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Dear Subscriber, 

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Dear reader,

The Signal is taking a break as we are revamping the product. We will be back sometime next week with some exciting changes.

Our weekly spin-off newsletter products—The Impression and The Playbook—will continue to drop on Wednesdays and Fridays respectively. However, our weekend product, The Intersection, will be discontinued.

Also, subscribe to our flagship newsletter, The Core, to start your mornings with sharp insights on business, economy, and policy.

Venkat

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LEADERSHIP

The Answer Lies Within

There was a time (until about six years ago) when Indian companies looked outside to fill executive roles. The belief was that fresh pairs of eyes would help them steer uncharted territory in ways internal talent may not.

That playbook, as we saw in the case of Wipro, has been junked.

Tata Group, Mahindra Group, L&T, Vedanta, and Aditya Birla are increasingly filling C-suite positions with in-house talent. Why? The cynical view (ours) is that it’s cheaper to hire in-house than spend at least 40% more on external candidate scouting. These companies’ executives say this approach helps them build a long-term talent pipeline and “derisk” in times of rapid growth. Internal candidates are also better versed with company culture and goings-on over time.

This is good news for millennial and Gen Z employees, who’re more likely to switch jobs if there’s no career progression or decent appraisals.

GOVERNANCE

Honeymoon’s Over

The NDA government’s flagship schemes and economic projects since 2014 were executed with much pomp and few legislative roadblocks thanks to a weak Opposition. But now that Narendra Modi’s third term as PM came with no outright majority for the BJP, his development thrust is already being panned. Some criticism is from the BJP’s very own ranks.

The party’s women’s wing has demanded an investigation into Apple supplier Foxconn’s alleged discrimination against married women in its Sriperumbudur plant. The Modi regime is effectively holding Tamil Nadu to account, but even a probe request may not have been if not for vociferous Opposition criticism — which now also extends to the Agnipath scheme and the NEET leak.

Questions are also being raised over the quality of infrastructure projects after the collapse of airport canopies in Delhi and Gujarat, bridge crashes in Bihar, and roof leaks at the recently inaugurated Ayodhya Ram Mandir complex.

US ELECTIONS

Biden (Inadvertently) Makes A Case For Ageism

If he’s elected again this year, incumbent US President Joe Biden will be 86 at the end of his second term. That reality sucker punched millions of viewers who tuned in to the now-infamous presidential debate between Biden and challenger Donald Trump on Thursday.

Biden’s halting, meandering performance hasn’t just cemented worries about his cognitive health, but jeopardised the Democratic Party’s chances of rendering former President Donald Trump a no-go. Democratic voters have indicated that they’d be less likely to vote for Biden after Thursday’s debacle. Even Democratic lawmakers are pushing for him to step aside and pave the way for someone more coherent. But Biden, currently on a spree to placate donors, isn’t relenting.

The Signal

That convicted felon Donald Trump still has more generous donors and an edge over Biden (as of May) speaks volumes.

Democrats can still replace Biden as their presidential candidate, but the process is long-drawn and mostly contingent on Biden voluntarily stepping down. In the unlikely event this happens, VP Kamala Harris could be the top replacement.

But Harris herself isn’t popular with swing and moderate voters, a belief advocated by Biden’s inner circle or “oligarchy” of family advisors who pressed him to run for a second term.

Either way, the world will be in for serious ramifications given the right-wing resurgence in Europe, war in West Asia and Russia-Ukraine, and the US’ favourite bogeyman, China. This year was the Democrats’ for the taking, and they seem to have messed it up.

FYI

BIG close: The Economic Times reports that Coca-Cola has formally shuttered its Bottling Investments Group, which controls global bottling operations including India bottler Hindustan Coca-Cola Beverages.

Rocking the vote: French voters have turned up in record numbers in the first round of the country’s snap elections that could usher in a far-right government. Nearly 60% cast their ballot, the highest in 40 years.

Pay up… or don’t?: Zomato has received a Rs 9.5 crore tax demand from the Karnataka commercial taxes authority. The company has stated that it will appeal the demand.

Dirty Davos: Leaders of the World Economic Forum, including founder Klaus Schwab, have been accused of sexual harassment and discrimination against Black people and women in a damning investigation by The Wall Street Journal.

Money bags change hands: Berkshire Hathaway chief Warren Buffett has confirmed that he’ll bequeath his wealth to a new foundation led by his three children and not include the Gates Foundation, a longtime donation beneficiary, in his will.

THE DAILY DIGIT

53 million

The peak concurrent viewership on Disney+ Hotstar during the T20 World Cup final between India and South Africa on Saturday. Despite a nail-biting finish and India lifting the trophy after 17 years, the viewership fell short of the 59 million recorded during last year’s 50-over World Cup final between India and Australia. (Business Standard)

FWIW

All-weather friends: It seems that Washington DC has found an unlikely friend in Hollywood, at least when it comes to climate change advocacy. At the recently concluded Hollywood Climate Summit, US Energy Secretary Jennifer Granholm called for directors and showrunners to “accurately portray” climate change. The summit not only teamed her up for a panel discussion with Wonder Woman director Jennifer Granholm, but also had filmmakers vouch for their upcoming movies (Twisters is one) being more scientifically accurate rather than alarmist, which has been the disaster movie template for decades. That apart, the Summit also served plant-based snacks and pushed for the movie business itself reducing emissions. In case you’re wondering about who generates a bulk of said emissions, it’s streaming platforms.

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Biswajit Dhar

One of the more enduring images from the iconic film from the 1950s, Do Bigha Zameen, was its poster showing the family of a marginal farmer looking anxiously at the sky hoping that rains would save his tiny holding, their only source of livelihood, from being appropriated by the landlord. 

Seven decades later, the importance of timely rains remains critical for the survival of the millions of small and marginal farmers in India, especially for those who are dependent on the kharif (summer) crops. Therefore, year-after-year, the progress of the monsoon is watched with much anxiety.

In April, the Indian Meteorological Department (IMD) predicted that in the 2024 southwest monsoon season, rainfall would be 106 percent of the “long period average” of 870mm, based on rainfall data during 1971-2020. 

This scenario was based on the assessments made by the World Meteorological Organization (WMO) in March that the El Nino climate pattern in the Pacific Ocean, which adversely affects, among other things, rainfall in several regions, including South Asia, was at the end of its 2023-24 cycle. 

The La Nina climate pattern bringing favourable weather was likely to take effect from July-August. 

A more precise reading of the WMO assessment meant that India would experience better rains in the later phase of monsoon.

El Nino effect slow to wear off

However, three months after the WMO’s assessment, it appears the effect of El Nino has been slow to wear off. The onset of the monsoon has been delayed in large parts of the country. 

The monsoon usually sets in around June 1 in the southern states and spreads nationwide by the first week of July. This allows farmers to plant the kharif crops, including the most important staple, rice, besides millet, cotton, maize, pulses, soybean and sugarcane. 

This year, the monsoon arrived in Kerala two days early, but its progress has slowed resulting in insufficient coverage by mid-June. The delay will impact the planting of the kharif crops.

The latest IMD assessment said that the rainfall over the entire country until June 18 was “64.5 mm which was 20 percent less than its Long Period Average (LPA) of 80.6 mm”. 

Except for the southern states, every other region had moderate to high levels of rain deficiency. The worst affected is the northwest region with a 70 percent deficiency, while central India had a shortfall of 31 percent. 

Dryness and heat are worrying signs

These regions were not only extremely low on precipitation, but they also suffered from extreme heatwaves, making conditions worse for farmers to begin planting once the rains arrive. 

These are worrying signs for the agricultural sector. 

The states most affected by deficient rains account for more than a quarter of the total rice production in India and are also major producers of millet, soybean, sugarcane and pulses. 

The prospects of rainfall for the entire month of June are somewhat better with the IMD predicting an eight percent shortfall as compared to the “long period average” and this may not have a serious impact on the levels of production of the major crops.

Even if the monsoon continues to play truant, adversely affecting the production of rice, two developments may help the government tide over short-term domestic rice supply constraints. 

First, the Food Corporation of India currently holds 50 million tonnes (MT) of rice, nearly four-fold higher than the buffer of 13.5 million tonnes for July 1. 

Second, the government had banned non-basmati rice exports in July 2023 to prevent domestic supply shortages and to keep prices in check. 

However, at the same time, the government allowed limited exports to certain countries to meet their food security needs. 

According to data provided by the Department of Commerce, Government of India, this caused rice exports in 2023-24 to fall by nearly 26 percent (6 million tonnes) as compared to a year before. 

Indications are that the export ban will continue in the current financial year as well.

Irrigation issues

There’s a good reason why a large section of India’s farmers continues to depend on the monsoon. Irrigation facilities remain significantly inadequate in several states, more than five decades after the Green Revolution was introduced. 

In 2019-20, the latest year for which data are available, 65 percent of rice production was under irrigation This figure is deceptive since there were considerable variations among states as regards availability of irrigation facilities. 

The largest rice producing state, West Bengal, has 51 percent of area under irrigation, while two other major rice producing states, Chhattisgarh and Odisha have 37 percent and 32 percent respectively.

The NDA government has been popularising the consumption of millet, but the major varieties grown in India, jowar and bajra, are not under widespread irrigation. In 2019-20, only 11 percent of jowar production was under irrigation, while for bajra, it was a little higher at 15 percent. 

The deficiency of irrigation in the country is the result of inadequate infrastructure supporting agriculture. This is a consequence of decades of neglect. 

For years, agriculture has received progressively smaller share of the country’s overall investment. In the 1950s, agriculture’s share was nearly 25 percent, but four decades later, the share had halved. 

After 1991, share of investment in agriculture has consistently remained in single digits. In 2021-22, the latest year for which this figure is available, agriculture’s share was below six percent. 

Unless the government shows the political will to prioritise the development of agriculture by ensuring that irrigation facilities, together with adequate drainage are provided, uncertainties of the monsoon will continue to adversely affect the economic well-being of a majority of India’s farmers.

 Biswajit Dhar is Distinguished Professor, Council for Social Development, New Delhi.

 Originally published under Creative Commons by 360info™.

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Dinesh Narayanan, Roshni Nair, and Anup Semwal also contributed to today’s edition.

The Market Signal*

CSR

Corporates Are Being Good Sports

Indian companies typically direct corporate social responsibility (CSR) resources towards education, healthcare, gender equality, and environment. This mix is changing as conglomerates make aggressive pushes into sport as a sector offering more than promotional value.

Take Reliance Foundation, which established an ‘India House’ in Paris for next month’s Olympics. Coca-Cola India has a three-year initiative to support women’s hockey. JSW, which signed track and field star Neeraj Chopra as brand ambassador, has had a Sports Excellence Program (SEP) since 2012. SEP has backed Chopra and women wrestlers such as Sakshi Malik and the Phogat sisters for years.

Details of CSR spending are voluntary, but The Economic Times estimates that sports initiatives accounted for Rs 280 crore in FY23, up from the Rs 248 crore average during FY19-FY22. This will increase in the run-up to India bidding for the 2036 Olympics, though the endeavour will require more grassroots programmes to back ‘newer’ sports like fencing. 

