INDIA 2012 CONTEMPORARY HISTORY

Following a long history of numerous independent kingdoms, India was progressively conquered by Great Britain in the 18th and 19th centuries. By 1850, Britain had taken control of the whole of India (including present-day Pakistan and Bangladesh) and had consolidated it into the jewel of its empire for almost 100 years. But colonists typically tire of their situation and India was no different. After a long struggle for Indian independence led by Mahatma Gandhi, India was granted its freedom in 1947. But as is often the case with significant regime change, this freedom lead to violent conflicts as competing groups vied for power. Simultaneous with independence, India split into two countries: Muslim Pakistan and pluralistic India (with a Hindu majority). India developed as the worlds largest democracy. However, conflicts with Pakistan, primarily over the disputed region of Kashmir, dominated post-independence events. These conflicts led to three major wars with Pakistan in 1947, 1965, and 1971. Fighting started up again in 1999 after both countries exploded nuclear weapons. A cease-fire signed in 2004 has been maintained. India is a federal republic, based on the English model with a prime minister, a parliament for its legislative branch, and a common law system for its judicial branch. The head of the government is the prime minister, who is currently Manmohan Singh. He came to office in 2004. The next election for prime minister must be held by May 2014.

PROFILE
India is located in South Asia, between Burma and Pakistan. It also shares a border with China. With a long coastline, India is bordered by the Arabian Sea on one side and the Bay of Bengal on the other. The country is about a third of the size of the U.S., but it has almost five times as many people. India's median age is 26, one of the youngest among large economies. It is the largest democracy, dwarfing the U.S. with over one billion people. It has recently overtaken Japan to become the third largest economy in the world (by purchasing power parity) and the second largest in Asia, behind China. It is a developing country with income in the lower-middle range. Its HDI is 134 out of 173, mostly due to its problems with child labor and poverty.

Prior to the 1990s, India had a very protected economy, giving it limited interactions with the global economy. But in 1991, the country launched major economic reforms, moving toward a free market economy. The country has been developing rapidly in the last few years, despite obstacles such as an under-developed infrastructure, significant overpopulation, and widespread corruption. Part of the key to Indias advancement is that English is the countrys official language. With telecommunication advancements that allow for inexpensive international calls, India has become the customer service center to the English-speaking world. Such employees make about 20% of what a comparable worker in the U.S. would earn. The gap between the rich and poor in India has not improved in 30 years, even though the economy has been growing 6-7% for 20 years. The top 5% of households possess 38% of the total country assets. The bottom 60% of households own a mere 13% of assets. Predictably, it is the rural agricultural laborers and the urban casual laborers who are the poorest. It is estimated that India has 33% of the worlds poormore than all of the countries of Africa combined. According to Indias Millennium Development Goals (MDGs) report, the poverty rate is projected to fall from 51% in 1990 to 22% in 2015. Since the 1950s, the government and nongovernmental organizations (NGOs) have instituted several programs to reduce poverty, such as subsidized food and other necessities, increased access to loans, improved farm productivity, and the promotion of education and family planning. These measures have helped eliminate famine, reduced illiteracy, and cut the lowest level of poverty in half. However, it is doubtful that India will meet its MDG goals relating to undernourished children and child mortality rates. Their target for underweight children is 25.5% by 2015. But as of 2005-06, the rates had only dropped to 45.8%. Corruption is one of the main causes of poverty. It delays projects, takes care of the people who can afford to pay bribes first, and often allows substandard construction. The examples of graft [corruption by officials] are staggering: $40 billion lost in payments for cell phone licenses, $40 billion stolen from food and fuel subsidies for the poor, and billions stolen in government money to hold the 2010 Commonwealth Games in New Delhi. Indias anti-corruption chief has been forced out, accused of being corrupt himself. International companies are attracted to India in spite of the corruption partly because they want to sell products to the large middle class of India--300 million people. The tragedy is that with this growth come more opportunities for corruption. Foreign companies are impacted along with Indias citizens. Foreign direct investment (FDI) is beginning to slow in India partly over foreign disgust over corruption. The government has begun to take some action against powerful individuals who are the worst abusers. In one state the chief minister was forced out over a property scandal. The Cabinet Minister who oversaw the cell phone license sale has been arrested. Computers are allowing more transparency. The latest bidding process for cell phone licenses was done on-line. Some bidding for state contracts are being run on-line, which allows anti-corruption groups to monitor them. Websites, such as ipaidabribe.com, reveal the cost of graft by publicizing the sums demanded by officials from registering a baby to fixing a broken water supply. There are two things the government has not done yet that could lessen corruption: 1) sell its many corrupt and inefficient state owned firms. If they sold them, there is a better chance that competition would force them to improve their efficiency and become more competitive. 2) Issue 2

