Arvind's Newsletter

1.Kerala’s 500 days challenge: Can ‘God’s own country’ become a Gujarat? N. Madhavan in Mint

Between FY18 and FY24, Gujarat was India’s fastest growing state, closely followed by Assam and Telangana. What about Kerala? Its economy is sinking into a quagmire. The famed Kerala Model of Development is now throwing up demographic changes. But there’s a way out.

Kerala’s economy is in a crisis. Its gross state domestic product (GSDP) is not growing fast enough (see chart). Its unproductive expenses far exceed its revenues. Borrowings bridge the gap. This has put the state perpetually in debt.

The famed Kerala Model of Development that ensured significant improvement in human development parameters such as life expectancy, literacy levels and population control is now throwing up demographic changes that are beginning to hurt. Society is ageing and people live longer. This is adding pressure to the pension payouts and healthcare budget. The nature of migration from the state is changing and this is impacting the remittances that oil the state’s economy.

Kerala is realizing the need for a new model of development and the Pinayari Vijayan-led Left Democratic Front government is attempting a course correction. It is wooing investors hoping to boost industrial development. It wants to take advantage of projects such as the Vizhinjam port. A few weeks back, the state surprised many by topping the ease of doing business (EoDB) ranking for 2021-22. Can Kerala shake off its anti-investor image, attract investments and extract itself from the quagmire it finds itself in?

2.Investors Lose Nearly Rs 10 Lakh Crore As Last Hour Panic Grips Dalal Street; NDTV Profit

In a volatile session on Tuesday, the BSE Sensex crashed up to 1002 points or 1.23 per cent to 80,433 levels, while NSE’s Nifty50 fell 336 points or 1.35 per cent at 24,445.80 levels in intraday deals. 

At close, the Sensex tanked 930 points or 1.15 per cent at 80,220.72, whereas the NSE’s Nifty50 slumped 308.96 points or 1.25 per cent to 24,472.10 level.

The benchmarks retreated amid continued weakness exhibited by the bourses, on account of foreign institutional investors selling Indian equities for cheaper markets in China and Hong Kong. The bourses were also under pressure from the quarterly earnings of which have been underwhelming till now. 

Foreign institutional investors have been net sellers for the 16th consecutive day and have offloaded nearly Rs 93,500 crore since Sept. 27, according to provisional data from NSE.

3.In India, women hold up a third of the sky; Manas Chakravarty in Moneycontrol

The CAMS Survey, the PLFS and the World Bank’s South Asia Development Update all point to the need to have more women in the labour force. But we need to create more and better jobs first

India’s female labour force participation ratio has improved markedly of late. The LFPR for females aged 15 years and above has gone up from 23.3 percent in 2017-18 to 41.7 percent in 2023-24, according to the government’s Periodic Labour Force Survey. Most of the improvement has happened in the rural areas, where the female LFPR for those aged 15 years and above went up from 24.6 percent in 2017-18 to 47.6 percent in 2023-24. This estimate is very different, however, from the ILO’s modelled estimate, which put India’s LFPR for females 15 years and above at a much lower 33 percent in 2023. The reason is differences in definitions—for example, the Indian estimates count persons engaged as unpaid helpers in household enterprises as employed, which means that if someone is helping out at her uncle’s shop without earning a wage, she is counted as employed.

The ILO’s estimate puts female LFPR even lower than that of Saudi Arabia, which is saying something about how conservative Indian society is. And even if we take the PLFS data on Indian labour force participation rates, the figures for females 15 years and older, at 41.7 percent, would be lower than the ILO estimates for China (61 percent), Vietnam (68 percent) or Indonesia (53 percent).

After the Chinese revolution, Mao Ze Dong encouraged women to join the labour force by saying, ‘’Whatever men comrades can accomplish, women comrades can too’’. A more famous quote from him is: ‘’Women hold up half the sky.’’ In India, they hold up much less. If we take the respective Labour Force Participation rates for males and females, women seem to be holding up around a third of the sky in India.