WORK

Bottled Payouts

While the rest of the world debates whether or not to tax the wealthy, China is determined to make the well-heeled pay by not letting them earn. Senior executives in finance companies not only have their payouts capped, some have even been asked to return previously earned remuneration. 

Bond traders, investment bankers and fund managers, who typically earned fat bonuses and lavish lifestyles, now have a 2.9 million yuan or $400,000 pay ceiling. The cap is a result of Beijing’s anti-corruption drives that have ensnared at least 130 executives and officials in the financial sector, Bloomberg reported.

The crackdown has caused a talent exodus from the industry even as deals dry up in a weak economic environment. The Chinese economy has struggled to revive despite government efforts. China first began graft inspections in the finance industry in 2021 and this is the second round.

TECH

Zoomcarcrash

It’s hard to sell subscriptions in India (ask us in the media 🥲). It’s harder still to rent or sell subscriptions to something expensive, like cars. Zoomcar, founded in 2012, had a rare dream run: big-name backers (Accel VC, Sequoia Capital) and a listing on the Nasdaq during a global bull run (2021).

But the company is now a penny stock. The board has fired co-founder and CEO Greg Moran as Zoomcar worries about getting delisted. 

Bad biz: This didn’t happen overnight. Zoomcar has been bleeding money both globally and in India. In the nine months ended December 2023 (pdf), Zoomcar Holdings’ revenue grew 16%, but on losses of $26.7 million. It lost money the previous year, too. In FY23, its India arm’s revenue shrank 27% to Rs 69 crore in operating revenue, and losses more than doubled to Rs 237 crore. Last year, it defaulted on loans from Mahindra & Mahindra Financial Services and venture debt firm Blacksoil. 

The Signal 

Even car market leaders Hyundai and Maruti Suzuki have found little success in their subscription businesses. Zoomcar’s rivals such as Myles are struggling as customers complain of poorly-maintained cars, which is a routine problem with Zoomcar too. Others like Revv were acquired. 

Moran and Zoomcar’s early investors seem to have timed their IPO to perfection. Tech valuations were sky high in the pandemic years and plentiful capital fuelled a flurry of IPOs. His unceremonious exit may not pinch Moran too much in the long run. 

FYI

Deal: India’s largest cement maker, Aditya Birla Group-owned UltraTech Cement, will buy 23% of Chennai-based India Cements for Rs 1,885 crore (~$225 million). 

Pay ji for 5G: Brokerages tracking India’s telecom sector estimate that Airtel, Jio, and Vodafone Idea will hike tariffs by <25% within the next six months. The telcos may also charge a separate premium for 5G services.

Masa’s blessing: Softbank’s Vision Fund 2 is investing $10-20 million in Perplexity AI at a $3 billion valuation, Bloomberg reports.

Dark energy: Moscow is reportedly building a dark fleet of liquefied natural gas carriers, similar to its shadow fleet of oil tankers. On an unrelated note, the Kremlin is also considering downgrading relations with western countries due to their “hostile” intervention in the Russia-Ukraine war.

Fizzles out: Soldiers made an unsuccessful attempt to storm the presidential palace in Bolivia in what was described as a failed coup to overthrow President Luis Arce. 

THE DAILY DIGIT

$210 billion

The estimated value of Elon Musk’s SpaceX based on a tender offer for insider shares at $112 each. (Bloomberg) 

FWIW

All that hullabaloo: Have we over-intellectualised the phenomenon that is Taylor Swift? Sure, when Ms. Swift rolls into town with her entourage, hotels and restaurants cash in, merch flies off shelves, and Swifties flock from all corners of the globe. But does her concert really wield such economic clout that we're crafting odes to "Swiftonomics"? Economists in Stockholm, for one, aren't sold on Swift saving sluggish economies. Their argument is simple: all that splurging happens over a weekend, and that's about it. A Swift concert doesn’t alter spending habits in ways that could revive economies; instead, all that extra cash blown on tickets ties up wallets later. Oh, and did we mention that most of the cash flows straight back to America? You definitely can’t argue that. 

Dear reader, 

This is my last week steering The Signal and associated publications. 

Three years ago this month, five of us came together to start a company that took over the publication of this newsletter, which was born in the throes of the pandemic. All of us save one were first-time entrepreneurs. Our agenda was to build a new-age media company that vibed with a young, digital-first generation but resonated with an older cohort (what’s a startup memo without some jargon, eh? 😉) too. The Signal is edgy, not flippant. It’s serious, not heavy. The three years have been deeply satisfying despite the insomnia and nerves typical of a steep learning curve (sprinkling some vintage management spiel 😄). We scored on the metrics too 😎. 

Our audience survey of October 2023 revealed the high quality of readership the newsletters and podcasts attracted in a crowded media market. More than a third of our readers are mid-career professionals. Another 15% are senior and C-suite executives, founders, or partners in leading firms. Over 22% are students, largely from professional colleges and top universities. We reach every IIM and IIT, for instance. 

All told, The Signal now has 85,400 readers, a fifth of them outside India. (psst: we unsubscribe those who don’t read us for a while). Another 10,800 readers subscribe to The Playbook, the Friday newsletter anchored by Venkat on the business of sports. Soumya writes The Impression, a newsletter on the media and entertainment business, which reaches 8,000 subscribers. Shorbori, Manaswini (who recently moved to a new company), and Anup built The Signal Daily podcast into a listener’s favourite, with upwards of 25,000 downloads a month. It is the top editors’ pick on Apple Podcasts (hey 👋advertisers, are you listening?).

In 2022, the five co-founders were joined by 32 investors 🫡 who generously infused seed capital, helping us expand and grow to where we are today. There were many highs and lows in our journey. Unfortunately, The Signal caught the financial chills in the startup funding winter of last year. In March 2024, it merged with The Core, a news features site focussed on mature businesses founded by financial journalist Govindraj Ethiraj, who will now steer your favourite morning newsletter. 

My colleagues Roshni P Nair, executive editor and the longest-serving teammate, John Chacko, and Anup Semwal, the veteran and cub of the team, respectively, are also bidding adieu on June 30. 

I believe we have succeeded in building The Signal into a newsletter with a unique character and voice that informs and delights you every morning. It will continue to keep its daily 8 AM appointment with you. The new leadership will keep you posted about any changes to the newsletters and podcasts. 

A big thank you to my team members past and present, co-founders, investors, and audience for playing a crucial part in shaping The Signal. 

It has been a great ride. 

Thank you.   

Cheers, 

Dinesh Narayanan,

Managing Editor

🎧 No jobs for married women in India’s iPhone factory. Also in today’s episode: fake resume are everywhere. Tune in to Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.

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Jessica Jani, Anup Semwal, and Roshni Nair also contributed to today’s edition.

The Market Signal*

Stocks & Economy: Usually when regulators caution about too much exuberance and it becomes public that a large mutual fund is under investigation for possible malpractice, investors turn wary, which affects sentiment. Not Indian equities. Despite Sebi warning of froth in small-cap shares and the Reserve Bank of India watching futures and options, indices continue to set new records. 

Sandeep Tandon, founder and chief investment officer of Quant Mutual Fund, which grew assets by 400% and notched up returns of 560% in five years, brushed aside the charges of frontrunning to “jealousy”. Tandon told investors that the fund, which has shifted from mid-caps to large-cap shares, was not facing any abnormal redemption pressure. 

Asian markets were awash in red in early trade even as currencies across Asia slipped against the US dollar. The GIFT Nifty indicates a slow start for Indian equities.

CONSUMER GOODS

You’re Gonna Have To Pay More To Beat The Heat

This was the year the unfortunate among us living in heatwave-afflicted areas realised that the very appliance supposed to offer reprieve from white-hot heat is actually ineffective because of it. According to a survey by community social media platform LocalCircles, 43% of respondents said their ACs were ineffective in reducing ambient temperatures to the desired 23-24°C. Of these, 84% were users of split ACs.

There were also reports of fires in the NCR because of AC blasts, supposedly caused by overheated compressors. The current crop of ACs aren’t built to withstand temperatures exceeding 42-44°C; just 2-3% of models are able to operate in temperatures over 50°C.

Result: brands such as Godrej, Voltas, and Daikin will increase the proportion of models that can run in extreme heat. That calls for higher-grade compressors, which translates to higher input costs and ultimately, more expensive ACs. Either way, we’re doomed.

AUTO 

Growing Traffic For Indian Cars 

It’s boom time for India’s car market. Nine manufacturers, which account for about 97% of the market, are adding capacity of three million cars per annum starting November this year. The additional capacity will take the Indian car market from the current 5.77 million to 8.77 million cars by FY31, Business Standard reported. The wheels have been in motion mostly due to robust post-Covid recovery and record sales in the last fiscal year. 

India’s top car makers have big plans. Hyundai Motor is going public with what could be India’s biggest ever IPO. Maruti Suzuki is increasing capacity and will roll out its first EV this year. And MG Motor’s joined hands with steel giant JSW. 

Tata Motors demerged its commercial vehicles and passenger vehicles segments into two separate entities earlier this year. N Chandrasekaran told shareholders that the demerger would allow the company to ensure synergies between its PV, EV, and premium JLR businesses. 

CORPORATE

Show Me The Money

Will the much-anticipated private capex cycle start gaining momentum post-Budget? There are mixed signals. 

The Adani Group will invest Rs 1.3 lakh crore in FY25 (~$15.5 billion) as part of its 7-10 year business expansion plan. The money will go into its portfolio companies in sectors ranging from infrastructure to media. The group has previously said that it would invest up to $100 billion during this period. 

Some others are turning cautious, however. The Tata Group did not infuse any new capital into its e-commerce and electronic retail businesses such as Tata Neu, Tata Cliq and Croma in FY24. It is reportedly focussed on improving efficiencies before committing more capital. 

Other conglomerates such as Reliance, JSW, and AV Birla groups also have large projects in the pipeline but none of them has announced any fresh ones. 

The Signal

Finance minister Nirmala Sitharaman has repeatedly raised government capital expenditure in her budgets, providing primary fuel for economic growth in the past two years. The minister’s hope that private capex will pick up the baton has been belied. She will likely make another attempt to prod industry into committing more capital, of which they have enough and more, in her July Budget. A June 10 research report published by broking firm Motilal Oswal said the profits to GDP ratio of listed companies climbed to a 15-year high of 5.2% in FY24.

FYI

Probed: India asked the Tamil Nadu government to investigate Foxconn facilities in the state after a Reuters investigation found they denied jobs to married women. 

Foreign shores: Aditya Birla Group will invest $50 million to set up an advanced materials facility in Texas, marking the US entry of the conglomerate’s chemicals business. 

New money: E-commerce firm Flipkart launched a mobile payments app Super.money in beta mode, competing directly with its former group company PhonePe. 

Shopping: Struggling telecom operator Vodafone-Idea bought spectrum in 11 circles worth Rs 3,510 crore in a government auction held this week. 

Cleared (?): India’s Ministry of Corporate Affairs found edtech firm Byju’s did not siphon funds or cook its books, Bloomberg reported; the MCA has denied this. 

Powering through: Megha Engineering (MEIL) won a Rs 12,800 crore contract to build two plants for the Nuclear Power Corporation of India in the latter’s biggest ever tender. The CBI is investigating MEIL for alleged bribery for its purchase of electoral bonds worth Rs 966 crore. 

