What will be the fallout from Manmohan Singh's bold move to hike petrol prices and rein in the rupee? The plummeting Indian currency continued to trade lower early Friday, after an apparent intervention by the central bank arrested its fall Thursday. But even as economists argue that a comparable hike in diesel and kerosene prices is needed to end the slide, stiff opposition from Singh's coalition partners and the opposition -- as well as street protests across the country -- have further hampered the prime minister's ability to take action. Instead of an increase in diesel and kerosene prices -- which is riskier than hiking petrol prices, because the diesel price has a more direct effect on inflation and kerosene is the fuel of the ... Continue reading →

Look out, Vijay Mallya! Now that India and Pakistan are getty cosy, ,Kingfisher may be getting some new competition from the King of Bad Times. According to the UK's Guardian newspaper, India is finally get to taste the delicious lager produced by Pakistan's Murree Brewery -- which has limped along through 30-odd years of prohibition under Sabih-ur-Rehman, a former major who helps run the brewery and is in effect the Bizarro world Pakistani version of India's self-styled "King of Good Times." Pakistan natives have told me that the brew's quality goes up and down (at least in the bootleg version). But in the free-flowing confines of the Lahore-based American Club, I rated it the best beer in South Asia. Definitely much better than the weirdly ... Continue reading →

Nepal's efforts to draft a new constitution hit another hurdle Thursday with the resignation of the country's deputy prime minister. Krishna Sitaula said he was resigning in protest over a move to extend the mandate of the provisional Constituent Assembly for another three months to finish writing the constitution. At present, the assembly has until Sunday to draft the document, or risk the legislature being disbanded. "I am no longer in the cabinet from today. It is up to the party to decide whether to stay in the government but there is no relevance in me staying in the government," he told reporters, according to the Times of India. If there is no new constitution and no agreement on an extension by Sunday, parliament will ... Continue reading →

COIMBATORE, India — Combating charges of “policy paralysis,” Prime Minister Manmohan Singh raised India's petrol prices by the steepest amount ever on Wednesday, in an effort to woo back foreign investors and slow the fall of the plummeting rupee. But the sudden, bold, and much needed move could well put an end to hopes of a third term for his United Progressive Alliance coalition — and could also lead to a call for early polls. By hiking the petrol prices charged by India's state-owned oil companies nearly eight rupees per liter — or more than 10 percent — the government will dramatically reduce fuel subsidies, and thus reduce the fiscal deficit. But even though that is exactly the move that economists and investors have demanded ... Continue reading →

As the rupee continued to plunge Thursday despite the largest ever hike in petrol prices overnight, Prime Minister Manmohan Singh is reportedly weighing an increase in the prices for diesel and kerosene, according to the Times of India. "A panel of ministers is due to meet on Friday to discuss diesel, LPG and kerosene prices, according to unconfirmed reports, although full deregulation is not expected," the paper said. While a diesel and kerosene price hike would result in a more significant reduction in the government's subsidy bill -- and thus provide more encouragement to foreign investors -- politically the move is even riskier than Singh's unpopular decision to raise petrol prices. Not only does an increase in kerosene prices hit the poorest of the poor ... Continue reading →

Bad PM, bad! Trinamool Congress leader Mamata Banerjee -- a key ally for Prime Minister Manmohan Singh's United Progressive Alliance (UPA) government -- blew a gasket over a surprise hike in petrol prices on Thursday. But so far it's all bark and no bite, as she also said she won't withdraw support for the government, FirstPost.in reports. “It is all financial mismanagement. We don’t know what the economic situation is. They don’t discuss with us,” a visibly upset Banerjee told reporters in Kolkata, according to the website. “We would not withdraw support because this would be another economic burden on the country. Only for economic and political stability we will support the government. But support does not mean we won’t protest.” That's like waving a ... Continue reading →

India hiked petrol prices in an attempt to stop the rupee's plunge and bring the economy back on track late Wednesday, but the move has outraged citizens and united the opposition and his Congress Party's coalition partners against Prime Minister Manmohan Singh. According to NDTV: "The hike has prompted calls for a rollback from leaders who are key to the government's survival - [the Trinamool Congress'] Mamata Banerjee,[the Dravida Munnetra Kazhagam's] M Karunanidhi and [the Samajwadi Party's] Mulayam Singh Yadav. Even Congress heads of government like Sheila Dikshit are upset, indicating that the price hike may once again position the Congress vs the government, and prompting speculation of whether a partial rollback may have been built into the hike." Singh's bold maneuver comes amid accusations ... Continue reading →

Pakistan fears that India may ink some major defense deals with the US, as Secretary of Defense Leon Panetta visits New Delhi next month. The Nation cited the Times of India as saying that New Delhi is likely to finalize the acquisition of 145 M-777 ultra-light howitzers in a government-to-government deal worth $647 million, as well as a $1.4 billion contract to buy 22 missile-armed helicopter gunships from Boeing. Panetta's visit, and the possible arms purchases, come amid continuing tensions between the US and Pakistan over Islamabad's blocking of the NATO supply route into Afghanistan and the US president's refusal to apologize for drone attacks conducted in Pakistani territory. Meanwhile, Lisa Curtis, a senior fellow at the Heritage Center, wonders if US-Pakistan relations will EVER ... Continue reading →

The rupee whizzed past 55 against the dollar to hit another new low Wednesday, touching 55.95 by midday, reports the Hindustan Times. Traders said increased dollar demand from banks and importers, especially oil refiners coupled with capital outflows from foreign funds following melting stocks mainly affected the rupee value against the dollar. They said the plunging dollar had overshadowed the stocks market as the BSE benchmark Sensex dropped below the 16,000 mark, down 179 points in midsession trade today. Can anybody stop the bleeding? Clearly, Manmohan Singh's mea culpa, tempered with a lame attempt to defend his government against charges of "policy paralysis," on Tuesday has not done the trick. Look for my report later... (yes, yes, GlobalPost still uses editors!)... But the gist is ... Continue reading →