Arvind’s Newsletter

This edition of newsletter comes during the first week of my travels in Europe so may miss out on some India news.

1.Google has a new tool to outsmart authoritarian internet censorship, reports MIT Technology Review

Google is launching new anti-censorship technology created in response to actions by Iran's government during the 2022 protests, the company has exclusively told MIT Technology Review. It hopes that the tool will increase access for internet users living under authoritarian regimes all over the world.

The company already offers a privacy tool called Outline, which provides free, open, and encrypted access to the internet through a VPN. It’s releasing Outline’s code in the form of a software developer kit so that other websites and applications can build censorship resistance directly into their products, removing the need to connect separately to the internet through a VPN.

Outline VPN will also allow developers from different companies to work on the same code and enable them to run updates more efficiently, allowing for quicker responses to evolving censorship tactics. Read the full story.

2.Signs that Western policymakers will keep interest rates high for longer than expected are a major risk for developing economies, the Asian Development Bank warned. Faster-than-anticipated U.S. inflation drove the dollar higher and cemented expectations the Federal Reserve will next week maintain its current level of rates, the highest in more than 20 years, while European Central Bank raised benchmark rate at a meeting today. “Governments and central banks in emerging East Asia need to stay vigilant to guard against potential financial risk associated with higher interest rates,” the ADB said in a new report. “Higher borrowing costs have contributed to debt stress and bond defaults in some Asian markets.”

3.Hyperlocal weather forecasters are now influencers in India, reports Rest of the World.

Though they may not always be accurate, these “weather influencers” are gaining followers for being available to take questions online.

A community of weather enthusiasts, who provide hyperlocal weather predictions via X, YouTube, and WhatsApp, are gaining popularity in India. In some cases, they are replacing government weather departments, which lack the manpower and funds to focus on making localized predictions. They make assessments based on publicly available data and their own findings. Some also have dedicated setups to observe changes in weather.

4.Electric vehicle maker Tesla is looking to source components worth around $1.9 billion from India this year, commerce and industry minister Piyush Goyal said.

But Tesla is not yet close to Elon Musk’s stated aim of building its own plants in India.

5.Once beset with violence, this city in Colombia- Medellin, now struggles with too many tourists, reports Bloomberg.

"Today, tourism is surging. An explosion of newcomers since the pandemic has brought new restaurants, fancy shops and guided tours. But it is also driving up rents and drawing pushback from locals. As cities around the world struggle with the negative consequences of mass tourism." This is a common story of how quickly tourism, remote workers, and outside investment can change a city. What's less common about this story is that we're talking about a city that, not all that long ago, was known as the murder capital of the world.

6.The global race to set the rules for AI

No one can agree how to regulate AI. The EU, UK, US, and China have very different ideas, reports the Financial Times. Some excerpts:

The release of ChatGPT by OpenAI in November spurred a rush of feverish excitement as it demonstrated the ability of large language models, the underlying technology behind the chatbot, to conjure up convincing passages of text, able to write an essay or improve your emails.

It created a race between companies in the sector to launch their own generative AI tools for consumers that could generate text and realistic imagery.

The hype around the technology has also led to an increased awareness of its dangers: the potential to create and spread misinformation as democratic elections approach; its ability to replace or transform jobs, especially in the creative industries; and the less immediate risk of it becoming more intelligent than and superseding humans.

Regulators and tech companies have been loud in voicing the need for AI to be controlled, but ideas on how to regulate the models and their creators have diverged widely by region.

The EU has drafted tough measures over the use of AI that would put the onus on tech companies to ensure their models do not break rules. They have moved far more swiftly than the US, where lawmakers are preparing a broad review of AI to first determine what elements of the technology might need to be subject to new regulation and what can be covered by existing laws.

The UK, meanwhile, is attempting to use its new position outside the EU to fashion its own more flexible regime that would regulate the applications of AI by sector rather than the software underlying them. Both the American and British approaches are expected to be more pro-industry than the Brussels law, which has been fiercely criticised by the tech industry.

The most stringent restrictions on AI creators, however, might be introduced by China as it seeks to balance the goals between controlling the information put out by generative models and competing in the technology race with the US.

These wildly divergent approaches risk tying the AI industry up in red tape, as local regimes have to be aligned with other countries so that the technology — which is not limited by borders — can be fully controlled.

