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India News Network Digest    Mon, 7 Mar 94      Volume 2 : Issue 199

Today's News Topics:

   India in a hurry
   Mr Singh goes for broke
   Indian Stocks shrug off Asia's downturn
   A lofty goal: Ending India's worst poverty by year 2000
   Japanese Investment Mission heading to India
   21 is age of majority in S'pore : Court orders Bank of India to refund
   Ericsson rings up new order in India
   Four children killed, over 1,600 homes burned in Southern India
   India relaxes controls on its state airlines
   Indian Prime Minister to pay official visit to the U.K.
   India's two reformers on collision course
   Indian economy seen picking up steam after budget
   Iran, India discuss Asian cooperation
   Six miners die in Indian coal mine accident
   Reporter assault

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----------------------------------------------------------------------

Date: Sun, 06 Mar 1994 17:44:54 +0100
From: micl@ccr.jussieu.fr
Subject: Articles from the Economist (London)

Two articles from the Economist (London) dated the 5th March,
1994, the first a leader (editorial) the second from the Asia
section.

#1  INDIA IN A HURRY

Given steady liberalisation, India could rival China as a new
economic force. But its reckless budget spells trouble

Over the past decade, there has been no serious contest between
Asia's two giants. China started its market reforms in 1978, and
has been haring along. India, after small spurts of reform in the
early and middle years of the 1980s, started again in earnest only
in 1991. Its GDP growth has been lumbering behind at an
average of 3.1% a year since then (compared with China's
average over the same period of 10.9%). Still, as all children
know, the tortoise won at the end. As the economic and political
risks in China become even more evident, India's steadiness is
looking increasingly attractive to investors. That makes the Indian
budget announced on February 28th specially worrying ( see next
article) , for it suggests that the government is prepared to risk
stability for a burst of speed.

The flow of foreign money into India demonstrates investors'
new interest. Some $1 billion poured into Indian stockmarkets in
1993, most of it in the second half of the year. Morgan Stanley
launched the first Indian mutual fund: hoping for $100m, it pulled
in $300m within three days. New foreign direct investment, into
factories rather than equities, reached $900m last year, compared
with $200m in 1992. Of course, China is in a different league: in
1993, it attracted $15 billion-worth of direct investment.

Yet sentiment is shifting. his year, investors are sounding warier
about China. India's political virtues were brought into sharp
focus last month at the Chinese new year, when 89-year old Deng
Xiaoping was, literally, held up in front of the cameras. China's
government meant to reassure the world that he was still active;
instead, it reminded foreigners how feeble was the shoulders on
which China's political order rests and how uncertain the future
once the battle for succession is joined. By contrast, India's
Narasimha Rao looks a solid sort of fellow. More important, his
survival matters less to India than Mr. Deng's does to China, for
India settled the question of political succession in 1947.
Religious riots and sporadic secessionism notwithstanding,
India's democratic system is secure.

Foreign businessmen are also attracted by the institutional depth
which India has and China does not. India has a well-developed
legal system and courts that enforce it with reasonable objectivity.
It has something like a modern financial system, with
stockmarkets on which over 6,000 firms are listed, and a
regulatory system that, prodded by recent scandals, is developing
into one foreign investors feel they can trust. For its part, China
lacks an independent legal system, a code of private-property
rights, an effective central bank, developed financial markets, a
banking system and bankruptcy laws.

India's institutional maturity provides the government with the
tools for economic management. In 1991 it set out to use them to
stabilise the economy. Within two years it had shrunk the budget
deficit from 8.4% of GDP to 5.2%. By contrast, when
overheating began to worry China's government last year, Zhu
Rongji, the country's new economic supremo, threatened to
"chop off the heads" of officials who defied his orders to stem the
flow of credit into the economy. Inflation is showing little sign of
responding to this subtle signal: in December 1993 it was running
at 17.6%, compared with 6.7% a year earlier.

India is solid, but it has yet fully to unleash its entrepreneurial
potential; China is more exciting but also more dangerous. Both
countries are trying to change. At the Communist Party plenum
last November, China announced a programme to create a
properly functioning central bank, foster an independent banking
system, develop commercial law and sort out the tax system.
These changes cannot be made quickly, or easily: there is
currently a row between Beijing and the provinces over a
proposed new value-added tax; confusion over a new capital-
gains tax is depressing China's fledgling markets; and the
commission trying to draw up a law to regulate financial markets
is struggling with a seventh draft. meanwhile, however, India is
trying to throw away its stolidity without being able to match
China's vigour.

