India monthly review: Walking the tightrope

Month to month, India bends over backwards to damper the internal and external conflicts brewing in and around the subcontinent. A major concern of Indian authorities related to border issues is the resignation of president of Pakistan, since it may open the door to Pakistani fundamentalist groups and further complicate its already precarious relations with India.

After nine years of rule, the president of Pakistan Pervez Musharraf resigned his post. In this manner he announced the possibility of his being replaced. MK Narayana, India’s National Security Adviser, expressed his disquiet on the Musharraf resignation, noting that this potential political vacuum was cause for concern in India.

Border problems flared throughout the month in the province of Kashmir – an area claimed by India and Pakistan - because of a curfew imposed by India. It was a measure in the zone to curb a wave of Muslim protests which started months ago. In spite of its attempts, the government curfew seems to have only aggravated the situation. Muslim separatists are protesting every day, increasing the level violence and the number of dead.

With regard to the role of India with Afghanistan, the prime minister of India received Afghan President Hamid Karzai. During the meeting between the two leaders, Manmohan Singh announced the delivery of $450 million in aid to Afghanistan.  India is one of Afghanistan’s closest allies and has already contributed $750 million for reconstruction of the country.

Sky Rocketing Inflation

In the economic sphere, India’s inflation has increased from 5% to 12% in less than a year. Analysts expect this figure to rise to 14% by year end. Its growth comes despite three, consecutive government interest rate increases.

Pursuant to this crisis, the government approved a salary increase for five million public administration workers. The move will cost the Treasury $ 5.2 billion. The Cost-of-Living adjustment had been pending since January 2006 and precipitated by current inflation rates.  Authorities promised to pay this commitment during the period 2008-2010.