NEW DELHI, mumbAi, beNGALuru, kOLkAtA, cHeNNAi, AHmedAbAd, HyderAbAd, cHANdiGArH*, PuNe*, LuckNOw* VOL. 18 NO.

49

Monday, February 26, 2024

Govt plans talks with NHAI’s Gloomy outlook for IT as

livemint.com creditors to prepay debt uP1 companies slash staff uP1
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 NEW DELHI, mumbAi, beNGALuru, kOLkAtA, cHeNNAi, AHmedAbAd, HyderAbAd, cHANdiGArH*, puNe*, LuckNOw* VOL. 18 NO. 49

Monday, February 26, 2024

Think Ahead. Think Growth.

New data reveals QUICK EDIT

how India spends Byju’s: A
Consumption in rural India grew faster than in urban India between 2011-12 and
2022-23, and food no longer forms the major chunk of rural household
budgets, a government survey found. The all-India survey gives a view of
spending habits after a gap of 11 years—the last one, in 2017-18, was junked by
case study
the Centre. The survey is essential to keeping India’s inflation calculations up to A mirage of calm at Byju’s van-
speed. Here are some of its highlights. (Full report and more charts on page 8). ished on Friday, with a battle
By Shuja Asrar for the edtech firm’s control out
shuja.asrar@livemint.com in the open between significant
Rural India outpaced urban India in household investors and its founder.
spending growth in past decade Rebellious investors called an
Average monthly per capita Average monthly per capita spending at extraordinary general meeting
spending at 2011-12 prices (₹) current prices (₹) (EGM) where 60% of share-
2011-12 2022-23 7,000 Urban holders reportedly voted out
6,459
% change 33.5 Rural founder and chief executive
6,000 officer Byju Raveendran along
3,510
40.4 2,630 5,000 with the board. Dutch invest-
2,008 ment firm Prosus NV, which
4,000 3,773
was among the investors that
1,430
3,000 2,630 called the EGM, claimed that
shareholders passed resolu-
2,000
tions aimed at resolving “out-
1,000 1,430 standing governance, financial
mismanagement and compli-
0
Rural Urban 1999-00 2011-12 2022-23 ance issues” at the company,
The data is not strictly comparable across years because of different methodologies. reconstituting the board of
Think and Learn, the parent of
Share of rural food spend Spending of urban top 5% is Byju’s, so that its founder no
now below 50% of total 10 times that of bottom 5% longer controls it, and also
Share (%) of food and non-food items Average monthly per capita spending by changing operational leader-
in overall monthly per capita spending top/bottom 5% of population (in ₹)
ship. Raveendran and his fam-
Non-food Food Top 5% Bottom 5% ily dismissed last week’s EGM
Urban Rural as “procedurally invalid,” citing
57.4 60.8 47.1 53.6 the absence of any founder. To
Rural 10,501 1,373 his relief, the Karnataka high
court had already stayed the
meeting’s decisions from being
implemented until it heard the
founder’s plea on 13 March. An
interesting case study of Indian
Urban 20,824 2,001 startup shareholder activism is
42.6 39.2 52.9 46.4 in the making. As precedents
2011-12 2022-23 2011-12 2022-23 may get set, this power struggle
Based on current prices. needs to be followed closely.
Source: Household Consumption Expenditure Survey (National Sample Survey Office)

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 PLAIN FACTS

Why India Inc’s growth

story of Q3 is a puzzle
BY MANJUL PAUL & NITI KIRAN

C
orporate India’s revenue and profit growth diverged in the December quarter, with both good and not-so-good news
coming out of the current earnings season. On the face of it, revenues expanded 8% on a year-on-year basis, the fastest
in three quarters, but profit growth slacked to 31%, the slowest in 2023-24 so far. On the flip side, the revenue growth
is still highly subdued compared with what it was just four quarters ago (18%), thanks to struggling rural demand; yet, profit
growth is shining on account of reduced input cost pressure.
Meanwhile, India Inc. finally came out of the shadow of the vibrant fortunes of the country’s banking and financial services
sector, which had been riding on healthy business performance and asset quality so far, but was no longer the primary driver
of the profit growth in the December quarter, showed a Mint analysis of the earnings of 3,478 BSE-listed companies. Exclud-
ing banking, financial services and insurance (BFSI) firms, total revenue growth returned to positive territory (3.4%) after
two consecutive declines, and profits swelled by nearly 43%.
Sequentially, revenues rose 3.6%, a three-quarter high, while profits shrank marginally, largely owing to smaller companies
in the sample, whose profits shrank 38%. Even on a year-on-year basis, small businesses’ profit growth lagged larger firms.
Size was not the only factor dictating the hits and misses this quarter. Across sectors, too, the performance was not uniform,
with rural demand remaining a major pressure point, a Bank of Baroda report dated 22 February pointed out.

Profit growth hits a three-quarter low, Large and medium-sized firms fare well,
even as revenue growth paces up while smaller ones lag behind
Year-on-year change (%) in revenue and net profits of listed firms Year-on-year change (%) in key metrics in Q3FY24, by company size
Total revenue Large Medium Small and micro
18.3
34.7
12.2 32.3

8.4 28.4
6.4
4.8 25.4

Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24

Total net profits

Q3FY23 0.5

9.3 9.5
Q4FY23 9.9
7.2 6.7
Q1FY24 33.8
1.1
Q2FY24 36.5 Total revenue Net profits Operating profits

Based on analysis of 3,478 BSE-listed companies. Classification based on revenue in

Q3FY24 30.7 December quarter: Large (>₹10,000 crore), Medium (₹1,000 crore to ₹10,000 crore),
Small and micro (<₹1,000 crore).
Based on analysis of 3,478 BSE-listed companies. Source: Capitaline, Mint calculations

Banking in the Spotlight BFSI revenues gained the most but the
sector's profit growth slowed down
THE OVERALL earnings show was impressive, but surely not Year-on-year growth in Q3FY24 (%)
broad-based. As many as 11 of the 18 key sectors covered in the Top 5 Revenue Net profits
analysis showed some slowdown in their net profit growth. BFSI 25.9 12.8
Among them was the BFSI sector, which had largely done the Infra and engineering 17.6 69.9
heavy-lifting for corporate India earnings in recent quarters. Auto and ancillaries 16.2 82.1
The sector’s profits rose 12.8% from a year ago, against a 31% Hospitality 14.2 24.1
growth in the September quarter. Sequentially, the sector Textiles 12.3 284.5
witnessed a contraction in net profits. Bottom 5
“With the exception of a few public sector banks, the majority Agri and allied -23.1 -55.2
of banks saw their margins remain flat or slightly decline,” said Chemicals -3.5 -7.6
Palka Arora Chopra, director at Master Capital Services Ltd. Oil and gas -1.3 49.3
However, the sector remained a leader in terms of revenue Metals and mining 2.4 55.8
growth (25.9%), followed by infrastructure and engineering IT and ITeS 2.8 0.6
Analysis based on a sample of 3,478 BSE-listed companies. Sectors
(17.6%), auto (16.2%), hospitality (14.2%), and textiles sector sorted on the basis of revenue growth. BFSI: Banking, financial
(12.3%). For nine of the 18 sectors, revenue growth exceeded the services, and insurance companies. ITeS: IT-enabled services.
aggregate rate of 8.4%. Source: Capitaline, Mint calculations

Aggregate expenses show a flat

trend in the latest quarter
Relief on the Way?
Various expense heads as a share (%) of total revenues NOT TOO long ago, businesses faced the terror of high
Total expenses
expenses—both raw material and employee salaries. Much to
80 their relief, the pressure has eased. In the December quarter,
71.4
70 total expenditure was up only 2% from a year ago, with the pace
60
stable for some time. As a share of revenue, aggregate expenses
for the sample stood at 71.4%, or thereabouts, for three quarters.
50 The raw materials head has also been coming under control
40 since a high of 33.6% as a share of revenues in April-June 2022.
Raw material cost
28.3 In the last four quarters, it has come down from 30% to 28.3%
30
(with only a marginal rise in the December quarter). Employee
20 costs were 8.5% of revenues, marginally down from the
Employee expenses 8.5 preceding two quarters but slightly higher compared with the
10
same quarter a year ago.
0
Q3FY22 Q3FY24 “With input prices abating, profit margins have seen a sharp
BFSI companies excluded for calculation of raw material cost. uptick…contributing to higher profits,” the Bank of Baroda
Source: Capitaline, Mint calculations report said.

Margins Risk Operating margins fell from Q2, while

net margins touched a three-quarter low
AGGREGATE OPERATING margins remained strong, rising Aggregate profits (as a % of revenue), quarterly
from 24.1% a year ago to 28.6% in Q3FY24. However, there was 35
a 57-basis-point dip on a quarter-on-quarter basis. Net profit
28.6
margins—or net profits as a share of revenue—also saw a dip in 30 Operating profits
the last two quarters, even as it rose on a year-on-year basis.
25
The signs of stability on margins could change in the coming
months. “The next few quarters may remain volatile or a mixed 20
bag as freight costs are on a rise due to the Red Sea crisis,
15
affecting some of the input cost and margin,” said Mukesh Net profits 9.8
Kochar, national head of wealth at AUM Capital. 10
On the positive side, companies could also expect a lift from
5
increased consumption demand, especially in urban areas, in
election season, Kochar said. However, that’s not to say that the 0
rural demand factor is out of the woods: analysts will closely Q1FY23 Q3FY24
watch the recovery on that front. Based on analysis of 3,478 BSE companies.
Source: Capitaline, Mint calculations
manjul.paul@livemint.com
PARAS JAIN/MINT

PEANUTS by Charles M. Schulz

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 NEW DELHI, MUMBAI, BENGALURU, KOLKATA, CHENNAI, AHMEDABAD, HYDERABAD, CHANDIGARH*, PUNE*, LUCKNOw*
Monday, February 26, 2024
SENSEX 73,142.81 0.00
Govt plans talks to
prepay NHAI debt
Move to trim interest payments, free NHAI to expand network
Subhash Narayan & Rhik Kundu
NEw DELHI
A
fter suspending fresh
borrowings by the
National Highways
Authority of India
(NHAI) for two years,
the Centre is now looking to prepay
some of its ₹3.4 trillion debt, two
people aware of the plan said.
The Centre may soon begin talks
with NHAI’s long-term bond holders
for the prepayment, the people cited
above said on condition of anonym-
ity. The move would allow NHAI to
deploy more capital for strengthen-
ing the highway network, and bring
down interest payments, which are
taking up a big chunk of the govern-
ment’s annual budget allocations.
“Prepayment of NHAI bonds is
among the options being considered
for reducing highway developer’s
debt,” the first of the two persons
cited above said. “However, this will
depend on investors’ willingness to
forgo high interest-bearing bonds.
An earlier attempt to retire bonds
prematurely, had found limited
interest among investors.”
NHAI raised funds through fixed
coupon rate bonds with tenures of
five, 10, 15, 20, 25 and 30 years,
respectively. Several of these bond
issues, the last of which came in
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livemint.com
NIFTY 22,212.70 0.00
MAKE WAy
Since FY23, the government has suspended large borrowings by NHAI,
and met its entire capital requirement through budgetary measures
Borrowings by
NHAI (in ₹ Crore) 74,987
65,080
61,217
2018-19 2019-20
Source: Ministry of Road Transport and Highways of India (MoRTH)
ROAD AHEAD
A previous attempt to PLAN to first prepay
persuade lenders did bonds maturing betw-
not find many takers en 2025 and 2030
FY22, are maturing between 2025
and 2030. The plan is to retire these
bonds first before looking at giving
early exit to long-term bond holders
having payers with maturity extend-
ing up to 2040, the second person
mentioned above said.
Spokespersons of the finance and
road ministries, and the National
VOL. 18 NO. 49 Rs. 10.00 . Price with Hindustan Times Rs. 15.50 20 PAGES
Urban Company’s gigsters: India will be the testbed for
Hostage to the algorithm uP12 GenAI: McKinsey’s WrightuP3
DOLLAR ₹82.95 ₹0.00 EURO ₹89.73 ₹0.00 OIL $82.55 $1.54 POUND ₹104.98 ₹0.00
Trimming headcount
76,572 job losses at the 10 largest IT services companies.
Headcount at the
end of Dec 2023
Change from
Dec 2022
Sony eyes aha
after Zee deal
DON’T MISS
MINT
ends; Sun TV
TCS
Cognizant
Infosys
HCL
603,305
347,700
322,663
224,756
-24,182
-10,669
-7,600
2,486
interested too
Anirudh Laskar& Lata Jha
Wipro 240,234 -21,875
MUMBAI/NEw DELHI
State Bank of India shrinks ICICI
C
Tech Mahindra 146,250 -10,818 ulver Max Entertain-
ment (earlier Sony Pic- Bank lead in market value
LTI Mindtree
Mphasis
82,471
33,992
-3,991
-1,458
tures Networks India)
and regional broadcaster Sun
Public sector lender State Bank of India has
shrunken the gap in market cap with private
Persistent 23,336 738 TV Networks have begun initial sector lender ICICI Bank to ₹585 billion in
less than two weeks, as investors bet on its
LTTS 23,298 797 discussions to purchase a stra-
tegic stake in Arha Media & operational efficiency and robust loan
76,150
Note: Cognizant follows Jan-Dec financial year while Source: Mint research based on Broadcasting, which runs the growth. >P9
all other companies follow April-March fiscal year. fact sheets of companies.
South Indian video streaming
SATISH KUMAR/MINT
platform aha. Two auto component makers
*₹798 crore was
Gloomy outlook for Arha Media, a joint venture
between Geetha Arts and My
Home Group, has roped in
closer to receiving PLI payouts
Sona Comstar and Toyota Kirloskar Auto
Parts have received eligibility certifications
raised through
the issue of 54EC
bonds in 2022-23 IT as cos slash staff KPMG Corporate Finance as a
strategic adviser, said three
people familiar with the devel-
for two of their key products, making them
the first component makers to qualify to
receive benefits under a production-linked
opment. incentives scheme. >P8
Devina Sengupta & Hitesh Oberoi, CEO of Info A possible deal could value
798*
Varun Sood Edge India Ltd, which operates aha at ₹1,500-2,000 crore, one India for no tariffs on textile,
2020-21 2021-22 2022-23 Naukri.com, said IT services of them said.
MUMBAI/BENGALURU companies went on a hiring Promoted by the ₹9,000-
apparel during EU FTA talks
binge during the two pandemic crore My Home Group and India is advocating for labour-intensive
H
eadcount at India’s top years, but a subsequent slow- backed by film producer Allu textiles and apparel products to be classified
10 IT firms employing a down forced them to trim Aravind (Geetha Arts), aha was as non-tariff items in the ongoing negotiations
NHAI may pay for a FTA with the European Union. EU nations
₹30,000 cr in debt combined two million down. launched in March 2020 as a impose higher import duties, typically ranging
servicing in FY24 people fell by 76,572 last year, “We didn’t see any recovery Telugu content service; subse- 10-12%, on textile products. >P2
as companies retrenched in Q3. IT hiring was slow in Q3 quently it added original Tamil
SARVESH KUMAR SHARMA/MINT
workers in the face of a slow- as well. What we’ve been seeing language content to its reposi-
Highways Authority of India (NHAI) down. for the last three quarters now tory. Surging Nvidia stock keeps
didn’t respond to emailed queries. According to staffing firms is a serious slowdown in IT hir- With Sony terminating its drawing in more believers
“The repayment of existing debt and job portals, hiring is not ing,” said Oberoi in a post-earn- proposed merger with Zee Nvidia’s historic run is minting profits for
before its original maturity will obvi- expected to pick up soon either, ings interaction with analysts Entertainment Enterprises, investors big and small. Many are betting the
ously increase the demand for long- amid muted demand for tech- on 13 February. “They’ve (IT regional content remains a big boom is just beginning. They are piling into
tenor AAA instruments and, nology services and rising fears services firms) not been adding missing piece in its portfolio, trades that the chipmaker’s shares, which
thereby, the yield for long tenor will of artificial intelligence eating new people. In many cases, said one of the persons familiar have more than tripled over the past year,
into existing jobs. are headed still higher. >P10
TURN TO PAGE 8 TURN TO PAGE 8 TURN TO PAGE 8
 02 MoNDay, 26 FebRuaRy 2024
New Delhi ECONOMY & POLICY LIVEMINT.COM

STRAIGHT
F O R WA R D
India for no tariffs on textile, ‘Armenia
for strategic
Respond to this column at
feedback@livemint.com
SHASHI SHEKHAR
apparel in EU free trade deal partnership
with India’
OPPOSITION’S LOST EU nations impose 10-12% import duties on textile products, placing India at a disadvantage
Shashank Mattoo
shashank.mattoo@livemint.com
NEW DELH

ART OF DEVELOPING
A
rmenia is eager to fur-
Dhirendra Kumar came in force in August 2011, the ther strengthen its ties

GOOD POLL PLANKS dhirendra.kumar@livemint.com

NEW DELHI
expected gains did not happen."
Negotiations for an FTA between the
EU and India were launched in 2007,
with India and is work-
ing on elevating it to a strategic
partnership, Armenia’s labour

I
ndia is advocating for labour-inten- but were suspended in 2013. Discus- minister Narek Mkrtchyan

S
andeshkhali, a village in Bengal, is now making national and sive textiles and apparel products sions resumed on 17 June 2022, with said. “Our relations are mature
international headlines. The BJP has made it a poll plank, to be classified as non-tariff items in commerce minister Piyush Goyal, and enough to be defined as a stra-
converting it as an issue between the country’s two major the ongoing negotiations for a free- Valdis Dombrovskis, the executive vice tegic partnership. I hope our
religions. Before each election, the saffron party brings up such trade agreement (FTA) with the president of the European Commis- ministers of foreign affairs will
issues that benefit it. The Congress and Mamata Banerjee were European Union. sion, leading the efforts. have discussions on this issue.”
formerly experts at it. EU nations impose higher import The EU is a significant export desti- As a part of this effort Arme-
Sandeshkhali being in Bengal, let us start with Mamata. You duties, typically ranging 10-12%, on tex- nation for India, ranking second only to nia is also looking to deepen its
may recall that Ratan Tata had plans to build a facility at Singur tile products, placing India at a disad- the US. Nevertheless, non-tariff barri- defence ties as well. “We are
to build the Tata Nano—the ₹1-lakh car for the common man that vantage compared to China, the EU's ers imposed by the EU have led to a looking to make our coopera-
Tata had envisioned—in 2007. Back then, Mamata launched a leading supplier of apparel and textiles, decline in goods exports over the past tion in defence much deeper.”
movement with the slogan Maa, mati, manush (mother, mother- said two people seeking anonymity. two decades. After a brief but intense con-
land, people), which forced Tata to drop his Singur plans. The seventh round of negotiations An FTA could reduce duties and also flict between Armenia and
Narendra Modi, the then chief minister of Gujarat, offered Tata with the 27-nation bloc, which started address the barriers affecting Indian Azerbaijan over Nagorno-Kar-
the space and facilities to relocate the Nano plant to Sanand. Who on 19 February, is significant for the agricultural exports. Moreover, India's abakh in 2020, resulting in sig-
knew then that Modi’s move would propel him towards India’s Indian textiles and apparel sector, con- India is emerging as a preferred destination for sourcing textiles, with better production-linked incentives (PLIs) nificant military losses for
prime ministership in just six years? sidering that the EU, the US and West quality products, adhering to global standards, driving exports growth. MINT could boost exports of textiles, pharma- Armenia, India increased arms
This method of recognizing issues and turning them into pop- Asian countries, are the major export ceuticals, and mechanical appliances, sales and strategic support to
ular slogans was originally the style of the Congress party. Ahead destinations for Indian garments. $4.30 billion and handicrafts worth textile exports. Mere signing of an FTA all of which are significant imports for the South Caucasus nation.
of the general elections in 1971, Indira Gandhi gave the slogan Ve “The issue of bringing textiles under $330 million. may not result in a rise in export of the EU. Since then, defence ties with
kahete hain Indira hatao, main kahti hoon garibi hatao (they say the non-tariff barrier category was India is emerging as a preferred des- India’s labour-intensive goods, said In the sixth round of negotiations in India have strengthened. In
remove Indira, I say remove poverty) from Kalahandi, a district prominently raised during the tination for sourcing textiles, Ajay Srivastava, founder, Global October, the two sides made 2020, Armenia purchased the
in Orissa (now Odisha) that epitomized starvation and poverty. seventh round of discus- with better quality products, Trade Research Initiative progress in 18 out of the 23 Swathi weapon-locating radar
The symbolism and the slogan proved successful. Indira won 352 sions. The talks are still on, adhering to global stan- (GTRI). chapters. system from India, followed by
Lok Sabha seats at that election. It is a different matter that Indira
eventually lost her way and ended up declaring the Emergency.
and we are positive about
it,” the first person said. $36.68
worth textile
dards, driving exports Eliminating duties in
bn growth. The elimination the EU or the UK may
worth textiles have
Geographical indica-
bn tions (GIs) are the other $27.69 an agreement with New Delhi
for purchasing ammunition,
When Jayaprakash Narayan called for Sampurna kranti (total India's textile exports of import duties will fur- benefit Indian exports, key issue that both sides and Pinaka multi-barrel rocket
revolution), another slogan was coined: Indira hatao, desh bachao to the EU fell from $44.43 exports were made ther stimulate growth, but for a significant been exported so seek to address. launchers, as well as anti-tank
(remove Indira, save the country). Those words resonated with billion in 2021-22 to to the EU in FY23 the second person said. increase, we need to far in this fiscal According to the EU's munitions. It is also keen to see
the already unhappy and furious nation, and Indira lost power. $36.68 billion in FY23. In Emailed queries to the strengthen our product website, bilateral agree- Indian firms bid for tenders to
After acquiring power, the leaders who supported Sampoorna the first 10 months of the cur- Union commerce ministry profile, Srivastava, a former ments aim for significant construct infrastructure, par-
kranti started infighting, and the government collapsed within rent fiscal year, India exported remained unanswered till press Indian trade service officer, progress in protecting geographi- ticularly for key projects, such
two years. The current crisis of the Indian opposition is a result textiles worth $27.69 billion globally, time. The European Commission’s added. “India’s export of apparel to cal indications, enhancing GI safe- as the North-South Road, that
of that period. including products valued at $7.67 bil- press officer refused to comment. Japan is an example. Even after elimi- guards within the trade partner's terri- connects Armenia’s southern
At the following election in 1980, Indira went to the electorate lion to the EU. This merchandise However, experts hold differing nating duties on all apparels from day tory to standards similar to the ones border with Iran and northern
with the slogan, Jaat par, na paat par, Indira ji ki baat par, mohar included readymade garments worth views on the proposal for zero duty on one of the India-Japan FTA, which upheld by the EU. border with Georgia.
lagegi haath par (votes for the Congress will come not based on
caste or creed, but on Indira’s words).
Recognizing People, tired of the lust for power of
issues and
turning them
senile politicians, naturally gravitated
towards Indira. She won the election
and remained prime minister until her
Oil tanker shortage B’desh exempted from onion export ban
into popular
slogans was
last breath.
After nearly 14 years, the Congress’s
Congress’ style ability was visible again. Atal Bihari
amid Houthi attacks Puja Das
puja.das@livemint.com
will be celebrated between 10
March and 8 April. the official
Vajpayee entered the fray in 2004 with NEW DELHI said.
the “India shining” slogan. Until then, Bloomberg longer term. But increased Ramadan is a month-long

