India's national anthem completes a century

Kolkata: 'Jana Gana Mana...', India's lilting national anthem, completed 100 years Tuesday.

First sung by a choir on this date in 1911 at the 26th session of the Indian National Congress here, 'Jana Gana Mana' was composed and set to tune by Rabindranath Tagore - the first Asian to win the Nobel Prize for Literature in 1913 - days after the British government annulled its plans for the partition of Bengal.

Independent India's constituent assembly adopted the first stanza of the Brahmo hymn as the national anthem on Jan 24, 1950, after an intense debate that saw Bankim Chandra Chattopadhyay's 'Vande Mataram' lose out narrowly following objections, particularly from Muslims.

'It's a proud moment for us. 'Jana Gana Mana' is not only the most beautiful song, it also comprehensively describes our unity in diversity. It is the symbol of Indian unity,' said classical vocalist Ustad Rashid Khan.

In 1919, Tagore sang it at the Besant Theosophical College at Andhra Pradesh's Madanapalle town. It so impressed the college authorities that they decided to make it their prayer song.

Within days, Tagore translated the song into English and set down the notation alongside Margaret, wife of Irish poet James Cousin. The song came to be known as 'The Morning Song of India', which became India's national anthem.

Since then, the anthem has moved Indians both at home and abroad. They have sung it with passion, standing in unison, often shedding tears during intense emotional moments, be it on the sports field or even in a cinema theatre.

'It is truly the symbol of unity as it is the only song which people from east to west, north to south know and sing,' said Sahitya Akademi president and eminent writer Sunil Gangopadhyay.

However, the song has had its share of criticism.

Critics had opposed making it India's national anthem, claiming it was written as an eulogy to King George V, as the song coincided with the coronation durbar of the British emperor in New Delhi.

In 1937, Tagore, in a letter, admitted that one of his pro-establishment friends had requested him to write a paean for the emperor.

'I was stunned at that, and also angered. As a result of this catastrophic reaction, I have declared the victory of the dispenser of India's destiny in the 'Jana Gana Mana' song,' wrote Tagore, who holds the unique distinction of having his compositions as the national anthems of two countries - India and Bangladesh.

Can 1.2 bn people save the economy?

One thing that India always had going for itself was its large population. The consumption needs of India's billion plus were supposedly enough to help sustain the nation. But are they really? India has been hit by bad news after bad news. Slowing GDP, lower credit offtake, and dismal IIP numbers have all disappointed markets. And now, even domestic consumption seems to have taken a turn for the worse.
Now that the festival season is drawing to a close, consumption trends have reversed. According to an article in Firstpost based on a survey by Emkay Global, inventory seems to be moving slower than usual. This is an indication of lower demand. Many popular goods in the fast moving consumer goods (FMCG) basket were tracked. The findings of the survey proved that manufacturing dates of most products was about 2.5 months old. Only milk and noodles seem to be moving quickly with recent manufacturing dates of 1.5-2 months. However, this survey was only conducted in Mumbai. With a large metro like Mumbai seeing slower consumption, the situation in smaller cities may be even worse. Even the jobs scenario has deteriorated with a worsening external environment.
Even rural areas don't seem to be in the best shape. Agricultural credit is at a decade low. Plus, agricultural non-performing assets (NPAs) have also grown. Even FMCG companies are seeing slower growth in their rural counters. Plus minimum support crop prices and spending on NREGA (National Rural Employment Guarantee Act) are not up to the mark.
Indian consumers, too, seem to be running for cover. They are not stepping out and spending as much as the economy would like them to. While this works well for their end of the month cash balances, for corporates it is another story. Companies were betting on the second half of this financial year 2011-12 (FY12) in order to counter their dismal performance in the first half. But with domestic consumption slowing, this may be a tough task for them to achieve.

By Equitymaster – India's leading 'independent' equity research initiative. Trusted by over a million members all over the world, Equitymaster is known for its well-researched, unbiased and honest opinions on the Indian stock markets.

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India inches closer to crisis as rupee retreats