THE DAILY DIGIT

47 million

The number of fake resumes circulating in the Indian job market, representing 10% of the total Indian workforce (The Economic Times) 

FWIW

C'est la vie: 2024 is do-or-die for the Olympics. Tokyo and Beijing's ghost-town games were duds, with Covid-emptied arenas tanking TV ratings. Can Paris flip the script? They're trying. Organisers are betting on the City of Light's natural pzazz to pull off a spectacle without breaking the bank. The star of the show? The river Seine which will double up as a swimming pool for triathletes and swimmers. A lot is at stake. Nevertheless, Parisians don’t give a fig. They're already grumbling about the chaos and closures, and the looming tourist tsunami is what they’re afraid of. If the Netflix show Emily in Paris taught us anything, it's that nothing ruffles Parisian feathers quite like a flock of tourists, especially loud-talking, chirpy Americans.

🎧 Why AI companies are rushing to adapt chatbots to Indian languages. Also in today’s episode: an abrupt end to Julian Assange’s legal saga. Tune in to Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.

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Dinesh Narayanan and Anup Semwal also contributed to today’s edition.

The Market Signal*

Stocks & Economy: A US Federal Reserve governor Michelle Bowman has said that the central bank could raise interest rates again if inflation remains steady or rises. Bowman, a member of the Fed’s rate-setting committee, said conditions that could fuel a price rise persisted in the economy. 

The Indian economy is going great guns, according to Reserve Bank of India governor Shaktikanta Das. It is on the cusp of a structural shift where its growth trajectory would sustainably move into the 8% orbit, Das said. 

Meanwhile, market regulator Sebi’s same-day settlement cycle experiment called T+0 has failed to take off. A pilot for 25 stocks has seen trades of just Rs 8.7 lakh on the NSE and BSE combined since it was launched in March. 

Asian stocks opened mixed. The GIFT Nifty indicates a flat to positive opening for Indian equities.

WORK

Wanted: Single Women To Make iPhones

Foxconn doesn’t like married women, it seems. A Reuters investigation has found that the iPhone maker systematically avoids recruiting married women at its plants in India. 

The report says the company rejects married women because of “family duties, pregnancy and higher absenteeism”. Some recruiting agents and former Foxconn HR executives also claimed that one reason was that customary jewellery worn by married women could mess with production processes. 

India does not have any rule against such discrimination, but it violates the company’s own as well as Apple’s policies. Both companies’ hiring rules specifically bar discrimination on the basis of marital status, among others. The companies reportedly informally instruct recruiting agents to not hire married women. However, some of them even put out the condition on public ads, unwittingly blowing the lid on the practice. 

Foxconn assembly line jobs are coveted by low-skilled women as it offers them a secure work environment and financial independence.

FMCG

A Desi Bet On Beverages

Lahori, which specialises in ethnic aerated drinks, competes in a cutthroat beverage market dominated by global giants. Offering flavours like jeera and masala soda, the homegrown Lahori leans into nostalgia and regional preferences overlooked by major players. Its differentiation is desi flavour and affordability, with products priced at Rs 10 for 160 ml. It recently got a $15 million investment from Verlinvest to boost production and marketing capabilities. 

Yet, Lahori faces hurdles scaling nationwide, particularly in less familiar markets. The impending entry of giants such as Parle Agro threatens Lahori's market position, since the former has superior distribution and production capacities. Lahori's journey illustrates the opportunities and complexities of carving out a niche in India's diverse beverage landscape. Head to The Core to read the full story. 

ARTIFICIAL INTELLIGENCE

Local Colour For LLMs

If you’re following the trajectory of AI frontrunners such as OpenAI, Microsoft, and Google, you know the next frontier of their ongoing rat race is about the full stack: enterprise and consumer-facing software anchored by custom chips and data centres. This is so resource-intensive that companies are investing in alternative energy and trying to convince the world that the entire exercise is worth trillions of dollars in investments.

Indian AI startups have no such privilege. Instead, they’re betting on adapting existing large language models (LLMs) for Indian languages. Financial Times reports that Silicon Valley-backed Indian companies such as Krutrim and Sarvam AI are developing AI voice assistants given Indians’ penchant for audio messaging over text. This approach, if successful, will be emulated in other markets.

The Signal

We’ve curated multiple editions about AI hallucinations, copyright infringement, and disinformation. Over a year ago, we also wrote about the many issues with introducing AI in India’s legal system. One of those is the lack of database standardisation. And that’s in major languages such as English and Hindi, of which there are a lot more repositories to train LLMs.

AI trained on relatively scant or ‘noisy’ data is more likely to spew garbage. This is a disturbing prospect for the world’s most populous country, one that’s a major market for Google (Android, YouTube) and Meta (social media). For all its prowess in indexing, Google has yet to make Translate foolproof. We shudder to think what inadequately-trained LLMs could bring to the table.

FYI

Back to the garage: Tesla is recalling 11,000 Cybertrucks to sort out issues with windshield wipers and exterior trim. 

Shore-up deal: Volkswagen may invest up to $5 billion in loss-making electric pick-up maker Rivian in a bid to bolster its own software shortcomings. 

Sell one to save one: After selling its 18% stake in Indus Towers for Rs 15,300 crore ($1.8 billion), Vodafone Plc will likely invest Rs 3,000 crore in its Indian venture Vodafone Idea.

New leader: Rahul Gandhi will be the Opposition Leader in the Lok Sabha, the Congress Party announced after a meeting with its alliance partners. 

Duke it out: Kodikunnil Suresh, Congress Party’s member of Parliament from Mavelikkara, Kerala, will face off with Bharatiya Janata Party’s Om Birla for the Lok Sabha Speaker’s post on Wednesday unless the BJP agrees to a deputy speaker from the opposition. 

THE DAILY DIGIT

Rs 11,131.6 crore

Or ~$1.3 billion. Bids received on the first day of the government’s 5G telecom spectrum auction. (Moneycontrol.com) 

FWIW

Weird flyers: Trends, right? Some we get, some we don’t. But this one? Mind-boggling. So guys on TikTok are hyping each other up to ‘rawdog’ flights. Yep, they’ve coined a phrase for an activity as thrilling as staring at the flight map for the entire duration of a flight and doing nothing else. Not even bathroom breaks. The London dude who blew the lid off this quirky pastime of a small group of male flyers claims staring into the map nonstop is his meditation. For other men, it’s a challenge of how long they can resist any form of pleasure. Well, to each his own, but let’s just hope this doesn’t turn into the big boy stereotype: "Real men don’t watch movies on flights."

Everything you wanted to know about NEET’s chequered past. Also in today’s episode: how pet parenting is propping up the animal healthcare industry. Tune in to Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.

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Soumya Gupta and Anup Semwal also contributed to today’s edition.

The Market Signal*

Stocks & Economy: After rising 240% in 2023 and 140% in 2024 so far, shares of artificial intelligence chipmaker Nvidia fell 13% in three days, shedding $430 billion from its market cap and entering the correction territory many predicted it would.

A lack of enough well-paying steady jobs and skyrocketing stock valuations in India have attracted millions of inexperienced investors hoping to make a quick buck and shore up their incomes. A chartered accountant revealed to Moneycontrol.com that one of his college-going clients lost Rs 26 lakh in FY24 trading in futures and options. The third-year engineering student had lost Rs 20 lakh the previous year.  

Meanwhile, Pakistan has emerged as Asia’s best performing stock market in 2024 and cheap valuations will likely help it rise more. The GIFT Nifty hints at a slow start for Indian equities.

LOGISTICS

Fight Or Flight For Delayed Freight Corridor

The Western Dedicated Freight Corridor (WDFC) project that stretches from Dadri in Uttar Pradesh to Jawaharlal Nehru Port Trust (JNPT) in Mumbai remains incomplete, with a 102-kilometre stretch between Vaitarna and JNPT pending. 

Announced in 2005, this grand plan aimed to revolutionise India's logistics sector. Two decades on, it is mired in land acquisition drama.

Although initial land acquisition began in 2008, legal disputes and forest clearances slowed progress. About 3,000 project-affected persons lived on the encroached land between Vaitarna and JNPT. These residents, not legally recognised but firmly entrenched, demanded their dues, turning the relocation into compensation. 

The delay in the project costs ballooned from a modest Rs 2,800 crore to Rs 5,000 crore. Meanwhile, cargo that should be transported via the WDFC is instead being ferried by road transport. Read the full story in The Core.

CONGLOMERATES

Family Matters

Succession battles invoke images of warring brothers. This one is playing out a little differently. Modi family scion Samir Modi is fighting his mother Bina Modi for control of their family empire that includes the tobacco company Godfrey Phillips.

Samir has written to the company’s board of directors, accusing them of helping his mother stage a physical attack on him in May. Bina Modi’s personal security officer had claimed he was the victim, not perpetrator in the incident; Samir allegedly attacked him while forcing his way into a board meeting. A Delhi Court is hearing the matter of who-hit-who. 

Better together: In contrast, its smooth succession for the Godrej family. 

After amicably splitting the family conglomerate, the Godrej siblings and their children are setting up a family council to plan for their respective businesses. Meanwhile, the children of one sibling, Smita Crishna, are setting up family offices for investments. 

SOCIAL MEDIA

No One’s Fave

The world’s hottest social media platform has lost goodwill among anti-China hawks and lawmakers in the US. Now, TikTok is losing favour in a way it can’t afford to: Financial Times (FT) reports that advertisers — who reportedly accounted for a bulk of the app’s $16 billion in sales in 2023 — are chickening out in fear that the US will ban the app in January 2025 if Chinese parent ByteDance doesn’t divest the American business.

Details: Advertisers are introducing contingencies that can shield them from any haemorrhaging if TikTok gets banned in the US. These include “kill clauses” in contracts, which will allow them to avoid financial commitments to the app. Advertisers typically pay platforms in advance to “secure prominent slots or volume discounts”.

The Signal

Ad major GroupM has forecast that Shorts and Reels will be the biggest beneficiaries of migrating advertisers if TikTok gets banned.

That’s great news for their respective parents, Alphabet-owned YouTube and Meta-owned Instagram. TikTok has 170 million users, and it’s unlikely that advertisers and content creators would take a bulk of their business to Twitter/X, which is suffering its own executive chaos and plummeting ad revenue.

Advertisers will be wary of the long-term scenario, though. Social media giants, including Meta, are force-fitting AI chatbots across platforms to juice up engagement and ad revenue. All while said bots have proved that they can do little more than summarise content and offer biased suggestions. The last thing advertisers would want is to swim in choppier waters.

FYI

Win some, lose some: PE firm Prosus wrote off its 9.6% stake in dying edtech firm Byju’s but also disclosed that revenues of food delivery firm Swiggy grew 24% last year; it is Swiggy’s largest shareholder. 

Business calling: After buying a 1% stake from its struggling rival Vodafone-Idea, Airtel is considering buying an additional 3% in Indus Towers to take its total shareholding in the firm to a controlling 52%, CNBC-TV18 reported. 

Scarce: As supplies get tighter, India may cut taxes on wheat imports to tame rising prices; traders are keen to cash in on low-cost Russian wheat supply. 

