Author: Sanjoy Narayan

Farmers’ Agitation Is Modi Govt’s Biggest Test

By Sanjoy Narayan

Forget the Covid pandemic; forget the economic downturn; forget election debacles or political crises. The biggest test that the Modi regime, soon to turn seven years old, has been subjected to during its ongoing tenure is the deafening protests by farmers against the changes that the Indian government has sought to bring about in the way farmers are able to grow, market, and price their produce.

In the last three months, protests by farmers have reached a crescendo. On January 26, which was India’s 72nd Republic Day, a group of angry farmers deviated from their designated protest route, tried to storm the historic Red Fort, and clashed with police. As that was happening, a few kilometres away, Prime Minister Narendra Modi was presiding over the official Republic Day celebrations on Delhi’s Rajpath.

At least 70 farmers have died during the raging protests against three laws that the government has passed. And, the protests, which began in the northern state of Punjab, have now spread across the country. What makes the controversial farm laws and the protests against them such a big trial for Modi and his government? For an answer, let us first recapitulate the new laws and their impact.

The three new farm laws change decades-old policies regarding procurement and storage of farm produce. One law permits the setting up of mandis (or trading places) that are de-regulated from government control—that is, where farmers can sell directly to all traders at prices they negotiate rather than to only government licensed traders; another law permits farmers to enter into contract farming through deals with corporate entities and to grow whatever crops they decide to under contract; and the third allows traders to stock produce with less restrictions than at present.

The government’s rationale for these changes is ostensibly this: they will enable farmers to sell at whatever prices they want and to anyone they want to; and to be able to enter into contracts that could assure them regular and steady streams of income. From the ongoing protests, which have been escalating, it is quite evident that the farmer community has not bought this logic.

Farmers and their supporters feel that especially the smaller farmers whose incomes are meagre will be hit by the new measures. First, their produce volumes are too small for them to be able to negotiate prices with traders who aren’t regulated—thereby they would likely be exploited. Second, although the government has assured that the mandi system will not be dismantled, farmers fear that the new “unregulated” mandis will consequently do exactly that, and that small and medium farmers will suffer. Lastly, contract farming, they fear is a way of giving the corporate sector easy access to the farm sector.

Nearly 60% of 1.3 billion Indians depend either directly or indirectly on agriculture, which accounts for 18% of the GDP. But the farm sector is severely skewed. Almost 70% of Indian farmers own land that is less than 2 hectares (20,000 sq. m) in area. And as much as a quarter of Indian farmers subsist below the poverty line. Moreover, because of lack of alternative employment opportunities millions of Indians depend on the farm sector without really contributing to productivity.

Against that background, reforms in the agriculture sector are overdue. But changing the system of pricing and procurement of crops without other structural changes in the sector cannot be a solution. In fact, it could lead to further suffering for millions of Indian farmers. The farmers’ protests are a sign of how acute the problem is. And, for the Modi government, it is the most critical test that it faces in its tenure thus far. In 2016, Prime Minister Modi announced a sudden decision to demonetise large currency bills. Ostensibly, it was with the intent of limiting or detecting unaccounted money in the system. What resulted was: widespread suffering for small traders, daily wage earners and other large segments of the population that operate in the “cash economy”. Those with so-called unaccounted wealth went largely unscathed.

Demonetisation was certainly a critical test that the government faced. But its effects—on economic growth and on small businesses—were not nearly as serious as the impact of the new farm laws have been. Over the last few days, the clashes between farmers and the authorities have turned more violent, particularly in the areas surrounding the capital city of Delhi. The authorities resorted to blocking of Internet in various areas around the capital and neighbouring states—purportedly in efforts to curb social media interactions. Police resorted to tear gas and baton charges against thousands of protestors. Already, the ripples of what is happening in India have reached the world outside. And questions are being asked about the true value of democracy in a country that prides itself as being run on the highest democratic principles.

ALSO READ: The World Is Taking Note Of Indian Farmers’ Protest

The police and authorities’ action against famers’ protests have also spilled over to affect others. A freelance journalist, Mandeep Punia, who was covering the protests, was arrested on the border between Delhi and Haryana last weekend. He was granted bail after spending two days in custody and much outrage. Others have had cases filed against them for reporting or broadcasting news that has been considered “anti-government”.

But the more serious issue is that India’s mainstream media has almost been rendered toothless in recent years, particularly after the current government came to power in 2014. It does not require media experts to see how the majority of mainstream TV news channels and print publications largely avoid taking on the government and critiquing its policies. When they choose to do so the critiques are of the milquetoast variety, tailored not to ruffle the feathers of those in power too much. In any democracy, the role of the media as the fourth estate should be that of a watchdog. In India, at least when you look at it from a dispassionately distanced point of view, it may seem that the mainstream media is more of a lapdog.

For the Modi government, the farmers’ agitation has other possible consequences. The farm sector’s voters aggregate as the largest block during any election. And although the government at the Centre is safely ensconced for the next four years, there are crucial state elections that are due and those could be impacted by which way farmers decide to vote. Also, if the agitations escalate and food supplies are affected across India, they could have other economic consequences such as inflation and distribution bottlenecks. Already reeling from the impact of the Covid pandemic, the economy could be hit further. For the Modi government the farmers’ agitation over the controversial laws could be something that could bring it to its knees.

Are India’s Probing Agencies Becoming Political Puppets?

By Sanjoy Narayan

Last month the Jammu & Kashmir People’s Democratic Party (PDP) president and former chief minister Mehbooba Mufti said the Centre was “weaponising” central investigating agencies such as the Central Bureau of Investigation (CBI), National Investigation Agency (NIA), and the Enforcement Directorate (ED) by using them to probe and harass her, her friends and family, and her party leaders. She scathingly remarked that the ruling regime, led by the Bharatiya Janata Party (BJP), was using these agencies as its “mistresses” to target her and her party.

