Unrest Risk in India

On Monday I wrote to clients that

Similarly, it would be not be a surprise to see a major social unrest event  in either Turkey or India in coming quarters as a response to irresponsible monetary and fiscal policies.

India in particular is worth keeping an eye on.

India’s youth unemployment has risen sharply in recent years, while student loans have boomed. GDP growth is slowing, which means students will enter a weak jobs market with debts hanging over them. Meanwhile, the rupee exchange rate is weak, and as a result the prices of basic commodities are rising sharply, hurting the poor. The Reserve Bank of India has plans to weaken the rupee even further from here.

Now note the FT reports this morning that

India’s major cities were on high alert after two bombs exploded in the southern city of Hyderabad, killing at least 13 people and injuring almost 80 others…

India’s home affairs minister, Sushil Kumar Shinde, said New Delhi had indications of a possible terror attack two days ago, but had no concrete information. He also said the death toll could rise.

The blasts come two weeks after India secretly executed Afzal Guru, a Kashmiri man who was convicted of providing logistical support to a planned 2001 attack on the Indian parliament.

The execution provoked an outcry across Kashmir, where many believed that Guru had been denied a fair trial, and also denied his legal right to make a final appeal against his hanging.

India’s National Intelligence Agency had warned cities across the country of the potential for retaliatory attacks in the wake of the execution, which came just three months after India executed Ajmal Kasab, one of 10 Pakistani terrorists responsible for the 2008 Mumbai attacks.

 The scene is set for some major social unrest in India in 2013.