentence tells us. We must grow if we really want others to grow.
This is also called leading by example, and leading by example is far
better than leading by teachings and help.

Friends, I strongly believe that noone can win a war by killing the
enemies when the enemies are continuously produced. The best way is to
attack the production base and by helping poor we are showing a human
sympathy but we are showing other people that if they come to that
condition will get our help. This will make him carefree and one day
that man will come and cry for help. People will die and its the rule
of law. We cant stop that. We can give food to a hungry now, but what
about tomorrow. If someother peoson feeds him tomorrow then what about
the next day. He will get hungry everyday.

Now, coming to our main topic of thanking god and saying "oh god" and
all. It is just to show that we are still humans and have the feel in
self that this should not happen, also showing that I cant do anything.
I am busy doing something and hope that will help the world, god please
show them the path to live their life. This is totally logical and
valuatic.

"Charity is an excuse of the people who doesnot dare to think something
big in life. Thinking small is not a weakness, its a social crime. It's
simply passing the present day hardship to the coming generation."

Some Economics with Stefen.

Well this is one of the happiest day. There were many questions in my mind about the economics and I got the answers today. There still remains something to be studied but the stefen's argument has given me a way to look.

I:

Stephen, I found your claims very interesting and it has added a lot in me. I have some doubts here:

1. social cause - in any economy there are some basic requirements, the basic infrastructure like roads, education, health, etc. Do you mean to privatise everything possible? Privatisation may bring efficiency in the organisations but what about the affordability? Do you think no sector of the economy is left out? If a sector is left out and is out of the economy and if he doesnt get any government assistance, will he not turn out to be a social criminal?

2. When the economy is rising like in the developing countries, i think govt needs to invest heavily in infrastructure as per the economic needs while the private investors will invest only in the segments where there is high profitability. By this some of the segments are leftout and this will be the cause of the economic backlash in the future. What do u think on this?

3. Americans are heavy spenders and so it is also the largest market of the world. Many economists say that most of the Asian economies are running only by US consumptions. US has given more power to the private then any other country. It has deregulated the labor market but what about the fiscal deficit? Do you think the way US economy is going is safe enough for others to follow - less govt spending and more private ownerships? How do u see the US economy when many of its pillars are dying .... enron is out, GM and Ford are loosing? How do u analyse this situation?

4. Comparing India and China, China has built its infrastructure more and the govt spending is very high w.r.t the indians and so is the economy. China is growing faster than India, and the only reason is infrastructure as the govt in india is democratic and anyone want to come to India then to China provided they provide equal oppertunity. But the flow is seen the otherwise. The govt spending is strengthening the rural markets of China. comments on this plz.

5. Nepal govt had privatised most of its economy and it is the most capitalist country in the whole of South Asia but this resulted in social unrest, while the semi-socialist govts are slowing rising. dont u think a proper planning is necessary by the govt? One thing most of the countries while developing has been controlling their economy. the better the planning by the govt and more the govt spending the faster a country develop. Japan was most controlled market before opening its economy to the world. They had made huge investments with one of the highest tax rate in the world. Is this claim false??

I have seen by your comments that you follow that " the least governing govt is the best". But is this suatainable?

When a baby is born, if it is exposed to so much competition it will never get food and so will never grow. It needs protection till a certain stage of life when he can compete. So I think a optimal protection necessary for the new entrants in the market. Whats your view?

Stefen:

There are so many issues you raise. Let me try to keep the answer as simple as possible, mostly by referring you to other posts in this forum, e.g. the one on privatization.

The issue is not if investment is private or government, but if competition is legal. I wouldn't mind government as an agency, if it was just one actor among many and of course if government didn't finance its projects with tax revenue, which dissociates the payment from the actual demand and real cost.

Any infrastructure must be financed by the users. If users can't finance it, then who should? If there are "indirect benefits", the active users will charger their own costs (e.g. of road use for transportation of goods) to their customers through prices.
Every single infrastructure, including roads, railways, schools etc, were built privately in Europe and the US before the invention of the modern State, which is a very recent invention.

Things started getting worse, not better, when governments got involved. I highly recommend the book "The Myth of the Robber Barons", Burton W. Folsom, which documents wonderfully how an entirely privately operated railroad outperformed subsidized and then state run companies, to the point where government eliminated the annoying competitor through trumped-up anti-Trust charges.

Imagine that: government was running 80% or more of all the railroad services, but the tiny proportion that was run privately was supposed to "control" the market for railroad services and cause "unfair competition".

