Had she ring fenced him and Harvard educated Finance Minister Chidambaram from the Left and their Jurassic ideologies, and allowed both to do their jobs, we would not be where we are today.

Had she also not given in to the propensity to continue in power as long as possible, but had, instead, taken a cue from both Gavaskar and Gates, who retired at the peak of their careers, and been bold enough to call elections last year, when things were good and inflation under control, it would have ensured another innings.

The going was ‘seemingly’ good, one could add. The fiscal deficit was apparently falling within the limits of the FRBM Act but was, in reality, shooting well past it due to creative accounting; the sort that, in the corporate world, brought down Kenneth Lay of Enron. Expenditure which ought to be shown in the Budget, such as subsidies on petro products, or on fertilisers, were not, thereby fictitiously bringing down the fiscal deficit and partly compensating PSU oil companies and fertiliser companies through issuance of bonds. These bonds become a liability for a future finance minister; hence a tax burden on a future generation.

This was accompanied by a loosish monetary policy, albeit not anywhere as loosish as what the US Federal Reserve is doing. Result: inflation, which is close to 12%.

Of the petro product subsidies of around Rs 230,000 crores an insignificant portion goes to the truly deserving, for their cooking needs. A chunk of it goes to support an oil mafia that adulterates diesel with cheaper kerosene, causing environmental and health problems. There are several other pernicious effects.

The cheaper petrol encourages overusage as people buy gas guzzlers. The resultant crude oil imports weaken the rupee. Now, instead of encouraging new oil, which NELP VII seeks to do, the Finance Ministry, starved of resources despite having got the biggest ever increases in tax revenue ever, is trying to restrict tax concessions under Sn 80(1B)(9) only for oil and not for gas. Those who take the risk of bidding for blocks do not know whether they will find oil, or gas, or both, or neither. But such has been the utter wastage of tax revenue, that the Finance Ministry is looking more to its own interest than that of the country.

The US has increase petrol prices which are now over $4/gallon, resulting in a decline in consumption for the first time in 17 years. Governments of emerging economies like Indonesia, Thailand and Malaysia have increased theirs by 30-40%, causing a drop in consumption. We do not have the courage to do so because of resistance from the Left parties. Interesting, communist China has done so!

Such servility to the Left, which has not accepted the responsibility to be a part of Government but lends outside support to it (withdrawable any time) is now leading to the stand-off that is causing nervousness in the stock market. Had the UPA Government found its backbone last year, and called the bluff, it would have had a far better chance of re-election than it has now, with inflation and the fiscal deficit running amok. The Congress should have done a Gavaskar.

Now that inflation is running high and elections may be nigh (needing inflation to be tamed fast), the RBI has gone aggressive with interest rate hikes. It hiked the repo rate (at which it lends to banks) by 0.50%, and CRR (which banks have to deposit with RBI) by 0.25%. In turn, commercial banks like SBI and Union have raised PLR by 0.5%. Deposit rates would also be raised soon; net of inflation they are hugely negative. When deposit rates rise, equity markets fall since debt becomes relatively that much more attractive than riskier equity.

This also sucks money out of the system, and farmers are finding it impossible to get loans for planting in the kharif season from co operative banks and difficult from commercial banks. So the debt waiver of Rs 70,000 crores will come to naught if farmers do not get credit and thus cannot plant crops, in the coming season. Given that there is also a huge shortage of fertilisers (despite the Rs 90,000 crores subsidy for them) this can affect agricultural growth; and hence GDP numbers.

The corporate sector is tightening its belt, cutting down costs such as travel costs and vehicle costs, and giving notice to non performers. In contrast, a recent VVIP visit to Mumbai witnessed hold up in traffic for a cavalcade of 40 cars to pass through! The pay commission has awarded steep pay increases for Government employees, none of whom are ever sacked, and the Parliament has hiked fees for MPs to witness their walk outs.

Oil prices have now hit $ 142/barrel. A lot of it is speculative demand; there are fully loaded oil tankers awaiting demand for the oil! So, it is quite likely that the speculative demand for oil would come down, bringing with it a much needed relief. This is likely when the US Fed increases interest rates; it hasn’t, unlike most other countries, including the EU and India.

Last week the sensex fell 769 points, to 13802, including a teeth shattering 619 point drop on Friday. Of the 769 points, ICICI Bank contributed 132, L&T 113 and Infosys 85. Reliance Industries (RIL) was positive at 90, followed by TCS with 1. RIL’s gas from the KG Basin is to start flowing from Sep and, as directed by the Government’s priorities, will flow first to fertiliser, then to LPG and then to existing power plants.