I
the BJP’s organizational structure was not very robust. Vajpayee feedback@livemint.com avoidance of the southern Red ndia has decided to exempt religious festival that culmi-
and Lal Krishna Advani were not as focused as Modi or Amit Shah. Sea is adding to the duration of Bangladesh, one of its close nates in the important holiday

L
They differed on many matters. This is why the Congress rode ongstanding warnings trades that had already allies, from the onion of Eid-ul-Fitr, which is also
back to power on one simple question: what did the common man from the oil tanker indus- become elongated due to Rus- export ban and ship 50,000 celebrated in Bangladesh.
get? It is important to note that while Manmohan Singh remained try that too few of the sia’s war in Ukraine. tonnes of the produce ahead During Ramadan, demand
in power for the next 10 years, the Congress was beginning to ships are being built are com- “The impact of the diver- of Eid, said three senior offi- for onions typically increases
show signs of ageing. ing back to haunt the market sions can be seen every day in cials aware of the develop- as citizens of Bangladesh use
This is why, in 2013, when Modi’s name was proposed for after Houthi attacks on com- shipping in general and I ment. them for a variety of dishes for
prime minister at the Goa convention, it became clear that good mercial shipping caused wide- would say crude oil and prod- As an exception, the Indian Iftar. The country’s annual
days of the Congress party were coming to an end. spread diversions in global uct tanker shipping” specifi- government has also allowed demand for onions is approxi-
Modi had meticulously reviewed previous mistakes. As soon petroleum trades. cally, Alexander Saverys, chief onion exports to three other mately 2.5 million tonnes
as he gained power, he began devising new ways to move for- Just two new supertankers executive officer of Euronav countries: Mauritius (1,200 (mt), with consumption
ward. He developed plans to deliver benefits to the country’s are due to join the fleet in 2024 NV, one of the largest pureplay tonnes), Bahrain (3,000 ton- reaching about 500,000 ton-
underprivileged citizens. This new class of voters goes above —the fewest owners, said on nes), and Bhutan (560 ton- India imposed a ban on onion exports last December amid nes during this period. Bang-
caste, region, and gender to vote for him. additions in With just two new an earnings call nes), with immediate effect. concerns over domestic production shortfall. BLOOMBERG ladesh produces 2.3-2.4 mt,
According to a recent survey by the Centre for the Study in almost four dec- supertankers due e a r l i e r this India had banned exports and the rest is imported.
Developing Societies (CSDS) and Lokniti, the majority of individ- ades and about to join the fleet in month. Com- of onion in December after a about a production shortfall, said a second official seeking It imported 723,643 tonnes
uals who voted for the BJP prioritise Modi’s face and personality 90% below the 2024, the addition bined with few 40% export duty and a floor driven by erratic rains, caus- anonymity. of onion from India alone dur-
over BJP’s ideology. This marks the first time since Indira that the yearly average new deliveries price of $800 per tonne failed ing price increases. The ban While the MEA suggested ing the April-December 2023
is the lowest in
prime minister’s face has been successful in winning elections in this millennium. and an aging fleet, to lower domestic prices. will remain in effect until the granting an exemption to period. In FY23 India sup-
Gujarat, Madhya Pradesh, Rajasthan, and Chhattisgarh. This was But after owners almost four the outlook for This coincides with Bang- end of the cur- export 20,000 plied 671,125 tonnes of the
not the case until the past elections. Modi is the first such leader increasingly decades tankers is “very ladesh’s Prime Minister rent financial tonnes of onions kitchen staple to Dhaka. India,
of democratic India whose popularity has grown over time. started to shun positive.” Sheikh Hasina taking office year. The govt decided and 50,000 ton- the second-largest onion
Despite this, the BJP does not want to leave any stone unturned the southern Red While other for fifth-term in January. The decision to supply 50,000 nes of sugar to grower globally, exported
to win elections. The party and the government are well aware Sea, the lack of new capacity is commercial vessels started to “We have allowed exports was made after tonnes of onions Bangladesh, the nearly 1.7 mt of onion to the
that dynasty and corruption have eroded the foundations of the starting to bite: rates have seen avoid the Red Sea soon after of 50,000 tonnes of onions to the Ministry of given Ramadan is Centre refused to world in FY24, until the ban
opposition. They have never let go of an occasion to assault them spikes, and voyage durations the attacks started in Novem- Bangladesh. Shipments will External Affairs was imposed in December.
between 10 March a l l o w s u g a r
ruthlessly. The breakdown of the “INDIA bloc”, the imprison- are going up. ber, oil and fuel tankers were be undertaken by private was informed exports due to New Delhi shipped 2.5 mt in
ment of Jharkhand’s chief minister, and numerous opposition Rates had been held in slower to steer clear. That all trade until 31 March and the that Dhaka had and 8 April, an domestic supply FY23, according to data from
leaders jumping ship to the BJP did not occur by chance. check last year as OPEC and its changed last month after US modalities are being worked requested an official said concerns. the consumer affairs ministry
Sandeshkhali is likewise a waypoint along this ongoing politi- allies kept oil off the market. At and UK forces bombed Yemen out,” Rohit Kumar Singh, exemption from However, on showed.
cal journey. Let’s see how effective this messaging will be during the same time, a wider energy to quell the incidents. Military consumer affairs secretary, India’s current Thursday, the The top importers of Indian
the upcoming general elections. transition is meant do away interventions didn’t stop the told Mint. prohibition on export of food government decided to sup- onion are Bangladesh, United
Shashi Shekhar is editor-in-chief, Hindustan. with fossil fuels — dimming Houthis and instead kept The ban on onion exports items, including onion and ply 50,000 tonnes of onions, Arab Emirates, Malaysia, Sri
Views are personal. the industry’s outlook in the many tanker owners away. was imposed due to concerns sugar via the Indian embassy, considering that Ramadan Lanka and Nepal.

NCT approves inter-state transmission projects worth over ₹736 crore CORRECTIONS AND
CLARIFICATIONS
Mint welcomes comments,
Rituraj Baruah and Rajasthan. respectively. nective transformers at the Telangana. suggestions or complaints
rituraj.baruah@livemint.com The NCT has entrusted The committee has also 765/400/220 kV Mandsaur Considering the relatively about errors.
NEW DELHI state-run Power Grid Corp. of approved an additional trans- Substation in Madhya Pra- short line length of around
Readers can alert the
India to enhance the transfor- mission system to transport desh. The project aims to 30km for the Nizamabad-II
newsroom to any errors in the

T
he National Committee
on Transmission (NCT),
under the ministry of
power, has greenlit four new
inter-state transmission sys-
tems (ISTS) valued at ₹736.83
crore. The projects have been
allocated to Power Grid Cor-
poration of India, Adani
Energy Solutions, and REC
Power Development and Con-
sultancy Ltd (RECPDCL).
In its last meeting in Janu-
ary, the committee sanctioned
these transmission projects
spanning Karnataka, Gujarat
mation capacity of the Tum-
kur (Pavagada) pooling station
in Karnataka by 2x500 MVA to
400/220 kV ICTs. This
project, with an estimated cost
of ₹116 crore, will be imple-
mented through the regulated
tariff mechanism (RTM) mode,
with a tentative implementa-
tion timeframe of 18 months.
Likewise, Adani Energy
Solutions Ltd's Jam Khamb-
haliya Transco Ltd and WRSS
XXI A Transco Ltd have
received approval for increas-
ing transmission capacities at
electricity from the Bhadla-III
pooling station, a component
of the Rajasthan REZ Phase-III
scheme, with a capacity of 20
GW. The project will be exe-
cuted by RECPDCL, a wholly-
owned subsidiary of state-run
REC, at an estimated cost of
In November, the NCT had approved 10 new transmission ₹368.83 crore. It was sanc-
projects worth over ₹6,600 crore. MINT tioned under the tariff-based
competitive bidding (TBCB)
the Jam Khambhaliya pooling expected costs for the projects route.
station in Gujarat, and the are ₹110 crore and ₹142 crore, The NCT also reviewed pro-
Lakadia substation under the respectively. The projects are posals for other new projects,
Western Region Strengthen- expected to be completed by one of which involves increas-
ing Scheme, respectively. The June 2027 and June 2025, ing the capacity of intercon-
improve connectivity to pump
storage projects of Greenko.
“NCT opined that connec-
tivity to PSP of Greenko can be
accommodated within the
present scope of works.
Accordingly, augmentation of
transformation capacity and
line bays is not required at
Mandsaur S/s at present,”
according to the minutes of
the meeting. The NCT also
discussed the need for a trans-
mission system for integrating
the Nizamabad REZ (Renewa-
ble Energy Zone) (1 GW) in
765 kV D/c line, Central paper by emailing us, with your
Transmission Utility of lndia full name and address to
Ltd (CTUIL) proposed that feedback@livemint.com.
both the Nizamabad-II PS and
the line should be at the rated It is our policy to promptly
respond to all complaints.
voltage of 765 kV right at the Readers dissatisfied with the
initial stage. “NCT directed response or concerned about
that the modified transmission Mint’s journalistic integrity may
scheme should be put up for write directly to the editor by
deliberation in the next NCT sending an email to
meeting." CTUIL is a 100% asktheeditor@livemint.com
subsidiary of Power Grid Corp. Mint’s journalistic Code of
of India. In November, the Conduct that governs our
NCT had approved 10 new newsroom is available at
transmission projects worth www.livemint.com
over ₹6,600 crore.

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First published in February 2007 to serve as an unbiased and clear-minded chronicler of the Indian Dream.
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 LIVEMINT.COM CORPORATE MoNDay, 26 February 2024
New Delhi 03

Razorpay eyes global

boost, moves to India
The company plans to launch its products in West Asia and Southeast Asia
Ranjani Raghavan
ranjani.raghavan@livemint.com
MuMbai

P
ayment gateway business
Razorpay Software Pvt. Ltd is
preparing to launch its prod-
ucts in new Southeast Asian
and West Asian markets this
year, aiming to garner 5-10% of its reve-
nue from its international business in 3-5
years.
“We should definitely launch in some
new countries this year as we look to
expand our business in Southeast Asia
and Middle East,” said co-founder and
managing director Shashank Kumar.
The Delaware-incorporated company
that’s working on changing its domicile
to India entered international markets in
2022 by acquiring a majority stake in
Mayalsia’s recurring payments provider
Curlec. Razorpay co-founder and managing director Shashank Kumar.
“We will go deeper on some of the
international markets as well as dive into line business (point of sale devices) that fully it should be in that range,” Kumar
the cross-border flows,” Kumar said. “We we are investing in—all of these are still said.
expect international business to grow up not at breakeven,” Kumar said. “Over the PhonePe last year said its investors had
to 5-10% of our total revenue in 3-5 next 2 years, we want to hit our goal to to pay ₹8,000 crore in taxes for shifting
years.” ensure we are in the black in all of these its domicile from Singapore to India.
For FY22, Razorpay reported a stan- lines before we go for a listing.” Razorpay, in the meantime, has seen a
dalone profit of ₹7.38 crore on an opera- Razorpay has kickstarted the process spike in onboarding merchants since it
tional revenue of ₹1,481.2 crore, up from of shifting its domicile to India as it seeks received its payments aggregator license
a profit of ₹6.19 crore and rev- in December. The Reserve
enue of ₹841.2 crore in the GROWTH TRAJECTORY Bank of India had asked
year before. The company has Razorpay and some other
not yet declared its financials THE company RAZORPAY posted THE firm has seen a companies to not onboard
for FY23. entered int’l markets a standalone profit spike in onboarding merchants till they received
in 2022 by acquiring of ₹7.38 cr on an merchants since it
Kumar said the company a majority stake in operational revenue received a payments their final payments aggre-
had achieved break-even on Mayalsia’s Curlec of ₹1,481.2 cr in FY22 aggregator licence gator license.
its payments gateway busi- Since December, Razor-
ness, but newer products are pay has onboarded more
yet to become profitable. Razorpay is to list on domestic bourses. The process than 3 times the number of merchants it
backed by Lightspeed, Tiger Global and is expected to take 6-12 months, pending had on its platform previously, Kumar
Peak XV Partners, among other inves- approvals from US regulators over tax said. Last week, the company said it had
tors, and was last valued at close to $7.5 and Indian regulators such as RBI. crossed a total payment volume of $150
billion in 2021. Razorpay has made provisions for a tax billion. Razorpay also said it had
“On the new lines of business—like outgo on its books, Kumar said. “We will launched a payment gateway product
neo-banking business (around payroll come to know about the exact tax amount and was working on incorporating artifi-
and vendor payments) and marketing that needs to be paid in due course. We cial intelligence solutions across its prod-
stack (such as dynamic QR code) and off- have accounted for some of it and hope- uct stack.

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 04 MoNDay, 26 February 2024
New Delhi MARK TO MARKET LIVEMINT.COM

S&P BSE Sensex Nifty 50 Nifty 500 Nifty Next 50 Nifty 100 S&P BSE Mid-cap S&P BSE Small Cap
ClOsE 1-WEEK CHANGE (%) ClOsE 1-WEEK CHANGE (%) ClOsE 1-WEEK CHANGE (%) ClOsE 1-WEEK CHANGE (%) ClOsE 1-WEEK CHANGE (%) ClOsE 1-WEEK CHANGE (%) ClOsE 1-WEEK CHANGE (%)

73142.80 0.99 22212.70 0.78 20313.50 0.74 59153.75 0.97 22734.30 0.86 39934.21 0.01 46033.47 0.82
1-MONTH CHANGE (%) 3-MONTH CHANGE (%) 1-MONTH CHANGE (%) 3-MONTH CHANGE (%) 1-MONTH CHANGE (%) 3-MONTH CHANGE (%) 1-MONTH CHANGE (%) 3-MONTH CHANGE (%) 1-MONTH CHANGE (%) 3-MONTH CHANGE (%) 1-MONTH CHANGE (%) 3-MONTH CHANGE (%) 1-MONTH CHANGE (%) 3-MONTH CHANGE (%)

3.94 10.79 4.59 12.17 5.76 15.16 10.99 26.73 5.71 14.71 7.21 18.97 6.12 15.80
6-MONTH CHANGE (%) 1-YEAR CHANGE (%) 6-MONTH CHANGE (%) 1-YEAR CHANGE (%) 6-MONTH CHANGE (%) 1-YEAR CHANGE (%) 6-MONTH CHANGE (%) 1-YEAR CHANGE (%) 6-MONTH CHANGE (%) 1-YEAR CHANGE (%) 6-MONTH CHANGE (%) 1-YEAR CHANGE (%) 6-MONTH CHANGE (%) 1-YEAR CHANGE (%)

11.78 22.71 14.24 26.85 19.84 38.50 33.39 57.59 17.41 31.52 29.04 64.88 27.64 66.63

No respite soon for FMCG cos

Languishing
Schaeffler India's exports share in Q4CY23 dropped to the lowest in
two years at least
Exports (as % of sales mix)
20
Vineetha Sampath hinges on volume performance as the reflected at the operating profit level. 18
vineetha.s@livemint.com Good and bad room for price hikes seems narrow. While margin expansion should 15.8
16
In Q3FY24, the revenue growth of consumer staples companies was at a Hindustan Unilever Ltd (HUL) continue, the pace of increase may

F
or consumer staples compa- multi-quarter low but margin continued to expand expects price growth to be a tad nega- slow due to the high base. So, a signifi- 14
11.4
nies, it will be a while before Revenue (in %) Ebitda margin (in basis points) (right-hand scale) Year-on-year change tive if commodity costs stay put. cant uptick in margin will be category 12
the choppy waters calm 16 200
Besides, competition would have a or company specific. Investors in 10
down. Not only is demand in bearing on the market share of the FMCG stocks are treading cautiously, Q1CY22 Q4CY23
rural markets weak but stress listed FMCG companies. with no big triggers for Note: Schaeffler's financial year is January to December.
Source: Company, Centrum Broking
in the urban portfolio is an emerging 12 100
Price cuts and promo- TUrbULENT demand revival in the near
PRANAY BHARDWAJ/MINT
worry. tional activities due to stiff WATErS term. In the past one year,
Fast-moving consumer goods
(FMCG) companies gave a muted vol-
ume show in the three months ended
8 0
competition in biscuits,
foods, detergents and HUL expects price
soaps means stress for growth to be a tad
negative if
shares of HUL and Dabur
were down 4% and 1%, and
Marico Ltd were up 6%.
Exports a trouble
December (Q3FY24) despite it being a
festival quarter.
Rural growth lags urban still. Over- 4 -100
HUL and Britannia Indus- commodity costs
tries Ltd, said Antique stay put
Stock Broking.
Amid muted demand
environment, earnings
delivery will stay margin-
for Schaeffler?
all, the FMCG industry volume was at In fact, HUL expects the COMPETITION dependent, notes Emkay
would have a bearing Dipti Sharma
6.4% year-on-year in Q3 versus 8.6% in quantum of businesses on the market share Global Financial Services. Q1CY24 on the exports front, it
0 -200
Q2, said Mihir Shah, a Nomura Finan- Q3FY22 Q3FY24 winning market shares to of the listed FMCG The valuations of key dipti.sharma@livemint.com also added, “We will have to
cial Advisory and Securities (India) Note: Aggregate revenue and Ebitda margin of consumer staples companies under Nomura's coverage.
drop in the coming quar- companies FMCG stocks are not wait for another couple of

analyst, in a report. However, in abso-
lute terms, volume consumption has
remained at the same level for three
quarters, said Shah.
Specifically, things were a tad differ-
ent for Dabur India Ltd as it saw com-
paratively better rural demand. Still,
this does not imply that a rural recov-
ery is on the cards as Dabur owes it to
Ebitda is earnings before interest, tax, depreciation and amortization; one basis point is 0.01%.
distribution expansion.
In general, benign commodity costs
meant more competition from local
players in some categories. This
means muted volumes coupled with
A
ters from 60% levels seen exactly cheap. Shares of slowdown in exports months to clearly know what
Source: Company data, Nomura Research
in December. HUL, Dabur, Marico and over the past few quar- direction this is going to go.”
On the bright side, FMCG compa- Britannia trade at 42-50 times their ters has been a chief Centrum Broking estimates
PRANAY BHARDWAJ/MINT
nies continued to see margin expan- FY25 estimated earnings, according to concern for Schaeffler India export headwinds to continue
price cuts impacted revenue. sion despite product price cuts. But Bloomberg. Ltd’s investors. In the Decem- in 2024 and optical growth to
The aggregate Q3 revenue growth with companies stepping up advertis- Emkay notes that valuations would ber quarter (Q4CY23), exports come in the second half of the
of FMCG companies under Nomura’s ing and promotional expenses to hold on in case demand remains were 11% of revenue, the lowest year led by a low base. Given
coverage was at 2.7%, the lowest in tackle competition, the extent of rise at muted and rational competition helps in at least two years. The com- weak demand trends in Eur-
nine quarters, at least. The path ahead the gross margin level was not fully margin-led earnings delivery. pany has a January to Decem- ope and China, Schaeffler
ber financial year. Sure, exp- plans to explore South-East
orts are a small part of revenue Asian markets like Indonesia,
now but the growth in over- Vietnam, and Thailand to

Paints: A sector out of its complacency zone m CHART BEAT seas markets is crucial for its
revenue growth. “Exports
de-risk the export business
and raise capacity utilization.
Poor performance have relatively higher margins Besides, adverse sales mix
Indian public sector companies saw sharply lower as compared to domestic busi- impacted margin. In Q4CY23,
Harsha Jethmalani bution expansion to over smaller ones, a run for their ishes, incentives for contrac- earnings beat in Q3FY24 ness, it helps expand distribu- consolidated Ebitda margin
harsha.j@htlive.com 6,000 towns by end-FY25. money. tors, and free tinting machines. Indian state-owned firms earnings beat (in %) tion reach, and optimizes cap- fell to 17.3% from 19.2% a year
This will be the fastest and “We reckon, [comfortable] The company is yet to final- 40 acity utilization, making it a ago. Though, new products

A
ditya Birla Group led-
Grasim Industries Ltd
is set to disrupt the oli-
gopolistic Indian decorative
paints industry with its strong
distribution strategy and man-
ufacturing prowess. Under its
paints brand, Birla Opus, six
plants are set to come on
stream by the end of FY25.
Collectively, these plants will
widest pan-India launch by competitive equilibrium in ize a brand ambassador, but its 20 significant growth driver,” said and localization are seen driv-
any paint brand, the manage- paints is likely broken,” ICICI advertisement and promo- Q1FY23 Abhishek Gaoshinde, Share- ing improvement in margin.
ment said last week. Securities said in a report. tional expenses in absolute 0 khan by BNP Paribas analyst. On the bright side, Schaef-
Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24
Birla Opus has Details on pric- terms would be at par with the -20 The overseas markets saw fler stuck to its capital expend-
set ambitious Birla Opus eyes ing will be a cru- market leader. Note: Earnings beat is the variance between reported earnings and average some strong headwinds in Q4, iture plan of ₹1,500 crore for
financial targets of analysts estimates compiled by Bloomberg
₹10,000 crore in cial distinguish- Counter moves in pricing,
Source: Bloomberg, YES Securities
and Schaeffler expects these 2023-25, which shows that the
as well. The com- gross revenue ing factor to mainly by Asian Paints and challenges to persist. During management is keen on seiz-
SATISH KUMAR/MINT
pany eyes and profitability gauge the com- Berger Paints India, dealer Q4, exports fell by 36% year- ing long-term opportunities.
₹10,000 crore in
gross revenue
within three years pany’s aggression
in chasing
incentives, and increased ad
budgets by incumbents can-
PSUs: Time for catch-up on-year due to slackening eco-
nomic growth in Europe and
Moving forward, deteriorating
global outlook and uncertain-
and profitability of full-scale incumbents’ mar- not be ruled out. This could China. Demand began to slow ties may disrupt supply chain,
operations

have a total capacity of 1,332
million litres per annum,
which is 40% addition to the
current industry capacity.
Its plants at Punjab’s Ludhi-
ana, Haryana’s Panipat and
Cheyyar in Tamil Nadu were
commissioned last week. The
company aims for rapid distri-
T
within three ket share. put the sector’s margins at risk he S&P BSE PSU index has nearly doubled in in the overseas markets with leading to higher costs. Besi-
years of full-scale Birla Opus will as tailwinds from easing input the past one year. Now, to justify the valua- the Ukraine war, and the con- des demand revival and scale
operations. offer 10% addi- costs fade, thus driving earn- tions, earnings performance of the companies flict in Israel added to the up in exports, new product
While there was no clear indi- tional quantity in most water- ings downgrades by analysts. in this index needs to catch up meaningfully. An woes. A significant portion of launches should be monito-
cation on whether it will break based paints during the promo- Plus, valuations of key listed analysis by Yes Securities showed that PSU compa- the company’s exports is to red. For now, investors seem
even at Ebitda or profit after- tional period. To establish its paint makers are expensive nies’ earnings performance has lagged the Street’s Europe, with some also going to be cautious. The stock has
tax level, analysts caution that brand value, the company will and will be soon put to test expectations sharply in Q3FY24, falling to 2%, put- to China, Schaeffler said in its fallen 2% in the past one year
the company seems prepared also be offering a one-year war- amid rising competitive pres- ting up the weakest show in the past six quarters. earnings call. While the com- vis-à-vis the 65% jump seen in
to give incumbents, especially ranty for enamels/wood fin- sures. pany hopes for a better S&P BSE Capital Goods index.

