Arvind's Newsletter -Weekend edition

1.India’s election could be the world’s most expensive, opines the Economist

Ask which of this year’s many elections will be the most expensive, and most people would say America’s. They could well be wrong. India’s most recent general election, in 2019, was already the most costly at the time by some estimates, with campaign spending conservatively put at $8.5bn. America’s presidential poll the next year exceeded that. But India’s parliamentary vote this spring will be much dearer and could exceed the $10bn-16bn that is likely to be splurged on the White House race.

India’s ballooning campaign costs have often been linked to illicit cash, sometimes from the criminal underworld. In recent days, however, a spotlight has fallen on corporate funding after Indian companies, including some of the country’s biggest, were revealed to have made political donations worth hundreds of millions of dollars via an opaque system of “electoral bonds”. Proceeds went overwhelmingly to the ruling Bharatiya Janata Party (BJP).

When the government launched the bonds in 2018, it said they would stop the flow of “black cash” into politics by providing a legal yet anonymous channel for donations. But in a rare setback for the prime minister, Narendra Modi, the Supreme Court declared the scheme unconstitutional on February 15th. It ordered the State Bank of India (sbi), the bonds’ sole issuer, to provide details of who bought and received them by March 6th to the Election Commission, which was required to publish those details a week later.

After a failed attempt to extend the deadline until late June, the bank complied. The Election Commission published the data on March 14th, just two days before announcing that the election would be held over six weeks starting from April 19th (with results on June 4th).

Data published so far only identify bond purchasers and recipients without showing which donation went to which party. They have caused a stir nonetheless, as about 50% of $2bn in bond proceeds since 2018 has gone to the bjp, compared with some 12% to its main national rival, the Congress party. The 25 largest buyers of bonds were all Indian companies. Some depend heavily on government contracts and approvals. Several were previously targeted by tax or investigative agencies. A handful bought bonds worth considerably more than their profits.

The BJP denies any wrongdoing. But opposition leaders and activists accuse the government of strong-arming donors into buying bonds for the BJP while deterring them from funding opposition parties, for fear that Indian authorities could get hold of bond buyers’ data via the government-run SBI. Rahul Gandhi, a Congress parliamentarian, branded the scheme “the world’s largest extortion racket”.

The BJP says that its share of donations reflects the number of seats it won in 2019 (303 out of 543 in the lower house) and the number of states it governs (12 out of 28, versus three for Congress). It also blames Congress for the influx of illicit cash in politics after its prime minister, Indira Gandhi, banned corporate funding in 1969. Her son, Rajiv, lifted the ban in 1985 but clandestine cash payments continued, not least because opposition donors feared retribution from those in power.

Critics say the bond scheme did not stop the flow of undeclared cash to parties, which still far exceeds what they report officially and is often used to buy votes or bribe candidates to switch sides. But even activists who challenged the scheme in court are divided on how to replace it. Some favour total transparency, calling for all donations to be made digitally while others argue that anonymous channels are essential to safeguard opposition donors.

The Communist Party of India (Marxist), which governs the state of Kerala and was among the bond scheme’s legal challengers, advocates a German-style system of state funding for political parties. But its leader, Sitaram Yechury, says there is little support among other parties. “Nobody wants to stop corporate funding,” he says. The risk now, he warns, is that if campaign costs continue to grow “parties like ours will find it very difficult to contest”.

2.Wegovy will soon be available to U.S. Medicare patients with heart conditions.

The drug, the higher-dose version of semaglutide specifically for weight loss, costs around $1,300 a month. As well as treating obesity, in a major trial last summer the drug was shown to reduce heart attack and stroke risk in overweight patients.

It’s not clear whether Wegovy reduces heart risk directly by making people slimmer — patients on the trial lost 9% of their body weight, on average — or by more direct means:

In its lower-dose form, Ozempic, semaglutide is also a diabetes medication. Two in five Americans are obese, Gizmodo reported, making the US a huge market for the drug.

3.Neuralink video shows patient using brain implant to play chess on laptop

Nueralink introduced its first patient to the world yesterday. 29-year-old Noland Arbaugh, who lost all movement beneath his shoulders after a 2016 accident, received Nueralink’s first brain-computer chip implant a few months ago.

