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UNCLAS SECTION 01 OF 07 NEW DELHI 000699 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR SCA/INS 
 
E.O. 12958: N/A 
TAGS: PGOV PTER PREL PINR KDEM IN
SUBJECT: INDIA SCENESETTER FOR CODEL BERMAN 
 
NEW DELHI 00000699  001.2 OF 007 
 
 
¶1.  (SBU) Dear Chairman Berman and Delegation: Embassy New 
Delhi warmly welcomes you to India.  Your visit coincides 
with a historically unprecedented level of U.S.-India 
collaboration encompassing everything from defense 
cooperation to agriculture and reflecting widespread support 
in both countries for broadening existing ties and building 
new ones.  India and the U.S. have begun working more closely 
together than we ever have before, as exemplified by our 
parallel efforts to assist in Afghan reconstruction, and to 
cooperate on law enforcement following the November terrorist 
attacks in Mumbai.  This level of cooperation reflects a 
transformation in Indian attitudes.  For many decades, the 
default position was distrust and suspicion, but now we see 
an India that seeks increasingly to advance shared interests. 
 India has entered the election season and the main parties 
are sharply contesting on many issues, but the positive 
growth in U.S. - India relations is not one of them.  Your 
visit will give you the opportunity to judge how cooperation 
has furthered U.S. interests. 
 
 
Chennai:  Gateway to South India 
--------- 
 
¶2.  (SBU) Your visit begins in Chennai, the capital of the 
state of Tamil Nadu, which is the traditional administrative 
and economic center of South India, one of India's most 
economically vibrant regions.  The entrepreneurial dynamism 
found in South India is a major factor in India's recent 
ascent as an emerging economic power.  Tamil Nadu's 
population of more than 65 million people exceeds that of 
France, but is packed into one quarter as much space.  The 
south Indian states share a cultural and linguistic heritage 
that sets them apart from their northern neighbors, with 
Tamil Nadu home to the most distinct identity, heavily 
grounded in pride in the Tamil language.  Most south Indians 
are Hindu, but the region is home to large communities of 
Muslims and Christians.  Tension between the various 
communities are muted in comparison to the rest of India. 
 
¶3.  (SBU) Tamil Nadu and its fellow southern states generally 
have better social indicators - literacy, infant mortality, 
and lifespan - than north Indian states.  An emphasis on 
education and a high density of quality educational 
institutions has resulted in the ready availability of 
skilled labor.  Tamil Nadu and its neighbors are also known 
for relatively good governance and, with the exception of 
communist-ruled Kerala, for their business-friendly policy 
environments.  Together, these factors have made South India 
a preferred destination for foreign direct investment (FDI). 
Tamil Nadu joins Karnataka and Andhra Pradesh among India's 
top five in drawing FDI.  Tamil Nadu's growth is distinct for 
its diversification.  The state's strong IT services sector 
is complemented by a major automotive sector and India's 
largest electronics manufacturing corridor. 
 
¶4.  (SBU) South India is also politically distinct from the 
north.  India's major national parties, BJP and Congress, 
face stiff competition from, and generally take a backseat 
to, various state-based regional parties in the south.  Tamil 
Nadu is run by the DMK party, one of several "Dravidian" 
parties that emphasize the distinctness of the local Tamil 
people.  Various Dravidian parties have ruled Tamil Nadu 
since 1968, when the Congress last ruled the state. 
Throughout Chennai you will see countless photos and 
paintings of an older man wearing his trademark sunglasses. 
He is the 85-year old MK Karunanidhi, Chief Minister and 
leader of the ruling DMK party.  Similarly ubiquitous are the 
matronly photos of the leader of the opposition AIADMK party 
¶J. Jayalalithaa, usually with her hands folded together in 
 
NEW DELHI 00000699  002.2 OF 007 
 
 
the traditional Indian greeting.  Like the rest of India, 
Tamil Nadu is looking towards the upcoming elections.  It 
goes to the polls in the last of the five stages of the 
elections, on May 13. 
 