an ID card to all individuals, like the social security card in the U.S. This would allow citizens to track their welfare payments, which are presently being reduced as state workers take their cut. Inheriting many English traditions, Indias government and courts have strong rule of law enshrined in both the Constitution and in judicial decisions. However, there is a difference between intent and actual practice. [It is the difference between saying you will do your homework and actually doing it.] Pervasive corruption (including judges), over population, an unequal society, and the general apathy of people towards obeying the rule of law all contribute to making the observance of laws weak. For example, the painted lines down the middle of a busy road are taken only as a suggestion. Drivers will create gridlock as they run red lights and jam their vehicles into any available space on the road, including the oncoming traffic lanes. Compared to China, Indias infrastructure is a decade behind. For example, up to 40% of farm produce spoils in the fields or rots before it reaches consumers due to poor or non-existent roads from farm to market. This raises the cost of food for everyone. The large tech service sector and call center business that India has relied on for much of its recent growth does not need transportation infrastructure such as roads, ports, and airports. But if India is going to continue growing its economy, it needs to expand its manufacturing base, which requires adequate infrastructure. In 2007, India only produced 1% of global trade vs. the 7% China provided. After losing some big manufacturing plants to China and Vietnam due to their superior infrastructure, the government understands that infrastructure matters. There is now a plan in place to spend $1 trillion in its next five-year plan period (2012-17) on roads, railways, ports, etc. To reduce the cost and the cut taken through corruption, a law was passed in 2005, which allows public-private partnerships for large infrastructure projects. This means that private companies share the risk and rewards with the government. Developers put up most of the money and then collect tolls or other usage fees. Many of Indias main roads are now wider, better paved, and have raised dividers so driving is more orderly. Many airports have already been enlarged. While this is an improvement, bureaucratic red tape and corruption are so ingrained in India that its still unclear if its economic destiny can be fulfilled. Due to its size, growing economic strength, and strategic location, India plays an important leadership role internationally. It has been an active member of the United Nations and is one of the leaders for the developing nations. In 2011-12, India will hold one of the non-permanent member seats on the UN Security Council. This is considered a prestigious post. The country holds membership in many regional groups, such as ASEAN, and the South Asian Association for Regional Cooperation (SAARC).

HUMAN RIGHTS
India opposes interfering in the sovereign rights of countries for human rights promotion. It believes that human rights are dependent on culture and on historical conditions. India also strongly opposes linking foreign aid to human rights and has even refused foreign aid (such as aid from USAID) when it suspected a connection to a political or human rights agenda. India's own human rights track record is mixed. In theory, India is a democracy and guarantees the political and civil freedoms of its citizens. However, the current nationalist government has been accused of ignoring an increase in the number of attacks on both Muslims and Christians. Post 9/11, the government enacted an anti-terror law. It provides police with sweeping powers to 3

arrest suspects and detain them without charges for three months. It also makes it tougher to release suspects on bail and allows for heavy sentences. Indian society forces limitations on the rights of certain groups, particularly women and the Harijan (or untouchables, who represent 20% of the population, or almost 200 million people). Despite government-sponsored affirmative action programs, the age-old caste system in India means that certain groups do not have equal access to education, job opportunities, social status, and wealth. Gender Rights There is an elaborate system of laws to protect the rights of women against violent acts and forced prostitution. For example, India ratified the Convention on the Elimination of All Forms of Discrimination against Women (CEDAW) in 2000. It is commonly called the womens bill of rights. The National Policy For The Empowerment Of Women was passed in 2001. The Protection of Women from Domestic Violence Act came into force in 2006. However, the government often is unable to enforce these laws, especially in rural areas where traditions are deeply rooted. Domestic violence as a result of dowry disputes is a serious problem, sometimes ending in the woman's death. Also, in many parts of the country, women do not enjoy equal rights under the law in such matters as inheritance of family property. Human trafficking is a serious problem in India. The government estimates that 90% of India's sex trafficking is internal. There is no national law enforcement mechanism for any form of trafficking in India and it lacks the minimum standards for the elimination of trafficking. India does not have adequate punishment for people who commit trafficking crimes. The few shelters that India has for trafficked victims cannot support victims for more than a few months, leaving them vulnerable to being re-trafficked. Corruption in law enforcement prevents India from enforcing its anti-trafficking laws. Much of the problem of cross-border trafficking through India is a result of the porous border between India and its neighbors, Bangladesh and Nepal. Empowering women lets them work to eliminate the discrimination they face. Beginning in the 1990s, grants from foreign donor agencies enabled the formation of new women-oriented NGOs. Groups such as the Self-Employed Womens Association (SEWA) have played a major role in women's rights. For example, such organizations along with media coverage were able to reverse a ruling in the case of a Muslim rape victim by the name of Imrana in 2006. After she was raped by her father-in-law, some Muslim clerics decided that Imrana should marry her father-in-law to protect the familys honor. However this decision led to widespread protests and eventually Imrana's father-in-law was given a prison term of 10 years. This would not have happened if other women had not spoken up. The Criminal Procedure Code has been amended due to an increase in rape cases in the country. It is intended to protect rape victims from suffering further trauma during the process of investigation by having women police officers interview the victim and women judges preside over hearings and trials. But the social impact can still be devastating, as the victims family and the community may ostracize her. It has been recommended that funds by set aside for rape victims in case they have nowhere to go. Being such a large country, India decentralized the governing of local rural districts in the 1950s and 60s with the 73rd and 74th Constitutional Amendment Acts. They created a form of government called Panchayat Raj, which are responsible for governance, economic development 4

