Although the RBI expects India to be a global performer, it has pegged the GDP growth at 6.5 to 7 per cent against last year’s 8 per cent. Though the monsoon is supposed to be normal this year, some domestic and global factors are likely to slow down the growth momentum. Under the Left’s pressure, the new government may have to resort to populism, maintain or raise subsidies and dither on hiking prices of public utilities when required, possibly adding to the fiscal deficit. The rising global oil prices may unsettle RBI calculations, particularly on growth and inflation, projected rather conservatively at 5 per cent. The oil price hike, which is inevitable after the global oil price increase, can have a cascading effect on prices.

Corruption was a major theme in the elections this time. Orissa has no dearth of mineral and natural resources. However, there is a general impression that the state continues to remain backward and underdeveloped mainly because of the corrupt politicians. Against this background, Mr Naveen Patnaik in his own quiet way infused a whiff of fresh air after he took over as Chief Minister in March 2000. Mr Patnaik is yet to speak Oriya fluently. Though this is an hindrance in the decision-making process, especially in the lower rungs, his sincerity of purpose and integrity are beyond doubt.

So much so, that exceptions become a record, such as the Congress not winning a single seat from Kerala in this election. The difference between the vote share of the respective fronts led by the Congress and the Left being very little, in almost every election there is no great disparity in the way the 20 Lok Sabha seats get apportioned. At the best of times the Congress won 14, which the Left-led alliance overtook only once before - in 1967 when the Congress had to be content with just one seat. This time, the Left Democratic Front made a near sweep, winning 18 seats. The CPM alone bagged a record 13 seats, leaving one for the Indian Union Muslim League, a Congress ally, and another, surprise of surprises, for the NDA.

In a couple of meetings he was warned that tensions between Jammu and Kashmir regions might explode, which would have an adverse reaction on Kashmir’s relations with the rest of the country. A plea was made for a federal set-up in which political power was equitably shared between the three regions of the state - Kashmir, Jammu and Ladakh - which would serve the best interests of all the regions. Kashmir would not be able to defend its autonomy and identity unless it recognised a similar urge for autonomy and identity of the other regions.

Nehru was able to see through the point of view and, after a discussion with Sheikh Abdullah, announced at a joint Press conference on July 24, 1952, that the state constitution would provide for regional autonomies. Had this formula been implemented, the Kashmir problem would have been resolved long ago.

The main reason why it could not be implemented was the opposition of the Praja Parishad, an affiliate of the Bhartiya Jana Sangh, the earlier incarnation of the BJP, which instead started an agitation for what it called full accession and abrogation of Article 370 of the Indian Constitution which governed the state’s relations with the Union government. It argued that to the extent political power was transferred from Kashmir to Delhi; the former’s capacity to dominate over Jammu would be reduced. On the other hand, people like this writer believed that whatever might be the merit or demerit of Article 370, it had nothing to do with the Jammu problem which could only be solved if it shared political power through regional autonomy. The Praja Parishad and the Jana Sangh’s opposition to Article 370 and regional autonomy was also due to their belief at that time, as Mr Vajpayee himself admitted recently, in a unitary form of constitution and their fear that a federal set-up in India or in the state would break up their integrity.

The Praja Parishad agitation had an adverse reaction in the Kashmir valley as it attacked their right granted under the India Independence Act and the Instrument of Accession to shape their relations with the union. The matter was further complicated by the unfortunate death of the founder-President of the Jana Sangh, Dr Shyama Prasad Mukerjee, in a jail in Kashmir where he had gone in support of the Parishad agitation. Protest demonstrations in many parts of India against the death of an Indian leader held Sheikh Abdullah as his murderer who was sought to be hanged. Kashmiri Muslims, who had fought against their co-religionists in Pakistan to join India, were shocked over such threats to their leader. This caused the first emotional rupture between them and the rest of the country.

The agitation in Jammu in 1952 and the continued opposition of the Jana Sangh to regional autonomy had caused deep fissures not only between Jammu and Kashmir but also between the latter and the rest of India. And the formula of 1952 would now not be enough to resolve the Kashmir dispute. For while in 1952, Pakistan did not matter in Kashmir as the people were overwhelmingly for India, now Pakistan is a factor in the situation.