Market madness: Several Indian firms across sectors are preparing for their markets debut; the latest include insurance firm Niva Bupa that will file for an IPO next week and EV maker Ather Energy which has converted to a public limited company. 

Waiting: Construction of the proposed Noida Airport in the NCR is delayed by four months, shifting its opening date to April next year. 

THE DAILY DIGIT

$31 trillion

The cumulative amount over one million ultra-wealthy individuals (those with an individual net worth of $5 million-plus) worldwide will pass on to their heirs by 2033, according to data firm Altrata. (Quartz)

FWIW

Too much of a good thing: Pets aren't just pets anymore, they're fur babies. When celeb couples split, they pledge on Instagram to co-parent their pets. That's commitment! But our love for these critters goes further: we're now all about helicopter pet-parenting. Outdoor time? Nah, too risky. Diets? Custom-made. And guess what? Pet strollers are now a thing. But hold up — this intense care might not be so pawsome after all. Veterinary experts warn it stifles their natural cat-titude and doggy-style. Result? According to one survey, about 60% of our furry friends are now overweight. 

A newfangled way to prove the authenticity of Alphonso mangoes. Also in today’s episode: Indian film and TV writers push for IP rights. Tune in to Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.

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The Market Signal*

Stocks & Economy: It’s a sea of red today as markets open on negative global cues. Asian indices traded lower in the run up to inflation data from Japan and Australia this week, and after Japan’s top currency official said he’d intervene in the yen market “24 hours a day if necessary”.

The Nasdaq and S&P 500 closed lower on Friday mostly on account of technology stocks. Nvidia is back to being the world’s second-most valued company mere days after overtaking Microsoft to occupy the top spot. Questions are now being raised over its valuation.

The Sensex and Nifty 50 are expected to open lower today in keeping with global cues. Investors are now keeping a close on Union Budget-related announcements after Finance Minister Nirmala Sitharaman chaired a pre-Budget weekend on Saturday. The GIFT Nifty indicates a negative opening.

INTELLECTUAL PROPERTY

Numbered For Provenance

Maharashtra’s Alphonso mangoes are arguably India’s most prized fruit export. So much so that Indians rarely get to eat the best of the harvest. 

Alphonso or hapus from five districts—Ratnagiri, Sindhudurg, Palghar, Thane and Raigad—has the Geographical Indication tag. Those grown in Devgad in Sindhudurg district are top of the heap for their taste and texture. Devgad growers are annoyed that farmers from other regions spike the market with their own pretenders to take advantage of the price difference. These fruits could sometimes cost more than Rs 600 (~$7) apiece.

They have now devised a clever hack to authenticate their purebreds. It’s a unique number on a sticker, half of it printed on the flip side and visible only when peeled off. Buyers can send a photo of the hidden number to a farmers’ cooperative, which will reply with the fruit’s origin info and the grower’s identity.

EDUCATION

Exam Blues On Manic Monday

It’s the first day of the 18th Lok Sabha today. And it is likely to be engulfed by a storm as a resurgent opposition tries to begin with a thump even as the new-yet-old Narendra Modi government digs in its heels to hold ground. 

NEET affair: The undergraduate National Elgibility-cum-Entrance Test (NEET) fiasco claimed its first high-profile scalp when the government sacked National Testing Agency chief Subodh Kumar Singh. The government also notified The Public Examinations (Prevention of Unfair Means) Act, 2024, aimed at dealing with paper leaks and exam fraud. The education ministry is framing rules and regulations under the law. 

An Indian Express investigation has, meanwhile, uncovered that Jharkhand and Bihar-based syndicates, including one called the “solver gang”, likely leaked question papers of the medical entrance exam and coached students. Police have arrested the leader of the gang, Sanjeev Mukhiya, from Nalanda, the home turf of Bihar chief minister Nitish Kumar. 

TECHNOLOGY

Apple AI Play: One Bite At A Time

Apple held talks with Meta to explore incorporating the social media company’s generative artificial intelligence model into its devices, The Wall Street Journal reports. 

The Cupertino company launched Apple Intelligence, an ultra personalised AI tool, earlier this month. Integrated into the iPhone, iPad, and Mac, the generative model helps users polish their communication and augment creativity. However, its model is not yet equipped to handle complex tasks. 

Apple already has a partnership with OpenAI for ChatGPT. It is also in talks with Google, Anthropic, and Perplexity. OpenAI has partnered with both Microsoft and Apple.

The Signal

Apple’s flailing efforts to join hands with even rivals, barely two years after its snooty turn with Apple Store payments, lays bare the crossroads the industry is in. Its App Tracking Transparency feature launched three years ago cost Meta $13 billion in 2022. It took Meta three years but the Mark Zuckerberg-led company appears to be turning around its fortunes with its Large Language Model Llama 3. Its augmented reality-virtual reality smart glasses with Ray-Ban are a sleeper hit. Yet, as the Journal reports, Apple offers unparalleled distribution. While the company appears to be resigned to the fact that it will not be able to catch up with the rest of the industry in time, it is racing to make sure that it's not left completely high and dry. Interestingly, that is a game everyone in the industry is playing—sew up alliances and wait for the breakthrough.

FYI

Getting ahead, are we? Markets regulator Sebi is investigating suspected front-running in Quant Mutual Fund, whose small-cap fund manages more than Rs 20,000 crore and returned 69% in the past one year, Moneycontrol.com reported.

Return policy: Drugmakers Lupin and a US arm of Aurobindo Pharma are recalling an anti-bacterial medicine and a steroid, respectively, from the US market for manufacturing deficiencies.

Olive branch: The Goods and Services Tax Council has waived penal interest and fines on tax demands between FY18 and FY20 so long as the taxpayer coughs up the full amount asked for by the end of FY25. 

Reaching out: The State Bank of India will open 400 branches in FY25 as it seeks to expand advisory and wealth management services. 

Soaring high: The Indian Space Research Organisation has successfully test-landed a Reusable Launch Vehicle, which could become a fixture in future space missions. 

THE DAILY DIGIT

72%

The chance of an asteroid hitting earth, according to NASA's fifth biennial Planetary Defense Interagency Tabletop Exercise held in April. (The Economic Times)

FWIW

Fine men: All ye men in finance, break the bubbly. You are in demand. It began on TikTok (where else?) with the croon “I’m looking for a man in finance. Trust fund. 6’5.” Blue eyes.” Made by 27-year-old Megan Boni with the nome de plume Girl On Couch, the April post has 49 million views and made “Men in Finance” a thing with variations aplenty. It got Boni a Universal deal too. The song has returned the cool quotient to finance pros (or bros). The Girl On Couch may just as well have asked for a taller wolf of Wall Street. 

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Biswajit Dhar

Decline in wheat production over the past two seasons because of rising temperatures has reduced domestic availability

India is facing a third year of falling wheat production.

The culprit? Heat.

Yields of the country’s second most important food staple have declined significantly in the past two years.

In 2022, excessive temperatures in March hit wheat production, lowering output by almost 4 million tonnes below the government’s forecast of 110 million tonnes.

Studies show that the impact of “heat stress” was more evident in key wheat growing states of north India where wheat productivity declined significantly during the 2021-22 rabi or winter planting season (sowing in mid-November and harvesting in April-May). 

In Punjab, for instance, the decline was 13.5 percent compared to the previous year. Scientists have estimated that for every 1 degree Celsius increase in temperature wheat production reduces by 4-5 million tonnes.

Worryingly, the adverse effect of “heat stress” is threatening to reverse the substantial improvements in wheat production India experienced between 2014-15 and 2020-21 when output increased from 86 million tonnes to 110 million tonnes. 

Production target missed

In 2023, the official target for wheat output of 113 million tonnes was again down by almost 3 million tonnes.  This year, the government expects wheat output to be 110 million tonnes again, but the actual level will not be known for several months. 

However, these figures are disputed by the main industry body, the Roller Flour Millers’ Federation of India.

It says wheat output levels were lower than those projected by the government by at least 10-14 percent. This year, the federation expects wheat production to be around 105 million tonnes, 8 percent lower than government projections, although this would be about 3 percent higher than the federation’s estimates of the previous year’s output.

Lending credence to the estimates of the industry was the consistently lower-than-expected level of wheat procurement by the government. 

During the 2022-23 rabi marketing season, procurement by government agencies was 18.7 million tonnes as against the government target of 44.4 million tonnes, a 60 percent shortfall.

The following year, the government set a considerably lower procurement target of 34.2 million tonnes, but actual procurement was 26.1 million tonnes, almost a quarter lower. 

Given the experiences of the past two rabi marketing seasons, the government lowered the wheat procurement target for the current season further to 30-32 million tonnes. However, as in the past two seasons, actual procurement is expected to remain below the target.

Latest estimates indicate that wheat procurement would be marginally higher than that of the previous year.

The decline in production over the past two seasons has reduced domestic availability of wheat, thus jeopardising the government’s targets on two fronts.

First, by lowering publicly held stocks, namely buffer stocks, critical for providing subsidised food grains to the poor as well as for conducting open market operations necessary for keeping domestic wheat prices in check. 

Secondly, lower output has affected the government’s aspirations for transforming India into an agriculture export hub. 

Export ban

These aspirations were fuelled during 2021-22, when India emerged as one of the major exporters of wheat, exporting a record level of over 7.2 million tonnes of the commodity. 

But with wheat output declining in 2022 after increasing continuously for six years, between 2015-16 and 2020-21, the government banned wheat exports in order to “manage the overall food security of the country and control the increasing prices of foodgrains”. 

However, even while imposing the export ban, the government decided  to “continue with deals which are done directly with other governments” resulting in export of more than 4.6 million tonnes during 2022-23.

But with wheat production declining during the year, continued wheat exports made its impact felt on the domestic food reserves.

Buffer stock of wheat maintained by the Food Corporation of India (FCI), had dropped to 29.9 million tonnes on June 1, 2024, almost 4.7 percent lower than the 31.4 million tonnes a year ago. 

The current buffer stock level is at a 16-year low, slightly higher than the previous lowest wheat stock that was at 24.1 million tonnes on June 1, 2008.

Though the government claims that the existing level of buffer stock was adequate for meeting any exigencies, there are indications that it is less certain than it professes.

Imports increase

That supply constraints have become an area of concern from the government stems from the fact that India has begun importing substantial quantities of wheat, the first time since 2017-18. 

Imports began in June 2023 and have increased consistently since. Until April this year, total imports have been almost 115,000 tonnes.

There is no doubt that India would find it difficult to enhance the production of wheat given the significant challenges posed by consistent increase in temperatures in the immediate pre-harvest phase. 

Faced with similar imperatives to ramp up wheat production in the mid-1960s, the then government had adopted the green revolution with strong research support that allowed the realisation of the objective of food self-sufficiency. 

The National Mission for Sustainable Agriculture (NMSA) is expected to play a similar role having been tasked with the responsibility of transforming Indian agriculture into an ecologically sustainable climate resilient production system. 

In addition, National Innovations in Climate Resilient Agriculture aims at “strategic research on adaptation and mitigation, demonstration of technologies on farmers’ fields and creating awareness among farmers and other stakeholders to minimise the climatic change impacts on agriculture”.

