Arvind's Newsletter-Weekend edition

1.Digital payment's rise leads to shutting of ATMs

There are 215000 ATMs currently active in the country, which has declined from around 2,19,000 a year ago. Despite record-high cash circulation used for transactions, Indian banks are shuttering down ATMs and cash deposit machines.

Experts said the rising popularity of digital payments coupled with the non-lucrative costs of operating ATMs have also forced banks to close down these cash touch points. Economic Times reported that the current cash in circulation in India hit Rs 34.7 lakh crore, a 100% increase since demonetisation.

2.Vistara CEO to lead major post-merger integration as Air India reshuffles senior management

Air India Group on Friday announced a rejig at the senior management level ahead of the merger of Vistara with Air India.

As part of this exercise, Vistara chief executive officer Vinod Kanan, who has also been holding the role of Chief Integration Officer for the merger of the two entities, will continue in the latter role post-merger.

Besides, he will be a member of the management committee and report directly to Air India CEO Campbell Wilson, a statement said.

Full-service carrier Vistara, which is a 51:49 per cent joint venture between Tata Sons and Singapore Airlines, is all set to merge with Air India on November 12.

3.India's smartphone market becomes second largest globally by unit volume

India’s smartphone market emerged as the second largest globally by unit volume and the third largest by value in the third quarter (Q3) of calendar year (CY) 2024, according to estimates by Counterpoint Research.

 In Q3 smartphone shipments, India accounted for 15.5 per cent of global shipments, second only to China, which led with a 22 per cent share. The US followed India with a 12 per cent share. By value, India ranked third, holding around 12.3 per cent of the market in Q3 CY 2024, up from 12.1 per cent in the same quarter last year. China maintained its dominance with a 31 per cent share of total sales, while the US held the second position with 19 per cent.

4.China unveils $1.4tn package to shore up economy

China has announced a Rmb10tn ($1.4tn) fiscal package to bail out local governments and help shore up its faltering economy, as it braces for increased trade tensions with the US under Donald Trump.

The long-awaited fiscal plan is one of the biggest to target the country’s troubled local authorities, but it disappointed investors expecting more support for flagging household consumption in the world’s second-largest economy.

The measures announced on Friday by the National People’s Congress, China’s rubber-stamp parliament, follow a monetary stimulus package released in September that was Beijing’s biggest since the coronavirus pandemic.

As part of the bailout, Beijing would authorise local governments to issue bonds over three to five years to restructure most of an estimated Rmb14tn in “hidden” or “implicit” debts, finance minister Lan Fo’an said in a rare press briefing at the Great Hall of the People in Beijing.

Though a huge sum, it fell short of analysts’ hopes for a broader package targeting China’s deeper economic challenges, ranging from a collapsing real-estate sector to high levels of youth unemployment: Chinese stock futures dropped, while one economist told The New York Times, “What has been announced so far is not likely to be enough.”

5.Business school and the pursuit of rigour, resonance and relevance; Financial Times

At the Academy of Management conference in Chicago last August — one of the world’s largest and most important annual gatherings of business school academics — one theme was prominent in numerous presentations: balancing rigour and relevance in research. Among the hundreds of projects discussed in the space of a week, a number of impressive studies stood out. But many others appeared more than a little esoteric and theoretical. Research with practical applications — let alone a focus on addressing the most important issues facing society, such as climate change, poverty and inequality — was less evident.

To some academics, any attempt to hold them accountable through measurement of their outputs — let alone to influence the direction of their research — is a threat to their independence in principle and doomed to fail as a way to drive better outcomes in practice. 

But, as George Feiger, a veteran business school dean who also worked as a management consultant and banker, puts it: “The real issue is a truly dramatic lopsidedness in focus in business schools, where academics measure their success — and their institutions evaluate them — almost entirely according to publications in a proliferating array of journals that nobody reads.” Read on

6.Europe is under pressure to step up its defence spending

US President-elect Donald Trump is expected to once again call on European countries to contribute more to NATO, and defence manufacturers told the Financial Times that they anticipate greater investment.

It will be challenging for the EU to “step up,” the Carnegie Council wrote — defence manufacturing lead times are long, and Europeans are best at “talking a good game” rather than doing anything: French President Emmanuel Macron labeled ‘the continent a “herbivore” in a world of carnivores’.

But there has been change, with Europe’s NATO members spending 50% more on defence than what they did 10 years ago, according to the International Institute for Strategic Studies.

7.Oil giant BP is killing 18 hydrogen projects, chilling the nascent industry

BP has been one of hydrogen’s biggest backers, investing in several startups, but according to its latest earning report will cut back significantly, TechCrunch said.

The oil and gas industry is eyeing hydrogen as its route into a zero-carbon future, since many fossil fuel majors already make hydrogen from natural gas and some of the infrastructure — and skills for making and maintaining it — is transferable.

But hydrogen has been slower to take off than other green-energy technologies, notably batteries and solar, and BP at least is reducing its bets on its future.

8.Welcome to Trump’s world; the leader in the latest Economist is worth pondering on

A STUNNING VICTORY has crowned Donald Trump the most consequential American president since Franklin D. Roosevelt. After defeating Kamala Harris—and not just narrowly, but by a wide margin—America’s 45th president will become its 47th. The fact that Mr Trump will be the first to win non-consecutive terms since Grover Cleveland in 1892 does not start to do justice to his achievement. He has defined a new political era, for America and the world.

