Do it yourself

One of the biggest hurdles to doing business in India today is not infrastructure, taxation, or talent—it is policy unpredictability. The Economic Survey 2019 reminded us that India’s own thinkers since ancient times tied prosperity to rule of law ( Dandaniti ) and protection against arbitrary rule ( Matsyanyaya ). In modern terms, this means clear rules, consistent enforcement, and contract sanctity. Investors, entrepreneurs, and global partners all look for this. Yet, over the past decade, India has repeatedly seen sudden policy shocks. These not only create losses for businesses and investors but also erode long-term trust between government and enterprise. Case Studies of Policy Uncertainty Maggi Ban (2015) FSSAI imposed a sudden nationwide ban on Nestlé’s Maggi noodles citing excessive lead/MSG. Months later, the Bombay High Court lifted the ban after independent tests cleared the product. ·          Nestlé lost sales and investor...

One thing that the prime minister Narendra Modi is well known for is his business friendliness. At the core of the famous Gujarat Model, that shot Mr. Modi to the national and international scene, was his claim of making Gujarat the most business-friendly state in India. He is also often accused by the opposition parties for unduly favoring the large corporate at the expense of micro and small enterprises and middle-class households. In the past ten years, the policies followed by the PM Modi led central governments have stayed true to his reputation. For example— ·          The effective tax rates of the corporate sector have been reduced. This has resulted in the aggregate tax collection from individual taxpayers to rise higher than the tax paid by corporations. ·          It is widely believed that the demonetization of high value currency notes and the implementation of GST have also adversely affe...

One of the economic positives of Covid-19 pandemic is material rise in digital payments and e-commerce. The steep rise in adoption of digital payments by household consumers and merchants in past one year should have arguably led to lower currency in circulation. However, the recent data released by RBI indicates that the cash in circulation is highest in 6 decades relative to GDP. In absolute terms also, the cash is materially higher than the pre demonetization levels. It may be argued that holding more cash during the times of distress (e.g., Pandemic) is natural instinct; and this trend has been seen globally. Nonetheless, in the Indian context, the issue needs deeper examination by the policy makers. Digital payments rising exponentially The initial public offer (IPO) by One 97 Communication Limited, the owner of India’s largest payment brand PayTM, celebrates the exponential growth in digital payment in past few years. As per NASSCOM, digital payments in India have grown ~10x ...

As expected, the GDP growth data for 2QFY20 came out to be poor. In the quarter ended September 2019, India's real GDP grew 4.5% and GVA grew 4.3%, the lowest rate of growth in 6years. The latest economic growth rate of India is now lower than China, Indonesia, Myanmar, Vietnam, Philippines, and similar to Malaysia. The supply side data explains that the slowdown is pervasive and all sectors of the economy are struggling. Industrial sector was stagnant with manufacturing recording its first quarterly contraction in a long time. Services grew less than 7%, the lowest pace in 2years. Despite above normal monsoon, the agriculture growth at 2.1% was also lowest for the second quarter of a fiscal in many years. On the demand side, private consumption grew 5.1%, slightly better than 3.1% in 1QFY20, but dismal in comparison to historical trends. Investments grew barely at 1%. Both exports and imports contracted for the first time since 2016. Import contraction of 6.9% d...