Arvind's Newsletter

1.Why government’s tax collections are beating estimates

The Union government’s tax collections are beating estimates. The latest July figure showed nearly 20 per cent growth in the gross direct tax collections for 2024-25 (FY25) to Rs 6.5 trillion, largely driven by an increase in advance tax payments.

The Budget is likely to increase the tax revenue  projections by Rs 30,000-40,000 crore compared to the Interim Budget in February, Business Standard had reported earlier. Gross tax revenue as a percentage of gross domestic product (GDP) was already near its highest level in many years.

Personal income-tax collections have been larger (Rs 3.6 trillion) compared to corporation tax collections (Rs 2.7 trillion) so far this year. The growth rate is also higher for personal income- tax collections, shows government data.

Individuals are declaring more capital gains than before, according to an analysis of data previously released by the government. Growth in capital gains declared over the last decade is 23.5 per cent, compared to 15.5 per cent for salary income.

Booming stock markets have attracted a large number of investors. The activity has continued into the current year, at least going by securities transaction tax collections, which have more than doubled so far in FY25.

Equity culture is spreading. Two states contributed half of the total direct tax revenue in the country since FY19. Maharashtra with the financial capital and the political capital of Delhi together make up 50 per cent of the total tax revenues. These are followed by Karnataka at 11.6 per cent, Tamil Nadu at 6.5 per cent and Gujarat at 4.9 per cent.

2.Chip dreams: As Taipei takes a short step forward, Delhi assures a smooth long road

Despite a strong nudge by former President Tsai Ing-wen to Taiwan’s chip fabrication giants to consider investing in India, there’s only one company that has stepped up — Hsinchu-based Powerchip Semiconductor Manufacturing Corp or PSMC, one of Taiwan’s smaller chipmakers that fabricates legacy logic and memory chips.

In the partnership announced with Tata Electronics Pvt Ltd (TEPL), the Taiwanese company is not contributing equity, and restricts its exposure to providing technological expertise on licensing basis.

One reason why this new model is being tried out, said a Taiwanese executive associated with the policy aspects of chipmaking, is because key players want to play it safe. PSMC is a relatively smaller company and so has “negotiated a model where they would not need to put money on the table. I’m not sure how this model progresses,” the executive said.

This is unlike the venture the other big player, Taiwan Semiconductor Manufacturing Company (TSMC), is undertaking abroad – the company’s new fab in the Japanese city of Kumamoto, two $40 billion facilities in Phoenix, Arizona, and a commitment to invest nearly $4 billion to build a fab in Dresden, Germany.

In these new fabs, apart from significant equity investment, TSMC, the ninth-most valuable business in the world, is an equity partner, and has invested in the ecosystem; it has taken along its key vendor base of some 25-30 companies to each of these locations, and is also undertaking large-scale training of manpower on the nuances of chip fabrication, a high tech-intensive job.

In the Tata-PSMC venture, much of the heavy lifting is done by the Tatas, who have no real experience in chip manufacturing so far. “Part of the reason for a lack of response by TSMC or United Microelectronics Corp (UMC), the other big Taiwanese chipmaker, is because they were all busy with investment pledges in the developed world,” the Taipei-based executive said.

Read on

3.US Vice President Kamala Harris was the frontrunner to win the Democratic nomination after President Joe Biden’s withdrawal opened up an election that had favoured Donald Trump.

Biden and party grandees endorsed Harris, potential challengers fell in line, and big-money donors backed her. Focus quickly shifted to her policies: The Information said that she is seen as a moderate by Silicon Valley — much of which has supported Trump — and Bloomberg noted she had more ambitious climate policies than Biden’s. On foreign policy, she has rebuked Israel, and would likely remain tough on Russia and China, Politico reported. Yet she is no shoo-in: Major figures such as Barack Obama have not yet backed her, and a centrist senator Joe Manchin was mulling a challenge but has now backed out.

4.This Chinese new nuclear reactor  meltdown-proof
And could serve as the blueprint to assuage fears around other reactors.

A large-scale nuclear power station in China is the first in the world to be completely impervious to dangerous meltdowns, even during a full loss of external power. The design can not be adapted to existing nuclear reactors around the world, but could be a blueprint for future ones.

5.India’s Narendra Modi faces budget demands from ‘kingmaker’ allies

India’s Narendra Modi faces an early test to his third term in office as the prime minister prepares to unveil a budget that must balance the demands of new coalition partners while putting forward an economic vision that reinforces confidence after an unexpected election disappointment.

Modi’s Bharatiya Janata party was re-elected to a historic third term in June but unexpectedly lost its parliamentary majority, forcing the prime minister to depend on two regional “kingmakers” to see off a resurgent opposition.

Those allies, the Telugu Desam party from southern Andhra Pradesh and Janata Dal (United) in northern Bihar, are demanding billions of dollars in financing for their states ahead of the government’s first budget, which will be delivered on Tuesday for the financial year ending March 2025. Neelayapalem Vijay Kumar, a spokesperson for the TDP, said the party wanted to “utilise the clout” it has as a coalition partner to secure funding for roads, an oil refinery and Amaravati, a new “high-tech” state capital.

The JDU, meanwhile, has requested airports, medical colleges and infrastructure projects including power plants and new roads. “A new government has been formed and our party, the JDU, is part of that,” said spokesperson Kishan Chand Tyagi. “The expectations of the people of Bihar have risen.”

Nomura estimates that requests from coalition partners could cost about 0.2 per cent of India’s GDP this year.

Modi, a domineering leader known for bold, surprise announcements, has never ruled in a minority government. Investors are watching closely for an early indication of whether he can adapt to the compromises required of coalition politics, while continuing the fiscal consolidation and business-friendly reforms that he hopes will make India a global manufacturing and tech hub to rival China.

