Indian Prime Minister Narendra Modi addresses a rally in Tura last month ahead of the just-concluded Meghalaya legislative assembly election. Getty Images
Indian Prime Minister Narendra Modi addresses a rally in Tura last month ahead of the just-concluded Meghalaya legislative assembly election. Getty Images
Indian Prime Minister Narendra Modi addresses a rally in Tura last month ahead of the just-concluded Meghalaya legislative assembly election. Getty Images
Indian Prime Minister Narendra Modi addresses a rally in Tura last month ahead of the just-concluded Meghalaya legislative assembly election. Getty Images


To understand Indian politics, look beyond Modi and New Delhi


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March 07, 2023

Over the past week, national media outlets based in and around New Delhi have focused primarily on the positive results for Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) in three Indian states' legislative assembly elections. All three states are situated in the country’s far-flung north-east region, each with its own political culture, parties and personalities. Yet, the national media’s focus has mostly been on the BJP’s moderate successes and whether they would have an impact on next year’s general election.

Like so much else of the political reporting from newspapers and television channels at the so-called “all-India” level, this framing is incomplete and misleadingly out of context.

Three aspects of Indian politics, in particular, deserve attention.

The first is that, thanks to the design of the Indian constitution, the political culture of a state has far more impact on the average Indian citizen’s everyday quality of life – ranging from policing, to education, health care and welfare services – than the union government. For example, as I noted in these pages, the vast discrepancies in Covid-19 fatality rates between states has very little to do with which government is in New Delhi, but rather the investments that state governments had put into public health and medical infrastructure. Different states even under the same party had radically different results; Haryana’s case fatality rate, for example, was half of Uttarakhand’s, despite both having BJP governments.

The second is that neither the BJP, nor its bitter rival, the Indian National Congress, hold much sway across vast swathes of India. To put this in context, more than 80 per cent of India’s population live in 14 of the 28 states; of these, only five currently have chief ministers from either the BJP or Congress. Instead, both these national parties must court local parties that are built around local identities and local concerns.

Third, any party struggling to succeed at state-level politics is unlikely to be competitive when India’s parliamentary election is held in 2024.

Meghalaya Chief Minister Conrad Sangma being felicitated by Assam Chief Minister Himanta Biswa Sarma in Guwahati, India, in 2021. Sangma runs a government with support from Narendra Modi's BJP. Getty Images
Meghalaya Chief Minister Conrad Sangma being felicitated by Assam Chief Minister Himanta Biswa Sarma in Guwahati, India, in 2021. Sangma runs a government with support from Narendra Modi's BJP. Getty Images
The political perceptions of a significant number of Indians is shaped by media consumption rather than direct experience with the political process

These dynamics explain why the BJP, like the Congress before it, often goes to such great lengths to try to secure even limited participation in coalition governments in as many states as possible, and failing that, some kind of electoral alliance with locally dominant parties. In several cases, big wins and losses are driven by building and breaking party coalitions rather than big changes in voters' sentiments – in other words, highly pragmatic and transactional politics. For example, the BJP is a junior partner to highly local parties in three out of the four north-eastern states facing elections this year. These parties have allied with the Congress in the past, and could just as easily switch back if they thought there was a benefit to doing so.

As in so many other democracies around the world, the political perceptions of a significant number of Indians is shaped by media consumption rather than direct experience with the political process. As a result, those who rely on national – as opposed to regional – media are particularly prone to missing out on these basic political realities. National political reporting brushes over an extraordinary cultural and political diversity that cannot be reduced to a single story, or a single competition.

It also exaggerates the power and responsibility of the union government for outcomes that it often has little to do with, whether good or bad. Often, even states with positive results have pursued very different pathways.

Tamil Nadu, for example, has India’s second-largest economy, and successive governments – all led by local parties – have relied on the growth of private-sector industrial manufacturing backed by a highly inclusive welfare state. Meanwhile, next-door Kerala, currently governed by a coalition of left-wing parties, has relied on tourism, remittances and even more generous welfare spending to achieve social indicators that are more comparable to Western Europe than the rest of India. Both significantly diverged from the BJP and Congress formulas, irrespective of which party has been in power in New Delhi. Bihar and Odisha, states once noted for poverty, dysfunction and natural disasters, have seen remarkable turnarounds in recent decades, led once again by local parties.

