Saturday, December 31, 2011

The Shiva Rules: Is growth enough?

India's economic boom has widened the gap between rich and poor – and now it's slowing down.

By Jason Overdorf
GlobalPost (December 31, 2011)

Editor's Note: The Shiva Rules is a year-long GlobalPost series that examines India in the 21st century. Correspondents Jason Overdorf and Hanna Ingber 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 — For the past two decades, policymakers have been banking on rapid economic growth to lift millions of Indians out of poverty.

But even as the boom has made it easier for the country's poorest people to afford refrigerators, televisions and mobile phones, the spending power of the rich has grown many times faster.

Now, the widening gulf between those at the top and those at the bottom is steadily increasing the pressure on the many fissures in this highly fractured society — and a looming slowdown could hit the poor harder than anybody.

“We have to see this in the context of a country that already bears a huge burden of stratification, but also caste and gender and all these things compounding each other,” said development economist Jean Dreze, who played a key role in designing and implementing India's largest social welfare scheme.

“The fact that there's a new, rising dimension of inequality, that is income inequality, reinforces something that's already a big issue for Indian society and the Indian economy,” Dreze said.

Despite boasting the world's second-fastest economic growth, India has made little progress in eradicating poverty since it began liberalizing its economy in 1991, according to a new study by the Organization for Economic Cooperation and Development (OECD). Instead, the gap between the incomes of the rich and poor has doubled, so the top 10 percent of workers now earn 12 times the amount earned by the bottom 10 percent — while 42 percent of the country's 1.21 billion people survive on less than a dollar a day.

Consider 36-year-old Indu Devi. Only semi-employed, she works from home sewing dupattas — the scarf-like complement to a woman's salwar kameez, or loose pajama-like trousers — for a local factory.

In a good month, she earns $30; in a bad one, only $10. In the past 10 years, she's acquired luxuries like a television and a mobile phone — partly because she “owns” her tiny room in an illegal structure in one of New Delhi's many “unauthorized colonies.”

Devi shares a space the size of an American bathroom with a man and four children. There's no bathroom or sink. Water comes from a hand pump outside, shared with the neighborhood. The stove is a burner attached to a gas cylinder, and everything the family owns is hanging from half-a-dozen hooks on the wall: two sets of clothes for the adults, one to wash and one to wear; four sets for the kids, along with their school uniforms.

Her thoughts about India's economic boom?

“Sometimes I feel frustrated, as I can cannot meet the demands of my kids all the time."

Nobody will be surprised to hear that India's new wealth has been slow to trickle down. But as debate rages over government programs designed to provide more equal opportunities to the poor — or simply to ease their suffering — the bald facts beg the question: Is growth enough?

Many economists point out that an increase in inequality is inevitable with rapid economic growth — though the OECD found this was not the case for Argentina, Brazil or Indonesia over the past decade or so. In those three countries, the economists found, income growth of the bottom and middle groups outpaced that of the highest earners. And at least in Brazil — where inequality remains much higher than in India in absolute terms — higher taxes and a new focus on social programs seems to have been a factor in making the difference.

Some argue, as well, that rising inequality is not an evil in itself, so long as life also improves for the country's poor. The real problem is absolute, not relative poverty, they say. And the best way to address that is to make the pie larger, not to change the way you slice it up — especially where government programs are hampered by corruption and inefficiency.

“This is inequality in outcomes, either in terms of consumption expenditure or in terms of income,” said economist Bibek Debroy, a professor at the New Delhi-based Center for Policy Research.

“If you are talking about inequality in terms of access to health services, education, financial products, technology, the law and order system, then I'm prepared to buy the argument that we should be concerned. But that's not what this inequality is about.”

It's not that the benefits of economic growth don't trickle down at all. Debroy believes, for instance, that the biggest reason for the increase in inequality is geography, not class or caste.

While the trickle has missed some parts of India altogether, he would argue, poor people like Indu Devi have seen marked improvements in their lives over the past 20 years. The trouble is that rapid growth and runaway consumption by the burgeoning middle class has simultaneously increased the aspirations of the poor and driven up prices.