Growth or bust
The Indian government's priority is growth: while china is
struggling to hold its growth rate down to 9% in 1994, India's
looks to ending up at 3.8% in the fiscal year that ends this month.
Hence this dangerous budget. While continuing to liberalise the
economy, the government seems to be ignoring the need for fiscal
responsibility. The target for the budget deficit for 1993-94 was
4.7% of GDP; the out-turn is likely to be 7.3%. There is no
suggestion of how the gap might be filled. The government has
done nothing either to cut expenditure or to reduce the vast public
sector. Inflation is already running at 8.6%, up from 4.5% in the
middle of last year.

The finance minister, Manmohan Singh, is hoping that growth
will produce the revenues to fill this budgetary gap. optimists
point to the 21% rise in exports in the first ten months of 1993-
94. Yet exports, which make up a tiny proportion of India's
GDP, say little about the big picture. industrial production has
grown by less than 2% for the past two years: good weather
accounts for most of the recent growth in GDP.

India's impatience is understandable: it has been frustrating to
watch its rival pull ahead. But if inflation and government
finances get out of control, the country could lose its reputation
for steadiness. Asia's success stories argue that macroeconomic
stability is a necessary condition for long-term prosperity. The
tortoise did not win by pretending to be a hare.

#2  MR SINGH GOES FOR BROKE

The good news is that the Indian budget  announced on February
28th slashed the maximum customs duty from 85% to 65%, cut
corporate tax from the range 51.75-57.5% to a flat 46%; cut the
top income tax rate from 44.8% to 40%, rationalised indirect
taxes, made the rupee convertible for current account transactions
such as travel and education abroad and set a ceiling of 600
billion rupees ($19 billion) on the money that can be printed to
meet the fiscal deficit. The bad news is the size of the deficit itself
- 7.3% of GDP for 1993-94, instead of the 4.7% originally
planned.

The finance minister, Manmohan Singh, has rationalised taxes as
well as cut them. He has extended value-added tax and replaced
many specific duties (so many rupees for a kilo of a particular
good) with duties levied as a percentage of sale value. Revenue
will therefore increase with inflation.

Mr Singh has also cleaned up hundreds of messes created by tax
concessions for various lobbies. Most countries have a single
duty on, say, stainless steel. But India has lots of different rates
on stainless steel, depending on whether it is converted into
pressure vessels, cutlery or whatever (and depending, in
particular, on whether the makers of said items happen to be
friends of the government). The budget is claimed to have
reduced the number of these anomalies by two-thirds.

India's politicians have always insisted on the government's right
to print any amount of money to fund fiscal deficits. Mr Singh
therefore described as historic his decision to place a ceiling on
resort to the printing press in 1994-95. But he is not yet willing to
enshrine this principle into law, and until he does so this move
will remain reversible. Besides, if the fiscal deficit remains high,
a refusal to print money will crowd out private investment and
raise interest rates.

The new convertibility of the rupee for current transactions is
subject to ceilings- $2000 for a tourist going abroad, for instance-
to prevent capital flight. Mr Singh has no intention yet to make
the rupee convertible on capital account. But the main aim of
capital convertibility is to attract foreign investors, and for them
the rupee is already fully convertible. Foreigners shifting money
are subject only to capital-gains tax.

Mr Singh's previous reforms of India's currency regime are
credited with the rise in foreign-exchange reserves, which
touched $13 billion at the end of February, up from $5 billion a
year ago. But there is a risk implicit in this achievement. India's
foreign-exchange crisis in 1991 forced it to turn to the IMF for
assistance, and IMF conditions provided much of the pressure for
reducing the fiscal deficit from 8.4% of GDP in 1991-92 to 5.2%
in 1992-93. India planned to borrow another $7 billion or so
from the IMF in instalments over the next three years, and the
IMF had indicated that it would like to see the deficit down to 3%
of GDP.

But now that dollars are pouring into India, the government has
abandoned plans for a big loan. indeed, it proposes to repay $1.4
billion ahead of schedule, using excess reserves to bring down its
foreign debt. And now that India is free of IMF-imposed
constraints, its government seems worryingly willing to splurge.

Rising borrowing means that interest payments on government
borrowing have grown alarmingly. newt year they will for the
first time take up more than half of the government's current
spending. It is having to borrow increasing sums simply to pay
interest on past debt.

