- Arvind's Newsletter
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- Arvind's Newsletter
My newsletter returns after short break while I was travelling in Europe. I may have missed a few stories or update of stories I usually track so will see if I can bring some of them in the newsletter over the next week or so if necessary.
1.India may aim to monetise $24 bn worth of highways by 2027
The Indian government plans to generate revenue of approximately two trillion rupees (equivalent to $24.1 billion) by monetising highways in the coming years, said rating agency CareEdge.
According to the agency’s report, the National Highways Authority of India is expected to build approximately 4,000 to 4,500 kilometers (equivalent to 2,796.2 miles) of new roads annually in the next three years, and the government can generate revenue from these assets using an Infrastructure Investment Trust (InvIT) or a toll-operate-transfer (TOT) model.
The government’s current plan, which is based on a public-private partnership model, has been successful as 88% of road projects awarded prior to March 2020 are now operational and can be monetised. Only 12% of projects awarded in the pre-2020 period are delayed due to weaknesses of their operators, the rating agency said.
Read more at:
2.Behind ITC’s hotels demerger
Indrajit Gupta, senior journalist and editor, and co-founder of Founding Fuel Publishing, in his latest Strategic Insight column takes a deeper look behind ITC’s hotel business demerger.
ITC is demerging its hotels division into a separate entity called ITC Hotels. It will retain a 40% stake. Indrajit Gupta says the demerger allows ITC to focus on its core businesses and improve returns on capital. It also provides flexibility for shareholders like BAT to potentially exit the hotels business in the future.
He writes: “ITC’s demerger plan was mooted in its annual report of FY 2019-2020. Sadly, [then chairman Y.C.] Deveshwar succumbed to cancer on May 11, 2019. And next year, the ensuing pandemic and the lockdown wrecked havoc with the entire hospitality industry.
The post pandemic bounceback in the hotel industry is now palpable, with all the leading hotel brands reporting exceptional Q1 performance in 2023. Much of the growth has been led though by domestic travel. Sensing the uptick, the new chairman and MD, Sanjiv Puri, put the demerger plan back on track.
The demerger kills at least three birds with one stone. It offers ITC shareholders, including BAT, an option to either stay invested in ITC Hotels or exit. ITC Hotels now has a strong book of assets, branded properties at different price points (ITC Luxury Collection, Welcomgroup, WelcomHeritage, Fortune, Mementos, Storii). Its zero debt status will allow it to raise resources, have the agility to operate through its own independent board and yet have access to the goodwill, ITC brand and group capabilities. ITC, on its part, is likely to see the upsides of higher returns, based on reduced capex needs.”
3.India’s Global bond index inclusion can attract $20-50 billion in capital, but increases risks too, reports Gaurav Kapur, Chief Economist of IndsindBank in his opinion piece in Moneycontrol.com
The announcement of inclusion of eligible Indian government bonds in the JP Morgan Emerging Markets Bond - GD index last week was a much awaited and anticipated move, considering that India has been on the watch list for all the major index providers.
Given the capital controls on debt investments, Indian sovereign bonds were not a part of these indices, even as the stock of outstanding bonds reached $1 trillion. To facilitate inclusion of sovereign bonds on such indices, the RBI in consultation with the government introduced a Freely accessible route (FAR) window in March 2020. Bonds issued under this facility are free of any capital controls and at present 31 government securities are outstanding under the FAR channel. As per JP Morgan, 23 of these bonds with a notional value of $330 billion are eligible for index inclusion.
The process of inclusion will be pursued in a staggered manner starting June 2024 to reach a total weight of 10 percent by March 2025. This is the maximum possible weight which is given to a country in an emerging market index, which is an indication of a strong appetite among foreign investors for Indian assets. While the issue of settlement through the Euroclear system and tax treatment of capital gains have delayed this inclusion, the other two major bond index providers – Bloomberg Barclays and FTSE Russell – would also look to now include Indian bonds in their indices.
The experience from the equities market where India is already well represented on key equity indices (like the MSCI class of indices), suggests that opening up to such capital flows has proven to be beneficial in channelling foreign capital in various sectors of the economy. That in turn has allowed for increasing liquidity and the development of both the spot and derivatives market.
This move would help reduce the government’s cost of borrowings gradually as it opens a new and stable avenue of demand for sovereign bonds. The weighted average yield on the outstanding government bonds stood at 7.26 percent by end the March 2023, which can fall by up to 50 bps over next few years, as other index providers also include Indian bonds
Read on
4.Bosses won’t like it but WFH is a happier way to work, writes Simon Kuper in his opinion piece in Financial Times.
The pandemic induced ‘Work from Home’ has gone through a full cycle with businesses initially forced to embrace it, then finding cost and productivity benefits to now recalling workers back to office citing productivity issues. Simon Kuper argues why that might not be a great idea.
“…the argument for the efficiency of office work is dubious. Sure, office workers are more productive than the small minority of workers who work entirely remotely, but there’s a trade-off: the latter are cheaper to employ and easier to retain. In fact, the low cost of fully remote workforces is helping encourage start-ups, says Nicholas Bloom of Stanford University. He adds that hybrid workers — people who come into the office sometimes — appear to be about as productive as office workers.
No doubt certain jobs ought to be done on site. We should identify them. But overall, as a report by Goldman Sachs notes, “economic studies disagree on the productivity effects of remote work”
..This seems a slim basis for scrapping a happier way of organising work. Some people live to work, while most work to live. But nobody lives to commute. Policymakers who fret that public transport is no longer full at rush hour ought to reflect that few passengers wanted to be there every rush hour.