However, fiscal support for agricultural research has remained inadequate as increases in budgetary allocations have often not been increased in real terms, which shows a lack of political commitment in this vital area. 

This situation needs to change quickly to prevent a catastrophic decline in wheat production.

Biswajit Dhar is Distinguished Professor, Council for Social Development, New Delhi.

Originally published under Creative Commons by 360info™.

🎧 Indian banks are inflating metrics and cooking the books. Also in today’s edition: Putin’s bonhomie with Kim Jong Un. Tune in to Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.

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Soumya Gupta, Anup Semwal, and Roshni Nair also contributed to this edition.

The Market Signal* 

Stocks & Economy: Asian currencies are having a tough time. The rupee fell to a record low on Thursday as the dollar gained in strength across the board. Softer interest rates in Europe, combined with growth in the US economy, added strength to the greenback. 

The Japanese yen has been sliding too. It lost value for the sixth consecutive day even as speculation rose that the central bank could intervene if it falls any further. The US has, meanwhile, added the yen to the list of currencies it is tracking for manipulation. 

The Chinese yuan, which is a managed currency, recovered after the People’s Bank of China propped it up. It is still at its lowest level in eight months.

Asian equities were mixed in morning trade with Japan’s Nikkei 225 the only green patch on a red board. The GIFT Nifty indicates a flat opening for Indian shares. 

BANKING

Federal Schemes In Fudge-Making Folly

An Article 14 investigation — part one of two — reveals that the Centre’s financial inclusion schemes, including eRupee and the Kisan Credit Card (KCC), are little more than smoke and mirrors. As with the ATM crisis, the rot here is of the Centre’s own making. Government and RBI pressure to showcase digital schemes as success stories pushed managers and employees to commit fraud for metrics’ sake.

Explosive: Canara Bank (CB) and Bank of Baroda staffers were coerced to make a fixed number of eRupee transactions daily. This resulted in eRupee transactions hitting the one million mark on December 27, 2023.

CB, alongside Punjab & Sind Bank, Bank of Maharashtra, and several rural banks also allegedly sanctioned KCC loans to ineligible individuals and forged documents to whitewash non-performing asset numbers. Customers were enrolled in schemes such as the Atal Pension Yojana and Pradhan Mantri Suraksha Bima Yojana without their consent.

ECONOMY

The Have-Nots Have No Hope

Pandemic over, a historic third term for Narendra Modi. Isn’t this India’s time to shine? No. In a poll of independent economists, Reuters found a majority have little (or no) confidence that India’s historically high economic inequality will reduce in the coming years. 

Almost all respondents said unemployment is India’s biggest economic challenge. Besides, India’s official 3.2% unemployment rate is probably incorrect; the Centre for Monitoring Indian Economy says it is likely closer to 7%.

No respite: What about all that free food going to 80 crore households? Mint found that such welfare policies have had little to no impact in most states. The gap between the top and bottom 10% households is getting frighteningly wide in richer states and is lower only in already poorer states like Bihar and Chhattisgarh. 

Reminder: The World Inequality Lab reported we are more unequal today than we were under British rule. 

GEOPOLITICS

Bros In Arms

The year 2024 is likely to be a landmark one for global relationships, as they get remoulded and restructured amid intense superpower rivalry. 

Russian President Vladimir Putin signed a defence agreement with North Korean leader Kim Jong Un during his first visit to that country this week. The two countries have pledged to help one another should they face attacks from a third nation. 

On the second leg of his tour, Putin visited Vietnam and sealed a slew of energy deals, including one to build a nuclear technologies centre. Russia will also supply military equipment to Vietnam. 

The Signal

Russia has stitched up close relations with a bunch of countries inimical to its arch rival, the US. The list includes Iran, which helped build an armed-drones factory in Russia’s Tatarstan region, China, with which it has pledged unlimited friendship, and Kim’s North Korea, also an arms supplier to Moscow. 

But Vietnam is different. It has hosted US President Joe Biden, Chinese President Xi Jinping and now Putin within 10 months. Despite territorial disputes with its neighbour, it is a key connector economy and is building faster connectivity with Chinese industrial centres. Vietnam hosting Putin has not gone down well with Washington, but Hanoi has ignored its concerns. As more countries choose to prioritise national self-interest and cooperate with Russia and China, the West’s ability to financially weaken the two will erode, blunting the sanctions regime and trade shackles.

FYI

Leaky Binders: The question paper for the UGC NET exam held on June 18 had been circulating on Telegram and the ‘dark net’, education minister Dharmendra Pradhan said; a high-level committee will probe the National Testing Agency for this and other competitive exam leaks. 

Freed: A Delhi court granted bail to Delhi chief minister Arvind Kejrwal in the excise policy corruption case. 

Fat profits: Indian pharma firm Biocon is looking for a partner in China to test generic versions of weight-loss drugs Ozempic and Wegovy, Reuters reported. 

🤝: Silicon Valley VC firm General Catalysts has acquired local counterpart Venture Highway to invest $500 million - $1 billion in India. 

Level up: With Rs 18,000 crore in the bag, Vodafone-Idea is strengthening its 4G coverage in Uttar Pradesh and Uttarakhand, among its top priority markets. 

THE DAILY DIGIT

51°C+

The temperature in Mecca this week. Scorching heat in Saudi Arabia has claimed hundreds of lives during Haj season, with 530 Egyptians alone dying during pilgrimage. Heat waves across the Northern Hemisphere have also resulted in Arizona and Serbia forecasting highs of 45.5°C and 40°C, respectively. (Reuters)

FWIW

Date jugglers: Ethiopians are living it up in 2016. No joke. They're truly seven years and eight months behind the rest of the world. Why? Blame it on ancient church shenanigans. Back in 500 CE, the Roman church tweaked its maths, but the Ethiopian Orthodox Church shrugged that off. Besides, unlike the Gregorian calendar, the Ethiopian version is elegantly simple: 12 months of 30 days each, with one extra month accommodating the remaining 5 or 6 days of the year. The sole challenge of having a unique calendar arises for those in urban areas who interact with international businesses. They must simultaneously navigate two different dates daily. While this may seem daunting, Ethiopians consider it a routine aspect of life. 

🎧 Are Meta’s smart glasses all they're cracked up to be? Tune in to Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.

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Roshni Nair, Dinesh Narayanan, and Anup Semwal also contributed to today’s edition.

The Market Signal*

Stocks & Economy: Authorities overseeing the Indian economy may be beginning to worry about the disconnect between stock market exuberance and sluggishness in the real economy. “Options and futures volumes are larger than the nominal GDP of the country. We have discussed this matter with SEBI, and they will address it,” Reserve Bank of India governor Shaktikanta Das said at a media event. India now accounts for over 80% of global derivatives volumes. A couple of months ago, Sebi chair Madhabi Puri Buch had warned of froth in the small cap segment.

High food prices are thwarting the RBI’s efforts to bring down inflation, hobbling its ability to bring down interest rates, which could prod private consumption and capital expenditure.  

Asian investors, meanwhile, did not share their US counterparts’ enthusiasm in early morning trade as most markets opened weak. The GIFT Nifty hints at a flat opening for Indian equities.

WEALTH

Modern Family In Deed

Young global citizens hailing from traditional Indian business families are discovering an invisible leash in their inheritance. 

Designed to protect and manage wealth built over generations, iron-clad family settlement deeds — often decades old — deter new forays and overseas expansion. Several wealthy families are hiring armies of accountants, lawyers and succession specialists to amend and update them to cater to the aspirations of a new generation.

The Economic Times quoted a lawyer as saying that “issues about separation of ownership and management, succession and gender neutrality, the ability for parties to exit the structure and more nuanced dispute-resolution provisions are some of the areas where thinking has evolved”. 

For instance, a few generations ago, women were kept away from business, which is antithetical to modern progressive mores. Similarly, in some communities, marrying outside the community could result in denial of inheritance.

FINANCE

Ghost In The Machine

ATMs ran dry in India during demonetisation. Then came Covid-19, when ATM operators had to shut down machines due to social distancing and fears of contagion over handling bank notes. That left the industry in a crisis, crippling the cash economy in a country that stubbornly holds on to the stuff, the digital payment revolution notwithstanding.

Another crisis is now in the making. And this time, policy is to blame.

The Economic Times reports that banks have appealed to the Centre and RBI about low ATM capacity due to stringent Make in India guidelines and procurement via the government e-marketplace (GeM) portal. The issue is compounded by the fact that banks have to upgrade ATMs in line with norms issued by the RBI in 2023.

What now?: Lenders want the government to accommodate independent “requests for proposals” once all guidelines are met. We’ll see how that goes.

POLICY

Advertisers Rush To Declare That They… Advertise 

As of yesterday, brands across India had registered nearly 9,000 ads along with a certificate solemnly swearing they carried no false or illegal claims. Why? Because the Supreme Court said so. 

While hearing a defamation lawsuit against Baba Ramdev and Patanjali Ayurved this May, the Court ruled (pdf) all online and offline advertisements must be registered with a self-declaration certificate starting June 18. This, in accordance with a 1994 cable TV ads law. That means every kind of ad – TV spot, Instagram post, sponsored Google search result, and local newspaper classified – must first be registered with the Ministry of Information & Broadcasting. 

This is a mammoth exercise. Remember, India’s ad industry is worth over Rs 1 lakh crore. Predictably, advertisers struggled as the certification portal crashed frequently while they rushed to register their ads for everything from cat litter, annual general meetings notices, obituaries, web-series trailers, and hundreds of dummy ad copies. 

The Signal 

Patanjali landed up in the Supreme Court for claiming to invent a miracle herbal cure to covid and deriding the Indian Medical Association. Since then, the Court has been cracking down on lying advertisers. Already, it has said celebrities are responsible for the claims made by the brands they endorse. 

But this new directive takes compliance for advertisers to an impossible standard. Forget accountability, this government portal may just buckle under the weight of certificates for the millions of ads India produces. Who can wade through this veritable ocean of ads to look for violators? 

FYI

Can’t beat the heat: The RBI has warned that the disinflationary process will be affected by an “exceptionally” hot season stunting summer crop harvests. Delhi’s ongoing water crisis may also get worse, with Central Ground Water Board data revealing that the national capital has already extracted 99.1% of available groundwater.

Support, on condition: The Centre has approved the Minimum Support Price (MSP) for 14 Kharif crops, including various millets, ahead of Assembly polls in states such as Maharashtra and Haryana.

About that data void: India is set to change the frequency of its urban labour force survey from quarterly to monthly, and that of rural data from annual to quarterly, by the end of 2024.

Making bank: OpenAI has more than doubled its annualised revenue from $1.6 billion to $3.4 billion in the last six months, The Information reports.

Rogue support: North Korea’s supreme leader Kim Jong Un has pledged “unconditional support” to Russian President Vladimir Putin over the war on Ukraine.