As a rule of thumb, any service operated by government costs 2 to 3x more than it would, if the exact same service was run through competitive enterprise. So the question becomes: can any society, especially a poor society, afford to waste so many resources? The answer is obviously NO.

The next question is: would private companies provide those services? The answer is YES. Why would government have to make laws to exclude competition, if no one wanted to compete? If government does not exclude private operators either directly or through excessive legal or financial requirements, then naturally, private companies will try to offer those services, as they expect them to be profitable.

The largest infrastructure project ever, the tunnel between England and France, was built with private resources. That is a very interesting example, as it turned out that there wasn’t really that much demand for it. The ferry services were quite good, though overpriced. What happened right away was that the new competition lowered the price of ferry tickets. Investors lost a lot of money, but the project was simply taken over by new investors, who were now operating at a lower cost. The initial investors had lost most of their capital, but that was their risk.
No one ever said that every infrastructure project is really useful and will be profitable. It is the risk of entrepreneurs to find profitable investments. Non-profitable ones represent a waste of resources and should be discontinued, if their cost cannot be lowered. Governments will finance such loosing projects at excessive cost way longer than any private business would.

Given that government operating costs are so much higher, they will even loose money on potentially profitable infrastructure, which is one of the many defects of loosing information via government interventionism and tax financing.

I don’t know enough about the situation in Nepal, except that government is very strong and cronyism is widespread. Hence I imagine that “privatization” really meant tax farming privileges handed over to people who are in favor with government. Tax farming is what brought on the French revolution. It has nothing to do with competitive enterprise.

As for China, what really drives their economic growth is the fact that they finally allowed people to keep most of the benefits of their private activity. It has nothing to do with government infrastructure, which would be built one way or another. As I understand, there is even a lot of excess infrastructure and useless, glamorous projects, instead of things that people would really need.

Extremely rapid growth is possible for countries that start low. They just need to copy what is already well known from elsewhere. When they approach the state of the art, growth will naturally slow down. The amazing thing is not that some countries grow rapidly, but that many others grow very slowly or not at all, which just demonstrates how many obstacles they must impose on all economic activities. They must use FORCE to stop people from acting in their own interest to remain so poor.

The most amazing thing is that people from more wealthy countries are lining up to invest in such poor countries, something that was entirely unavailable for people in Europe or the USA in the 19th century, because there were no foreign countries with great wealth and technology. They had no choice but to do it all by themselves. So what gives? The fact that there is very little protection for private property in poor countries, that political whims may change rapidly, that corruption is universal and finally, absurd nationalistic opposition.

Nationalism is particularly stupid. Think of Argentina: while some British companies were operating the Argentinean railroads, they ran perfectly well. But then, some idiot decided that they should be “nationalized” (he stole private property for his own benefit, garnering public support for the theft through emotional appeal). As a result, within a few years, those railroads stopped working. WHO owns a company is entirely unimportant to the consumer. The only thing that counts is that he can purchase some useful service at a low price.

India still has many roadblocks for foreign investment and so does China. The successes of China are currently so visible that the shortcomings are not given much thought, but they are quite real. If China grows faster than India, it simply means that India still has more bureaucratic hurdles, more corruption and less protection for private property.

The same is true for western countries: their comparative wealth is so great that they are assumed to have done everything right, when in fact they are far below the possible level of wealth they could have if they had not given in to Keynes and Socialism. Their wealth only seems great as compared to countries that really, really screwed up their economies.

The US are an incredible mix of a very free society with a very large and heavy government. The spirit in America is one of free enterprise and individual achievement, which is what creates all the very real wealth, while the government is often totally out of control. Fortunately, the total share of government in the US GDP is only about 29%, which goes a long way to explain their prosperity. More than the nature of any interventionism, it is the absolute share of GDP that is really important. In France, it is 65%, which explains why they have so many problems.

US spending is not the cause of US growth and their contribution to the world economy. Far more important is their very real productivity. Why should anyone want to sell to the US if they don’t expect to get anything in return? You don’t produce just for the benefit of US consumers, right?

Americans have a special trump: they benefited largely from the fact that a lot of foreigners are happy to hold US currency. Given the instability of most national currencies, the USD is still far more convenient. So Americans are able to buy tons of real goods in exchange for some pieces of paper, because these pieces of paper are of real value to their customers. Currency DOES have a value, if it is stable. The dollar is not, but it is still far more stable than most other currencies. The US supply a service to other people in the form of a universal currency system and they get a lot of consumer goods in exchange. Fair trade.

When some stupid Marxists propose to burn US dollar notes, I always wonder just how stupid they are: that is the greatest service they can render to Americans. If currency is burned, they will never have to deliver any good in exchange for it.

