Arvind's Newsletter

1.India to expand digital payments with AI-powered voice transactions

India is to roll out ways of making voice-based and offline digital payments to expand the country’s fast-growing digital infrastructure and close a yawning divide between rural and urban areas

Since UPI was launched in 2016, digital transactions have taken off: about 350 mn people now use UPI to pay for goods and services or to transfer money instantly. The system recorded almost 10bn transactions in July, more than 50 per cent higher than the same month last year.

But its penetration into India’s poorer rural areas has been hampered by sparse internet access and lower levels of literacy outside urban areas.

The service, which will use open-source AI language tools developed by the Indian Institute of Technology Madras, will initially be available in English and Hindi before being broadened to other languages. Users will also be able to make transactions without the internet by using “near field communication” technology, a system widespread in contactless card transactions, that uses a connection between two close-by phones. This will “enable retail digital payments in situations where internet [or] telecom connectivity is weak or not available”.

2.Titan acquires additional 27.18% stake in CaratLane for Rs 4,621 crore

Watch and jewellery retailer Titan Company Ltd. has increased its shareholding in CaratLane Trading Private Ltd. to 98.28% from 71.09%, paying ₹4,621 crore for the additional stake buy. The acquisition values the company at Rs 17,000 crore ( ~USD 2 Bn).

In what is the second biggest e-commerce exit after Walmart bought 77 percent in Flipkart for $16 billion in 2018 giving Sachin Bansal and Binny Bansal an exit, CaratLane founder Mithun Sancheti and his family have sold their stake in the online retailer.

3.Why gig work matters. Economists Maitreesh Ghatak and Ajay Shah, writing in Business Standard provides three reason why the gig economy matters.

Firstly, these jobs are reasonably well paid in the context of a country where the per capita income is Rs 17,000 per month: “A survey conducted by Centre for Internet and Society suggests that in one kind of gig work (deliveries) net of all expenses, the income is Rs.15,200 per month.”

Secondly, given the changes in India’s labour laws and the relentless rise in the popularity of smartphones, the gig economy is likely to grow significantly: “According to a recent Niti Aayog policy brief, there are about 7.7 million workers, which is a drop in the bucket given the 440 million strong Indian labour force. However, it is expected to grow as it is largely an urban phenomenon, concentrated in the service sector, both being expanding domains.”

Thirdly, the gig economy is in a sense an urban version of the NREGS, a central Government funded scheme which economists of all political persuasions believe has delivered good results over the past two decades: “Economists in India have long been excited about the NREGS. The big insight there was to create a mechanism through which the individual always has an option of doing some labour supply and earning the minimum wage. The gig economy is functionally the same as an urban employment guarantee scheme. For any adult armed with a mobile phone, it is now easy to step forward and do labour supply. The onboarding process takes about one to seven days depending on the platform. We saw this vividly during the Covid lockdowns, where many individuals took to gig work in response to the economic crisis, and we saw many in the middle class doing deliveries.

The rise of gig work thus improves the safety net in urban India. There is an alternative perspective here: if one had aspired for establishing an EGS in urban India through the government, analogous to the NREGS, this would have been quite a challenge given the limitations of state capacity. That objective has now been at least partly filled through the gig economy.”

4.Have we reached peak coffee? The demand for coffee is expected to double by 2050 to 6 billion cups a day, as new consumers in China and India take it up. 

However as global temperatures continue to rise — July was the hottest month on record — growers will struggle to keep up with demand. Up to half of the current coffee farmland could soon be unusable, and already for the past two years, consumption has outstripped production. El Niño, a warm weather pattern, could further hurt growers. “Coffee is a tree that loves perfect weather, just like Goldilocks” the head of the World Coffee Research institute said. “Not too cool, but not too hot — just a really optimal zone, which is increasingly hard to find.”

5.A retiring consultant’s advice on consultants (in Bartleby column in the Economist)

Dear robin, I was delighted when you commissioned me to prepare this report for you after our discussion at the club. As a newly appointed chief executive at a Fortune 500 company, a thrilling yet perilous adventure awaits you. I commend your wisdom in choosing to hire a management consultant to guide you on your way.

I, naturally, would have been ideally positioned, given my many years of experience serving your company’s principal rival. Alas, the time comes in every man’s life when he must hang up his hat and retire to his home in the Bahamas. As my swan song, I have thrown together, as requested, a few thoughts on how to handle my kind. I hope you find the attached 120-page PowerPoint presentation useful. Below you will find a brief summary.

Be ready for the “bait and switch”: Do not be fooled by the eloquent veterans who will turn up to your office to plead for your business. The work will mostly be done by clever but pimply 20-somethings, armed with two-by-two matrix frameworks recycled from client to client. What they lack in wisdom will be made up for in long hours. You need not feel sorry for them. They are cocooned in a shell of fancy meals, lavish hotels and private drivers—at your expense.

At first you will find them to be of no use at all—detrimental, even—as they harry your management team with endless questions and urgent requests for data. Eventually, they will win you over with their brains and gumption—or be quietly replaced. Meanwhile, those grey-haired senior partners will pop by from time to time. Beware.

Watch out for “land and expand”: We consultants are masters of the clandestine sale. If you hire us for a two-month project, it will assuredly take 12. By the time it ends, our tentacles will have spread. Ask for a new company strategy, blink, and we will be cutting your costs, fixing your it systems and tinkering with your supply chain.

Like many other bosses, you may one day tire of our eye-watering rates and decide to poach the cleverest consultants for yourself. We will happily oblige. The most reliable missionary for the merits of consulting is one of our own. The more senior, the better. Hire them, but do not give them the cheque book.

Question everything: Every self-respecting consultant knows that big recommendations demand big numbers. As a rule, divide everything you see by two. Never trust a benchmark; I made up most of mine. And carefully read those endless notes at the bottom of charts. That is often where the dirtiest secrets are buried. Be doubly dubious of any consulting reports your underlings happen to commission, especially when they recommend a bigger budget for said underling.

Take none of the blame: As a freshly minted chief executive, you are undoubtedly brimming with ideas. Many of them are terrible. Some may prove catastrophic. Among the valuable services offered by management consultants is the human shield. Make sure your board knows it was they who recommended the disastrous new product line or the overpriced acquisition. You always had your doubts, but trusted their illustrious reputations. Equally, your consultants may, from time to time, stumble upon a good idea. You thought of it first.

Experiment with polygamy: Your consultants will do their utmost to woo you into exclusivity. There will be much talk of “long-term partnership”. Yet it is a one-sided monogamy they seek. Fidelity is not in a consultant’s nature. Chances are they are already advising your competitors, with only the thinnest of Chinese walls between teams.

Follow their example and hire their rivals, too. Ideally, sit them in adjacent rooms at your offices. Consultants are fiercely competitive, and nothing will better spur them on to even longer reports than seeing their nemeses wandering the halls of your company. If bored, invite representatives of two warring firms to a meeting and watch them tussle for your favour.

As I look back on my career, I am not too proud to admit that I have occasionally fleeced the odd firm. But I maintain that my profession is a noble one. “Impact”, after all, is our industry’s watchword. (Admittedly, I never was quite clear what it meant, but you cannot deny it sounds lofty.)

One final thought to conclude: there is never a problem too big or small for a consultant. That I can confirm from experience. Your bill, including expenses, is attached. Good luck.