Arvind's Newsletter

1. At a time when many believe that India is the bright spot in a global economy heading into recession and from longer point of view that India's moment has arrived, it is always worth reviewing the contra point of view. Ashoka Mody wrote his new book "India Is Broken: A People Betrayed, Independence To Today" to challenge prevailing narratives about India’s place on the world stage and to analyse the growth and development of ‘India at 75’ through the prism of human-welfare indicators. A former World Bank and International Monetary Fund economist and now a professor at Princeton university, Mody argues the country is celebrating ‘superficial gloss’ over rosy predictions made for its future. Mody was with me in school (same batch but different section so I did not know him personally, but knew him to be a brilliant student.) He has an interesting education background in that after completing his BTech (Electronics) from IIT, Madras, he instead of going overseas to pursue further studies or staying in India to do an MBA (the route taken by most IIT-ians in those days), pursued an MPhil in Economics from Centre for Development Studies, Trivandrum and later completed his Phd in Economics from Boston University. Most of his working career was with World Bank and IMF before moving into academia. Kavita Iyer, has interviewed Mody for this article which is a worthwhile long read."GDP growth itself is a faulty measure of human welfare, Mody said, arguing that on all the metrics of liveability and human welfare including jobs, health, education, women’s participation in the labour force, the quality of life in cities, levels of pollution, the resilience of democratic institutions, India is lagging behind nations with which it competes."

2. With the space sector opening up startups are have begun to rapidly transform the industry.

Dhruva Space founder Sanjay Nekkanti’s obsession with satellites began early. It was 2008 and he was still in college. The country was basking in the success of Chandrayaan-1, India’s first moon mission, which generated a lot of interest in the space programme, especially among students. The Indian Space Research Organisation (Isro) decided to tap into this frenzy and asked universities to encourage students to build satellites. It offered to deploy the student satellites in orbit for free.

Chennai’s SRM University was among the earliest to take up this offer. Nekkanti, who was pursuing a bachelor’s degree in electronics and telecommunication engineering, was drafted into the university team building the satellite, thanks to his unusual hobby, ham radio (amateur radio, involving two-way communication). After many challenges, the SRMSat, designed to address pollution by monitoring carbon dioxide and water vapour in the atmosphere, was ready in 2010. It was put into orbit by Isro’s PSLV-C18 (Polar Satellite Launch Vehicle) in October 2011.

The experience of building a satellite set Nekkanti thinking. “I was surprised by the cost arbitrage that existed in building a satellite in India and appalled that no one was tapping this huge opportunity," he recalls. Barring Isro, no other organization was building satellites (or rockets) in India back then. When he graduated in 2010, he reached out to his SRMSat mates with the idea of starting a company that builds satellites. But they were sceptical and declined. Nekkanti put his entrepreneurial ambitions on hold and headed to Europe to pursue a Masters in Space Technology and Spacecraft Instrumentation.

He returned in 2012 and set up Dhruva Space to build satellites. The initial days were tough, with funding hard to come by. Investors questioned Nekkanti on his business plan. Four years later, the market was still unresponsive and he almost sold the company. Things began to change only in 2019, as investor interest picked up.

Today, Dhruva Space is a sought-after satellite maker. On 26 November, it launched two of its own satellites, Thybolt-1 and Thybolt-2, on board PSLV-54. The company now offers end-to-end services—building satellites, launching, tracking and maintaining them. It has raised $8 million in funding so far and has orders to put three satellites in space. Many foreign entities are in talks with Dhruva Space to build and launch their satellites.

Dhruva Space is a part of India’s space odyssey 2.0. Read on.

3.Students are using artificial intelligence chatbots such as ChatGPT to cheat in U.S. schools and universities, forcing major overhauls to teaching. The New York Times reports that students regularly use AI to write essays, so teachers increasingly require work to be written in the classroom, and set more specific, less open-ended questions. AI companies are aware of the problem. OpenAI, ChatGPT’s creator, hired the quantum computing pioneer Scott Aaronson to work on “watermarking” its output. If it’s successful, all ChatGPT writing would seem natural, but be distinguishable by statistical methods. Essays could be run through a detection algorithm, and cheats unmasked.

4.India could produce half of all iPhones by 2027. Apple is urgently diversifying its supply chains to reduce its dependence on China, moving assembly plants to India and Vietnam especially. India makes just 5% of iPhones, but a recent JPMorgan report suggested that figure could reach 25% by 2025, and the Taiwanese analysts DIGITIMES said it could be 50% within five years, the South China Morning Post reported. Apple is deeply reliant on China, the Financial Times said: More than 95% of devices including iPhones, AirPods, Macs and iPads are made, and a fifth of its goods sold, in China.

5. A growing number of indicators suggest the global economy’s prospects are not as dire as once feared. Germany’s chancellor said his country would not fall into recession this year, British inflation slowed again, and though the International Monetary Fund’s second-in-command said that 2023 would be a “tough year,” she also suggested the multilateral lender would soon upgrade its growth forecasts. Much of the optimism is driven by less-than-expected fallout from Russia’s invasion of Ukraine, huge U.S. spending on climate investments, and China’s unexpected reopening after years of zero-COVID restrictions. Investors have responded by piling into stocks, fueling a $700 billion rally in Chinese tech in particular, reports the Financial Times. Excerpts from the FT report:"China’s tech stocks have staged a $700bn rally as the country reopens and a regulatory clampdown on the sector loosens, drawing the attention of international asset managers who fled the market in recent years. Hong Kong’s Hang Seng Tech index, which is stacked with Chinese companies, has soared almost 60 per cent from its lows last October, with heavyweights such as Tencent and Alibaba gaining $350bn combined in market value, according to Financial Times calculations based on Bloomberg data.

The gains, which picked up late last year when Beijing began lifting its Covid-19 curbs, sharply contrast a painful stretch for Chinese tech shares. Many big-name groups in the sector had their valuations dragged lower since 2021 by punitive central government measures. At the height of the crackdown, many foreign fund managers debated the extent to which Chinese equities were rendered “un-investable”. Foreign investors remain sceptical, with strategists and traders saying that while local investors and hedge funds had been snapping up China tech stocks since the start of the rally, most global mainstream investors had yet to take the plunge.

Now strategists say the game has changed again, with Beijing using all available means to bolster growth as the country leaves behind its longstanding and economically damaging zero-Covid policy. Recent share price gains have been reinforced by a growing number of positive calls from analysts previously wary of recommending that investors jump back into the beleaguered sector."