What is interesting is that for the four days to Thursday (Fri information not available), domestic mutual funds were net buyers on all days whilst FIIs were net buyers only on Tuesday. This indicates availability of domestic money at attractive levels..

Tata Steel produced consolidated results (with Corus) with sales at Rs 132,110 crores (second to RIL) and PAT at Rs 12,350 crores. ONGC, with a PAT of Rs 19,872 crores, has the highest profit of an Indian company even after being eaten away by Government, its majority owner. It is doing much to assure energy security for the country but its capex plans are bound to be hampered because its profits are eaten away so that you and I can get cheaper petrol today, and probably have to cycle to work tomorrow! Myopia, thy name is Government!

The fundamentals that created the India story remain. Our demographic profile, with over 40 m. people going to be added to the 19-25 years (most productive) workforce in the next 5 years, the huge domestic market for almost anything that can be produced, the entrepreneurs that pop up now they have been given freedom to be so, the growth of the service sector etc. What defeats all these advantages is poor governance. With an election coming soon one hopes that governance will also improve. After all, we have seen how good administration helped a reelection in Gujarat and how poor governance led to a defeat in Karnataka.

The sensex, having broken the 14,500 support, could now find support at around 12,250 levels. Given the political drama that will be played in the next week over the nuclear deal, the market could swing either way depending on whether the Government survives (in which case a sharp rally will ensue) or falls. It could survive either with the Left backing down (unlikely) or Mulayam lending support (more likely, given the right incentives).

The next few weeks should be spent deciding what to bottom fish for and buy. As mentioned earlier, the underlying fundamentals are good and hopefully governance will improve. And yes, spend the time also watching Wimbledon!

Source: Gandhi, Gavaskar and Gates

It is a well managed bank with healthy financials. But after 119 years, it is valued at $3.6 b., less than half the valuation Ranbaxy, a private company, achieved in 47 years, which is less than half the time.

Okay, one may say it is in a different line of business. Fair comment. Compare ICICI Bank, with a market cap. of $ 22 b. with SBI, at $ 21b. Now SBI is no ordinary bank. It has a 200 year history and has an unbeaten record of uninterrupted dividend history for over 150 years, testimony to its financial strength and good management. With such a long history of success, why is it valued at one twentieth the value of China’s ICBC, with a market cap of over $ 450b. HDFC Bank, at $ 10.5b. is nearly 3 times PNB.

In oil and gas sector, Reliance Industries, also set up in 60s, has a valuation of $ 80 b., larger than that of ONGC, at $ 45b. even though ONGC has excellent financials. Take telecom. Bharti, an upstart, has a market value of $ 40 b. whilst MTNL, an erstwhile monopoly, is only $ 1.5b.

The reason is obvious to all but those in Government who are in denial of true facts. Government treats public sector companies as milch cows, irrespective of the fact that they have minority shareholders. ONGC is valued where it is because it has to bear a huge subsidy bill for petro products. Regrettably, most of this subsidy goes to people who don’t deserve to be subsidised, such as car owners for petrol, truck owners for diesel, the mafia who adulterate diesel with kerosene, for kerosene, and restaurants for LPG cylinders. ONGC, Oil India and GAIL pay the bill, but are still very profitable. IOC, HPCL and BPCL also pay the bill, and have been bankrupted.

There was a joke about the Chairman of a company asking his finance manager why their company’s share price was half that of their competitors when their performance and profitability was the same. A month later it had caught up, so he called in the finance manager, complimented him and asked him how he had achieved it. The manager said he had just spread a rumour…that the Chairman had resigned!

One thinks that if the Government were to resign from these companies they would be doing the companies and themselves a favour. But the disinvestment process is stuck, like a lot of other necessary and sensible reforms, in the quagmire of a failed politics.

The Government did not take the necessary and sensible decisions to hike petro product prices in line with rising oil prices, to sell companies which they have demonstrably failed to manage (look at the valuation differentials), and a whole host of other things, because of politics. The argument was that taking tough but necessary decisions would cost it votes in the next election.

Well, election time is near. Do they now think that subsidised petro product consumers are going to vote for them en masse? Why, then, have they spent Rs 200,000 crores a year subsidising them when a better targeting of subsidies to the needy would have probably cost less than a fifth of the amount?