and social justice in the rural districts. Interestingly, these amendments state that 1/3 of the governing seats are to be held by women. As a result, over a million women have entered political life through their local Panchayat Raj. As of 2011, the President of India, the Speaker of the Lower House of Parliament, and the Leader of the Opposition in the Lower House are all women. So while some progress has been made, the resistance socially, politically, and economically to equality for women still has a long ways to go. Minority Rights The borders of India were artificially set in 1947 when British India became two separate countriesIndia and Pakistan. This resulted in one of the largest mass migrations the world has ever seen, as about 14.5 million people moved to be on the side of the religious majority. Thus, many Muslims moved to Pakistan and Hindus moved to India. But this has still left India as a nation of minorities, even though Hinduism seems to be the unifying thread. Beneath the surface, India is a country burdened with ethnic, religious and linguistic conflicts. With a weak central government that struggles to find a majority to elect it, many experts have feared that India would split apart just as the former Yugoslavia or the former Soviet Union have done. However, it is perhaps remarkable that a state presenting so much diversity in the character of its peoples, religions and cultures, with an underdeveloped infrastructure and a majority of the population living in poverty, has managed to survive as a viable unit. The main minority groups in India include the socially excluded Harijans, also known as the Dalits or Untouchables at 16%, the religious minority Muslims at 13.4%, and an indigenous group the Adivasis at 8% of the population. There are some smaller minority groups, but the two groups most discriminated against are the Harijans and the Muslims. The Harijans are the unfortunate victims of the caste system, which has existed for hundreds of years. The Harijans have been discriminated against socially, politically, and economically. They lack equal access to education, job opportunities, social status, and wealth. The Indian constitution requires the government to provide some sort of solution to the discrimination against lower caste members. Since 1980, there has been an affirmative action law, which mandates a certain percentage of higher education slots and government jobs to lower caste members and indigenous groups. But it has been difficult to combat this discrimination at the cultural level. In an unusual move, the UN appointed a special committee to propose a set of Principles and Guidelines aimed at eliminating caste-based discrimination in 2009. Yet due to sovereign issues, the UN report is only a recommendation and it is up to individual states in India to determine to what extent they want to adopt the recommendations. Even though they are a minority in India, there are more Muslims living in India than in any other country including the Middle East. Post 9/11, there has been the troubling emergence of religious fundamentalism in India. There have been a rise of religious fundamental political parties and an increasing number of attacks against Muslims and Christians. In theory, India is a democracy and guarantees the political and civil freedoms of its citizens. The national government has ratified The Convention for the Elimination of All Forms of Discrimination. The country was one of the first to ratify the ILOs Convention 107 on Indigenous and Tribal Populations. In 2006, it was one of the 47 nations elected to the new UN Human Rights Council. Yet, India is increasingly challenged by the plethora [overabundance] of minority demands from separatist demands [separate country] to increased political representation to protection of the powerless. The better able India is able to put in place 5

processes that enable minority problems to be discussed and resolved, the more the country will benefit as a whole. Recommendations include improving the quality of education for all, setting up an Equal Opportunity Commission, and a National Data Bank to monitor compliance.

ENVIRONMENT
With its huge population of over 1.1 billion growing by 25 million a year, India has major environmental and health-related problems. They include deforestation, soil degradation, overgrazing, desertification, air pollution from both industry and vehicle emissions, and water pollution from raw sewage and agricultural pesticides. Among these problems, the biggest is probably water pollution. Tap water is not safe to drink, exposing the population to many waterborn diseases. Global Warming India ratified the Kyoto Protocol in August 2002. As a developing country, India is not required to reduce its emissions under the Protocol. In November 2002, India hosted the United Nations Framework Convention on Climate Control (UNFCC) conference in New Delhi. A report from the Netherlands Environment Assessment Agency (NEAA) reveals that global emissions have increased 5.8% in 2010 compared to 2009. The report holds India and China responsible for the bulk of this increase. India, like many developing countries, is frustrated for the developed countries have been polluting for over 100 years as they grew their economies. But as the less advanced countries grow their economies today, the effects of global warming are restricting their ability to expand. As former Prime Minister of India Indira Gandhi said poverty is the greatest polluter and development is the greatest healer. The problem India is struggling with is its insatiable need for more electricity to feed its growing economy. Most analysts expect that the demand for electricity will rise at about 10% a year. (For comparison, U.S. power demand rises about 2% annually.) Over the past decade, about 33% of India's new power supplies came from sources that emit fewer GHG emissions--natural gas and hydro electricity. However, the higher cost of natural gas and environmental objections to building hydro dams mean that the fuel of choice is primarily coal. Coal is the most polluting of all fossil fuels. Already more than half of India's new power supplies come from coal, and that could grow rapidly. In its defense, the country argues that it still has a tiny per capita carbon footprint of 1.02 tons vs. the world average of 4.25 tons. Despite Indias objections of unfairness, it has pledged to lower its emissions intensity of its GDP by 20-25% by 2020. India is spending over 2.6% of its GDP on mitigation and adaptation to climate variability. Here is a list of some of the pollution reduction measures being adopted in major cities such as New Delhi: (1) reducing the sulfur content in fuel, both gas and diesel; (2) phasing out of commercial vehicles older than 15 years and buses older than 8 years; (3) rickshaws and taxis must use CNG (compressed natural gas) or other clean burning fuels; (4) lead in gasoline has been phased out in the entire country since 2000; (5) since 1995, only cars with catalytic converters can be sold in major cities; and (6) periodic emission testing of in-use vehicles. Going forward, there are three main areas to address with climate change: 1) land management, 2) alternative energy sources, and 3) energy efficiency and sustainability. Land management includes the way agriculture and livestock production are contributing to global warming as well as deforestation or degradation of national forests. 6

