India Business and Finance, February 15th

What happened in India's economy during the past week

Prices

Retail inflation dropped from 5.7% in December to 5.1% in January (year-to-year)--outside the government’s 4% objective but below the 6% which would have required some sort of response by the Reserve Bank of India. Importantly, inflation in a subset of the index, food, was 8.3%. The sharp rise of prices in this area is believed by many business people to explain the slowing growth of consumer product sales that became apparent in the fourth quarter of 2023. Food comprises a major component of spending for a large swath of India’s population and higher prices are seen as having damped other forms of spending.  

Justice delayed

The National Judicial Data Grid disclosed that there are 45m pending legal cases in India, with 6% more than 20 years old and 24% more than 10 years old.

Long goodbye

British American Tobacco (BAT) created the Imperial Tobacco Company in 1910 and still holds a 29% stake in what is now known as ITC, an Indian conglomerate that dominates the Indian cigarette market and has a substantial presence in consumer goods and hotels. It has long been thought that BAT would like to reacquire control but it has been thwarted by the company and the Indian government. It seems, after more than a century, to have come to terms with being unwanted and disclosed that it intends to reduce its shareholding

What taxes say

Tax revenues from personal income, company revenues and securities transactions rose 20% in the months between April 1 through late February. Many suspect the tax number is a far better indicator of India’s growth than the usual statistic.

Getting with the programmer

Satya Nadella said that by 2027, the number of Indian programmers on its development platform will exceed the number in America, making it the largest community in the world.

Work from the office

Depending on the stockmarket fluctuations of the day, Tata Consulting Services is India’s most valuable, or second most valuable, company and the giant among giants in the IT outsourcing business. That makes its managerial practices particularly influential. During the covid-19 lockdown it adopted a hybrid model intended to persist, at least in some form, into the future. That policy is now dead. All employees must return to the office by the end of March.

It is easier to nationalize than denationalize.

After missing targets for the divestment of state-run companies for five years in a row India’s central government has given up on explicit targets for sales. The process for getting rid of companies has not been easy. Prior scandals have meant those in charge were concerned about any suggestion sales were done too cheaply. Labour unions have posed obstacles that were particularly difficult because many of the companies to be divested provided employees with housing and other services. All of this became even more difficult when the performance of these companies improved over the past two years, providing dividends to the government and lessening the pressure to cut ties.

Words matter

Hawkers are not permitted to run their small stands outside of the stores in Colaba, Mumbai’s old business district. They do it anyway, blocking all the sidewalks. It has been this way for years, with the clutter disrupted briefly during the occasional raid, only for it to reappear. The area was cleared several weeks ago for a visit by Prime Minister Narendra Modi and “no hawking” signs were posted. The signs were then modified mysteriously with the word “no” deleted. Hawkers returned. Following a report by The Times of India, the “no” was restored by the city’s government suggesting a new found seriousness about formal property rights. That would be a big change, perhaps too big. In the hours before this substack was posted, the hawkers were back reassembling their stands (see this week’s logo photo) along with the familiar, impenetrable crowds. The signs had disappeared.

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