When Mr Singh took office, he inherited a supposedly disastrous
current fiscal deficit of 187 billion rupees. Far from cutting that to
zero, he has increased it to 341 billion rupees. Political pressures
to increase subsidies and spending are not going to ease in the
near future.

Elections are due in ten states over the next two years. A general
election is due in 1996. Mr Singh is gambling that rapid growth
in the economy will yield enough revenue to bury these
problems. But growth could well be constrained by factors
beyond his control, like drought, or a rise in oil prices, or some
persistent and worrying refusal on India's part to get moving
economically.

------------------------------

Date: Mon, 07 Mar 1994 06:11:20 -0700
From: RAJESH <RAJESH_H1@sfov1.verifone.com>
Subject: Indian Stocks shrug off Asia's downturn

#3  INDIAN STOCKS SHRUG OFF ASIA'S DOWNTURN

By ROBERT STEINER
AP-DOW JONES NEWS 03-06-94
  HONG KONG (AP-DJ)--India, never a full participant in Asia's ascent
among international stock investors, is now shrugging off the region's
downturn, The Asian Wall Street Journal reported Monday.
  Just as a rise in short-term interest rates has fanned fears across
Asia that international investors will keep their money at home, Indian
stockbrokers seem to talk about nothing but the tidal wave of foreign
cash washing into local shares and the ease with which they can sell
Indian shares abroad.
  So far this year, the index is up about 13%, despite a steep setback
last week.
  'Almost every company that's going ahead with road shows for various
Indian stocks is coming back with a positive impression,' says Suresh
Balasuramaniam, head of merchant banking at Credit Lyonnais India in
Bombay. 'Good companies will not have any problem selling reasonably
sized issues.'
  At D.S. Purbhoodas & Co., equity dealer Nikhil Gupte adds: 'Every
week, nearly, a new India fund is set up.'
  India's market was held back in the last several years as other Asian
markets surged ahead partly because foreign institutions must receive
approval to buy and sell shares in the country. But even many of those
with regulatory approval to trade shares shunned the Indian markets due
to political violence and strikes on the Bombay exchange.
  In several respects, 1994 seems propitious for the market, analysts
say. For one thing, earnings of companies whose shares make up the
sensitive index are expected to show an average gain of about 25% in
the year ending March 31. Moreover, because foreigners put relatively
little money in the Indian market last year, it now is seen as less
vulnerable to withdrawls by foreign investors.

India No Longer Seems So Exotic

  India's market also no longer seems so exotic to foreigners. During
1993, a spate of Indian companies ventured overseas to sell global
depositary receipts, certificates representing listed stocks in India.
Foreigners' equity purchases in India and Indian companies' sales of
shares abroad have drawn a total of about 5 billion dlrs of foreign
cash into Indian stocks in the past 18 months, says Dayal.
  By May, 200 foreign institutions should be approved to trade Indian
shares, predicts Shanti Ekambaram, assistant vice president at Kotak
Mahindra Finance Ltd.
  If 1994 is to be India's year, then March and April may be the ideal
months for foreign investors to join in. A hefty chunk of the new funds
Ekambaram expects to hit India are lining up to do so now. In the past
three weeks, the New York Stock Exchange has listed three major
closed-end India funds, managed respectively by Morgan Stanley & Co.,
Oppenheimer Management Corp. and Jardine Fleming International Fund
Management.
  The funds may have to wait a while before moving cash into Indian
shares. The custodian banks that safeguard investors' cash and
securities in India are so clogged with paperwork that opening a new
account 'is extremely difficult,' says Giulio Franzinetti, a Hong
Kong-based fund manager who has been working toward the launch of an
India fund since November.
  But delays caused by the custodians' backlog might end up benefiting
foreign investors. Their funds could hit the Indian market while the
country's speculators are relatively inactive. There probably will be
little news to excite the locals before May, says Dayal; that's when
companies are due to report earnings for the year ended March 31 and
when the first clues of the strength of India's crucial monsoon are
likely to emerge.

