DEA monthly review cites e-commerce report panned by Commerce Min

The August economic review of the Department of Economic Affairs (DEA) in the Finance Ministry has cited a study on the e-commerce sector, which was widely panned by Commerce Minister Piyush Goyal last month. That report by the Pahle India Foundation had faced scathing criticism from the minister, who termed it as a compilation of “lies, damn lies, and statistics”.

The DEA’s 26-page Monthly Economic Review for August, which was released on September 26, has cited the findings of that report over one-and-a-half pages on the “role of the e-commerce industry in employment generation and enhancing consumer welfare."

The review says, “India’s e-commerce industry has emerged as a dominant player in driving services sector growth in recent years,” and refers to an excerpt from the foundation’s report on the performance of the e-commerce industry.

At the launch of the report in August, Goyal said, “I would like to completely disassociate myself from this report. Let me be clear that I do not agree with any of these findings.”

The Commerce and Industry Minister had also accused Amazon of “predatory pricing” at the same event. His comments came after news that Amazon’s parent company was investing another $1 billion in its India operations to compensate for huge losses. “I don’t see it as a matter of pride. It is a huge concern,” he said about the massive infusion of funds. Expressing concern over the impact on the very survival of mom-and-pop stores, the minister had raised the possibility of half of India's market becoming part of the e-commerce network in the next decade.

According to the Pahle India Foundation report, e-commerce has been widely accepted in Indian cities with more than 90 per cent of the participants spending over an hour online weekly. More than 40 per cent, the report says, spend more than 10 hours. This online activity, according to the report, has boosted the e-commerce market, with 85 per cent of users shopping online weekly.

The report also highlighted the role of the e-commerce sector in job creation, revealing that online vendors have generated 1.58 crore jobs across skill levels and retail functions. “On average, online vendors employ 54 per cent more people and almost twice the number of female employees, compared to offline vendors,” said the report.

Goyal had differed, saying the e-commerce business was a more complex subject. “There is a need to carefully assess the sector and its impact on mom-and-pop stores, but it should not be lauded based on a one-sided report that only sheds light on job creation,” Goyal said. 

The Pahle India Foundation report was based on a pan-India survey of 2,062 online vendors, 2,031 offline vendors, and 8,209 consumers of products from e-commerce websites across 35 cities in 20 states and Union territories. 

Citing the report, the monthly economic review said the e-commerce sector encourages competition by providing more choices and boosting consumer confidence. On the other hand, the minister had said the e-commerce sector practised predatory pricing and was responsible for marring the business of small retail stores. “E-commerce is eating into small retailers' high-value, high-margin products," he had said.