1) Land management: dense forests once covered most of Indias land. Today, remaining forestry cover is estimated to be at about 20%. To stop deforestation, India passed the National Forest Policy in 1988. When the local citizens ignored most of the deforestation rules in the national law, a program called Joint Forest Management proposed that designated villages in association with the forest department manage specific forest blocks. In essence, the protection of the forests would be the responsibility of the people. By 1992, 17 Indian states were participating in Joint Forest Management. This brought about five million acres of forests under protection. A large pollution problem for India is that it is the world's largest consumer of wood for fuel. Its consumption of fuel wood is about five times higher than what can be sustainably removed from forests. About 80% of the rural population and 48% of the urban population use wood for energy. Unless India makes rapid and sustained efforts to expand electricity generation and power plants, the rural and urban poor in India will continue to meet their energy needs through unsustainable destruction of forests and fuel wood consumption. The burning of wood is claimed to be the primary cause of India's near-permanent haze and air pollution. Globally, livestock contributes 20% of all GHG emissions. India's livestock of roughly 485 million (including cows, sheep and goats) contributes more polluting emissions that all the car and truck traffic combined. The first ever livestock emission inventory shows methane releases to be 11.75 metric tons annually. Economically, it is estimated that livestock contribute 5.3% to total GDP. Already the world's largest producer of milk, India production will likely nearly double by 2021-22 to keep up with its growing population and expanding incomes. In addition, many rural residents rely on their farm animals for work in their fields and transportation, so they are indispensable. It is a cultural no-no to kill a cow, so even old cows remain alive, contributing to the methane pollution. Because most Indian livestock is underfed and undernourished, the government knows that it cannot persuade farmers to make the expensive dietary changes some developed countries are trying. So Indian researchers are looking locally to see what fixes might work. One example is urea-molasses-mineral blocks that are cheap, reduce methane emission by 20%, and also provide more nutrition, so they're easier to sell to illiterate farmers who may not care about global warming but want higher milk yields. Farmers that can afford it are encouraged to use oilseed cakes, which provide unsaturated fatty acids that get rid of the hydrogen that allows the conversion to methane gas. A third solution is locally grown herbal additives such as shikakai and reetha. The Indian researchers are excited by this third option. It may allow them to make a profit by selling a simple and inexpensive solution to decreasing methane gas to other countries facing similar problems. 2) Alternative fuel sources: India began installing wind power in the 1990s. It now has the fifth largest installed wind power capacity in the world. At the beginning of 2012, there was 20,550 MW installed, which equals 6% of Indias total power. In a projection from only 13 out of 28 states, there is a potential of about 45,000 MW of capacity. When the other 15 states are surveyed, this total may be higher. Solar power: under its National Action Plan on Climate Change, the government has a threephase plan to add solar power. In 2010, the total installed solar power was a mere 10 MW, which is only 1% of Indias total energy demand. Geographically, it is a great location for solar power, for it has 300 days of high solar intensity days a year. Assuming the efficiency of solar panels to be at 10%, the total sun hitting India is 1,000 times more than the domestic electricity demand 7

projected for the year 2015. There is a perfect storm of factors that are pointing to a drive towards solar in the next five years. The price of solar panels has dropped dramatically due to Chinas entry into the manufacturing of the panels, there is government support and a huge need for electrical power. In July 2009, India unveiled a $19 billion plan to produce 20 GW of solar power by 2020. A 76 square mile section of the Thar Desert has been set aside for solar projects. It is estimated that 700-2,100 GW of solar panels could be installed there. Hydropower: India has realized about 20% of its potential energy by water power (dam building). However, new hydro projects face severe resistance from environmentalists and by the people whose homes would be submerged by the lakes behind the dams. Such people face relocation, which forces them to leave their community and jobs. Nuclear power: Nuclear power is a sore subject with India. India is one of three countries that refuses to sign the Nuclear Non-proliferation Treaty (NPT). Thus, up until recently, their ability to develop new power plants has been blocked. But the world community has a dilemma with India, for it also is pressuring the country to find cleaner sources of fuel. A compromise was reached in 2008, which put the civilian uses of energy under the control of the IAEA, just like countries that have signed the NPT. As of 2010, India became only the sixth country to have 20 or more nuclear reactors in operation in six nuclear power plants. Seven other reactors are under construction. When they are completed by 2017, the country will have 10,080 MW generating capacity, or 9% of its energy needs. India has an ambitious plan to have 63,000 MW of capacity by 2032. However, the March 2011 Japanese nuclear disaster has raised questions about atomic energy as a clear and safe alternative to fossil fuels. There have been mass protests around the country, particularly around three proposed nuclear sites by local farmers and fishermen. There is now a class action suit filed with the Indian Supreme Court, calling for a stay of all nuclear power plants construction until satisfactory safety measures and cost-benefit analyses are conducted by independent agencies. Aware of the dangers of nuclear energy, India is conducting research on the newer, but potentially safer types of nuclear power plants. The country has a large amount of thorium reserves, so it is very interested in developing a thorium nuclear reactor. Such reactors cannot meltdown in the case of an emergency. They can just be turned off with a switch. The other program India is partnering in is fusion type reactors. These are the reactors used by the TV show Star Trek to power the starship Enterprise. However, both types of reactors are still in the experimental stage, and it will be many years before it is known if they will be commercially viable. Microgeneration or micropower is the production of zero or low-carbon power by individuals, small businesses and communities to meet their own needs. This includes small wind turbines, solar power photovoltaic or biomass conversion systems that have been promoted for decades as alternative sources of renewable energy. In a country the size of India, even handheld solar and wind-power charging devices for computers and other personal electronics could relieve the need for additional megapower electrical power stations. 3) Energy efficiency and sustainability: Green building construction has been a goal in India since 2001, when the India Green Building Council was established. A green building is one that: 1) uses less water, 2) takes advantage of energy efficiency, 3) conserves natural resources, 4) generates less waste and 5) provides healthier spaces for occupants, as compared to a conventional building. There are currently 1,482 LEED registered buildings and 214 that are LEED certified buildings. This green footprint totals 1.07 billion square feet of buildings space. 8