Jammu and Kashmir is now administered as a Union Territory under the terms of Article 239A (which was initially applied to Puducherry is now also applicable to the Union Territory as per The Jammu and Kashmir Reorganisation Act, 2019) of the Constitution of India. Before that Act was passed, J&K was administered by a coalition government that was formed by an alliance of the PDP and the BJP. That alliance was ill-fated and in June 2018, it broke down, leading J&K back to Governor’s Rule.

Ms Mufti’s remarks alleging that the Centre is using the government’s investigation agencies to target the ruling regime’s political opponents is not an isolated one. This is not the first time that CBI, NIA, ED, and other central investigative agencies have been accused of being used politically by ruling regimes in India. The CBI is India’s premier investigating agency and functions as a national investigating and security organisation as well as an intelligence agency; the NIA acts as the Central Counter Terrorism Law Enforcement Agency; and the ED is a law enforcement agency and economic intelligence agency that is responsible for enforcing economic laws and fighting economic crime in India.

Targeting political rivals or opposition leaders by using the services of such agencies is not new in India. Successive ruling regimes have been observed to have done it. However, the rising concerns are about the alleged spread of the practice since 2014 when the incumbent BJP-led coalition came to power at the Centre and, subsequently, was re-elected in 2019. The BJP’s clearly-stated objective is not only to make India emerge as a country “freed of the Congress” (Congress mukt Bharat, in Hindi) but also to wrest control in as many of the Indian states as it can. So, its political rivals include, not only a national party such as the Congress, but also several regional parties that hold sway in the states.

ALSO READ: Press Freedom Is A Myth In India

The first of the apparently politically-motivated actions by investigating agencies during the BJP-ruled regime began early. Soon after the BJP-led coalition came to power in 2014, investigative agencies swung into action. There were raids at the Delhi chief minister (and vocal opponent of the BJP) Arvind Kejriwal’s office; and old cases against Uttar Pradesh’s Samajwadi Party leader Akhilesh Yadav and Bahujan Samaj Party president Mayawati were revived. In 2019, just before the general elections, the CBI raided the Kolkata police commissioner’s office without a warrant in what was an action quite clearly directed at undermining the Trinamool Congress’ Mamata Banerjee who is the chief minister of West Bengal and also a huge critic of the ruling regime at the Centre.

The list of such political targeting by investigative agencies is long. In 2019, former Haryana chief minister, Bhupinder Singh Hooda, faced raids in connection to old cases of alleged corruption in land deals; Congress MP and political secretary to Sonia Gandhi, Ahmed Patel (who passed away in 2020) was linked to a money-laundering scheme in Gujarat; and the homes of leaders close to the Biju Janata Dal leader and Odisha chief minister Naveen Patnaik were raided before panchayat elections in that state. These are only a few examples of what Indian political parties, particularly those who oppose the BJP, call “political vendetta” against them. Last month, when the ED summoned a Shiv Sena leader’s wife in Mumbai for questioning in connection with a bank fraud, the party’s workers put up a banner in front of the city’s ED office, which proclaimed that it was a BJP office.

ALSO READ: Is Maharashtra A Wake Up Call For BJP?

It should not be anybody’s case the charges that are levelled by the investigating agencies against opposition politicians are rigged or false. Some (or perhaps, even all) of them may have some basis for investigation. But it is the concerted manner in which the agencies are used that is of concern because it smacks of government interference in the role of the agencies that are supposed to be autonomous and apolitical.

One of the most high-profile cases was the one involving former finance minister P Chidambaram in 2019. He was accused of being involved in the INX Media scandal. Chidambaram was charged with allowing an irregular transfer of overseas funds to the media company. Chidambaram was arrested and the CBI tried to extend his custody many times. But that case has now gone nowhere.

That is the other thing. Many of the cases on which investigative agencies have based their actions against opposition political leaders have either died down, reached a dead-end, or not been pursued after the initial raids, arrests, and so on. While that could reinforce the opposition parties’ allegations that the ruling regime is using the agencies for political vendetta, the more serious issue is about what such a practice could do to the reputation and autonomy of India’s central investigating agencies, which are, by law, meant to be non-partisan, apolitical, unbiased, and independent. If these institutions and their functioning are prone to political interference, not only will their functioning be eroded but Indians will lose their faith in the establishment and its ability to function without fear and favour.

Winds in Bengal May Be Blowing Against Didi

By Sanjoy Narayan

The next big state assembly election after Bihar’s will be in four states—Assam, Kerala, Puducherry, Tamil Nadu, and Bengal. In Assam, a BJP-led coalition is in power; in Kerala, it is a coalition of left parties rules; in Puducherry, a tiny union territory, it is a Congress government. But of those elections, the one that will be watched most keenly are the elections in West Bengal where for the second term, it is the Trinamool Congress (TMC) that is in power, led by its feisty chief minister, Mamata Banerjee, fondly called “Didi”, by her supporters.

In the wake of the Bihar elections where the BJP-led National Democratic Alliance (NDA) has won the recent elections, the focus on what happens in Bengal has turned sharper. But first, a quick rewind on Bihar.

Although Bihar’s incumbent government before the elections was an NDA one, it wasn’t meant to be when the 2015 election results were announced. Then, it was the coalition opposed to the BJP that got the winning numbers. But, famously, after the Nitish Kumar-led Janata Dal (U) quit that coalition and crossed over to support the BJP, the tables turned and Nitish Kumar became chief minister of a NDA government in Bihar. Before this year’s elections, there was much speculation about whether the BJP and Kumar would part ways (the latter has had a love-hate relationship with Prime Minister Modi and his party in the past). That did not happen and Kumar was sworn in as chief minister for a second term.

In Bengal, things are quite different. Ms Banerjee whose party won 222 of the 294 seats in the assembly in 2016 could look like she will contest the next elections, scheduled in 2021, from a position of strength. The Left parties in the state, which was run by a leftist alliance for more than three decades, have been decimated in the past decade—they have just 24 seats in the assembly—and the Congress with 23 fares no better. But all eyes are on the BJP. From virtual non-existence in Bengal, the nationalist party won 16 seats in 2016, and in recent years it has been trying to bolster and grow its support base in the state.