Mark to Market writers do not have positions in the companies they have discussed here

Risk models get FPIs stay bullish, infuse ₹18,500 crore in debt market in February
harder to crack PTI
feedback@livemint.com
highest monthly inflow in more
than six years. This was the
Founder Fidelfolio, said.
On the other hand, foreign
the debt markets for the past
few months.
too attracted FPIs towards the
debt market. JP Morgan Chase
bolstering the economy.
On equities front, FPIs
New Delhi highest inflow since June 2017, investors pulled out ₹424 crore FPIs infused ₹18,302 crore in & Co. in September last year pulled out ₹424 crore so far this
Bloomberg when they infused ₹25,685 from equities during the period the debt market in December, announced that it will add month, sharply down from

F
feedback@livemint.com oreign portfolio investors crore. under review. Before this, they ₹14,860 crore in November, Indian government bonds to its ₹25,744 crore in January. The
(FPIs) continued their “With introduction of India withdrew a massive ₹25,743 and ₹6,381 crore in October. benchmark emerging market resilience of the market is pre-

A
s the best hedge fund
strategy of 2023
becomes a magnet for
mainstream investors, the
risk models it relies on are
getting a lot tougher to crack.
The strategy in question is
tied to insurance-linked secu-
rities, which are dominated
by catastrophe bonds (often
dubbed cat bonds). In 2023,
no other asset class produced
a better-performing bet for
hedge funds, with firms
including Fermat Capital
Management and Tenax Cap-
ital booking their biggest-
ever returns.
Cat bonds have been
around for more than 25 years
Cat bonds are used by insurers
to shield them from losses too
big to cover. ISTOCKPHOTO
have been used to shield
insurers from the kinds of
losses associated with once-
in-a-generation natural disas-
ters.
But last year, those primary
bullish stance on the
country’s debt markets with a
net infusion of over ₹18,500
crore so far this month, driven
by the upcoming inclusion of
Indian government bonds in
the JP Morgan Index.
This came following a net
investment of over ₹19,836
crore in January, making it the
Wall Street’s latest pitch is a contradiction: Private IPOs
Laura Cooper
feedback@livemint.com
in global bond indices this year,
Indian debt inflows should get
steady flows going ahead. Also,
further front-loading before
actual inclusion in June this
year is also expected. This is
also in line with long-term aim
to deepen our underdeveloped
debt-markets,” Kislay Upad-
hyay, smallcase Manager &
traded stock. They do allow
companies to avoid the poten-
tial embarrassment of a new
crore in January, data with the
depositories showed.
According to the data, FPIs
made a net investment of
₹18,589 crore in the debt mar-
kets this month (till 23 Febru-
ary). With this, the total invest-
ment by FPIs reached over
₹38,426 crore in 2024. They
have been injecting money in
The upcoming inclusion in JP
Morgan EMBIGD in June 2024
is a major driver for the huge
inflow in the debt market, Bhu-
van Rustagi, co-founder and
COO, Per Annum and Lend-
box, said.
Additionally, attractive yield,
stable macroeconomic indica-
tors and relatively stable rupee
index from June 2024.
This landmark inclusion is
anticipated to benefit India by
attracting around $20 billion–
$40 billion in the subsequent 18
to 24 months. This inflow is
expected to make Indian bonds
more accessible to foreign
investors and potentially
strengthen the rupee, thereby
Executive Christian Sinding
said. “Why don’t we just create
a parallel structure—why does
venting FPIs from selling aggr-
essively despite attractive bond
yields in the US, V. K. Vijaya-
kumar, chief investment strate-
gist, Geojit Financial Services,
said.
Overall, the total FPI flows
for 2023 stood at ₹1.71 lakh
crore in equities and ₹68,663
crore in the debt markets.
public offering.
The private-equity giants
KKR and Bain Capital have

and are used by the insurance
industry to shield itself from
losses too big to cover. That
risk is instead transferred to
investors who lose money if a
pre-defined catastrophe hits,
and rake in potentially huge
returns if it doesn’t.
But calculating cata-
strophic risk is much more
complex than it used to be.
That’s because there’s a grow-
ing concentration of property
in areas that are prone to
increasingly frequent storms,
fires and floods. Taken indi-
vidually, each event is less
intense than a major earth-
quake or hurricane. In aggre-
gate, however, such losses can
be a lot bigger, and that has
major implications for the
growing numbers of investors
now adding exposure to cat
bonds.
Traditionally, cat bonds
P
perils, as they’re known,
accounted for only 14% of
global losses, according to
broker Aon Plc. Meanwhile, a
category known as secondary
perils “outpaced their cumu-
lative costs in the 21st century
by a large margin.”
Such secondary perils—
mostly in the form of destruc-
tive thunderstorms—aren’t
being consistently captured
by models designed to meas-
ure cat bond risk, according to
fund managers monitoring
the development.
“We see that some models
are actually not pricing these
perils adequately,” said Eti-
enne Schwartz, head of
investment management at
Twelve Capital, which holds
$3.7 billion of cat bonds. In
fact, he says “the expected loss
on paper is way below what
we actually think it is.”
rivate-equity firms are listing falling flat. a company need to be public?” each held talks with bankers
desperate to cash out of Some on Wall Street balk at EQT is considering a private and institutional investors
investments. But enthu- the name, seeing it as window IPO for one of the companies it about orchestrating private
siasm for initial public offer- dressing for private place- owns and has been fielding calls IPOs for some of their portfo-
ings is low after several stock- ments, which are sales of from private-equity peers and lio companies, people familiar
market debuts flopped. shares from one private owner bankers curious about the idea. with the matter said.
Enter so-called private to another and have been used Hellman & Friedman in Wall Street had hoped IPOs
IPOs. for years. Skeptics say bankers, 2023 sold a minority stake in would bounce back in 2024
The concept is being ban- never a group to sit still, are the $23 billion insurance bro- after two terrible years that
died about on Wall Street as playing with semantics to kerage Hub International to saw the majority of IPOs fall
investors drum up Leonard Green and other below their initial offering
and bank- business. Private IPOs are being bandied about on Wall Street as investors institutional investors, allow- price. One of the first major
ers search What’s and bankers search for ways to keep the money flowing. AP ing the private-equity firm to debuts, the KKR-backed
for ways to more, some partially cash out of its 2013 healthcare company Bright-
keep the money flowing. The mutual-fund managers who for a future stock-market buyers and sellers to agree on initial investment. Spring, dropped 15% on its first
contradictory moniker refers have been approached to do debut. Most important, they prices, said David Ludwig, About a year ago, the pay- day of trading. That and other
to stock sales in which early private IPOs are wary. While allow private-equity owners to global head of equity capital ment processor Stripe sold disappointments prompted
backers privately sell to they might get better prices return capital to their investors markets at Goldman Sachs. around $6.5 billion of stock to many companies to put offer-
longer-term investors such as and bigger allotments of shares who have been frustrated by a EQT, a Stockholm-based large investors, including ings on hold.
mutual funds or sovereign- in a private IPO, the liquidity— drop in deal activity. They can private-equity firm, helped Temasek, on behalf of employ- A few still plan to take their
wealth funds, sidestepping the or lack of it—is a big drawback. also give impatient employees popularize the term “private ees in a deal that was a varia- chances, including the social-
traditional IPO process. If the managers buy stakes this the chance to sell stock. IPO” this past fall. tion of a private IPO, people media company Reddit, which
Private IPOs don’t come way, it isn’t clear when they Private IPOs, versions of “We just made up the name close to the deal said. It valued first filed to go public in 2021
with the splashy bell-ringing would be able to sell them. which have been around for a because we were getting frus- Stripe at around $50 billion and is preparing to list its stock
ceremony of a traditional Proponents of private IPOs while, are attractive right now trated at the challenges of the and bought the company time next month.
debut or result in publicly say they lay the groundwork as it has become harder for public market,” EQT Chief before a highly anticipated ©2023 DOW JONES & COMPANY, INC.

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 LIVEMINT.COM
MoNDay, 26 February 2024
New Delhi 05

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 06 MoNDay, 26 February 2024
New Delhi
m THE MONDAY QUIZ
1) WhICh two Indian
IT services majors part-
nered with Intel Foundry
last week?
3) WhICh global semiconductor firm became the
first to reach a $2 trillion valuation in less than a year?
4) WhICh tech major
suspended image gener-
ation capabilities of AI
service over inaccuracy?
GLOSSARY
Bring Your Own
Encryption: Also called
hold your own key, bring
your own encryption
(BYOE) is a security model
where a user, as a cloud
customer, is responsible
for encrypting own data
before uploading to cloud
providers’ platform. Users
get a greater control over
the management of their
encryption, reducing risk.
Network Slicing: A tele-
communication configu-
ration, network slicing
allows creation of multi-
ple virtualised and inde-
pendent networks on top
of a common physical
infrastructure. Each slice
acts as a dedicated net-
work to needs of an app or
service. Operators opt for
this to manage a network
while meeting (and
Manufacturing Company (TSMC)
Nvidia 4) Google 5) Taiwan Semiconductor
1) Wipro and HCLTech 2) Orchid Cybertech Services 3)
THE MONDAY QUIZ ANSWERS:
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2) WhICh company
was acquired by Tech
Mahindra-owned sub-
sidiary for $3.27 million?
5) WhICh chipmaker
will get $4.9 billion subsi-
dies from Japan to build
its second chip plant?
exceeding) emerging
requirements from users.
SCADA: Short for super-
visory control and data
acquisition, SCADA is a
category of computer
applications used for
managing industrial pro-
cesses. It gathers data
from sensors and others
for measuring parameters
like temperature, pres-
sure. This data is analysed
to diagnose potential
problems, adjust opera-
tion of devices, and opti-
mise performance.
Dimensionality Reduc-
tion: In machine learning
(ML), dimensionality
reduction is a method to
reduce variables in a train-
ing dataset used for devel-
oping models. It aims at
reducing the number of
features while retaining
important information
required to build an effi-
cient ML model. The goal
of is to lower complexity
while working with mas-
sive data sets, as well as
reduce storage and com-
putation time.
DEALS, TECH & STARTUPS LIVEMINT.COM
‘GenAI is a force multiplier,
and India will be the testbed’
Leslie D'Monte nology as a core element of everything
leslie.d@livemint.com we do. Cognitive abilities of an individ-
BeNGALuru ual will be enhanced with GenAI.
McKinsey research shows tech jobs The ring’s official launch is
A
rtificial intelligence and are expected to grow 14% across indus- expected later in 2024. REUTERS
generative AI, or GenAI, tries by 2032. There will be new growth
will inevitably disrupt
existing roles, but that will
in terms of roles. The question is how
do you ensure everyone is included in Samsung
also mean the emergence that growth. We need to definitely do
of new roles. In fact, McKinsey & Co.’s
research predicts that technology jobs
things. One, is education —early educa-
tion and awareness from under-repre-
to unveil
will grow by 14% across all industries by
2032. For CEOs and other senior cor-
porate leaders, that would mean think-
sented (communities) and helping peo-
ple understand what's possible.
Women don't move towards science
wearable
ing about the future of work with tech-
nology as a core element of everything
and technology naturally. So how do
you help girls early on? I think inter-
smart ring
they do, says Jacky Wright, McKinsey’s vention is required. We should think
first-ever chief technology and plat- about increasing more forums, where Bloomberg
form officer. “The question is, how do women and those under-represented feedback@livemint.com
you make sure everyone is included in get access to opportunities and things
S
that growth,” Wright said in an inter- like broadband access, additional train- amsung Samsung Elec-
view with Mint during her recent visit ing, and skilling. Digital inclusion must tronics Co. is planning to
to India. GenAI would play a critical be at the heart of everything we do. unveil its first wearable
role in making technology available to How do you see the AI ecosystem in smart ring as part of its health
India’s vast population, and work done India, given its AI skillsets and very lineup at the Mobile World
on AI in India could serve as a proof-of- humans in the loop? must ensure there are a few key things robust semiconductor design eco- Congress in Barcelona.
concept for the world. “If we can do it I would characterise GenAI as the you think about… How do you upskill system, but without a cutting-edge The South Korean company
here at scale and at speed, and if we can force multiplier for human capability. and rescale? Do you have the right pro- chip manufacturing plant? will publicly display the Galaxy
harness the power of GenAI... it would Humans must always be in the loop. cesses in place? Do you have the right Anuj Kadyan (senior partner and Ring for the first time after teas-
be powerful for the rest of the world,” Let's use engineering as an example, guardrails? Is there a focus on risk? Do leader of McKinsey's India tech, media ing it last month at the Galaxy
Wright, who is a member of the World and developer experience using CoPi- you have a culture embracing the abil- and telecom): We have four opportu- S24 smartphone series launch
Economic Forum’s chief digital officer lot. For us, it is a matter of how we work ity to innovate, fail fast, and drive tech- nity areas. One, is that we are the largest in California. The Galaxy Ring
‘
community, said. Edited excerpts: together with the technology. We can nologies in ways that you never ecosystem of developers—software offers users more personalized
develop code, and we can auto generate imagine in an organisa- engineering, (BPO), engi- and seamless experiences
What key initiatives are you imple- code. But when it comes to QA (quality tion? Managing change is neering services—there's backed by advances in artificial
menting to drive McKinsey's digi- assurance), and thinking about the QA really, really hard. As a GenAI would play a lot of development and intelligence, Samsung said in a
tal transformation? process, someone has to be in loop to leader, you have to make a critical role in innovation, and India will statement Sunday. Visitors at
It's broadly a three-pronged focus— account for hallucinations to ensure a sure you have right lead- making technology be the test-bed for those the Mobile World Congress will
driving our own trans- quality product. I don't ers in place who have opportunities. There is a also be able to see new health
available to the
formation to make sure
that technology is at the
m INTERVIEW think we're anywhere
near the point of non-
right types of leadership
skills—empathy, the abil- vast population
massive opportunity for
us to be the AI or GenAI
features on Galaxy Watch6
series paired with the Galaxy
core of everything we human intervention ity to be curious, ability to of India (centre of excellence) for S24, prior to public availability
do; using the technology we build our- when implementing GenAI. harness power of collab- the world. With the talent later this year, Samsung said.
Jacky Wright
selves and in partnership to drive client How must leaders look at emerg- oration, and ability to Chief tech & platform we are providing cutting- The Galaxy Ring’s official
impact; and our client engagement ing technologies like AI, GenAI, harness the power of dif- officer, McKinsey edge tech to global enter- launch is expected later in 2024.
advisory. We've been focusing, much quantum computing, synthetic ferences—to really get prises on many of these Health tracking is already a
like any other firm or company, on AI— biology, etc., in the context of their these outcomes. topics. With all the GCCs key selling point of smart-
launching our pilots and, hopefully, organisations and the impact on How do you see the future of work (global capability centres or R&D units) phones and watches, with
converting those to derive value and their workforce, culture, etc.? evolving? The impact of automa- that are already here, a lot of it is driven Samsung, Apple Inc. and
make an impact. We are just touching the surface of tion, AI, and GenAI on jobs, for the by the tech talent we have. Alphabet Inc.’s Google using
Considering the challenges inher- the cognitive changes that are going to next 2-3 years? Also, what needs to Wright: India is the proof-of-con- such features to attract and
ent in implementing AI and GenAI, occur from harnessing the power of be done to get more women in tech cept for the world. If we can do it here, retain customers. Creating
including hallucinations, biases, GenAI. There's a lot more research to leadership positions? at scale and at speed, and if we can har- sensors for continuous blood
copyright violations, plagiarism, be done in that space. A CEO should be There will be disruption of roles and ness the power of GenAI for everything pressure tracking and glucose
and privacy and security breaches, focused on how to harness the power of emergence of new roles. But the key is that Anuj pointed out, it would be pow- monitoring would be particu-
would you agree it's crucial to keep these new technologies. To do that, you to think about future of work with tech- erful for the rest of the world. larly valuable breakthroughs.
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 08 MoNDay, 26 February 2024
New Delhi CORPORATE LIVEMINT.COM

Auto parts makers get Food now takes up less in spending bills
Rhik Kundu
closer to PLI payouts rhik.kundu@livemint.com
new DeLHI
veyed households, unlike a
Expense tracker
single visit earlier.
The share of food in per
capita spending in rural areas
Household spending highest in Sikkim,
least in Chhattisgarh

S
pending on discretion- fell to 46% in the latest survey States/Union territories with highest/lowest monthly
ary items—such as from 53% in 2011-12—the per capita spending (in ₹)
durable goods and con- sharp decline not being sur- Top 3
sumer services—has risen prising given the increase in Rural Urban
sharply over the past decade disposable incomes in this Sikkim 7,731 Chandigarh 12,575
Sona Comstar, Toyota Kirloskar Auto Parts 1st to get eligibility certification or so, even as the share of period. In urban areas, the
Chandigarh 7,467 Sikkim 12,105
food in rural Indians’ house- share of food declined to 39%
hold budgets slid below the from 43% earlier. Goa 7,367 Andaman & 10,268
Alisha Sachdev Nicobar Islands
50% mark for the first time in These numbers do not take
alisha.sachdev@livemint.com 2022-23, the results of a long- into account the impact of Bottom 3
Rural Urban
new DeLHI awaited household consump- subsidies and free goods and
tion survey revealed on Sat- services received from the Chhattisgarh 2,466 Chhattisgarh 4,483

T
wo auto component makers urday. government. Jharkhand 2,763 Bihar 4,768
have qualified a key step to be The survey, conducted by The consumption of non-
eligible for benefits under the the statistics ministry’s essential items such as dura-
Odisha 2,950 Manipur 4,880
government’s production- National Sample Survey ble goods comprised about Beverages, processed food constitute
linked incentive (PLI) scheme, Office, lays out India’s spend- 7% of per capita spending in
setting the scheme in motion for auto ing patterns for the first time 2022-23 across both rural
10% of overall household spending
The areas Indians prioritize the most when given ₹100 to spend
parts companies, according to the compa- since 2011-12. and urban regions, up from
Rural Spending in ₹
nies and test agencies. A survey took place in around 5% in 2011-12. The Beverages, refreshments,
Sona Comstar, one of India’s leading 2017-18 as well, but the gov- spending on conveyance rose processed foods 9.6
electric vehicle (EV) parts suppliers to ernment had junked its to about 8-9% in 2022-23 Milk/milk products 8.3
international automakers, and Toyota results, citing data quality across urban and rural areas, Conveyance 7.6
Kirloskar Auto Parts have received eligi- issues, while up from 4-7% in
Medical 7.1
bility certifications for their hub-wheel many experts, The share of food 2011-12.
drive motors for e-two-wheelers and citing a leaked in per capita The survey Durable goods 6.9
e-trans axles, respectively. This makes version of its spending in rural data is essential Fuel and light 6.7
them the first components makers to findings, attrib- areas fell to 46% to review the bas- Urban
qualify to receive benefits under the PLI uted the deci- ket of goods that Beverages, refreshments,
in the latest 10.6
scheme for advanced automotive technol- Three OEMs—Tata Motors, Mahindra & Mahindra and Ola Electric—have already cleared sion to unfa- help compute processed foods
ogies. the eligibility criteria for the incentives for multiple products. REUTERS vourable results. survey from 53% India’s retail Conveyance 8.6
While three original equipment manu- The average in 2011-12 inflation. How- Milk/milk products 7.2
facturers (OEMs)—Tata Motors, Mahindra draw any incentives before FY26. conservative estimate of EV penetration per capita con- ever, experts said
& Mahindra and Ola Electric—have Auto parts makers still have a long way touching ~6% and 9% for passenger vehi- sumer spending that 2022-23 was Durable goods 7.2
already cleared the eligibility criteria for to go before they can receive the actual cles and two-wheelers by 2W by FY28, the in urban areas increased to an an unusual year, as the econ- Miscellaneous
6.6
the incentives for multiple products, the incentives—which, according to the PLI budget may cover about 60% of the estimated ₹6,459 in 2022-23, omy saw pent-up demand fol- goods/entertainment
certifications for auto parts makers were scheme, range from 13-18% of the incre- PLI claims. Falling battery prices and no from ₹2,630 in 2011-12, the lowing periods of lockdowns Rent 6.6
significantly delayed given a complex pro- mental sales revenue of each EV part (and changes in taxation/incentives could lead survey said. In rural India, in the previous year and, Source: Household Consumption Expenditure Survey
(National Sample Survey Office)
cess involving auditor certifications for 8-13% for non-EV parts). Claims for sales in to higher penetration as well. The actual this rose to an estimated thus, shouldn’t be used as a
DATA BY SHUJA ASRAR; GRAPHIC: PARAS JAIN
domestic value addition (DVA) at a certain fiscal year, according to benefit is likely to be lower than 60% as we ₹3,773 from ₹1,430 during basis for reviewing the con-
the component makers’ tier-II the scheme, will be disbursed have not considered claims on exports by the same period. In real sumer price index.
and tier-III vendors. the following fiscal. OEMs and suppliers. Given that the bene- (inflation-adjusted) terms, “The year 2022-23 saw higher than the previous In rural areas, the spending by
With the advanced auto
parts makers receiving cer- ₹604
Allocation under
cr A Nomura analysis states fit is likely to get paid out on pro-rata basis,
that even with a conserva- it may be prudent to not assume more
the growth was 40% in rural huge pent-up demand, which
parts and 33.5% in urban along with festival demand,
years, which showed that
people were borrowing more
the top 5% stood at an average
of ₹10,501, nearly eight times
tification confirming they tive estimate of EV adoption than 50% of eligible incentives. Thus, parts. led to good results for corpo- to buy non-food items. How- that of the bottom 5%.
meet the stringent 50% DVA the auto parts in India, PLI claims by business plans need to stay focused on The survey’s findings are rates, especially in the manu- ever, at present the circum- Sikkim, Chandigarh, and
criteria laid down under the PLI for FY25 OEMs and components fundamentals such as strong product not strictly comparable due facturing sector. This was evi- stances have changed with Andaman and Nicobar
scheme, the decks have now makers are likely to far exceed offering and cost leadership rather than to methodology changes. The dent in their financial results the pent-up demand, and Islands were among the states
been cleared for the govern- the government’s budgetary pricing,” the Nomura report said. latest edition of the survey, during the fiscal. However, consumption of non-food and Union territories with the
ment’s move to finally start dis- allocation for the scheme. The gov- For Sona Comstar, which was the first conducted between August the pent-up demand eased items,” Sabnavis added. highest monthly per capita
bursements under the scheme, which it ernment has allocated ₹604 crore under auto component maker to receive DVA 2022 and July 2023, assessed during the next fiscal The top 5% spenders in the consumption expenditure
has said will begin in fiscal year 2025. the scheme for disbursement in FY25 (for certification by the Global Automotive spending on more items than (2023-24),” said Madan Sab- urban population spent an among both rural and urban
However, multiple industry executives claims made for FY24) and ₹3,150 crore in Research Centre (GARC) on 19 February, before, used computer-as- navis, chief economist at the average of about ₹20,824 per areas, while Chhattisgarh and
said that unless the government decides to FY26 (for claims made for FY25), out of half a dozen more products are in the DVA sisted interviews unlike the Bank of Baroda. capita per month in 2022-23, Jharkhand featured at the
settle PLI claims on a quarterly basis, com- the total five-year outlay of nearly approval process, while applications for pen-and-paper format used “The amount of personal according to the survey, bottom among rural regions,
panies that have only now received DVA ₹26,000 crore. four more are yet to be made, according to earlier, and comprised multi- loans given out during which is about 10 times the and Chhattisgarh and Bihar
certification are unlikely to be able to “Our analysis indicates that even on a a top official at the company. ple visits to the 261,746 sur- 2022-23 was also much spending by the bottom 5%. among urban regions.

