Pan-India look for King’s Team! « Investsure’s Blog
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Thursday, May 28, 2009
Sunday, May 3, 2009
‘Economy to grow 6% in 2009-10’
Indian economy will grow at 6% in 2009-10, according to RBI, making it the weakest GDP growth projection in seven years. However, on the inflation front, governor D Subbarao projected a moderate price rise of 4% by March 2010 based on wholesale price index.
Subbarao said the lower GDP growth projection was mainly because of the recessionary global economic condition, which has affected India's export badly. However, on the domestic front, the fiscal and monetary stimulus measures initiated during 2008-09, coupled with lower commodity prices, would cushion the downturn, he added.
He said the economy will achieve 9% growth only if the global economy bounces back from recession. ‘‘For India's economy to go back to the same high growth trajectory of 9% and more, we need the rest of the world to go back to the earlier growth levels,'' Subbarao said.
‘‘We also need export prospects to open up,'' the governor said. ‘‘Like all other emerging economies, India too has been impacted by the crisis, and much more than what was expected.''
Subbarao said GDP growth has moderated reflecting lower industrial production. Besides, negative exports, deceleration in services activities, dented corporate margins and diminished business confidence have impacted growth rates.
"There are some comforting factors — well-functioning financial markets, robust rural demand, lower headline inflation, and comfortable foreign exchange reserves — which buffered us from the worst impact of the crisis," he said.
The RBI had, in its January 2009 policy review, projected growth for 2008-09 at 7% with a downward bias. ‘‘The downside risks have since materialised, and GDP growth for 2008-09 is now projected to turn out to be in the range of 6.5-6.7%,'' he said.
Subbarao projected a moderate inflation because of the global trend of low commodity prices and domestic demandsupply balance. WPI-based inflation is expected to be in the negative territory in the early part of 2009-10, which has a stastical significance, but does not reflect demand contraction, he added.
Subbarao said the lower GDP growth projection was mainly because of the recessionary global economic condition, which has affected India's export badly. However, on the domestic front, the fiscal and monetary stimulus measures initiated during 2008-09, coupled with lower commodity prices, would cushion the downturn, he added.
He said the economy will achieve 9% growth only if the global economy bounces back from recession. ‘‘For India's economy to go back to the same high growth trajectory of 9% and more, we need the rest of the world to go back to the earlier growth levels,'' Subbarao said.
‘‘We also need export prospects to open up,'' the governor said. ‘‘Like all other emerging economies, India too has been impacted by the crisis, and much more than what was expected.''
Subbarao said GDP growth has moderated reflecting lower industrial production. Besides, negative exports, deceleration in services activities, dented corporate margins and diminished business confidence have impacted growth rates.
"There are some comforting factors — well-functioning financial markets, robust rural demand, lower headline inflation, and comfortable foreign exchange reserves — which buffered us from the worst impact of the crisis," he said.
The RBI had, in its January 2009 policy review, projected growth for 2008-09 at 7% with a downward bias. ‘‘The downside risks have since materialised, and GDP growth for 2008-09 is now projected to turn out to be in the range of 6.5-6.7%,'' he said.
Subbarao projected a moderate inflation because of the global trend of low commodity prices and domestic demandsupply balance. WPI-based inflation is expected to be in the negative territory in the early part of 2009-10, which has a stastical significance, but does not reflect demand contraction, he added.
IMPORTANCE OF FINANCIAL PLANNING
Do you think you would achieve your financial goals in life? If you pose this question to your friends or relatives, most of them would answer in the affirmative. However, if you talk to advisors, they would tell you that most people are unlikely to meet their financial goals: be it for their retirement or children’s education. Why? Because they don’t have a proper financial plan, experts say.
“Mostly, investments are made in a random fashion. Sometimes there would be a goal in mind, but even in those cases there won’t be any follow up.
“In most cases, people don’t bother to review their investments periodically and make additional investment if needed to realise their goals. For example, some people would have some money in provident fund, fixed deposit, mutual funds and so on. They believe these investments would be enough to realise various life goals.
However, that won’t be the case. This is because they don’t know how much money would be needed to send their children to a foreign university. Or what should be the size of their investment corpus. “Since they haven’t worked with real numbers like inflation and rate of return, they wouldn’t have a realistic picture. For example, in the last 15 years the cost of education has gone up drastically.
That is why advisors insist one should have proper financial planning in life to achieve them. “As individuals, we are exposed to many eventualities in life. We have to be prepared to meet them. That is why we have to plan for it.