Do they think farmers are going to vote for them when they continue to reel under inadequate financing, lack of fertiliser and unfair product pricing? Unlikely. Why, then, did they incur some Rs 100,000 crores on subsidising one bit of fertiliser, viz. urea. How much of this has gone to absentee farmers from Punjab and Haryana enjoying tax free income in Canada?

It is easy to spend money, but the spend must result in a gain in productivity. For example if a Government employs, say, 1 lac people, paying them Rs 100 to dig a hole, and another 1 lac, paying them Rs 100 to fill it, GDP will grow by Rs 2 crores without any increase in the nation’s productivity. Such spending thus results in increasing money supply, hence inflation, without increasing the economy’s ability to compete. Inflation has now hit 11%.

Not that the PM and his officials do not know all this; they have been hobbled by survival politics subjugating revival economics.

Investors know all this too, and react to it by selling shares. FIIs continued their selling last week, except on Tuesday, causing the market, which seemed to be rallying till Tuesday, to collapse. The BSE sensex ended the week at 14571, down 618 points. The NIFTY ended the week at 4347, down 170 points.

The market is at a crucial level. If it goes significantly below 14500, the sensex would then look for support at around 12,500. What are the factors that investors need to look out for.

Basically it is how domestic politics shapes up; next week there is a crucial meeting between the Government and its Left allies (is that the correct word?) over the nuclear deal with the US. There is no more time for waffling over this. If the Left continues to be obdurate and prefers to withdraw support, the 14,500 level can crack. Investors do not like political uncertainty and the withdrawal would lead to early elections. If, however, Mulayam supports the Government, it can survive and the nuclear deal can make progress. The market will rally sharply.

Added to this is the likelihood of a fall in global oil prices. A lot of the price rise in oil is now speculative with too much money chasing it. It is not a mismatch of demand and supply; in fact there are a lot of full oil tankers whose cargo cannot find buyers.

In USA consumption of petrol is likely to fall for the first time in 17 years, simply because prices of petrol have been raised. South East Asian countries like Indonesia, Thailand and Malaysia have raised prices 30-40%. They are not, perhaps, hobbled by ‘allies’ or maybe their political leaders have the necessary anatomical parts ours don’t.

So the next week is crucial. Since it involves trying to predict political behaviour it is anybody’s guess.

Source: Stark Contrasts in Creation of Value

Like the synthetic materials that artificially shape a human body to perfection.
It is fake because there is nothing real about it.

Investing in India – the unreal thing.
Every morning the anchors on television channels chimed in unison that they were looking for “global cues”. They scanned the horizon for a sign of that ship – even for a shadow – to tell you where the global cues were going to lead the Indian stock markets on any given day.

For all our chest-beating, the sail winds of India Shining, India Resurgent, and Incredible India were being blown by the butterflies flapping their artificial wings in some remote financial capital.

There is nothing wrong about foreign money coming into India. But there is everything wrong about not knowing why that foreign money is coming in; how long it intends to stay; and who owns it.

But neither the BJP-led NDA coalition nor the Congress-led UPA coalition paid much heed to the warnings of the Reserve Bank of India. Bankers – the traditional ones that we thankfully have at the RBI – are, by nature, cautious. They ask questions: “Good morning. I believe you wish to invest in the Indian stock markets”, they would ask a typical foreign investor, “that is so very nice of you. But, I beg to know, who are you and what do you want from this investment in India?”

Hey, this is the 21st century and the world is fat with money sloshing around. Who has time for questions and filling in all those badly drafted FII registration forms? Just take it as it comes, baby. Turn on the P-Note tap. Flood me with your synthetics.

And so the bull market began. The synthetics came bouncing around and jiggling all over. The surging Index had the media and the government officials into a salivating fit. Every trading day for the past 5 years (approximately 1,320 trading days) the foreign investors bought a net of Rs 3 crore of stocks in every hour of trading.
About Rs 5 lakhs every minute.
Looking good, baby! Jiggle away!
And the share prices went into a dance and then into a wild dance in September 2007 when the pace quickened by 8x to Rs 24 crore every hour.
That is Rs 40 lakhs every minute.

But every dance comes to an end.
Every sailor heads back home.
The butterflies stop flapping their wings.
The mighty sail of the Indian stock market flutters in search of direction and then folds.
Marooned in a sea of red, everyone wonders what happened. The markets are down. There is no global cue on the horizon. You see the plastic on the floor – that is a residual of the synthetics. The central bankers shake their head in a “we told you so” motion. And they, like true bankers, help to clean up the mess.