However, the choice is not between a solution and no solution. A process needs to be started in the right direction. Much depends on Indo-Pak relations. There are some hopeful developments in these relations which should be consolidated and further improved. But if aspirations and interests of the people of the state also matter, these must be reconciled through a democratic, federal and decentralised set-up. For this purpose, an internal dialogue on inter-regional relations within the state and inter-ethnic relations within the regions, is as important as a dialogue with any section of the Kashmiri leadership and the Centre and the Indo-Pak dialogue.

In this context, an exercise made by Sheikh Abdullah in 1968 as President of the Plebiscite Front is of great relevance. Though his and Front’s representative character, as far as the Kashmir region was concerned, was beyond doubt, he invited even those who did not see eye-to-eye with him, including the Jamat-e-Islami, Maulvi Farooq’s Awami Action Committee, G.M. Karra’s pro-Pakistan People Conference, Bakshi Ghulam Mohammad’s National Conference, and all religious sects of Muslims in the valley to the J&K People’s Convention to “decide the future of the state.” I was the only member in its 12-member steering committee from Jammu. About 300 delegates from the Kashmir region unanimously adopted an outline of internal constitution of the state drafted by me which included regional autonomy and further devolution of power to the districts, blocks and panchayats. Sheikh Abdullah declared that any country which agreed to implement that constitution, the state would accede to it. The convention had further resolved that any final solution must keep in view the interests of the three regions of the state.

Such an exercise is needed again to evolve a consensus on an internal set-up not only for a peaceful and normal life in the state but also as a prerequisite for its stable and satisfactory external status. It has a better chance of success as the BJP-led NDA and the Congress, the two major political formations of the country have, for the first time, supported the autonomous regional councils in the state.

The next step should be to make the border soft. If India-Pakistan relations continue to improve and borders, say, along Punjab, also become soft, and South Asian identity emerges, borders would cease to be a source of tension or of much importance. A soft border would become more useful if the democratic system is well established not only in what is called Azad Kashmir but also in the Northern Areas of Gilgit and Baltistan, which is still governed by Rawalpindi.

Another point to be noted is that the LoC does not divide Kashmiri identity. In fact, the advancing Indian Army was halted against the advice of Generals and under a political decision, after the Kashmir valley was cleared of the raiders in 1948. For, Sheikh Abdullah was keen to consolidate the identity of the Kashmiri-speaking people of the valley. The non-Kashmiri-speaking people of what is called Azad Kashmir are ethnically much closer to Jammu. An autonomous, self-confident and secular Jammu would establish harmonious relations with the people across the LoC apart from being a vital geo-political like between Kashmir and the rest of India.

But federalism without democracy is incomplete. In the restoration of democracy in the state, one of the handicaps has been the lack of a tradition of political dissent. Sheikh Abdullah, the most popular leader Kashmir ever produced, build up a monolithic and regimented society; with the slogan “One Leader, One Party and One Programme”. Less popular leaders also followed the same tradition and the ruling parties in Delhi connived at that for their partisan interests.

The spell of the one-party system was broken when Sheikh Abdullah’s party National Conference, defeated the ruling party at the Centre, the Janata Party, in the assembly election in 1977 and again when after him his son and successor led the party to victory in 1983 against the Congress which was then ruling at the Centre.

The present phase of the Kashmir problem started in 1987 when Dr Farooq Abdullah signed an accord with the leader of the Congress, which was ruling in New Delhi, to form a coalition government and rigged the election. A vacuum in the opposition blocked the pro-India outlet of discontent while the rigged election blocked a democratic outlet of discontent.

A reverse process started with the election to the state assembly in 2002 when for the first time a government was changed through the method of the ballot. The recent parliamentary election (2004) was also hotly contested.

In 1972 when only a few of these officers were left, the government decided that the relevant rules should be altered to provide for their retirement age being reduced to 58 years to bring it at par with that of the IAS. As that would be possible only after amending the Constitution, which had guaranteed the original provision, it was decided further that the necessary amendment should be made in the Constitution.