THE DAILY DIGIT

4,300

The number of millionaires expected to quit India this year, according to Henley Private Wealth Migration Report 2024. (The Economic Times) 

FWIW

A palace of illusions: Beach view ✅. Italian marbles and tiles ✅. A spa in the bathroom ✅. Sounds like a dream hotel, right? Yeah, keep dreaming, ‘cos it's actually a government building in Visakhapatnam built with public funds. The sarkari hilltop palace was unveiled last Sunday, and has since sparked outrage over its ₹450 crore price tag. Ruling party TDP alleges the previous CM YS Jagan Mohan Reddy constructed this opulent palace for his use. Reddy's party shot back, claiming it was built to host visiting dignitaries such as the president and governors. Either way, it’s one outrageously expensive guest house.

🎧 Unpacking the NEET controversy. Also in today’s episode: Air India takes matters into its own hands. Tune in to Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.

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Dinesh Narayanan and Anup Semwal also contributed to today’s edition.

The Market Signal*

Stocks & Economy: The crown of the most valuable company in the world passed on to Nvidia, the newest sensation in the tech universe. The artificial intelligence chipmaker’s shares rose 3.5%, boosting its market capitalisation to $3.34 trillion, which was more than that of the previous toppers Microsoft and Apple, the only others in the three-trillion club. 

Bloomberg reports that $2 trillion of Nvidia’s market cap was added this year and the company's value has risen 591,078% since it first sold shares to the public in 1999.  

Asian shares rose in early trade, taking cues from US counterparts, which continued their bull run despite chances of an early interest rate cut fading. Indian equities too are setting new record highs. Vodafone Plc is expected to sell an ~10% stake in Indus Towers, raking in an estimated $1.1 billion. The GIFT Nifty indicates a flat opening.

AVIATION

Clearing Runway For Pilot Pipeline

While more and more Indians are hopping on planes and business is growing, Indian airlines are still as anxious as ever over pilot shortages. So much so that one of them has now decided to take matters into its own hands. Tata-owned Air India is setting up a new flying school in Maharashtra’s Amravati. 

What’s the endgame?: The school will secure the airline first dibs on 180 fresh pilots annually. At present, about 400-500 commercial pilots graduate from India’s flight training institutes, while demand is for 1,000 new pilots every year. 

Besides, existing flying schools have got themselves a bad name. Marred by frequent crashes, the DGCA had last year suspended operations at Redbird Flight Training Academy, one of India’s largest flight schools. 

Meanwhile: A whistleblower has alleged that Boeing may have installed faulty parts on new 737 Max planes.

CORPORATE

Premium Property For Sale

Life Insurance Corporation of India (LIC), India’s third-largest landlord after the defence services and Railways, is planning to put some of its prime real estate on the block. 

The insurer, which went public about two years ago, hopes to raise about $7 billion, Mint reports. The company has properties in the heart of India’s major metros and several other cities. The report quoted officials as saying that it would start with Mumbai, where LIC is headquartered in the semi-circular Yogakshema building off the bay.

Valuing LIC’s massive real estate portfolio was one of the biggest obstacles for its initial public offer in 2022. Sales realisations could now be paid out as dividends, which will benefit the majority shareholder, the Indian government. In fact, the centre has a comprehensive plan to monetise the real estate assets of its various entities, including defence and railway land.

QUICK COMMERCE

Groceries Out, Home Appliances In

To clarify, staples aren’t getting the boot, but they’ve become less of a priority for Zepto, Blinkit, Swiggy Instamart, and BigBasket’s BBNow. According to The Economic Times, quick delivery platforms may offer smartphones and white goods by Diwali this year. Flipkart’s blow-hot, blow-cold relationship with quick commerce may also change. Mint reports that it will launch rapid delivery of electronics, appliances, and staples in metros “within weeks”.

Ticket (size) please: Never mind the turnaround in Blinkit’s financials, quick commerce continues to be a high burn model. Which is why the apps offer a lot more than staples now (see: smartwatches, Bluetooth accessories, kitchen appliances, water purifiers, fans, gaming consoles, etc.), and continue to eye other avenues for increasing average order value and stickiness.

The Signal

There are only so many washing machines and refrigerators you can fit in a hub, leave alone a dark store. For this reason, quick commerce apps will stock limited ranges of “top-selling models”.

There’s also the question of how these platforms will replicate the buying experience offered by electronics retail chains (Croma, Vijay Sales, etc.) and e-commerce platforms (Flipkart, Amazon). This includes interest-free EMIs, exchange offers, free installations, and extended warranties. E-commerce majors have cracked that especially with smartphones and laptops.

Flipkart and BigBasket — which is tying up with fellow Tata Group brand Croma to source electronics — have advantages in this context that others don’t. That said, there’s a use case for quick buying a smartphone if you lose an existing device. We’ve all been there.

FYI

Swelling coffers: Direct tax collections this fiscal year up to June 17 rose 21% to Rs 4.62 lakh crore (~$55 billion). 

Gone bust: US electric car maker Fisker, founded by vehicle designer Henrik Fisker, has filed for bankruptcy. 

Annihilation assured: China now has 500 nuclear warheads, three times more than India’s 172 warheads, according to the Stockholm International Peace Research Institute. That’s no match to Russia’s 4,380 and the US’s 3,708 bombs, though.

Besties’ meet: Russian President Vladimir Putin is on his first visit to North Korea where the two countries are expected to sign a strategic agreement.

Welcome to America: In an election-year move to counter rival Donald Trump’s anti-immigration stance, President Joe Biden has unveiled a plan to naturalise illegal immigrants married to US citizens.

THE DAILY DIGIT

2,74,580

The number of vacant posts in the Indian Railways as of June 2023. Of these, 1,77,924 are in the safety category. The numbers were revealed in response to an RTI query by Madhya Pradesh-based activist Chandra Shekhar Gaur. (The Hindu)

FWIW

Don't suppress that yawn: How to deal with boredom at work? A new study suggests keeping your head down and powering through boring tasks might not be the key. If you're bored with one thing, you'll likely get distracted during meaningful work as well, killing productivity. The solution? The lead researcher suggests it helps to alternate between dull and exciting tasks, so you don't end up draining energy on boring stuff nonstop. What say, shall we all skip morning emails hereon?

Programming note: We are on leave today on account of Eid ul-Adha. There will be no editions of The Signal newsletter and The Signal Daily podcast on Tuesday, June 18.

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🎧 How does the Indian summer impact electric vehicles? Also today: China's formidable solar energy industry is facing the twin challenges of prices crashing at home and trade restrictions abroad. Tune in to Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.

The Market Signal*

Stocks & Economy: Political turbulence in Europe is making global investors jittery. French President Emmanuel Macron calling for snap elections has thrown his country’s political parties in disarray. They are hastening to cobble together coalitions even as they bicker about agendas should they come to power. 

Observers are forecasting far-right ascendancy in France even as they expect the Tories to be routed in neighbouring UK which will go to the polls on July 4. 

US markets are calm and that, The Wall Street Journal reports, is making investors nervous. The volatility index, also known as the fear gauge, has dropped to a five-year low and they know that it is unlikely to stay subdued for long. What worries them is the uncertainty of what comes next. Asian markets were awash in red in morning trade. Indian markets are closed for Eid ul-Adha.

GEOPOLITICS

A Thawing Of The Ice

The camaraderie between Indian PM Narendra Modi and Italian counterpart Giorgia Meloni is grabbing headlines in the Indian media. But there’s a juicier story about Modi trying to rebuild bridges with US president Joe Biden and Canadian PM Justin Trudeau at the just-concluded G7 summit in Italy.

Modi used his prime placement in the G7 ‘family photo’ to strike conversations with Biden and Trudeau at a time when Washington and Ottawa have accused India of trying to assassinate dissidents on their soil. India is now cooperating more with both countries about the murder plots, which may have given Modi an opening.

A more consequential stabilising of relations is taking place between China and Australia. Premier Li Qiang became the first Chinese leader to visit Australia since 2017 — a significant development given the otherwise hostile bilateral relations, Indo-Pacific tensions, and Australia being a close ally of the US.

PODCAST

Tune in every Monday to Friday as financial journalist and host Govindraj Ethiraj gives you the most important take on the latest in business and economy.

In today’s episode, he speaks about Wall Street’s nerves, the Hyundai IPO, likely the largest in India, and the global shipping crisis.

CORPORATE

The Pretence Is Over

OpenAI’s governance model of the nonprofit parent overseeing the for-profit business won’t stick if CEO Sam Altman has his way. The Information reports that he’s in talks with shareholders to possibly turn OpenAI into a for-profit benefit corporation that could finally give him equity in the company that once ousted him for not being “consistently candid”. Altman was reinstated as OpenAI’s chief with help from friends such as partner-investor Microsoft and backer Khosla Ventures.

Why this matters: The primary responsibility of OpenAI’s nonprofit board is to prioritise the company’s mission of “AI for the benefit of humanity”. But investors like Microsoft have pushed for a for-profit model that could give them board seats and quicker returns on investments. Restructuring will remove profit caps for shareholders.

Tangent: OpenAI still claims to work for the benefit of humanity, but according to Financial Times, it’s hiring more lobbyists to influence AI regulation worldwide.

STRATEGY

One Man’s Trash, Another Man’s Treasure

Word on the street is that One97 Communications, the parent company of Paytm, is in advanced talks with Zomato to sell its movies and ticketing businesses. While Bloomberg reports that there are “other suitors” for Paytm Movies and Paytm Insider, The Economic Times (ET) reports that Movies and Insider will be merged into one vertical, which could be valued at around Rs 1,500 crore. If the deal goes through, it will be Zomato’s largest acquisition after Blinkit (then Grofers), which was snapped up for Rs 4,447 crore.

Movies and Insider compete with segment leader BookMyShow, which is closing a funding round that values it at ~Rs 7,500 crore. Paytm doesn’t disclose standalone numbers for these businesses, though events and ticketing fall under ‘marketing services’. That vertical reported revenue of Rs 1,734 crore in FY24. Zomato began sharing numbers from its “going out” vertical — which includes food fest Zomaland — late last year. It reported Rs 73 crore in revenue for the October-December 2023 quarter.

The Signal

According to the ET report, One97’s decision to sell the businesses comes after the board urged chief Vijay Shekhar Sharma to fix what’s broken: financial services and payments, both of which are in the doldrums after the RBI’s ban on Paytm Payments Bank.

While Paytm focuses on its core businesses, Zomato’s Deepinder Goyal is a step closer to his stated diversification plan for a “fourth large business”. After all, movies and events are an obvious choice to capture additional consumer demand for food and/or staples.

FYI

Bundle of energy: India is in talks with Equinor to secure long-term liquified natural gas deals and have the Norwegian energy giant participate in exploration and production of local petroleum reserves, Mint reports.

Green bet: Essar Group is planning a four-year investment of Rs 30,000 crore to set up a green hydrogen plant in Gujarat and also considering a foray into mining critical minerals for renewable energy.

Delay upon delay: Boeing has informed its suppliers about a three-month delay in 737 output goals, a decision that will affect airlines already waiting to expand fleets, Reuters reports.

Nature’s fury: Authorities in California have evacuated at least 1,200 people as a wildfire north of Los Angeles continues to spread over thousands of acres.