Opportunity For Foreign Buyers Seen

  Meantime, local disappointment over the federal budget may provide a
buying opportunity for foreigners. Many Indians have criticized the
government for failing to reduce its deficit in the budget, announced
last week; the Bombay 30-share index slipped 9.4% during the week,
closing Friday at 3801. But personal and corporate income tax cuts
should bolster corporate earnings in the coming year, analysts say, and
other measures are expected to spur capital spending.
  If those big stocks get pricey, investors will find it easier these
days to wade beyond them into India's ocean of small stocks.
Foreigners' 'focus has definitely shifted to shares of smaller and
medium-sized companies,' says Ekambaram. That's partly because Indian
regulators recently allowed foreign brokers to earn commissions on
sales of Indian stock, without which many brokers say they would have
little incentive to spend time researching anything but blue chips.
  Nonetheless, the very smallest Indian companies are likely to remain
ungroped by most foreigners, says Franzinetti. A foreign investor is
limited to owning no more than 5% of any listed company's shares, he
says. That means large institutions would have to invest in mounds of
different tiny companies to reap any meaningful benefits from a focus
on truly small-capitalization Indian stocks.
  'But prudent funds don't go beyond holding 50 stocks, because there
are only so many things you can follow,' Franzinetti says. His
small-companies fund aims to manage no more than 25 million dlrs.

#4  A LOFTY GOAL: ENDING INDIA'S WORST POVERTY BY YEAR 2000

THE LOS ANGELES TIMES   (LATM)
Byline:   JOHN-THOR DAHLBURG
Credit:   TIMES STAFF WRITER
03/05/94
   The sweating Calcutta rickshaw wallah, the impoverished Bihari
sharecropper and millions of other Indians struggling to get by
were not consulted about it. But in the long run, they are meant to
be the chief beneficiaries.
   In announcing India's 1994-95 budget this week, and disclosing
the next moves in the government's economic reform game plan,
Finance Minister Manmohan Singh spoke in detail of tax reform,
revenue projections and the need to give stagnating industry a
helpful push.
   But his first thought, the mild-mannered Oxford Ph.D. said
later, was for the neediest.
   For only through growth-enlarging the size of the macroeconomic
pie-can the grinding indigence that blights life for countless
Indians be eradicated, Singh said.
   With sufficient growth, say 6% annually, India can abolish
"extreme poverty" by the year 2000, he predicted.
   That rosy forecast, a parting of the ways with the longtime
official conviction that an end to misery could be engineered by
government regulation and state planning, sounds much like
"trickle-down economics"-and it is, at least of a kind, Singh
acknowledged to foreign reporters at a dinner given in his honor.
   It's supposed to work this way:
   Indian industry, which grew fat for decades on a domestic market
protected from outside competitors by high tariff walls, is in the
gradual process of becoming much freer from government control and
more export-oriented.
   As Indian companies find a niche in the global marketplace, that
should create more jobs.
   Allowing those entrepreneurs to build a richer India and
continuing to court foreign investment will produce a broader
revenue base to pay for a more secure social safety net. That will
ignite a "ray of hope" of a better life in a nation where yearly
income averages $330.
   To coax India's economy into expanding, the former university
professor announced this week to Parliament that he is ready to
take a risk that some fellow economists find audacious, even rash.
   Singh wants to spend so much more than the government takes in
over the coming 12 months that the fiscal deficit is projected to
hit $17.8 billion, or 6% of gross domestic product.
   His proposed reductions in excise taxes and customs tariffs and
breaks on corporate and capital-gains taxes that will produce a
steep drop in government revenue are meant mainly to revive Indian
industry, which has been in the doldrums.
   Once factories are working full tilt, the hope is that they will
import more goods and refill government coffers, because about 40%
of total revenue comes from fees on imports.
   Higher output will also mean greater receipts from excise taxes,
and more funds to spend on health, education and other basic
services.
   Such is the essence of what one Calcutta newspaper called
Singh's "big gamble."
   It all must seem unfathomable to a needy person, for whom the
main discernible impact of the minister's recent decisions has been
an increase in the state-controlled price of bottled cooking gas
and other staples.
   Predictably, a leader of the opposition Bharatiya Janata Party
called Singh's $49-billion budget nothing but a prettily wrapped
"sweet of cow dung."
   But parliamentary opponents of the ruling Congress-I Party
mostly listened in respectful silence to Singh and offered no
coherent counter-plan.
   Free marketeers, on the other hand, expected more and were
disappointed that Singh had not gone further.
   Some critics were irked by the willingness of the finance
minister, a professed apostle of fiscal "rectitude," to spend
beyond the government's means.
   Because Singh was a full 2.6% off in his 1993-94 calculations of
the fiscal deficit and the GDP, those critics fear that the
government is on the verge of losing control over spending.
   Defending his proposals, which must still be enacted by
Parliament, the minister stressed that reform in India can only
garner continued citizen support if it has a "human face"-meaning
that it is slow and in small doses.
   "Given the right climate, India can surprise itself and the rest
of the world," he said. "India has the potential to be among the
top five or six economic players in the world."