VinFast Gloomy outlook for IT as cos slash staff Govt plans talks with NHAI’s
seeks EV FROM PAGE 1
bondholders to prepay debt TeamLease and Quess Corp

import duty they’ve been letting people go.”

Oberoi’s acknowledgment of
also shared a dull outlook for the
sector. “I think the demand still
stays quite muted,” Ashok FROM PAGE 1 provided in FY24, and the ₹1.41
cut for 2 yrs retrenchment is the first com-
ment by a boss of a job portal, a
Reddy, co-founder and manag-
ing director of TeamLease Ltd, fall depending upon the per-
trillion provided in FY23. In all
these years, NHAI has not been
subject that none of the compa- said in a post-earnings call with centage of debt getting repaid allowed to make fresh borrow-
Reuters nies admit to. It is also signifi- analysts on 30 January. “The ser- in the same fiscal year,” said ings.
feedback@livemint.com cant because staffing firms and vices companies are still, at best, Venkatakrishnan Srinivasan, NHAI is estimated to be pay-
THOOTHUKUDI job portals including Naukri, replacing attrition but not bring- managing partner at Rockford ing over ₹30,000 crore
Quess Corp and TeamLease ing new demand to the table.” Fincap Llp, a financial advisory towards debt servicing in FY24.

V
ietnamese electric vehi-
cle (EV) maker VinFast
has asked India to
reduce import duties on its cars
for about two years so custom-
ers can get familiar with its
products while a local manu-
facturing plant comes on
stream, an executive said on
Sunday.
VinFast has started building
a factory in Tamil Nadu and
hopes to start production by
the middle of next year, for
domestic sales first and then
exports, its India CEO Pham
Sanh Chau told Reuters.
VinFast and Tamil Nadu
government said last month
they have agreed to work
toward an investment of up to
$2 billion, with an intended
commitment of $500 million
for the first five years of the
project.
Like Tesla, VinFast has also
asked for a reduction to India’s
100% import duty on fully-built
EVs, which has been opposed
by domestic automakers.
India, the third-largest vehi-
cle market, has been consider-
ing the requests but has not
made a decision, a government
official said last month.
A government spokesperson
did not immediately respond to
a request for comment.
“We ... proposed a reduction
of import duty tax ... for
instance by bringing it to 70%
to 80% just for two years and for
a very limited a number of cars
in order for the customers to
get used to our products,”
Pham Sanh Chau said at the
sidelines of VinFast’s ground-
breaking ceremony in Thoo-
thukudi district.
“The central government is
still considering it. But while
waiting for the final decision of
the central government, we
move ahead with our construc-
tion of the manufacturing facil-
ity,” Chau said.
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Ltd are the first to offer people
a role with companies in good
times, making their commen-
tary and performance a good
leading indicator of the health
of the sector.
Infosys Ltd and Wipro Ltd,
the Bengaluru-based twins,
together accounted for 46,057,
or more than half of the total
reduction in workforce at the
largest companies, according
to an analysis by Mint. HCL
Technologies Ltd, Persistent
Systems and L&T Technology
Services Ltd were the three
companies that bucked the
trend and ended last year with
more employees than they
started in 2023.
Queries emailed to Tata
Consultancy Services, Cogni-
zant, Infosys, Wipro, Tech
Mahindra, LTI Mindtree and
Mphasis seeking comment
went unanswered.
“This is the phase-one cor-
Sony eyes aha after collapse of Zee merger; Sun TV interested too
FROM PAGE 1
with the developments.
“Though it is too early and
they (Sony) are still coming out
of the termination of a deal that
was in the making for over two
years, there is interest for
regional, especially South
Indian content,” he said. “But it
is too early to say if a deal will
happen.”
All the three persons men-
tioned spoke on condition of
anonymity.
Sun TV, which had also
explored acquiring the regional
assets of Disney, is looking at
aha to strengthen its content
library and slate, as its over-the-
top (OTT), or video streaming,
platform, Sun NXT, is yet to
“The Indian IT staffing and firm. “The long-term investors This will peak to over ₹62,000
collection business continues may find it difficult to balance crore in FY28, when its earn-
to remain impacted by global their investments if the govern- ings of ₹69,000 crore would
IT services industry has been grappling with slowing growth. MINT headwinds,” Quess Corp CEO ment decides to repay the large give it a surplus.
Guruprasad Srinivasan said in amount in a single year.” “The government aims to
rection where IT services firms uncertain about how recruit- an analyst interaction on 5 Feb- “Part of the money required NHAI is estimated to be paying reduce NHAI’s debt by ₹1 tril-
are letting go of junior and mid- ment will pan out in the IT ruary. “Current open mandates for this prepayment may be over ₹30,000 crore towards lion by FY25. Even if this (no
dle management,” said Sunil sector. stand at approximately 1,200, a raised through InvIT and NHAI debt servicing in FY24. MINT borrowings and budgetary
Chemmankotil, chief executive “Right now, our IT growth is drop of 16% quarter-on-quarter may also raise additional reve- allocation) continues for the
officer for TeamLease Digital. negative. It’s down may be and 31% year-on-year.” nue through asset monetisa- incentives for early comple- next few years, NHAI would
“More than 60,000 have 5%-6% year on year,” said The IT services industry has tion like BOT toll and annuity tion. This helps in attracting become a completely debt-free
been let go of by Oberoi. “Of been grappling with slowing model, and HAM projects,” private finance in procuring company only by FY50,” said
the top 5 IT firms. Technologies like course, we had a growth, as clients cut back on Srinivasan added. national highways and state the first person quoted earlier.
The clients now generative AI very good two discretionary spending amid InvITs are investment vehi- road projects. Since FY15, the highway
want technology- have raised fears years before this, high interest rates and military cles that pool money from inves- Since FY23, the government developer’s debt has increased
driven services that much of the and the IT busi- conflicts in Ukraine and West tors and invest it in income-gen- has suspended large borrow- 14 times from ₹24,188 crore to
which means less ness grew by more Asia. Simultaneously, the rise erating infrastructure assets, ings made by the agency, while ₹3.48 trillion (as of September
work done by
human interface. than 100% back of disruptive technologies such such as roads, bridges, power meeting the entire capital 2023). NHAI borrowed close to
IT firms are also engineers now then. But in the as generative artificial intelli- plants, and airports. needs of the highway devel- ₹65,000 crore and ₹76,000
facing resistance will be automated process, I suspect gence (AI) have raised fears that A hybrid annuity model oper through budgetary meas- crore in FY21 and FY22,
to their policy of IT companies also much of the work done by engi- HAM takes a balanced financial ures. respectively. Experts said if the
asking employees over-hired. And neers now will be automated, risk sharing approach without The Union budget for FY25 same level of borrowings had
to come back to offices. Those now because demand is soft, posing an existential threat to allocating demand risk to the raised NHAI’s allocation for continued in FY23 and FY24,
who are unwilling are being they sort of have some extra the country’s $245 billion out- private sector. It consists of building roads, highways and its total debt would have
asked to go,” Chemmankotil manpower,” said Oberoi. sourcing industry. contractual safeguards that bridges to a new record of ₹1.68 crossed ₹4 trillion.
added. “What is likely to happen in Q4, devina.sengupta@live- emphasize high project readi- trillion, marginally higher than subhash.narayan@live-
Naukri’s Oberoi seemed hard for me to say.” mint.com ness while also providing ₹1.67 trillion (revised estimates) mint.com
reach significant subscriber catering to at least 12 million “We will actively explore ping shows in three langua-
numbers, said another person monthly active users, making it new organic and inorganic pos- ges—Tamil, Telugu and Mala-
familiar with the talks. the largest regional OTT plat- sibilities to strengthen our yalam, which should be fol-
Arha Media, Culver Max, form in the southern market. market presence,” Singh wrote lowed by Marathi and Bengali,”
KPMG and Sun TV did not The company in an email Saugata Mukherjee, head of
reply to emailed queries on the expects to reach GROWING addressed to content, SonyLIV, said in an
stake sale negotiations. more than 25 mil- MARKET employees. interview in December.
Arha has been looking to lion domestic and 3 SonyLIV, the SonyLIV aims to roll out 18
raise funds for some time as million global paid INDIA’S media video streaming titles across the three southern
competition in India’s clut- subscribers for its sector is likely to see
more mergers and
platform owned by languages this year.
tered video streaming space Telugu and Tamil acquisitions (M&A) Culver Max Enter- India’s media sector is likely
has intensified, adding pres- content by FY26. in the coming days tainment, is also to see more mergers and acqui-
sure on revenues and profita- Last month, N.P. betting on shows in sitions, especially with Reli-
bility, said one of the persons Singh, managing SOUTH India’s Telugu, Tamil and ance Industries Ltd and Walt
streaming and digital
mentioned earlier. South India accounts for almost 35% of India’s total media and director and chief media market is Malayalam, Disney expected to reach a deal
South India accounts for entertainment market. ISTOCKPHOTO executive at Culver expected to grow spurred by the shortly. Mint reported last
almost 35% of India’s total media Max Entertain- at a CAGR of 25% rapid adoption of month that Disney would
and entertainment market. The which would make it one of the Industry report. ment, assured online content in transfer its assets and employ-
region’s streaming and digital fastest-growing sub-segments aha has a diverse content employees that the southern states. ees to a new company in which
media market is expected to in the domestic media and library of more than 900 mov- Sony had “long-term plans” for “We’re looking at an expan- Reliance Industries is expected
grow at a compound annual entertainment market, accord- ies and series, including reality expanding in India despite sion of our content slate plan in to pick up a 60% stake.
growth rate (CAGR) of 25%, ing to a Confederation of Indian shows as well as originals, ending merger talks with Zee. the south and will start drop- anirudh.l@htlive.com
 LIVEMINT.COM CORPORATE MoNDay, 26 February 2024
New Delhi 09

HMD to
SBI shrinks ICICI Bank Fewer flights take off in Jan
launch own as airlines face headwinds
smartphone
brand
lead in market value Anu Sharma
anu.sharma@livemint.com
new delHI

Gulveen Aulakh

gulveen.aulakh@livemint.com
BarCelona
J
anuary saw fewer aircraft
taking to the skies and
SBI dramatically narrowed the gap with ICICI Bank in the past 12 sessions steeper fares as numerous
planes await engines and

H
MD, the licensor of
Nokia phones, will
bring out its own brand
of smartphones by the middle
of the year.
repairs, portending bad times
Ram Sahgal for travellers in the year ahead.
ram.sahgal@livemint.com Closing the gap The number of domestic
MuMBaI SBI shares have gained 12.4% in the past flights fell 2.3% year-on-year
12 sessions, against ICICI Bank's 3.8% rise (y-o-y) in January 2024 to

Three types of smart-
phones, including two focused
on sustainability and repaira-
bility, and one Barbie flip
phone in partnership with
Mattel, will be introduced glo-
bally by July. Nokia brand, for
which HMD has the licence till
the end of 2026, will be limited
to feature phones, a model of
which will also be introduced
by May.
"We have plans to do so
much more as we introduce
the world to the new HMD. We
want to be a catalyst for posi-
tive and profitable change by
embracing a multi-brand
strategy: crafting new HMD
original devices, creating
Nokia phones and collaborat-
ing with well- known global
partners," Jean-Francois Baril,
HMD co-founder, chairman
and chief executive, said.
The smartphone brand has
a small share, about 1%, of the
Indian market, as per Counter-
point Research, but considers
the South Asian nation its most
critical one. Senior executives
said that products will be made
available in the market soon
after or possibly alongside the
global launch.
"We are confident about a
strong smart 5G portfolio for
India and other markets which
we will announce very soon,"
said Ravi Kunwar, vice presi-
dent—India and APAC at
HMD.
The reporter is in Barcelona
to cover the Mobile World Con-
gress at the invitation of
Xiaomi.
S
tate Bank of India and ICICI Market capitalization (in  trillion) around 187,660; it was also
Bank are locked in an exciting SBI ICICI Bank down nearly 3% compared to
battle of market value, with the December, per data from Air- The number of domestic flights fell 2.3% year-on-year in January
8
state-run lender steadily creep- ports Authority of India (AAI). 2024 to around 187,660. BLOOMBERG
ing up on its private-sector rival 7.45 Experts said this signals a
over the past few trading sessions, and challenging year for Indian hold those causing this drop in affected engine, airframe
7
likely to race ahead of it soon. airlines, as they contend with air traffic accountable and manufacturing and its mainte-
More than four years ago, ICICI Bank, supply-chain issues, unrelia- with that, immediately extend nance, repair, overhaul.
India’s second-largest private bank, had 5.88 ble engines, grounded aircraft, relaxation with the import of The situation is such that
6
6.77
crept ahead of SBI, India’s largest bank, in and overcrowding at airports. Airbus 320CEOs and Boeing airlines have deputed execu-
terms of market value. In the past 11 The fall in January is the 737NGs that are older than 15 tives to look for aircraft that
months (10 March 2023 to 7 February 4.88 first in nearly two years, and a years,” Mark D. Martin can be inducted to fill the
5
2024), it steadily widened the gap with huge change from last Janu- MRAeS, chief executive officer shortage, an airline executive
SBI to a daily average of over ₹1.44 trillion. ary, when flights rose 44.2% of Martin Consulting said. said. “Airlines have dedicated
Then, the state-run lender came from y-o-y and 2.5% on-month. The Currently, the civil aviation teams to find old aircraft avail-
4
behind, dramatically shrinking the gap to 10 Mar 2023 23 Feb 2024 last time the number of flights norms permit import of air- able for lease, but the shortage
just ₹585.5 billion in the past 12 trading The last time SBI was ahead of ICICI Bank fell in any month was in Febru- craft for passenger operations is global,” said the executive,
Source: Bloomberg
sessions through 23 February, as SBI in market cap was in 2019. MINT ary 2022. At the time, the scare that are of maximum 15 years requesting not to be named.
PRANAY BHARDWAJ/MINT
joined a rally in stocks of public sector of the omicron variant of the of age with some exceptions. The reduced capacity has
companies. As of Friday, SBI’s market cap Bloomberg data over five years shows ₹1,061.3 during the period. The outper- coronavirus impacted travel, A back-of-the-envelope cal- also affected fares. There has
stood at ₹6.77 trillion, against ICICI Bank’s that the last time SBI was ahead of ICICI formance increased in the past 12 sessions, and domestic culation shows been a 7.5% spike y-o-y in Jan-
₹7.45 trillion, Bloomberg data showed. To Bank in market cap was in 2019. Between with SBI share rising 12.41% from ₹675, flights dipped The fall in Jan is more than 170 uary in average domestic fares
be sure, both the banks are behind HDFC 25 February and 6 August 2019, the SBI against ICICI’s relatively modest 3.83% 10.6% to 121,850. the first in nearly aircraft are to ₹5,420 compared to ₹5,040
Bank, which had a market cap of ₹10.79 stock traded at an average daily value of return from ₹1,022. Total domestic two years, and a grounded across a year ago, as per travel portal
trillion on Friday. ₹29,686.07 crore above ICICI Bank’s. “Between the two, odds of outperform- aircraft move- huge change from major scheduled Cleartrip. The limited capacity
Investors are betting on greater opera- After that, ICICI Bank pulled ahead, ance are stacked in favour of SBI,” said ment in January airlines, with sup- means air fares may not drop
Jan 2023, when
tional efficiency, robust loan growth and with the gap between the two expanding Nirav Karkera, head of research, Fisdom. 2020 (just before ply-chain issues anytime soon.
stable credit costs at the state- “Though stories for both the first lock- flights rose and inspection Demand is likely to have
run bank, analysts said. They THE VALUATIONS GAME banks are distinct, there’s down in March) 44.2% y-o-y requirements in suffered due to the shortage in
believe the outperformance enough reason to believe that was up 3.2% y-o-y Pratt & Whitney capacity. Consultancy firm EY
could continue, and that SBI’s MORE THAN four IN the past 11 INVESTORS believe valuations for ICICI Bank are at 195,210 flights engines being the said the dip in aircraft activity
market cap might converge years ago, ICICI Bank months ICICI Bank
had crept ahead of widened the gap
that SBI’s market cap
might converge with
rather fairly priced in, and up 0.5% compared to major reasons. was not due to a decrease in
with ICICI Bank’s over the SBI in terms of with SBI to a daily ICICI Bank’s over the whereas there’s some more December 2019. IndiGo, with 60.2% market passenger demand, but the
coming months. market value avg of over ₹1.44 tn coming months headroom for an earnings-led As per aviation consultancy share in domestic aviation result of airline restrictions in
“Low cost of deposits, upgrade in SBI.” firm Martin Consulting, the market in January, has more response to various factors.
healthy loan growth and use According to Siddhartha drop indicates the impact from than 70 aircraft grounded, “These included flight can-
of better technology to gain more custom- to a record ₹1.76 trillion on 7 August last Khemka, research head of Motilal Oswal grounding of aircraft, and the which translates to around cellations due to weather, air-
ers are among the factors markets are year. From 10 March last year through 7 Financial Services, SBI remained the bro- persistent issues in the Pratt & 20% of its fleet, due to supply space restrictions at Delhi air-
pricing in, which has caused the value February 2024, ICICI Bank’s market cap kerage’s “top pick” among banks as rela- Whitney-powered engines for chain issues and recall of Pratt port, and flight restrictions at
re-rating,” said A. Balasubramanian, MD stayed ahead of SBI’s by more than ₹1 tril- tively steady credit costs of 35-40 bps Airbus A320neo aircraft and & Whitney engines. Mumbai airport aimed at alle-
and CEO, Aditya Birla Sun Life AMC. “It’s lion on a daily basis, shrinking below that would enable an estimated 22% earnings the Boeing 737MAX fleet. The covid pandemic viating congestion,” Bhavana
quite probable that the PSU banking stock mark only after 8 February. growth on a compounded basis over “India needs to immediately derailed the aviation supply Yerrumreddy, partner-avia-
could maintain its momentum,” Balasu- Between 10 March 2023 and 23 Febru- FY24-FY26. “We expect a 12-month price induct reliable aircraft to sus- chain due to closure of shop by tion, EY India, said. “However,
bramanian said when asked whether SBI’s ary 2024, the SBI stock has outshone target of ₹860 and convergence of market tain growth. The only solution several suppliers, layoffs and despite these challenges, the
market cap could converge with ICICI ICICI Bank; while SBI rose 38.68% to cap with that of ICICI Bank over the next left on the table is strong meas- migration of workforce to growth trajectory of Indian
Bank’s. ₹759.05, ICICI Bank rose 25.95% to few months,” Khemka added. ures by the government to other industries. This has aviation is expected to persist.”