This was rather reminiscent of a sledgehammer being used to crack a nut-which would not be too good for the health of the nut nor too flattering for the wielder of the hammer. But as government had so decided the amendment was duly made.

The result was that the length of service of some of the ICS men before retirement got reduced by periods ranging between a few months and some two years. Regarding this, one view was that as the amendment was of very questionable legal validity, it was almost certain to be struck down if the matter was taken to court. Against this, however, there was the strong point that litigation with the government was always likely to be a losing game. Unlike the affected officers, the government had limitless funds at its disposal and was inclined to use them most lavishly over litigation. In fact, if it lost its case in the first court, it would make it a point of prestige to go up in appeal to one higher court after another. That would obviously make the entire business prohibitively expensive as well as time-consuming.

Even more important was the consideration that there was no reason at all why anyone should want to fight to continue working for a government which had made it clear that it had no use for his services. So it would be best to leave that government well alone and to accept without contest the premature retirement decided on by it. The original passing thought, rather nebulous at best, of taking the government to court was dropped.

The story had another twist. After some years, by which time all the ICS men had faded away, the retirement age which had been reduced to 58 years for the ICS in 1972 with much fanfare, was again raised to 60 years. Promotion of public interest is presumably the most basic aim of government in its functioning: in this instance it seems public interest kept on moving to and fro.

Pakistan Foreign Minister Khursheed Mehmood Kasuri praising Mr Vajpayee’s role in initiating the Indo-Pak peace process immediately after the election results were known is pregnant with meaning. It is a different matter that in the same breath he expressed his confidence that “the process will be carried forward” by the next government in India. He also underlined the fact that the Vajpayee initiative “enjoys the support of the people and the political parties of both countries, including the Congress”.

The sceptics in Pakistan have their own reasons for what they think. They are influenced by history when they say that whenever Mr Vajpayee found an opportunity to cement friendly relations between the two countries he did his level best. He eased visa restrictions when he was India’s External Affairs Minister. When he became Prime Minister he undertook the Lahore bus yatra in 1999. He hosted the Agra summit in 2001 despite the bitter experience of Kargil. He restarted the Indo-Pak dialogue process despite the terrorist attack on the Indian parliament in December 2002. He also approved of a cricket series in Pakistan in spite of threats from terrorists. They ignore the talk of “aar-paar ki larayee”as a mere rhetoric.

Pakistanis rightly believe that Mr Vajpayee had established a personal rapport with Gen Pervez Musharraf and was finding it easy to push forward his peace programme. Mr Vajpayee was seen as having an “ambition to be recognized as a world statesman” and that is why, according to one commentator, he “put his political neck on the block a number of times by seeking peace with Pakistan, though often meeting with embarrassing results”.

Some people think Mr Vajpayee desired to change the very complexion of India-Pakistan relations with a view to sharing the Nobel Prize for Peace with Gen Pervez Musharraf. The most startling comment was carried by one of the popular Urdu dailies, Nawa-e-Waqt. The paper sees in the defeat of the Vajpayee-led NDA a rejection of his friendship agenda by the people of India. Obviously, a reflection of a lack of understanding of the complex political realities in this country, the observation shows that Mr Vajpayee had come to be regarded as a man of peace.

So much expectations from Mr Vajpayee’s leadership might have been not only because of his drive to improve India’s relations with Pakistan but also owing to his image of being a softliner who could carry along with him even the hardliners in the BJP and the rest of the Sangh Parivar. He was believed to be better placed to pursue a policy of give-and-take than Mrs Sonia Gandhi. Now he and his party colleagues are unlikely to behave in the manner they did when they were in the government.

In any case, a BJP-led government in New Delhi and an Army-controlled dispensation in Islamabad provide a climate conducive for the normalization of relations between the two. An atmosphere of hostility, as the general belief goes, suits the Army on the other side and the ultra-nationalist forces on this side of the border for protecting their political interests. That is why Mr Vajpayee could easily mesmerise the Pakistanis by showing a stake in friendship.