ALSO READ: BJP Now Dominant Partner In Bihar

The BJP’s main issues in its campaign will likely be charges of non-governance against Ms. Banerjee’s government, and allegations that it has been overly appeasing minorities in the state. The BJP has been fanning these sentiments for a while in its efforts to garner voters. If elections in Bengal are held as scheduled (in May), there is barely five months left before voters cast their ballot. The BJP has already ramped up their campaigning. Home Minister Amit Shah, and the party’s president JP Nadda have planned frequent visits to Bengal, to address rallies and strengthen the party’s state-level organisation.

The thing that stands in favour of Ms Banerjee, however, is that unlike the BJP or other opposition parties in the state, in her (as the two-time chief minister), the Trinamool Congress has a face and, obviously, a clear chief ministerial candidate for the election. The BJP doesn’t. At least not yet. But opposition parties, including the BJP, hope that anti-incumbency sentiments may finally begin to stir up against Ms. Banerjee and her Trinamool government.

Earlier this month, a small organisation, Crowdwisdom360 (it calls itself India’s first Political Prediction Market) carried out small on-the-ground polls to get a feel of the political mood in Bengal’s districts. Crowdwisdom360 claims that in the recently-held Bihar elections, its seat-level accuracy was 70%. In Bengal, its surveys appear to show that the BJP’s dual messaging against the Banerjee regime (poor governance; and minority appeasement) has been working better than the incumbent government’s absence of positive messages. Crowdwisdom360’s surveys have shown that voters are unable to zero in on concrete reasons why they should vote for Trinamool candidates.

There are problems with such surveys, of course. First, there could be sampling errors that let biases creep in; and second, in India’s electoral politics, things change sometimes quite mercurially. But even if such surveys are disregarded, the mood in Bengal as it heads for another election is quite different from what it was when Ms. Banerjee steered her party to victory for the second time in 2016.

There is discontent among rural voters, largely fuelled by what is perceived as minority appeasement; the COVID-19 pandemic has not helped matters; and the opposition’s campaigns, particularly the BJP’s, have been having an impact. In 2021, for Ms. Banerjee and her party, returning to power for the third time may not be a cakewalk.

It Might Be Too Late To Revamp Congress Leadership Now

By Sanjoy Narayan

When one of the senior most leaders of the Indian National Congress, Ghulam Nabi Azad, recently said that the party was at its “historic low” and that if elections to appoint a new leader of the Congress Working Committee (CWC) and other key organisational posts were not held soon, it could mean that the Congress could continue to sit in the Opposition for the next 50 years, the furore his statement caused was not unexpected. Such voices of dissent are not common in the Congress party and, expectedly, a Congress leader from Uttar Pradesh quickly demanded that he be ousted from the party.

But Azad, who is the current leader of Opposition in Rajya Sabha, and has held key posts as a Cabinet minister, and as a chief minister of Jammu & Kashmir, like the young child in the Hans Christian Anderson folktale, The Emperor’s New Clothes, was telling the blunt truth. Decimated in the parliamentary elections of 2019, the Congress has been plunged into a crisis like it has been never seen before. Its leadership, still controlled by the Gandhi family—Ms. Sonia Gandhi continues as the party’s interim president after her son, Rahul Gandhi, stepped down from the post in 2019—has lacked decisiveness and several party leaders, have either left the party to join the ruling Bharatiya Janata Party (notably Jyotiraditya Scindia), or have dissented against the Congress party’s leadership.

In late August, 23 senior leaders of the Congress party, including five former state chief ministers, members of the CWC, MPs, and former central government ministers, wrote to Ms. Gandhi calling for sweeping changes at all levels of the party. The letter focused on the erosion of the party’s support base; and loss of support from among India’s youth, who make up a substantially large proportion of the nation’s electorate. The letter, in effect, was a sharp indictment of the party’s leadership.

ALSO READ: Rahul’s Return At Helm Will Harm Cong

When Rahul Gandhi took over as the Congress’s president in 2017 it was in line with the sort of dynastic leadership lineage that one has come to expect in the party. The nadir of Gandhi’s short-lived tenure—he stepped down in less than two years—was the second defeat of the party he was leading at the hands of the BJP in 2019. Since then the Congress, already nearly marginalised after the 2014 parliamentary elections, which it also lost, has become a faint shadow of what it was. Among India’s 29 states, the party is in power in the states of Punjab, Chhattisgarh and Rajasthan where the party has majority support. In Puducherry, it shares power with alliance partner, Dravida Munnetra Kazhagam (DMK), the regional party. And besides, simmering dissent within the ranks of its central leadership, the Congress has also lost much of its direction.

Partly that has happened as a side-effect of a series of debilitating electoral defeats; but it is also the lack of a decisive leadership that has weakened and made it rudderless. The contrast between the two central parties is stark. The strength of the BJP leadership has never been greater than it is now. The Congress’s, on the other hand, has never been lesser than it is now.

The Congress may have missed an opportunity to revamp its leadership three years ago when Ms Gandhi stepped down and a new president was to be appointed. As it happened, it was her son who succeeded her. And that might have been the most serious wrong move by the party to create a strong leadership. For Rahul has never really demonstrated his ability to be the leader of the party. His track record—whether it is in leading an electoral campaign or strategy, or in restructuring the party—has been lacklustre to put it mildly.

Back in 2014, before the parliamentary elections, this author had written in a column for an Indian newspaper that the Congress had done a wise thing by not naming Rahul (who was then the party’s vice-president) as its prime ministerial candidate. The argument that I put forward was that he was not ready for the role. And although wishing that the Congress party will come back to power when the next parliamentary elections are held is, at least for now, in the realm of fantasy, Rahul still isn’t ready for that role. Then and again in the 2019 elections, the BJP went to the polls with a strong prime ministerial candidate, Narendra Modi, and won both times.

ALSO READ: Can Capt Amarinder Save Congress?