“If I perceive that inequality is increasing, but I also perceive that over a period of time the prospects of my standard of living improving are getting enhanced, then I think I'm less concerned about inequality,” said Debroy. “But if I perceive that inequality is increasing, but my standard of living is not improving, then I tend to be more concerned.”

Right or wrong, many of those at the bottom see the glass as half empty.

Despite a shortage of skilled labor, for instance, 25-year-old machinist Rajesh Kumar, who lives a few houses away from Devi, earns only about $150 a month. Based on India's erstwhile economic forecasts, he should be poised for great changes. Yet he's pessimistic about his prospects.

"Even if the number of companies are rising, unemployment is also on the rise,” Kumar said. "If the country progresses, the poor will only become poorer, as things will get more expensive. We can never progress."

Now, India's booming economy is slowing down, perhaps dramatically.

With inflation hovering around 10 percent, the central bank has raised interest rates 13 times since March 2010. But today India Inc. faces a drop in foreign investment and skyrocketing fuel costs resulting from a 20 percent plunge in the value of the rupee.

As a result, a manufacturing sector that had only just begun to take off is gearing down — as signaled by a 5 percent drop in industrial output for October, the last month for which data is available. And, at least in private, investors and entrepreneurs are beginning to think the unthinkable: That GDP growth might just dip below 6 percent.

Inequality problem solved, you might be tempted to say. But it looks like the poor will likely bear the brunt of the slowdown, too. They lack savings to carry them through bad times, of course, and they fight for work where competition is the toughest.

But the downturn has also resulted in new criticism for the current government's social welfare programs, such as a planned expansion of the distribution of subsidized grain to cover two-thirds of the population.

“If I am able-bodied and in the working age group, I am not voluntarily poor,” said Debroy. “I am poor because I don't have access to the roads, I don't have access to health [care], I don't have access to education. So the right public policy intervention to me is the provision of those goods and services.”

In terms of access, too, however, the vast gulf between India's rich and poor appears to be acting as a multiplier, worsening the country's long-standing problems while preventing action from being taken against them.

The rapid growth of high-quality, private hospitals in India's cities means that the most vocal and influential citizens no longer complain about public facilities. All but the poorest Indians have abandoned the government's free schools, even as the current administration strives to make education a basic right.

And though wealthy and middle-class Indians carp about “leakages” in the welfare system that distributes subsidized grain to the destitute, they do so primarily to argue against spending increases, without taking much interest in fixing the problem — even amid Anna Hazare's anti-corruption fervor.

This vast difference in perspective, incidentally, may also explain why none of the many Indian papers that reported on the OECD study mentioned its conclusion about the main reason for the dramatic increase in income inequality over the past 20 years: A widening gap between the regular, salaried workers protected by the country's labor laws and the so-called “contract workers” outside the system.

So, too, that difference in outlook may explain the silence on the OECD's recommended course of action: more flexible labor policies and higher spending on education and social welfare — funded by progressive taxes.

“There's a pervasive problem in public policy of lack of attention to the underprivileged and insensitivity to their needs, which is not necessarily out of hostility to them,” said Dreze. “It's just that the people who run the show don't relate very closely to these people.”

The result of India's gross inequity, therefore, is a vicious cycle. India spends less on social programs than the world's other large emerging economies, according to the OECD study.

Brazil and Russia spend nearly three-fourths as much on social programs, as a percentage of GDP, as OECD member countries like the Netherlands, Spain and the United Kingdom, for instance. India spends only a fourth as much as the OECD average.

The biggest reason for the discrepancy is that it has virtually no safety net for the aged or unemployed, apart from the recently created National Rural Employment Guarantee Scheme, a program that is often criticized locally as expensive and corrupt, and yet one that the OECD recommends expanding.

“It could go either way. Depending on the politics, you could see India moving toward more extensive welfare provisions and reconstructing the health-care system,” said Dreze.