The visible disappointment in Pakistan can also be interpreted as if it is only India which has been responsible for the unhappy state of relations between the two countries. Or the new government will find a virtue in rolling back the peace process initiated under the leadership of Mr Vajpayee. The truth is that no government can afford to ignore the cause of peace under the prevailing global circumstances. Moreover, the peace constituency in India is big enough to force the government of the day to carry forward the dialogue process.

There is a national consensus on improving relations with India’s neighbours, incling Pakistan, as Mr K. Natwar Singh, a Congress leader, stated after the elections. Another Congress leader, Mrs Ambika Soni, asserted: “We in the Congress have always held that the only way to resolve issues with our neighbours is through dialogue.” There is no reason why the process of normalization of relations should get disturbed. But Pakistan will have to keep under tight leash the jihadi elements who become overactive in an atmosphere of distrust.

Crude prices that had hovered around $40 for close to a week - thanks to the `war on terror' and a shortage of the right kind of petrol in the US — hit a 13-year high of $40.77 on Wednesday with news that US gasoline stock had fallen by 1.5 million barrels.

British petrol prices are rising towards pounds sterling 4 a gallon, road lobbyists are grumbling and there is an election on the horizon, so this was not good news for Blair.

For the markets, which expected US stocks to rise, it was a shock. Christopher Bellew, an oil trader at Prudential Bache in London, said Wednesday's figures were merely the latest in a bewildering slew of news that has consistently surprised traders. `A lot of people have been caught out of step with the market and been very surprised by its strength,' he says. Other traders are pointing north to $50.

The gloom has been unremitting. In March Opec, in a move orchestrated by Saudi Arabia, announced a 1 million barrel a day (b/d) output cut to stem stock building among consumers and prepare for seasonal decline in demand. Shortly afterwards data showing a 1 million b/d increase in already massive Chinese demand were published by the International Energy Agency (IEA).

Then came terrorist attacks against Saudi Arabian oil installations and attempts to blow up an oil terminal in Basra. Last weekend, saboteurs cut a pipeline supplying the terminal.

On top of this, the US has been sucking in crude to fill its strategic petroleum reserve at 200,000 b/d, 25 per cent faster than over the previous year. By last week, Saudi was promoting an increase in production of 1.5 million barrels to ease the price. But Opec said it had not agreed to this.

Meanwhile, production estimates for non-Opec countries - which account for 66 per cent of crude output — have been revised down by the IEA. Confusion reigns, which is good for speculators. Hedge funds have been taking long futures positions, says Bellew, indicating they think the price is rising — a trend they are helping.

Airlines have jacked up their fares. British Airways followed Qantas and Air New Zealand by adding pounds sterling 5 on return trips. The Bank of England was aware of the oil problem when it took its decision to raise interest rates. And Labour MPs will have noticed price rises as they drove to their constituencies this weekend.

So how long will oil prices remain high, and what damage is being done? Deutsche Bank's Adam Sieminski says: `High oil prices are likely to remain until you see a significant change — either a rise in interest rates and a slowdown in the US that makes its way into Asia, or a lot more oil production coming out of Iraq in particular.' Sieminski dismisses the notion that oil supply is peaking and high prices are here to stay. But he concedes there could be serious economic effects. `There is a risk that oil prices at these levels will slow down economic growth. The rough rule of thumb is that a $5 increase in oil shaves a quarter of a per cent off GDP.'

Warwick University's professor Andrew Oswald adds: `$40 is enough to be bad news for the major economies. There have been three oil shocks — in 1974, '79 and '91 — and recession has followed each. You saw a similar effect after the spike in 2000.'

Those looking for evidence of price strength found it in last week's oil market report from the IEA. It upgraded its forecast for global demand growth to 1.95 million b/d, or 2.5 per cent, a rate not seen since 1988.

Antoine Halff, who studies demand factors for the IEA, says: `There is big demand for three key things: transport fuel, gasoil (diesel) for electricity generation and petrochemicals. All are likely to stay with us even if governments succeed in containing economic growth.'