The thing is that the Congress has never really looked beyond the Gandhi family for its top leadership position. In 2017, Rahul took over from his mother; in 2019, when he stepped down, his mother became interim president, a position she continues to hold even as dissent, and calls for a new leadership are welling up from within the party ranks. It is true that the Gandhi family has acted like some kind of glue that keeps the Congress party together. The family’s writ runs large in the party and dissent has been discouraged. Probably not any longer.

The letter by senior leaders; Azad’s recent statement; the resignation of several leaders (some of them to join the BJP) all of this point towards one thing: the Congress cannot exist in the manner it has been for so long. A non-Gandhi leader is what the party needs most now. But even if it finds one, that person has to enjoy the autonomy and freedom to change how the party organises; how it functions; and how it strategises.

The first step would be for its current leadership to heed the voices of reason that are surfacing from within. Its most important leaders, some of whom have much more successful political achievements than, say, Rahul Gandhi, have demanded changes in the way the party is led and how it functions. For Ms Gandhi, as interim president, that is the writing on the wall—in clear and bold letters. The second thing for the party and its main movers is to realise that the climb from where the party has fallen is going to be a long and very arduous one. The morale of its grassroots-level workers is low; dissent has spread among its leaders in various states; and the BJP has strengthened its position over the past six years that it has ruled at the Centre.

The Congress’s comeback, if the party reads that writing on the wall, is going to be slow, and often not painless. And, if those warning signs go unheeded, then what once was India’s all-powerful national party could hurtle towards extinction.

Higher Job Quotas For Locals Can Adversely Hit Society & Economy

By Sanjoy Narayan

The first reaction to the government of Haryana’s recent stipulation of reserving jobs in the private sector for people domiciled in the state has predictably come from employers. Private sector companies fear that the new rule—encapsulated in an ordinance—will, by hindering their recruitment efforts, hamper their ability to get workers with appropriately high skills. To be sure, the Haryana government’s decision was influenced by pre-election promises by one of the BJP-led coalition’s partners, Deputy Chief Minister Dushyant Chautala’s Jannayak Janta Party (JPP).

The Haryana ordinance stipulates that 75% of all new recruitment by companies based in or operating in the state have to be people who are domiciled in the state. The rule will apply to jobs that pay a salary of Rs 50,000 per month or less. Industries operating in the state have already made a plea to the government to reconsider the move but by all reckoning that is unlikely to happen.

Moves such as Haryana’s aren’t new in India. Last year, a Maharashtra minister from the Shiv Sena party demanded that 100% of jobs in private companies in his state ought to be reserved for local youth. A year ago, Andhra Pradesh passed a law to reserve 75% of jobs for youths belonging to the state. States such as Assam, Odisha and Madhya Pradesh have been contemplating similar laws. And in southern Indian states, which have witnessed substantial migration of workers from northern India, similar sentiments have begun showing up.

WATCH: ‘Local Quota Law A Black Day For Haryana Inc’

The call for protection or reservation of local youths’ jobs is obviously a populist move, and political parties are often motivated by the electoral objectives of garnering votes. But it is also a sign of nativism, a policy of protecting the interests of native-born or established inhabitants against those of immigrants. It also reeks of jingoism and xenophobia, and while employers are understandably upset by such protectionist policies, the inherent harm that such policies can do run deeper.

India’s Constitution guarantees individuals the right to freedom of movement within India and the right to seek employment anywhere within the country’s territory. Its various articles also specify that there can be no discrimination on the basis of where one is domiciled or born when it comes to employment. In that regard, the recent moves in various states to reserve private sector jobs for locals may seem unconstitutional and something that eventually the judiciary may have to take up.

Nativist movements are not new in India. In the past decades, local parties such as the Shiv Sena in Maharashtra; the DMK in Tamil Nadu; the Akali Dal in Punjab; and several other smaller regional parties have expressed sentiments against inter-state immigration. Even in Bengal, a relatively obscure party, Amra Bangali, has for long demanded, among a long list of other things, 100% reservation of jobs for Bengali youth.

Curiously, inter-state immigration is not of a huge scale in India. One study based on census data shows that on an average not more than 10% of workers in a district are from another state. In some states, the proportion is much lower. Also, seasonal migration has been common in many states. During harvest time or other labour-intensive seasons, northern states such as Punjab and Haryana depend heavily on workers who migrate from the eastern states of India. Many of the stranded migrant workers whose plight was highlighted when the Indian government announced a lockdown across the country after the outbreak of the Covid pandemic were agricultural and construction workers who routinely migrate out of their states to seek casual or seasonal employment.

Diversity in India is unlike in most other countries. Its population of 1.3 billion is hardly homogenous. Besides being diverse in terms of language, food, and culture, there are sharply contrasting economic disparities between states. But every Indian citizen has a right to decide where he or she would like to live; work; or settle down. Curbs such as Haryana’s new law would seriously hinder that right. But they would also impair economic development and equitable growth.

WATCH: Manesar Labourers Mourn Loss Of Jobs

The short-term political gains of a move such as Haryana’s reservation policy are obvious. Appeasement of local youth could help in ensuring the government’s re-election once its term is completed. And, of course, if jobs are reserved for them, the future of local unemployed youth could brighten. But consider this. Haryana is among one of the India’s states that attracts substantial private sector investment—mainly because it has cities such as Gurgaon that have quickly become hubs for technology, automotive, and financial services companies. If employers are restricted by a reservation norm some of them could consider shifting out of the state.

Also, for people living in economically weaker states where employment opportunities are limited such restrictions could have adverse economic impact. Moreover, if more and more states follow in the footsteps of Haryana and Andhra Pradesh, what would it make of India’s much touted claim of having harmony in diversity? Would it lead to greater intolerance between communities and regions? Would it foster more inter-state jingoism? And, could it, conceivably, threaten the democratic structure that is at the heart of the country?

There is also the matter of the Constitution and the freedom it ensures for Indian citizens. The spawning of policies that are inherently anti-immigrant in nature could seriously impinge on that freedom. It is perhaps time for the courts to examine these issues before they grow into a full-blown crisis.