Even if foreigners did demand goods in exchange for their dollars, there wouldn’t be any shortage: the total wealth in the US in the form of land, buildings, companies and available services is immense, so people who sell to Americans do act rationally. The “trade deficit” is not a problem at all. We all run trade deficits. I for one buy a lot more from supermarkets than they buy from me, but that doesn’t bother either of us, because I earn income from other sources with which I am able to pay the supermarket.

“When a baby is born, if it is exposed to so much competition it will never get food and so will never grow.”

It is not really the baby that is competing, it’s his parents. And competition is exactly what allows the parents to buy food, health care and everything else cheaply. It is the lack of competition that produces poverty. Countries where children die of hunger know almost no competition at all. They do not participate in global trade. If they did, they wouldn’t be so poor. The more “protected” a country’s economy is, the poorer it is. Switzerland has almost no protectionism, except for agriculture. The only sector of the Swiss economy that is a complete failure is agriculture.

It’s amazing to see that when the market for cheese was finally deprived of protection and subsidies, it soared and started exporting like crazy. The producers simply didn’t have any alternative and so they started marketing their product, specialized in products where they had an edge and oh, surprise, they became profitable.

“ It needs protection till a certain stage of life when he can compete.”

A very bad analogy: companies are not children. A company is run by adult people who need to make rational decisions. Size is never a problem: small companies can be far more profitable than large ones.

“So I think a optimal protection necessary for the new entrants in the market”

The current justice minister of Switzerland, Christoph Blocher, is an entrepreneur. He got into politics as an act of self-defense against the increasing pressure on private business. He started his activity by taking over a tiny chemical company that was on the verge of bankruptcy. At great personal risk, he bought it and built it into one of the largest Swiss companies, with factories all over the EU and China. He went from zero wealth to 2 billion CHF.

His opinion on “protecting” small firms? “Any company that is not able to survive on its own should fail! There never should be any form of government protection or subsidies.” It is hard to survive when you run a small company, but its independent success is the only way to know if it is viable.


....................Thanks a lot Stefen. (Stefen is a Independent software from Switzerland, educating people on Economics is his hobby).

Formation of South Asian Union

Praveen:
South Asian/SAARC Union 6/7/2005 10:04 AM
We all know, not so long ago the entire South Asian region was the Indian sub-continent or what some call United India! History has changed all that and we have borders separating each of the countries in the region. Yet, nothing can change the fact that the countries in the region have many similarities and share a common ancient civilization.

Now, I know some of you might call me a dreamer for raising this topic since we have differences like territorial disputes, terrorism, insurgency, naxalism etc.

But, why not? If Europe with a much larger area and more countries with differences and facing many setbacks(like the recent referendum) can still keep its focus on the ultimate goal of a united europe, why not this region?

Why can't we have soft borders, free trade area, relaxed visa regime, open societies, common financial system and currency, shared goals at international forums like UN? All this should co-exist with an individual's national pride vis-a-vis his/her country in the region.

It's only then we will be able to foster communal harmony and be economically prosperous. It's only then the world will respect us. The potential for this region is tremendous because the talent and manpower in the region is unmatched compared to the rest of the world. The world won't see the real South Asia/SAARC until we get our house in order.

Let us all help the South Asian/SAARC region in returning to its glorious past of becoming a world leader again in all walks of life!

I:
yeh praveen u have rightly pointed out 6/7/2005 9:34 PM
i agree with praveen in all his points. SAARC has to come forward with the economic and defence integration if it wants to get a respectable position in the world economy or politics. india, the largest member may not also enjoy much power going unilaterally. the present growth has made india very optimistic but it should not be forgotten that Germany, France, Britain, Japan etc are not anything if seen singally .... their power is in collaboration and unity among their group menbers.
Free trade among the SAARC contries is a most now and for that india must take lead giving many benefits for other smaller nations as it is going to be the largest benefitter in the long run. Other countries must see what they are gaining nad must not cry for th larger benefit that india is getting. Lets build a prosperious and developed SAUTH ASIAN UNION.

Vishal:
Hi praveen and friends

This is really a valid point that has been brought up. Our governments needs to work in this regard.

But I have a serious reservation. While it is necessary that India should help other SAARC counties, India should not be taken for granted. Things like terrorism, infiltration and the recent attacks on BSF soldiers by BDR should not be allowed to go unchecked. It is necessary that other nations see India as a friend and not as a dumb person who will take whatever is thrown at it. We need to promote our interests first and then that of the subcontinent. We can only think of a united sub-continent if countries like Pakistan and Bangladesh give up their hatred and age-old grudges. You need two hands to clap. SAARC can become G-8 only if all the member countries are untied and share a common interest. We want more than words.