“You could also see the schooling system being privatized. There's a huge lobby of insurance companies that would like to see the health-care system go in the direction of health insurance. Nothing can be taken for granted.”

Wednesday, December 28, 2011

Analysis: India's anti-corruption crusade far from over

India's anti-corruption bill passed the lower house, but exposes the limitations of street protest politics.

By Jason Overdorf
GlobalPost (December 28, 2011)

NEW DELHI, India — The Indian government pushed a bill designed to fight corruption through the lower house of the parliament late Tuesday, in a move that has exposed the limitations of street-protest politics.

Demonstrators can demand that a law be passed and vow to vote out politicians who oppose it. But they still cannot draft bills themselves.

The government's so-called Lokpal and Lokayuktas Bill would set up a powerful ombudsman to investigate and prosecute government officials for corruption, as the anti-corruption movement led by social activist Anna Hazare has been demanding since he first lauched a hunger strike this summer.

But the proposed law does not allow the ombudsman to initiate investigations independent of a complaint. It does not put low-level officers of the bureaucracy under the ombudsman's direct supervision, and it does not grant the office control over the Central Bureau of Investigation, India's chief law enforcement agency, or allow it to constitute its own investigation wing.

Moreover, the law gives the ruling government significant control over the selection of the members of the ombudsman's office.

All these supposed shortcomings — which Hazare's team has called “non-negotiable” — have prompted the activist to embark on yet another a hunger strike, this one three days long, in protest. And he has called on his supporters to force police to arrest them through mass acts of civil disobedience, beginning Jan. 1.

Team Hazare is hoping for a repeat of the massive, nationwide agitation that shook India's politicians out of complacency this August. At that time, tens of thousands of protesters — disgusted by corruption scandals surrounding the Commonwealth Games and the distribution of 2G telecom spectrum licenses — took to the streets in support of the activist's hunger strike.

But at least some experts argue that the government's anti-corruption law could have a salutary effect.

“We have to see how it plays out,” said M.R. Madhavan, a researcher at PRS Legislative Research. “A lot of it will depend on the personalities involved in the first few years. Many institutions at the end of the day are shaped by the people running them.”

“The Election Commission had largely been a somnolent body which was basically going through the motions of holding elections,” said Sumit Ganguly, a professor of political science at Indiana University.

“But under a man called T.N. Seshan in the late 1980s, early 1990s it became a much more formidable body, and a body that decided to take the statutory powers it possessed and genuinely implement them to make elections fair, open, honest and transparent.”

The niceties of the law notwithstanding, the Lokpal could accomplish the same transformation.

“I genuinely think that if you get a group of individuals in the Lokpal who are serious about this endeavor ... the Lokpal could become a similar institution,” Ganguly said, citing similar successes achieved by the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI).

“A number of institutions in India do work, and do carry out the tasks they're expected to perform,” he said.

Before its proposal becomes a law, Prime Minister Manmohan Singh's United Progressive Alliance (UPA) government will also need to get the Lokpal bill through the upper house of the parliament — where the coalition does not have a majority. Debate is underway there as this article goes to press, but there are only several possible outcomes.

With the tacit support of two opposition parties that abstained from voting in the lower house, the bill could go through unchanged. It might be amended and returned to the lower house for reconsideration. It might be voted down, then later approved by a vote by the combined houses. Or it might be rejected and put off indefinitely, like a bill to set up a quota for women in the legislature that has theoretically been pending since it was passed by the upper house in March 2010.

Whether its Lokpal bill works or not, however, the government's success in pushing it through the lower house — where Singh's UPA enjoys a slim majority — has stolen much of Hazare's thunder.

It's easy to mobilize people who are angry because nothing is being done about all-pervasive corruption. It's far more difficult to rally the masses around a difference of opinion about the finer points of a piece of legislation — just imagine if the Occupy Wall Street movement hinged on the nuances of banking reforms.

Perhaps that's why, according to some estimates, only around 4,000 people showed up for the hunger striker's Mumbai demonstration Tuesday — compared with a daily turnout of 30,000 to 40,000 people in Delhi this summer.