Apps Are Only Tip Of China’s Huge Presence In India’s Tech Sector

By Sanjoy Narayan

On June 29, the Indian government banned 59 Chinese-owned mobile apps. The list included many but the most prominent ones were TikTok and WeChat, both hugely popular among Indian users. India has the world’s second largest number of mobile phone users. The number of mobile phones in use in India is estimated to be 1.38 billion, with more than 104 connections for every 100 citizens. Even if a third of those are on smart phones, it is a staggeringly huge number that accesses internet on their mobile apps, a market that most global app makers worldwide cannot afford to miss.

The ban on Chinese apps came shortly after a border clash between troops from the two countries left 20 Indian soldiers dead earlier in June. The Indian government blocked the apps ostensibly because of cybersecurity risks and the possibility that some of the apps could be used to compromise India’s defence systems. But the ban may have also been a way of sending a message to China. Ever since the most recent border clash between the two countries occurred—at a time when India is struggling with a massive internal problem of containing the rapidly spreading pandemic of Coronavirus within the country—there has been a clamour for boycotting all Chinese products and services in India.

ALSO READ: China’s Threat: Raise Defence Budget

TikTok and a host of other apps that have been blocked or banned in India will no doubt affect users as well as the makers and suppliers of those apps but China’s less visible but ubiquitous presence in India’s tech and internet landscape goes way beyond Chinese apps that have been popular in that market. Chinese venture capital is probably the biggest component of funding that India’s start-ups, most of them internet based and online. In many ways, Chinese funding is the lifeline for India’s bustling and vibrant start-up industry.

Chinese venture capitalists and private equity investors have invested huge amounts in India’s tech start-ups. And one could argue that without their funding, India’s start-up sector could lose much of its buoyancy. US investors who earlier dominated India’s start-up funding have been eclipsed by Chinese funders. According to GlobalData, an analytics firm, Chinese investments in Indian start-ups increased 12 times since 2016 to $4.6 billion. Eleven of the 30 Indian unicorns (start-up firms with a valuation of $1 billion or higher), at least 15 are funded by Chinese venture capitalists, with two of the biggest funders being China’s Tencent and Alibaba.

Some Indian start-ups that have become household names in India have raised huge amounts from Chinese firms. Paytm, the mobile payment system that has become ubiquitous in India, particularly after the government resorted to demonetisation of large currency notes, has raised $3.5 billion; Flipkart, India’s challenge to e-tailing giant Amazon has raised $7.7 billion; food delivery major Swiggy got $1.6 billion; and Uber’s Indian rival Ola $3.8 billion. All of their funding coming almost exclusively from Chinese venture capitalists. Between 2016 and 2018, Chinese funds for Indian start-ups grew an eye-popping five-fold.

Much of this has happened because of the potential that Chinese investors see in India. India’s population of 1.3 billion is expected to cross China’s 1.4 billion. Middle-income earners in India who comprise the biggest chunk of consumers are estimated at more than 30% of the total population. Moreover, there have been changes in the global dynamics of manufacturing and supply of products. Tech giants from across the world have been steadily shifting their manufacturing bases to emerging markets and India is a prime destination for them. This trend has a multiplier effect, spawning new start-up ancillaries and other firms in India, all of which need funding, which has translated into opportunities for Chinese venture capitalists and private equity investors.

ALSO READ: China-India Faceoff Will Linger On

Some Chinese investors appraise the Indian market as China was some years ago when the mobile access to internet began taking off. There are other similarities with China—the size of the market and the willingness of Indian consumers to quickly adopt new apps for convenience or recreation when they are launched. Chinese investors not only have a deeper understanding of the Indian market (because it is not unlike China’s) but they are also funds-rich.

The recent ban on Chinese apps is likely, of course, to have an impact. Both on users as well as app makers who are set to lose what is probably their biggest market with the promise of a huge potential. But what could happen if India follows it up with a decision to curb or restrict Chinese investment in Indian companies? In April this year, the Indian government amended its foreign direct investment (FDI) policy by stipulating that any country that shares a border with India cannot any longer take recourse to the automatic route for FDI but has to take government permission before investing in Indian firms. Besides China, India shares borders with Pakistan, Afghanistan, Nepal, Myanmar, and Bhutan, but those latter countries account for negligible amounts of investment in India.

The new policy, therefore, is presumably aimed at a closer scrutiny of China’s investments in India. This could hit India’s start-up industry hard. Some start-ups, such as the popular food delivery major, Zomato, are already witnessing a slowdown in investments that were slated to come from Chinese funds. It is early days still because the policy has just been implemented but by all reckoning, it will have an adverse effect on Indian firms whose business models pin their hopes on easy funding from Chinese investors.

What exacerbates the situation is India’s large trade deficit with China—in 2019 it was $57 billion. India imports a vast range of products from China. Much of it is capital goods such as telecom equipment, power plants, railway coaches, value-added iron and steel items; electronic and household durables such as air conditioners, washing machines, refrigerators and so on; as well as mobile phone components, chemicals, auto components, and pharmaceuticals.

If the tensions at the Sino-Indian border spills over to the economic front, there could be a bigger impact on the Indian economy. Banning apps is just the tip of the looming iceberg below. If Indian firms’ funding is affected, India’s burgeoning start-up industry would suffer. If India resorts to trade restrictions in the form of import sanctions, it is conceivable that the economy could be hit hard. In both countries’ interests it is, therefore, prudent to dial down the tensions at the borders they share and foster greater economic ties instead.

Covid Is A Crisis But Also An Opportunity For Indian Media

By Sanjoy Narayan

A huge fall-out of the COVID pandemic has been the impact on Indian mainstream media. With overall economic activity declining, one of the first factors to have affected the media is the sharp drop in advertising, the revenue from which is the mainstay of Indian media outlets, particularly print. The fall in advertising revenue has been so huge that leading Indian media brands have resorted to many drastic measures to reduce their costs. Print publications, already reeling from slowing advertising revenues, have been the worst hit. In several newsrooms across the country, this has meant retrenchments and salary cuts, and, in many cases, both.