I:
India must lead 6/11/2005 2:48 AM
you are very true vishal that india has lots of challenges from pakistan and bangaladesh which these need to check to make good union but it must not be forgotten that even in nepal, bhutan and sri lanka there is sufficient anti-indian sentiment in the public. this is because of the short-sighted policy of the indian government and over-involvement policy it is adopting.

for any country to evolve it must take "pig policy" ... and this is the only way to become a superpower. china never involves in the internal matter of any sovereign countries for which it gets good public support. the situation is recently fely in nepal. the kings move is condemned by india and is taken as internal matter by china. by condemning india might have made good impression in the eyes of the global democrats and the nepalese politicians but the public and the intellectual circle of nepal dont welcome the indian step.
THESE MATTERS DONT MATTER MUCH IF THE POLITICAL WILL OF THE SEVEN MEMBERS COME TOGETHER. IF FRANCE AND GERMANY, PORTUGAL AND BRITAIN, CAN COME TOGETHER THEN WHY NOT INDIA AND PAKISTAN.
with other countries other than pakistan there was never any problem. the only problem is the growing muslim extrimism in bangaladesh and hindu extremism in india. most of the problems here are not solved because the top order never wanted it to be solved.
The political will must come and india must lead.

Praveen:
I knew one of my Indian friends would mention these issues... anyway, other nations in the region must take into account India's concerns my friend pointed out here.

Please take back your comment vis-a-vis China after what they did in Tibet, the threats they give to Taiwan regularly, occupying north eastern areas of Kashmir from India and lastly, their hidden but long-term goal of de-stabilizing the north-eastern areas of India.

As for extremism, it should be condemned. Islamic extremism has affected just about every part of the region and the world and has been justified on the grounds that it is in the name of religion, which is totally baseless. Nothing can justify killing innocent civilians.

Hindu extremism in whatever form it exists in India is mainly against the so-called Jehadis and the Evangelist forces. They have been grossly misunderstood by the public and have been demonised by the pseudo-secular forces saying they are anti-minority, which I think is going a bit too far. However, they also need to reform in certain areas. Anyway, I don't think they will create a problem because organisations like RSS believe in Akhand Bharat... which is stretching a bit as unifying entire South Asia as one country is no longer possible, but a South Asian Union which is very close to this is possible, if people shed away old mindsets and address the problems and concerns of each country in the region.

I:
yes praveen u are right. u have rightly pointed out about the matters of extremism. in reality i also think that what u said is correct but one thing, is RSS really good for india and its cause is justified. i dont agree, we are hindus so we think from our side and it looks pretty good but any group that is not fair to all and is lead by some religious belief is not good for the country, they are the causes of social violence; RSS may be doing good by balancing the muslim extremism and the christian invasion but that maynot be justified fully.

there is a interesting experience i had while in college. one of my friend from Maharastra and i were going through the news once. there was a news that BBC is banned in nepal followed by the students protests regarding a panel discussion topic in BBC ....... should india and nepal be unified in the basis of cultural similarity.
he said to me, "if u look at the base of everything dont u think that nepal must be a part of india. more than the gorkha population in nepal, there are gorkhas in india and we share many things in common which makes sense of making a unified territory."
i said, " ok, then lets annex india to nepal. india will be a part of nepal and u will be then nepali."
he didnt like this statement and said, " ha ha what rubbish are u talking, india to come inside nepal??" ...

praveen if u look at joining the territories the result is same ... whether nepal annex with india or india annex with nepal, but our national sentiments dont allow that. country is made up of peoples and not of territories, and our goal must be development of societies not territories but this is hardly felt.

while there can be no loosing of sovereignity so building Akhand Bharat will not be digestable to anyone other than the indians. practical thoughts must come form everyone.

Praveen:
My friend, I don't support each and every thing RSS does. In my earlier post I had mentioned that there are some areas where they need to reform as well. I still maintain the view that they have been unfairly demonised by pseudo-secular parties, politicians and the media ever since Independence.

People forget the fact that they have done lots of social work especially in rural areas, they have done so much during natural disasters. For example, after the recent tsunami, they went and provided relief to everyone in Tamil Nadu, Kerala etc without even looking at whether a person is hindu, muslim, christian etc. But the evangelist forces were busy asking people to be converted to christianity in order to be provided relief. Where were the so-called Islamic extremists then? Parties like Congress allow the Muslim league to get away with burning of Indian flag in public when it is a punishable act by Indian Constitution.