But confusion and protest fatigue aren't Team Hazare's only problems.

At the beginning of the anti-corruption movement, Hazare succeeded in mobilizing people against an amorphous lot of dirty politicians he portrayed as opposing the Lokpal bill. Now, his team is attempting to shift that anger onto the government and, more particularly, the Congress party — announcing that he will campaign against the Congress during state elections in Uttar Pradesh this February.

Hazare and company maintain that the anti-corruption movement can no longer stand outside and above electoral politics. But now that Hazare has joined the fray, what will he argue? And, more importantly, who will he campaign for?

Even if the Congress-led UPA has failed to meet all Team Hazare's demands for the Lokpal bill, it can hardly be said that the Congress has taken no action against corruption — though belatedly, perhaps.

Along with its version of the ombudsman law, the government on Tuesday pushed through the lower house a law to protect whistleblowers and on Wednesday it also introduced a judicial accountability bill designed to set up a credible mechanism for investigating corruption complaints against judges.

Moreover, only some of Team Hazare's objections to the Lokpal bill, such as the decision not to grant it control over the Central Bureau of Investigation can be traced to the Congress. Other dilutions, such as the rejection of a proposed amendment to grant the Lokpal constitutional authority and a decision not to compel the individual states to create their own anti-corruption watchdogs, were concessions to the opposition Bharatiya Janata Party and Singh's allies in the Dravida Munnetra Kazhagam and Trinamool Congress.

And both of the Congress party's main rivals in Uttar Pradesh — the caste-affiliated Samajwadi Party and Bahujan Samaj Party — abstained from voting on the Lokpal bill at all.

Two things are certain. The war against corruption is far from over. And street protests will have limited usefulness in the next stage of the battle.

“At the end of the day you cannot get at something as nuanced as this with a few hundred people screaming,” said Madhavan. “The nuances have to be discussed in a civilized place, with people listening to each other. It doesn't always happen, but in some sense, parliament is supposed to do that.”

Friday, December 09, 2011

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.

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.

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.”

Tuesday, December 06, 2011

India: The end of Manmohanomics?

Singh's legacy could depend on drawing a line in the sand on economic reforms.

By Jason Overdorf
GlobalPost (December 6, 2011)

NEW DELHI, India — Earlier this month, India's beleaguered prime minister drew a line in the sand. This weekend, he erased it. His legacy could well be determined by what happens next.

Here's what's on the scoreboard:

With his government seemingly paralyzed by corruption allegations, Prime Minister Manmohan Singh tried to set the stage for a bold winter season, betting that the country's future depends on the government's ability to push through economic reforms. But now it looks as though he will have to backtrack on his first big ticket play since the 2008 nuclear pact with the United States, putting a plan to open up the retail sector to foreign direct investment (FDI) in a deep freeze.

That could be a big blow for the country, according to India Inc.

“The next stage of our growth cannot take place without a huge influx of capital from across the globe,” said Vijayan Krishnmurthy, who headed JP Morgan Asset Management in India before moving to social investment firm Mi-India. But that capital won't come if it looks like India is regressing to the policies of 1962, he said.

With that same line of thinking, earlier this month, Singh moved to raise the cap on FDI in multi-brand retail stores like Walmart to 51 percent and to allow wholly owned single-brand stores like Ikea or Reebok — which proponents say will both create jobs and lower prices.

But to block the new FDI policy, legislators from the Opposition Bharatiya Janata Party and Singh's United Progressive Alliance (UPA) partners from the Dravida Munnetra Kazhagam (DMK) and Trinamool Congress prevented the parliament from conducting any business through the first week of the month-long session. And now it appears that Singh will admit defeat.

An official announcement from the government is expected Wednesday. But Trinamool Congress leader Mamata Banerjee already told reporters over the weekend that Singh had agreed to suspend the issue “until a consensus is evolved.”

And Finance Minister Pranab Mukherjee reportedly told the leadership of the BJP on Monday that the policy has been put on hold, only to have it thrown back at him that the Opposition will accept nothing less than a full reversal.

