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The Week That Was:

From: Vartaa Editorial Team on Jul 17, 2016

The Valley on a simmer

For the second week in a row, the Kashmir Valley continues to remain tense in the aftermath of the killing of local militant Burhan Wani. The administration has imposed curfews across many areas of the state and the press has also come under the clampdown with newspaper circulation being shut. Mobile network and internet services have already been stopped earlier. While the on-ground situation remains tense, many analysts fear that home grown terror, the likes of which was last seen in the valley in the 1980s may well be making a strong comeback.

Political game of musical chairs in Arunachal

Political intrigue returned to the state of Arunachal Pradesh this past week. The Supreme Court set aside the Central Government's decision to impose President's Rule in the state which had been done in light of 11 Congress MLAs turning rebels and reducing the state government to a minority. The Court's ruling was seen as a setback for the BJP. The Congress meanwhile developed cold feet in proving its strength on the floor of the assembly with CM Nabam Tuki as its leader. Tuki was replaced by the party and Pema Khandu was elected as the new leader of the Congress Legislative Party. Meanwhile, the larger battle between the Congress and the BJP over Arunachal will be fought in Delhi where the Congress seems to be in no mood to compromise with the government in Parliament over key bills, specially the GST.

With an eye on the polls

In a surprise move, the Congress party completely revamped its Uttar Pradesh leadership and brought in erstwhile actor Raj Babbar at the Pradesh Congress Chief and ex Delhi Chief Minister Sheila Dixit as its CM candidate for the Assembly polls in the state in 2017. Dixit, who is in her late 70s and had been sidelined in the party's Delhi unit, has now promised to tour the state promoting the Congress's message. The move did invite some snide reactions from the BJP, which itself is uncertain about who to project as its CM face. Meanwhile, across the country in Gujarat, opposition parties such as the Congress and the NCP are looking to woo Hardik Patel, the leader of the Patidar agitation, who is now seen to command a significant vote back that could tilt the next assembly polls.

Opinions you must read:

  • Pratap Bhanu Mehta offers a bleak analysis of the violence in the Kashmir valley and how the Indian state continues to keep its eyes shut
  • The Hindu examines why Indian politicians talk at and not to the Indian people.

Chart of the Week

Amidst the much hype around Online Retail in India in recent months, a lot of questions are being asked about the frothy valuations of the homegrown e-tail giants such as Flipkart and Snapdeal. We decided to take a look at the online Retail market trends in India to put these valuations in perspective.

As you can see, in 2016, eCommerce will be barely 2.5% of the total Retail market in India. The growth however has been very impressive- the market was less than $1 Billion in 2011 and has grown more than seven-fold in the 5 years since. However it is important to note that even in 2019, according to eMarketer, the online retail market will be less than 5% of the total Retail market in India. The US online market which is considered to be a mature online retail market is almost 7.7% of the total Retail market in the country in 2016.

All of this makes investors question the hype around online retail. Discounting- a strategy increasing employed by the major players to win over more customers- after all cannot be sustainable unless it is complemented by a relentless cost reduction strategy. The only answer seems to be aggressive supply chain efficiency improvements. With the tremendous infrastructure challenges in India and problems with last-mile delivery, this seems unlikely to come to fruition over the next 4-5 years. The Retail market however as a whole is projected to grow significantly over the next few years. Which should make the brick-and-mortar retailers such as Big Bazaar, Reliance Fresh, and possibly Walmart India, winners at least over the near future.