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 10 MoNDay, 26 February 2024
New Delhi GLOBAL LIVEMINT.COM

Surging Nvidia stock keeps

drawing in more believers
This reflects FOMO among investors who have sat on the sidelines while the firm’s valuation has eclipsed $2 tn
Gunjan Banerji There have been few signs of profit- Charlie Munger, Buffett’s longtime friend and partner, died
feedback@livemint.com taking so far. Investors added a net 28 November at age 99. AP
$263 million to the fund in the past

N Charlie Munger was

vidia’s historic run is month. The fund’s cousin, which tur-
minting profits for bocharges bearish bets against
investors big and small. Nvidia, has been much less popular.
Many are betting the
boom is just beginning.
They are piling into trades that the
The euphoria surrounding Nvidia
has spread to other stocks, too. Shares
of Super Micro Computer, a much
the architect of
chipmaker’s shares, which have more smaller company worth less than $50
than tripled over the past year, are
headed still higher. Some have
turned to the options market to look
billion, popped more than 30%
Thursday after Nvidia’s earnings
report. Traders spent more than $5
Berkshire: Buffett
for ways to turbocharge their bets on billion on options tied to the com- Karen Langley slumped, Berkshire posted a
artificial intelligence (AI) after a pany, more than what they spent on feedback@livemint.com loss of $22.8 billion.
blockbuster earnings report sent the Tesla this week. Tesla is worth about Berkshire’s operating earn-

stock up 17% over the past two days.
The exuberance reflects hope that
the company is the vanguard of wide
adoption of artificial intelligence—
and an intense fear of missing out
(FOMO) among investors who have
sat on the sidelines while the com-
pany’s valuation has eclipsed $2 tril-
lion.
With the help of Nvidia, stocks
have stormed into 2024. The S&P
500, which has chalked up fresh
records in recent weeks, is up 6.7%.
That is the index’s second-best per-
formance for this time period over
the past 10 years. The gains were only
surpassed by an 11% increase in 2019.
Nvidia has contributed to about a
quarter of those gains, according to
S&P Dow Jones Indices.
The Nasdaq, too, is up 6.6% this
year and neared a record Friday. The
tech-heavy index has been boosted
by Nvidia, which this week tacked on
$277 billion in additional market
value, along with six other tech titans
collectively known as the Magnifi-
cent Seven.
The Dow Jones Industrial Average
is up 3.8% this year and has hit
repeated records in recent weeks.
“You look at these numbers and
what this company’s done—it’s
almost without precedent,” said Mike
Ogborne, founder of San Francisco-
based hedge fund Ogborne Capital
Management, who counts Nvidia
among his top five biggest holdings.
“It is nothing short of amazing.”
Ogborne compared AI with the
launch of the internet more than two
decades ago, which kick-started a
technology craze that lasted years.
“It’s exciting,” Ogborne said. “It’s
great for America.”
Unfazed by questions about AI
Tamar June in Reno, Nev., is one
investor along for Nvidia’s furious
stock-market ascent. Since the 1990s,
the 61-year-old software-company
chief executive has been buying
shares of tech firms, including Apple,
Microsoft, Cisco, Intel and Oracle.
At Robinhood Markets, Nvidia was the most purchased stock by customers on a net basis.
June had been familiar with Nvidia
for some time but in recent years kept
reading about the chip company in
the news. She liked that it was profita-
ble and growing.
June decided to purchase some
shares in 2022 at about $260, then
watched the stock erase more than
half of its value later that year. She
held on, knowing that Nvidia’s graph-
ics processing units were in high
demand for cloud computing. Then,
an AI frenzy hit the stock market in
2023, sending Nvidia’s stock soaring.
Now, Nvidia shares are closing in
on $800 and June is looking for
opportunities to
buy more. She isn’t
fazed by worries
that the AI boom is
bound to come crashing down. June
experienced the bursting of the dot-
com bubble and the 2008 financial
crisis—and watched stocks bounce
back to new highs.
“I think it’s still in the beginning
stages,” June said of AI develop-
ments. “There’s still a lot of headroom
for technology because our whole
future depends on it.”
$20 billion in options
A herd of investors chased Nvidia
while it raced toward its $2 trillion
valuation.
At Robinhood Markets, Nvidia was
the most purchased stock by custom-
ers on a net basis and received the
heaviest notional trading volumes
over the past month, according to
Stephanie Guild, head of investment
strategy at the digital brokerage.
The rise drove many traders to pile
into the company’s options, a risky
corner of the market notorious for
boom-and-bust trades.
Nvidia has also morphed into one
of the most popular trades in this
market, with traders placing more
than $20 billion in stock-options bets
tied to the company over the past
week, according
to Cboe Global
Markets data.
That was more
than what they spent on Tesla, Meta
Platforms, Microsoft, Apple, Amazon
and Alphabet combined.
Call options, contracts that confer
the right to buy shares at a specific
price, were particularly popular. And
many of the trades appeared to sug-
gest that investors were fearful of
missing out on bigger gains to come.
Some of the most active trades Friday
were calls pegged to the shares jump-
ing to $800 or $850, up from their
closing price of $788.17.
Betting against the shares has been
AP
a losing game, leading many investors
to throw in the towel on bearish
wagers.
The values of many of these
options bets exploded while Nvidia
soared, rewarding those who piled in.
The big gains also enticed others to
join in the trades while the stock’s
rally continued.
“There’s a snowball effect,” said
Henry Schwartz, a vice president at
exchange-operator Cboe Global Mar-
kets, of the options activity surround-
ing Nvidia.
Ahead of the tech behemoth’s
earnings report Wednesday, options
pegged to the shares jumping to
$1,300—around double where they
were trading at the time—were some
of the most popular trades.
And for some investors, the 16%
one-day jump in Nvidia’s share price
Thursday wasn’t enough. They
sought even bigger returns and piled
into several niche exchange-traded
funds that offer magnified exposure
to Nvidia stock.
The GraniteShares 2x Long NVDA
Daily ETF has taken in almost half a
billion dollars from investors on a net
basis since launching late in 2022.
The fund’s shares have more than
doubled in 2024 and have surged
nearly 650% since inception.
13 times as much as the company.
Software that is eating the
world
Nvidia’s continued, rapid ascent
has stunned even early bulls on semi-
conductors and generative AI.
Atreides Management founder
Gavin Baker, who started covering
Nvidia as an analyst at Fidelity in
2000, reminded investors in his Bos-
ton hedge fund in an early 2021 letter
of Marc Andreessen’s adage that soft-
ware was eating the world. “Today, AI
is replacing software,” he wrote.
Atreides started buying Nvidia
shares in the fourth quarter of 2022,
according to regulatory filings.
The wager proved profitable. But
as Nvidia shares kept soaring, Baker
started selling. Atreides was out of
Nvidia by the end of the second quar-
ter of 2023. “This has been a painful
mistake,” Baker wrote in a June 2023
letter to his clients, when Nvidia was
trading north of $420 a share.
Atreides’s stake in competitor
Advanced Micro Devices has helped
alleviate the pain from missing out on
larger gains. The firm made nearly a
quarter billion last year alone on
AMD, which it continues to hold
along with several other related bets.
Michael Hannosh, a 20-year-old
college student in Chicago, said he
first purchased shares of Nvidia in
August 2022, when the stock traded
below $180. Nvidia was one of his
first-ever stock purchases. He had
built a custom computer for video-
gaming and used a lot of Nvidia parts.
Hannosh said he kept the shares
until last March, then sold them for a
roughly 30% profit. He later bought a
few more shares at about $230 and
sold them over the course of the next
several days at a profit.
The shares have tripled since.
“It’s blown my f—ing mind to bits.
It’s insane,” said Hannosh. “I really
wish I held it, obviously.”
—Jack Pitcher contributed to this
article.
© 2024 DOW JONES & CO. INC.
W
arren Buffett ings, which exclude some
remembered Char- investment results, rose to
lie Munger as the $37.35 billion.
“architect” of Berkshire Hat- Buffett has advised share-
haway in his annual letter to holders to focus on operating
shareholders Saturday. earnings. Accounting rules
Munger, Buffett’s longtime require the company to
friend and partner, died Nov. include unrealized gains and
28 at age losses from
99. Buffett its stock
has cred- portfolio in
ited Mun- its net
ger, who was vice chairman of income. Volatile markets can
Berkshire, with shaping his make that number oscillate
thinking about investing. quarter to quarter.
“Berkshire has become a Berkshire recently dis-
great company. Though I have closed that it trimmed its hefty
long been in charge of the con- position in Apple in the fourth
struction crew, Charlie should quarter while adding to its
forever be credited with being stakes in Chevron and Occi-
the architect,” Buffett said in a dental Petroleum. The com-
tribute to Munger that pref- pany maintained its big hold-
aced his formal letter to share- ings of Bank of America,
holders. American Express and Coca-
The title “Charlie Munger— Cola. Most of those stocks
The Architect of Berkshire advanced in the fourth quar-
Hathaway,” typed in an ornate ter. American Express shares
font, topped the tribute page. rallied 26%, Bank of America
Buffett ended his letter rose 23%, Apple gained 12%
offering shareholders an invi- and Coca-Cola added 5.3%.
tation to Omaha, Shares of Occi-
Neb., where he Berkshire dental and Chev-
said Greg Abel, recently disclosed ron, by contrast,
who heads Berk- that it trimmed its fell 8% and 12%,
shire’s noninsur- hefty position in respectively.
ance business, Berkshire
Apple in Q4 while
and Ajit Jain, who ended 2023 with
leads the insur- adding to its a record $167.6
ance operations, stakes in Chevron billion in cash
would join him and equivalents.
on stage. Berk- Followers of the
shire’s annual meeting, an company have been watching
event he has called Woodstock for signals of what Buffett and
for Capitalists, is set for May 4. his deputies might do with the
Berkshire also released its mountain of cash.
results for 2023, reporting a Berkshire’s stock has been
profit of $96.2 billion. on a tear lately. Class B shares
The company, which owns have rallied 17% this year, com-
businesses including insurer pared with a gain of 6.7% by
Geico, BNSF Railway, and the S&P 500. Both Class A and
See’s Candies, said the results Class B shares closed at
were boosted by a rising stock records Friday.
market. In 2022, when stocks © 2024 DOW JONES & CO. INC.

The tech titan who led his company from a 68-square-foot jail cell
Jiyoung Sohn ter’s summer-internship plans executives were his regular ing by business groups that an heiress of Daesang Group, Korean city of Asan and called
feedback@livemint.com at a Chicago-based NGO visitors at the Seoul Detention warned his absence might one of South Korea’s large on the firm to “innovate con-
SEOUL became national news. Center, where Lee was serving result in the country losing its food-business conglomerates, tinuously and invest pre-emp-
A Seoul court this month time for his bribery conviction top status in semiconductors in 1998. They have a son and a tively to develop capabilities

T
he executive chairman
of Samsung Electronics,
Lee Jae-yong, has been
convicted of bribing a former
South Korean president. He
was charged with stock-price
manipulation and accounting
fraud for a past merger of two
Samsung affiliates. And he was
charged with unlawfully using
the sedative propofol. For the
bribery conviction, he spent
roughly 560 days behind bars
in two separate stints during
the past decade. He continued
to lead the electronics titan
during this time.
Now, in a
rare break
for Sam-
s u n g ’ s
leader, he isn’t facing any
criminal charges.
Lee, 55 years old, is the
wealthiest person in South
Korea and a celebrity. Local
media closely follow his every
move. A padded vest he was
photographed in at the air-
port—made by a Samsung-
owned fashion brand Bean-
pole—quickly sold out online.
Locals have taken note of his
choice of eyeglasses (the Aus-
trian brand Silhouette) and
flocked to buy the lip balm that
Lee was seen applying during
a televised parliamentary
hearing (the American brand
Softlips).
More recently, his daugh-
acquitted him of the last out-
standing charges of stock
manipulation and accounting
fraud. Prosecutors have
appealed, but even if the
higher court were to reach an
alternate ruling, the chances of
his landing back in prison are
low, legal experts say. Lee has
said he is innocent of all
finance charges and was par-
doned for the bribery convic-
tion in 2022. He paid a fine to
settle the drug charges in 2021.
A Samsung Electronics
spokeswoman declined to
comment or make Lee availa-
ble for an
interview
for this arti-
cle.
When his father, a legendar-
ily hard-charging leader of
Samsung, fell ill in 2014, Lee
seemed poised to elevate Sam-
sung to new heights. He had
been groomed from an early
age to lead South Korea’s larg-
est business conglomerate and
its crown jewel, Samsung Elec-
tronics, the world’s largest
maker of memory chips and a
dominant player in smart-
phones and TVs. He studied
business administration at
Harvard, is fluent in English
and Japanese, and favors a
Westernized name abroad:
“Jay Y.”
Executive visits in jail
Instead, senior Samsung
in a cell measuring 68 square
feet, which is roughly half the
size of a standard U.S. parking
space. He had a foldable mat-
tress, table, chair, sink, toilet
and television (it was made by
Samsung’s rival LG). After his
jail time ended, Lee continued
to be tied down by legal woes.
Over the last roughly 3 years,
Lee has had weekly court
appearances while on trial for
charges linked to the 2015
merger of two Samsung affili-
ates.
Samsung’s different busi-
nesses are run by CEOs and
senior managers, but Lee is the
top boss who sets the firm’s
strategy and approves major
decisions.
Now that Lee can focus on
the business full-time, Sam-
sung Electronics, where Lee
dedicates most of his time, just
posted its worst annual earn-
ings in a decade amid a slump
in its mainstay memory-chip
business and a reordering of
the semiconductor industry.
Apple just leapfrogged Sam-
sung as the No. 1 smartphone
maker by shipments. SK Hynix
has raced ahead in partnering
with Nvidia with specialized
memory chips that power arti-
ficial-intelligence systems.
Taiwan Semiconductor Man-
ufacturing Co.has extended its
lead in the contract chip-mak-
ing business. Samsung hasn’t
Samsung Electronics executive chairman Lee Jae-yong.
made a major acquisition in
seven years.
Days after his recent acquit-
tal, Lee visited a Samsung SDI
battery factory in Malaysia. He
implored employees not to
dwell on short-term perform-
ance. He called for bold invest-
ments and change.
“We must not be intimi-
dated by difficulties,” he said.
Lee’s assumption of power
atop Samsung was never in
question. His unrivaled
appointment to head Sam-
sung—his two sisters head
Samsung affiliates—is a vestige
of South Korea’s decades-old,
family-run conglomerates, or
chaebols, where family suc-
cession is the norm. As the
country climbed out of post-
AFP
war poverty, the government
maintained close ties with a
handful of mega-firms, such as
Samsung, allocating capital
and quieting labor unrest.
The lines between govern-
ment and business have often
blurred. Many of the chaebol
heads of the past have been
convicted of white-collar
crimes involving political
leaders. With few exceptions,
the business tycoons got exon-
erated with presidential par-
dons intended to spur the
economy—and in the case of
Lee’s father, Lee Kun-hee, to
help South Korea land the
2018 Winter Olympics.
Lee Jae-yong’s pardon fac-
tored in the nation’s economic
situation and followed lobby-
and other key businesses. daughter who were born in the that no one can surpass.”
South Korean corporate- U.S. and have dual citizenship Since leaving jail, Lee has
governance experts, foreign in the U.S. and South Korea. also traveled abroad for, or
investors and local civic The couple divorced in 2009, hosted in Seoul, some of Sam-
groups have often criticized and Lim has been publicly dat- sung’s key business partners,
the leniency shown to chaebol ing Lee Jung-jae, the lead including Google Chief Exec-
heads—as they did again after actor in the Netflix hit “Squid utive Sundar Pichai, Micro-
Lee Jae-yong’s recent acquit- Game.” soft’s Satya Nadella and Soft-
tal. Lee doesn’t receive a salary. Bank founder Masayoshi Son.
“This is an unprecedented He maintained the title of vice His style stands in contrast
‘let Samsung off the hook’ rul- chairman from 2012 until with the forceful direction of
ing,” according to Solidarity 2022, and became executive his late father, who died in
for Economic Reform, a South chairman in October 2022. 2020. Under Lee Kun-hee,
Korean civic “I know there Samsung became a dominant
group, which Lee Jae-yong has are concerns, memory-chip manufacturer
argued the deci- been convicted of criticism, worries and evolved from a copycat
sion distorted bribing a former and big expecta- electronics maker into Apple’s
basic facts to win South Korean tions for me. I will chief smartphone rival. He
Lee and Sam-
president and has do my best,” Lee
once famously assembled top
sung’s innocence. had told report- Samsung officials, burned a
The Republic spent about 560 ers in 2021, as he pile of the company’s mobile
of Samsung days behind bars left the Seoul phones in disgust and issued a
South Korea Detention Center famous directive: “Change
has been called after getting everything except your wife
the Republic of Samsung. It paroled for the bribery charge. and children.”
has dozens of affiliates span- While scheduling around Lee is now expected to
ning theme parks to biophar- his court dates, Lee made become more active in push-
maceuticals to credit cards. A more than a dozen trips in ing for major investments or
South Korean can be born in a recent years, including a state structural changes to show
Samsung hospital and be laid visit in December to the Neth- what he can do without legal
to rest at a Samsung funeral erlands with South Korean issues holding him down, said
home. Samsung Electronics President Yoon Suk Yeol to Mike Cho, a corporate-gov-
alone represents about one- discuss semiconductors. He ernance expert and professor
fifth of the country’s bench- has also visited various Sam- at Korea University in Seoul.
mark Kospi index. sung affiliates in South Korea “A lot of people want him to
Lee’s legal travails haven’t and elsewhere and delivered act like a big tech leader, who
largely hurt his or his firm’s short, motivational messages is really active and proactive.
local standing. More than to employees. He knows that, so I think he
three-quarters of South Kore- In February of last year, Lee will act more like that in the
ans backed his pardon in 2022. visited Samsung’s display- future,” Cho said.
Lee married Lim Se-ryung, making facilities in the South © 2024 DOW JONES & CO. INC.

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 LIVEMINT.COM NeWs Wrap MoNDay, 26 February 2024
New Delhi 11

NEWS
46.4%
THE SHARE of food in monthly
₹13.4 cr
THE BOX office collection of Article 370,
₹25 cr
THE DONATIONS received by Ayodhya
1.5 mn
THE NUMBER of Palestinian civilians who
$150 mn
THE VALUE of JPMorgan Chase stock
IN consumption in rural India in 2022-2023, a Bollywood movie starring Yami Gautam Ram Mandir in the one month since the are currently squeezed in Rafah, a city in sold by its CEO Jamie Dimon and his
NUMBERS down from 53% in 2011-12, according to a
statistics ministry report.
in the two days since its release, according
to industry tracker Sacnilk.
consecration ceremony of the Ram Lalla
idol, not including online donations.
the south of Gaza, as Israel continues to
bombard the Gaza Strip.
family, the first time he is selling the bank’s
stock since taking the helm 18 years ago.

HOWINDIALIVES.COM

Barriers at Singhu, TESTING THE WATERS MHRIL to double

Tikri removed room capacity

A M
s the farmers halted their proposed
march towards the national capital, the
Delhi police on Sunday arranged a
pathway for the commuters by removing a
portion of blocks at the Singhu and Tikri
borders.
“We are removing a portion of the barrier
from Point-A to Point-B for the commuters.
The deployment of police and paramilitary
forces will ensure strict vigil round the clock.
Force deployment will stay in place. Vehicle
movement will not be allowed for now,” a
senior police officer said.
On Sunday, the city police removed two
huge cement barriers for those commuters
who walk towards Delhi using a small passage
at the Singhu and Tikri borders.
A commuter Suresh said he commutes to
Kundali for work but due to the barriers he has
to walk an additional distance of more than a
kilometre everyday.
ahindra Holidays & Resorts India Ltd
(MHRIL) plans to invest up to ₹4,500
crore in the next three to four years to
double its room capacity to 10,000, according to
company MD and CEO, Kavinder Singh.
The company is actively pursuing
partnerships with state governments besides
setting up new resorts, brownfield expansion
and acquisitions to achieve the target to increase
room count from 5,000 to 10,000 by FY30.
“We have all the strategies on the table to get
from 5,000 to 10,000 rooms. We are well on our
way there,” Singh said. At the moment, about
₹835 crore of investment is underway for five
greenfield, brownfield, and acquisition projects,
comprising about 690 keys. On the strategy for
expansion, Singh said apart from greenfield,
brownfield and acquisitions, the company is also
emphasizing on public-private partnership
(PPP). PTI
PTI

Indian Coast Guard (ICG) vessels take part in an event organized as part of its 48th Raising Day near Chennai, on Sunday. PTI

Growth in CiC fell to 3.7% from 8.2% a year ago,

PM halts Mann ki Baat, hints RERA was set up in different states to ensure
transparency in real estate projects. MINT
reflecting withdrawal of ₹2,000 banknotes.

Growth in CiC dips about Lok Sabha elections Tax exemption to

RERA to be clarified
due to RBI decision
T
he GST Council is likely to soon clarify that

T
he growth in currency in circulation (CiC)
decelerated to 3.7% for the week ended 9
February from 8.2% a year ago, reflecting
the impact of the decision of the Reserve Bank of
India (RBI) to withdraw ₹2,000 banknotes.
Currency-in-circulation (CiC) refers to notes
and coins in circulation, while currency with the
public comprises notes and coins in circulation
Real Estate Regulatory Authority (RERA)
The Model Code of Conduct may be in force from March, PM Narendra Modi says will not be required to pay Goods and
Services Tax (GST), an official said.
According to the official, RERA, which
Somrita Ghosh Mann Ki Baat aims to connect with various seg- The PM hailed woman power ahead of Women's functions as a regulator as well as facilitator for
somrita.ghosh@partner.livemint.com ments of Indian society including women, the eld- Day on 8 March and interacted with some women the realty sector, is covered under Article 243G
nEw DElhI erly, and the youth. The next episode will be the who have achieved significant success in their of the Constitution dealing with powers,
111th, and what could be better than the auspicious respective fields such as Drone Didi. authority and responsibilities of panchayats.

I
minus cash with banks. According to the RBI,
commercial banks have reported double-digit
growth in deposits in January, which too can be
attributed to withdrawal of ₹2,000 currency
notes. The growth of Reserve Money (RM), as
per the RBI data, decelerated to 5.8% as on 9
February 2024 from 11.2% a year ago (8.8%
adjusted for the first-round impact of change in
Cash Reserve Ratio (CRR). Components of RM
include CiC, banks’ deposits in RBI and other
deposits with the central bank. The growth in
CiC , the largest component of RM, decelerated
to 3.7% from 8.2% a year ago, reflecting the
withdrawal of ₹2,000 banknotes, according to
the RBI. On 19 May 2023, RBI announced
withdrawal of ₹2,000 denomination banknotes
from circulation. PTI
n his Mann ki Baat monthly radio programme
on Sunday, Prime Minister Narendra Modi
hinted that the dates of the Lok Sabha elections
may be announced soon and that there would
be a three-month break before the next episode
since the Model Code of Conduct may take effect
in March.
While speaking on the 110th episode of the pro-
gramme, he said, "The atmosphere of Lok Sabha
elections is all pervasive in the country and as hap-
pened last time, there is a possibility that the code
of conduct might also be in place in the month of
March.”
In 2019, the Election Commission had
announced the Lok Sabha elections on 10 March.
The voting took place in seven phases between 11
April and 19 May. Launched on 3 October 2014,
number 1-1-1, he said. Highlighting the importance of technology in RERA was set up in different states to ensure
Mentioning first-time voters, the PM appealed reducing the conflict between humans and ani- transparency in real estate projects, protect the
to the youth to vote mals, he said artifi- interest of consumers and to establish an
in large numbers cial intelligence has adjudicating mechanism for speedy dispute
and asked promi- Launched on 3 October 2014, Mann helped people to redressal. The official said that after discussions
nent influencers Ki Baat aims to connect with various co-exist with tigers with RERA functionaries about the nature of
from sports, films, in Chandrapur in their function it was decided that GST is not
social media to moti- segments of Indian society including Maharashtra. applicable on them. The official further said that
vate people to vote. women, the elderly, and the youth Further, a Benga- RERAs are funded by respective state
He hoped that the luru-based company governments and hence levying GST would
Election Commis- has made apps mean taxing state governments. PTI
sion’s campaign—‘Mera Pehla Vote–Desh Ke Liye’— named 'Bagheera' and 'Garuda' to monitor the
would motivate these first-time voters and activate speed of vehicles and other activities during jungle
its youth power. “On turning 18, you are getting a safaris.
chance to elect a member for the 18th Lok Sabha. Reaching out to people in Bihar, he spoke about
That means this 18th Lok Sabha will also be a sym- Bhim Singh Bhavesh who is working to educate
EY Entrepreneur of
bol of youth aspiration," he said. children of the Musahar community.
the Year 2023

V
ellayan Subbiah, chairman of
IOC, 5 others fined Cholamandalam Finance and executive
India, Japan begin military exercise vice-chairman of Tube Investments of
for 3rd quarter India, has been named the EY Entrepreneur of
the Year 2023.
Ground Self Defence Force is being Subbiah was selected as the winner for his