The Indian slow dance.
Meanwhile, the poor Indian investor kept on giving their two-bits to the mutual funds and the Indian stock markets. No minister came to meet them in Jalandar, Patiala, or Secundrabad. No one sent them any invitations to attend any conferences in London and New York and Hong Kong about what a wonderful investment destination India is. The local investors took out 2% from their annual savings of USD 300 billion and plonked their Rs 3 lakh per minute investment into the Indian stock market. Most of this found its way into the Indian stock markets via a mutual fund or a unit linked insurance policy (a bad choice of vehicles, most likely, but that is a topic for another Honest Truth!).

This kathak-like pace is no match for the synthetic foreign investors who are now running for the exit.
Running as if they are in a disco that has caught fire. As the foreign investors dump their shares, the buying power to match that selling is just not there in India.
In simple economics, when supply exceeds demand – when sellers of shares are more than the buyers of shares – the share prices have only one way to go: down. Sharply down. Like the panic sales you have seen recently.

Shift the beat to a disco bhangra.
But this gentle pace of the Indian kathak, can turn into a sustained disco bhangra.
A bhangra that will match the selling by the foreign investors.

Another law of equilibrium in economics: when demand matches supply, prices will be stable.
So far this year foreign investors have sold USD 5 billion worth of shares. That is Rs 53 lakhs every minute of trading.
The Indians are buying at the rate of Rs 3 lakhs per minute.
“Houston, we have a problem.”
Supply (Rs 53 lakhs of selling by the foreign investors) is more than demand (Rs 3 lakhs of buying by the Indians). Ouch!
When supply is more than demand, prices have only one way to go: freefall!

There is a way to make the Indian supply zoom really quickly. This is to allow the pension funds to start buying into the Indian stock market. However, given the fact that this proposal has been sitting with the government for a few years, the reality of coalition politics will ensure that nothing will happen.

But there is another way: extend the benefits of Section 80 C.
Currently, any individual can use up to Rs. 1 lakh to buy shares (locked in for 3 years in an ELSS), repay a home loan, and contribute to a PPF. This entire Rs 1 lakh is freed from any income tax obligations.

The Government, cowing like a wimp to pressure from its Left coalition partner, had tried to bury its hydra head in the sand staving off hikes in petroleum products and trying to escape the facing of reality. That left oil marketing companies gasping for breath, with no money left to buy petrol and diesel, which were under threat of being rationed, including to the armed forces. Last week the Government faced (partly) the reality of the situation and raised petrol prices by Rs 5/litre, diesel by Rs 3 and LPG cylinders by Rs 50. Even with this, the hikes absorb only about 9% of the total under recoveries estimated at Rs 245,000 crores. Fifty five percent is borne by issuing oil bonds, which is simply passing on to a future generation the cost of profligacy of the current one. Reprehensible policy!

What followed was a sheer hypocrisy by other political parties. The CPM and Trinamool Congress called bandhs in Kolkata on two successive days, never mind the hardship imposed on people or the futility of such a bandh on the decision. Price increases are not going to be reduced because of the bandh; instead, West Bengal’s GDP will suffer.

It was the Left parties, supporting Government from outside without taking the responsibility of joining it, that were, in fact, responsible for the apparent steepness of the hike. Had the Congress mustered up the spherical objects to raise petrol prices by, say Rs 1/litre five times instead of once, it would have been far more acceptable.

The fact that it did not indicates the invertebrate nature of Prime Minister Manmohan Singh’s government. Being an economist he ought to have been able to convince others of the folly of defying economic reality; sadly politics and the lack of backbone prevented it.

The BJP’s protests of economic terrorism also smacks of hypocrisy. During its incumbency, the BJP Government had raised prices of petrol and diesel to the same extent as the UPA Government, despite the fact that crude oil prices hadn’t increased as dramatically as they have under this Government. So its claim that the UPA Government has unleashed economic terror is only posturing for the next election.

Finally the Prime Minister’s appeal that ministers cut down on air travel and on unnecessary usage of cars is another display of crass hypocrisy. It does not take the public protest of a petro product price hike to make these sensible suggestions. Any good leader must prepare for bad times instead of making senseless gestures after they have arrived.

