Arvind’s Newsletter

1.Indian Cabinet approves royalty rates for lithium, niobium, Rare Earth Elements, to enable their auction for the first time in country

The Centre on Wednesday approved royalty rate for lithium, niobium, and for Rare Earth Elements (REEs). For lithium and nobium a royalty rate of 3% each has been fixed, while for Rare Earth Elements (REEs), the rate has been set at 1%.

The Mines and Minerals (Development and Regulation) Amendment Act, 2023, came into force 17 August 2023. The amendment, among other things, delisted six minerals, including lithium and niobium, from the list of atomic minerals, thereby allowing grant of concessions for these minerals to private sector through auction.

Further, the amendment provided that mining lease and composite license of 24 critical and strategic minerals (which are listed in Part D of the First Schedule of the Act), including lithium, Nnobium and REEs (not containing uranium and thorium), shall be auctioned by the central government.

The rate of royalty rate on minerals is crucial for auctions.

2.Israel-Hamas War:Israel announces national unity government as it tightens siege and is on the verge of a full-scale invasion of Gaza, intended to destroy Hamas and prevent future attacks. Israelis seem largely united behind this goal, despite their political divisions: Hamas’s attacks have killed at least 1,200 Israelis — relative to population size, the equivalent of around 44,000 Americans, reported the New York Times.

Many victims were defenseless civilians. One video shows a group of armed Hamas members marching four Israelis, with their hands tied behind their backs, down a street. Another video, analyzed by The Washington Post, shows the four lying on the same street, shot dead.

Israel faces its own dilemma. Hamas is likely holding the hostages in small groups, scattered through tunnels beneath Gaza, to make a large rescue operation impossible. Any Israeli attacks on Gaza risk killing hostages, including citizens of the U.S. and Thailand.

“This is a challenge of a magnitude that has never been faced before,” Bruce Hoffman, a terrorism expert at the Council on Foreign Relations, wrote this week.

Most experts ruefully say that they expect more hostages to die. As Hoffman put it, “How this crisis will end is anyone’s guess, but the shedding of more innocent blood — Israeli, Palestinians and indeed noncombatant citizens of other countries — is certain.”

3.The war and changing geopolitical environment

The conflict between Israel and Hamas has exposed both new and old geopolitical fault lines, and not just in the Middle East. This new war in turn raises questions about Russia’s 19-month, full-scale invasion of Ukraine, where Vladimir Putin set in motion a conflict that’s killed or wounded an estimated half a million people reports Bloomberg. Israel’s request for additional US military aid may divert Washington weapons and focus from Ukraine, all while oil’s rising price bolsters Russia’s economy. Though the US is seeking to reassure allies that it can help supply two wars at once, it’s becoming clearer that the Kremlin may benefit from the conflict.

China’s response to the Israel-Hamas fighting meanwhile appears at odds with its push to be seen as a global peacemaker. Xi Jinping waded into the Middle East peace process in March, when he took credit for small signs of rapprochement between rivals Iran and Saudi Arabia. While there was widespread skepticism the pact would last—and of Beijing’s responsibility for it—its mere existence put the US on notice that its indispensable role in the oil-rich region was quickly becoming less so. But much like its response to Russian aggression in Ukraine, China’s response to the surprise attack by Hamas has been tepid. The war also deals a blow to Saudi Arabia’sCrown Prince Mohammed bin Salman’s purported vision of a Middle East that placed shared economic benefits at its heart—including an historic alliance with Israel. He appears to already be tempering that enthusiasm for a deal with Israel by returning to the kingdom’s emphasis on the rights of Palestinians in the Occupied Territories.

4.The day of the password is nearly over

Google has declared that passkeys are the way forward.

Google is making it easier for users to ditch passwords on their Google accounts in favor of passkeys — a fast, secure, and passwordless approach to logins that utilizes the pin, face, or fingerprint authentication built into your devices. Starting today, Google account users will be prompted to create a passkey for their account by default, sparing them from manually hunting through account settings for the setup process.

While the industry-wide goal is to eventually make passkeys the new login standard, Google says that passwords will “still remain part of our lives as we make the pivot.” As such, users can still choose to sign in to their Google account with traditional passwords and can opt out of using passkeys entirely by disabling the “skip password when possible”option for their account.

5.AI takes JEE (advanced) test, does well... but not enough for IIT seat

An artificial intelligence (AI) module, based on the model underpinning ChatGPT, scored well enough to be in the 80-90 percentile of India’s one of the toughest engineering college admission tests but did not fare well enough to clinch scores that would secure a seat in the premier Indian Institute of Technology (IIT) colleges, an experiment by IIT-Delhi researchers has claimed.

6.FT Interview with Uday Kotak: Some excerpts from the interview.

“India must not let a handful of conglomerates “define its destiny”, the billionaire who founded one of the nation’s largest banks has warned, as he urged the country to aim for broader growth with many “winners”.

The comments by Uday Kotak reflect concerns that a handful of tycoons and storied business houses have come to dominate swaths of the economy in India, which overtook China this year to become the world’s most populous country.

“We need to see many flowers bloom. And I’m not a believer that a few companies should define India’s destiny,” said Kotak in an interview with the Financial Times. “We need a broad-based growth of the Indian economy, with many winners.”

India’s 20 biggest companies now make about 80 per cent of the total profits generated by the country’s economy, according to research by Mumbai-based fund manager Marcellus, a figure that has doubled in the past 10 years. Its biggest industrialists include Mukesh Ambani, chair of Reliance Industries and Asia’s richest man.

Kotak became one of the most influential figures in Indian finance after building his bank into the country’s third-largest private sector lender with a market value of about $44bn. After leading Kotak Mahindra Bank for 38 years, he stepped down as chief executive last month to comply with a 15-year regulatory term limit. He retains a 26 per cent stake in the company and a non-executive board seat. Joint managing director Dipak Gupta will lead the bank until a successor is approved by the Reserve Bank of India.

Kotak said he believed India’s economy needed to expand faster in order to lift millions out of poverty. The IMF projects that India’s gross domestic product will grow at 6.1 per cent this year. “I would like to see India grow faster,” Kotak said, “because if India is to transform our destiny for 1.4bn people — we’ve got to get a lot of people out from below the poverty line into the mainstream — India has to aspire to grow at 8 to 9 per cent”.

“In my career I’ve seen many points of time when India has looked promising. This time the promise is much stronger and more real,” Kotak said.

Kotak clashed with the RBI in a 10-year battle over the size of the Kotak family’s stake in the bank, after the regulator introduced legislation to diversify bank ownership. Ultimately, Kotak managed to retain 26 per cent.

Praising regulators for “protecting and nurturing” banks, Kotak said the financial system could be strengthened through measures including loosening acquisition financing rules for banks and streamlining the bankruptcy process.

“We need to have a vision which enables us to have the capacity and capability to — in the next 20 to 25 years — take us to a $30tn economy,” he said, “so you need a combination of good process, good policy and some bold steps”.