India's Singh: I Am Not A 'Lame Duck Prime Minister'

Feb. 19 (EIRNS)—With his government facing an avalanche of corruption charges and public outrage over burgeoning food price rises, India's Prime Minister Manmohan Singh sought refuge in his residence, and called TV networks on Feb. 16 to tell them: "We have a functioning government, and whatever some people may say, that we are a lame duck government, that I am a lame duck prime minister, we take our job very seriously."

For all practical purposes, the Singh-led United Progressive Alliance (UPA), a mishmash of coalition of parties headed by the Congress Party, has become non-functional. The proverbial straw that broke the camel's back is a telecom licensing swindle that saw the UPA ministers salting away about $40 billion of public money while the prime minister watched, remained silent, and was unwilling to act. Afraid to take responsibility of this huge money-swindle, Singh has blamed the arrested Telecom Minister A. Raja for the scam.

The telecom money swindle, known as the 2G scam in India, saw "85 of the 122 licenses were issued to companies which suppressed facts, disclosed incomplete information and submitted fictitious documents to DoT [Department of Telecommunications] and thus used fraudulent means of getting licenses and thereby access to spectrum." This was the conclusion prepared by the government's auditor, the Comptroller and Auditor General, in its report, submitted last November.

The corruption scandal laid bare the collaboration of the UPA and the business elite, which has benefitted the most from the recent economic growth at the expense of hundreds of millions of India's poor. The most powerful businessmen, such as Anil Ambani and Prashant Ruia, have both been questioned by the domestic intelligence, CBI. A number of business houses have also been raided.

India Could Be World Food Basket with New Green Revolution

Feb. 13 (EIRNS)—India needs a second Green Revolution, but if that were achieved, India could become the "food basket of the world," Minister of State for Commerce and Industry Jyotiraditya M. Scindia said today. "[The] agriculture sector is critical for our economy as 60%-70% of our population is dependent on it for livelihood. We require 4.5%-5% growth in the farm sector to uplift our economy in rural areas," Scindia said. He was speaking at the Commerce Ministry's Agricultural Export Development Authority (APEDA).

Scindia emphasized the need for a second Green Revolution. Between 1965 and 1980, increased use of fertilizers, pesticides, irrigation facilities, and introduction of high-yield varieties of seeds—the first Green Revolution—nearly quadrupled the production of rice and wheat, and made India, a nation of 1.1 billion people, almost self-sufficient in food grain production. "With proper investment in agriculture, technical innovation and infrastructure for food processing, India could well become the food basket of the world," Scindia said.

Labor Shortage Changing China's National Economy

Feb. 13 (EIRNS)—Despite its huge population of 1.3 billion, China is facing a serious labor shortage, which makes economic development all the more urgent. In China, "the era of limitless labor supply has come to an end," Zhang Zhanxin, an expert on social security at the Chinese Academy of Social Sciences (CASS), told Xinhua. Although some 230 million people have left the countryside to find work in the cities, the growth rate of this huge workforce is dropping, seriously affecting the national economy. After 30 years of the one-child policy, the labor population and its ratio to the total population has decreased significantly, and the reserves of rural migrant workers have dropped by 20 million over the last three years, Xinhua's Wenzhai magazine reported.

The shortage is having most effect in the eastern coast, where China's labor-intensive export industries first developed 20 years ago. Now, interior cities such as Chongqing are also industrializing. East coast manufacturers have been forced to raise wages significantly over the past two years, as well as improve working conditions. Zhang said it is urgent to expand pensions, health care, housing, education, and other social benefits for migrant workers. Pressure is growing to reform the household registration policy, which prevents workers from getting full access to these benefits away from their original homes.

Zhang Yi of CASS's Institute of Population and Labor Economics, said that, "Increasingly, more young and fairly well-educated workers do not want to be in labor-intensive factories that pay low wages and produce low-value goods." Younger workers make up the vast majority of the migrant workforce.

South Korea Real Estate Bubble Starts To Blow; Two Banks Shut

Feb. 17 (EIRNS)—As hundreds of customers tried to enter a branch of Busan Savings Bank in South Korea, to withdraw their deposits, the Korean Financial Services Commission (FSC) today suspended operations of two savings banks as part of its ongoing restructuring of the savings bank sector hit by toxic construction debt. The great speculative bubble in condominium construction in Seoul and other cities is ending, leaving huge construction and real estate loans on the savings bank books.

The FSC also announced plans to provide a nearly $18 billion credit line to support other viable—but troubled—institutions. The regulator said it had halted the business of Busan Savings Bank, the No. 1 in the industry in assets, and its subsidiary, Daejeon Savings Bank, for six months, until Aug. 16, and suspended operations of Samhwa Savings Bank on Jan. 14, also for six months.

China Moves To Control Inflation, Focus on Food Security

Feb. 18 (EIRNS)—China's central bank has raised banking reserve requirements for the second time this year, in order to counter inflation and curb property-price rises. Reserve ratios will increase half a percentage point starting Feb. 24, the People's Bank of China announced on its website today.

Today's move came ten days after China raised interest rates. Reserve ratios stood at 19% for the biggest banks before the move, after being raised multiple times. Chinese banking authorities want to contain the international flood of valueless money, by damming it up in pools of back reserves away from the real economy.

The most recent figures have food inflation in China running at 10.3%, with anecdotal evidence that the non-official rate is far higher. Just today, the Ministry of Commerce released a draft measure on emergency management of food staples, aiming to prevent severe shifts in prices and supply of daily necessities. This extends and/or formalizes a number of previously announced measures to ensure the food supply at reasonable prices.

The ministry said it seeks to combat "abnormal" market developments, such as serious supply shortages of meat, vegetables, sugar, salt, dairy products, and other key goods, according to a draft published Feb. 17, on a website of the State Council. It also said the program is aimed at countering large-scale panic buying and price surges due to natural disasters or accidents.