1. A NBER working paper examined the impact of new national highways construction on the local monopsony power exercised by manufacturing firms in labour market in India,
Using panel data on manufacturing firms, we find that monopsony power in labor markets is reduced among firms near newly constructed highways relative to firms that remain far from highways. We estimate that the highways reduce labor markdowns significantly. We use changes in the composition of inputs to identify these effects separately from the reduction of output markups that occurs simultaneously. The impacts of highway construction are therefore pro-competitive in both output and input markets, and act to increase the share of income that labor receives by 1.8--2.3 percentage points.
2. Josh Lerner, Nick Bloom et al examines the diffusion of 29 disruptive technologies across firms and labour markets in the US and find five stylised facts.
First, the locations where technologies are developed that later disrupt businesses are geographically highly concentrated, even more so than overall patenting. Second, as the technologies mature and the number of new jobs related to them grows, they gradually spread across space. While initial hiring is concentrated in high-skilled jobs, over time the mean skill level in new positions associated with the technologies declines, broadening the types of jobs that adopt a given technology. At the same time, the geographic diffusion of low-skilled positions is significantly faster than higher-skilled ones, so that the locations where initial discoveries were made retain their leading positions among high-paying positions for decades. Finally, these technology hubs are more likely to arise in areas with universities and high skilled labor pools.
3. Inflation is biting Indian consumers hard,
Edible oils are the largest category in the fast-moving consumer goods (FMCG) sector, with Rs 1.5 trillion yearly sales. Their average price has spiralled upwards by over 45 per cent in the last year... Analysis by Edelweiss Research for the April-June quarter shows that HUL raised prices by at least 6 per cent. The prices of its leading soap brands such as Dove, Lux, and Lifebuoy have gone up by 16 to 27 per cent since last year... Amul has announced a Rs 2 per litre hike in packaged milk... TV prices have so far been raised by up to 15 per cent as panel prices surged by 30 to 100 per cent, depending on their size... most electronic appliance brands have had to increase their prices by seven per cent. Smartphones and notebooks... prices rose around 5-10 per cent as a result of chipsets becoming 30 per cent more expensive in the past year.
4. Inflation has been compounded by the effect of Covid on health care prices. Here is another report from Business Standard,
According to industry estimates, consumables earlier made up between 2 per cent and 8 per cent of hospital bills. But during the pandemic, this has increased to 15-20 per cent, with some putting the figure to as high as 30 per cent... There are four major heads under consumables — administrative charges, housekeeping charges, part of room charges, and disposable treatment items. Bhaskar Nerurkar, head of health claims at Bajaj Allianz General Insurance, said... “Consumables made up approximately 8-10 per cent of the hospital bill before the pandemic. But, now, it has gone up to 25-30 per cent.” Amit Chhabra, health business head at Policybazaar.com, said: “Because of strict sanitisation measures as well as higher usage of PPE kits, gloves, and other items, consumables are now almost 15-20 per cent of the bill amount.”... He said for other diseases and in the pre-Covid period, the firm would pay anywhere between 88 per cent and 92 per cent. “There is a 5-10 percentage point enhancement in the consumables as a proportion of the hospital bill. So, earlier 5-10 per cent of the bill was consumable items, now it has moved up to 18-20 per cent,” he said.
5. FT reports that Chinese investors have been the big losers in India's record $7.2 bn venture capital fund raising in Q1 of 2021-22.
6. Martin Wolf has some informative graphics that compare equities and debt instruments.
In the 1900-2020 period, equities have outperformed bonds big time.
The outperformance is much higher over longer durations
However, equities are more volatile than bonds.
No single historical episode is a perfect template for current events. But when looking for historical parallels, it is useful to concentrate on inflationary episodes that contained supply chain disruptions and a spike in consumer demand after a period of temporary suppression. The inflationary period after World War II is likely a better comparison for the current economic situation than the 1970s and suggests that inflation could quickly decline once supply chains are fully online and pent-up demand levels off. The CEA will continue to carefully gauge the trajectory of inflation.
8. Livemint long read that examines the agritech startup scene in India. Consider this claim,
Over 500,000 farmers spread across six states are currently on the DeHaat platform, which handles about 1,500 tonnes of produce and 9,000 delivery orders for crop inputs daily... Gramophone, which provides farmers with agronomic intelligence and input delivery services, began its journey in 2016 with just 5,000 farmers in Madhya Pradesh... In FY21, Gramophone added 400,000 farmers to its platform, taking the total number to 850,000.
This is typical of the claims that growth-focused startups make. It's high time that investors go beyond these irrelevant metrics and look at metrics like average revenue per user, number of transactions per subscriber, per capita transaction value etc. As I co-wrote here, the point should be to focus on value proposition demonstration indicators like intensity of adoption/use of the innovation.
The point that investors (and entrepreneurs) should fuss over is how much value is DeHaat and Gramaphone generating for its median customer, and what's the universe of that customer base.
9. India middle class fact of the day,
While India has about 550 million smartphone users, most are not high-value “targets”. Zomato has an average monthly user base of only about 10 million. These are high net-worth individuals at the very apex of the digital pyramid. In that same income segment, Amazon Prime has 7 million users, while Netflix has about 3 million subscribers.
10. Shyam Saran has a very good oped where he outlines the emerging geopolitical dynamics in Afghanistan as the Taliban closes in on taking over the entire country. With a hostile Pakistan providing the military and political support, and with the simmering border tensions with China, the emergence of Taliban controlled Afghanistan poses enormous risks for India.
11. Border conflict and import controls notwithstanding, India's import dependence on China continues to rise,
In April, 40.71 per cent of India’s imports of electronic components were from China. The share was 33.54 per cent during the same month in 2020, 33.82 per cent in 2019, and 33.90 per cent in 2018... Similarly, imports of electronic components... the share rose to 40.5 per cent in FY21 from 37.2 per cent in FY20 and 36.9 per cent in the previous year. China accounted for 16.53 per cent of India’s imports in FY21, the highest in at least 12 years... About 63 per cent of consumer electronics imports in India were from China in April compared to 26 per cent last year. The share grew significantly in 2020-21 to 52.3 per cent from 44 per cent in 2019-20. Computer hardware and peripherals... share has grown to 50.8 per cent in FY21 compared to 46.4 per cent in FY20 and 44.6 per cent in FY19. The share has expanded further in April 2021 to 55 per cent compared to 51 per cent in the corresponding period last year. Telecom instrument imports from China accounted for 43.5 per cent of India’s inbound shipment in this area in 2020-21, compared to 39 per cent in the previous year. In April, the share of telecom instruments from China rose to 47.3 per cent from 33.6 per cent. More than half the consumer electronics imports in India in FY21 were from China, compared to about 40 per cent in the previous two years.
12. Excellent primer on the microchip shortage problem that's adversely impacting the automobile industry globally. This snippet conveys a lot about the reasons,
Apple alone consumes more semiconductors (worth $58 billion) than the entire global auto industry ($40 billion) and mobile phones use higher-end, higher-margin chips compared to cars. So chip makers had little incentive to prioritise the auto industry.
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