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Business & Religion

by Anuja Prashar

London: As the unregulated financial markets (Private Equity Funds, Sovereign Wealth Funds and Hedge Funds) gain the primary global economic power and influence over the movement of funds to growth areas, the influence of a media ‘experienced’ reality, could become increasingly important over time.

The Dow Jones Faith Indexes and their implications lead me to ask what could be the economic relevance for such information? The presentational form in which vast quantities of economic information is presented in the global era, renders experience as mediated communication. Thus, we need to ask ourselves, who needs this type of information and to what purpose?

I would like to suggest that the ‘filtering criteria’ for indexes, in the instance of Islamic Index and Dharma index, plays a part in creating culturally valued hierarchies for both consumers and investors, not dis-similar to hierarchies of ethnicity produced by ethnic minority monitoring practises in the UK, based upon faith, race and country of origin. The link between culturally valued economic information and economic investment practise is the key to the answer we seek.

It is a very ‘complex connectivity’ that I am trying to describe, in which economic, social and political dimensions become intertwined and inadvertently impact upon each other, within the transnational era. This article attempts to guide you through these interfaces, created by Dow Jones faith indexes and one possible path for assessing and reflecting upon the possible consequences in the future.

Dow Jones Industrial average is one of several stock market indices created in the 19th Century. The Dow Jones Indexes are part and parcel of the whole Dow Jones media global mechanism - they produce information for stakeholders in financial markets. Today Dow Jones Indexes offers “more than 130,000 equity indexes as well as fixed-income and alternative indexes, including measures of the hedge fund and commodity markets”.

The development of the Dow Jones Islamic Index was launched in 1999 and according to the website “Today the series encompasses more than 70 indexes and remains the most comprehensive family of Islamic market measures”. The absence of a Christian or Jewish Index raises some ambiguity is this area.

Thus, I ask why would there be a need for a Dharma Index? Especially when there are no set criteria within any of the scriptures or practises of the Dharmic faiths (Hindu, Sikh, Buddhist or Jain) that would provide useful or pertinent information to investors from within these faith groups. This index will collectively pool approximately 600 Asian businesses and corporations (without any need for their voluntary consent) for assessment. In this case, the signifying practise of creating arbitrary faith based criteria assessments seems as banal as monitoring for blued eyed or browned eyed people within a population.

How and why would this system of media operations become useful for Islamic and Dharmic faith economic groups in the 21st Century – or is it more useful for purposes other than economics – or is it more meaningful to others outside of these faith groups? I wish to suggest that changes to a wealth fund portfolio can become influenced by the information generated by a faith Index. It is this relationship that is the focus of the rest of this paper.

At the World Economic Forum, Davos 2008 in panel discussion, former U.S. Treasury Secretary Lawrence Summers expressed serious concerns about the increasing power and influence of wealth funds. Bader Al Sa’ad, managing director of the Kuwait Investment Authority, which recently bought large parts of Merrill Lynch and Citigroup (, 1/10/08) said, “All the fears about the sovereign wealth funds have no basis and no case to build on.” Stephen Schwarzman, chief executive of private equity giant Blackstone Group (BX), said he had been dealing with such funding investors for 20 years and, “It was amazing to see them given a new name, ‘sovereign wealth funds,’ and become something journalists write about as a threat”.

In the same discussion, Russian Finance Minister Alexei Kudrin suggested a double standard was working in the calls for a code of conduct for global flows of funds. “When funds from developed economies moved into markets and bought industries, we did not speak of restricting capital,” Kudrin said. “Now that funds from emerging economies are on the scene we are having discussions about the aim of investment”. Chief executive officer of Lehman Brothers (LEH) suggetsed that wealth funds present value may be as high as $3 trillion and could command as much as $20 trillion in five years.

Nouriel Roubini, chairman of Roubini Global Economics LLC, also a professor at New York University’s Stern School of Business, wrote in a Jan. 24 research report that “For 2009 don’t be surprised if next year the star, fad or bugaboo at Davos becomes the large private multinational corporations in emerging market economies.” This notion takes on serious implications when we consider the theory proposed by Andrew Inkpen and Kannan Ramaswamy, from the school of Global Management in Arizona, who suggest that the emerging markets are “redrawing the picture” as their corporations develop supply and demand chains outside of the familiar domains and causing shifts in central headquarter control and local controls.

In other words, the projection is that transnational corporations of emerging markets increasing in size and increased profitability, as they realise the scales of economy and efficiency of new suppliers and new markets in other developing countries, will become lucrative attractions for capital investment from all wealth funds.

Currently, most wealth funds are re-investing into developed economies through US treasury bonds and acquisition of European and US financial assets etc. If these funds were to shift to increasingly more lucrative investments of transnational corporation stock portfolios within the fastest emerging markets of India and China, the implication here is that overtime, we may see a greater shift of capital from the metaphorical North countries into South countries. This has real positive economic implications for economic development across the range of developing countries.