6.Is ‘Rizz’ the secret to getting ahead at work?

Great leaders have it. Gen Z has a new word for it. Can the rest of us learn it?

Charisma—or rizz, as current teenage slang has anointed it—can feel like an ephemeral gift some are just born with. The chosen among us network and chitchat, exuding warmth as they effortlessly hold court. Then there’s everyone else, agonising over exclamation points in email drafts and internally replaying that joke they made in the meeting, wondering if it hit.

Who could blame us for obsessing over charisma, or lack thereof? It can lubricate social interactions, win us friends, and score promotions. It’s also possible to cultivate, assures Charles Duhigg, the author of a book about people he dubs super communicators.

At its heart, charisma isn’t about some grand performance. It’s a state we elicit in other people, Duhigg says. It’s about fostering connection and making our conversation partners feel they’re the charming—or interesting or funny—ones.

The key is to ask deeper, though not prying, questions that invite meaningful and revealing responses, Duhigg says. And match the other person’s vibes. Maybe they want to talk about emotions, the joy they felt watching their kid graduate from high school last weekend. Or maybe they’re just after straight-up logistics and want you to quickly tell them exactly how the team is going to turn around that presentation by tomorrow.

You might be hired into a company for your skill set, Duhigg says, but your ability to communicate and earn people’s trust propels you up the ladder: “That is leadership." Read on.

7.The Bay of Bengal should be an economic superpower Why isn’t it?

It is the biggest bay on Earth—so big that five countries define the Bay of Bengal’s rim, among them India, the biggest country in the world by population, and Bangladesh, the eighth most populous. As such, the Bay of Bengal should be a natural and thriving economic space, binding South Asia and dynamic South-East Asia into one. But today it is a relative backwater. Ambitions are building to change that.

Elsewhere natural “macroregions”, a wonkish term beloved by planners, have cohered as reasonably powerful blocs: for example Europe, North America and South-East Asia itself, with its Association of South-East Asian Nations (ASEAN). But following post-colonial independence in the late 1940s, India, Bangladesh (first as part of Pakistan), Sri Lanka and Burma (now Myanmar) turned inward. Protectionism and even animosities rose.

Compared with other blocs, the trade that the Bay of Bengal’s countries conduct today with the outside world is paltry, despite being near one of the world’s busiest business shipping routes. Worse, they trade alarmingly little among themselves: only just over 6% of their total trade, compared with about 23% for ASEAN. The regional economy is fragmented.

However, change is under way. Constantino Xavier of the Centre for Social and Economic Progress, a Delhi-based think-tank, describes a “race to correct the fragmentation”. The impetus comes from India, says Ali Sabry, Sri Lanka’s foreign minister. It is motivated by a desire not only to foster regional development but also to counter China’s own efforts to increase its influence in its backyard.

Combined with this, Bay countries now mostly understand that connectivity and trade are key to prosperity. One indication is a splurge of infrastructure spending on ports, power and the like: from the construction of Bangladesh’s first deep-water port at Matarbari at the top of the Bay to the vast expansion of Colombo port, which sits on major trans-ocean shipping routes, at the bottom. The Matarbari project—which is the largest in Bangladesh—is backed by the Japan International Co-operation Agency (JICA), a body charged with development assistance. One part of the Colombo port is being developed by China; another by India’s Adani Group, along with American development financing.

Meanwhile India’s government is leading an attempt to revive the group charged with helping develop a regional economy. Founded in 1997, bimstec (short for the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Co-operation) includes the five Bay countries, plus Bhutan and Nepal. It is poorly staffed, while initiatives run into the sand for lack of interest or consensus. Only recently did it adopt a basic charter. But hopes in some quarters are now rising that its summit in Bangkok in September—the first in two years—will see greater co-operation.

Meanwhile India’s government is leading an attempt to revive the group charged with helping develop a regional economy. Founded in 1997, BIMSTEC (short for the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Co-operation) includes the five Bay countries, plus Bhutan and Nepal. It is poorly staffed, while initiatives run into the sand for lack of interest or consensus. Only recently did it adopt a basic charter. But hopes in some quarters are now rising that its summit in Bangkok in September—the first in two years—will see greater co-operation.

In many places, change can already be glimpsed. Tomohide Ichiguchi, jica’s head in Bangladesh, reckons the country’s main transport bottlenecks will be sorted within a few years. (JICA is also involved with improving links with Bhutan, Nepal and land-locked north-eastern India.) And obvious gains from improved cross-border energy trade are starting to be reaped. For instance, India is selling increasing amounts of power to Bangladesh from West Bengal, while Bhutan and Nepal are starting to sell their abundant hydropower to India.

Grounds for scepticism remain. In 2007 the Asian Development Bank laid out a plan that detailed the road, rail and port links needed to boost regional connectivity. For years the plan gathered dust. Neighbours neglected to inform each other of infrastructure projects, let alone co-operate on them. A failure to bring down barriers to trade is another problem—import tariffs not only provide tax revenues but an opportunity for corruption.

And even if the political will is found for deeper integration, two huge challenges loom. The internal one is Myanmar. It is the natural link between South Asia and Thailand and the rest of South-East Asia. But the country is at war with itself. The benighted junta in charge has neither the appetite nor the expertise to think about long-term planning.

The other challenge is geopolitics. The Bay of Bengal is an important place in the rivalry playing out across the Indo-Pacific. For example, China is increasingly interested in Myanmar as a way to get access to the Indian Ocean. The Chinese government also seeks to spy on rivals’ navies: that is one reason why India is exercised about the possibility of Chinese radar stations being built on Myanmar’s Coco Islands and in Sri Lanka. Even if its member-states find greater means to co-operate, contestation also looks set to become a permanent feature in the Bay of Bengal.