 
U.S. Assistance: Making a Difference in India 
--------------------------------------------- ----------- 
 
¶5. (SBU) Turning to some of the sites that you will visit, 
the Mission understands that you and the delegation are 
particularly interested in getting an on-the-ground feel for 
the effectiveness of U.S. assistance programs. Your schedule 
will allow you to visit several projects, and we'd like to 
provide some context for our programs.  Although India's 
economy is growing at 7-9 % annually, this significant and 
impressive growth is deceptive.  India has 456 million 
people, or 42 % of its population, living below the official 
poverty line of $1.25 per day, and a staggering 828 million 
people, or 75.6 % of the population, living on less than 
$2.00 per day.  This puts India's poverty levels above those 
of sub-Saharan Africa.  The rural and urban poor in India do 
not have the education, workforce skills, social capital or 
access to primary health care and basic infrastructure 
including water, sanitation and electricity to participate in 
and benefit from India's economic growth.  They are generally 
not the focus of private investment.  Deep rooted gender 
inequities further undermine India's potential to convert its 
economic growth into human development.  According to the 
World Economic Forum's Gender Index, India ranks 113th out of 
130 countries and is in the bottom five countries for 
economic participation and opportunity, and health and 
survival.  The GOI and the private sector are eager for 
international best practices that U.S. foreign assistance 
offers to address this glaring economic disparity.  The U.S. 
assistance program builds the capacity of local partners - 
government institutions, private sector, and civil society 
and non-governmental organizations - by promoting replicable 
models and engaging in policy dialogue that leads to higher 
development impact and improved resource allocations.  U.S. 
foreign assistance, coupled with Government of India and 
private sector resources, improves India's ability to achieve 
sustainable growth and reduce poverty. 
 
¶6. (SBU) Health: India's growing population of more than one 
billion strains resources and complicates disease prevention. 
 More than two million Indian children under age 5 die every 
year, most from preventable causes, while avoidable 
complications during childbirth kill approximately 78,000 
Indian women every year.  Family planning choices are 
limited, with more than two thirds of women opting for 
sterilization as their method for family planning.  The 
health of the urban poor is considerably worse than the urban 
middle and high income groups and is as bad as that of the 
rural population.  2.47 million people in India are estimated 
to be HIV positive.  Although eradication efforts are 
promising, India remains one of four countries where polio 
continues.  One fourth of the world's TB cases are in India, 
which is now the number one high burden country for Multi 
Drug Resistant (MDR) TB.  The U.S. assistance program works 
in close collaboration with the Government of India and state 
governments in many health activities designed to increase 
access to family health care, nourish needy mothers and 
children, fight infectious diseases, and prevent HIV/AIDS. 
 
¶7. (SBU) Education: India has achieved significant progress 
in increasing access to basic education.  However, improving 
the quality and relevance of education remains a major 
challenge for the public education system.  Despite massive 
government investment in the sector, student learning levels 
 
NEW DELHI 00000699  003.2 OF 007 
 
 
continue to be alarmingly low across most schools in the 
country, leading to large numbers of children dropping out of 
school.  Approximately 50.8 % of children in India drop out 
at the elementary level, while at the secondary level, as 
many as 62 % drop out.  Enrollment in higher and technical 
education is only about 11 %.  High drop out rates at all 
levels negatively impact long term employment opportunities. 
U.S. assistance to India provides quality education to 
marginalized children, including Muslim minorities, promotes 
the use of technology to improve the teaching and learning, 
and supports interventions that link education to employment. 
 The overall approach is to initiate pilot projects, 
demonstrate success, and partner with the government and the 
private sector for scale-up and sustainability. 
 
¶8. (SBU) Energy: India is a major producer of Green House Gas 
(GHG) emissions, with the power sector the largest single 
contributor.  Indian power stations, characterized by old 
equipment, inefficient technologies, poor maintenance 
practices, and low quality coal, are some of the highest GHG 
emitters in the world.  Given India's dependence on coal for 
power generation, efforts to reduce GHG in this sector are 
critical.  The key challenge therefore is to move India 
towards clean coal technologies.  Nearly 20 % of villages and 
32 % of households do not have access to electricity. 
Development of an efficient and modern energy system is also 
necessary to sustain India's economic growth and social 
development.  U.S. assistance is designed to assist India 
significantly advance its quest for better infrastructure by 
reducing electricity distribution losses, improving end-use 
efficiency, and advancing market based solutions for the 
co-management of energy and water. 
 