The national government has under consideration a law that all new government building construction must include solar power. It would be extended to new hotels and hospitals as well. In the state of Tamil Nadu, the government broke ground in 2011 on 60,000 houses for the poor that will have many sustainable features. At 300 square feet, each house will use a rain catchment system that provides all the water used in the home. They will also be powered by solar energy and each has five solar lights. Thus the homes do not need to be connected to the electrical grid or a municipal water source. Health India's enormous population and widespread poverty compound its challenges in health. There is a large divide in access to healthy conditions between rich and poor, and also between urban and rural areas. Many Indians in rural areas and urban slums face health problems due to poor living and working conditions and unequal access to safe drinking water and sanitation. When combined with poverty, these conditions result in high rates of malnutrition and child mortality. In India, 66 out of 1,000 children die before the age of five. India is not on track to meet most of the health targets outlined in the MDGs. Though child mortality and maternal mortality are decreasing, the rates will still be higher than the MDG targets. India has universal health care, but medical services are still lacking because there are not enough resources or staff to serve everyone. Those who can afford it often use private health care. Current expenditures for health care equal 4% of Indias GDP, with about 68% coming from private sources. This makes Indias ranking for health care spending 145th out of 193 countries. Communicable Diseases: a number of communicable diseases pose serious risks for Indians, including dengue fever, malaria, diarrheal diseases, and even polio, which has been eradicated in most other countries of the world. Unsafe drinking water and poor sanitation in parts of India contribute to the spread of some communicable diseases. The prevalence of tuberculosis (TB) in India is 256 per 100,000 people, which is a decrease from previous years. However, TB remains a strong concern because new strains of the disease are developing in India that are resistant to drug treatment. The MDGs call for a significant reduction and reversal of the number of people with malaria, TB, and other diseases. While rates for malaria and TB are decreasing, they are not decreasing fast enough to meet the MDG targets. In addition, India is home to the third largest number of people living with HIV in the world. The prevalence of HIV is 0.3%, which equals about 2.4 million people with HIV. The public health care system is not able to handle the large number of HIV cases in India, thus most of the treatment for HIV comes from the international community. As with other diseases in India, the rate of HIV is decreasing slightly. However, the decrease is tiny only 0.01% from 2008 to 2009. This means that India is nowhere close to meeting the MDG target for reducing and reversing the trend of HIV. One sign that the message about HIV is reaching people is reflected in smaller towns and remote regions where young people, despite their limited education and conservative upbringing, are requesting pre-marital HIV testing with the support of their families. Non-communicable Diseases (NCDs): non-communicable diseases account for about 53% of the deaths in India. Heart disease is the most common NCD in India, accounting for 24% of all total deaths in India. The leading risk factors in India for heart disease and other NCDs are high blood pressure and high cholesterol. Alcohol consumption and obesity are low in India. Tobacco 9

consumption is a bit higher with a 14% prevalence rate, though still lower than many other countries.