THE DAILY DIGIT

~10,000

The number of staffers laid off by Indian startups during January-June 2024, per data from Longhouse Consulting. Twenty-one thousand startup employees were fired in the first half of 2023. (The Economic Times)

FWIW

They ain’t playing: The world’s biggest sporting spectacle is getting toned down. Organisers of this year’s Paris Olympics, as well as future hosts Los Angeles and Brisbane, have vowed to make the Games more sustainable. That means everything from recyclable cups to constructing fewer new venues. Paris has pledged to cut emissions in half compared to the 2012 London and 2016 Rio de Janeiro games, and it’s trying to achieve that goal by shunning diesel generators and serving athletes less meat. The athletes’ village, which has natural ventilation instead of air conditioning, will also be converted into a social housing facility after the event. Critics feel such measures are a drop in the ocean because athletes and spectators fly thousands of air miles anyway for the Olympics. The only thing that will make a radical difference, they feel, is to ‘decentralise’ the Games and organise “sub-events” across the globe. We stan this idea tbh.

Also check out our story from The Core edition of April 10 about a revolutionary waste management technology, which converts garbage mountains into charcoal.

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Veena Sahajwalla

Microfactories, an innovative approach to extracting value from waste materials, point the way to sustainable production and consumption.

At a waste depot in Shoalhaven, NSW, 200 km south of Sydney, old mattresses, fabric and dirty glass left over from household recycling are being transformed into something completely different: Green Ceramics, a versatile commercial product. 

These high-performance, nontoxic hybrids can be used for a variety of architectural and decorative applications, including furniture and ceramic tiles. The materials that go into them are difficult to recycle using traditional methods, which means they usually end up in landfills. But now they have a new purpose. 

The Shoalhaven Green Ceramics Microfactorie, which went online in October last year, is among the first of its kind. It was developed through a partnership between the local city council, Kandui Technologies and UNSW’s Sustainable Materials and Technology (SMaRT) Centre, a research centre aimed at translating new recycling science into real-world environmental and economic benefits. The partnership has been supported by UNSW, EPA Trust, OCSE, and recently the Trailblazer for Recycling and Clean Energy.

This Microfactorie can process around 450 tonnes of glass, mattresses and other textiles per year, but it is part of a much bigger concept – the movement towards a ‘circular economy’, which would get rid of the ‘throw-away’, consumer economy that relies on continuous extraction and use of raw materials and production of huge amounts of waste. 

Instead, production and consumption are aimed at minimising resource extraction, cutting down waste and lowering carbon emissions. Sustainability in every step in the cycle is the goal. 

The circular economy idea is growing in parallel with environmental movements and awareness of climate change. Processes around extracting raw materials, product manufacturing and waste disposal are carbon intensive and rely on finite resources.

Along the way, as conservation and sustainability have evolved into mainstream concerns, people and communities have adapted to different ways of dealing with waste. Recycling has become a routine for most people – many local government councils in Australia have programmes for recycling paper, plastic and glass, and recycling clothing, electronics and other materials has become more commonplace and more accessible. 

The ‘reduce, reuse, recycle’ mantra is familiar to everyone, but the circular economy is about more than that – one key element that makes it different from business-as-usual is ‘reform’. 

Reforming is about reimagining, redesigning and remanufacturing – not taking old bottles and turning them into new ones, but taking old plastics and turning them into new plastic filaments to be used in a 3-D printer to make all kinds of new objects, or taking old bottles and mixing them with old textiles and turning them into new Green Ceramics. 

With technology, the equation is more complex. The vast amounts of e-waste produced by obsolete, outworn and discarded technology present huge challenges. Many of the devices that people depend on every day contain rare earth metals that are costly and in short supply. They frequently contain a variety of other valuable metals. And they are constructed with high-grade polymers. 

Given the way technology products – mobile phones, computer hard drives, circuit boards, battery packs and so many others – are designed, constructed, and integrated, taking them apart can be an extremely difficult puzzle. So, they often end up in landfills, creating environmental hazards, or they are shipped off to places where poverty and desperation create economies of extraction, pulling apart the remnants of technology to salvage any valuable materials and discarding the rest. 

But new methods developed by the SMaRT Centre have created ways to deal with these challenges. The Microfactorie concept is central to the process – using the right tools, techniques and mechanisms to disassemble complex e-waste and recover the materials that went into it. 

Microfactories are designed to be either co-located to the waste source, such as a landfill, or located with an end-user, such as a manufacturer, to enable the substitution of virgin resources with waste materials. 

Their adaptability – the ability to perform the right tasks for the given inputs, and to create usable outputs based on need – creates economies of purpose. Each of the modules may look very different in each region, creating products and tackling waste in a way that is relevant and useful to the communities and industries they are a part of. 

Through successful embodiments of the circular economy, everyone will begin to view waste as a valuable resource. But it will take everyone in the value chain collaborating to redesign and remanufacture products to reduce the pressures on our planet and create more sustainable communities. 

A few years ago, no one would have imagined that a partnership between the local council, a university research centre and an industrial enterprise could lay the foundation for remanufacturing in the region with products made from waste glass and textiles being installed in new commercial and residential developments across the country. 

What is happening on a landfill site in Shoalhaven is proof that with imagination and commitment, the circular economy is within reach. 

Professor Veena Sahajwalla is Founding Director the UNSW Sustainable Materials Research and Technology (SMaRT) Centre and an Australian Research Council Laureate. She is an internationally recognised materials scientist, engineer and inventor. In 2018, Veena launched the world's first e-waste MICROfactorie and in 2019 she launched her plastics and Green Ceramics MICROfactories. She was named the 2022 NSW Australian of the Year in recognition of her work.

Anirban Ghose, head of Microfactories at the Smart Centre at UNSW, contributed to reporting.

Originally published under Creative Commons by 360info™.

🎧 Everything that’s wrong with the Agnipath scheme. Also in today’s episode: India and China’s trade situationship. Tune in to Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.

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Roshni Nair, Dinesh Narayanan, and Anup Semwal also contributed to today’s edition.

The Market Signal*

Stocks & Economy: Technology stocks continue to fuel sharp rallies, helping major US indices close at record highs for the fourth day in a row. Cooling inflation and better visibility on the interest rate cycle have pushed investors to take wilder bets. 

With the Reserve Bank rate action out of the way, investors in Indian shares are awaiting the new government’s fiscal policy, to be revealed in what will be finance minister Nirmala Sitharaman’s seventh consecutive Budget. While the direction was already indicated in the interim Budget in February, specific allocations were not spelt out. 

Asian stocks were largely in the red as traders awaited Bank of Japan’s move on interest rates. The central bank is expected to keep rates steady and low while beginning to withdraw monetary stimulus. 

The GIFT Nifty hints at a flat opening for Indian shares.

CORPORATE

Adani Begins A Cement Raid 

The Adani Group is taking a leaf out of roll-up commerce, it seems. It has purchased (pdf) Hyderabad-based Penna Cement for Rs 10,422 crore (~$1.2 billion). The Economic Times reports that it has three more cement producers in its crosshairs. 

Targets: Gujarat’s Saurashtra Cement and Vadraj Cement, and Jaiprakash Associates’ Madhya Pradesh units. The group has reportedly earmarked $3 billion to splurge on them. 

In 2022, Adani spent $10.5 billion to buy Ambuja Cement and ACC, marking its entry into the industry as India embarked on a massive infrastructure expansion. It has a 14% share of the market with a capacity of 79 million tonnes per annum (mtpa), behind only industry leader AV Birla Group’s UltraTech, which has a capacity of 146 mtpa. Adani wants to raise the share to 20% and capacity to 140 mtpa by 2028.

CONSULTING

The More Things Change, The More They Stay The Same

Gauging from his interview with The Wall Street Journal, Bob Sternfels would have you believe that McKinsey is undergoing a radical overhaul. The chief of the consulting major is overseeing a leadership shake-up, change in fee structures, a “partnership modernization task force”, and “communities” dedicated to sectors such as infrastructure. One of the changes includes separating the firm’s senior partners from the board, effective July 1.

But: Like accounting and consulting rival PwC — which is grappling with its own internal machinations — McKinsey has to fight several blazes, such as the US Justice Department’s criminal probe into the role it played in the opioid crisis. Washington also isn’t pleased with its consulting for state-owned enterprises in China and Saudi Arabia. To which Sternfels hints that US regulators will come around to a resolution, and that the Chinese companies it advises are vastly private sector or multinational corporations. ¯\_(ツ)_/¯

POLICY

Indian Army’s Trial By Fire

Recruit temporary soldiers to a professional army, retain only a quarter, abandon the rest with weapons training and little employment.

What could go wrong? 

In just two years, India’s Agnipath scheme is unravelling. The Indian Express reports the armed forces are considering retaining more Agniveers every year and increasing their training period. Instead of the current 25%, up to 75% of all temp recruits and specialist soldiers may get permanent jobs. 

Discontent: Why these changes? In internal surveys, the armed forces found that instead of learning to collaborate, Agniveers are competing with each other to get a permanent job. Armed forces can’t survive in the absence of trust. Besides, the forces want to extend Agniveers’ tenure to seven years, making them eligible for gratuity and ex-servicemen status. 

People wanted: Since recruitment was suspended during the pandemic, the armed forces are facing a severe manpower shortage. Their intake of soldiers under Agnipath is far below what they need, prompting panic and resentment among top-ranked officers and crucial army units such as the infantry and the Nepal-based Gorkha regiment. 

The Signal 

The benefits of the Agnipath scheme are clear — less permanent recruitment helps the government slash its wages and pensions budget, the biggest expenditure for the Defence Ministry. But this pursuit of budget cuts is decimating India’s once-venerated armed forces which desperately need more recruits even as young Indians desperately need good quality jobs. 

But will the government allow changes to its pet scheme? It may not be easy for top officers to even argue their point from a position of strength. Consider this: at PM Modi’s swearing-in last week, India’s current chief of defence and chief of army staff were purportedly seated much behind Mukesh Ambani and Shah Rukh Khan. 

FYI

Old team back in PMO: The government has reappointed Ajit Doval as the National Security Adviser and PK Mishra as Principal Secretary to the Prime Minister. Amit Khare and Tarun Kapoor also return as the PM’s advisers.

Pay in kind: Vodafone Idea will offer shares worth Rs 2,458 crore to vendors Nokia and Ericsson in lieu of pending payments.

Fat pay: Tesla shareholders have approved chief Elon Musk’s $56 billion remuneration as well as moving the company’s base to Texas.

Parity please: Apple has been slapped with a class action lawsuit for systematically underpaying over 12,000 women employees in its engineering, AppleCare, and marketing divisions.

Money in the bank: Indian beauty startup Renee Cosmetics has raised Rs 100 crore at a valuation of Rs 1,200-1,400 crore in a Series B round led by Edelweiss Group and Evolvence India.

THE DAILY DIGIT

500

The number of driverless taxis Chinese tech firm Baidu is testing in the city of Wuhan. China is testing more autonomous cars than any other country in the world. (The New York Times) 

FWIW

Big Brother is counting…: how many minutes you’ve been holed up inside the loo. No kidding. The restrooms in China’s Yungang Buddhist Grottoes are now equipped with shiny new toilet timers. When no one’s inside, the LED screen displays “empty” in green; otherwise, it flashes to those in line how many minutes and seconds you’ve been holding the fort. What’s the grand motivation? The Yungang caves are one of China's busiest tourist sites, but the authorities say there are no time limits and no question of kicking users out of toilet cubicles. Maybe then it's a ploy for shaming those who kill time scrolling videos inside the toilets. Workplace managers, don’t get any ideas, please. 