¶9. (SBU) Water and Sanitation: For many Indian cities and 
towns facing the challenges of growing populations and urban 
expansion, providing direct access to clean, affordable, and 
reliable drinking water is a significant challenge. 
Currently, only a fraction of the urban population has direct 
access to clean piped water, often because of inadequate and 
inefficient supply systems.  The delivery of water and 
sanitation services in cities is particularly important 
because of their direct impact on human health and 
productivity.  To help address the urgent need for investment 
in water and sanitation infrastructure across the country, 
USAID is testing two sustainable models for providing 
affordable and equitable access to safe drinking water and 
sanitation in the Indian states of Orissa and Madhya Pradesh. 
 
¶10. (SBU) Agriculture: Addressing the challenges of food 
security requires a renewed effort on developing agriculture 
in India.  The country is one of the largest producers of 
food grains in the world, feeding 17 percent of the world's 
population on only three percent of the world's arable land. 
And yet, with 600 million Indians dependent on agriculture, 
inefficiencies in the agriculture sector, including lack of 
scientific infomation and low adoption of new technologies 
and poor linkages between farmers and markets, 
disproportionately impact rural populations, which have 
particularly high rates of malnutrition and poverty. 
Improving agricultural productivity in India helps raise the 
incomes of poor rural farmers and helps mitigate global food 
shortages and volatile pricing.  Indian farmers, however, 
will have the difficult task of meeting the food needs of a 
growing population while coping with decreased area of arable 
land, increasingly scarce water supplies, and greater 
intensity and frequency of extreme weather events such as 
floods and drought caused by global climate change.  The U.S. 
response to the food crisis in India, integrates immediate, 
near-term, and longer-term activities in four key areas: 1) 
humanitarian assistance and social protection measures to 
 
NEW DELHI 00000699  004.2 OF 007 
 
 
help mitigate the risks of high food prices to poor people; 
2) activities to boost agricultural productivity and improve 
soil and water resource management; 3) linking farmers to 
markets and promoting the efficient flow of goods and 
services through strengthened value chains; and 4) disaster 
preparedness and mitigation and early warning systems for 
floods and droughts. 
 
¶11. (SBU) Law and Human Rights:  Deep-rooted gender 
inequalities continue to undermine India's potential to 
translate its economic growth into inclusive development. 
Despite progressive laws and policies, much more remains to 
be done.  One in three Indian women faces some sort of 
domestic violence, the sex ratio of female to male children 
is one of the lowest in the world, and almost 50 % of girls 
marry before the legal age of 18.  There are an estimated 
three million commercial sex workers, of which, approximately 
40-45 % are children, largely girls.  India is ranked 113 out 
of 130 countries by the World Economic Forum's (WEF) 2008 
Gender Gap Index, and is among the ten worst gender biased 
economies in the world.  USAID's access to justice program 
works with Indian NGOs to advocate for legal and 
institutional reforms; shift popular attitudes on issues like 
dowry and sex selective abortion; and increase access to 
legal rights information and redressal services.  The program 
puts a special emphasis on the needs of Muslim women.  USAID 
addresses the issue of trafficking of women and children by 
building the capacities of various stakeholders on minimum 
standards of care and protection and strengthening the 
community-based protection processes. 
 
¶12. (SBU) Disaster Management: Every year, India consistently 
ranks among the top five countries in the world in terms of 
lives lost, people affected, and economic loss from natural 
disasters such as floods, drought, cyclones, tsunamis, and 
earthquakes.  Human-caused hazards include hazardous wastes, 
chemical spills, industrial accidents, civil strife, and 
terrorism.  Large events create havoc and can lead to 
instability in the affected area; smaller scale, recurring 
events set back development gains for many years. 
Recognizing the immense need to reduce vulnerability to 
disasters, the Government of India has taken a new approach 
that fosters disaster resilience and includes preparedness 
and mitigation as well as relief and recovery.  For the past 
six years the U.S. has worked with the Government of India, 
through the Disaster Management Support (DMS) project to 
address the challenges of disaster mitigation and response. 
It draws on a range of U.S. government partners-such as the 
Federal Emergency Agency, the U.S. Forest Service, the 
National Oceanic and Atmospheric Administration, and the U.S. 
Geological Survey - to provide expertise and exchange 
information with Indian counterparts. 
 