S
tate-owned oil and gas giants including
IndianOil, ONGC and GAIL (India) have
been slapped with fines for the third
straight quarter for failing to meet listing norm
requirements of having the requisite number
of directors on their board.
Stock exchanges have fined oil refining and
fuel marketing giant Indian Oil Corp. (IOC),
explorers Oil and Natural Gas Corp. (ONGC)
and Oil India Ltd (OIL), gas utility GAIL, and
refiners Hindustan Petroleum Corp. Ltd
(HPCL) and Mangalore Refinery and
Petrochemicals Ltd (MRPL) a cumulative ₹32.5
lakh, stock exchange filings showed.
In separate filings, the companies detailed
It is an annual exercise and conducted
alternately in India and Japan.
conducted under the broad framework of
India-Japan strategic cooperation, officials
said. It is an annual exercise and conducted
alternatively in India and Japan.
The contingent of both sides comprises
40 personnel each.
The Japanese contingent is being
represented by troops from the 34th
Infantry Regiment and the Indian Army
contingent is being represented by a
battalion from the Rajputana Rifles, the
officials said. “The aim of the exercise is to
foster military cooperation and enhance
AFP combined capabilities to execute joint
operations,” the Indian Army said. “The
bold strategies to transform existing businesses
while seizing new opportunities through
acquisitions and diversification, which not only
helped him grow his group companies to
unprecedented scale but also created four times
increase in shareholder value in just three years,
as per a press statement from EY. He was chosen
by a nine-member independent jury led by K.V.
Kamath, the former chairman of ICICI Bank.
Meanwhile, Natarajan Chandrasekaran, the
Tata Motors Passenger Vehicles MD Shailesh chairman of Tata Sons, was conferred with a
Chandra. PTI Special Jury Award for his leadership of the Tata
group and his contributions to nation-building,
PV biz to moderate as per the press statement. STAFF WRITER

to less than 5% in ’25

I
the fines imposed by the BSE and National
Stock Exchange for either not having the
requisite number of independent directors or
the mandated women director in the third
quarter ended 31 December 2023, but were
quick to point out that appointment of
directors was done by the government and
ndia and Japan on Sunday kicked-off a
two-week military exercise in
Rajasthan’s Mahajan field firing range to
foster deeper cooperation in confronting
common security challenges.
The exercise ‘Dharma Guardian’
between the Indian Army and the Japan
exercise will also facilitate developing
inter-operability, bonhomie and
camaraderie between troops of both the
‘Steel exports at
T
sides. This will enhance the level of he growth of the domestic passenger
defence cooperation, further fostering
bilateral relations between the two friendly
vehicle (PV) industry is likely to moderate to
less than 5% in the next fiscal, according to 18-mth high in Jan’
nations,” it said. PTI Tata Motors Passenger Vehicles MD Shailesh

they had no role in it. PTI Chandra. The company, however, expects
electric vehicle sales to keep growing despite the
slow pace of charging infrastructure
development in the country.
Mcap of 8 of top-10 valued firms soars, RIL biggest gainer “We had seen a very strong growth in FY23
of 25%, which is likely to moderate in FY24 to
about 8%. Therefore, we are seeing with this
I
ndia’s monthly steel exports hit a 18-month
high to 1.1 million tonne (mt) in January 2024
on increased demand from the European
Union and supportive global prices, SteelMint
said. Besides, competitive domestic prices of
steel contributed to rise in export, the research
firm said in its latest report. The outbound

M
arket valuation of eight of the 10 most valued firms jumped ₹1.1 trillion high base effect, and FY25 will be slightly shipment of steel in January 2023 was 0.67 mt,
last week, with Reliance Industries Ltd (RIL) being the biggest gainer. challenging with less than 5% growth rate,” as per SteelMint data.
Last week, the 30-share BSE Sensex benchmark rose 716.16 points or Chandra said in an analyst call. On reasons behind the surge in exports,
0.97%. He further said, “As far as EVs are concerned, SteelMint said, “good restocking demand from
RIL, ICICI Bank, Life Insurance Corp. of India (LIC), ITC, and Hindustan I think the biggest challenge here is the pace at the European Union (EU) contributed 67% of
Unilever Ltd (HUL) were among the gainers while Tata Consultancy Services which the charging infrastructure is growing. the 1.11 mt (export) in January. It was highest in
(TCS) and Infosys saw a combined erosion of ₹38,477.49 crore in market It is lagging behind the pace at which the EV last 18 months.
valuation. Reliance Industries added ₹43,976.96 crore to its market valuation at adoption is happening.” Citing other “While the price of hot rolled coil (HRC) in
₹20.2 trillion. On Friday, the shares of the oil-to-telecom conglomerate hit a challenges, Chandra noted that while India’s trade segment was at ₹54,300 per tonne,
fresh 52-week high of ₹2,996.15 per share on the bourse. commodity prices have been stable in the past the global rate was $710 per tonne (about
The valuation of ICICI Bank jumped ₹27,012.47 crore to ₹7.4 trillion, and that quarter or so, there is a risk that prices of ₹58,000). Overall, Indian steel exports may
of state-owned insurer LIC surged ₹17,235.62 crore to ₹6.7 trillion. certain items may go up going forward. He remain largely range-bound or fall slightly in the
The market capitalization (mcap) of ITC rallied ₹8,548.19 crore to noted that Tata Motors has adopted an open near term because of the “global trade lull
₹5,13,640.37 crore, and that of Hindustan Unilever Ltd zoomed ₹4,534.71 crore Reliance Industries added ₹43,976.96 crore to its market valuation at collaboration strategy to expand charging induced by the Chinese lunar holidays and Tet
to ₹5,62,574.38 crore. PTI ₹20.2 trillion. AFP infrastructure for EVs. PTI festival in Vietnam,” SteelMint said. PTI

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 12 MoNDay, 26 February 2024
New Delhi
URBAN COMPANY’S GIGSTERS:
Hostage to tHe aLgoritHm
The home services platform’s ‘auto acceptance’ feature gives workers no say in the jobs assigned to them
Varsha Bansal
feedback@livemint.com
BeNgAlUrU
W
ith three children to
raise and a household to
run, the Lucknow-
based beautician had
her hands full. So, when
she joined home services platform Urban
Company three years ago, she was clear
about exactly what kind of bookings she
would accept. When the app buzzed with
an incoming salon job, her mind would
quickly run through a checklist: Is it at a
time when I don’t have caregiving respon-
sibilities? Is the distance under 7km? Is
the value of the service at least ₹2,000? Do
I have the products required? If the book-
ing checked these four boxes, she’d accept
it. Else, she would ignore it.
“That was the only way to ensure that I
made money on each booking,” said the
43-year-old beautician, who requested
not to be named for fear of being black-
listed by the company. “Otherwise, most
of it would go towards petrol, platform
commissions and product costs.” The
beautician used to earn around ₹40,000
a month, which went towards her chil-
dren’s school fees and
household costs.
But over the last six
months, her monthly earn-
ings have halved because of a
sweeping algorithmic change.
In the middle of 2023, Urban
Company introduced a feature
on its app called ‘auto accept-
ance’ where the algorithm
assigns the day’s work to ‘part-
ners’ without allowing them
the option of accepting or
rejecting bookings—they have
to compulsorily complete the
assigned tasks. Simply put, the gig
workers are now at the mercy of the com-
pany’s algorithm. The beautician couldn’t
work on some days and ended up getting
blocked a couple of times.
Urban Company has been slowly rolling
out the auto acceptance feature across dif-
ferent categories in various cities, includ-
ing Hyderabad and Bengaluru. As it eyes
an initial public offering, the company has
been looking for ways to show profitabil-
ity in its books. While this has meant add-
ing new revenue streams such as home
painting and in-house branded products,
and a greater focus on its entry into tier 2
cities, it has also meant holding the com-
pany’s roughly 45,000 workers to higher
metrics, reducing flexibility and creating
situations where they are forced to work.
According to a business summary on
the company’s website, its revenue from
operations surged 45% in 2022-23 to ₹637
crore, while losses before taxation fell 40%
to ₹308 crore.
Mint reached out to Urban Company
with a detailed questionnaire for this
story but the company declined to com-
ment. We did, however, manage to speak
to a senior executive, who sought ano-
nymity as he is not authorized to speak to
the media.
“Salon is a massive category, so it
becomes super-inefficient to handhold
thousands of partners in each city, which
is why we rolled out this feature,” said the
Urban Company executive. “The leads are
assigned based on who is available on their
calendar. We tell our partners
that it will be great (for
them to be available)
from 7am to 7pm but
it’s not mandatory.”
While the com-
pany told them
the new feature
was introduced
to ensure they did
not miss any work
that comes their
way, women work-
ers Mint spoke with
feel the move has
taken away the auton-
omy and flexibility of their
work, which were the primary
reasons for their joining Urban Company
in the first place.
The shift has been especially hard on
women workers—who make up at least a
third of the company’s partners—due to
their domestic responsibilities. Their rela-
tionship with Urban Company has
become fraught over the last year as they
believe the platform has shown little
regard for their concerns. And this has
prompted the workers to erupt in protests
against the company’s diktats.
“It’s getting more and more difficult to
work with them,” said a Bengaluru-based
Urban Company beautician, who is in her
thirties. “It’s not like it was when we joined
them.” She, too, did not want to be named.
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Beauticians working with Urban Company gathered outside the company’s office in Hyderabad last month to protest the rollout of its auto acceptance feature. (Bottom
left): Chandrika Goud, 32, a beautician, explains the difficulties she and others face in dealing with Urban Company to Telangana chief minister Revanth Reddy at an
event in December last year. (Bottom right): Sabina Dewan, founder and executive director, JustJobs Network.
Mint spoke to more than a dozen Urban
Company gig workers from Hyderabad,
Lucknow, and Bengaluru for this story.
None of them was willing to be named.
Since the change kicked in, salon work-
ers say their earnings have dwindled.
Urban Company charges a 25% commis-
sion on each job. On top of that, the work-
ers are required to buy products from the
company. Moreover, the workers added,
they have to bear all commuting costs—
some of them told this writer that while
most auto-acceptance orders are within
their hub of 6-10km radius, they often get
bookings that are further away, at least 4
to 5 times a week. The beautician from
Lucknow said she sometimes has to go as
far as 13km for a booking.
It isn’t just the women who are affected,
though it has been harder on them. New
workers joining Urban Company over the
last few months are directly being
inducted into the auto acceptance feature.
One electrician from Bengaluru, who
joined the platform this month, said that
with jobs being auto assigned, his days are
hectic. One Saturday this month, he was
assigned eight jobs, which he said was
frustrating because many assignments
took longer than expected, forcing him to
call customers and cancel some jobs. His
day started at 9 am, and he was only able to
wrap up 12 hours later. “Having jobs auto
assigned is difficult because the system
assumes a certain amount of time for each
task without taking into consideration the
issues that crop up,” said the electrician.
NO REPERCUSSIONS
G ig work in India is
growing—as per a
NITI Aayog report,
gig workers are
expected to grow
from roughly 7
million to 23 mil-
lion by 2030.
While cab-hailing
and food delivery
are dominated by
men, Urban Company
engages a high number
of women. It has over
15,000 salon workers cur-
rently, and aims to train at least
200,000 women service partners by 2030.
Labour experts point out that the con-
cept of auto acceptance goes against the
very foundation of gig work, which prom-
ises flexibility and autonomy. Instead, it
has created a situation where the workers
are coerced into accepting the bookings.
“The fundamental issue with any impo-
sition of a ‘neutral’ algorithmic system is
that it has a disproportionately negative
impact on women workers, in particular,
because it is not considering their unpaid
care burden or other aspects like mobility
or safety,” said Chiara Furtado, a gig work
researcher with the Bengaluru-based non-
profit Centre for Internet and Society (CIS).
While platform companies steer clear
LONG STORY
mint
SHORT
STORY
WHAT
Urban Company has touted the
auto acceptance feature as being
beneficial to gig workers and said
it would ensure they did not miss
out on any assignments that
came their way.
BUT
Women workers feel the move
has taken away the autonomy
and flexibility of their work,
which were the primary reasons
for their joining Urban Company
in the first place.
AND
Legal eagles say that the auto
acceptance feature can be seen
as a form of indirect
discrimination on the basis of
gender, as the people most
impacted are women.
of offering employee benefits to their gig
workers by claiming that they are inter-
mediaries, lawyers believe that in this spe-
cific case, an argument can be made for gig
workers to be treated as workers, extend-
ing the entire gamut of labour laws to
cover them.
“This is because they are no longer gig
workers if they cannot control their hours,
and if they cannot control the tasks they
take up,” said Shreya Munoth, a Delhi-
based lawyer, who has done work with
informal labour. “If everything is assigned
to them, then for all intents and purposes,
they are workers, and there should be no
reason for a company to evade its obliga-
tions under labour regulations.”
She added that in this particular case, it
can be considered as “indirect discrimina-
tion on the basis of gender, because the
people most impacted are women.”
HOW IT HAPPENED
S ometime in January, a Hyderabad-
based beautician received a call from
a manager asking her to appear at the
office for a meeting. When she reached
the office, she found 12 other workers
waiting to attend the same meeting. The
agenda was clear: introduce the group to
Urban Company’s new auto acceptance
feature and its benefits.
“They told us that sometimes we miss
accepting leads because our phones are
off, or we might be driving, so with this
new feature, the system will assign the
leads to us and that way we’ll never have to
miss out on incoming work,” she recalled.
“They said it would be good for us.”
After painting a rosy picture, the Urban
Company executives reeled off a laundry
list of new rules: the worker would have to
maintain a minimum credit of ₹2,000 on
her app (this is where Urban Company
deducts its commission from); they man-
datorily had to work on weekends, for 10
hours. And though they could take time
off during the weekdays, they had to com-
plete 50 bookings each month.
The beautician, 37, was perturbed by
the new rules. She had joined Urban Com-
pany two years earlier due to the flexibility
it offered. With a husband who is partially
paralysed, and two daughters to take care
of, she wondered if she would be able to
handle the added responsibility of auto-
matically-assigned bookings without any
planning. “I have family responsibilities,”
she said. “What if my daughters or I get
our periods on the weekends? How can I
leave them in pain and go for a booking?”
Not signing up for auto acceptance
would have repercussions. “They gave us
that option. But then they also warned us
that they would not give us many leads,
and even if we got leads, the booking value
would not be more than ₹600-800,” she
said. Caught between a rock and a hard
place, she signed up.
A few weeks after starting work under
automatic acceptance, the beautician is
already facing a multitude of problems.
She has to lug a 15kg bag around all day in
a bus and sometimes risk travelling at
night after completing a job
fixed for 7 pm.
“Previously, I would
carry products based
on the service book-
ing, which I would
know days in
advance,” she said.
“But now the
bookings can
come at any time
and we have to be
prepared with all the
products in our bag.”
As news of the diffi-
culties faced by the beau-
ticians spread in Hyderabad,
many of them showed up last
month outside Urban Company’s office in
Madhapur to protest the coercion and
question the introduction of automatic
acceptance. No resolution has been
reached yet.
This isn’t the first time the salon work-
ers and Urban Company have been at log-
gerheads. Last year, thousands of them
protested in June and July across multi-
ple cities fighting for their right to work
after the company permanently blocked
their accounts. While the company gave
in and reinstated the accounts of some
workers, it also launched a new pro-
gramme called ‘Project Shakti’, to tighten
the reins on workers.
Following this, in December, the Telan-
LIVEMINT.COM
gana Gig and Platform Workers
Union (TGPWU), of which Urban Com-
pany workers are a part, filed a complaint
with the Telangana department of labour.
“We complained against the company
pressuring the workers and then deacti-
vating their accounts,” said Shaik Salaud-
din, founder of TGPWU. “Urban Com-
pany is not interested in sitting down and
having a conversation, citing that this is
not an employer-employee relationship
(since these are gig workers).”
FLEXIBLE WORK PROMISE
U rban Company started out in 2014
under the name Urban Clap, with the
aim of organizing the home services mar-
ket. For customers, this meant being able
to find a plumber, electrician or beauti-
cian from the comfort of their smart-
phones. For workers, the discourse at the
time was focused on flexibility, and drew
thousands to the platform.
According to a 2020 report by global
NGO Oxfam, Indian women put in 3.26
billion hours of unpaid care work every
day. So, when Urban Company came
along with its flexible work options,
women workers grabbed the opportunity.
“When women workers were recruited,
they were told that they could handle both
home and work,” CIS’s Furtado recalled
from her interviews with several workers.
And while flexibility and high earnings
were a reality during the initial years,
things started to go downhill around 2021.
“Workers are starting to realize that
they’re not receiving the kind of
flexibility they had hoped
for, which is probably
why they are no longer
taking jobs that will
require them to get
in an autorickshaw
and travel for 45
minutes,” said
Sabina Dewan,
founder and exec-
utive director of
labour research
organization Just-
Jobs Network. “So, the
platform…says they will
remove their right to refusal.
But what they should do is create
incentives so that workers are attracted to
the platform. And if they are spread out
well geographically, then they will not
need to institute such a rule.”
Many women switched industries or
left inflexible jobs to start working with
Urban Company. One woman, for
instance, used to run a small salon in Tel-
angana’s Mahboobnagar district. Con-
cerned that the salon wasn’t making
enough money for her family of five, she
started seeking alternative options. Her
friend told her about “a company in
Hyderabad that’s offering flexible salon
work and paying well”, referring to
TURN TO PAGE 13
 LIVEMINT.COM MINT MONEY MoNDay, 26 February 2024
NeW Delhi 13

Why DSP MF’s Kalpen Parekh is POWER

POINT
bullish on long-duration debt ABHISHEK BONDIA

We welcome your views and comments at

mintmoney@livemint.com

MODERN HEALTH
Parekh, a conservative investor, is switching to long-duration debt to capture changes in the interest rate cycle
TREATMENTS AND
Jash Kriplani
jash.kriplani@livemint.com
1 WHAT'S YOUR
CURRENT 35%
KALPEN PAREKH
MD & CEO,
DSP Mutual Fund
Parekh sticks to his asset allocation
approach and simply rebalances his
portfolio when changes in market
POLICY COVERAGE
Hybrid

K
alpen Parekh, 51, believes ASEET MIX? Equity valuations move his portfolio away
funds

in conservative investing.
However, the managing
director and chief execu-
tive officer of DSP Mutual
Fund, has now tweaked his strategy
on debt investments. “Our view is that
interest rates are now reasonably
priced and long-duration looks
attractive right now,” Parekh says.
After four-five years of staying
away from it, Parekh has invested in
DSP Strategic Bond Fund, an active-
ly-managed duration fund. The fund
is currently invested in debt papers
that are of eight-nine years duration,
says Parekh in an interaction with
Mint for the Guru Portfolio series. In
this series, leaders in the financial ser-
vices industry share how they man-
age their own money.
Portfolio mix
Parekh’s portfolio has over the past
12 months delivered 29% returns.
“A lot of my incremental invest-
ments have been channelled into
hybrid funds as markets are expen-
sive right now,” Parekh says. He likes
hybrid funds, especially during
expensive markets, as they come with
a built-in feature to re-balance asset
allocations as per market valuations --
cheap market valuations: higher
equity and lower debt; expensive
markets: lower equity and higher
debt. Some hybrid funds such as
multi asset allocation funds and
equity savings funds also increase
exposure to other defensive assets
such as gold and put options when
markets appear expensive. Put option
prices rise during market corrections.
He says he follows one principle:
invest for good and don’t exit unless
you need money.
Hybrid funds such as DSP Multi
Asset Allocation Fund, DSP Dynamic
Asset Allocation and DSP Equity Sav-
ings Fund account for 26% of Parekh’s
overall portfolio. Equity funds make up
for 35% of exposure, global equity
funds 14%, debt funds 15%. Gold expo-
A
split from his target allocation. few days ago, I read a news story about a cancer survivor’s
A India equity
funds 35% For example, Parekh’s target asset struggle to get an insurance claim for a targeted therapy
65% Debt
allocation is in the ratio of 65 to 35 using Trastuzumab. She was successful in getting a partial
B Hybrid funds 26% (equity:debt and gold). As market val- claim after a legal battle. Despite it being a victory, in most cases,
C Global equity uations have remained on higher it often does not feel so for the policyholder. Health insurance is
funds 14% Gold side, he is making new investments in increasingly becoming a mainstay support for health expendi-
50%
D Debt funds 15% split 50:50 mix. Market rally has increased ture. Policyholders buy high sum assured to hedge against an
Sovereign
E Gold 10% 50% gold bond value of his equity investments, but accelerating medical inflation, advancement in medical treat-
by making higher allocation to defen- ment, and complex critical illnesses. The rapid medical progress
DSP's gold mining fund sive assets, he aims to maintain his means that some of the medical treatment undertaken by
YOUR PORTFOLIO 65:35 target allocation. patients may not be prevalent at the time of policy design and
2 RETURNS OVER WHERE ARE YOU “As investors, we can’t do too much underwriting. However, this should not become an insurer’s
WHAT WORKED STRATEGY ON
PAST YEAR? 5 INVESTING RIGHT 7 FOR YOU IN PAST 8 DEBT? about valuations. Now, there is a con- excuse to reject claims. If so, the insurer fails to provide due
NOW? YEAR? cern around broader market valua- indemnity. Aside from financial coverage, one of the primary
 About 29%  Invested in strategic
 Investing new  Certain theme-based bond fund for long tions. No one knows whether valua- objectives of insurance is to deliver peace of mind. The prospect
money in equity & funds did well and duration play tions are likely to come down or of legal fights is hardly any assurance.
WHAT'S YOUR
3 EXPOSURE TO
debt/gold in 50:50 small-cap fund remain high. Like last year, the mar- The regulator had taken note of the increasing health insur-
ratio. Also, investing in kets appeared expensive and we ance claim disputes and standardized health insurance exclu-
DSP SCHEMES? hybrids for multi-asset
diversification
WHAT'S YOUR INVESTING MANTRA? thought there should be a correction, sions in 2019. This was an extremely forward looking measure.
 About 87%. Investing Focus on asset allocation but that didn’t happen. Some pockets The regulations specifically asked insurers to cover modern
only in DSP schemes Growth assets = equity
since joining When valuations correct: of markets became even more expen- treatments. Advance technology methods such as robotic sur-
WHY THE SHIFT sive,” he points out. gery, deep brain stimulation, and stem cell therapy were explic-
6 IN INVESTMENTS?
prefer growth assets
Defensive assets =
Investing philosophy itly mentioned in the regulations. For cancer, treatments such as
WHAT'S YOUR hybrids, gold, debt
4  Equity share has If market valuations rise: Parekh says he doesn’t put too oral chemotherapy, and immunotherapy (monoclonal antibody
TARGET ASSET
ALLOCATION? gone up due to market defensive assets Prefer hybrids for much stock on short-term returns. to be given as injection) were covered. This significantly removed
run-up. Reducing dynamic asset allocation “For me, annual returns are not that ambiguity about coverage. However, the regulator left a window
 65:35 in equity & equity flows to stick to
Each investor has their own preferences and risk appetite, do your own important. I believe in investing for for insurers to cap these coverages to a pre-defined limit.
debt/gold target asset allocation
research before investing. Mint does not independently verify decades. My investing mantra is sim- The capping provision is misapplied in some cases. Unsuspect-
non-public data reported by interviewees.
ple: seek reasonable returns for ing policyholders do not understand the implications of such
unreasonable amount of time as that capping at the proposal stage. Worse, they sign-up being una-
sure through DSP World Gold Fund of well, which helped the fund. cap stocks, has done well for Parekh’s is how you can really see benefit of ware. Besides the capping, some insur-
Fund (invests in gold mining compa- Also, DSP Healthcare and DSP portfolio. compounding. And how can you stay The basic rule ers are being creative with the inter-
nies) and government-run Sovereign Global Innovation Fund did well. A Investing style invested that long? By ring-fencing of 24-hour pretation of these exclusions. One
Gold Bond is 10%. Almost 87% of bounce-back in global technology Parekh says he is a very low portfo- your portfolio to mitigate impact of
Parekh’s portfolio is in DSP Mutual companies helped the latter. DSP lio turnover investor. “I rarely like to external shocks and market volatil- hospitalization insurer rejects oral chemotherapy
claim if the treatment is not adminis-
Fund schemes, as all DSP employees Value Fund also helped Parekh’s port- switch, I rarely like to redeem my ity,” Parekh explains. does not apply tered without being hospitalized. This
can only invest in DSP’s schemes. The folio as the fund had zero exposure to investments,” he says. He doesn’t like “A hybrid fund would just auto- for day care is outrageous. Why should one need to
remaining investments were made banking segment, which has under- to book capital gains, as he says this mate that for me. I am not required to treatments get hospitalized for oral medication!
before he joined DSP. performed over the last year. Instead, not only makes you lose the benefit of do anything or sell any investment to Advancement of medical care has led
What has the fund had compounding, but there is also a taxa- increase equity exposure. When hundreds of surgeries to be converted
worked mGURU PORTFOLIO exposure to global tion impact from the capital gains. stock markets correct, it will auto- into day care procedures or ambulatory care.
He says some A MINT SERIES funds investing in Instead of focusing on a particular matically sell debt (or any defensive The basic rule of 24-hour hospitalization, for standard health
of the theme- global technology market cap (large-, mid- or small- asset like gold) and invest in equity. It insurance, does not apply for day care treatments. The same prin-
based funds did well for him over the and global luxury goods companies, cap), Parekh categorizes his invest- will do the reverse when valuations ciple should apply for oral chemotherapy, more so because the
last year. For instance, DSP Natural which have done well over the last six ments in growth and defensive buck- turn expensive,” Parekh says. regulatory intent was to cover all kinds of treatment process
Resources and New Energy Fund months. The fund also has 6.5% expo- ets. When markets correct, he He adds that when markets are whether “as in-patient or as part of domiciliary hospitalization or
delivered around 45% returns. The sure to Berkshire Hathway, the hold- increases allocation towards growth expensive; data shows that there isn’t as day care treatment in a hospital.” The insurer’s interpretation
fund accounts for 6-7% of Parekh’s ing company of the legendary investor investments. When markets turn a huge difference between three-five would not stand in the court of law. The question is: how many
overall portfolio. He says both global Warren Buffet. expensive, he increases allocation to year returns of equity and bonds. people would survive cancer and have the energy left to fight the
natural resources and domestic natu- Apart from this, DSP Small Cap defensive investments such as hybrid “This rule works 80% of time, 20% of insurer? Should the insurer be allowed to continue to benefit
ral resources segments performed Fund that invests primarily in micro funds, debt and gold. time it doesn’t seem to work,” he says. from this situation?
Regulations specify that “insurers may endeavour to cover any
other modern treatment methods.” For clarity, it would be
appropriate for insurers or the General Insurance Council to