#5  JAPANESE INVESTMENT MISSION HEADING TO INDIA

AGENCE FRANCE-PRESSE   (AFPR)
Byline:   Anil Penna
03/05/94
    NEW DELHI, March 5 (AFP) - Indian officials are giving top
priority to convincing a high-level business mission arriving
Monday from Japan to increase bilateral trade and boost Japanese
investment here.
   The 51-member delegation led by Eme Yamashita, a former
vice-minister in the Ministry of International Trade and Industry,
will talk with top Indian government and business leaders while on
the four-day visit.
   Major Japanese corporations and financial institutions will be
represented on the Yamashita team, which will also tour the cities
of Bangalore, known as India's Silicon Valley, and Bombay, its
business hub, before leaving for Nepal.
   The Indian government and industry have attempted to stimulate
Japanese investment in the country's liberalised economy, but so
far efforts to woo Japanese businessmen have met with a cold
response.
   Prime Minister P.V. Narasimha Rao has presided over strategy
sessions planning for the Japanese visit, officials said.
   Japan is India's biggest aid donor and one of its largest
trading partners with two-way trade estimated at an annual 3.5
billion dollars. But India has been at the bottom of Japan's
investment priorities.
   Japanese global investment in 1992 totalled 34 billion dollars.
But just 122 million dollars of that money came to India.
   That was mainly the result of auto giant Suzuki hiking its stake
in its successful joint venture with Maruti Udyog Ltd which today
commands a 75-percent share of the Indian passenger car market.

#6  21 IS AGE OF MAJORITY IN S'PORE : COURT ORDERS BANK OF INDIA TO REFUND

TAI -    SINGAPORE PRESS HOLDINGS   (SPHP)
Column:   In the Courts
03/04/94
   Court of Appeal orders Bank of India to refund $800,000 it
forfeited from minors
   THE Court of Appeal affirmed that the age of majority of a
person in Singapore is 21 when it ruled recently that a bank could
not enforce a mercantile contract it had entered into with two
minors eight year ago.
   In January, the three-judge court upheld the decision of the
High Court that the Bank of India must refund the nearly $800,000
it forfeited from two shareholders of a trading company registered
in Singapore.
   The shareholders, Mr Rai Bahadur Singh and Mr Lajwant Singh,
both Singaporeans, had signed an agreement with the bank in 1986,
offering their joint fixed deposit of nearly $800,000 in Bangalore,
India, as part of security for bank facilities granted to S. Pritam
Singh Co Pte Ltd.
   Mr Rai was 19 and Mr Lajwant was 18 when they signed the
agreement.
   The bank forfeited the money in India in 1991, when the fixed
deposit was no longer sufficient to cover the company's substantial
borrowings.
   This triggered off the suit by the two plaintiffs, represented
by Mr Dedar Singh, which resulted in the court ruling that the age
of majority of a person in Singapore was 21.
   The bank had originally argued that the pair were not minors as
they were above 18 years of age at the time the agreement was
signed, but it did not challenge the High Court's finding on this
point on appeal.
   The main issue in the appeal was whether the agreement by minors
was void (had no legal effect) or voidable (capable of being set
aside).
   It was an issue involving mercantile law, which, among other
things, regulates the rights and obligations of persons engaged in
"business adventures."
   The mercantile law applicable in this case would be the Infants
Relief Act 1874, which was repealed in England by the Minors'
Contract Act 1987.
   Under the 1874 Act, all contracts made by minors, other than
contracts for necessaries, which are sundry items, were rendered
absolutely void.
   The appeal court noted that Section 5(1) of the Singapore Civil
Law Act barred the consideration of English law in the
determination of any case if there was any local law governing the
issue.
   But as there was no such local provision in any written law, the
appeal court found that the law applicable was the Infants Relief
Act 1874.
   Although that Act itself was not, on the face of it, a
mercantile statute, its provisions impinged on mercantile
transactions entered into by minors.
   The court held that in the circumstances, the agreement signed
by the two plaintiffs was a mercantile transaction which was
absolutely void and therefore legally unenforceable.
   The appeal judges agreed with the High Court that the bank had
no defence to the plaintiffs' claim and dismissed the appeal with
costs.
   The appeal judges were Justices L.P. Thean, S. Rajendran and
Warren Khoo.