That's the score. Now, for the sake of establishing his legacy in what will doubtless be his last term, Singh needs to hit a buzzer beater.

Entering his second term with a near majority, Singh raised high hopes among Indian business leaders that “Manmohanomics” — combining economic liberalization with social welfare spending for the poor — would set the stage for the decade or so of 10 percent economic growth the country needs to pull its people out of poverty. But corruption scandals have prevented his government from making any significant progress, at least on the liberalization part of the formula.

Desperate, on Nov. 22 Singh pleaded with his political rivals to ignore the smell of blood in the water at the beginning of the winter session of parliament. Investor sentiment was plunging, economic growth was slowing and, just like the European Union, India could “also go down” if gridlock continued, he warned.

Indeed, a lot more than the future of Walmart is at stake.

India's economic growth dropped to 6.9 percent for the quarter that ended in September, marking its lowest clip in two years, and there was virtually no growth in FDI. Manufacturing projects have been stalled by land acquisition problems and environmental concerns. Infrastructure projects have been delayed by government sloth. And India continues to rank poorly in international surveys like the World Bank's Ease of Doing Business Report — where it comes in at 132 out of 183 countries ranging from Singapore to Chad.

“Investor sentiment is low. There's no doubt about it,” said Dharmakirti Joshi, chief economist at Crisil, the Indian arm of Standard & Poors. “If you take macroeconomic scenario outside India and in India, there's hardly any good news”

Meanwhile, several more key reforms are slated for the docket before the session ends.

In addition to opening up the retail sector, Singh reportedly hopes to push through reforms in India's laws governing land acquisition and the mining sector, for example.

Both issues are at least as contentious as FDI in retail. A bloody battle in 2007 over the acquisition of land effectively ended the 30-year reign of the Communist Party of India (Marxist) in West Bengal last term. And rapacious mining practices lie at the root of the Maoist rebellion simmering in the jungles of central and eastern India. Yet India's industrialization cannot proceed without land for factories or the iron and coal needed to build and fuel them.

“[These issues] are actually becoming binding on growth now,” said Joshi. “The mining issue needs to be sorted out, or it will lead to constraints for the steel sector and power sector. Then you need land acquisition issues to be made more transparent and accountable.”

Before the retail FDI debacle, the word was that Singh would also push forward on reforms ranging from allowing foreign investment in India's airlines and pension funds, as well. But at present, all the signs seem pointed in the wrong direction.

Political analysts say Singh and his colleagues miscalculated foolishly in introducing the FDI measure without first selling the policy to the broader Congress Party and negotiating for the support of its allies in the UPA. So some opposition emerged simply out of resentment of perceived unilateralism. And the subsequent climbdown only confirmed that Singh and company had blundered forward with the move without first playing out all the possible contingencies.

Whether it's good for the country or not, that doesn't augur well for Singh's economic agenda. And it leaves his opponents with the upper hand.

“They feel that if they paralyze the government and paralyze parliament, they will gain,” said a political analyst who asked not to be named. “Congress needs to confront them. But they're not willing to do that. For that, you have to be confident in yourself.”

Monday, December 05, 2011

India: an army of ethical hackers

For the coming cyber war, an army of geeks offers India its services.

By Jason Overdorf
GlobalPost (December 5, 2011)

NEW DELHI, India — To paraphrase an old saw: It takes a geek to catch a geek. That's the logic behind a new Indian response to the growing threat of cyber war, anyway.

Indian authorities were stunned by the impact of the Stuxnet virus on Iran's nuclear facility at Natanz last year. Now, in the wake of repeated assaults on Indian company and government web sites, an organization of self-professed "white hat" hackers is recruiting its own army.

“If you see the statistics, less than 15 percent of Indians use the internet, but we are already No. 1 when it comes to virus infections and we are No. 2 in cyber crimes,” said Rajshekhar Murthy, an Indian hacker and entrepreneur.

Last month, at Malcon — the malware conference Murthy founded in 2010 — the security expert's nonprofit Information Security and Analysis Center (ISAC) unveiled plans to create a national registry of hackers with the training to protect the country's critical electronic infrastructure.

