Arvind's Newsletter- Weekend edition

1.India is officially ending toll gate collections on roads and highways, transport minister Nitin Gadkari said. 

The government will introduce a satellite-based GPS tracking system to automatically deduct toll from car owners based on their location. Earlier in December, Nitin Gadkari had announced that the National Highways Authority of India (NHAI) aims to roll out this new system by March 2024. 

Efforts to streamline processes and reduce waiting times at toll plazas have been communicated to the World Bank. With the introduction of FASTag, the average waiting time at toll plazas has significantly decreased to just 47 seconds, marking a notable improvement from the previous average of 714 seconds.

2.Why this fuss about income inequality? Rama Bijapurkar opines in Business Standard

India has always had income inequality. In the past, it housed a large swathe of the world’s poor, and now it also houses some of the world’s richest, and many in between. 

This columnist, a homegrown, non-economist people researcher, struggles to understand the expectation that moving from socialism to capitalism should have decreased income inequality, despite the starting point of a steep pyramid on income and human development parameters.

 After 1991, a smaller group with skills, assets, education and enterprise, set free with the world as their oyster, seized the opportunity and made quantum leaps in income and wealth.  A much larger group, with lower income and poor skills were — and still are — not equipped to make a big income and social mobility leap. However, their incomes did not stagnate or deteriorate and their quality of living did improve. There has been a significant increase in the quality and quantity of public amenities, though far from enough for the size of the country. 

Obviously, there are miles to go before victory can be called. But is a part of the answer to the question that visiting foreigners invariably ask about widening income inequality and visible wealth causing social tension to spill out onto the streets? 

The rest of the answer, as always in India, is that God is in the details and that People India has its own logic that bears listening to.

The rich club today is pleasantly more inclusive than it was in the 1970s. In addition to mega-inheritor industrialists, there are equally large first generation industrialists, IT czars, startup prodigies with modest education who sold their companies for billions, stock option CEOs with well-positioned companies in a booming stock market, sports star in IPL, whizz financial investing professionals, and more. And then there is a huge inequality even among the rich.  According to the latest Hurun report, there are 271 billionaires in India with a combined wealth of $1 trillion. One of them has 11.5 per cent of this wealth and another has 8.6 per cent, so less than 1 per cent of billionaire India has 20.1 per cent of its wealth. Of course, 271 dollar billionaires is a big deal as billionaires go, but it is a nano fraction of India. 

This phenomenon of professionals and first-generation wealth creators is noticed and admired, serving as inspiration and aspiration for many young people from very modest-income homes. They say in focus groups that unlike earlier, you don’t have to be born right, people with smarts and talent are making it super rich too.

A research article available online at PNAS.org titled “People are more tolerant of inequality when it is expressed in terms of individuals rather than groups” holds some clues as to why we struggle socially with caste-based inequalities more than with individual inequality. It observes that “the success of individuals at the top can also seem more inspiring and exciting than success of groups… the sense of awe that sustained individual success tends to inspire”.

Of course, in India, every narrative will have an opposite one, which is also true. The narrative of envy and anger that Booker winner Aravind Adiga so chillingly writes about in his book, The White Tiger, is also evident. But it is safe to say that aspiration for one’s own progress in life is the more dominant societal theme than the envy of the haves. People tell us they want their family’s quality of living to improve, social mobility through better skills and education for their children, and better jobs with higher income and more predictability.

A canny politician described this as “sweating your mind not your body”. Expectations are pragmatic, graded and focused on themselves. If there is visible and continuous improvement for me and/or my peers, then there is less chance of discontent spilling on the street, even if the 271 billionaires become 500 trillionaires.

A Bloomberg comment on this new report on inequality in India poses this question to political scholars: “Why would 1 billion voters prefer to make the rich even richer, given the odds stacked against them? What’s the incentive?What’s in it for them is the steady improvements in their day to day living and their experience of the opposite of what inequality is supposed to do, which is to increase the power of the rich over the poor.

Polling agency C-Voter data shows: 18 per cent say the country is moving forward but not my life; another 15 per cent say that my life and the country are doing badly, while 62 per cent say that the country is moving forward and my life too. Sixty per cent feel that their living standards will improve in the next year, while 11 per cent say it will deteriorate.

Digital moksha has decreased power distance for many in so many ways, making access and service status blind —  whether it is gas cylinder refills, money transfers, Covid vaccine (a big one), or access to cash benefits without the indignity of middlemen. Much has been said about how this operates, and undeniable progress has been achieved. As long as low-priced smartphones and cheap data rates prevail, the juggernaut gathers speed and life does get easier.