“For example, we have financial goals like retirement, child’s education, and so on. If you don’t actually plan for them and work towards them, it would be difficult to realise those goals.
There was this guy who walked into my office just a few months after retirement. He had been steadfastly saving for his retirement. He had frugal habits and his savings rate has been very high. “However, when we sat and worked with real numbers, it became very clear that he would have to scale down his post-retirement expenses. This was because though he saved most of his salary, he put them in safe avenues like fixed deposits and PPF, which give modest returns. His corpus hasn’t grown much
because of this.
This is where absence of a “real financial plan’’ becomes evident. For example, if the person worked with real numbers, he would have had a rough idea about how much money he would have in his retirement corpus. If he thought that wouldn’t be enough to fund his retired life, he could have invested in stocks, which in theory is expected to deliver better returns. Further, if he had considered inflation, he would have got a rough idea that things would cost more in future, prompting him to add more to his retirement fund.
Mashruwala likens financial planning to driving a car to the destination. “Like a car’s four tyres, we also have four components in our life: income, expense, investments and liabilities. It is about synchronising these four,’’ he says. Trivedi says a proper financial plan would help people meet any eventuality in life. “It could be an individual problem or a general one like the current economic crisis. If you have a proper plan, you can tackle it better,’’ he says.
Get Ready
l Identify a goal l Find out how much fund you would require to achieve it l Work with real numbers to get a realistic picture l Identify the ideal investment vehicle l For short-term goals, stick to safer investment like debt l For long-term goals, you can opt for equity l Always review your investments periodically l Make changes in your plan if required
“Mostly, investments are made in a random fashion. Sometimes there would be a goal in mind, but even in those cases there won’t be any follow up.
“In most cases, people don’t bother to review their investments periodically and make additional investment if needed to realise their goals. For example, some people would have some money in provident fund, fixed deposit, mutual funds and so on. They believe these investments would be enough to realise various life goals.
However, that won’t be the case. This is because they don’t know how much money would be needed to send their children to a foreign university. Or what should be the size of their investment corpus. “Since they haven’t worked with real numbers like inflation and rate of return, they wouldn’t have a realistic picture. For example, in the last 15 years the cost of education has gone up drastically.
That is why advisors insist one should have proper financial planning in life to achieve them. “As individuals, we are exposed to many eventualities in life. We have to be prepared to meet them. That is why we have to plan for it.
“For example, we have financial goals like retirement, child’s education, and so on. If you don’t actually plan for them and work towards them, it would be difficult to realise those goals.
There was this guy who walked into my office just a few months after retirement. He had been steadfastly saving for his retirement. He had frugal habits and his savings rate has been very high. “However, when we sat and worked with real numbers, it became very clear that he would have to scale down his post-retirement expenses. This was because though he saved most of his salary, he put them in safe avenues like fixed deposits and PPF, which give modest returns. His corpus hasn’t grown much
because of this.
This is where absence of a “real financial plan’’ becomes evident. For example, if the person worked with real numbers, he would have had a rough idea about how much money he would have in his retirement corpus. If he thought that wouldn’t be enough to fund his retired life, he could have invested in stocks, which in theory is expected to deliver better returns. Further, if he had considered inflation, he would have got a rough idea that things would cost more in future, prompting him to add more to his retirement fund.
Mashruwala likens financial planning to driving a car to the destination. “Like a car’s four tyres, we also have four components in our life: income, expense, investments and liabilities. It is about synchronising these four,’’ he says. Trivedi says a proper financial plan would help people meet any eventuality in life. “It could be an individual problem or a general one like the current economic crisis. If you have a proper plan, you can tackle it better,’’ he says.
Get Ready
l Identify a goal l Find out how much fund you would require to achieve it l Work with real numbers to get a realistic picture l Identify the ideal investment vehicle l For short-term goals, stick to safer investment like debt l For long-term goals, you can opt for equity l Always review your investments periodically l Make changes in your plan if required
Pariahs in our own home
Ghettoisation is a grave and complex part of the communalism problem plaguing this country. The ghettoisation of Muslims has a decisive bearing on communalism but, unfortunately, it remains a theme ignored in public discourse. It is common knowledge that during the last two decades, Muslim families have faced enormous difficulties in renting houses in Hindu majority areas in India, as Hindu landlords tend to shun Muslim tenants even if they belong to the same social class and enjoy an equal or better footing in society.