#7  ERICSSON RINGS UP NEW ORDER IN INDIA

AGENCE FRANCE-PRESSE   (AFPR)
03/04/94
    STOCKHOLM, Mar 4 (AFP) - India's Ericsson Telecommunications
Private, a division of Swedish telecommunications giant Ericsson,
has won an order for 100,000 local telephone lines from the
Department of Telecommunications in New Delhi, Ericsson said Friday.
   The contract is valued at some 100 million kronor (12.5 million
dollars).
   Some 50,000 of the AXE switching system lines will be installed
in New Delhi, and the remaining 50,000 lines in Bangalore,
Ernakulam and Coimbatore.
   The equipment will be delivered from Sweden and the project will
be completed during the summer of 1994.

#8  FOUR CHILDREN KILLED, OVER 1,600 HOMES BURNED IN SOUTHERN INDIA

AGENCE FRANCE-PRESSE   (AFPR)
03/04/94
    NEW DELHI, March 4 (AFP) - Two fires in the southern state of
Karnataka killed at least four children and destroyed about 1,600
homes Friday, the Press Trust of India said.
   At least four children died and some 800 huts were destroyed in
a big blaze that broke out after a cooking accident at a crowded
shantytown on the outskirts of the Karnataka state capital
Bangalore, officials said.
   Firefighters and policemen put out the fire and rescued many
trapped children.
   Another blaze in the town of Sindhanoor burned down 800 homes
and seriously injured at least four people, the news agency said.
Firefighters were still struggling to douse the flames late Friday.

#9  INDIA RELAXES CONTROLS ON ITS STATE AIRLINES

   ASIAN WALL STREET JOURNAL (AWSJ)
   AP-Dow Jones News Service
03/03/94
   NEW DELHI -- India has given its two state airlines more autonomy
in operating in an attempt to compete with increasingly popular
private air carriers.
   The government also scrapped restrictions that barred private
carriers from publishing their schedules or calling themselves
airlines.
   Most private Indian carriers fly fewer than five jets -- compared
with the 55-jet fleet of Indian Airlines -- but many passengers
prefer the private carriers because their flights are on time and
the service is better.
   Under the new regulations, Air-India and Indian Airlines will be
allowed to sell stock to the public, raise loans from the market and
operate with less government control. The government didn't say what
controls would be relaxed.

------------------------------

Date: Mon, 07 Mar 1994 11:37:09 -0500 (EST)
From: "Sukhjinder S Bajwa" <bajwa@asd.enet.dec.com>
Subject: Indian Prime Minister to pay official visit to the U.K.

#10  INDIAN PRIME MINISTER TO PAY OFFICIAL VISIT TO THE U.K.

   NEW DELHI, March 7 (UPI) -- Indian Prime Minister P.V. Narasimha Rao
will pay a five-day visit to Great Britain beginning March 13. Rao's visit
is expected to strengthen bilateral economic ties and cooperation in
combating terrorism, a Indian foreign ministry spokesman said.

