India's Leading Stock Market Crashes

On April 12, India's leading stock exchange in Mumbai plunged sharply as the 30-scrip Sensex index lost 307 points, liquidating close to $8 billion. This followed a 170-point drop on April 7, but the index managed to gain back some of it early in the week. The 300-plus-point crash of the Sensex from 11,663 to 11,356 is the biggest drop in one day since May 2004.

According to some observers, the drop is a "correction" of the market, but they are quite uncertain as to whether many such "corrections" will not happen in the coming days. One observer pointed out that it is not yet a crash, but if the Sensex goes below 11,000, investors may leave the scene in a flash, causing a huge crash.

Meanwhile, on April 12, the Indian rupee fell sharply against U.S. dollar, losing almost 2.5% in one day. Some observers pointed out that the drop in the market and the demand for dollars were inter-related, because of the soaring oil price and the weakness in the global market.

China Makes Huge Grant to Cambodia

China's $600-million aid package to Cambodia is greater than the entire amount of aid to that country from the Western nations, and has sent the China-bashers into fits over China's "aggression," according to Reuters. Chinese Premier Wen Jiabao announced the package of loans and aid on April 8 after meeting Prime Minister Hun Sen, as part of Wen's Asia tour.

Half of the money will fund a hydro-electric plant, about $200 million will pay for two major bridges across the Mekong and Tonle Sap Rivers, and the rest will go on projects such as a new Council of Ministers building. China also gave Cambodia six naval patrol boats in September.

"It's working the turf to establish a Chinese presence," said Carl Thayer of the University of New South Wales in Canberra, a regular anti-China Southeast Asia watcher. "It's a broadening out from the political and economic and cultural and scientific dimensions to the military."

Stronger Indo-Chinese Military Ties Recommended

Indian Defense Minister Pranab Mukherjee, who will be visiting China in May, told reporters that both countries are involved in developing new initiatives in the defense sector to boost confidence, according to India Daily) April 14. "My efforts will have to have much larger participation in joint military exercises, more exchange of visits by armed forces personnel, and an expanded mutual training program," the Indian Defense Minister said.

Meanwhile, China's Ambassador to India, Sun Yuxi, told Indian media that, "We need developing countries in the expanded [UN] Security Council, and hope India would play larger role in the international affairs, including the UN." Ambassador Sun urged New Delhi not to make a claim jointly with Japan as part of Group of Four (which includes, besides India, Japan, Brazil, and Germany) if it wants Beijing's backing. He said China has worked against the G-4, because Tokyo is in the group.

Nepal Remains on the Brink

Despite King Gyanendra's announcement that he would hold general elections, demonstrations and protests have continued unabated in Nepal, Indian media reported from Kathmandu April 14. The King's announcement came in the context of participation of all major political parties in nationwide demonstrations and strikes.

It is evident that New Delhi, having stayed away from the year-long turmoil by the Nepalis against the King's absolute rule, has now conveyed to Kathmandu that it would not limit itself to tough words, but if the King continues to undermine the democratic forces, New Delhi is prepared to take tough actions as well. What those tough actions would be, has not been spelled out in public.

At the same time, New Delhi has informed the Nepali Parliamentary parties to continue with demonstrations until the King comes out with a definite date for general elections. "We have many levers to call Nepal's King to account. The only problem is that such measures might give some sections in Nepal fodder for anti-India propaganda," said former Maj-Gen. Ashoke Mehta, one of the leading Nepal policy experts in India.

Another Nepal expert, former Indian Ambassador to Laos, S.D. Muni, now professor emeritus with the Jawaharlal Nehru University in New Delhi, told the press: "We should encourage the setting up of an interim government of the Maoists and the seven democratic parties.... The King is fighting a violent battle which he can't win. There is a growing feeling in India that this King cannot be sustained."