In Mumbai, for instance, some housing societies refuse membership to Muslims openly. In other cities too it is difficult for a Muslim to get an apartment in a housing society. In cities like Delhi, housing societies generally do not say no to Muslims openly but adopt various subterfuges.
Muslim ghettoisation began in the mid-1970s, gathered pace in the 1980s and is now a wellestablished and worrying phenomenon. The Muslim population in many north Indian villages has been forced to migrate to Muslim localities in nearby towns. The situation is such that at present even new settlements and illegal and irregular colonies in urban India are ghettoised.
In general, Muslims today are forced to settle in Muslim-predominant areas, where poor infrastructure and civic facilities pose immense problems, for which only the government is to blame. Until the early 1990s, one could find Muslim government servants occupying government housing in areas where the majority of the population was not Muslim. But even here, a reverse trend has been visible lately. Take just one example: Muslim teachers in Jawaharlal Nehru University in New Delhi, reputedly an enlightened place with a liberal outlook, prefer to live in Muslim-dominated colonies rather than on the university campus.
The end result of this phenomenon is that Muslim families are seen only in areas that can be termed as Muslim clusters. It is important to note that families that moved from the old city to New Delhi some 50 years ago are now moving back to their old family houses simply because they do not feel secure in Hindu-dominated areas.
For instance, Jamia Nagar, in south Delhi, boasts a sizeable Muslim elite, which shifted there after 1992. Land costs here have now shot through the roof owing to the demand-supply mismatch, with each new day bringing more families, placing undue stress on the already poor infrastructure. The state of affairs is such that this area, which adjoins the Jamia Millia Islamia campus, a central university, does not even have a government dispensary or a nationalised bank branch (though there is one on the university campus).
Jamia Nagar conjoins many Muslim colonies such as Batla House, Zakir Nagar, Abul Fazl Enclave, Ghaffar Manzil, Noor Nagar, etc. This whole area, with a population of about 10 lakh, is a victim of official apathy. And this is just the case of Delhi, the national capital. This scenario is common to other parts of the country as well.
Who is responsible for this growing ghettoisation of the Muslim population? Undoubtedly civil society is to blame. The Bhagalpur riots of 1989 were responsible for the migration of rural Muslims in north India and the demolition of the Babri masjid on December 6, 1992 and the resultant backlash all over the country were the last nail in the coffin of Hindu-Muslim neighbourhoods. In contrast, there are fewer incidents of non-Muslims, particularly Hindu families, living in Muslim-dominated areas that have faced a similar situation during communal riots.
The question to ask is: Does this represent the death of our hitherto composite culture, with its liberal, tolerant and understanding outlook? Or can we still do something to save it? What can be done to set the clock back and foster secularism? It will take a lot of courage and will to figure out the answers but that is the only way Indian democracy can survive.
In Mumbai, for instance, some housing societies refuse membership to Muslims openly. In other cities too it is difficult for a Muslim to get an apartment in a housing society. In cities like Delhi, housing societies generally do not say no to Muslims openly but adopt various subterfuges.
Muslim ghettoisation began in the mid-1970s, gathered pace in the 1980s and is now a wellestablished and worrying phenomenon. The Muslim population in many north Indian villages has been forced to migrate to Muslim localities in nearby towns. The situation is such that at present even new settlements and illegal and irregular colonies in urban India are ghettoised.
In general, Muslims today are forced to settle in Muslim-predominant areas, where poor infrastructure and civic facilities pose immense problems, for which only the government is to blame. Until the early 1990s, one could find Muslim government servants occupying government housing in areas where the majority of the population was not Muslim. But even here, a reverse trend has been visible lately. Take just one example: Muslim teachers in Jawaharlal Nehru University in New Delhi, reputedly an enlightened place with a liberal outlook, prefer to live in Muslim-dominated colonies rather than on the university campus.
The end result of this phenomenon is that Muslim families are seen only in areas that can be termed as Muslim clusters. It is important to note that families that moved from the old city to New Delhi some 50 years ago are now moving back to their old family houses simply because they do not feel secure in Hindu-dominated areas.
For instance, Jamia Nagar, in south Delhi, boasts a sizeable Muslim elite, which shifted there after 1992. Land costs here have now shot through the roof owing to the demand-supply mismatch, with each new day bringing more families, placing undue stress on the already poor infrastructure. The state of affairs is such that this area, which adjoins the Jamia Millia Islamia campus, a central university, does not even have a government dispensary or a nationalised bank branch (though there is one on the university campus).