The consequences to the economy and to Government financing will be bad. For preparing the country for a future of high energy prices with shortage, even worse. By artificially curbing prices of petroleum products, the Government has not allowed demand to be curtailed, as it would be, if prices were raised. The export growth of 31.5% in April 08 (over April 07), to $ 14.4 b. seems impressive until juxtaposed with the 46.2% increase in oil imports to $8 b. and of 36.6% in total imports, to $ 24.3b.

This relates to pricing, but availability of fossil fuels is a bigger concern. An alternate energy basket has to be developed, with urgency. One of the options was to use nuclear energy, essential if India is to grow at 9% or more. However, once again politics takes precedence over sensible economics and long term planning.

The conclusion that all political parties care only about power and not about the country, thus becomes inescapable.

The upstream oil companies, ONGC and GAIL, have to bear Rs 45,000 crores, or 18% of the total underrecovery of Rs 245000 crores. This means that ONGC will not be able to make the investment in both developing and acquiring, energy assets to the extent of the subsidy burden it bears. Once more example of succumbing to political follies and jeapordising the future.

Auto companies will be hit. None of the auto companies have bothered to develop alternate fuel products, including CNG, electric hybrids or other hybrids. Years ago this columnist had written to the CEO of Maruti Udyog asking why Maruti did not provide factory fitted CNG car options and why was it necessary for a consumer to bear the risk of a CNG kit not working. It was, after all both a consumer need (to cut running cost) as well as a national priority. His reply was that there wasn’t enough demand to justify the investment! How on earth would there be demand without a product on offer? Even foreign manufacturers like Toyota, with its popular Prius electric hybrid, have been slow in introducing it. Auto makers are also faced with the prospect of a 30-40% hike in contracted steel price for high grade steel.

Immediately following the price hikes, road transport freights have been hiked by 10-15%, which would add to inflation. Middlemen will take the opportunity to hike prices of e.g. vegetables, by more than the freight hike, taking advantage of the situation. It is hard to imagine inflation coming under control fast.

One hope for inflation to be reduced was in the delivery of PMT gas. This would substantially reduce the feritiliser subsidy as cost of producing fertiliser using gas instead of naphtha would be much lower. A fire at the PMT gas field has affected production of oil and gas, which may cut supply by 6 and 20 % respectively.

Lastly the effect on the fiscal deficit. To cushion the popular backlash of the petro price hike, the Government cut excise duty on petrol and diesel by Rs 1 and customs duty on crude oil by 5%, and on petrol/diesel by 2.5%. This will deprive it of revenue. Combined with a farmer debt waiver of Rs 71,000 crores, and the hike to Government servants by the sixth pay commission, the fiscal deficit will probably exceed the limit set by FRBM. It surely will, if the fudging of accounts through issuance of oil bonds, and fertiliser bonds, which do not go into the budget and hence don’t reflect in the fiscal deficit, is counted.

Meanwhile the US Fed has signalled an end to interest rate cuts and may well raise them in order to defend the dollar which Bernanke has expressed a concern over. The RBI would also follow suit. That would act as a dampner to equity markets.

Last week the sensex fell 843 points to end at 15572 and the Nifty was down 242 points to end at 4627. Should 14,500 on the sensex crack, there could be a fall of another 2000 points. India’s growth story remains intact, despite all political parties doing their hypocritic best to derail it. The strains and contradictions of coalition politics will be evidenced as elections approach; as the saying goes, it is only when the tide goes out you discover who is swimming naked!

Source: Political Hypocrisy on Display

Africa is malnourished, politically impotent, overrun with disease, and teeming with warlords, so it’s no surprise the typical life expectancy is 20%-30% below the global average.

Despite such a daunting outlook, Africa will be the most hotly contested battleground for the two of the world’s most influential powers over the next 50-100 years.

That’s because Africa has become a key economic priority for both India and China – the two Asian powerhouses in the midst of major financial and industrial reformations.

China and India have been home to two of the world’s fastest-growing economies over the past several years, and that momentum is expected to carry through the rest of this year, as well. India’s economy is expected to expand by as much as 9.5% in the current (2008/2009) fiscal year. And China’s economy already has expanded by 10.6% in the first quarter of 2008, despite complications stemming from the U.S. credit crunch, the Chinese New Year, and the worst ice storm the country had seen in decades.

In addition to booming economies, China and India have the world’s two largest populations. The combined population of China and India (Chindia) is approximately 2.4 billion people. And it won’t be long before those 2.4 billion people evolve into the largest consumer class the world has ever known, making Africa – with its vast resources and close proximity – an ideal trading partner.