4.India shouldn’t become passive player in age of AI: Economics Nobel winner Daron Acemoglu; Interview in Times of India

Daron Acemoglu, is professor of Economic at MIT, USA and author of “Why Nations Fail”, “The Narrow Corridor and “The Power and Progress”. I have read the first two books of his, which are very readable and brings a historical perspective while being insightful ; and I would strongly recommend.

Here are some excerpts from the interview focusing on his views on AI:

Given the potential for AI to exacerbate inequality, how can we redirect technology?

We need to actively steer technological development in a direction that benefits broader swathes of humanity.  This require a pro-human approach that prioritises enhancing worker productivity and autonomy, supporting democracy and citizen empowerment, and fostering creativity and innovation.

To achieve this, we need to: a) Change the narrative around technology, emphasising societal control and a focus on human well-being. b) Build strong countervailing powers, such as labour unions and civil society organisations, to balance the power of tech companies, and c) Implement policies that level the playing field, including tax reforms that discourage automation and promote labour, data rights for individuals and creative workers, and regulations on manipulative digital advertising practices.

5.The Crorepati club gets bigger: India sees 5x jump in Rs 1 crore income tax filers

The number of salaried individuals that have declared Rs 1 crore as a taxable income in assessment year (AY) 2023-24 was 230000, an increase from 44,078 in AY 2013-14, reflecting rising incomes and improved tax compliance. Individual tax returns surged from 3.3 crore to 7.5 crore.

Meanwhile, in the Rs 4.5-9.5 lakh bracket, filers made up 52% of total returns. While salaried individuals dominated the Rs 1-5 crore range, wealthier brackets leaned toward business owners. None of the 23 individuals with Rs 500+ crore income were salaried. Meanwhile, India added a billionaire every five days, bringing the total to 334—crossing 300 for the first time, according to the 2024 Hurun India Rich List.

6.China is building diplomatic bridges with several countries it has sparred with in recent years, possibly because of concerns among its leadership over its softening economy

Beijing has agreed a border deal with India, held conciliatory talks with Britain and softened its stance towards Japan, Pekingnology’s Zichen Wang noted.
In part, we are seeing “a more cautious China that’s not looking for fights until it can get its economy back on track,” Ian Bremmer of Eurasia Group said in a note to clients. Western powers remain skeptical, though: Australia yesterday announced a $4.7-billion deal to acquire US precision missiles and “safeguard” Australians (read: “from China”) while Washington is upgrading airfield in the Pacific and challenging Beijing’s mineral dominance.

7.The data centre boom:The artificial intelligence boom has led to triple the number of new data centres being announced in the US in the first half of 2024 compared with the same period last year.

 Spending on new server farms by tech giants Amazon, Meta, Google, and Microsoft is expected to hit $178 bn next year, the Financial Times reported, citing an energy data firm’s report, with Texas, Virginia and Georgia seeing the most growth.

The data centres are energy-intensive, leading developers to rush both to build new energy sources and to link them to the grid: The analysis found a huge backlog of centres still waiting to gain access to electricity. Increased electrification in the economy is more broadly driving demand for power, notably battery charging for electric vehicles.

8.Apple’s new hearing aid technology is being billed in early reviews as a potential game-changer for accessibility.

A software update starting next week will allow owners of the AirPods Pro 2 to test for hearing loss and use the earbuds as personalised hearing aids — making the tech cheaper than many over-the-counter devices. People with mild to moderate hearing loss who tested the tech reported they could hear conversations better in crowded settings: “I’m not used to being able to hear this ,” said a 27-year-old with genetic hearing loss. The Apple test alone “can reveal potentially life-changing insights” a Wall Street Journal tech columnist wrote.

9.'A mesmerising mirage': How Monet's paintings changed the way we see London

A new exhibition charts how Claude Monet's revolutionary, fog-shrouded visions of the Thames would "irreversibly alter how London saw itself".

Some artists help us perceive the world more precisely. A rare few go further. They look beyond looking. Theirs is a deeper reality, more felt than seen. Claude Monet is one of those. In three visits to London between 1899 and 1901, the French Impressionist, then approaching 60 years of age, embarked upon one of the most ambitious series of penetrating paintings ever undertaken by any artist – a project that is now the focus of a groundbreaking exhibition at the Courtauld Institute, Monet and London: Views of the Thames.