In the live video, Noland played chess on his computer and moved his cursor around, notably while talking to the interviewer and engaging the audience on other topics. Arbaugh described the sensation by saying it felt like “using the force on a cursor.”

Brain-computer chips have been around for over 20 years, but Nueralink’s display was novel for two main reasons. First, Nueralink’s device transmits data wirelessly, meaning its mobile and not clunked down by wires. Second, Neuralink’s chip allows for a certain level of multi-tasking (playing chess telekinetically while speaking about surgery for example) that is indistinguishable from how a “normal” brain works.

4.Reddit cashes out in a stellar IPO — but can it grow up?

Reddit went public Thursday, the first major social media company to do so since 2019. The initial public offering on the New York Stock Exchange “was different from most — which is fitting since both the company and its user base are rather unusual,” Bloomberg wrote.

Known for its opinionated users, the company reserved up to 8% of its IPO offering for the most active Redditors, warning that it added “increased volatility” to the stock. But Reddit’s stock ended its first day of trading up 48%, signaling investor interest despite the company not turning annual profit since its 2005 launch. Reddit remains one of the 10 most popular U.S. websites and has become increasingly valuable as a search engine.

5.Western reviewers love Netflix’s adaptation of the acclaimed Chinese science fiction novel The Three Body Problem; Chinese nationalists, not so much.

 They criticised the Game of Thrones’ creators take on Liu Cixin’s beloved work for its multiethnic cast, its U.K. setting, and China’s portrayal as “tyrannical.” 

U.S. reviews called the show “mind-bending” and “more diverse,” with “a streak of techno-optimism,” and Beijing’s entertainment critics hailed it as a sign of Chinese sci-fi literature’s global popularity. Inside China, most sci-fi writers self-censor, and time travel narratives are banned. Liu’s works have also been altered: A Cultural Revolution scene in The Three Body Problem was moved from the beginning to the middle of the first book over concerns that it was “too politically charged.”

6.Indian airlines Oct-Dec overseas traffic up 22% on year

Domestic carriers registered a 22% increase in international air traffic to and from India at 7.7 million passengers, as per the latest data available for the October-December period, the fruits of a likely sustained post-pandemic focus by Indian airlines to expand their international network.

As per data from the regulator Directorate General of Civil Aviation, Indian airlines also registered an increase in the cumulative market share of international flights to and from India at 44.6% in the period. Their share was 43.5% seen in the same quarter a year ago for a total of 6.3 million passengers.

For the Oct-Dec period, India’s largest airline IndiGo held a market share of 18.2% as compared with 15.6% a year ago. The Tata Group-backed Air India and Air India Express held 12.8% and 7.1% as compared with 12.5% and 6.9% respectively in the same period a year ago. The market share of Vistara, a joint venture of Tata Sons and Singapore Airlines, rose to 3.6% from 2.6% earlier while that of low-cost carrier SpiceJet dipped to 2.8% from 3.5%.

7.How to make India richer opines The Economist

Every day roughly two dozen trains set off from Delhi, India’s capital, to Bihar, an impoverished eastern state. This week more will be added to ferry the thousands of Biharis heading home to celebrate Holi, the Hindu festival of colours that falls on March 25th this year. Even so, there will be many more people hoping to travel than train seats—not just on the Delhi-Bihar routes, but also on the hundreds elsewhere in India that carry people between its pockets of prosperity and its hinterlands.

Such internal mobility is central to the country’s development. Internal migrants are an important pillar of urban economies. Big cities pull in professionals from across the country. Lower-skilled migrants work on construction sites, guard gates and clean houses. The money they send home brings relief to areas that desperately need it. Yet given enormous income disparities between Indian regions, the number of Indians who migrate is small by comparison with other large and unequal countries such as China. The country could be much richer if more did so.

According to an estimate in India’s annual economic survey, domestic remittances were worth the equivalent of 1% of GDP in 2016-17.

That number could be much larger if Indians started moving more. Reliable data on the number of migrants do not exist, in part because so much of India’s economy is informal. One survey conducted in 2021 estimates that 29% of Indians (nearly 400m people) are migrants. That includes those that move within the same state. Just 12% (160m) move between states. The overwhelming reason for both types of migration is marriage, accounting for 72% of all moves. The share of those moving for work is just 11%, including migration within states. Most of them are men: only 2% of women move for work.