Tax implications, benefits of gifting shares to children
Neeraj Agarwala
I have shares worth ₹9.3
lakh that I bought in 2013
for around ₹3 lakh. I want
to gift these shares to my
22-year-old daughter. I
want to know whether sell-
ing the shares and gifting
her the sale proceeds
would be more beneficial
in terms of taxation (for
both of us) or gifting shares
ASK MINT
m TA X AT I O N
will be better?
—Name withheld on request
As per Section 56 of the
Income Tax Act, any monetary
gift, immovable property or
moveable property received
by an individual becomes taxa-
ble if the aggregate sum of
money received during the
year exceeds ₹50,000. How-
ever, there are specific excep-
tions to this rule, including
gifts received from relatives.
For the purpose of the
Income Tax Act, ‘relative’
includes: spouse of the indi-
vidual; brother or sister of the
individual; brother or sister of
the spouse of the individual;
brother or sister of either of
the parents of the individual;
any lineal ascendant or
descendant of the individual;
any lineal ascendant or
descendant of the spouse of
the individual; spouse of the
persons referred to in the
above cases, except the first
one.
Accordingly, the transfer of
shares or money to your
daughter will be non-taxable
in the hands of your daughter.
In case you sell the shares and
gift the money to your daugh-
ter, the capital gains will be
taxable in your hands at 10%.
In case you gift the shares to
your daughter, it will be taxa-
ble in her hands as and when
she decides to sell the shares.
Both options have distinct
tax implications. Gifting the
shares directly to your
daughter seems more tax-ef-
ficient, as it involves no tax
liability for her at the time of
the gift. However, the capital
gains, when realized in the
future, would be taxable in
her hands.
Neeraj Agarwala is partner,
Nangia Andersen India.
Do you have a personal
finance query? Send in your
queries at
mintmoney@livemint.com
and get them answered by
industry experts.
come out with a proactive notification or clarification about cov-
erage of such procedures. It will certainly bring more transpar-
ency and goodwill to the sector. Indemnity policies are not ade-
quate for critical illnesses. Sometimes patients may have to
undergo experimental treatments which is clearly outside the
policy scope. A large amount of non-hospitalization medical
expenses and non-medical expenses are incurred for critical ill-
nesses. This increased cash outflow coincides with an impaired
income earning ability of the patient. For these reasons, a fixed
benefit critical illness plan will be beneficial.
Health insurance is a specialized field. Effective delivery of ser-
vice requires solid actuarial pricing, an understanding of medical
care, and a proactive service. The industry needs to up the game
in customer centricity, and reduce its avoidable legal disputes.
Abhishek Bondia is principal officer and managing director,
SecureNow.in
(For an extended version of this column, go to livemint.com)

Best home loan rates When the algorithm holds gigsters hostage
A home loan is probably the biggest loan that one takes. Not only in terms of the loan
amount, but also tenure, which can be 15 years or more. The total final amount that one
pays can be double of what was borrowed. But a home loan is among the cheapest loans
FROM PAGE 12 after the protests in Hydera-
bad, for instance, Urban Com-
available, and usually it is the only way a person can buy a house. A home loan is called Urban Company. Excited at pany posted two clarification
a ‘good’ loan because it helps you acquire a tangible asset that can appreciate over the the prospects, she made three videos on YouTube. One has a
long term. It makes sense to buy a house if you plan to live in it. Given the fact that the trips to Hyderabad with her bunch of managers explaining
construction of several housing projects in India continues to be delayed or stalled by husband to understand the the different ways in which
many years, financial advisers say that one should buy a ready-to-move-in house. Here’s a job, get trained and find a auto acceptance will help the
look at the lowest home loan interest rates of some leading banks. house. Convinced that this partners. They speak about
Loan amount = ₹30 lakh. Tenure = 20 years was their path to a better life, creating a fair earning system
the couple along with the and creating a better customer
family relocated to Hydera- experience. “Auto acceptance
Interest bad four years ago. will help all partners with
Lender EMI (₹) Processing fee
rate (%) Now, with the introduction equal earnings,” Harsh, an
of auto acceptance, she is wor- Urban Company category
Bank of India 8.30-10.75 25,656-30,457 Waived till 31 March 2024 ried that her only source of live- Beauticians gathered at an event in Hyderabad last year to voice manager from Hyderabad,
Bank of Maharashtra 8.35-10.90 26,283-30,762 Nil lihood is hanging by a thread. “I their concerns. explains in the video. But nei-
have already been (tempora- ther of the videos addresses
Union Bank of India 8.35-10.75 26,283-30,457 0.50% (Max. ₹15,000) + GST
rily) blocked twice. With auto ery of services. panies on a range of criteria the issues specifically faced by
Bank of Baroda 8.40-10.60 25,845-30,153 Nil; Subject to recovery of expenses of up to ₹10,000 + GST acceptance, if I miss a single “I don’t think there’s any from fair pay and working con- women workers.
booking and get blocked a third incentive for the platform to ditions to fair representation, Meanwhile, the Lucknow-
Canara Bank 8.40-11.25 25,845-31,478 0.50% (Min. ₹1,500 and Max. ₹10,000)* time, I will be permanently really value the worker; their Urban Company’s score has based beautician featured at
blocked,” she said. whole model is based on a been dwindling in the last few the beginning of this story is
IDBI Bank 8.40-12.25 25,845-33,557 ₹5,000 to ₹15,000
Workers are given three labour-surplus structure,” said years. It went from 8 out of 10 walking a tightrope with
Indian Bank 8.40-10.20 25,845-29,349 Up to 0.25% strikes: they are temporarily Dewan. “It will only change in 2020 to 7 in 2022 to 5 in Urban Company these days.
Indian Overseas Bank 8.40-10.50 25,845-29,951 Up to 0.50% (Max. ₹25,000) + GST blocked twice due to reasons when there’s government/ 2023. “The drop in score was Last month, she did not work
like non-acceptance of jobs, or regulatory pressure, con- due to losing out against prin- two weekends due to family
Punjab National Bank 8.40-10.10 25,845-29,150 Nil up to 31 March 2024 low ratings. Their third block sumer pressure or union pres- ciple 4 in 2023,” said Mounika commitments, which led to
UCO Bank 8.45-12.60 25,940-34,296 0.5% (Min. ₹1,500 and Max. ₹15,000) is a permanent one. Introduc- sure.” She added that regula- Neerukonda, a lead researcher her getting blocked twice. “I
Central Bank of India 8.50-9.50 26,035-27,964 Completely waived till 31 March 2024 tion of the new algorithmic tions can change how with Fairwork India. Principle had to attend my daughter’s
rule has only heightened anxi- platforms operate and bring in 4 refers to “fair management”, school function and parent-
State Bank of India 8.50-9.65 26,035-28,258 0.35% (Min. ₹2,000 and Max. ₹10,000) + GST eties, many women said. algorithmic transparency, as which evaluates a company teacher meeting, so I marked
Punjab & Sind Bank 8.55-10.00 26,130-28,951 Full waiver of processing charges Labour experts believe that well as structured working based on whether it has pro- my calendar as unavailable
the only solution to balancing hours and remuneration. vided due process in decisions because of which my accept-
HDFC Bank 8.55-9.10 26,130-27,185 For salaried & professionals: Up to 0.50% or ₹3,000 (higher) + taxes** company incentives and “There’s a huge role for regu- affecting workers. ance rating dropped. A man-
Axis Bank 8.70 26,416 Upto 1% subject to min of ₹10,000/- Upfront processing fee of ₹10,000/- plus tax worker rights is to bring in lation here.” Neerukonda added that no ager told me that if I regularly
regulation. The business platform, including Urban mark weekends off, I will be
Data taken from banks' websites as on 22 February 2024. EMI range is indicative and calculated on the basis of interest rate range; it may include other charges model of these platforms, they RAtINgS DEclINE Company, has tried to get the blocked permanently,” she
and fees. Actual applicable interest rate may vary based on the credit profile of the loan applicant. *50% waiver from 01 February 2024 to 29 February 2024
under Retail Loan Festival. **For self-employed non professionals: Up to 1.50 of the loan amount or ₹4,500 whichever is higher + applicable taxes
PRANAY BHARDWAJ/MINT Source: MyMoneyMantra.com
pointed out, is based on sur-
plus labour, the strength of the
network, and low-cost deliv-
A ccording to Fairwork, a
research group that regu-
larly evaluates platform com-
collective perspective of gig
workers before making signifi-
cant policy changes. Just days
said. “Since then, I ensure that
I am available all weekends.
This is my last lifeline.”
This PDF was uploade To Telegram channel_https://t.me/Magzines_latest_Newspaper(send Me Message telegram ya WhatsApp This number 8890050582)
 14 MoNDay, 26 February 2024
New DeLhi VIEWS LIVEMINT.COM

OUR VIEW MY VIEW | ThE INTERsECTIoN

REUTERS

Lessons on hyper-diversity from

the people of Papua New Guinea
Its challenge is to leapfrog its hundreds of small societies into one big Papua New Guinean one

You could say that PNG is caught in a
polycrisis of its own, but underlying the
visible symptoms are fundamental
problems. The Independent State of
Papua New Guinea is essentially a
hyper-diverse tribal society wrapped in
a Westminster style political system. A
people who did not have social struc-
ture bigger than a village before Euro-
NITIN PAI pean colonization 150 years ago are now
is co-founder and director of The citizens of a modern state. The basic
Takshashila Institution, an independent social unit is a wantok (“one talk”), a
centre for research and education in small community that speaks the same
public policy. language. Band and tribe loyalties are
Hyperdiversity results in weak social
capital, making effective cooperation
difficult at any meaningful scale, thus
resulting in poor societal outcomes.
Hence PNG’s low human development
indicators, high crime and corruption.
But there is high social capital within
wantoks, helping its members procure
jobs, favours and other forms of sup-
port. These are a little like Indian jaatis,
kinship groups with high trust and eco-
nomic ties. But unlike jaatis, wantoks
neither have an ideological basis nor
any presumptive hierarchy.

The WTO must double

strong. People expect leaders to act in Indian society has some problems in
the interests of their social group, so common with PNG. Electoral politics is
MPs are more concerned about favoura- organized around identity groups, not

T
here are so many crises raging ble redistribution than national govern- on different approaches to governance.
around the world that you can ask ance. Foreign missionaries might have There are a large number of political

down on climate talks why I have chosen to bring the

one in Papua New Guinea (PNG) to your
attention this fortnight. So let me tell
you the reason upfront: It is an example
converted people to Christianity, but
old tribal identities remain. After inde-
pendence from Australia in 1975, Papua
New Guineans have tried to construct a
parties and opportunistic leaders who
jump ship frequently. Governments
rule with less than half the total votes.
Federalism is impaired because MPs are
of why hyper-diverse societies can end national identity, but it remains a work expected to dispense local favours.
up in deep trouble unless they develop in progress. The wantok, tribe and There are conflicts over language. It is
It must work on fixing its dispute resolution device, but mustn’t lose time on working out a the necessary social capital needed to extended family remain powerful in hard to make simple, universally appli-
govern themselves. the face of monotheistic religion, cable laws.
deal that ensures fair trade and climate action aren’t at odds. It’s time to talk carbon markets The post-colonial state was carved nationalism and cosmopolitanism. So why is hyper-diverse India able to
out of an arbitrary chunk of the Melane- Earlier, I have argued that diverse do better? We have a stronger sense of
sian archipelago (the region comprising societies suffer from a problem of common civilization, geography and
the easternmost stretches of Indonesia under-cooperation resulting in under- community. Our religious, ethnic and

I
n an eerie echo of the protectionist 1930s,
globalization has been in retreat this dec-
ade amid a fast deepening geopolitical
divide. This explains feeble expectations
of anything multilateral. So too of the 13th
ministerial conference of the World Trade
Organization (WTO) being held in Abu Dhabi.
Ever since we lost a flawed but powerful pro-
moter of free trade in the US, which has left the
WTO’s dispute-resolving device in limbo since
2019, the cause has dawdled in the doldrums.
The real irony of today’s global ‘polycrisis,’
however, hangs invisibly in the stale air around
us. Trade talks are caught woefully out of step
with the planet’s climate crisis. While market
theory makes a cogent case against price distor-
tions to secure our economic well-being both
within an economy and across borders—asking
us to squeeze the most out of scarce resources
by letting unrigged forces of demand and sup-
ply allocate them—it confronts two hard-to-
crack nuts: distrust of one another, a classic old
rigidity, and the real cost of carbon, adjusted
for a global net-zero goal. The WTO must
met. As for other agenda items, on agriculture, and islands northeast of Australia). Its provision of public goods. PNG is so national identities cut across caste lines.
India is looking for a “permanent solution” that claim to fame is that it has the most diverse that for centuries its society In other words, Indians have a better
diverse population on the planet, with could not organize itself into tribal con- developed sense of higher-level imag-
grants our food security set-up WTO cover in over 850 languages and thousands of federations, leave alone kingdoms and ined communities. In a sociological
the face of arguments that trade-distortive sub- bands and tribes, in a population of over bureaucratic states. Village communi- sense, all these higher-level identities
sidies leave the world hungrier than need be. 10 million living in a country the size of ties were so geographically isolated, are a good thing, even if which should
The state’s mandate to feed our own hungry Maharashtra and Gujarat combined. culturally distinct and economically have political primacy is contested. To
means policy autonomy cannot be ceded on PNG is reeling from the after-effects self-sufficient that they couldn’t coa- my mind, a pluralist Indianness is the
of a volcanic eruption, urban riots, lesce and form a bigger entity. Inter- highest-level identity around which we
this. Fishery talks are another kettle; as Indian inter-tribal violence, fuel shortages, for- tribal violence, basic commerce and can create the broadest stock of social
fisher-folk had no role in overfishing, India eign exchange problems, an impending inter-marriage would maintain a rudi- capital, which can then achieve the
wants them duly shielded from any pact on sub- secession and ongoing parliamentary mentary order, and everyone just lived greatest cooperation.
sidy cuts and fishing curbs. Also up for discus- machinations to replace the prime min- with that. In 1975, a liberal democratic PNG’s challenge then is to leapfrog its
sion are e-com tariffs, which are best held off, ister. Its police force, which went on state was thrust on a people few of hundreds of small societies into one big
strike last month over a wage dispute, is whom could imagine who or what a Papua New Guinean one. It will not be
and investment facilitation, a trade-allied issue. too small to pacify warring tribes. Few ‘Papua New Guinean’ was. Things have easy. As much as foreign countries can
As an institution, the WTO must double down criminals are arrested and incarceration changed since, but the people of PNG provide economic and technical assist-
on climate talks to rally a response that does not rates are low, allowing them to operate have not been able to build social capital ance, the task of turning a hyper-diverse
warp free-and-fair trade. As its director-general with impunity. Geopolitically, it is in a fast enough to ensure that their govern- society into a pluralistic nation belongs
Ngozi Okonjo-Iweala has said, policies on the tight spot in the contest between the ment can maintain political order, rule to Papua New Guineans. And, as we in
West and China. of law and deliver basic public goods. India can attest, it is a never-ending one.
two need to be “mutually reinforcing,” not at
odds. The EU’s carbon barrier, let’s admit, does
aim to do that, even if clumsily. Using market
incentives to choke gaseous exhaust is a worthy
proposition, but gates slammed shut on imports
with ‘embedded emissions’ to keep its carbon
market leak-proof are untenably unilateral. Yet, www.livemint.com
New Delhi, Mumbai, Bangalore, Kolkata, Chennai, Ahmedabad, Hyderabad, Chandigarh*, Pune* Wednesday, February 26, 2014 Vol.8 No.49 `4.00 in Delhi­NCR/`5.00 outside Delhi­NCR 24 +244 PAGES

address the latter with utmost urgency. Even while it nudges suppliers to decarbonize (or get
MINT METRIC
The state of
CHARTICLE:
corporate governance >20
BANKING: Ball is now in RBI’s court after
Jalan panel submits report >6

as alternate means are sought to resolve trade priced out by a steep carbon tax), it also cues the CONTENT PARTNER
PHARMA: Ranbaxy halts drug ingredient
shipments from two plants >8
CORPORATE: IOC seen as buyer of
stake in Petronas assets >8

disputes, time must not be lost on how carbon idea of this model’s adoption by all stakeholders
SENSEX 20,852.47 Æ 41.03

THIRD FRONT
NIFTY 6,200.05 Æ 13.95 DOLLAR `61.96 æ `0.10 EURO `85.11 æ `0.17

Festival
GOLD `30,550 æ `120

QUICK EDIT
OIL $110.01 æ $0.56

by Bibek Debroy
11 parties seek to reframe toseason fails Winners

markets may be globalized. Indeed, this ought for the sake of our planet. Making polluters bid lure Indian

poll math at the 11th hour consumers B Y K RISHNA M ERCHANT

S APNA A GARWAL
·························
MUMBAI
&
take all
H ere is something for
all those worried
about growing inequality to
ponder. WhatApp has just
55 employees at a time

to assume equal priority at this week’s huddle. for a shrinking pile of exhaust licences through
RITUPARNA BANERJEE/MINT when Facebook has paid a
Meeting of leaders of
nine of the 11 parties C onsumer goods and retail
companies reported the
steepest sales decline in 24
massive $19 billion to ac-
quire it. It shows certain
digital companies that har-
ends without either quarters during the three vest network externalities
common agenda or months to December after fes- can create huge wealth
tivals and sales promotions with minimal people.
seat­sharing formula failed to attract shoppers wait- This is in contrast to the

India’s call for WTO reforms includes seeking a cap-and-trade platform is interventionist, no
B Y L IZ M ATHEW
·························
NEW DELHI

T
&

he math reads thus: 11

A NUJA

parties with 92 representa-

tives in the Lok Sabha cur-
rently that expect to do better in
the coming general election, and
with four leaders nursing prime
ing for an upturn in the econo-
my to open up their wallets.
Eight firms analysed by Mint
reported a decline in net profit
for the first time in nine quar-
ters, as slower economic
growth and persistent inflation
kept consumer confidence low
in Asia’s third largest economy.
Aggregate net sales stood at
view made popular by
former Wired magazine ed-
itor Chris Anderson that
the new digital economy
would encourage small
niche sellers through the
statistical property known
as long tails. The contrast-
ing trends of network ex-
ternalities and long tails
In Vancouver, board and rent
two-tier dispute resolution and pushing for the doubt, but the stakes are high and it’s an idea
ministerial ambitions. `12,366 crore, down 9.4% com- could frame a new debate

Make a considerable dent.