In some ways the Trump era is very modern. It was made possible by technological changes and media fragmentation, at a time when distinguishing law from politics and politics from showbiz is hard. But it is also a return to an old idea of America. Before the fight against fascism convinced FDR that it was in his country’s interest to help bring order and prosperity to the world, the country was hostile towards immigration, scornful of trade and sceptical of foreign entanglements. In the 1920s and 1930s that led to dark times. It could do so again.

After Tuesday’s victory, the world lies at Mr Trump’s feet. He has won a mandate and, probably, the control over Washington he needs to exercise it. In what was supposed to be a knife-edge election, Mr Trump carried most of the battleground states. Thanks to big swings in states that were never in doubt, including Florida, New Jersey and New York, he also won the popular vote. As the polls predicted, he enjoyed a big surge in support from Latino men. But women, whom Ms Harris had expected to move to her, also swung towards Mr Trump. His victory will be made complete by Republicans retaking the Senate and, as seems likely, holding on to the House.

There will be time for recriminations among Democrats about what went wrong, but the early answer is: almost everything. Poll after poll said that under President Joe Biden the country was going in the wrong direction. Voters never forgave him for the burst of inflation that began in the summer of 2021. The Biden administration promoted a view of culture that is out of step with most Americans, especially on sex and gender, which featured in a lot of Trump campaign ads. Most damaging of all, voters throughout the country were infuriated by the Democrats’ failure to stop people crossing the southern border illegally. The party compounded its errors by covering up Mr Biden’s disqualifying frailty until it was undeniable. By then they had no time to find a political talent capable of beating Mr Trump.

Something deeper is afoot, too. In 2016 some people comforted themselves with the thought that Mr Trump’s presidency was an aberration. By choosing to overlook his attempts to stop the transfer of power to Mr Biden in 2020, voters have shown how wrong that conclusion was. Instead they have endorsed Mr Trump’s unbounded exploitation of partisanship as the basis of his politics, including the slander of his opponents as corrupt and treacherous. This has spread a cynicism and despair about the merits of government that may serve him, but will not serve America’s democracy. MAGA is a movement of iconoclasm against the kind of benign internationalists who occupied the White House for 70 years. This week a majority of voters embraced it with their eyes open.

If Mr Trump has wrecked the old order, what will take its place? Whereas the old America championed free trade, Mr Trump will accelerate the return to pre-war mercantilism. He is a believer in tariffs. Trade deficits, he claims, are proof that foreigners are taking his country for fools. On his watch America is likely to be spendthrift, as he and his party push through tax cuts, which will further widen the budget deficit. Mr Trump has promised massive deregulation. That may well bring benefits, but the next president loves power and craves sycophancy. There is a risk he will carve out special deals for his supporters, such as Elon Musk, the world’s richest man.

Our hope is that Mr Trump will avoid these pitfalls, and we acknowledge that in his first term he mostly did. Our fear is that during this presidency he will be at his most radical and unrestrained, especially if, as America’s oldest-ever president, his powers begin to fail him. Having learned from Trump 1, his team will set out to ensure that no one who is likely to restrain him will be appointed to the administration. Mr Trump will therefore be able to put his control of Congress and his popular mandate to maximum use.

In the decades after FDR, American foreign policy worked through alliances. By contrast, Mr Trump’s instincts are to treat allies as suckers to be shaken down. He likes to say he is so unpredictable that America’s adversaries will be too cowed to try anything. He may indeed be able to strike a deal with Vladimir Putin over Ukraine that does not end up with Russian tanks in Kyiv. He may also be able to exert pressure on Iran and deter China from using military power to dominate Asia. But if Mr Trump’s threats seem like bluster, his unpredictability is just as likely to encourage Chinese and Russian aggression.

What is clear is that uncertainty will impose costs on America’s allies, especially in Europe. If they fear they cannot depend on Mr Trump to support them when they are threatened, they will take steps to protect themselves. At the very least America’s allies will need to spend more on their own defence. If they cannot muster enough conventional weapons to deter the local aggressor, some of them may follow Britain and France and seek to acquire nuclear weapons.

Part of America’s global influence came through the power of example. In their own politics and in their international conduct, its leaders were mindful of the precedents they were setting. What was remarkable was not that they sometimes broke the rules, but how much they stuck by them. Under Mr Trump the converse will be true. His victory will inspire imitators elsewhere. In Brazil Jair Bolsonaro was elected two years after Mr Trump won in 2016. In France Marine Le Pen now seems a more likely president in 2027. The international movement of nationalist populists that seemed to be waning after 2020 will be revived. If Mr Trump uses the justice system against his opponents, as he has vowed, it will set a dangerous example.

It will take time for the full significance of Mr Trump’s victory to sink in. America remains the pre-eminent power. Despite the debasement of its politics, its economy is world-beating—at least for now. It dominates artificial intelligence. It is rich and its armed forces are second-to-none, even if the People’s Liberation Army is catching up.

However, without American enlightened self-interest as an organising principle, the world will belong to bullies. Countries will be more able to browbeat their neighbours, economically and militarily, without fear of consequences. Their victims, unable to turn to America for relief, will be more likely to compromise or capitulate. Global initiatives, from tackling climate change to arms control, have just got harder.

Mr Trump would no doubt retort that this is the world’s problem, not America’s. Under him, Americans can get on with their lives free from the weight of foreign responsibilities. And yet, two world wars and the ruinous collapse of trade in the 1930s say that America does not have that luxury. For a time—possibly for years—America may do fine. Eventually, the world will catch up with it.