About Akhand Bharat, I already mentioned in the first and previous post that it's stretching a bit as most countries in the region have now become separate nations for some time and so, re-unification into one indian nation is impossible... but, south asian union is possible and needed in the long run.

I:
i admit it.

now lets dicuss on what we can do to have a good unified economic block.

Praveen:
Yes, it's about time... we were shifting a bit from the topic of discussion.

Most important thing in a unified economic block is political will and stability in the region. The previously elected NDA govt in India first suggested this and I think the current govt and all future govts in India will have this agenda whenever annual SAARC conferences are held. So, in terms of the political will, ball is in all other nations' court.

I agree some of the least developed nations in the region will be fearing an onslaught of Indian products in the market... it's the same fear Pakistan has too. For all this, I ask all of 'em to follow the India-Sri Lanka example. Sri Lanka and India had strained relations not so long ago, but look at the situation now... bilateral trade is booming, many Indian companies are present there and employment scenario has improved. With mutual economic linkages, all the issues and concerns will be addressed with pragmatism by nations in the region because there will be something to lose for the nations involved.

Pakistan should stop the attitude of Kashmir first, trade later. They don't know it's hurting 'em in the long run. They can get cheaper goods from India... instead, they chose to pay the extra buck by getting it from western nations for keeping their so-called pride of not buying anything from an enemy as some of their officials point out.

I suggest all the nations in the region to take bolder steps and develop a vision for a more prosperous and stable South Asia. India has already agreed to take into account concerns of some of the least developed nations by giving them more time and a level playing field when entering into the free trade agreement. They also have to take into account India's concerns as pointed out earlier.

As for Nepal, now the King should stay to get rid of the Maoist insurgency. But, in the long run... democracy(open society) has to be there not only in Nepal but in all other countries in the region.

I:
Nepal has a problem 6/13/2005 5:37 AM
Along with having free trade with the SAARC countries Nepal must have free trade with China too else it wont have an advantage in increasing its foreign investments. being in the centre india will get most of it. for Nepal without free trade with China the economy will be only one sided and this wont be good in the long run.

India has made its economic movement multilateral by doing bilateral FTA's with Singapore, Thailand and talks are going to have with Australlia. india also has preferential agreements with many other countries including Iran, Afganistan, japan and others. In this context SAFTA will give a good advantage for the indian companies to grow and compete with MNCs and also india will attract more FDIs from foreign firms looking the whole SAARC markets.

India has been seen openly against bilateral FTA between nepal and china fearing the invasion of chinese goods in india. I think india has to allow the smaller neighbors to grow and not only support development in words and just interfare in their internal matters.

Praveen:
/14/2005 8:26 PM
You have a valid point there regarding multilateralism. India's cultural linkages with Nepal are much more than any other nation in the SAARC. I agree that it still doesn't justify the interference into internal matters. The present Indian foreign minister despite all his experience is making a lot of mistakes, with Nepal being the biggest of 'em all.

I think Chinese investment must be promoted by India and I think it will, as relations between India and China continue to improve. About bilateral trade like FTA and all, it is a different thing altogether. After the USA-China trade deficit, the entire world wants to see the end of the artificial pegging of yuan in order to stop the unfair upsurge of Chinese exports.

I suggest Nepal only does a PTA with China for the time being like India or else the situation will be worse than USA-China. India doing a PTA with China has benefitted and has a decent trade surplus with China thanks especially to the huge Chinese steel imports from India. So, I am all for Chinese investment in Nepal, but be a bit cautious while dealing with a bilateral trade agreement.

Ultimately though, if investment, whether Indian or Chinese, has to come into Nepal, the insurgency has to reduce and a stable government has to be present at the centre.

I:
i salute u pravin ... i was waiting for ur reply for long.

SAARC doesnot have just the Kashmir problem and the trade problems.

Regarding Bhutanese refugee problem also there are some misunderstandings. almost all the bhutanese refugees and the nepalese believe that the whole crises of ethnic cleansening in bhutan has been done with the indian help. most of the nepalese speaking people driven away from bhutan have gone to nepal via the indian soil as there is no direct land link between bhutan and nepal. I have also heard that the trucks were provided by the Assam and the Bengal govt for carrying the people. but when it comes to the solution india has always commented this issue as the bilateral issue inspite of its involvement time and again in making it complex. Everybody has clear view that india has to play the last ball to solve the problem but in order to please the bhutanese monarchy india has always been away. the largest democracy of the world has been helping Srilanka and Bhutan for ethnic cleasing. This is a black mark india is having and the issue cannot be neglected but it has to be rectified.

(to be contd.)