ECONOMY
India has the worlds 12th largest economy. But it is a country of extremes devastating poverty for many of its people contrasted with a large, well-educated middle class. Since 2003, its economy has grown rapidly--an average of 7-9% a year. It is estimated that this growth will allow the middle class to grow ten-fold by 2025. Yet there are still millions of people living on less than $1 a day. India is considered a developing country with a lower-middle income level. Most people involved in business use English as their official language. This has allowed India to become a major exporter of software services and call centers outsourced from countries like the U.S. and Canada. This expertise with computers and other technology has helped modernize Indias economy. It has also created social changes, as call centers hire young educated women who become the first generation in their family to move from home and have a life of independence away from their traditional, multi-generational families. Politics may limit the things government leaders can do for the economy. While Prime Minister Singh has adopted a liberal economic approach, he heads a politically fragile coalition government. His government would fall without the support of four parties in parliament that have Communist and Marxist ideologies. The Left Front as they are called, opposes many aspects of economic liberalization and globalization. Because Mr. Singh needs to appease the Left Front in order to govern, the outlook for further trade liberalization is mixed. The Left Front wants Indian industries, especially small industries, protected from a flood of cheap imports. While this protects the jobs of many small manufacturers, protectionism tends to make companies inefficient and costs to consumers higher. Despite the growth of some very modern cities, Indias economy is limited by inadequate infrastructure, an inability to feed all of its people, corruption, a labor market that lacks the ability to move people to where the jobs are, and a high debt level. The government has been reducing its public debt since the 2008 recession. It is estimated to be running at 5.5% of GDP annually, for a cumulative total of 51.6% of GDP in 2011. That puts its rank at 50 out of 135 countries, with 1 having the highest debt level and 135 having the lowest debt level. International Trade The Indian government is opening the economy to trade as part of the economic reforms started in 1991. India has removed barriers to imports on 1,420 consumer items and has reduced tariffs from a high of about 300% in 1991 to around 40% now. However, Indian tariffs are still relatively high, especially to protect products that can be produced domestically. India is a member of the World Trade Organization (WTO) and has promised to continue reducing tariffs. India has been slow in implementing WTO intellectual property rights standards. However, India has a prosperous and influential industrial sector, a strong labor movement, and the Left Front political group which may work to keep some protections in place for certain Indian industries. As one of the largest developing countries in the WTO, India has pushed for the organization to address the interests of developing nations such as boosting public health and access to cheap prescription drugs. It is also a member of the G20.

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Regionally, India is a member of the South Asian Association for Regional Cooperation (SAARC). The group has been working on a free trade agreement called SAFTA, since 2004. It calls for the gradual reduction of tariffs, duties, and other trade barriers between the seven member countries. Some tariffs will be removed immediately and others over periods of several years. SAFTA will mean the eventual duty-free access for a vast range of manufactured goods and commodities traded between the signatories. India signed the agreement in 2009. India has been able to attract foreign direct investment (FDI) because of the reform of its financial sector, the size of its domestic market, and its large, educated workforce. India is one of the world's leading exporters of information technology (including computer hardware and software plus programming and data processing services). For example, all the major U.S. technology companies have offices in India. However, in order to continue to grow its economy India needs to shift to other types of manufacturing. But it has been losing such opportunities to Vietnam and China due to their superior infrastructure. Indias poor infrastructure causes too many delays to get goods to the port to be shipped. In addition, the extent of corruption in the Indian government and inefficient local government systems has discouraged some FDI. Child Labor Research shows that child labor can have serious economic and social consequences in a country. When businesses can freely employ children, this can hold the wages down for adult workers and can raise the unemployment rate for adults. For children, working instead of going to school often traps them in a lifetime of low-paying unskilled jobs or worse. India is a country where almost 30% of the population is younger than 15 years of age. A large proportion of all the world's child laborers is said to be in India. The officially recognized number of child laborers is 17 million as of the year 2000. But experts say the number could be as high as 60 million, for many child laborers are hidden away. This proves that their employers know that it is against the law but they continue to employ such workers. Many employers lie and say they have no child workers. So it is difficult to count them, enforce the laws, and to get to the root of the problem, which is poverty. Usually child labor traps the children into lowpaying work for the rest of their lives. Then the cycle is repeated for their children. About 70% of child laborers are working alongside their parents as paid agricultural laborers. Others work as domestic servants or are employed in industries that utilize child labor such as hand-knotted carpets, gemstone polishing, brass, glassware, footwear, textiles, silk, and fireworks. Perhaps half of India's child laborers are engaged in dangerous work activities. It is not unusual for children as young as five to work 12 hour days. It is both a social and economic issue, for not only do young laborers parents need the money they earn, but child labor is seen as socially acceptable. There are laws in place that are supposed to protect children from working. The Constitution of India states that no child below the age of 14 shall be offered employment in dangerous work environments. Also all children age 6 to 14 shall be provided a free education. In 2009, the Right of Children to Free and Compulsory Education Act was passed. It sets a quota of 25% of seats to be set aside in private schools for disadvantaged children. As for international conventions, India has not signed the ILO Convention #138 on Minimum Age and the Worst Forms of Child Labor Convention #182. It has ratified the UN Convention on the Rights of the Child.