Ironically, given their rivalry, the country that India most resembles in terms of electoral dynamics is Pakistan. Both countries feature significant numbers of regional parties, a great deal of linguistic diversity, and a tendency for their large national media sector to focus on national parties over regional ones, and the union government over the state governments. And much like in India, the stubborn localness of politics and its demographic complexities have placed natural limits on governments with authoritarian ambitions.

Supporters hold up cut-outs with images of Tamil Nadu Chief Minister MK Stalin in Chennai last April. Reuters
Supporters hold up cut-outs with images of Tamil Nadu Chief Minister MK Stalin in Chennai last April. Reuters

However, Pakistan’s experience also holds useful lessons.

Worried about loyalty and stability, Pakistan from its early days after partition attempted to curb political and cultural autonomy in the provinces while centralising administrative power in the name of efficiency and national security. The results were the exact opposite of what was intended: spiralling political instability, unresponsive top-down governance, and anti-competitive crony capitalism. Attempts to reverse this damage through measures such as the 18th Amendment of the Pakistan constitution, which restores power to the provinces, have so far failed to undo the deeper damage.

In the very same period that Pakistan was centralising authority and attempting to tamp down diversity, newly independent India reluctantly took the other road. The successes of Indian democracy didn’t merely come from a progressive constitution bequeathed by its founding leaders, but also from the representative nature of its states. When existing states neglected groups and regions, new states have been allowed to emerge to meet those needs. And when national parties could not find meaningful discourse or the right solutions, local parties did. Union governments have, ultimately, benefited from being open-minded as regional parties experimented with different development models. And in places and times when New Delhi attempted to manipulate or suppress state politics for partisan reasons, the results were often calamitous.

This is worth pointing out, given the emphasis in recent years on strengthening New Delhi's primacy and building a homogenous national culture. The results of the past 75 years of South Asian history should make clear how unlikely that is to succeed or to deliver the benefits imagined. No single government or individual can find solutions for more than one billion people speaking dozens of languages, and with vastly different economic and social needs.

To see that clearly, however, India’s national news outlets as well as outsiders need to start looking around the country a little harder, instead of maintaining their fixed gaze on the power-brokers based in the capital.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Key recommendations
  • Fewer criminals put behind bars and more to serve sentences in the community, with short sentences scrapped and many inmates released earlier.
  • Greater use of curfews and exclusion zones to deliver tougher supervision than ever on criminals.
  • Explore wider powers for judges to punish offenders by blocking them from attending football matches, banning them from driving or travelling abroad through an expansion of ‘ancillary orders’.
  • More Intensive Supervision Courts to tackle the root causes of crime such as alcohol and drug abuse – forcing repeat offenders to take part in tough treatment programmes or face prison.
RESULTS

6.30pm: Handicap (rated 95-108) US$125,000 2000m (Dirt).
Winner: Don’t Give Up, Gerald Mosse (jockey), Saeed bin Suroor (trainer).

7.05pm: Handicap (95 ) $160,000 2810m (Turf).
Winner: Los Barbados, Adrie de Vries, Fawzi Nass.

7.40pm: Handicap (80-89) $60,000 1600m (D).
Winner: Claim The Roses, Mickael Barzalona, Salem bin Ghadayer.

8.15pm: UAE 2000 Guineas Trial (Div-1) Conditions $100,000 1,400m (D)
Winner: Gold Town, William Buick, Charlie Appleby.

8.50pm: Cape Verdi Group 2 $200,000 1600m (T).
Winner: Promising Run, Patrick Cosgrave, Saeed bin Suroor.

9.25pm: UAE 2000 Guineas Conditions $100,000 1,400m (D).
Winner: El Chapo, Luke Morris, Fawzi Nass.