Some are attempting to co-ordinate a common approach. In May, the leaders of the G7 nations commissioned a working group to harmonise regulatory regimes dubbed the Hiroshima AI Process.

It wants to ensure legislation is interoperable between member countries. The UK, meanwhile, is hosting a global AI summit in November to discuss how international co-ordination on regulation can mitigate risk.

But each region has its own fixed ideas about how best to regulate AI — and experts warn that, as the technology spreads rapidly into common use, the time to fashion a consensus is already running out.

In July, the OECD warned that occupations at the highest risk of displacement of AI would be highly-skilled, white-collar jobs, accounting for about 27 per cent of employment across member economies. Its report stressed an “urgent need to act” and co-ordinate responses to “avoid a race to the bottom”.

7.Narendra Modi is widening India’s fierce regional divides, opines a piece in The Economist.

Narendra modi likes to pull rabbits out of hats. One evening in 2016 the Indian prime minister declared that 500- and 1,000-rupee notes—representing 86% of cash by value—would cease to be legal tender by the end of the night. In 2020 he locked down the country at only a few hours’ notice. So it is hardly surprising that speculation has been running rampant since Mr Modi’s government announced that it is to convene a “special session” of Parliament from September 18th to 22nd. What trick does he have up his sleeve now?

A feeble agenda released on September 14th convinced few watchers. For the moment the guessing game has settled on two possibilities. One is that Mr Modi and his Hindu-nationalist Bharatiya Janata Party (BJP) will change the country’s name in English from India to Bharat (which is already the name in Hindi). The nameplate Mr Modi sat behind as he negotiated with g20 leaders at a summit over the weekend has added fuel to that theory. The other guess is that Mr Modi intends to reorganise the electoral calendar, so that India’s never-ending carnival of state and federal elections henceforth takes place all at the same time, once every five years. A new committee to “examine and make recommendations for holding simultaneous elections”, appointed by the government and headed by an ex-president, will probably hold its first meeting next week. In either case the change would serve a project Mr Modi has been pushing from the start: trying to centralise and homogenise a staggeringly vast and diverse country.

Since coming to power in 2014, the BJP has set about transforming India into something more like a European nation-state. That vision involves both strengthening the central government and promoting a pan-Indian, Hindu-nationalist identity. The government routinely emphasises that India is “one nation”, implementing policies such as “one nation, one ration card” (for subsidised grain) and proposing many more, such as “one nation, one uniform” (for the police). The idea of synchronising polls has been on the bjp’s manifesto since 2014. It is known as “one nation, one election”.

In economic matters, the government’s centralising tendencies are mostly welcome. In 2017 Mr Modi introduced a national goods-and-services tax (“one nation, one tax”, better known as gst) seeking to deepen the country’s common market. It seems to be paying off. Between the fiscal years 2017-18 and 2020-21 the value of interstate trade increased by 44%, more than double the growth in gdp during the same period, according to a study in the Indian Public Policy Review, a journal. Its authors attribute the increase to the introduction of gst and greater economic integration.

Moreover, the government is furiously building motorways, commissioning new airports and launching zippy train services to knit Indians closer. The roll-out, over the past decade, of a national digital identity system and of digital payments has assuaged problems that sometimes caused headaches for Indians who travelled outside their own regions. It is getting easier to build businesses that span the country.

It is plainly in India’s interests to forge a more sophisticated single market. Yet the government’s strident “one nation” rhetoric is causing some other ties to fray. The chief divide in India is between the industrialised, richer south, and the agrarian, impoverished north. The south is made up of five states: Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Telangana (see map). The north is home to two of the poorest ones, Uttar Pradesh (UP) and Bihar. The south is richer, safer, healthier, better educated, and less awful to women and Dalits than the north (see chart).

At the time of the last census in 2011 up and Bihar had 25% of India’s population, compared with 21% in the south. The gap has grown. The latest official estimates suggest that in 2022 up and Bihar had 26% of India’s people, while the south’s share had declined to 19.5%. Their economies have also diverged. gdp per person in the south is 4.2 times greater than in up and Bihar, up from 3.3 in 2011-12. The southern states contribute a quarter of India’s corporate- and income-tax revenues, compared with just 3% for up and Bihar.

