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: Strong economic growth to remain local, Shumita Sharma Deveshwar, 15 Jun 2017
Despite India’s rising share in world GDP, the impact of growth drivers will be mainly domestic
Macro policy
* India: Return of cash bodes ill for tax revenues, Amitabh Dubey, 1 Jun 2017
Growth in digital payments is gradually reverting to the mean
Macro policy
* India: GST rollout threatens supply disruptions, Shumita Sharma Deveshwar, Amitabh Dubey, 25 May 2017
Even as big corporates gear up for the key tax reform, concerns about lack of preparedness among smaller firms and the government abound
Macro policy
* India: Political decisions will disrupt reform, Amitabh Dubey, 18 May 2017
Modi has notched up some hits and some misses, but demonetization presages a shift towards politically-motivated unpredictability
Macro policy
* India: Headline GDP obscures unbalanced growth, Shumita Sharma Deveshwar, 4 May 2017
The economic recovery will likely be gradual, uneven and, overall, fragile
Macro policy