Together, the states where
these 11 parties have a pres-
ence—they run the local govern-
ment in some—account for 298
Lok Sabha seats.
That’s the so-called Third
Front that has been mid-wifed
by the Communist Party of India
pared with the same period a about rising inequality.
Alternative message: The parties came up with a joint declaration in which they pledged to ‘throw Congress year ago. The companies Economists are yet to
out of power’ and defeat and prevent ‘the BJP and the communal forces’ from coming to power. picked represent a basket of fully explain what is driving
consumer goods ranging from growing inequality: digital
Janata Dal (United), or JD(U); da or a seat-sharing formula. of Tripura, the only state where apparel to jewellery and con- economics that helps win-
the All India Anna Dravida The Asom Gana Parishad and the Left is in power, came up sumer durables. This was the ners take all, crony capital-
Munnetra Kazhagam (AIAD- the Biju Janata Dal (BJD) were with a joint declaration in which steepest decline since the quar- ism that allows the elite to
MK); the Jharkhand Vikas not represented at the meeting, they pledged to “throw Congress ter ended September 2011. capture rents, rising differ-

old device’s revival. Since the WTO is based on whose time has come. If the WTO can work out
(Marxist), or CPM, in an attempt Morcha (Prajatantrik); the All which took place ahead of the out of power” and defeat and Aggregate net profit for ences in the returns to
to provide an alternative to the India Forward Bloc; the Revolu- likely announcement of the prevent “the BJP and the com- Shoppers Stop Ltd, the Tata skills or the destruction of
Indian National Congress and tionary Socialist Party, and the dates for the next general elec- munal forces” from coming to group’s Trent Ltd and Titan trade unions after globali-

A student with home in Calgary

the Bharatiya Janata Party (BJP).
On Tuesday, the leaders of
nine of the 11 parties—the
CPM, Communist Party of India
(CPI); the Samajwadi Party, the
Janata Dal (Secular)—met in
Delhi, the largest gathering of
the coalition-in-the-making, al-
though the meeting ended
without either a common agen-
tion in the first week of March.
The election is due to be held by
April-May.
The parties, which met at
Tripura Bhavan, the state house
power. Co. Ltd, Gitanjali Gems Ltd, zation. The answer contin-
“There has to be an alternative Cesc Ltd that runs the Spen- ues to elude them. But the
to the Congress and the BJP—an cers super and hypermarket recent WhatsApp deal does
provide food for thought.
TURN TO PAGE 2® TURN TO PAGE 3®

the General Agreement on Tariffs and Trade, how to integrate various carbon-trading plat- INSIDE SUDDEN SLIDE

Yuan’s decline triggers

AIADMK targets oil
cos’ rate fixing powers
T he AIADMK, if elected
for its very basis to be upheld judiciously, the forms—each with a price that must necessarily
to be a part of the Un-
ion government, will take
away the powers of oil
marketing companies
(OMCs) to determine the
prices of petrol and diesel,
it said in its manifesto for
fears on leveraged bets
B Y A NJANI T RIVEDI
The Wall Street Journal
·························
T he sudden slide of the Chi-
nese currency over the last
Uses air commute to solve his quandary.
The currency, which is also
known as the renminbi, is up
33% since 2005. And because
the currency is tightly controlled
by the Chinese government, vol-

Tim Chen’s solution finds approval and dissent.

the coming election. The week has raised fears that the atility is among the lowest in
manifesto, devoting its yuan is nearing levels that could Asia, making the bet seem even

US and others must honour the G20 New Delhi vary by local aims and conditions—at fair rates
longest section to petrol,
diesel and natural gas
pricing policy, said it will
review the government’s
decision, effective from 1
April, doubling the price
paid to developers and ex-
tractors of natural gas. >P4
trigger an unwinding of billions
of dollars in highly leveraged
bets on the currency’s apprecia-
tion. Traders and strategists say
a portion of the yuan’s recent
decline can be attributed to in-
vestors looking to get out of
trades before losses soar.
Daily trading volume in the
less risky.
On Tuesday, the offshore
yuan hit 6.1115 against the
greenback, sharply up from
6.0984 the day before. Earlier in
the day, the currency touched
an intra-day peak of 6.1250, its
highest since it reached 6.1272
on 22 August and the yuan’s

Declaration calling for talks aimed at a “fully of exchange, in line with justly borne climate
yuan has exploded recently, tri-
pling to $120 billion a day since
2010, when China allowed trad-
ing in its tightly controlled cur-
rency. The yuan is now the
ninth most traded currency in
the world, according to the
Bank for International Settle-
ments (BIS), rising from 17th
biggest daily drop since 28 Janu-
ary 2011. China’s stock market
suffered its biggest fall in five
months, dropping 2.1%, putting
its overall decline at 3.5% since
the beginning of the year.
Individual investors and
small- and medium-size busi-
nesses were among the biggest

and well-functioning dispute settlement system burdens, we could conceivably achieve a level
two years ago.In the past year,
trading in derivatives tied to the
currency have soared as inves-
tors bet on a continued rise in
the yuan. According to Deut-
sche Bank AG, approximately
$250 billion worth of these de-
rivative contracts were traded in
buyers of options that would
profit from appreciation in the
yuan, currency analysts say.
They bought structured invest-
ment products that magnified
gains but could lead to big loss-
es if the yuan fell below certain
levels. The rising yuan coupled

accessible to all members by 2024.” This dead- playing field by consensus. But trade can’t be
2013, the first year these prod- with higher interest rates inside
ucts took off. Already in 2014, China led even more investors
between $80 billion and $100 to buy yuan, pushing the cur-
Mint is also available for R8 with billion has been traded, the
Hindustan Times in Delhi-NCR only
bank says. TURN TO BACK PAGE ®

line, set at the WTO’s meeting in 2022, must be kept apart from the climate. Not anymore.

MY VIEW | MoDERN TIMEs

Semaglutide and the wild democratization of thinness

reflect human nature. Not everyone enjoys
MANU JOSEPH this revelation. But what can be wrong in a
levelling of the health field? What happens
when bad genes, gluttony and decadence
can go unpunished? What is the conse-
quence of simplification? Of something that
for it that Nova Nordisk is unable to meet it. mental ailments than any resolve. medicines. I do believe though that what is
An odd quality of our times is that the rich The fit ask others to be fit because it is in called longevity today is merely a prolonging
are our guinea pigs, and it is they who inform our nature to ask people to be like us, to do of death.
us of new cures and that they are ‘safe.’ what comes easy to us. But the path to fitness The fit do point out that Semaglutide has
But there is ancient wisdom in us that makes most people miserable. I know people to be had forever, so its consumers will have
warns us of easy things. Among the people who start believing in mysterious injuries to deal with the side effects forever. But

A
cross the world, a wonder drug is
helping the rich lose weight without
the inconvenience of putting in an
effort. As a result, Semaglutide, a string of
amino acids created by a Danish pharma
giant to reduce blood sugar, is democratiz-
ing thinness. What was once possible only
for people with resolve, lovers of fitness, aus-
used to be very difficult becoming easy?
Semaglutide was developed by the
pharma major Novo Nordisk as a way to
manage diabetes. The drug increases the
production of insulin, which in turn reduces
blood sugar. A collateral benefit is fat loss.
Semaglutide, which is sold under various
brand names, is a prescription drug. It is pre-
who are very suspicious of Semaglutide are, inside them just to save themselves from then, people who eat frugally, too, have to do
not surprisingly, those exercise, and who manu- it forever. People who work-out, too, have to
who would not be needing facture mental trauma just do it forever. Exercise has its own adverse
it. They are fit and usually What is the to eat some chocolate. side-effects, like injuries. I am just saying
misunderstood as ‘disci- Modern food is a very that the case against the drug is obvious but
plined.’ consequence of powerful drug. So maybe it not terrifying, at least not terrifying to most
It is one of our most is only fair that the modern people.
bogus concepts—that
simplification? world has given us another There is one argument against it, though.

is a journalist, novelist, and the

tere eaters, the genetically lucky, the vain,
and masochists, is now attainable by unre-
creator of the Netflix series,
‘Decoupled’
markable people. In time, as patents expire
across the world, the prices of the drug will
crash and most people will be able to lose
weight in the easiest way the world has yet
invented. And we will move closer to a kind
of equality that is not talked about often—
better health for people who cannot work
hard to achieve it, or people who are simply
not lucky enough to be born with normal
metabolism. Is this sort of equality a good
thing? What can ever be bad about equality?
For centuries, democracy had a great rep-
utation, until our times when the democrati-
zation of opinions began to accurately
This PDF was uploade To Telegram channel_https://t.me/Magzines_latest_Newspaper(send Me Message telegram ya WhatsApp This number 8890050582)
scribed for obesity too, but widely used
unofficially, without prescription, by those
who may not be diabetic or obese, but want
to look fit, or at least thinner.
There have been weight-loss drugs
before, but Semaglutide actually works,
according to general medical and user opin-
ion. There are side effects, but so far nothing
out of the ordinary when compared to other
medicines. It is very expensive, as new
superstar drugs tend to be. It is usually
injected every week, or had orally everyday.
In India, its injections can cost ₹80,000 per
month and the pill can cost ₹10,000 per
month. The drug is even more expensive in
the West. Yet, there is such strong demand
some people can endure a
degree of suffering to do
Of something drug in compensation.
I am trying hard to be
Just 20 years ago, only people who read a lot
had access to knowledge. Not all of them
the right thing, or, in other
words, that some people
that used to be compassionate, but lest you
mistake me for a wonderful
were intuitive, so they could not make ana-
lytical leaps with it, but still they possessed
are ‘disciplined.’ The fit are very difficult person, I should say I am some information. Today, knowledge can be
usually people who are among the people who Googled, even sought from a chatbot. Yet,
simply lucky enough to becoming easy? believe that there can be no there is a difference between a person who
enjoy physical exercise and alternative to austere eat- has the foundation of accumulating infor-
who find it easy to stay ing and exercise; not just mation the hard way and someone who is
away from fast carbs, or who have a strong exercise, but vigorous daily exercise. That is able to arrive at the same conclusion using
useful vice, like vanity, that helps them make the way to be, I want to say, because that is technology. The muscle memory of labour
little sacrifices. Discipline is a name given to way that comes easy to me. But I am unable lends depth to people. This muscle memory
private procedures that come easy to some to find a clinching argument against deca- is, in fact, our true self. Our true health is not
people and is plain suffering for most others. dence. If people love eating, why shouldn’t what we appear to be, but what the body
Even most ascetics in history who did pain- they simply have a wonder drug? After all, knows it has gone through, what the body
ful things were probably aided more by their half the world is alive today only because of knows it can endure.
 LIVEMINT.COM VIEWS MoNDay, 26 February 2024
New Delhi 15

THEIR VIEW M I N T C U R AT O R

Keynes’ equitable society won’t Think slow: Don’t let political

deepfakes take over our minds
be attained without intervention Kahmeman’s ‘deliberative thinking’ is what the world sorely needs

Greed and competitiveness have led to enormous disparities but fiscal policy-led redistribution could play a corrective role

GETTY IMAGES

FAYE D. FLAM
is a Bloomberg Opinion columnist.

KAuShIK BASu
is a professor of economics at Cornell
University and a former chief economic adviser
to the Government of India.

R
ealistic AI-generated images and
voice recordings may be the latest
threat to democracy, but they’re part

I
n 1930, John Maynard Keynes published his
short essay ‘Economic Possibilities for Our
Grandchildren,’ in which he outlined his
vision of a future global economy character-
ized by leisure and abundance. As the rapid
advance of artificial intelligence (AI) now
threatens to displace millions of workers, it is
worth revisiting this brilliant, passionate work.
Keynes originally wrote his essay in 1928 for a
lecture at a boys’ school in Hampshire, England,
and spent two years revising it before its publica-
tion. Despite being taken aback by the 1929 stock
market crash, he encouraged his readers to view it
as a “temporary phase of maladjustment.” Demon-
strating his characteristic foresight, Keynes
avoided making predictions for the next five or ten
years, instead focusing on the century to come.
Many of Keynes’s insights were remarkably pre-
scient. Modern society, he observed, had become
“afflicted with a new disease,” whereby technologi-
cal advances had reduced demand for labour. But
he viewed this “technological unemployment” as a
reason for hope, not despair, predicting that inno-
vation would drive rapid GDP growth and usher in
an age of leisure. “The standard of life in progressive
countries one hundred years hence,” he speculated,
“will be between four and eight times as high as it
is.” Despite the economic ups and downs of the past
century, this prediction has proven to be accurate.
But as far-sighted as he was, Keynes’s other
forecasts were far off the mark. “Within a hundred
years,” he asserted, humanity’s “economic prob-
lem”—the need to work in order to produce the
goods that sustain us—would be resolved. While
people may still work “three hours a day,” mainly
“to satisfy the old Adam in most of us,” both the
poor and the rich would enjoy such prosperity that
labour would become unnecessary.
Keynes has been rightly taken to task for this
wildly optimistic prediction. As Elizabeth Kolbert
noted in The New Yorker, the productivity gains of
the past century have not translated into increased
leisure time for all. To be sure, the economically
disadvantaged work less now, both because there
are fewer jobs and because life is less precarious
than it used to be. But the wealthy, driven by a
culture of competitive greed, find themselves
working more than ever.
Moreover, work-leisure balance varies across
regions and countries. The average American, for
example, works 100 hours more annually than the
average British worker and 300 hours more than
the average French employee. US workers also
take fewer vacation days than their European
counterparts, who are legally entitled to at least
four weeks of paid vacation per year.
But while Keynes failed to anticipate how the
economic problem would evolve, his essay’s
underlying normative argument is often over-
looked. Indeed, one of the main reasons why he got
his prediction wrong is that he projected his own
ethical principles onto others. Much like his
Bloomsbury Group peers, Keynes viewed greed
with disdain. In the same essay, he described the
relentless pursuit of wealth for its own sake as a
“disgusting morbidity.”
Keynes’s mistake was to underestimate human
greed and assume that a certain level of financial
security would satisfy most people. He envisioned
a more equitable world where individuals could
enjoy unprecedented prosperity, free from eco-
nomic anxieties. But, as Joseph E. Stiglitz has
pointed out, Keynes misjudged the balance
between the desire for leisure and the appetite
for consumption. After all, why settle for a single
TV when you can work harder and install screens
“in every room and in both the front and the back
of automobiles”?
Keynes also underestimated the competitive
drive that fuels the relentless quest for wealth and
social status. The wealthy, in particular, are often
motivated by a desire to maintain their relative
standing, leading to an endless competition for
supremacy. While Keynes believed that a shift
toward an equitable world would occur naturally,
it has become clear that achieving this goal
requires government intervention.
One way to bring about the equitable society
Keynes envisioned is to tax the rich. In my recent
book Reason to be Happy, I propose a tax regime
designed to redistribute income from the wealthy
to the poor, leaving relative positions unchanged
and without undermining individual incentives.
This system, which I have dubbed the “accordion
tax,” aims to narrow the income gap by taxing
those with above-average earnings and transfer-
ring these funds to those with below-average
wages as a form of negative proportional tax.
This approach would enable billionaires like
Elon Musk and Jeff Bezos to maintain their relative
standing, even with substantially reduced post-tax
earnings. Given that their primary concern is their
rankings among the world’s wealthiest individuals,
their motivation to innovate and venture into new
fields would not be diminished. Meanwhile, the
economic well-being of lower-income households
would significantly improve.
Contrary to Keynes’s expectations, we cannot
build a fairer society by leaving people to their own
devices. Fortunately, a growing number of people,
including several of the world’s billionaires, are
committed to addressing today’s extreme eco-
nomic disparities, even though that would be to
their own disadvantage.
Nearly a century after Keynes outlined his vision
of the future, the road to solving our economic
problem remains long. Still, there is cause for hope.
While avarice has grown, so has awareness of its
consequences. ©2024/PROJECT SYNDICATE
of a long-standing family of deceptions.
The way to fight so-called deepfakes isn’t to
develop some rumour-busting form of AI
or train the public to spot fake images. A
better tactic would be to encourage a few
well-known critical thinking methods—
refocusing our attention, reconsidering
our sources and questioning ourselves.
Some of those critical thinking tools fall
under the category of ‘System 2’ or slow
thinking, as described in Daniel Kahne-
man’s Thinking, Fast and Slow. AI is good
at fooling the fast thinking ‘System 1’: the
mode that often jumps to conclusions.
We can start by refocusing attention on
policies and performance, rather than gos-
sip and rumours. So what if former Presi-
dent Donald Trump stumbled over a word
and then blamed AI manipulation? So what
if President Joe Biden forgot a date? Nei-
ther incident tells you anything about
either man’s policy record or priorities.
Obsessing over which images are real or
fake may be a waste of the time and energy.
Research suggests that we’re terrible at
spotting fakes.
“We are very good at picking up on the
wrong things,” said computational neuro-
scientist Tijl Grootswagers of the Univer-
sity of Western Sydney. People tend to
look for flaws when trying to spot fakes,
but it’s the real images that are most likely
to have flaws.
People may unconsciously be more
trusting of deepfake images because
they’re more perfect than real ones, he
said. Humans tend to like and trust faces
that are less quirky, and more symmetrical,
so AI-generated images can often look
more attractive and trustworthy than the
real thing.
Asking voters to do more research when
confronted with social media images or
claims is not enough. Social scientists
recently made the alarming finding that
people were more likely to believe
made-up news stories after doing some
‘research’ using Google.
That wasn’t evidence that research is bad
for people, or for democracy for that matter.
The problem was that many people do a
mindless form of research. They look for
confirmatory evidence, which is abundant
on the internet—however crazy the claim.
Real research involves questioning
whether there’s any reason to believe a par-
ticular source. Is it a reputable news site?
An expert who has earned public trust?
Real research also means examining the
Daniel Kahneman is the first psychologist to
win an Economics Nobel prize GETTY IMAGES
possibility that what you want to believe
might be wrong. One of the most common
reasons that rumours get repeated on X,
but not in the mainstream media, is lack of
credible evidence.
AI has made it cheaper and easier than
ever to use social media to promote a fake
news site by manufacturing realistic fake
people to comment on articles, said Filippo
Menczer, a computer scientist and director
of the Observatory on Social Media at Indi-
ana University.
For years, he’s been studying the prolif-
eration of fake accounts known as bots,
which can have influence through the psy-
chological principle of social proof, making
it appear that many people like or agree
with a person or idea. Early bots were
crude, but now, he told me, they can be cre-
ated to look like they’re having long,
detailed and very realistic discussions.
But this is still just a new tactic in a very
old battle. “You don’t really need advanced
tools to create misinformation,” said psy-
chologist Gordon Pennycook of Cornell
University. People have pulled off decep-
tions by using Photoshop or repurposing
real images—like passing off photos of
Syria as Gaza.
Pennycook and I talked about the ten-
sion between too much and too little trust.
While there’s a danger that too little trust
might cause people to doubt things that are
real, we agreed there’s more danger from
people being too trusting.
What we should really aim for is discern-
ment—so people ask the right questions.
“When people are sharing things on social
media, they don’t even think about
whether it’s true,” he said. They are usually
thinking more about how sharing it would
make them look.
If AI makes it impossible to trust what we
see on television or on social media, that’s
not altogether a bad thing, since much of it
was untrustworthy and manipulative long
before recent leaps in AI. The advent of TV
notoriously made physical attractiveness a
much more important factor for all candi-
dates. There are more important criteria on
which to base a vote.
Contemplating policies, questioning
sources and second-guessing ourselves
requires a slower, more effortful form of
human intelligence. But considering what’s
at stake, it’s worth it. ©BLOOMBERG

MY VIEW | GeneRal DISeqUIlIBRIUm

We the People versus They the State: Our rights matter

has conferred greater primacy to the state
RAJRISHI SINGHAL and private-sector firms over individual
rights. The state has used almost every
opportunity to appropriate superior rights
under the pretext of national security or eco-
nomic imperatives. Economist and political
bility and Development Council (an inter-
regulator coordination body for the financial
sector) to prescribe uniform KYC norms and
allow for inter-usability of KYC records.
The ability to put undue pressure on indi-
viduals—using the threat of withholding ser-
ties face immense difficulties, including pro-
tracted legal proceedings, while trying to
repossess their properties. The inequity
finds expression even in the relationship
between a corporate employer and an
employee. Employment contracts are usu-
ments to the Act that downgraded the infor-
mation commissioner’s post and empow-
ered the government to fix their salaries;
and, finally, by enacting the Digital Data Pro-
tection Act, it completely diluted the RTI
Act. Ironically, while the 2023 law attempts

W
riting in the Young India journal in
March 1922, Mahatma Gandhi
invoked the spirit of democracy to
support voices of dissent within the Congress
party: “Democracy is not a state in which peo-
ple act like sheep. Under democracy individ-
ual liberty of opinion and action is jealously
guarded.” Modern democracy’s litmus test
philosopher Friedrich Hayek may have fore-
seen such an eventuality when he had stated
that “emergencies” have always been the
pretext for eroding safeguards of individual
liberty. The Supreme Court’s electoral
bonds judgement provides the country an
opportunity, and a legal precedent, for cor-
recting multiple anomalies in society.
vice unless provided with copies of KYC ally one-sided, with little or no legal recourse to provide limited protection to the privacy
records—perhaps ema- available to employees. A of personal data under the banner of individ-
nates from the corporate good example is the forced ual rights, it ends up defanging a person’s
sector’s inherent advan- A systemic gardening leave imposed right to information, something that became
tage in the legal process, on employees quitting the bedrock for the recent judgment.
which is structurally overhaul is their jobs, with the com- The Indian citizen’s individual rights are
loaded against individuals. pany’s apprehensions of enshrined in the Constitution, especially in
Any legal challenge to an
needed to place the executive joining the Articles 19 and 21. But, unfortunately, India’s

is a senior journalist and author

of the recently released book
‘Slip, Stitch and Stumble: The
Untold Story of India’s Financial
Sector Reforms’
@rajrishisinghal
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has been to expand the contours of individual
liberty, within the limits of reasonableness
and without infringing the rights of others, as
new contingencies and technologies emerge.
The Supreme Court’s recent judgement ban-
ning electoral bonds has once again focused
the arc-lights on individual liberty. Hope-
fully, it will also precipitate a discussion on
the state of personal rights today, and
whether the verdict will reverberate across
society, correcting a systemic and structural
debasing of individual rights.
In recent times, a synthetic tension has
been inserted between the need for eco-
nomic growth and the need to foster or pro-
tect individual liberties; it is an artifice that
For example, the inconsiderate demand
on individuals to provide know-your-cus-
tomer (KYC) documentation afresh, multi-
ple times, to every service provider in the
economy—banks, telecom firms, insurance
companies, mutual funds, stockbroking out-
fits, broadband vendors, high-end retailers
and, bizarrely, airline loyalty programmes—
for every insignificant transaction, without
any corresponding obligation on corporates
to safeguard these records, has led to several
breaches of privacy and scams in which peo-
ple have lost money. It may have been a
growing drumbeat of consumer disaffection
that compelled finance minister Nirmala
Sitharaman to recently ask the Financial Sta-
errant corporate service
provider entails a lengthy
individual rights
judicial process with
attendant costs, which
over those of
automatically dissuade a the state or
large number of individual
appellants. Hopefully, the corporates
Supreme Court will follow
up its electoral bonds
judgement with an earlier promise made by
Chief Justice of India D.Y. Chandrachud to
work for the common people, especially on
judicial reforms.
The corporate sector’s legal privileges and
entitlements work in different ways. Indi-
viduals renting premises to corporate enti-
competition accorded
greater importance than
the individual’s right to
employment or livelihood.
The state has also been
an active party in the deval-
uation of individual rights.
Individuals gained a hard-
won victory against the
state when the Right to Information (RTI)
Act was legislated in 2005, empowering citi-
zens to seek information from the govern-
ment. However, the state has since pushed
back by first creating a capacity problem (by
slowing down appointment of information
commissioners); it then introduced amend-
fit-for-purpose Constitution has not been
able to scrub the vestiges of colonial inequi-
ties that have got entrenched across various
Articles and Sections. Clauses permitting
preventive detention constitute a glaring
contravention of basic democratic values
and civil liberties that has been carried for-
ward from a colonial regime to a modern-
day republic. What is even more tragic is that
this perfidy has found favour with every
political party since Independence.
Some of the skews can be corrected by the
executive, and some by the judiciary. But
these moves will shift the needle only mar-
ginally. A systemic correction will require
nothing short of a mass movement.
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