Politically, too, the north and south are different countries. No state in the south is ruled by a bjp government, which is seen as a party of the Hindi-speaking north. Karnataka, the only southern state where the bjp had made inroads, voted out Mr Modi’s party in elections earlier this year.

Regional differences are now causing tensions on three fronts: cultural, fiscal and political. Start with culture. The south has long resented what it sees as the imposition of values and language from the north. In 2019 Amit Shah, India’s home minister, tweeted that “if one language can do the work of uniting the country, then it is the most spoken language, Hindi.” In response protests broke out across the south, and even the bjp’s allies in the region distanced themselves from his comments. It is not just about words, explains R. Srinivasan of the Tamil Nadu state planning commission. Southern defenders of language also believe they are protecting a broader political identity, one that supports social justice, women’s equality and emancipation from caste prejudice.

Complaints about India’s fiscal compact are growing, too. Though the central government rakes in revenue, states do much of the spending, particularly in crucial spheres such as education, health and welfare. The introduction of the gst weakened states’ revenue-raising powers. In 2021-22, spending by states accounted for 64% of public expenditure, but they raised only 38% of revenues. As a result, states now depend more than ever on transfers from the centre. How much they get is decided every five years by the Finance Commission, a constitutional body.

What each state receives varies depending on measures such as its population and level of development. As a result, southern states receive far less from the centre than they contribute. Redistribution across states is a feature of any federal system, a moral duty and, in India, a constitutional obligation. But it is becoming more controversial as state economies diverge. Concerns will probably redouble later this year, when the next finance commission starts working out how it will share revenues for the period 2027-32.

The third and potentially most dangerous set of tensions relates to political representation. The constitution requires that seats in Parliament be allocated according to population, with a roughly equal number of voters in each constituency and redistricting carried out after every census. But in 1976 the Congress government froze India’s electoral boundaries for 25 years to avoid penalising states that succeeded with family-planning policies. In 2002 a bjp government extended the moratorium until 2026. The south’s share of India’s population has dropped by five percentage points since the 1970s, while that of up and Bihar has grown by three points.

The result is a misallocation of seats. Going by the 2011 census, the south should have 18 fewer mps in India’s 545-seat lower house than its current 129. up and Bihar ought to gain 14 over their existing 120, according to calculations by Milan Vaishnav and Jamie Hintson of the Carnegie Endowment for International Peace, a think-tank in Washington. On average, an mp in Uttar Pradesh represents nearly 3m people; his counterpart in Tamil Nadu a mere 1.8m.

The constitutional and moral arguments in favour of redistricting are plain. But the practical ramifications for southern states would be large. If the centre goes ahead with it, warns a prominent figure in the south, “that is the beginning of the end of India as a country…In my children’s lifetime this will not be one country any more.” In May Mr Modi inaugurated a new Parliament building, capable of seating 888 lawmakers, lending credence to the idea that his party intends to reallocate seats while also expanding the house in order to soften the blow for states that lose out.

The idea of synchronising India’s many elections is also causing worry. The government’s critics insist that holding all polls at the same time would reinforce the advantages that national parties enjoy over regional ones (such as those that run most of the southern states). Regional parties, which have limited resources, would struggle to fight both national and state-level campaigns at the same time. The bjp says that the current system, under which a handful of states go to the polls every year, is broken. It paralyses policymaking, forces political parties into non-stop campaign mode and costs a fortune for parties and the exchequer. Having simultaneous elections would be cheaper and lead to better governance, say supporters.

Analyses of past elections have produced conflicting answers about whether harmonising polls will change how people vote. Any new policy would have to make provisions for state governments losing the support of their legislatures and collapsing in the middle of electoral cycles. And it is unclear whether Mr Modi would be able to push through the constitutional amendments this plan would require.

Since coming to power nine years ago, Mr Modi and his party have fulfilled many elements of their agenda, from turbocharging infrastructure upgrades and raising the country’s global profile to revoking the special constitutional status of the Muslim-majority state of Jammu & Kashmir and building a temple to the Lord Ram in the northern city of Ayodhya. The extraordinary session of Parliament next week may be about simultaneous elections (an old pledge), about changing India’s name (a newish obsession), or about something else entirely. Whatever the agenda, the great magician must be careful not to saw the nation in half.■