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February 2017

 

Perspectives: The Month Through India’s Eyes

Media headlines in India covered three major events in February, two domestic and one international.  Domestically, the civic body elections in the state of Maharashtra was heavily scrutinised, with many publications viewing the outcome of the elections as a referendum on demonetisation, while the decision of internet retail major, Snapdeal, to lay-off employees was cause for a number of columnists to weigh in on the state of e-commerce in India.  On the international front, the shooting of an Indian engineer by a US navy veteran in Kansas in an alleged hate crime gave rise to a variety of commentary in the Indian press.

Civic Body Elections in Maharashtra

In the recently concluded civic body elections in the state of Maharashtra, the Bhartiya Janata Party (BJP) emerged as a clear winner in eight out of ten cities and towns, while also making significant gains in Mumbai.  By contrast, the other national political party in the country, the Indian National Congress (Congress), suffered heavy defeats across the board.  The outcome of these elections – which was considered by many to be a referendum on the BJP government, and in particular, its demonetisation scheme – led to a number of political commentators to weigh in on the futures of the BJP and Congress, and the evolving political landscape in Maharashtra and India.

An editorial in Firstpost, a leading digital publication in India, opined that the election results significantly strengthened the hand of Devendra Fadnavis, who heads the first BJP-led government in the politically crucial state, single-handedly led the party’s campaign criss-crossing the length and breadth of Maharashtra, aggressively projecting “transparency and development” as the central slogan.   Significantly, the BJP’s urban sweep came close on the heels of its sterling performance in municipal council elections in November-January, rubbishing the predictions that the party would do badly in the backdrop of the note ban.”  The column further went on to state that “in contrast to the well-crafted BJP campaign, the Congress leaders largely confined themselves to their respective districts during the run-up, failing to put up a spirited fight by overcoming organisational weaknesses and internal bickering.”

The Indian Express focused on a similar theme, noting that the BJP’s strategy to focus on development and governance was instrumental in shaping the outcome of the elections, and possibly even the long-term political landscape in Maharashtra:  “Moreover, the BJP has also succeeded in setting the political agenda in the state.  However empty the rhetoric of development may now seem in post-election analyses and however ironical his insistence on clean politics may appear, the fact remains that Fadnavis pitched the battle on questions of clean government and the state’s development and the Congress and NCP were clueless about how to respond to this political agenda.  This is because of the aimless existence of these two parties since their defeat in 2014.  They have no agenda, no leadership, no organisation, and above all, no willingness to reconnect to the masses on the issues their opponents raise.  Consequently, the local body elections in Maharashtra have underlined the decimation of the Congress and NCP in the state, opening the doors for a restructuring of political competition…The new-born dominance of the BJP has many cracks but there is no political player willing and able to occupy the space in the state.”

Finally, a column on the website of NDTV, one of India’s most prominent news channels, also weighed in on the implications of the BJP’s success, but argued that the outcome may not necessarily be all positive for the party.  “The BJP can look at a rosy future in which it is the new Congress.  But it must also reckon with the fact that it will inherit the Congress’ curse: anti-Congressism will become anti-BJPism.  Disdain for centralisation, the power of the PM’s outsize personality, and fear of homogeneity and high commands will force regional political parties together just as opposition to the Gandhi Congress did in the past.  And this will be worse for tomorrow’s BJP than yesterday’s Congress, because its base is just not large enough to triumph consistently if BJPism vs anti-BJPism becomes the new norm.  If the BJP is sensible, it will realise that becoming the new Congress means it will actually have to become more like the old Congress: expand its sociological and ideological footprint, recognise that sometimes a certain muddiness of ideology can allow disparate forces to live together under the same umbrella.  If that happens, maybe we’ll return to a stable equilibrium of BJP and non-BJP governments, with the Gandhi Congress reduced to a bit player, strong in some states, occasionally supporting other regional forces.  If the BJP is unable to expand its social coalition – well, it had better enjoy its success, because the chances are it won’t last for as long as it would like.”

Cost Cutting Measures Announced by Snapdeal

In a letter to its employees, the founders of one of India’s largest internet retail companies, Snapdeal, admitted to execution mistakes, and announced that the firm would be undertaking a series of cost-cutting decisions, with up to half its workforce being potentially let go.  This announcement came within the context of valuation write-downs and senior management churn at a number of India’s e-commerce companies, and resulted in a wide range of commentary on the state of e-commerce in India and the likely path forward.

An editorial in the Hindu deemed Snapdeal’s announcement as a “wake up call” for the industry as a whole, stating that “this whole episode therefore exposes the fragility of both the e-commerce business model and the fanciful GMV-based valuation assumptions that have kept this juggernaut going since 2011…. e-commerce is a knowledge-intensive business and such expensive course corrections entailing hire-and-fire decisions can do a lot of harm not just to the brand, but also to the entire sector, in attracting talent.  It is also difficult to countenance such wastage of funds in a capital-scarce economy like India, where thousands of established SMEs in less glamorous businesses struggle for finance.”  The column further went on to argue that “the Snapdeal episode is a wake-up call to India’s tech start-ups and their investors to temper their ambitions with prudent financial decisions, as the music can stop anytime.  The prospect of write-downs and job losses in e-commerce is a worry for policymakers, who were relying on this sector to create employment opportunities in the coming years, as traditional IT firms curb their hiring.”