Jamia Nagar conjoins many Muslim colonies such as Batla House, Zakir Nagar, Abul Fazl Enclave, Ghaffar Manzil, Noor Nagar, etc. This whole area, with a population of about 10 lakh, is a victim of official apathy. And this is just the case of Delhi, the national capital. This scenario is common to other parts of the country as well.
Who is responsible for this growing ghettoisation of the Muslim population? Undoubtedly civil society is to blame. The Bhagalpur riots of 1989 were responsible for the migration of rural Muslims in north India and the demolition of the Babri masjid on December 6, 1992 and the resultant backlash all over the country were the last nail in the coffin of Hindu-Muslim neighbourhoods. In contrast, there are fewer incidents of non-Muslims, particularly Hindu families, living in Muslim-dominated areas that have faced a similar situation during communal riots.
The question to ask is: Does this represent the death of our hitherto composite culture, with its liberal, tolerant and understanding outlook? Or can we still do something to save it? What can be done to set the clock back and foster secularism? It will take a lot of courage and will to figure out the answers but that is the only way Indian democracy can survive.
Where should advertising campaigns draw the line?
Have you seen the ad where a young boy is magically cured of his illness by using a particular brand of soap? Or all those toothpaste commercials in which an actor purporting to be a dentist advises you that this particular toothpaste is guaranteed to kill 99 per cent of the germs present in your mouth?
Some media-savvy consumers may recognise their claims as being the grossly exaggerated fiction they are, but an equal number might not. And if people start to believe that a soap has the power to cure diseases, we have a problem on our hands.
Advertisements are meant to promote a particular product or service and to that end, marketers are allowed to be a little creative with the truth. Everybody expects some amount of hyperbole, but outright lies in an advert are unacceptable. And the commercials described above come uncomfortably close to false advertising.
Advertising in India is currently regulated by the Advertising Standards Council of India (ASCI), which is a voluntary, selfregulatory body. It is not a government body. Under the Cable Television Networks Rules, 1994, an advertisement that violates the code for self-regulation in advertising, as adopted by the ASCI, cannot be carried on cable. So, there is legal recourse for consumers if they suspect that advertisers are taking them for a ride.
But that does not excuse advertisers themselves from exercising their judgment in what constitutes an acceptable commercial and what does not. Just because the advertising industry is meant to get people to part with their money, it is not exempt from the ethical considerations that govern other professions. Advertisers have a responsibility towards the consumers of the products being advertised.
It is in the best interests of both consumers and advertisers to build awareness so that blatant untruths aren’t conveyed by television commercials. Consumer pressure is the most effective means of ensuring that advertisers do not deliberately mislead buyers about their products.
The line between exaggeration and outright lying is a thin one and it would do nobody any good if advertisers did away with that line altogether.
Some media-savvy consumers may recognise their claims as being the grossly exaggerated fiction they are, but an equal number might not. And if people start to believe that a soap has the power to cure diseases, we have a problem on our hands.
Advertisements are meant to promote a particular product or service and to that end, marketers are allowed to be a little creative with the truth. Everybody expects some amount of hyperbole, but outright lies in an advert are unacceptable. And the commercials described above come uncomfortably close to false advertising.
Advertising in India is currently regulated by the Advertising Standards Council of India (ASCI), which is a voluntary, selfregulatory body. It is not a government body. Under the Cable Television Networks Rules, 1994, an advertisement that violates the code for self-regulation in advertising, as adopted by the ASCI, cannot be carried on cable. So, there is legal recourse for consumers if they suspect that advertisers are taking them for a ride.
But that does not excuse advertisers themselves from exercising their judgment in what constitutes an acceptable commercial and what does not. Just because the advertising industry is meant to get people to part with their money, it is not exempt from the ethical considerations that govern other professions. Advertisers have a responsibility towards the consumers of the products being advertised.
It is in the best interests of both consumers and advertisers to build awareness so that blatant untruths aren’t conveyed by television commercials. Consumer pressure is the most effective means of ensuring that advertisers do not deliberately mislead buyers about their products.
The line between exaggeration and outright lying is a thin one and it would do nobody any good if advertisers did away with that line altogether.
Still Waters Run Deep
China has enhanced naval clout and is willing to use it
Games played at sea seldom make headlines. Yet most empires were built by nations with powerful navies. China’s leaders realised that a modernised China required a strong navy to protect its territorial boundaries and, more importantly, vital imports of precious fuel and other natural resources. Such concerns have been accentuated by recent hijacking attempts on cargo ships in the Indian Ocean.