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MUMBAI (Reuters) - India may face its worst financial crisis in decades if it fails to stem a slide in the rupee, leaving the Reserve Bank of India (Toronto:RBI.TO - NewsRBInull) with a difficult choice over how to make best use of its limited reserves to maintain the confidence of foreign investors.
If the RBI is too timid, it risks adding fuel to the ire of portfolio investors, which India relies on heavily to cover its imports tab.
Aggressive intervention would leave the central bank open to criticism that it is wasting precious money on problems that are beyond India's control anyhow, noteably Europe's debt crisis.
Unlike most of its Asian peers, India has recently been running large current account and fiscal deficits. That means it must attract sufficient foreign money -- namely U.S. dollars -- to close the gap, and a weaker home currency makes that costlier.
This is a perennial problem for India. The current situation is so worrisome because India is grappling with big internal and external economic threats simultaneously. Growth is slowing. Inflation remains high. Political paralysis has stymied domestic reforms.
The RBI, the last line of defence against a currency meltdown, has cautiously begun to support the rupee, but its firepower may be more limited than its $300 billion in reserves would suggest.
Beyond India's borders, Europe is the biggest worry. As its banks deleverage, investment money has flooded out of India's markets. If Europe's debt troubles deteriorate, India could be hit with a balance of payments crisis as severe as the one that forced a sharp devaluation in 1991.
The rupee, which has dropped 16 percent in the past four months, got a reprieve last week after the world's big six central banks banded together to try to ease dollar funding strains, helping it to snap a four-week losing trend.
But analysts widely expect the rupee, trading on Monday at 51.26 per dollar, to resume its slide.
"The Indian currency will be the first casualty of a deterioration in the euro zone crisis," said Rupa Rege Nitsure, chief economist at Bank of Baroda in Mumbai.
If Europe's crisis deepens, India's trade deficit would widen even more rapidly, and it would have even more trouble attracting foreign capital.
"Risk appetite will obviously collapse and gradually the currency crisis is likely to take the shape of a balance of payments crisis," Nitsure said.
Worries about India have spiked in tandem with concern over Europe. UBS hosted a client conference call about India on November 29, which it announced with an email headlined "India explodes." Deutsche Bank sent out a report on November 24 entitled, "India's time of reckoning."
"Suddenly everything seems to be coming to a head in India," UBS wrote. "Growth is disappearing, the rupee is in disarray, and inflation is stuck at near-record levels. Investor sentiment has gone from cautious to outright scared."
India's current account deficit swelled to $14.1 billion in its fiscal first quarter, nearly triple the previous quarter's tally. The full-year gap is expected to be around $54 billion.
Its fiscal deficit hit $58.7 billion in the April-to-October period. The government in February projected a deficit equal to 4.6 percent of gross domestic product for the fiscal year ending in March 2012, although the finance minister said on Friday that it would be difficult to hit that target.
India relies heavily on portfolio inflows -- foreign purchases of shares and bonds -- as a means of covering its current account gap. Those flows are fickle.
Foreign portfolio investors have sold a net $50 million worth of equities so far in 2011 , in sharp contrast to the $29 billion they invested in 2010, data from the Securities and Exchange Board of India's website showed. In November alone, foreign funds pulled $661 million out of Indian stocks.
"The Indian economy is one of the most vulnerable to liquidity shocks in the region, not helped the least by deficits in its key balances," said Radhika Rao, an economist with Forecast PTE in Singapore.
WHERE IS THE RBI?
The drop in portfolio inflows and the hefty current account and fiscal deficits have been a key factor behind the rupee's decline.
The RBI appears to have intervened in mid-November to try to slow the decline. Between October 28 and November 25, reserves dropped by $16 billion to $304 billion, yet the currency still fell by 7 percent over that period.
Trading in rupee offshore forward contracts show traders are betting on the rupee declining a further 1.7 percent over the next three months, and 4.5 percent in a year.
Many economists argue the RBI has been too timid, and deserves part of the blame for the rupee's weakness.
A deputy governor said on Saturday that the central bank would use "all available instruments" to stem a downward spiral.
Other officials have insisted the RBI should avoid "undue" intervention, especially when the currency depreciation is caused by external forces, a message economist Rajeev Malik says could backfire.
"The biggest mistake RBI has made is that it has almost given an open invitation to speculators to short the rupee," said Malik, who is with CLSA in Singapore.
"It is really bizarre for any central bank to openly keep on saying that it will not intervene when there is already pressure on the currency to weaken and globally things are so uncertain."
Contrast that with Indonesia, which burned through 8 percent of its foreign exchange reserves in a single month in September to defend the rupiah from a global bout of market volatility.
The rupiah has weakened in recent weeks after Bank Indonesia twice lowered interest rates. RBI, however, has been among the most hawkish central banks in the world, raising rates 13 times since early 2010. Normally, higher interest rates boost currencies, so the rupee's weakness is all the more significant.
KEEPING POWDER DRY
If the RBI decides to step in more aggressively, its manoeuvring room is more limited than its reserves tally would suggest.
After covering the current account deficit, short-term debt and foreign investment flows, there would be less than $20 billion left over.
J. Moses Harding, head of market and economic research at Indusind Bank in Mumbai, said the RBI's immediate concern would be arresting the spread of currency woes into the money market.
India's banking system already borrows more than $19 billion from the central bank to meet reserve requirements, so if the RBI moved to prop up the rupee, it would drain more liquidity out of an already tight market.
Companies make quarterly advance tax payments around mid-December, which puts an added strain on liquidity.
In addition, a glut of foreign currency convertible bonds, issued when the rupee was much higher, falls due in the first quarter. They include a $1 billion Reliance Communications bond.
The bonds are too expensive at current levels to be converted into stock and the sharp depreciation of the rupee will leave issuers with a heavy redemption bill.
The central bank could boost liquidity by cutting the cash reserve ratio, the proportion of deposits banks must set aside with the central bank as cash. Talk of a cut has circulated in Indian markets in recent days, although some economists argue that such a move could stoke already hot inflation.
"It would be extremely difficult for RBI and the government to arrest simultaneous downward pressures from equity, currency and money markets while struggling to address low growth and high inflation issues," Harding said.
That argues in favor of RBI keeping its ammunition dry in case conditions worsen. If India is indeed heading for a 1991-style balance of payments crisis, those reserves would be vital.
Back then, India rapidly depleted its reserves, forcing a currency devaluation.
But the risk is that RBI will wait too long to act.
"While it is important for RBI to not shed its FX reserves unnecessarily, the approach of allowing such a massive pace of slide in the rupee could backfire," CLSA's Malik said.