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A national policy begun in 1988 entitled the National Child Labor Projects (NCLPs) has worked in limited areas to provide education and vocational training to former child laborers. Over the years the government has continued to expand this program and to publicize the fact that child labor is bad for the country. Some NGOs have tried paying off the debts of bonded child laborers, but often these children end up back in the workforce within a few years. One method that has recently been effective against child labor is to look at the supply chain for international companies. If one of the companys subcontractors is using child labor, publicizing this information may mean reduced profits and a sullied reputation for the company. This is because often people in developed countries will avoid buying products made with child labor. This tactic has been used against companies such as the Gap and Monsanto in India. In response, companies often hire inspectors who monitor child labor. While this may reduce child labor, it could also make it worse for the child or her family who may need the income. Sometimes such children end up in more dangerous work for less pay when they lose their more stable factory jobs. Or they are hidden away in tiny, non-ventilated rooms so the inspectors cannot find them. Cash transfer programs (CCTs) such as Bolsa Familia in Brazil have been used in some very limited trials in India. Typically such programs pay the mother of school age children to keep them in school and make sure they have their immunizations and basic health care. It has worked in Latin American countries for they have a well-developed banking infrastructure and computer-based monitoring systems. Many rural areas of India still lack electricity and they have no local banking system to allocate the funding of CCTs. About 73% of farming communities have no access to formal credit, with the lower caste members and indigenous tribes the worst hit. Without a bank, if agents are sent to deliver the funds some will be siphoned off due to corruption. But some of the new technology may make such programs more viable. Most rural villages are within walking or biking distance to a post office. There is a plan to provide banking and other financial services through biometrically identified [such as fingerprints] smart cards to 4.4 million of the very poor in rural areas. Also, the use of mobile phones is exploding in India. So some of the technology used to transfer money via text messages such as m-Pesa may work in India.

SECURITY
When India and Pakistan gained their independence from the United Kingdom in 1948, an arbitrary border was drawn to split the former British colony into multiple states. The two main states were India and Pakistan. Kashmir was given the chance to decide which country to align itself with. But both India and Pakistan want to claim a third area, Kashmir, for themselves. This ongoing dispute is the only serious security issue India has had to contend with. India and Pakistan have fought three wars over this issue, the last one in 1971. India won all three conflicts. There has been a lot of saber rattling since then. But once both countries secretly developed nuclear weapons, this ongoing conflict became a global concern. In 1998, India and Pakistan exploded nuclear devices within days of each other, to prove that they both had the biggest stick in the military arsenal. [It is like two men who race their cars on a street trying to show who has the better car.] Troops were massed on their joint border. Tensions ran high until 2003, when a ceasefire was signed. Confidence-building measures have taken place, such as meetings and sports competitions. However, a terrorist bombing in Mumbai, India in November 2008 has again raised the tension level between these two nuclear powers. India has asked Pakistan to arrest the 10 Pakistani men implicated in the bombing, but Pakistani resents such 12

interference in their national affairs. It seems that Kashmir will continue to be a serious sticking point in relations between India and Pakistan, and that the two countries will remain rivals. Recently, there has been a greater emphasis on regional groups that allow countries to discuss issues of mutual interest. The group for South Asia is the South Asian Association for Regional Cooperation (SAARC). India and Pakistan are both members, so forward movement sometimes slows when there is tension between the two countries. The countries or entities of China, Japan, the EU and the U.S. are observers. Established in 1985, SAARC encourages cooperation in agriculture, rural development, science and technology, culture, health, population control, narcotics, and terrorism. Nuclear Non-Proliferation Nuclear non-proliferation is a sore subject with India. India is one of three countries that refuses to sign the Nuclear Non-proliferation Treaty (NPT). India developed its nuclear weapons program in secret due to its concerns over China's possession of nuclear weapons. Because Pakistan also developed a secret weapons program, both India and Pakistan were sanctioned [penalized] under the 1994 Nuclear Proliferation Prevention Act by the G-7 countries. Since India and Pakistan developed nuclear weapons, every few years there is a terrorist attack in India that appears to be the work of Pakistani terrorists. Then the world holds its breath to see if the two countries escalate the fight all the way up to the use of nuclear weapons. If one country detonates a nuclear weapon on another countrys soil, there is a fear that the other country would feel forced to retaliate. The explosion of nuclear weapons would cause social, political, environmental, and economic turmoil in the whole world. Any country downwind of the explosion would be exposed to radiation with no way to prevent it. It would make the site of the explosion(s) uninhabitable, forcing the relocation of those that did not die in the explosion. Financial markets hate conflict and uncertainly, so stock, currency, and commodity markets would probably be erratic [go up and down]. Thus, such an explosion would create turmoil around the world. Indias secrecy and fears of its Pakistan rival has also colored its behavior with civilian nuclear power. In the last few years, India has been looking longingly towards nuclear energy to help wean it away from GHG emissions. This has caught world leaders in a bind, for India refuses to join the NPT. [Refusing to join the NPT even though most other countries have done so is like being told by your parents that you cannot go out with your friends because of bad behavior, but letting your sister go with her friends even though she also misbehaved.] The question becomes, which is more important, to hold India accountable like other countries have been held accountable with their nuclear technology? Or to give it access to the nuclear supplies it needs so it can build cleaner nuclear plants instead of polluting coal plants for its rapidly expanding energy needs? After much debate, it was decided that allowing India legitimate access to the needed supplies was the lesser of two evils. As the originator of the Atoms for Peace Program, the U.S. signaled its approval by signing with India the U.S.-India Civil Nuclear Agreement in 2008. India has agreed to separate its civil and nuclear facilities. The civilian facilities will now abide by the International Atomic energy Agency (IAEA) safeguards. In exchange, the country received a waiver that will allow it to trade nuclear fuel and other supporting equipment with the rest of the nuclear world. 13