#11  INDIA'S TWO REFORMERS ON COLLISION COURSE

    By Sumit Sharma
     BOMBAY, March 7 (Reuter) - Two of India's most respected reformers,
the Finance Minister and the head of the Election Commission, are heading
for a collision that analysts fear may hurt the very reforms the two
painstakingly set in place.
     The squabble is over a decision by Chief Election Commissioner T.N.
Sheshan to probe the entry of Finance Minister Manmohan Singh into the
upper house of parliament through the time-honoured, but dubious tradition
of getting elected from a state in which he had never lived for any length
of time.
     Analysts said Prime Minister P.V. Narasimha Rao may have to find a new
finance minister if Singh does not met the requirements governing his
period of residence in Assam, the northeastern state where he was elected.
     "The liberalisation process will continue but the markets will get a
bit of a jolt," says Pradip Shah, mananging director of India's premier
credit-rating agency, Crisil of Bombay.
     Shah said replacing Singh could slow down the pace of the reforms
programme launched nearly three years ago to lift controls on the
socialist-style economy India adopted on gaining independence from Britain
in 1947.
     "It will introduce uncertainties for both Indian and international
investors...a known devil is better than an unknown devil," he added.
     The Bombay Stock Exchange, India's premier bourse, reacts sharply
whenever Singh comes under criticism.
     "If the finance minister resigns, the stock market index will lose by
about five to 10 percent. The reforms are going on because of Singh and
Rao," said merchant banker Asit Mehta of Nucleus Financial Services.
     Singh, unexpectedly appointed finance minister by Rao after the 1991
general election, is credited with launching a radical programme to
liberalise the country's protectionist, poorly performing economy.
     Seshan is held equally high in public esteem for helping India reform
its political system for the first time since 1947.
     He took over before the 1991 election in which there was unprecedented
violence that was capped by the murder of former prime minister Rajiv
Gandhi while he was campaigning.
     In a bid to restore Indians' faith in their political system Seshan
banned all elections after December 31, 1994, unless eligible voters each
had an identity card.
     Elections at every level in India are marred by widespread fraud,
including people impersonating other voters and violence, especially
against the underprivileged by thugs hired by political parties spending
huge amounts of money.
     The Congress-ruled government and other political parties crticised
the card plan because of high costs but Seshan, living up to his reputation
for tenacity, said: "No card, no vote."
     His determined stand improved the confidence of the public in
elections.
     The first polls to be held with identity cards were in five state
assemblies last November.
     Independent obeservers said there was much higher voter turnout, far
less violence and less fraud as the government deployed unusually tight
security to head off further criticism from Seshan.
     Admirers of the two men say they share the qualities that have made
them folk heroes -- honesty and the courage to pursue reforms despite
bitter opposition from peers.
     Now the two are locked in confrontation over one reform.
     Seshan says legal proceedings will be launched against Singh if the
inquiry into his enrolment as a voter in Assam shows he wilfully made a
false declaration in securing his candidacy.
     India's electoral laws require deputies to the upper house be elected
by the regional assemblies of the states of which they are residents and
election authorities have in the past turned a blind eye to the documents
provided by the parties as proof of residence.
     But Seshan has changed this, demanding that even senior politicians
furnish proof of their residence.
     "The report is coming and I shall not presuppose a decision of the
election officer. We'll deal with the results when they come," Seshan said.
     A decision will be made by March 31, he said.
     The regulations say the candidate must be "ordinarily resident" in the
state from where he seeks election but do not elaborate on the term,
leaving much room for interpretation. Candidates generally solve the
problem by renting a house to give the election officials an address in the
state.

#12  INDIAN ECONOMY SEEN PICKING UP STEAM AFTER BUDGET

    By Jeremy Clift
     BOMBAY, March 7 (Reuter) - India's economy, spurred by interest and
tax cuts in the budget, is expected to pick up steam with overall growth
projected at 5.0 percent in the coming year, Finance Minister Manmohan
Singh said.
     In an interview with the Financial Express newspaper published on
Monday, Singh said his 1994/95 budget announced last week was designed to
pull India out of a period of slow growth and relatively high inflation.
     But he said that despite a fiscal deficit estimated at 7.3 percent of
gross domestic product (GDP) in the currrent year, "there is no danger of
inflation getting out of hand."
     Real GDP growth would be a minimum of 5.0 percent in the financial
year starting in April, against 3.8-4.0 percent in the current year, Singh
said.
     He said India had considerable idle industrial capacity, while its
foodgrain stocks were at a seven-year record high. Foreign exchange
reserves were at a record $14 billion.
     "With this resources endowment, if I don't take some risks when will I
do?," he was quoted as saying.
     "Without taking risk there is great danger of our economy remaining
mired in stagflation. Therefore I have come out with a package which in my
opinion is a serious attempt to get the economy out of stagflation," he
said.
     There were risks "but I believe, whatever else you may say, that there
is no danger of inflation getting out of hand."
     "I expect inflation to come down, it will not go up," Singh said.
     He gave no projections for 1994/95 inflation. In the current year it
is forecast to average 8.6 percent on an annualised basis, down from a peak
of 17 percent in mid-1991 when the country faced a severe balance of
payments crisis.
      Bankers and economists have expressed concerns about renewed
inflationary pressure because of the high fiscal deficit. Singh projects
the 1994/95 deficit at around six percent of GDP.
     Singh said in the interview he expected India's export growth to
average 15 percent or more in the coming year, against around 20 percent
achieved in 1993/94.
     He said India's economic reforms were restructuring the country's
economy and helping it to integrate with the global trading system after
decades of protectionism.
     But companies would be given time to adjust so that the harmful
effects of liberalisation on jobs and inefficient factories could be
minimised.
     "We are not doing a shock therapy of the type Russia did," he said.
"We are building on successes step by step."
     The government forecasts industrial growth to rise to more than six
percent in 1994/95 against 1.6 percent in the current year, when it was
bogged down by government spending cuts.
     To spur growth, Singh cut corporate taxes, import tariffs and interest
rates in his fourth budget, which also restructured India's complex tax
regulations and gave a new impetus to the liberalisation programme.
     "We are giving reasonable protection to the Indian industry and
simultaneously opening up the economy so that we can benefit from
participation in the global economy... ," Singh stated.
     Jamshed Irani, managing director of Tata Iron and Steel Co Ltd
(TISCO), the country's largest private steelmaker, said sluggish steel
demand was now picking up.
     "The budget is likely to stimulate industrial growth which in turn
will boost demand for steel," he said.

