Arvind's Newsletter

1.Govt shifts focus from privatisation to investing billions in ailing PSUs

Prime Minister Narendra Modi is pouring billions into ailing state-run firms after slowing ambitious divestment plans that were intended to reduce the role of the state in business, according to government sources and a document reviewed by Reuters.

Less than a month into 2025, New Delhi has plans to invest about $1.5 billion in financial rescue packages for two state-owned firms after failing to sell them to private companies.

It has also decided to put in "abeyance" privatisation of at least nine state-owned units after opposition from relevant ministries, according to a document that detailed recommendations of a government panel set up to identify privatisation candidates. The document, reviewed by Reuters, did not cite reasons for the decision.

The nine companies include Madras Fertilizers, Fertilizer Corp of India, MMTC and NBCC (India), the document showed. Housing and Urban Development Corp, that was also identified for privatisation, has now been 'exempted' implying it will not be sold, according to the document.

2.Indian officials raised the alarm over a huge Chinese hydropower project, threatening to derail nascent efforts to reduce bilateral tensions.

New Delhi has argued the Chinese plans — for a dam three times as large as the Three Gorges Dam, currently the world’s biggest — could impact regional water security and cause flooding downstream: One Indian state chief minister warned it could unleash a “water bomb.”

The hydropower project in the lower reaches of the Yarlung Tsangpo river, announced last month, is part of a network of dams being built across Tibet as China aims to increase the renewable energy share of its power consumption to 33 per cent this year from 28.8 per cent in 2020. “It is a mega project with a lot of ecological disturbances and it does not take into account the interests of the lower riparian states,” said Randhir Jaiswal, spokesperson for India’s foreign ministry, this month.

Indian officials are wary of the opacity surrounding the project, with basic designs or details of the companies undertaking construction not yet made public.

3.India’s middle class left stranded in a political muddle

It is that time of the year when the taxpaying middle class hopes the promised dawn will arrive. The middle class is stranded in a political muddle between oligarchs extracting rent and parties wrenching rent for votes.

The most viral memes on social media are about GST, freebies announced by parties, dysfunction in the delivery of basic services, tax rates and the state of urban India. This year is no different, as hopes are building up around speculation.

The expectations are at a confluence of politics and economics. The persistence of food price inflation—hovering at around 8 percent for over a year—has shrunk the purchasing power of middle class households. The slide in consumption has exposed the reality of structural inadequacies haunting and halting the virtuous cycle of demand, consumption, investments, employment and growth.

4.What Is China’s DeepSeek and Why Is It Freaking Out the AI World?

The little-known startup’s AI assistant has rocketed to the top of the app download charts since it was released last week with capabilities widely seen as being competitive with the likes of OpenAI and Meta’s technology. The worrying part for its US rivals? It claims to have done so without having spent billions on cutting-edge chips. Investor Marc Andreessen hailed it as “one of the most amazing and impressive breakthroughs.” 

The revelation is prompting a major rethink about the big boys in AI’s massive spending needs, triggering doubts about the sky-high valuations for companies like Nvidia. More broadly, it has called into question the widely assumed lead the US has in AI.

The contrast between DeepSeek and its more established competitors is stark and telling. While OpenAI, founded a decade ago, boasts of 4,500 employees and has raised a staggering $6.6 billion in capital, DeepSeek has produced a competing product in just two years, with a mere 200 employees and less than $6 million in funding.

“DeepSeek shows that it is possible to develop powerful AI models that cost less,” said Vey-Sern Ling, managing director at Union Bancaire Privee. “It can potentially derail the investment case for the entire AI supply chain, which is driven by high spending from a small handful of hyper-scalers.”

And the damage goes beyond Big Tech. As often happens in a market frenzy, investors loaded up on risk across the spectrum on the way up, and now they’re dumping broadly on the way down. So Bitcoin is getting whacked too.

5.Which AI to Use Now: An Updated Opinionated Guide by Ethan Mollick, Professor of Management at Wharton Business School.

He is also author of one of my favourite books on AI, Co-Intelligence: Living and Working with AI.

“Every six months or so, I have written an opinionated guide for individual users of AI, not specializing in any one type of use, but as a general overview. Writing this is getting more challenging. AI models are gaining capabilities at an increasingly rapid rate, new companies are releasing new models, and nothing is well documented or well understood. In fact, in the few days I have been working on this draft, I had to add an entirely new model and update the chart below multiple times due to new releases.” Read on.

6.The long-awaited Gulf railway project is finally picking up steam.

Kuwait awarded a contract to build the first phase of its 111-kilometer (70-mile) section of the railway to a Turkish engineering firm. The project, set to be completed by 2030, will connect Kuwait to Saudi Arabia and, eventually, to a line linking Manama, Doha, Abu Dhabi, Dubai, and Muscat. Projected to transport eight million passengers and 95 million tons of cargo annually by 2045, the 2,117-kilometer (1,300-mile) Gulf Cooperation Council network is seeing contracts awarded across most Gulf countries, according to AGBI.

One of the busiest routes — the Abu Dhabi-Dubai corridor — will feature a high-speed train capable of transporting passengers between the two cities in just 30 minutes at speeds of up to 350 kilometers (215 miles) per hour. Senior UAE royals inspected a train cabin last week and unveiled designs for stations in Abu Dhabi, Dubai, Fujairah, and Sharjah. The high-speed train is expected to contribute 145 billion dirhams ($39.5 billion) to the UAE’s economy over the next 50 years.

7.China may have hit its peak oil demand sooner than expected, analysts told Nikkei Asia.