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Jetour T1 specs

Engine: 2-litre turbocharged

Power: 254hp

Torque: 390Nm

Price: From Dh126,000

Available: Now

Real estate tokenisation project

Dubai launched the pilot phase of its real estate tokenisation project last month.

The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.

Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.

Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

SPECS
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THE CLOWN OF GAZA

Director: Abdulrahman Sabbah 

Starring: Alaa Meqdad

Rating: 4/5

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Sarfira

Director: Sudha Kongara Prasad

Starring: Akshay Kumar, Radhika Madan, Paresh Rawal 

Rating: 2/5

Pox that threatens the Middle East's native species

Camelpox

Caused by a virus related to the one that causes human smallpox, camelpox typically causes fever, swelling of lymph nodes and skin lesions in camels aged over three, but the animal usually recovers after a month or so. Younger animals may develop a more acute form that causes internal lesions and diarrhoea, and is often fatal, especially when secondary infections result. It is found across the Middle East as well as in parts of Asia, Africa, Russia and India.

Falconpox

Falconpox can cause a variety of types of lesions, which can affect, for example, the eyelids, feet and the areas above and below the beak. It is a problem among captive falcons and is one of many types of avian pox or avipox diseases that together affect dozens of bird species across the world. Among the other forms are pigeonpox, turkeypox, starlingpox and canarypox. Avipox viruses are spread by mosquitoes and direct bird-to-bird contact.

Houbarapox

Houbarapox is, like falconpox, one of the many forms of avipox diseases. It exists in various forms, with a type that causes skin lesions being least likely to result in death. Other forms cause more severe lesions, including internal lesions, and are more likely to kill the bird, often because secondary infections develop. This summer the CVRL reported an outbreak of pox in houbaras after rains in spring led to an increase in mosquito numbers.

FFP EXPLAINED

What is Financial Fair Play?
Introduced in 2011 by Uefa, European football’s governing body, it demands that clubs live within their means. Chiefly, spend within their income and not make substantial losses.

What the rules dictate? 
The second phase of its implementation limits losses to €30 million (Dh136m) over three seasons. Extra expenditure is permitted for investment in sustainable areas (youth academies, stadium development, etc). Money provided by owners is not viewed as income. Revenue from “related parties” to those owners is assessed by Uefa's “financial control body” to be sure it is a fair value, or in line with market prices.

What are the penalties? 
There are a number of punishments, including fines, a loss of prize money or having to reduce squad size for European competition – as happened to PSG in 2014. There is even the threat of a competition ban, which could in theory lead to PSG’s suspension from the Uefa Champions League.

War 2

Director: Ayan Mukerji

Stars: Hrithik Roshan, NTR, Kiara Advani, Ashutosh Rana

Rating: 2/5

Who's who in Yemen conflict

Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government

Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council

Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south

Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory

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Tips for used car buyers
  • Choose cars with GCC specifications
  • Get a service history for cars less than five years old
  • Don’t go cheap on the inspection
  • Check for oil leaks
  • Do a Google search on the standard problems for your car model
  • Do your due diligence. Get a transfer of ownership done at an official RTA centre
  • Check the vehicle’s condition. You don’t want to buy a car that’s a good deal but ends up costing you Dh10,000 in repairs every month
  • Validate warranty and service contracts with the relevant agency and and make sure they are valid when ownership is transferred
  • If you are planning to sell the car soon, buy one with a good resale value. The two most popular cars in the UAE are black or white in colour and other colours are harder to sell

Tarek Kabrit, chief executive of Seez, and Imad Hammad, chief executive and co-founder of CarSwitch.com

Trolls World Tour

Directed by: Walt Dohrn, David Smith

Starring: Anna Kendrick, Justin Timberlake

Rating: 4 stars

'Dark Waters'

Directed by: Todd Haynes

Starring: Mark Ruffalo, Anne Hathaway, William Jackson Harper 

Rating: ****

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Engine: 3.5-litre V6

Transmission: eight-speed automatic

Power: 290hp

Torque: 340Nm

Price: Dh155,800

On sale: now

The Sand Castle

Director: Matty Brown

Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea

Rating: 2.5/5

Updated: March 07, 2023, 5:12 AM