India

Trusted Sources has unique expertise in India to provide comprehensive political and economic analysis as the first single-party majority government in 30 years seeks to implement a broad-ranging reform programme to help sustainably revive the domestic economy. Our analytical team, which is based in New Delhi, has a close insight into policy drivers. The team travels regularly throughout the country, most recently to Uttar Pradesh and Punjab ahead of crucial state elections. It combines political, economic, social and external factors to provide independent investment research that goes far beyond short-term data to offer clients not only the big picture but also actionable views. Our weekly thematic and drill-down coverage looks into key sectors such as infrastructure and consumption and constantly monitors the impact of commodities markets on import-dependent India.

Prime Minister Narendra Modi’s government has an historic opportunity to carry out structural economic reform. Favourable external conditions – notably, softer commodity prices, which have led to a near automatic macroeconomic rebalancing – are aiding a cyclical recovery, as is the effective Reserve Bank Governor Raghuram Rajan, who is bringing India’s monetary policy up to the global state of the art by implementing inflation targeting and other financial reforms.

But even at the best of times, governing India is a difficult balancing act, particularly when there is no crisis to break down the resistance of various interest groups. India may well be the world’s most complex society – a federation of nation-states, many of which are organized along linguistic and ethnic lines and riven by competing ideologies and overlapping jurisdictions. Thus, reform requires Modi to mobilize the electorate’s desire for change while navigating myriad constraints imposed by the upper house, an activist judiciary, state and local politicians, the bureaucracy and special-interest groups.

For these reasons, we expect Modi’s reform strategy to be incremental as he prioritizes what is possible rather than what is theoretically best practice in order to protect the ruling Bharatiya Janata Party’s political interests. The risk is that this approach may allow time for internal opposition to reform to crystallize, especially if external shocks drive up inflation and energy prices or undermine the recovery. Supply-side bottlenecks persist in almost every aspect of the economy – from physical infrastructure to human capital, meaning that the threat of inflation resurgence persists. From a political perspective, the risk is that Modi overcentralizes political authority, perpetuating the policy backlog that he was elected to overcome.

* India: Fiscal policy puts Modi at odds with RBI, Shumita Sharma Deveshwar, 12 Oct 2017
Slow economic growth ahead of a busy election season is raising the risk of fiscal slippage, which, in turn, is making the increasingly conservative RBI wary
Macro policy
* India: Gujarat poll to test identity vs economics, Amitabh Dubey, 5 Oct 2017
Modi’s BJP is still the favourite to win the Gujarat state election in December 2017, but the battle is closer than expected
Politics/governance
* India In Charts: A disappointingly slow recovery ahead, Shumita Sharma Deveshwar, 21 Sep 2017
Macro policy
* India: RBI firm on inflation, despite growth risk, Shumita Sharma Deveshwar, 14 Sep 2017
The Finance Ministry’s deflation argument is losing steam, putting the onus back on the government to revive growth
Macro policy
* India: Modi risks losing control of jobs narrative, Amitabh Dubey, 8 Sep 2017
Macro policy