How bad is the situation? WARC, a London-based market intelligence agency, estimates that global advertising spend could fall by 8.1% ($49.6 billion) to $563 billion this year because of big cuts in investment across product and services categories. According to WARC’s projections, which are based on analysis of data from 96 countries, traditional media—cinema, outdoor advertising, newspapers, magazines, radio and TV–will be hit the hardest. In North America, which accounts for nearly 40% of global adspend, advertising revenues are estimated to decline by 3.7% ($8.5%). In Asia-Pacific, it is set to fall by 7.7% ($14.4 billion); in Europe, the forecast says the drop will be 12.2% ($18.1 billion).

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Interestingly, while in most markets the adspends are trending negatively, in India, according to WARC’s data, adspends will still grow in 2020, not by a lot but a little. In 2019, advertising revenues in India grew by 5%; WARC estimates that in 2020, it could grow by 0.7% to a total of $9.4 billion. This is significant in a global scenario where nearly every large market is set to shrink.

It could be too early to assess the full impact of the ongoing pandemic. For one, it is still raging. And in India, particularly in dense urban hotspots, despite a lockdown imposed in late March, infections have been spreading. And the resurgence of a second phase of outbreaks cannot be ruled out. Yet, there could be a glimmer of hope in the Indian media landscape. Where other comparable markets are shrinking, adspends in India are still set to grow.

India’s print media publications have been hit severely and the quick response to that has been the recent bouts of layoffs, wage cuts and, in many cases, measures to cut costs by reducing the size (or pages) of publications. The fact is that print media in India was already in dire straits: advertising from some of the biggest sectors such as education, real estate and financial services had begun shrinking long before the COVID pandemic began. Partly it was because of sluggish activity in these sectors but also because many advertisers moved online, which can be more cost-effective for them.

Indian publications, including the biggest media groups in the country have been grappling with the challenge they face from online media for more than a decade now. Every publication has an online presence but few have been able to work out business models that could work. Paywalls and subscription-led models have largely not been successful because it is a very small proportion of readers who are willing to pay significant amounts to read publications online. And, although online advertising is growing, the revenues are still nowhere near the levels that could cover the costs of maintaining large newsrooms.

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Newsrooms at many Indian publications are huge in terms of the number of journalists employed. These are fixed costs that are high and require revenues commensurate with those. Indian newspapers have cover prices that are low. For instance, the price of a newspaper hardly covers the cost being delivered to a reader’s door and is a piffling amount compared to the cost of producing and printing it. This has been the principal bane of Indian print media. As a result, it is difficult to charge readers to read online when they are used to getting news/content at dirt cheap prices.

Interestingly, however, the ongoing crisis could be the wake-up call that Indian media, particularly print publications, direly need. Even if the salary and job cuts may be knee-jerk reactions that smack of short-termism—after all, the economy is likely to bounce back after a while and sectors such as healthcare, well-being, and e-commerce could be new advertising sources—the current crisis is probably an opportune time for Indian media to re-strategise.

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It is a time for media owners to introspect and find new ways of providing content. Specialised online multi-media publications that target specific interest groups is one avenue that could be explored. There could be many ways to do that. A few to ponder: reducing the size of bloated newsrooms and replacing them with smaller ones with professionals equipped with higher area expertise; hyper-local online publications that address smaller areas within cities or suburbs; more investments in multimedia content production capabilities; and collaborations between media brands.

Therefore, for Indian media this COVID-induced downcycle could be the source of opportunities. Opportunities to spot new sectors and trends that could emerge out of the changes in social behaviour; opportunities to use online platforms, including social media more effectively; and, of course, opportunities to take a close and hard look at junking the past and thinking of new ways to conduct the business of content generation and distribution.

Get Ready For ‘New Normal’ In Post-Corona Times

By Sanjoy Narayan

Wherever you are in this recently-turned-surreal world, you’re either locked down at home; or self-isolated with minimal social contact; or, in the worst case, quarantined somewhere. In India, the entire population has been locked down now since March 24, and people’s movement has been severely restricted. The lucky ones have work that they can do from home; the less fortunate are seeing their incomes dwindle. Elsewhere in the world, such as in Finland where I temporarily reside, the population is so sparse that voluntary self-isolation and social distancing are thought to be enough to curb the spread of the deadly Covid virus that has held the world in suspended animation.

But no matter where you are, the weeks of isolation have probably begun to take their toll and affect your life in more ways than you could have imagined. For those eking out a living at the margins of the economy such as daily wage earners, casual workers, or those employed in the informal sectors (in India that means more than 80% of the workforce), the lockdown is like a devastating blow to their lives, a blow from which they could take months, if not years, to recover. For others, it has changed their lives in lesser but still significant ways.

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Some symptoms of those changes are palpable. When liquor sales were allowed in several Indian locked-down states, queues, some of them albeit socially-distanced, snaked outside liquor shops, and, in some places, stretched for several kilometres. Alcohol-deprived, locked-down denizens just wanted to stock up on booze, which to many is a convenient aid to escape the monotony and depression that sets in when movement is restricted, economic fortunes seem uncertain, and fear and anxiety looms large. The queues outside alcohol shops were probably longer than those outside stores that sold essentials such as food during the lockdown.

Several state governments, which get to set their own excise duties on liquor, raised the rate of taxation, some by as much as 70%, trying to maximise the revenues that can earn in an economy that has sputtered to a halt. These high prices for booze are unlikely to decline even after the Corona virus scare has ended (and no one still knows when that could happen).  

Alcohol consumption could be on the rise during the lockdown but there are less visible changes that are already affecting people’s lives. Staying indoors, often with children and other members of the family, 24X7 for weeks on end can take its toll psychologically. Even in a developed country such as Finland, police admit to getting increased number of complaints of domestic abuse and violence towards women and children. In India, data is as yet unavailable for that sort of behavioural changes but with entire families cooped up in (often) cramped homes; strapped for cash; or for even food and other daily necessities, it could be like ticking time-bombs.