Domestic Political Landscape 
-------------------------- 
¶13. (SBU) During your meetings with political figures in New 
Delhi, the ongoing election campaign will be in the forefront 
of their considerations.  National parliamentary elections 
will take place across India from April 16 through May 13. 
The political season will enterits final phase by June, when 
the new Parliament will convene and the next government will 
be sworn in.  It remains impossible to predict which party 
will emerge on top in the national elections, but it is safe 
to say that whichever party forms the government will have to 
rely on a diverse coalition with the smaller regional 
parties.  Both the BJP and the Congress support a closer 
U.S.- India relationship. 
 
The Politics of Terrorism 
------------ 
 
NEW DELHI 00000699  005.2 OF 007 
 
 
¶14.  The anger over the November Mumbai attacks may be less 
visible now, but India still expects Pakistan to arrest and 
try Pakistanis involved in planning and organizing the attack 
and to dismantle terrorist infrastructure.  In addition to 
their reactions against Pakistan, Indians directed an 
unprecedented level of fury at their own political 
establishment which they feel failed to protect them.  This 
helped propel new anti-terrorism legislation to further 
empower local police in terror related cases and to establish 
a new police organization to investigate terror incidents, 
the National Investigation Agency.  Additionally, the 
public's reaction pushed the Congress Party-led government of 
Prime Minister Singh to shelve the bilateral Composite 
Dialogue that was focused on resolving contentious issues 
between India and Pakistan, including Kashmir.  While the GOI 
and Congress Party leaders have made muscular statements 
demanding the GOP investigate and prosecute those involved in 
the attack, India's strategy so far has been to pursue a 
diplomatic rather than a military solution.  India has 
launched a worldwide diplomatic offensive to put pressure on 
Pakistan. 
 
Increased Cooperation 
--------------------- 
¶15. (SBU) Post-Mumbai there has been unprecedented 
cooperation between U.S. and GOI law enforcement and 
intelligence agencies, most notably with the FBI.  The U.S. 
continues to highlight this burgeoning cooperation and 
importance of India's counter terror efforts with almost 
monthly visits of high level U.S. officials, including the 
FBI Director Mueller and CIA Chief Panetta.  Whereas in the 
past the GOI has been a reluctant law enforcement partner, 
today Indians are far more amenable to accepting our offers 
of counterterrorism assistance and training.  Moving forward, 
we believe the most constructive approach to take with the 
GOI is to continue offering assistance and to encourage the 
GOI to focus on improving security preparedness and 
prevention of terrorist attacks. 
 
Civil Nuclear Cooperation 
------------------------- 
¶16. (SBU) India viewed the signing of the U.S. - India Civil 
Nuclear Cooperation Agreement as an historic event and as an 
essential part of transforming our relationship.  India has 
since followed through on its nonproliferation commitments by 
signing its IAEA Safeguards Agreement and concluding an 
Additional Protocol with the IAEA.  We expect the next 
government to implement commercial cooperation, giving U.S. 
firms access to an estimated $150 billion of business and 
leading to the creation of thousands of high-skilled American 
jobs.  The Agreement no longer dominates the headlines, but 
the goodwill it generated has also contributed to improved 
cooperation following the Mumbai terrorist attacks and 
receptivity toward President Obama's Afghanistan-Pakistan 
strategy. 
 
Regional Issues 
--------------- 
¶17. (SBU) Under Prime Minister Singh's leadership, the 
Government of India is emerging as a responsible leader in 
the region and in Asia at large.  India's foreign policy can 
best be summarized as "be friends with everyone."  India is 
seeking to increase engagement with the U.S., China, EU and 
Japan.  India's top priorities include maintaining healthy 
relations with neighbors to promote stability and access to 
resources, countering terrorism, and pursuing a seat on the 
UN Security Council in order to institutionalize India's 
global status.  Pakistan/Kashmir is seen as the most 
immediate threat in the region and China is seen as the 
long-term, strategic threat.  India encourages democracy in 
 
NEW DELHI 00000699  006.2 OF 007 
 
 
the region, but is concerned about continuing political 
instability in both Nepal and Bangladesh and the humanitarian 
situation in Sri Lanka. We have followed closely as India and 
China have sought warmer relations by engaging in a strategic 
dialogue that sparates the contentious border issues from a 
broader engagement.  India is the fifth largest donor to 
Afghanistan's reconstruction, pledging more than $1.2 billion 
to date.  While we have made remarkable progress in our 
bilateral relationship over the past decade, greater 
cooperation on regional and global issues remains an area for 
us to build on. 
 