As a leading exporter of gold, silver, cotton, cocoa, copper and aluminum ore, and oil, Africa is an invaluable ally to emerging economies that will require vast amounts of raw material to sustain growth.

The bottom line: China and India will be vying for Africa’s favor in the years ahead.

Of course, China already has a head start.

“The Chinese Are Everywhere”

In 2006, Beijing hosted the China-Africa Cooperation Forum – an event attended by more than 40 African heads of state. At the forum, China unveiled $9 billion in preferential loans, export credits, and trade incentives – all part of a strategic plan to achieve a preferential status with key African nations.

The meeting was more than a mere publicity stunt to play up Beijing’s humanitarian efforts. It was a symbolic acknowledgment of growing cooperation between the regions.

Trade between Africa and China has grown 40% a year since 2001. In just seven years, trade volume grew from $4.5 billion to as much as $55 billion, meaning that China has emerged as Africa’s third-largest trading partner after the United States and France.

China also has invested tens of billions of dollars directly into African-infrastructure and social-development projects. Some examples:

• In Freetown, the capital of Sierra Leone, office blocks, military headquarters and a refurbished stadium are all the work of planners from Beijing.
• In Uganda, the new State House was built with Chinese money.
• In the city of Rwanda, Chinese companies built 80% of all new roads.
• And in Nigeria, China’s Civil Engineering Construction Corp. is building an $8.3 billion railroad linking Lagos and Kano.

While in Zambia, an “economic partnership zone” that will attract $800 million in investment was promised by the Chinese president on a recent state visit. Even Zimbabwe’s international pariah, Robert Mugabe, has declared: “We have turned East, where the sun rises, and given our backs to the West” – perhaps grateful for Chinese assistance in cultivating crops on land seized from white farmers.

In short, as Granta magazine put it, “the Chinese are everywhere.”

Chinese involvement also has received a slightly warmer welcome than efforts by Western nations. Where western powers have attempted to use aid and investment as bargaining chips to achieve certain political or social reforms, China employs a less-conditional “no-strings-attached” attitude that many African leaders find appealing.

“With the Chinese, we don’t feel any interference in our traditions or politics or beliefs,” said Awad al-Jaz, Sudan’s energy minister.

Most recently, China agreed to take on large-scale infrastructure projects in the Democratic Republic of Congo, in exchange for copper and cobalt reserves. To facilitate the exchange, Congolese and Chinese state-owned enterprises (SOEs) set up a joint venture known as Socomin. The mining company will invest $3 billion, mostly in new mining projects. The profits of Socomin will then be used to repay these mining investments, and also to find Chinese investment in other big infrastructure projects.

Under the agreement, Socomin will raise about ten million metric tons of copper to pay off $12 billion in total investments over a 15-year period.
And last year, the state-owned Industrial and Commercial Bank of China Ltd. took a 20% stake in South Africa’s Standard Bank Group Ltd. for $5.4 billion. Standard Bank is Africa’s largest lender, servicing 18 sub-Saharan countries. And now, China’s government will get a piece of every new loan, every ATM fee, every credit card taken from Standard Bank.

India Follows China’s Path Into Africa

With all China has achieved in the past few years, India is beginning to wake up to the potential benefits of a strong relationship with African nations, many of which are enjoying their fastest growth rates in 30 years.

The first-ever India-Africa summit concluded last week, having laid the groundwork for future cooperation between the regions. The two-day summit – attended by eight heads of African states and delegations from 14 African countries – culminated with the signing of the Delhi Declaration and the Africa-India Framework for Cooperation, two documents designed to build political and financial synergy. The accords stressed cooperation in agriculture, food security, technology, trade, energy and education.

At the summit, Indian Prime Minister Manmohan Singh announced duty-free access to Indian markets for the world’s 50 least-developed countries, 34 of which are located in Africa. Singh also said his nation would more than double India’s credit line to Africa, from $2.15 billion in 2003-2004 to $5.4 billion in 2008-2009, and boost grants and aid to the continent to $500 million in the next five to six years.

“It sounds like something Beijing did a few years ago,” Philip Aves, an economist at South Africa’s Institute of International Affairs, told the Financial Times. “It’s a mini-China approach to dealing with Africa. It has all the same elements, except on a much smaller scale.”

But Prime Minister Singh was careful to point out that, while China has clearly established economic and political inroads in the region, this is not a competition.