By international standards migration in India is weak. One study in 2014 found that India’s internal migration levels were lower than in all but one of the 82 countries examined. More recent globally comparable data are not available, but urbanisation rates, a proxy for domestic migration, suggest that India still lags. The World Bank estimates that in 2021 35% of Indians lived in cities, a lower share than China (63%), Indonesia (57%) and other lower-middle-income countries (43%).

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Every day roughly two dozen trains set off from Delhi, India’s capital, to Bihar, an impoverished eastern state. This week more will be added to ferry the thousands of Biharis heading home to celebrate Holi, the Hindu festival of colours that falls on March 25th this year. Even so, there will be many more people hoping to travel than train seats—not just on the Delhi-Bihar routes, but also on the hundreds elsewhere in India that carry people between its pockets of prosperity and its hinterlands.

Such internal mobility is central to the country’s development. Internal migrants are an important pillar of urban economies. Big cities pull in professionals from across the country. Lower-skilled migrants work on construction sites, guard gates and clean houses. The money they send home brings relief to areas that desperately need it. Yet given enormous income disparities between Indian regions, the number of Indians who migrate is small by comparison with other large and unequal countries such as China. The country could be much richer if more did so.

Consider the case of Vijay Kumar, who works as a security guard in a posh suburb of Delhi. He earns 15,000 rupees ($181) a month, far more than he would at home. The 8,000 rupees ($96) he transfers to Rataul in Bihar is enough to feed his family and send his children to school. According to an estimate in India’s annual economic survey, domestic remittances were worth the equivalent of 1% of gdp in 2016-17.

That number could be much larger if Indians started moving more. Reliable data on the number of migrants do not exist, in part because so much of India’s economy is informal. One survey conducted in 2021 estimates that 29% of Indians (nearly 400m people) are migrants. That includes those that move within the same state. Just 12% (160m) move between states. The overwhelming reason for both types of migration is marriage, accounting for 72% of all moves. The share of those moving for work is just 11%, including migration within states. Most of them are men: only 2% of women move for work.

By international standards migration in India is weak. One study in 2014 found that India’s internal migration levels were lower than in all but one of the 82 countries examined. More recent globally comparable data are not available, but urbanisation rates, a proxy for domestic migration, suggest that India still lags. The World Bank estimates that in 2021 35% of Indians lived in cities, a lower share than China (63%), Indonesia (57%) and other lower-middle-income countries (43%).

The other issue is that a lot of migration is “circular”, says Chinmay Tumbe of the Indian Institute of Management in Ahmedabad and author of “India Moving”. He reckons that there are 100m temporary migrants in the country, who will return home eventually. But lasting wealth is created only when families spend generations in cities. Returning migrants also add pressure to strained rural economies.

Why are Indians not more mobile? In cities most work is too precarious for migrants to put down roots. Housing is expensive and jobs do not pay enough to cover it. A quarter of Mr Kumar’s salary goes on renting “a pigeon hole and a shared toilet”. Differences in culture and language are another barrier in a country with hundreds of different languages and no lingua franca. So is the rise of nativist movements across the country. This year Bangalore, India’s tech capital and a magnet for migrants, has been embroiled in a battle over language. Municipal authorities have required businesses to display signs predominantly in Kannada, the state’s tongue, or risk losing their licences. Calls to reserve jobs for locals are getting louder.

The lack of a safety-net is another obstacle. Migrants lose welfare benefits, such as access to public health care, when they cross state borders. Welfare spending is skewed towards villagers, who enjoy generous subsidies in agriculture and can get access to a guaranteed workfare programme. Few equivalents exist in cities.

Some signs of change are visible. After a sudden pandemic-era lockdown triggered an exodus of migrants from cities, their travails prompted the national government to improve the portability of government welfare schemes. One initiative now allows people to access subsidised grain anywhere in the country. The southern manufacturing hubs of Karnataka and Tamil Nadu are planning to provide safe accommodation to encourage more women to move there, possibly mindful of the role female workers played in China’s manufacturing boom.

At the national level, the government could establish an inter-state migration council to help migrants and ensure their freedom of movement, suggests Mr Tumbe. Narendra Modi, the prime minister, extols the importance of national unity and national industries to make India a developed country by the time it celebrates 100 years of independence in 2047. Making it easier to move around would be one way to achieve that goal.