There is still a huge gap between aspiration (what I want for myself and my family) and opportunity/ access for decent education, health care and employment — more so, in some parts of the country than others.  It is this gap that needs constant monitoring and fixing more than the gap between the rich and the poor.

3.The economic impact of the Indian diaspora

Around 18 million Indians now live overseas – and they're infusing billions into local economies, reports BBC.

“Indians who have moved to Germany in recent years, a figure that's been steadily rising following more accommodating visa regulations for highly skilled workers. Many well-educated and English-speaking Indians are acquiring jobs primarily in science, technology, engineering and maths – often high-paying fields. With full-time employees earning a median monthly wage of €4,974 (£4,253; $5,416), Indians now rank as the top immigrant earners in Europe's largest economy.”

“Indians in Germany are emblematic of a wider story linked to the largest diaspora group in history: according to the UN, around 18 million Indians now live overseas, in places including North America, Europe, the Middle East and other parts of Asia, such as Malaysia and Singapore. Economists say that amid this growth, the economic power of Indians has spread beyond their native borders, leaving a major global economic mark.”

4.Shortcuts Everywhere : How Boeing favoured Speed over Quality; New York Times

“There’s a lot of areas where things don’t seem to be put together right in the first place." That's not a line you want to hear about any product you use. But you really don't want to hear it when it's describing a product moving 500mph while 30,000 feet above the ground and that has you in it.

"Some of the crucial layers of redundancies that are supposed to ensure that Boeing’s planes are safe appear to be strained, the people said. The experience level of Boeing’s work force has dropped since the start of the pandemic. The inspection process intended to provide a vital check on work done by its mechanics has been weakened over the years. And some suppliers have struggled to adhere to quality standards while producing parts at the pace Boeing wanted them."

5.AI boom drives global stock markets to best first quarter in 5 years

An MSCI index of worldwide stocks has gained 7.7 per cent this year, the most since 2019, with stocks outperforming bonds by the biggest margin in any quarter since 2020, even as traders scale back their expectations for rapid interest rate cuts.

The charge has been helped by the S&P 500, which has closed at a record high on 22 separate occasions during the quarter. The AI boom has fuelled the market gains, with chip designer Nvidia adding more than $1tn in market value during the first three months of the year, equivalent to about one-fifth of the total gain for global stock markets over that period.

ChatGPT maker OpenAI’s CEO Sam Altman has been in Hollywood, showcasing its new video-generating AI Sora, capable of making photorealistic footage from text prompts. An analyst told the Financial Times that “it is going to revolutionise the making of movies by lowering production costs and reducing demand for computer-generated imagery.

6.A new study suggested that eggs are not bad for your heart after all. 

Nutritional science is notoriously tricky — almost all of it is observational, meaning scientists can see that, say, people who eat more asparagus tend to be healthier, but not whether the asparagus makes them healthier, or whether people who are healthier for other reasons also tend to eat asparagus. 

Unusually this was a randomised controlled trial (RCT), with 70 people on an eggy diet, and 70 on a low-egg diet, for four months: It found no difference in cholesterol levels at the end of the experiment. The study was small and short-term, so not conclusive, but it is a rare bit of causal evidence in a field crammed with weak research and overconfident claims.

7.Generative video has good and bad aspects. Either way, it's coming to a screen near you. MIT Tech Review: What’s next for generative video?

“The best of Sora’s high-definition, photorealistic output is so stunning that some breathless observers are predicting the death of Hollywood. Runway’s latest models can produce short clips that rival those made by blockbuster animation studios. Midjourney and Stability AI, the firms behind two of the most popular text-to-image models, are now working on video as well.”

As we continue to get to grips what’s ahead—good and bad—here are four things to think about. Read on for a taste of where AI moviemaking is headed. 

8.Tyler Cowen, spoke to Farid Zakaria , Indian-American journalist, political commentator and author in his superb podcast, Conversations with Tyler. This a must listen or read.

In the podcast, Tyler sat down with Fareed to discuss what he learned from Khushwant Singh as a boy, what made his father lean towards socialism, why the Bengali intelligentsia is so left-wing, what’s stuck with him from his time at an Anglican school, what’s so special about visiting Amritsar, why he misses a more syncretic India, how his time at the Yale Political Union dissuaded him from politics, what he learned from Walter Isaacson and Sam Huntington, what put him off academia, how well some of his earlier writing as held up, why he’s become focused on classical liberal values, whether he had reservations about becoming a TV journalist, how he’s maintained a rich personal life, and more.

Fareed’s new book — was discussed in the podcast — Age of Revolutions: Progress and Backlash from 1600 to the Present