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With much of the privileged world shifting to school education online during this period, many parents feel the pressure to cope with enforcing discipline on their children to adhere to the new norms of lessons via the internet—not an easy task, particularly when their children are very young and unaccustomed to the process. According to a few family therapists, in many cases, this could lead to abnormal tensions within families and affect family members adversely. Coupled with their own predicament—job cuts; reduced earnings; and the uncertainties about the future—such pressures, not inconceivably, this could lead to serious long-term psychological effects on people and even lead to familial fragmentation.

No one knows yet when the threat of the pandemic will ebb but psychologists and trend forecasters are already talking about a new way of living that may emerge. In many countries, notably in Europe, restrictions are being slowly relaxed. In Finland, restaurants will be allowed to operate in a limited manner (no more than 50 diners at a time) from June1. Schools are being opened for 11 working days from May 14, ostensibly to gauge whether the virus spreads further or not. In India, in some cities, people are being allowed to move around between 7 am and 7 pm in a sort of curfew relaxation. And standalone stores in many cities are now operating normally. Yet, as the threat of the virus refuses to die down, people have grown cautious about social mingling or being out and about in places where there are others.

These are trends that could come to stay. Many business models that are pinned on attracting volumes or numbers of people to make them viable—such as big restaurants; sports events; shopping malls; and so on—could be hit for a long time as customers and consumers decide to err on the side of caution even after the restrictions are gone. In some Chinese cities, after movie theatres were opened partially, they had to be shut down again not because of the renewed spread of the virus but because people just didn’t want to go and watch movies with others as they normally would have.

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The flipside of the pandemic-led paralysis of society could be in the form of innovations. Artists and musicians have already begun online virtual concerts on platforms such as YouTube with a pay as you please business model. Restaurants are cutting their overheads and focussing more on home deliveries of their fare as customer feel more comfortable and secure eating at home rather than visiting public places. Air travel is likely to change forever as business and leisure travel shrinks and people and businesses use the Internet to get work done. For many businesses that could lead to substantial reductions in cost.

Many may believe that these will only be a short-term impact of the pandemic. But perhaps not. The after-effects of the pandemic could be longer lasting. The ongoing crisis that the world is experiencing could upend many of the ways in which we live, communicate, and consume. The new normal after the Corona scare is over (whenever that is) would be very different from what we have been used to till now. It could be a not-so-brave new world.

How Coronavirus Will Change Our Lives

By Sanjoy Narayan

The biggest challenges that the world continues to face from the Coronavirus pandemic are: how to stop its spread; find a cure or preventive; and protect the health and well-being of the entire population of the world.

While governments, healthcare authorities, and others wrestle with these confounding tasks, let us take a moment to try and look into a post-Corona world and what that will mean for all of us. At the moment, when everything about the pandemic continues to be unpredictable and uncertain, such a proposition could seem akin to crystal-ball gazing but yet, given the various trends that have surfaced in today’s beleaguered world, it may be time to try and conceive a new order that may emerge.

According to an estimate by the Imperial College, London, unless there is a sure-shot vaccine that is developed or an accelerated pace of herd immunity (which is a form of indirect protection from infectious disease that takes place when large proportions of the population becomes immune to the infection and, thus, provides a degree of protection from the virus for people who are not immune), the current crisis that the world faces could continue for 18 months or more. Perhaps even two years. That is long enough for individuals, communities, businesses, and governments to change the way we all live and work.

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For businesses, depending on the products and services they purvey, this could call for scenario analyses—whether to ride out the slowdown; or restructure and pare their activities and markets; or simply close down and abandon their enterprises. Such scenarios, as always, range from the mildly disruptive to ones that are radically destructive and catastrophic. But even as businesses try to contend with such challenges, what may have emerged are distinct changes in the way individuals have begun to behave. Restrictions on normal life, ranging from complete lockdowns to self-isolation to quarantine will likely change the way people live, work, think and value their lives as well as material items such as what they buy, eat, or do for leisure.

Many of the new limitations that people have been grown used to in the past several months such as travel restrictions; restrictions on gathering and socialising; and protection for high-risk groups will likely be adopted as the new order in the months to come and may even become the new norm for living. Some of this has already led to new habits: remote working; an unprecedented shift to e-commerce; online schooling and education; and a blurring of the lines between work and leisure. It has, of course, also led to large-scale lay-offs, factory and business closures, and, consequently, a rise in social tension and stress.

But here’s the thing. Could this also result in people and organisations discovering the benefits of a new way of living and working that challenge traditional business and lifestyle norms? According to the Board of Innovation (BoI), a business design and innovation strategy firm, these are changes that will very likely happen in the not-so-distant future. In a recent report, Shifts in the Low Touch Economy, BoI analyses the emerging trends—mainly from the point of view of businesses but also in terms of changing behaviour of individuals and consumers.

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But first, the status of the world. More than 1/3rd of the world’s population is under some form of lockdown and in the parts where there is no official lockdown yet, there is some form of self-isolation and restriction on gathering of people. Borders between most countries have been shut down. Unemployment owing to waves of lay-offs are at very high levels.

Bankruptcies and business closures are already spreading in waves across the world. In poor countries such as India where hundreds of millions live on daily wages, the distress levels could lead to serious strains in the social fabric. In other countries, including those in the developed world, the closing of borders and domestic economic strain could fuel already existing xenophobia and demands for protectionism. In the US, for instance, issues such as immigration, work permits for foreigners, and racial discrimination could become hotspot topics as the economy tries to rehabilitate.

Those are real problems and much would depend on how long the pandemic and its effects last. But there could be other changes too, as the BoI report suggests. Consumer behaviour could change more permanently than we had thought. Changes that had begun before could get accelerated. For instance, remote working could be a habit that both employees and employers adopt as a norm. Home deliveries of essentials such as groceries could become a cost-effective way for both consumers and merchants. People could travel less than they did before and movement restrictions between countries could last longer than we think. Isolation and loneliness could have psychological impacts on people and conflicts and tension could rise at all levels. Mistrust of people and products could also rise.