#13  IRAN, INDIA DISCUSS ASIAN COOPERATION

    NICOSIA, March 6 (Reuter) - Iranian President Akbar Hashemi Rafsanjani,
meeting India's External Affairs Minister Dinesh Singh on Sunday, urged
Asian cooperation against "hegemonist" powers and a peaceful solution to
the Kashmir conflict.
     Tehran Radio said Rafsanjani told Singh that Iran, India, China and
Pakistan together held enormous natural and human resources which, if
marshalled effectively, could "block the path to interference in the region
by hegemonist powers which think about nothing but their ominous goals and
interests."
     Singh said India and Iran could cooperate to set up a "powerful Asian
and Third World entity," the radio said.
     The report did not say if Singh also mentioned China and Pakistan --
India's regional rivals with whom it has fought several separate wars in
nearly half a century of independence -- as candidates for closer Asian
cooperation.
     Rafsanjani spoke on the theme of a new Asian axis on Saturday when he
met Chinese Foreign Minister Qian Qichen, who was due to end a three-day
visit to Tehran later on Sunday.
     There was no sign that Singh and Qian would meet in Tehran although
Indian diplomats in New Delhi said on Saturday that that the two ministers
and the Iranian Foreign Minister Ali Akbar Velayati might meet to discuss
mounting Western pressure on their governments to stop alleged human rights
violations.
     Rafsanjani said the conflict in Kashmir could be solved if Indian and
Pakistani leaders sought a solution to secure the interests of the mostly
Moslem population of the province.
     "The Islamic Republic of Iran...hopes that the Kashmir issue would be
resolved in a peaceful atmosphere in the interest of the people of that
region," he said.
     India accused Pakistan of arming and training Moslem militants waging
a four-year-old uprising against Indian rule in the northern state of Jammu
and Kashmir. Islamabad denies the charge but verbally backs some militant
groups.
     The radio said Singh relayed an invitation to Rafsanjani from Prime
Minister P.V. Narasimha Rao to visit India. Rao visited Iran in September
on the first mission to Tehran by an Indian leader since Iran's 1979
Islamic revolution.

#14  SIX MINERS DIE IN INDIAN COAL MINE ACCIDENT

    BHOPAL, India, March 5 (Reuter) - Six miners were killed and one
injured in a cave-in at a state-owned coal mine in India's central Madhya
Pradesh state on Saturday, officials said.
     They said several people were pulled out alive by rescue workers from
the Kotma mine 700 kms (430 miles) east of the state capital Bhopal.
     The accident was the second mine disaster in India six weeks. At least
55 miners were found dead after they were trapped for two days by a fire at
the state-owned Newkenda colliery in West Bengal on January 25.

#15  REPORTER ASSAULT

By G.C. SHEKHAR
 Associated Press Writer
   MADRAS, India (AP) -- A reporter investigating alleged kickbacks to a
politician in southern India was stripped and beaten at a bus station, his
editor said today.
   The reporter said he believed he was beaten because a local politician
was angered by an article about 400 people who said they had given the
politician bribes.
   Relations are strained between journalists and the government of Tamil
Nadu state, whose chief minister has filed more than 100 libel suits
against journalists critical of her administration. A U.S. State Department
report said press freedom in the state was in jeopardy because of the
numerous attacks on journalists and news organizations.
   The Tamil Nadu Union of Journalists today condemned what it called a
systematic attack on journalists in the state.
   S. Arumugasamy, a part-time reporter for the pro-government Tamil
language daily Dinamalar, was attacked Thursday in the town of Kamudi. Four
people dragged him off his motorcycle, stripped him and beat him with
sticks and glass bottles until he fell unconscious, Dinamalar editor S.
Krishna Murthy said today. Arumugasamy was hospitalized, the editor said.
   Police arrested four people on charges of assault.
   Since Jayalalitha Jayaram became the state's chief minister in June
1991, at least 10 journalists have been attacked, reportedly by supporters
angry about articles critical of the government.

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End of India News Network Digest
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