Called the National Security Database (NSD), the body will accredit and train hackers who pass an exam that will cost about $500 a whack.

“The NSD is a project to address the broader need, not just to identify the best security professionals in India,” said Murthy. The idea is to identify “where these professionals can assist the country not only in solving cyber crimes but in addressing policy issues and assisting in reforms to create better governance of IT security across critical infrastructure projects.”

Not a moment too soon, either.

“As the government is trying to spread its reach through financial inclusion and e-governance projects, it's crucial that we are able to handle cyber crime,” said Murthy.

At a curtain raiser for next year's Global Cyber Security Summit in New Delhi, Information Technology Minister Kapil Sibal called for just such a community of ethical hackers last week.

And for good reason. Already, a drive to eliminate corruption and increase efficiency through e-governance had made many government services vulnerable to attack, and Sibal aims to introduce a bill in parliament this session mandating that all government services be automated.

"To combat cyber crimes and make the cyberspace secure, there is a need for greater government-to-government collaboration on sharing of information, global vision to deal with hackers, legal framework that addresses the requirements at the global, and wider public-private collaboration," Sibal told reporters last month.

Last year, state-owned ONGC found some of its oil rigs had been infected by Stuxnet — and only narrowly escaped catastrophe because they operate on ABB, not Siemens, systems, according to a recent report in India's Tehelka magazine. Similar virus problems were detected at a power generation facility in Gujarat and a communications satellite providing the feed to state-owned Doordarshan television and several DTH broadcasters.

And researchers from the Munk School of Global Affairs at the University of Toronto claimed in 2010 that Chinese hackers had cracked Indian government computers to dig out sensitive information related to defence, foreign affairs and the Dalai Lama, according to another report.

But can a team of rogue operators compete with state-sponsored cyber espionage?

When Stuxnet hit Iran, experts immediately fingered Mossad and the CIA because the man-hours needed to create the complex worm more or less guaranteed it was a state-sponsored project. And one of the biggest failures of India's intelligence agencies is that they rarely listen to each other — much less to outsiders who literally speak in code.

Friday, December 02, 2011

India and China: Commence "cold peace"

China says muzzle the Dalai Lama. India says no. China calls off talks.

By Jason Overdorf
GlobalPost (December 2, 2011)

NEW DELHI, India — The deal George W. Bush offered the world at the beginning of the Iraq war sounded tough. But the choice Beijing has offered New Delhi is even tougher: You're either against us or ... you're against us.

Beijing called off talks with Delhi this week that were meant to address their long-running border dispute. The decision followed a spat over the Dalai Lama's planned speaking engagement at a meeting of Buddhist leaders in the Indian capital.

Despite US President Barack Obama's emphatic statements about America retaining preeminence in Asia — most recently in the form of an address at a gathering in Indonesia of the Association of Southeast Asian Nations (ASEAN) — New Delhi has held out hope that it can remain non-aligned amid China and the US' struggle for dominance.

But, according to analysts, Beijing's decision to pull out of talks with Delhi may wind up pushing India closer to Washington after all, ratcheting up tensions between Asia's largest military powers.

“The soap opera [of India-China relations] just got a little interesting,” said Jabin Jacob, assistant director at the New Delhi-based Institute of Chinese Studies. “It's not really a cold war, but sort of a cold peace.”

According to Indian media, China was unhappy that the border talks were to coincide with the conclave of Buddhist leaders, where the Dalai Lama was set to deliver the valedictory address.

Beijing views the Dalai Lama as a figure intent on undermining China's power and pushing for Tibetan independence, although the Tibetan Buddhist spiritual leader has repeatedly said he wishes for autonomy for Tibetan people rather than independence.
Beijing pressured New Delhi to cancel the conference or bar the Dalai Lama from speaking. When India refused, it cancelled special representative Dai Bingguo's planned meeting with Indian national security advisor Shivshankar Menon.