Economic Ties 
------------- 
¶18. (SBU) The U.S.-India economic relationship, for decades 
narrow and circumspect, is gathering steam and is becoming a 
key driver of our overall bilateral relationship.  The United 
States is India's largest trading partner and one of its 
largest foreign investors.  Two-way merchandise trade grew to 
a record USD 44.4 billion in 2008, a 76% increase from 2005. 
At the same time, investment has surged between our countries 
in recent years, prompting agreement to launch negotiations 
this spring on a Bilateral Investment Treaty.  India was 
represented by its economist Prime Minister at the London 
G-20 Summit on April 2.  The Indian delegation has supported 
U.S. calls for economic stimulus and has been looking to the 
U.S. to lead on resolution of the banking crisis as a 
necessary step towards global economic recovery.  India has 
expressed concern about protectionist measures in the 
developed countries having a disproportionately damaging 
effect on more vulnerable developing countries, which India 
sees as victims of a crisis they did not create. 
 
¶19. (SBU) The Indian economy continues to be the second 
fastest growing economy after China, even as the global 
slowdown and financial crunch moderate GDP growth from 9% in 
fiscal year (FY) 2007-08 to an anticipated 6.5-7% in FY 
2008-09, which ended March 31.  Growth in calendar year 2009 
is expected to be in the 6% range.  Most of India's growth is 
domestically generated and the government's pre-election 
expansionary budget provided a fiscal stimulus that has 
helped sustain consumer demand.  India's conservative central 
bank had restricted many of the derivative innovations linked 
to the global financial crisis, creating insulation for much 
of the banking sector.  However, India's globalizing 
companies and banks are feeling the pinch of tougher foreign 
financing conditions, but this has not prompted the private 
sector or the government to denounce India's integration with 
the international financial system.  Rather, India's central 
bank and SEC-equivalent have liberalized foreign capital 
inflows and investment procedures.  The government was also 
quick to offer concessions to the labor-intensive textile and 
jewelry export sectors, hit by slowing global demand.  The 
Labour Ministry estimates half a million jobs (out of India's 
roughly 500-million strong labor force) were lost between 
September and December, mainly in hard hit export industries. 
 The Commerce Secretary recently stated he sees export demand 
leveling out in April after several months of contraction, 
with the worst of job losses over. 
 
¶20. (SBU)  As India heads to the polls in mid-April, there 
are some signs of recovery in industrial production, such as 
steel and auto sales.   In addition, sales of lower end 
consumer goods remain high, fueled by increasing purchasing 
power in the rural sector and tax reductions.  Anecdotal 
reporting from around the country indicates that the 
government's programs geared towards rural employment and 
infrastructure, as well as farm debt relief and high price 
supports to the agricultural sector, have boosted rural 
incomes.  In the medium term, India will find it hard to 
 
NEW DELHI 00000699  007.2 OF 007 
 
 
increase or even sustain its high growth rates unless it 
undertakes a second generation of critical but politically 
difficult reforms, especially in the financial, energy and 
agricultural sectors, education and labor laws.  Regardless 
of who wins, we expect the new government to continue 
economic liberalization.  As it is, lagging growth in 
agriculture and a weak - but improving - infrastructure 
constrain growth. The top Indian economic priorities are 
physical and human infrastructure development and spreading 
economic benefits into rural India. 
 
Agriculture:  An Opportunity to Build Partnerships 
--------------------------------------------- ---------- 
¶21. (SBU) The Agricultural Knowledge Initiative (AKI) was 
launched in 2005 by President Bush and PM Singh and is in the 
process of wrapping up the previously agreed joint projects. 
The Indians have told us they are eager to continue bilateral 
cooperation in this sector that employs almost than half of 
all Indians workers, many at a subsistence level.  The 
Indians have responded positively to our concept of a 
multi-pillar approach to knowledge sharing including; 
productivity, market efficiency, environmental 
sustainability, and finance/insurance.  This approach would 
procedurally look similar to our successful Energy Dialogue 
with India.  However, we will not be able to table our 
proposal to India until we can back it up with significant 
USG funding. 
BURLEIGH