Bharat defining India’s economics and politics
The integration of Bharat into the global MNC strategy implicitly suggests a formalization of the local economy—a trend that will only reinforce the transformation that Bharat is already witnessing
Later this week the Election Commission of India will declare the results of the just concluded vote for the Karnataka assembly. Regardless of the outcome, it is clear that the victor will have had to have carried rural Karnataka—six out of 10 people still live in rural areas of the state.
Nothing new. After all we have seen this play out in election after election; winning in Bharat or rural India is the key to claiming power in Delhi. Significant because a similar transformation is underway in economics too—Bharat’s appeal to the India industry is an established fact; but now you have their MNC counterparts queueing up to feed off the same potential. And future elections will be altered by this new dynamic.
Clearly the compact between Bharat and India (the traditional English-speaking elite cabal has dominated the discourse in Delhi) is poised for change. No longer will it be possible to take Bharat for granted, especially in terms of public policy focus.
The growing assertiveness of Bharat, whether it be in making cause (sometimes violently) on the issue of farm distress or the growing defiance and push back by Dalits to upper caste oppression, is already visible in the political arena. Materially, too, their lot has improved as India’s growth process has gained momentum (something this column has argued several times previously and captured so well in the 2011 census), adding more heft to their collective voice.
This is exactly why public policy towards Bharat has decidedly, increasingly in the last five years or so, acquired an overt tone. Where previously its focus would largely have been on promoting growth inspired by big-ticket manufacturing, now the focus of the policy, particularly in the Union budget, is on promoting hitherto ignored sectors in the economy like small scale industry, Dalit-sponsored start-ups, a friendlier ecosystem to promote the participation of women in business and greater attention to incentivize a rapidly diversifying farm sector.
The political economy of this change is that not only is it ordering a reset in the unequal relationship Bharat enjoyed with India previously, but in the process is creating a great opportunity for a fundamental economic and political empowerment. Presumably, that is something that hasn’t gone unnoticed by MNCs seeking new markets for opportunities.
Few weeks ago in his annual letter to shareholders Amazon founder and chief executive officer Jeff Bezos pointed to the potential by identifying India as the fastest growing market place. Particularly telling is how Amazon is localizing its strategy to make its offerings attractive to India, particularly for Amazon’s Prime subscription service. “Prime selection in India now includes more than 40 million local products from third-party sellers, and Prime Video is investing in India original video content in a big way, including two recent premiers and over a dozen new shows in production,” said Bezos.
Significantly, the company’s global rival, Walmart, last week announced the largest ever e-commerce deal when it committed $16 billion to acquire Flipkart. Walmart chief executive officer Doug McMillon, who was in India last week, waxed eloquent on the central role of kirana or neighbourhood mom-and-pop stores in Walmart’s future operations in India.
Similarly, in an interview published in Mint last week, Flipkart-owned Myntra and Jabong CEO Ananth Narayanan, pointed out that Bharat is already emerging as a key part of the strategy of these companies—e-commerce is serving as the substitute for market places like malls that dot the urban landscape.
“We are finding that the consumer is very spread out. So 55% of my revenues come from tier II. About 45% roughly are women and 55% are men,” Narayan said.
What is probably making it easier for global business is the slow, yet steady, steps India is taking to establish a rules-based regime; the roll-out of the goods and services tax is a good example of this intent.
What goes unsaid is that the integration of Bharat into the global MNC strategy implicitly suggests a formalization of the local economy; a trend that will only reinforce the transformation that Bharat is already witnessing.
Anil Padmanabhan is executive editor of Mint and writes every week on the intersection of politics and economics.
His Twitter handle is @capitalcalculus. Respond to this column at firstname.lastname@example.org
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