Then there are would-be workers for whom a daily commute is close to impossible. That’s true for many disabled people, about one in six humans, who have been clamouring for remote work for decades. The US employment rate of disabled people hit a record 21 per cent last year.
Remote work also benefits the people who keep our ageing societies functioning: unpaid carers for elderly or disabled relatives. More than one in five American adults (disproportionately female) falls into this category. Many will only take jobs that they can do from their mom’s kitchen table. Yet office bosses tend to ignore the issue, possibly because few bosses have ever been carers (or disabled).” Read in full below.
5.Living to 120 is becoming an imaginable prospect, opines the Economist in its Leader column.
Listen to this story.
Want to live longer? For centuries the attempt to stop ageing was the preserve of charlatans touting the benefits of mercury and arsenic, or assortments of herbs and pills, often to disastrous effect. Yet after years of false starts, the idea of a genuine elixir of longevity is taking wing. Behind it is a coterie of fascinated and ambitious scientists and enthusiastic and self-interested billionaires. Increasingly, they are being joined by ordinary folk who have come to think that the right behaviour and drugs could add years, maybe decades, to their lives.
Living to 100 today is not unheard of, but is still rare. In America and Britain centenarians make up around 0.03% of the population. Should the latest efforts to prolong life reach their potential, living to see your 100th birthday could become the norm; making it to 120 could become a perfectly reasonable aspiration.
More exciting still, those extra years would be healthy. What progress has been made in expanding lifespans has so far come by countering the causes of death, especially infectious disease. The process of ageing itself, with its attendant ills such as dementia, has not yet been slowed. This time, that is the intention.
The idea, is to manipulate biological processes associated with ageing that, when dampened in laboratory animals, seem to extend their lives. Some of these are familiar, such as severely restricting the number of calories an animal consumes as part of an otherwise balanced diet. Living such a calorie-restricted life is too much to ask of most people; but drugs that affect the relevant biological pathways appear to bring similar results. One is metformin, which has been approved for use against type-2 diabetes; another is rapamycin, an immunosuppressant used in organ transplants. Early adopters are starting to take these drugs “off label”, off their own bat or by signing what amount to servicing contracts with a new class of longevity firms.
Another path is to develop drugs that kill “senescent” cells for which the body has no further use. The natural means for disposing of these cells, like a number of other repair mechanisms, themselves weaken with age. Giving them a helping hand is not just a matter of tidying up. Senescent cells cause all sorts of malfunctions in their healthy neighbours. “Senolytic” drugs which target them pose obvious risks: it is hard to kill off one type of cell without inconveniencing others. But the promise is clear.
For true believers that is just the beginning. Groups of academic and commercial researchers are studying how to rejuvenate cells and tissues by changing the “epigenetic” markers on chromosomes, which tell cells which genes they should activate. These markers accumulate with age; strip them back and you might produce the cells of a 20-year-old body inside one that is in fact 65. Mimicking calorie restriction and clearing out senescent cells would delay ageing. Boosters claim that epigenetic rejuvenation could halt or reverse it.
One cause for concern is people’s brains. Slowing bodily ageing will not change the fact that the brain has a finite capacity, and is presumably adapted by natural selection to conventional lifespans. This is quite separate from worries about dementia, which is caused by specific diseases. Society will thus have to find ways to adapt to the normal ageing in brains: centenarians may, for instance, find themselves increasingly occupied with asking their ai diary assistants questions for which once they would have remembered the answer.
An even greater concern is that none of these ideas has yet been tested formally on people. That is partly because drug-approval agencies do not yet recognise old age as a treatable condition, making trials hard to register. By their very nature, such trials must follow thousands of people over many years, adding to their cost and complexity. The lack of testing is also partly because many of the initial proposals use out-of-patent molecules that are of little interest to drug companies. Nevertheless some trials are now in the works. The Targeting Ageing with Metformin trial (tame) will follow 3,000 Americans in their 60s and 70s to see whether the drug does in fact aid survival overall. Such studies will necessarily take time. But more of them are needed, and governments should be helping bring them about.
Any development that causes people to live healthily for longer, and to take fuller advantage of what the world has to offer, is cause for cheer. Some people, observing billionaires’ interest in longevity-promoting startups, worry that the benefits will be captured mainly by the rich, leading to a class of long-lived Übermenschen lording it over short-lived ordinary folk. But technologies have a record of spreading, and cheapening as they do so. It is hard to imagine a privilege more likely to spark rebellion than a ruling class that hoards age-treatments to escape the great leveller.
The fact of many people living much longer would have wide ramifications. Most obviously, working lives will be extended, as they have already as life expectancies have lengthened, and possibly even more so for women, who will lose less of their careers to having children, perhaps narrowing inequality in the workplace. Over time there could be deeper shifts. People who live longer may care more about threats that are further away, such as the state of the world in 2100. Longevity permits the patient accumulation of capital, a factor in the emergence of a middle class. And times when political power is exercised mainly by young men, such as the Middle Ages in Europe, tend to be more violent than when older, cooler heads prevail. Families will span even more generations and, presumably, larger networks of exes, half-siblings and quarter-cousins. Will that atomise them, or bring them together? Will a surfeit of centenarians marginalise the young, create a cult of youth—or both?
People will seize on the elixir of life if it becomes available. Natural selection has no interest in indefinite longevity per se: the traits that spread best are those that make organisms fit in their prime; those that help them live on when reproduction is a distant memory must work through children and grandchildren. Yet the visceral drive to cling to life is the most basic trait of all. Indeed, it is prevailing today—to tantalising effect.
See this video on YouTube