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All of these would naturally result in new opportunities not only for businesses that are quick to adapt to the new behaviourial norms of their customers but also for those skilled in specialised fields. For example, psychiatric therapy online; or new forms of no-contact social gatherings. But there could be more fundamental changes. As people become more conscious of hygiene and risks of contagious diseases, companies may have to rethink packaging of their products and merchants of efficient ways of contact-less drop-offs. Travel and tourism could change: overseas travel could decline and local or domestic tourism could flourish. Companies could slash their office space requirements as they find it cost-efficient to have employees work from home. But with conflicts and tensions rising, legal activity could rise too—already lawyers and the justice systems across the world are turning to digital ways of functioning.

The BoI report outlines several fundamental shifts that could change the world we live in. While these have huge implications for businesses, they would, in varying degrees, affect individuals across the world as well. Chief among these shifts are: Geopolitics (where we could see the rise protectionism and xenophobia); Technology (where everything becomes more and more digital and contactless); Macroeconomics (the access to capital becomes scarcer); and Human behaviour (where isolation and social distancing becomes self-imposed).

While rich countries as well as the poor ones grapple with fighting the pandemic and protecting their citizens, these trends that could continue long after the pandemic has subsided and affect our lives over the forthcoming years are also probably worth thinking about.

How Tiny Finland Is Combating Corona Pandemic

By Sanjoy Narayan

(The author is based in Vaasa, a city on the west coast of Finland)

At the time India’s Prime Minister Narendra Modi was announcing a complete curfew-like lockdown of the country—1.3 billion people are not allowed to step out of their homes for 21 days—up in the Nordics, Finland’s government, a coalition of five parties, headed by Prime Minister Sanna Marin, 34, and her cabinet of mainly young women ministers were huddled together to discuss how to go about locking down Uusimaa, a southern province that, including the capital city of Helsinki, is home to 1.68 million Finns. That number might seem like a drop in the context of India’s vast ocean of people but compared to Finland’s population of 5.5 million, it’s a sizeable chunk.

Uusimaa is the worst affected province in the raging spread of the pandemic Coronavirus (COVID-19) and accounts for an estimated two-thirds of the total of 915 cases (at the time of writing) and five deaths. At an all-party meeting, Marin and her cabinet debated whether shutting down Uusimaa would impinge on the deep freedom, independence and autonomy that Finns have constitutional rights to. The negotiation took time and then, after nearly three days, the Finnish Parliament approved the requisite changes in the law to enable the lockdown for a period of three weeks.

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Finland treasures the rights of its people and its democracy is driven by consensus among parties ranging from leftists to centrists to right wingers. The good thing is at the time of national crises, these ideologically opposed parties manage to bury their differences and come together for the greater good of the people. The Coronavirus’ spread, like anywhere else in the world, has been an unprecedented crisis in tiny Finland. But a quick resolve to take measures has borne some fruit. The spread of the virus, at least till date, has been limited to some of its 19 provinces, while others have been largely spared its onslaught.

Yet, the measures have been effective. People have been advised to socially distance themselves; not gather in crowds of more than 10; avoid public places and restaurants and bars (most of which have been shut down); and stick scrupulously to personal hygiene such as frequent washing of hands. Self-isolation and quarantine for citizens coming back from abroad has been recommended and are largely voluntarily being followed strictly. In Finland’s cities—small as well as big ones—you see hardly any people on the streets but shops are stocked with food and other essentials. In the initial weeks, some panic had set in (not unlike in many other places in the world) and people were frenetically shopping for food, toilet paper and other items of daily use. But once they realised that supplies were not going to disappear that panic abated.

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Finland and India can never be compared. Besides their incomparable sizes of population, Finland is a rich country. Per capita income (in terms of purchasing price parity) in Finland is over US$45,700; India’s is 7,060. Finland’s free universal healthcare, free education, and social security system is among the world’s best. And, to boot, in the past two years, the country has ranked as the happiest nation in the world in a survey that is adjudged as credible. But then Finland is also a scarcely populated country: 19 people per square kilometre; contrast that with India’s 420 inhabitants per square kilometre. Also, that average figure is weighted by the cities. The fact is that nearly 74% of Finland is under forests.

Such demographic advantages help when a crisis such as Coronavirus hits. Finnish hospitals and health-care centres are well-equipped. Food supplies are adequate and there is, at least till now, no reason to fear a collapse of those essential services. Statistical models suggest that in the next four to six months the virus could mean that 11-15,000 Finns could be hospitalised, but the authorities are trying to take measures to stagger the possible spread so that it would ensure that no more than 900 people. The Uusimaa lockdown is a step in that direction.

Like in many other countries, the Finnish army is also on standby. Finland has compulsory conscription for young men (for women it is voluntary) and if needed conscripts and other trained personnel could be summoned to help in the containment measure that the virus’ spread would require. An example of the quick response: as soon as the death toll and incidence of infections increased, the government swiftly doubled the healthcare system’s intensive care facility.

But there are other scares. The virus scourge could contract the nation’s economy by 5%. Finland has a GDP of US$ 251.9 billion that has been growing at an average of just under 3%. But the virus’ impact has already cost 100,000 jobs and that puts pressure on the social security net. Moreover, it is vastly different from India in terms of its population distribution by age: the average age of its population is 42.5 years (in India it is 26.5) and 1.2 million of its 5.5 million population is above 65. As many as 1.46 million Finns are entitled to pensions. Already, the Finnish Pension Alliance, Tela, has said that the coronavirus-related fall in the markets has wiped out Euro 20 to 30 billion off pension firms’ investments. This could put pressure on sovereign debt and also perhaps affect people’s individual budgets.

The coronavirus’ impact in Finland (as in the rest of the world) could impact its economy and its citizens for a prolonged period even after the pandemic subsides. A couple of days back the Finnish government announced a Euro 15 billion package to prop up the economy by helping businesses and individuals and this could adversely affect state debt. But as Prime Minister Marin said that was a secondary consideration. “We are not thinking primarily of how much additional debt the state will have to take on,” she said.