🎧 A reality check for India’s lithium dreams. Also in today’s episode: how new ventures that provide elder care services in India are opening up. Tune in to Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.

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Soumya Gupta, Roshni Nair, and Anup Semwal also contributed to this edition.

The Market Signal* 

Stocks & Economy: Despite US consumer price inflation slowing to a pace not seen in three years and counterparts in Europe and Canada taking the global lead in cutting interest rates, the Federal Reserve is reluctant to bring down its benchmark rates. 

Fed chief Jerome Powell indicated that confidence that prices would continue to soften was still not high enough to reverse rates. The central bank now expects one cut in 2024 and four in 2025.  

Retail inflation in India softened too, dropping to a 12-month low of 4.75% in May, although food inflation remained at the same level as April. 

Meanwhile, industrial output fell to 5% in April, which was the lowest in three months. It was 5.4% in March. 

Asian equities were upbeat in early trade, taking their cue from US shares. The GIFT Nifty indicates a flat or positive opening for Indian equities. 

BUSINESS OF SPORT

Can Cricket Bowl Americans Over?

The US-India face-off at the 2024 Men’s T20 World Cup in New York was as much a sports event as a business plan. 

The US hosting the tournament and the game’s inclusion in the 2028 Los Angeles Olympics are significant milestones. Cricket’s initial addressable US audience would roughly be ~5-10 million (primarily those of South Asian descent). Tiny for a country of 335 million, but it matters.

At the heart of that story is a one-year-old T20 league, the Major League Cricket (MLC), backed by prominent Indian-Americans such as Microsoft CEO Satya Nadella and Adobe’s Shantanu Narayen, alongside top IPL franchises. The MLC saw 70% of its matches sold out, 80% of seats filled, 100% of hospitality sold, and ticket sales adding up to a third of its first-year revenue. Broadcast and sponsorship contributed 30% each. Head to The Core to know how MLC is conquering the US.

BIG FOUR

Striking When The Iron Is Hot

Word is that Beijing wants to levy a record fine of approximately $138 million on accounting and consulting services giant PwC for its audit of Evergrande, the Chinese property developer accused of committing financial fraud. The Big Four firm is also facing regulatory scrutiny from countries such as Australia.

Sensing trouble for PwC’s China unit, PwC’s India chief is closing in on a potential opportunity, according to Financial Times. Sanjeev Krishan is reportedly lobbying for a spot in the network leadership team. It’s a big deal because the executive committee only consists of leaders from the US, EU (rotating chair), UK, and Asia Pacific/China. The justification is that India was the fastest-growing of PwC’s 21 biggest businesses in 2023.

But: Krishan is up against a wall. India’s growth trajectory doesn’t make up for the fact that PwC’s business in the country is still small compared to that in other regions.

INDIA-CHINA RELATIONS

It’s Complicated

Imported Chinese machinery and plants are lying quiet in many factories for lack of knowledgeable technicians to run them. Industry has now persuaded at least two ministries to intervene with the external affairs ministry to fast-track visas to Chinese technicians to restart work. 

The ministries are said to be pressing for limited entry of Chinese experts. Nearly 60% of the $100 billion Chinese imports comprise engineering and electronic items.

Meanwhile, the government is said to be insisting on majority Indian ownership of any joint venture with Chinese companies. Several projects were reportedly stuck due to a lack of clarity but the MG Motor-JSW venture for electric vehicles, in which Indian entities, including the JSW Group, employees, financiers and dealers together have 51% ownership, could become the template for them as well. 

The Signal

Restricting trade, capital and people movement in a globalised world is often counterproductive. After the Galwan border clashes in 2020 between the armies of the two neighbours, India banned Chinese apps, and imposed curbs on personnel and imports, including capital inflows. While Chinese plants and machinery help reduce capital costs, skilled technicians help train Indian workers. Curbing movement of both harms local industry as developing domestic expertise takes time. It not only affects Indian competitiveness, but also forces more imports of finished goods. For instance, Indian drugmakers still heavily depend on active pharmaceutical ingredients made in China.

FYI

RIP: Two Indian nationals, recruited as helpers to the Russian Army, recently died fighting in the Ukraine war, India’s foreign ministry revealed. Separately, at least 40 Indians died in a building fire in Kuwait. 

Got the munchies: Snacks and namkeen maker Haldiram’s is considering a public issue as talks to sell a stake to PE investors fell through, Bloomberg reported. 

🌞safe: 50,000 women received insurance payouts as the ongoing heatwave in north and west India robbed them of work days; the scheme is run by self-employed women’s group SEWA. 

Cough up: A telecom operators’ body asked the new India government to introduce a fair share charge on OTT services such as messaging and streaming. 

No pilgrims: Airline operator Spicejet shut down direct flights from Hyderabad to Ayodhya in just two months, citing low demand. 

THE DAILY DIGIT

86

The percentage of Indian employees who say they are either struggling or suffering, according to the Gallup 2024 State of the Global Workplace report. Thirty-five percent of staffers surveyed said they felt angry every day, while just 14% said they thrive at the workplace. (The Economic Times)

FWIW

1,99,99,900%: That’s the profit percentage of one highly distinguished jeweller in Jaipur. Gaurav Soni reportedly sold several pieces of fake jewellery, worth no more than ₹300, for a staggering ₹6 crore. His victim? An American woman named Cherish, who only discovered the truth when she showcased her "treasures" at an exhibition in the US. Now, Jaipur police are hot on the trail of this cunning jeweller. Netflix, crime doc when?

🎧 Apple is back with an AI bang. Also in today’s episode: Japan’s newest bid address its tanking fertility rate. Tune in to Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.

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The Market Signal*

Stocks & Economy: It is not often that two events coincide to give sleepless nights to investors. But that is happening today as they await US retail inflation data as well as the Federal Reserve’s latest “dot plot”, a graphic representation of the monetary policymakers’ long-term rate expectations. 

Bloomberg reports that traders across Asia have set early-morning alarms to make sure they do not miss any quakes. A US rate decision will also impact the Indian rupee, HDFC Bank principal economist, Sakshi Gupta, told the news wire. 

US equity indices rose undeterred, setting new highs as tech stocks led by Apple soared. The S&P 500 technology index climbed 1.7% to a record close. The Asian counterparts, however, were largely languishing in the red in early trade, Shanghai being the sole exception. The GIFT Nifty hints at a muted start for Indian equities.

ECONOMY

The Ball Is In The Boardroom

India Inc. may be poised similar to how it was in 2004 when the Manmohan Singh government took office. Broking firm Motilal Oswal says corporate profit to GDP ratio for the Nifty-500 companies rose in FY24 to 4.8%, a 15-year high. 

The ratio for all listed and unlisted firms had slipped from 7.9% in FY08 to 1.9% in 2020 before reviving. Nifty-500 companies’ profits surged 30% in FY24, the same rate at which they grew in 2003-2008.

DK Joshi, chief economist at rating agency Crisil, estimates that 53% of India’s expected average annual GDP growth of 6.7% in this decade will come from capital because investment is a key driver. Efficiency will contribute 30% and labour another 17%. So will India Inc. begin to spend and create jobs? That really is the question. Head to The Core for more.

Not So Neat 

The sanctity of the test for those aspiring to be doctors was compromised, the Supreme Court has said. Without stopping counselling for qualified candidates, it has sought answers from the National Testing Agency, responsible for the NEET-UG 2024 exams for entry into the country’s medical colleges. 

What: Question papers of the exams held on May 5 were allegedly leaked beforehand. An improbable 67 candidates scored a perfect 720, the maximum. 

Alakh Pandey, founder of Physics Wallah, has alleged that over 1,500 students got 70 to 80 extra marks, ostensibly to compensate for an erroneous entry in one of the text books. 

Flashback: The case reminds one of the mess of 2013 when NEET was first introduced and met with vehement protests from states and private institutions. Long-running disputes in the Supreme Court then led to its cancellation, putting the academic progress of thousands of students in jeopardy.

TECHNOLOGY

Getting It Right Vs. Getting There First

Wall Street seems undecided about Apple’s AI announcements at its recently-concluded Worldwide Developers Conference (WWDC). Its shares fell by 2% after the event — apparently the worst drop since WWDC launched in 2010 — and those of its suppliers fell too. But its stock closed on a record high on Tuesday.

The unveiling of “Apple Intelligence” and announcements such as free ChatGPT integration with voice assistant Siri, customisable home screens (finally), text scheduling, and the international launch of augmented reality headset Vision Pro failed to enthuse investors. That Apple may integrate other AI models such as Google’s Gemini into its devices someday isn’t a big deal. For them, AI features such as call transcribing, image generation, equation solving, and email sorting and composing are already offered by the likes of Microsoft.

But Apple has an ace, contingent on sound execution of course: Private Cloud Compute (PCC).

The Signal

Analysts aren’t gung-ho about AI boosting stagnant iPhone sales. Then again, trigger-happy analysts rarely see the long-term picture.

Apple’s privacy pledge for AI matters because privacy is one of the lowest priorities for AI frontrunners. Complex tasks that can’t be processed on-device will be done so on PCC, specifically designed for secure processing on custom Apple silicon. The Information had reported on Apple’s ‘black box’ approach to AI processing, where data would be inaccessible even to employees.

Cutesy AI is just a start. If Apple builds features that are truly indispensable, with processing that stands out from others whose practices are opaque, it will have a win on its hands.

FYI

New head of state: Four-time BJP MLA Mohan Charan Manjhi has been appointed as the new Chief Minister of Odisha. Pravati Parida and Kanak Vardhan Singh Deo will serve as Deputy Chief Ministers.

Green light: Indian EV major Ola Electric has secured Sebi’s approval for a Rs 5,500 crore IPO, The Economic Times reports. State Bank of India’s board has approved the lender raising up to $3 billion (Rs 25,076 crore) via debt in the current financial year.

No respite: The India Meteorological Department has issued a heatwave warning for Delhi, where temperatures could reach 47°C until June 14. The national capital also suffered widespread power outages on Tuesday due to a fire in the Mandola substation, Uttar Pradesh.

Big Brother is watching: China has issued draft rules for cross-border e-commerce to “improve… data management and optimise the supervision” of exports from majors such as Shein, AliExpress, and Temu.

Tragedy: Malawi’s Vice President Saulos Chilima and nine others died in a plane crash in the country. The cause is currently attributed to bad weather.

THE DAILY DIGIT

$41 billion

Damage across the globe due to climate change in the past six months. (Business Standard) 

FWIW

Tokyo’s Seema Aunty…: …is its metropolitan government. Japanese Matchmaking isn’t a show just yet, but the thread that binds is bringing two people together in a culmination of (hopeful) holy matrimony. Japan’s declining fertility rate has been written about to death, but the Tokyo government’s move to launch its own dating app hasn’t. The hope is that people who sign up will eventually have kids after getting married — a differentiator in an otherwise crowded space where dating apps’ main priority is to keep people hooked, not find the right person. Tokyo’s official app even asks for salary and family register proof to keep out potential scamsters. Whatever it takes to make babies, we guess.