According to India's former national security advisor, America's responses to China's growing economic and military might have only made Beijing more anxious about perceived attempts at containment. “Now that there is talk of Japan, US and India sitting down and talking about [how to react to China's growing power], and perhaps getting Australia, the Chinese dream of becoming No. 1 in the world [has been] shaken,” said Brajesh Mishra, who was national security advisor to India's prime minister from 1998 to 2004. As a result, he said, “the relationship between India and China becomes very strained.”

China's claim to parts of Kashmir and Arunachal Pradesh — which Beijing likes to call “South Tibet” — have fueled the long-running border dispute between the two countries. But the cancellation of the high-level diplomatic talks had as much to do with the East Asia Summit as it did with border issues or the Dalai Lama.

“Many people in China — policy makers and analysts — are indeed concerned about Indian involvement in the South China Sea,” said Li Mingjiang, a professor at the S. Rajaratnam School of International Studies at Singapore's Nanyang Technological University.

“Some Chinese analysts believe that ... India wants to play the South China Sea card against China in order to complicate China's strategic environment in East Asia and gain some leverage in India-China relations.”

By demanding that India muzzle the Dalai Lama, Beijing established that it aims to continue to worry and provoke New Delhi under the guise of protecting itself from meddling in its internal affairs. Beijing believes a good offense is the best defense, Indian foreign policy experts say. And such protestations against purported wrongs keep India too busy parrying to make its own thrusts on issues like the reported massing of Chinese soldiers in Pakistan-administered Kashmir and alleged incursions across the disputed borders in Arunachal Pradesh and Ladakh.

At the same time, India's once-conciliatory Prime Minister Manmohan Singh has shown a new willingness to push back.

“The Indians finally discovered that they have a spine,” said Indiana University professor Sumit Ganguly. “Supineness before the PRC had not really paid off. The demands simply escalated.”

So far, statements from both sides have been carefully calibrated. Though New Delhi refused to interfere with the international Buddhist conference — which hosted some 800 Buddhist spiritual leaders Nov. 27 to 30 — India's president and prime minister avoided the event in deference to Chinese concerns. However, when China subsequently sought to compel the governor and chief minister of West Bengal to steer clear of a public appearance by the Dalai Lama in Kolkata on Thursday, the two officials refused to allow Beijing to dictate their itineraries. Moreover, New Delhi reportedly plans to register a protest with Beijing over its breach of protocol in writing directly to officials in West Bengal instead of going through the central government.

Similarly, even as Beijing blasted the Dalai Lama as a separatist and insisted it would not tolerate any nation providing a platform for his “anti-China” activities, a foreign ministry spokesman told a gathering of Indian reporters that work was already underway to reschedule the postponed border talks.

Yet, only a day or two later, Chinese officials wrote to the chief secretary of West Bengal saying that any official presence at the Dalai Lama's speech implied an endorsement of those self-same "anti-China" activities.

The postponement of the border talks itself may come at a cost to India-China relations, said Shrikanth Kondapalli, a professor of Chinese studies at Jawaharlal Nehru University.

Though progress on the border dispute was unlikely, Dai's discussions with Menon were meant to lay the groundwork for a subsequent visit by Chinese Vice-President Xi Jinping, whom observers expect will succeed Hu Jintao as the general secretary of the Communist Party of China (CPC) in 2012 and as China's president in 2013.

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“Xi Jinping's visit could have been useful and crucial,” Kondapalli said. “[And] if Dai Bingguo doesn't make it over the next one month or so, it would be difficult for Xi Jinping to visit.”

Meanwhile, China and India continue to jockey for influence in multilateral regional bodies like the Association of Southeast Asian Nations (ASEAN). The two nations are edging ever closer to becoming direct economic competitors.

Mutual distrust has mounted as both sides shore up their defenses. Each interprets the other's manuevers as an offensive threat. In recent months, India has declared it will raise 100,000 troops for stationing along its border with China, including a regiment equipped with cruise missiles.

“All this has led to a very uneasy situation between the two countries,” said Mishra, former national security advisor.

And there's no sign yet of an early thaw.