The Financial Express also chose to use this opportunity to critique the current e-commerce business model in India, stating, “that e-commerce player Snapdeal is strapped for cash and letting go of hundreds of employees does not come as a surprise.  If there are other online ventures that are still around, it is because their benefactors—private equity funds—generously continue to support them. This newspaper has argued for a long time now that most e-commerce players in the country do not have a viable business model since they are essentially relying on huge discounts to attract customers, while not being able to rein in costs.  And although there may be 30-35 million online shoppers today, the total spends simply aren’t enough to go around.  That is the story of organised Indian retail, whether in the brick-and-mortar space or in the online arena; the top-line is simply not big enough to keep everyone in business.  So, while there may be millions of customers, there are also thousands of vendors—in the organised and unorganised sectors—catering for customers at every price point.”

A column in Live Mint offered a counter-view, arguing that survival, rather than headcount is the primary objective of any start up.  There’s another way to look at the situation. It’s important to remember that the primary goal of a startup’s executive team isn’t to maintain headcount or prop up equity valuations — it’s survival.  Starting a new company from scratch is a risky business.  Far more fail than succeed.  After raising billions of dollars at home and abroad, Indian start-ups are struggling to turn the country’s growing e-commerce industry into profits, forcing some investors to reassess their worth and prompting managers to cut costs.  A Morgan Stanley mutual fund, for example, lowered its valuation of Flipkart Online Services Pvt by 38% in the September quarter.  Online retail, electronic payments and ride-sharing are here to stay, so despite all the pain and disruption the only real question is which companies will hang around and which won’t.  We already know that it’s not necessarily the biggest and strongest that survive, but those most adaptable to change.”

Shooting of Indian Engineer in Kansas

On February 25, a 51-year old US navy veteran, in an apparent hate crime, murdered an Indian software engineer in Kansas.  The incident sparked heavy media coverage, with a number of Indian media outlets opining on the implications of this crime, particularly within the context of President Trump’s anti-immigrant rhetoric.

An op-ed in the Indian Express stated, The election of Donald Trump as the 45th President of the US has emboldened the far-Right in the country.  There has been an increase in the number of hate crimes against minorities, immigrants, Muslims, etc.  The latest in the list is the killing of an Indian at bar in Kansas.  Hundreds of thousands of immigrants and minorities are reeling under the fear that their lives are under constant threat from some gun-wielding psychopaths.  Since Trump launched his election campaign last year, the anti-Muslim hate groups in US increased by 197 per cent in number, according to a study by US-based Southern Poverty law Centre.  The increase was from 34 to 101… Some citizens in the US prejudiced against a certain sections in the society are turning into the very terrorists that they claim to denounce.  How can these individuals be saving the US from terrorists by stopping immigration and putting travel bans when US nationals are turning into terrorists and shooting people on the street?  The question is whether the Trump administration will take action or stay in denial and let American society turn into one filled with home grown terrorists.”

The Hindustan Times also weighed in on the matter, focusing on the silence from President Trump in light of the shooting.  In an era of “America first”, this is the new normal.  A president obsessed with how the US media depicts him, even on comedy shows such as Saturday Night Live, had little to worry about as the shooting didn’t get wall-to-wall coverage in America.  And it’s rather obvious from media reports that Trump really doesn’t read much, leave alone the possibility of him reading the Indian media’s coverage of the shock and outrage at the death of Kuchibhotla.  At a time when Trump is talking about bringing jobs offshored by American firms back home and reviewing visa programmes such as the H-1B, under which Kuchibhotla and his colleague Alok Madasani were in the US, it’s hardly likely that he would be talking about the rights of foreign workers.”

Finally, another column in the Indian Express also took aim at President Trump, while commenting on the broader state of race relations in the United States.  “President Trump’s silence in the face of the hate he has unleashed is the real cause for concern.  After all, Sikhs were attacked after 9/11, and blacks subjected to violence by police and white extremist groups through the tenure of President Barack Obama.  Not since the end of the Second World War, though, has a president equivocated so deeply in the face of demonstrable racism.  President Trump’s Holocaust Day statement conspicuously omitted mention of Jews; his hyperactive Twitter feed was studiously silent on the bombing of a mosque in Quebec; he said nothing on threats to Jewish centres until his daughter, Ivanka Trump, herself Jewish, went public on the issue.  For Hindu nationalist groups in the United States, who have cheered on Trump’s anti-Muslim politics, Kuchibhotla’s killing should be a moment of awakening: Racism is a beast with a voracious appetite… Long years of struggle lie ahead, for the damage Trump has inflicted on the United States’ most cherished values will, almost certainly, outlast his years in office.”

 

 

 

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