As of 2010, India became only the sixth country to have 20 or more nuclear reactors in operation in six nuclear power plants. Seven other reactors are under construction. When they are completed by 2017, the country will have 10,080 MW generating capacity, or 9% of its energy needs. India has an ambitious plan to have 63,000 MW of capacity by 2032. However, the March 2011 Japanese nuclear disaster has raised questions about atomic energy as a clear and safe alternative to fossil fuels. There have been mass protests around the country, particularly around three proposed nuclear sites by local farmers and fishermen. There is now a class action suit filed with the Indian Supreme Court, calling for a stay of all nuclear power plants construction until satisfactory safety measures and cost-benefit analyses are conducted by independent agencies. Aware of the dangers of nuclear energy, India is conducting research on the newer, but potentially safer types of nuclear power plants. The country has a large amount of thorium reserves, so it is very interested in developing a thorium nuclear reactor. Such reactors cannot meltdown in the case of an emergency. They can just be turned off with a switch. The other program India is partnering in is fusion type reactors. These are the reactors used by the TV show Star Trek to power the starship Enterprise. However, both types of reactors are still in the experimental stage, and it will be many years before it is known if they will be commercially viable. Terrorism Geographically, India is located in an area of the world that is a hotbed of terrorist activity. India shares a long border with Pakistan, the country where Osama bin Laden was found. On the opposite side of Pakistan lies Afghanistan. Since the 18th century, Afghanistan has been a pawn in the great powers chess game. The U.S. and NATO have been attempting to strengthen the central Afghan government so it can resist terrorist incursions. While the goal is honorable, nation building is a very difficult and complicated process. Do people from halfway around the world understand the culture of Afghanistan well enough to know what will work to strengthen this country? India has a vested interest in what happens in Afghanistan, for terrorism that starts there can leak across borders. In 2010, India suffered nearly 1,900 deaths related to terrorism. This earned the country the unenviable reputation as one of the most terrorist-afflicted nations in the world. Continued violence in Kashmir and attempted terrorist border crossings from Pakistan contribute the most to cross-border terrorism. The lone survivor of the 2008 Mumbai terrorist attack was sentenced to death in May of 2010. But Pakistan has refused to arrest the 10 men India has identified as the planners of the attack. The Pakistanis bristle at the thought of another country dictating to them who they should arrest. The men are believed to still remain at large [free]. But in reaction to the attack, the Indians have developed Quick Reaction Teams in key cities and at the Delhi airport, for they were heavily criticized for being unprepared for the Mumbai attack. The terrorists roamed the city for three days before they were cornered and killed. Domestic terrorism is an equal threat to international terrorism. This is partly a result of the young age of the nation and the way in which it was formed. It is said that some independent groups and small kingdoms were literally forced at gunpoint to join India. There are at least 20 distinct insurgencies, mostly clustered in the Northeast or far Northwest, far from the booming trade-connected cities. India has tenuous control in these regions. There are Communist groups who are seeking a redistribution of land for the landless. There are religious fundamentalists who 14

feel constrained by the increasingly nationalistic nature of the Hindu majority. And there are ethnic groups who just want to be independent. One of the Communist groups is the Naxalites. They were estimated to be 80,000 strong in 2006. Their goal is to redistribute land to the landless. They target mostly Indian security forces but they have also blown up some trains and other infrastructure projects. In 2009, the national government began a plan called the Integrated Action Plan (IAP) to address the Naxalite problem. Importantly, IAP includes small economic development projects to address the poverty that is part of what is driving the insurgency. The government has reported some success in reducing the Naxalite numbers. In 2011, deaths and injuries were down 50% from 2010. In order to better anticipate terrorist attacks before they occur, the Indian government has strengthened its counterterrorism activities. It is building a fence along the shared Pakistan and Bangladesh borders to better control who might be entering its territory. An internal security force is being developed. The country is also looking outward, improving its regional and international cooperation with other countries. In 2010, the India-U.S. Counterterrorism Cooperation Initiative was signed. It allows for greater information sharing and the sharing of best practices in such areas as investigations, cyber security, and transportation security. There has been a concerted international effort in recent years to reduce international terrorism by limiting terrorists ability to finance their operations. This includes both the raising of funds in a neutral third country or the depositing of such funds in safer countrys banks. The Financial Action Task Force (FATF) has created a set of recommendations that require countries to develop laws which specifically address terrorist financing. Without such laws, terrorist bank accounts cannot be seized. India is a member of FATF. It has developed an action plan, which will help its financial institutions to meet FATF money laundering and terrorist financing standards. The country regularly shares information with other FATF countries on suspicious financial activities. However, India does not have a well-developed banking infrastructure or computer-based monitoring systems, so implementation by all banks may be challenging. While India has been working with other countries on terrorist financing, it does not appear that the country is as yet involved with either of the two port security initiatives--Megaports or Secure Freight (for nuclear material). Since 90% of world trade is shipped via shipping containers, the international community wants to prevent terrorists from shipping weapons of mass destruction or other illegal items in shipping containers. But since the Megaports and Secure freight initiatives rely heavily on computerized records to show what is being shipped and to whom, Indias ports may lack the level of computer sophistication needed to institute such programs.

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