E-commerce set to transform India's retailers

Subject E-commerce in India. Significance Following nationwide protests from small traders in late 2014, key sections of the Bharatiya Janata Party (BJP) government have demanded that Prime Minister Narendra Modi act against India's rapidly growing e-commerce platforms. Particular targets are the largest e-commerce players, mostly Indian, but including Amazon India, which have benefitted from large infusions of foreign capital and stand accused of side-stepping India's strict limits on foreign investment in multi-brand retail. Impacts Any improvement in transport and distribution infrastructure will boost e-commerce. Proliferation of mobile and banking facilities is key to expanding online retail. Small traders will oppose the expansion of e-commerce, causing greater political losses for the BJP than any other party.

Subject Prospects for India in the fourth quarter. Significance Flustered by a stock market collapse and continuing currency depreciation, Prime Minister Narendra Modi's government will enter the fourth quarter with some trepidation. Like all emerging markets, India faces economic uncertainty, with growth slowing and foreign capital exiting. Little relief is forthcoming on the political and policy fronts for Modi's Bharatiya Janata Party (BJP). The only bright spot may be diplomatic outreach.


Significance Each of these states except Punjab has a government led by Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP). Punjab is one of just three states with a chief minister that belongs to India’s main opposition Congress party. Impacts A poor showing by Congress would further reduce its leverage with other opposition parties in talks over forming a broad anti-Modi alliance. Victory in UP would enhance Chief Minister Yogi Adityanath’s national profile. Election campaigning will likely lead to a spike in COVID-19 cases.


Significance Prime Minister Guido Bellido’s threat to nationalise Camisea has further stirred debate at the heart of government, this time about implementing a campaign pledge to this end, notwithstanding the government’s professed aim to create a secure environment for foreign investment. Bellido’s announcement did not have the backing of the cabinet as a whole. Impacts Bellido’s position will suffer if he is seen to backtrack on a key issue contained in Peru Libre’s manifesto. Polarised disagreements within the cabinet will persist. Castillo’s position will suffer from the lack of clear leadership.


Subject Prospects for India to end-2016. Significance Policymakers are counting on improved agrarian performance, cheaper credit and economic diplomacy to drive growth in coming months. On the political front, after a modest triumph in the last round of regional elections, Prime Minister Narendra Modi and his Bharatiya Janata Party (BJP) are emboldened but still politically encumbered.


Subject SOE reform in China. Significance Recent announcements by senior figures give indications of state-sector reforms planned for 2016 and beyond. These break new ground in the range of industries affected, the degree of reform and the extent to which state-dominated markets are opened to private and foreign capital. In 2004, there were 196 central state-owned enterprises (SOEs); now there are only 111; the target is to reduce this to around 50. Impacts The focus of reform in 2016 will be heavy industry, where 70% of SOEs are concentrated. Integration of central SOEs in infrastructure and energy will create more formidable competitors to established multinationals. Some SOE-monopolised markets will open to private and foreign investment, including telecommunications and finance. SOE reform will expose corruption; anti-corruption operations will accompany it.


Subject Prospects for India in 2016. Significance Prime Minister Narendra Modi's government has accelerated its agenda of piecemeal and sequential reform following his Bharatiya Janata Party (BJP)'s defeat in the Bihar elections last month. As difficult state elections approach in the first half of 2016, the government is banking on these reforms and headline growth to secure voter and investor support. In foreign policy, the government is likely to focus on regions of strategic importance, especially Russia and the Middle East.


Subject The likely strategy of the BJP's opponents. Significance The opposition to Prime Minister Narendra Modi's Bharatiya Janata Party (BJP) lacks a coherent strategy at national level ahead of elections due in 2019. However, the large turnout at a public rally in Patna late last month, where Lalu Prasad Yadav brought together representatives of 18 opposition parties, suggests that there is popular support for a challenge to the BJP. Impacts States in which elections are due are more likely to see outbreaks of communal violence. Sonia Gandhi will come under increasing pressure to relinquish leadership of the Congress party. The BJP may support the creation of a separate Gorkhaland, at the risk of alienating support in the rest of West Bengal.


Significance Following the victory of his Pakistan Tehreek-e-Insaf (PTI) in elections late last month, he expressed a wish to improve relations with Pakistan's neighbour and traditional enemy India, especially on the disputed Kashmir valley. Indian Prime Minister Narendra Modi, whose Hindu nationalist Bharatiya Janata Party (BJP) will seek to retain power in elections early next year, congratulated Khan on his poll win. Impacts Pakistan’s military may try to influence the Afghan parliamentary election in October. The security of Indian-administered Kashmir will deteriorate. India will lobby the United States to exert further political and economic pressure on Pakistan over cross-border militancy.


Subject Prospects for India in 2018. Significance India’s ruling Bharatiya Janata Party (BJP) has responded to the recent economic slowdown by drawing up plans to recapitalise public sector banks (PSBs) and invest in infrastructure. Prime Minister Narendra Modi is also under pressure to create jobs. The government will be expected to deliver on its promises with elections due in around 18 months’ time.


Significance As the 2019 general election approaches, Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) is trying to secure the backing of India’s rural population, which is some two-thirds of the country’s total. Modi has encouraged state governments to waive farm debt worth up to 2.8 trillion rupees (39 billion dollars); suggested a procurement formula guaranteeing farmers a return of at least 1.5 times their costs of production; and promised to double farm incomes by 2022. Meanwhile, landowning castes are increasingly demanding opportunities in education and employment away from rural areas. Impacts State governments will try to pay off farm debts by issuing bonds. In election campaigning, opposition parties will claim to champion rural interests. An average 2018 monsoon should boost agricultural output.


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