However, if the Dow Jones Indexes media created reality of ‘artificial faith differences’ could influence the flow of funds away from certain emerging markets and corporations, that did not correspond with that of a particular faith group of a wealth fund.

Transnational organisations with owners, employees or stakeholders who also don’t fit into a model of “the desirable faith group” may be overlooked for capital investment and inclusion in investment portfolios. This scenario of a faith based global market fragmentation , makes a nonsense of the notion of free financial markets. These patterns of inclusion and exclusion would resonate with race or faith relations and Capital becomes ‘coloured’ by faith!

On the other hand, if economic market theory and current practise is to prevail and the economic imperative of pursuit of profit or return on capital investment remains the key driver, then the flows of funds would be directed by performance alone, despite the media manufactured ‘indexes of difference’ along faith lines. This later scenario, which would be the most desirable for a more equal liberal economic growth across the globe, brings us back to my original question then - why do we need a Dharmic Index and who will use it and for what purpose?

The political use of a ‘filter criteria’, disguised as a faith criteria, focused upon any particular agenda, has the potential to impose inclusion and exclusion onto whole emerging markets and individual corporations within those markets, if these faith indexes are allowed to become more influential.

There appears to be some risk that the impact upon flow of funds towards economic development and emerging markets, may become affected by faith based ‘discourses of differences’ manufactured around index information and political phobias and not free market forces. Worse still, perhaps these Media influences will result in the formation of barriers and obstacles for the growth and development of particular emerging market economies and those that need it the most - millions below the poverty line!

Kenya-born British national, Anuja Prashar, teaches Sociology & Research methodology at Goldsmith’s College, University of London.

Loan for Power Sector Infrastructure Development in India

 The Japan Bank for International Cooperation (JBIC) has signed an agreement to provide a guarantee for a syndicated loan of up to US$380 million to NTPC Limited (NTPC)1 of India, to be used for the capital investment of Barh Super Thermal Power Project (1,980MW)2. The agreement was made with four private financial institutions: Sumitomo Mitsui Banking Corporation (the agent bank), Mizuho Corporate Bank, the Bank of Tokyo-Mitsubishi UFJ, and the Tokyo branch of Société Générale.

 The Power Project will generate electricity to supply the north-western part of India including Delhi and Mumbai, where many Japanese companies are operating and further investments by Japanese companies are promised. This loan has been arranged on the initiative of JBIC, using its loan arrangement, assessment and risk-taking functions, following a request by NTPC and the private financial institutions.

 India’s population of over 1.1 billion and economic growth of between seven and nine percent p.a. has recently caught the eye of Japanese companies as a potential market as well as a production base3. However, investments and operations in the country have hit a bottleneck, because of inadequate infrastructure4. In particular, the short and unstable supply of electricity hinders ongoing operations and necessitates additional investment in costly self-generating power facilities.

JBIC’s aim in arranging and guaranteeing this loan is to improve the investment and business environment in India through the development of the power sector infrastructure in the north-western part of the county, thereby improving the international competitiveness of Japanese companies (including existing investors). JBIC will remain committed to further improving the business environment in India, using its loan arrangement, assessment, and risk-taking functions. 

NTPC is the biggest power producer in India, in which the Government of India possesses an 89.5% stake. NTPC undertakes design, construction and maintenance of thermal power stations throughout India, and accounts for around 29% of total power supply in India (as of March 2007).

This project utilizes supercritical technology, which is a method to enhance the efficiency of power generation by increasing the pressure within the boiler and thereby raising the temperature of the steam to be pumped into the turbine. It is expected that the adoption of this technology will reduce the level of coal usage and CO2 emission, compared with a standard coal-based thermal power plant.

In the Survey Report on Overseas Business Operations by Japanese Manufacturing Companies, an annual survey conducted by JBIC, India was ranked, in fiscal 2007, as the most promising overseas investment destination for Japanese companies’ over the long term.

In the abovementioned report, the majority of companies pointed to inadequate infrastructure as the challenge for investment in India.

India has replaced Taiwan as holder of the world’s fourth-largest foreign currency reserves, Taiwan’s central bank said on Monday.

Taiwan’s world ranking slipped to the fifth place as India surpassed it with foreign currency reserves of $279.5 b

At the end of January, Taiwan’s foreign currency reserves were $272.8 billion.

The world’s top holders of foreign currency reserves are:

1) China - $1.5 trillion; 2) Japan - $948 billion; 3) Russia - $479.4 billion; 4) India - $279.5 billion; 5) Taiwan - $272.8 billion; 6) South Korea - $261.8billion; 7) Singapore - $163.6 billion; 8) Brazil- $163.5 billion; and 9) Hong Kong - $146.9 billion.

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