Efforts commenced in the mid-1980s to modernise the People’s Liberation Army Navy (PLAN). Since then the navy has grown, steadily enhancing its ability to protect China’s territorial boundaries and 200-mile Exclusive Economic Zone. In recent years, it has enabled China’s leadership to craft a robust policy towards Taiwan and actively resist competing offshore territorial claims of countries like Vietnam, the Philippines, Japan etc.
China’s economic policies, pursued for over 30 years, have vastly increased its international economic interaction. China’s seaborne commerce now totals 700 million tonnes a year, the fifth largest in the world. Sixty per cent of China’s vital oil imports come by sea. The number of Chinese ocean-going cargo vessels and tankers has increased. These considerations ensured sufficient funds for PLAN’s modernisation, including construction of modern submarines and plans for three aircraft carriers. The navy’s operational doctrine has also been reformulated.
China’s decision last December to send a flotilla outside its territorial waters for the first time in 600 years — for anti-piracy operations in the Indian Ocean off Somalia — demonstrated its confidence in its navy. Continuing its presence in the Indian Ocean, PLAN this month replaced both its warships. The supply ship’s tour has been extended. The Chinese flotilla has a complement of 800 men, a Special Forces component and two helicopters.
Deployment of the ships has been portrayed as willingness to engage with the international community in anti-piracy operations in international waters. It additionally demonstrates the Chinese navy’s expanded operational reach, its ability to send groups of ships far from its territorial waters, and its determination to protect its seaborne commercial cargo. Deployment at the same time of warships for exercises with the Pakistan navy and of a frigate to the waters off the Philippines, points to PLAN’s enhanced operational and logistical capability.
China’s leadership kept the spotlight on its growing naval capability, especially in the Asia-Pacific region, just weeks before the first summit meeting between US president Barack Obama and Chinese president Hu Jintao in London this month. On March 8, five Chinese vessels confronted the USNS Impeccable, a survey ship on surveillance mission 70 miles from Sanya, capital of southern China’s Hainan Island. Towing a sonar apparatus that listens for submarines, mines etc, it was spying on the facility near Sanya where nuclear-powered ballistic missile attack submarines are built. By itself the presence of a US spy ship is not unusual as major powers continuously play cat and mouse games in these strategically sensitive waters. What is unusual is the Chinese action. This confrontation between a ship of China’s navy and one of the US navy, which has the largest presence in the region, follows four similar incidents, the last being in the Yellow Sea in 2002.
This demonstration of PLAN’s capabilities differed from earlier incidents. On this occasion, a Chinese vessel came within 25 feet of the US ship, prompting US officials to describe it as the most serious incident since 2001. Pentagon described the Chinese action as “dangerous, unprofessional” and a “violation of international law”. US officials emphasised that such missions would continue while Obama authorised dispatch of a destroyer to escort USNS Impeccable.
China’s riposte was that it was a violation of the UN Convention on the Law of the Sea as well as Chinese law and regulations. Military deputies echoed sharp sentiments during the National People’s Congress, China’s version of a parliament, then underway in Beijing.
The political leadership’s reactions, however, reflected the delicate balance in relations between the US and China and the latter’s growing role in international affairs at the present juncture. The US secretary of state and vicepresident both soft-pedalled the matter in meetings with Chinese foreign minister Yang Jiechi in Washington before he met the US president. Obama did the same and the US confined its actions to lodging a formal protest with the Chinese foreign ministry and summoning the Washington-based Chinese defence attache for a dressing down.
China’s leaders have been saying since the 1960s that the Indian Ocean is not India’s Ocean. They have been seeking a foothold in the region and wooing Mauritius, the Seychelles and France, till the latter approved a Chinese consulate in Reunion Island. Chinese navy presence in the Indian Ocean is now larger than India’s. The confrontation with the US navy survey ship is, however, significant as China’s action comes amidst a silent, and at times violent, tussle for territory among claimant nations in the South and East China Seas. In separate acts, the Philippines and Malaysia recently claimed sovereignty over parts of the Spratly Islands.
By its action, China has suggested it will oppose counterclaims with muscle, undoubtedly raising apprehension in the neighbourhood. While surveillance activities by the concerned powers in the region, accompanied by efforts to nibble territory, will continue, the Chinese leadership has opted for the policy: Kill a chicken to frighten the monkey!
Games played at sea seldom make headlines. Yet most empires were built by nations with powerful navies. China’s leaders realised that a modernised China required a strong navy to protect its territorial boundaries and, more importantly, vital imports of precious fuel and other natural resources. Such concerns have been accentuated by recent hijacking attempts on cargo ships in the Indian Ocean.