Crude imports shrank by almost 2% last year compared to 2023, the first annual decline in decades (excluding the pandemic years). The International Energy Agency had previously forecast demand would top out around 2030, but analysts said that the falling oil demand may go beyond China’s current economic slowdown. They pointed to the rapid rise of electric vehicles and reduced oil refining capacity.

Beijing is looking to bolster domestic renewable energy — and reduce its reliance on oil imports — “as an energy security strategy” a Tokyo-based expert said.

8.How Rajaraja Chola became the world’s richest king

Anirudh Kanisetti, author of ‘Lords of Earth and Sea: A History of the Chola Empire’, writes in The Print about the opulence of the Chola court: 
“The Brihadishvara Temple at Thanjavur is still one of the most stupendous monuments ever built in India. While often seen primarily as a religious monument, its inscriptions also reveal a Chola court of spectacular opulence, capable of gifting literal tonnes of gold and silver, thousands of animals, and tens of thousands of pearls. Sometimes we hand-wave the question of how medieval Indian kings obtained such vast riches. But in the figure of Rajaraja Chola – perhaps the most remarkable ruler of the period – we have some interesting, and counterintuitive, answers.”

“Military daring; alliances with merchants, smart public relations, and administrative genius. But more than anything else, it was his boundless imagination—his ability to break with the old and create new institutions.”

“At his accession, the upper Tamil plain finally possessed the mix of factors – internal cohesion and external disarray – to turn the tables on all its neighbours. And this Rajaraja did with violent efficiency, leading expeditions to the Malabar Coast, Sri Lanka, and southern Karnataka.

Most medieval Indian kings would simply demand tribute, vassalise foreign rulers, and return home. It was just too difficult, logistically, to administer conquered territory. But Rajaraja broke the mould: in south Karnataka, he renamed Talakkad, an old regional centre, “Rajaraja-puram”—Rajaraja City; in Lanka, after taking control of the town of Polonnaruwa, he renamed it “Jananathapuram”, People’s Leader City. These would hereafter serve as Chola centres. Rajaraja was able to do this with confidence because he had the support of Tamil merchant assemblies, who migrated to both regions accompanied by professional mercenaries.” Read on.

9.She Is in Love With ChatGPT by Kashmir Hill in New York Times

A 28-year-old woman with a busy social life spends hours on end talking to her A.I. boyfriend for advice and consolation. And yes, they do have sex.

10.Health warnings about alcohol give only half the story:The Economist

For many people, the new year brings both a banging hangover and a solemn resolution never to get drunk again. More than a decade ago Alcohol Change UK, which campaigns to cut drinking, launched its “Dry January” campaign. This year it reckons a third of British men will try to stick to it.

In America Vivek Murthy, the surgeon-general, is also keen to discourage drinking. Dr Murthy has recommended placing warnings on alcohol to highlight the fact that it raises the risk of some cancers, including breast and bowel cancer. If so, America could become the third country, after South Korea and Ireland, to require labels.

Drinking a lot is indisputably bad for you. Boozing has long been associated with heart attacks, liver disease, stroke and obesity. Drunks are more likely to get into fights or accidents. Alcohol is addictive, and the World Health Organisation (WHO) blames it for about one death in 20 around the world. The link with cancer is less familiar to most people. Dr Murthy’s statistics suggest that women who drink occasionally have about a 16.5% lifetime risk of several common cancers, whereas those who have one drink a day—America’s recommended maximum—have about a 19% chance.

As the evidence of alcohol’s harms has piled up, the public-health messages have become starker. The WHO says flatly that there is “no safe level” of alcohol consumption. America’s guidelines say that those who do not drink should not start “for any reason”. In 2023 Canada published guidelines recommending two drinks (roughly two cans of beer) a week for those who want to remain in the “low risk” category, down from 15 a week for men and ten for women.

It is all very sobering. But over-zealousness can be counter-productive. Taken literally, the WHO implies that it is unsafe to have even a sip of communion wine. If one bit of public-health advice seems absurd, people may start to doubt other bits, too.

And although there is unanimity that heavy drinking is very bad for you, there is less agreement around light indulgence. In December America’s National Academies of Science, Engineering and Medicine concluded, with “moderate certainty”, that moderate drinking (up to two cans of beer a day for men or one for women, as per official American advice) was associated with benefits rather than harms. Benefits in heart health appeared to outweigh the risks from cancer and other ailments, though the effect disappeared quickly with extra quaffing.

Many scientists think that the benefits of light drinking are a statistical mirage. But even if the WHO is right, and no amount of alcohol is safe, that is only half the picture. After all, there is no completely safe level of almost anything, from flying to going on a date. Walking is good for you, and touted at book length by the surgeon-general (“Step It Up!”). But 7,500 American pedestrians were killed by cars in 2022.

People balance the dangers of an activity against the benefits it brings. These days, suggesting that drinking might have any benefits at all feels faintly heretical. But many enjoy the taste of a good beer or wine, appreciate the buzz it provides, or take pleasure in the social rituals, like a pub visit or a dinner party, which it lubricates. That is why the world is willing to spend $1.8trn a year on drink. All that enjoyment belongs on the scales with the (equally real) harm.

Some perspective: Canada’s new guidelines define “low risk” as a one-in-1,000 chance of premature death owing to alcohol. Boosting consumption from two to six drinks a week raises the odds to 1 in 100. With walking, the lifetime risk of being run over in America is about 1 in 470.

What to do in 2025? If you are a heavy drinker, almost everyone would agree that it would be wise to cut down. For all but the most risk-tolerant, the middle-class habit of downing half a bottle of wine with dinner is worth examining. But if you fancy a pint or two with friends every now and then, you will be trading a tiny risk of harm for an evening of warmth and good company. That is a trade many rational people will be happy to make—especially amid the cold and gloom of January. ■