As the campaigning for the crucial 12 May Karnataka elections drew to a close this week, most opinion polls suggest the ruling Congress party will emerge as the single largest party and the Bharatiya Janata Party (BJP), the principal opposition party in the state, could be a close second.
In case of a hung assembly, where none of the three major political factions—the third being former prime minister HD Deve Gowda-led Janata Dal (Secular)—gets a clear majority, Gowda’s party could emerge as the king-maker and decide who between the Congress or the BJP forms the government.
Even as poll campaigning in Karnataka was on a fever-pitch, a Bangalore-based e-commerce company was making news. Online retailer Flipkart, which was co-founded 11 years ago in the garden city by two IIT alumni Sachin Bansal and Binny Bansal, was bought over by US retail giant Walmart. The deal that not only valued the company at a whopping Rs 1.4 trillion ($20.8 billion) but also left dozens of its employees dollar millionaires.
The deal would, however, see the two Bansals (not related to each other), part ways, as Sachin exits after selling his stake for almost $1 billion, making him perhaps India’s youngest self-made billionaire at just 36.
Yet, it appears that all aspects of the deal may not have been sorted out as yet. News reports emerged early on Friday that Japanese tech investor SoftBank could re-consider selling its 22% stake in the e-retailer, because doing so now would leave it with a heavy tax liability. If the Japanese investor does not sell its stake immediately, Walmart would own about 55% of the company as against the 77% originally announced.
Moreover, news reports say that the taxman is already knocking on the doors of the companies involved in the deal, which could attract a hefty tax liability on the same lines as did the Hutch-Vodafone deal, which was inked more than a decade ago and is still mired in arbitration.
Yet another deal that went through during the week was the one to acquire Fortis Healthcare. The hospital chain’s board approved a joint bid by the Munjal family that promotes two-wheeler maker Hero Group and the Burmans, who own consumer goods major Dabur. The Munjal-Burman combine thwarted stiff competition from Malaysia’s IHH Healthcare, TPG-backed Manipal Hospitals and KKR-backed Radiant Life Care.
While the deals space turned hot, so did the war of words over the troubled state of Jammu and Kashmir. Army chief General Bipin Rawat, whose comments in the past have stirred controversy, said in an interview to The Indian Express newspaper that the youth in the valley should stop thinking that they will gain freedom by attacking the army. He also said that the army will retaliate with force each time it comes under attack.
“Azadi (independence) will not happen, you cannot fight the army,” Rawat was cited by the newspaper as saying. “We don’t enjoy it (the killing of youth). But if you want to fight us, then we will fight you with all our force,” Rawat told the Kashmiri youth. He added that the Indian army has not been “so brutal” in quelling protests as have the armies in countries like Syria and Pakistan, which, he said, use “tanks and air power in similar situations”.
But Kashmir is not the only cause of worry for the government, which is looking at the spectre of oil prices rising and India’s balance of payments going for a toss, especially in the wake of the US unilaterally pulling out of the nuclear deal with Iran.
In fact, fuel prices are already at a three-and-a-half-year high and are only likely to inch upwards. This perhaps forced the government to informally ask the three state-owned oil marketing companies—Indian Oil, Hindustan Petroleum and Bharat Petroleum—to not revise retail prices ahead of the Karnataka polls.
Also, the Indian rupee has been on a free fall of sorts, sliding to 15-month lows as crude oil looks set to settle above the $70 mark at least for the foreseeable future.
Prime Minister Narendra Modi has another reason to be worried, at least if a report by investment bank UBS is anything to go by. The report says that investors are pricing in a Modi victory in the general elections of 2019, thereby implying that any dip in the popularity of the prime minister and his regime could have a negative impact on the markets and the overall investment scenario in the country.
Little wonder, then, that several union ministries have reportedly been asked to do the math on jobs numbers and showcase their success. A Bloomberg report says that ministries have been asked to come up with a detailed note on how many jobs were created in the last four years by the programmes undertaken by the Modi government since it assumed office in May 2014.