Efforts commenced in the mid-1980s to modernise the People’s Liberation Army Navy (PLAN). Since then the navy has grown, steadily enhancing its ability to protect China’s territorial boundaries and 200-mile Exclusive Economic Zone. In recent years, it has enabled China’s leadership to craft a robust policy towards Taiwan and actively resist competing offshore territorial claims of countries like Vietnam, the Philippines, Japan etc.
China’s economic policies, pursued for over 30 years, have vastly increased its international economic interaction. China’s seaborne commerce now totals 700 million tonnes a year, the fifth largest in the world. Sixty per cent of China’s vital oil imports come by sea. The number of Chinese ocean-going cargo vessels and tankers has increased. These considerations ensured sufficient funds for PLAN’s modernisation, including construction of modern submarines and plans for three aircraft carriers. The navy’s operational doctrine has also been reformulated.
China’s decision last December to send a flotilla outside its territorial waters for the first time in 600 years — for anti-piracy operations in the Indian Ocean off Somalia — demonstrated its confidence in its navy. Continuing its presence in the Indian Ocean, PLAN this month replaced both its warships. The supply ship’s tour has been extended. The Chinese flotilla has a complement of 800 men, a Special Forces component and two helicopters.
Deployment of the ships has been portrayed as willingness to engage with the international community in anti-piracy operations in international waters. It additionally demonstrates the Chinese navy’s expanded operational reach, its ability to send groups of ships far from its territorial waters, and its determination to protect its seaborne commercial cargo. Deployment at the same time of warships for exercises with the Pakistan navy and of a frigate to the waters off the Philippines, points to PLAN’s enhanced operational and logistical capability.
China’s leadership kept the spotlight on its growing naval capability, especially in the Asia-Pacific region, just weeks before the first summit meeting between US president Barack Obama and Chinese president Hu Jintao in London this month. On March 8, five Chinese vessels confronted the USNS Impeccable, a survey ship on surveillance mission 70 miles from Sanya, capital of southern China’s Hainan Island. Towing a sonar apparatus that listens for submarines, mines etc, it was spying on the facility near Sanya where nuclear-powered ballistic missile attack submarines are built. By itself the presence of a US spy ship is not unusual as major powers continuously play cat and mouse games in these strategically sensitive waters. What is unusual is the Chinese action. This confrontation between a ship of China’s navy and one of the US navy, which has the largest presence in the region, follows four similar incidents, the last being in the Yellow Sea in 2002.
This demonstration of PLAN’s capabilities differed from earlier incidents. On this occasion, a Chinese vessel came within 25 feet of the US ship, prompting US officials to describe it as the most serious incident since 2001. Pentagon described the Chinese action as “dangerous, unprofessional” and a “violation of international law”. US officials emphasised that such missions would continue while Obama authorised dispatch of a destroyer to escort USNS Impeccable.
China’s riposte was that it was a violation of the UN Convention on the Law of the Sea as well as Chinese law and regulations. Military deputies echoed sharp sentiments during the National People’s Congress, China’s version of a parliament, then underway in Beijing.
The political leadership’s reactions, however, reflected the delicate balance in relations between the US and China and the latter’s growing role in international affairs at the present juncture. The US secretary of state and vicepresident both soft-pedalled the matter in meetings with Chinese foreign minister Yang Jiechi in Washington before he met the US president. Obama did the same and the US confined its actions to lodging a formal protest with the Chinese foreign ministry and summoning the Washington-based Chinese defence attache for a dressing down.
China’s leaders have been saying since the 1960s that the Indian Ocean is not India’s Ocean. They have been seeking a foothold in the region and wooing Mauritius, the Seychelles and France, till the latter approved a Chinese consulate in Reunion Island. Chinese navy presence in the Indian Ocean is now larger than India’s. The confrontation with the US navy survey ship is, however, significant as China’s action comes amidst a silent, and at times violent, tussle for territory among claimant nations in the South and East China Seas. In separate acts, the Philippines and Malaysia recently claimed sovereignty over parts of the Spratly Islands.
By its action, China has suggested it will oppose counterclaims with muscle, undoubtedly raising apprehension in the neighbourhood. While surveillance activities by the concerned powers in the region, accompanied by efforts to nibble territory, will continue, the Chinese leadership has opted for the policy: Kill a chicken to frighten the monkey!
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