Investors are effectively willing to buy equities without any risk premium!
2. Indian farmers are among the only three major economies where farmers suffer a negative subsidy - they pay to the government!
3. The failure to capitalise on the booming stock prices of public sector units should count as one of the biggest public policy failures in India in the last five years.
Between May 2020 and February 2024, Indian Overseas Bank’s share price rose 10-fold, from Rs 7.25 to Rs 71 a piece! At Rs 71, the bank’s share was trading at five times its book value, making it probably the costliest bank in the world. Did the government seize the opportunity to divest? No. It’s not just state-owned banks. Other sectors, too, rocked but the government didn’t make hay while the sun shone.
4. Ruchir Sharma offers some numbers in the world of Donald Trump that point to a trend of growth in "trade without America".
Over the past eight years, more than four of every five nations — developed and developing — have seen trade rise as a share of their national GDP. Gains of more than 10 percentage points have been chalked up in more than a dozen major nations, from Japan, Italy and Sweden to Vietnam, Greece and Turkey. The big exception is the US, where it has dipped to around 25 per cent of GDP. The US has been growing faster than most of its peers — but with no boost from trade. America may be increasingly dominant as a financial and economic superpower but not so much as a trading power. Its share of global equity indices has exploded to almost 70 per cent. Its share of global GDP has inched up to more than 25 per cent. Yet its share of global trade is under 15 per cent, and has declined significantly in the last eight years... over the past eight years, as the locus of global trade shifted away from the US and towards the Middle East, Europe and Asia, nations registering big share gains included the United Arab Emirates, Poland and, above all, China. Of the 10 fastest-growing trade corridors, five have one terminus in China; only two have a terminus in the US.
5. What's possibly driving Trump's interest in Greenland?
Global warming is melting ice and opening up the Arctic in unprecedented ways. Arctic shipping has increased 37 per cent over the past decade, and the US, Russia and China are all eyeing new northern shipping routes that pass alongside Greenland. The geostrategic considerations and future mining opportunities are driving US President Donald Trump’s interest in acquiring the territory...
Greenland is another expected climate winner. In addition to being located along anticipated future international shipping routes and hosting a more temperate climate, it is believed to be home to valuable untapped mineral resources including iron ore, lead, gold, rare earth elements, uranium and oil. While only small parts of the island have been explored so far, mineral exploration and mining concessions are increasing as the ice melts. Large-scale mining is on the horizon and could be a key in making the transition to green industries.
The article also points to a second land reshuffle after colonialism induced by climate change, with countries like Canada standing to benefit and those in tropics and coasts set to lose.
6. In the eyes of the Indian news media, all ills of the world and all solutions to them lie at the doorsteps of the government. Sample this from Business Standard on the implications of DeepSeek
India’s policymakers should take note. Indian engineers are good at this sort of adaptation. What they may need is incentives. Incentivising AI-related research in India by offering targeted schemes could serve as a powerful accelerator. The rapid scaling up of India’s data centre capacity, alongside the substantial domestic market and large digital economy, could make India an excellent test bed.
Not a word on the failings of India's much-hyped software ecosystem which has been caught napping as much as the US Big Tech.
7. On UK universities and their commercial startup spinouts.
Universities, founders and investors clash frequently. All would agree that value resides in intellectual property, but where the IP itself resides is a knottier issue. At Cambridge, the university gets first dibs. Compare that with Sweden’s Uppsala University, which usually confers ownership on the originator. One case, involving the University of Oxford, wound up in court. That is just one hurdle. Extricating spinouts can be laborious; academia moves slowly. As the UK government’s 2023 review noted, panels are composed of committees that only meet irregularly and lack commercial experts. The average spinout took 10-12 months; for 16 per cent it was more than 16 months. Universities are reluctant to cede much of their innovations: one in four spinouts began negotiations demanding a 50 per cent equity stake. Investors balk at being accorded just crumbs. This is improving — the average university equity stake at spinout fell to 18 per cent in 2023, from 25 per cent a decade ago — but there is scope for further loosening of the reins.
8. KP Krishnan has a good summary of the regulatory systems put in place in the aftermath of the economic liberalisation in India.
9. When debt levels are rising globally, the one country which ought to be borrowing more to finance infrastructure investment, Germany, has its debt-to-GDP level going in the reverse direction.
Germany has an estimated €600bn in investment demand, according to a joint study by IW and IMK, an economic think-tank.
10. The stock prices of the magnificent seven have done great.
But productivity statistics do not reflect any such magnificence.
11. Interest payments absorb 61% of Pakistan's government revenues!
12. India income tax facts
For assessment year 2023-24, 99.1 million individuals filed income tax returns or paid income tax through the TDS route in India. Of these, 75.5 million filed a return. Of the latter, 47.3 million filed a nil return, suggesting that less than 30 million filed a return with a positive tax payment... all of whom have annual incomes above Rs 5 lakh... Personal income tax in India was forecast to reach 3.6 per cent of gross domestic product (GDP) in the Budget for 2024-25, supporting a gross tax collection-to-GDP ratio of 11.66 per cent for the Union government.
13. India's tax revenues as a share of GDP has remained the same over the last two decades.
15. Finally, Rwandan backed M23 rebels have occupied the Eastern Congolese city of Goma in an escalating civil war in the DRC.
The DRC has called it a “declaration of war” by Paul Kagame’s Rwanda... Kagame appears to have calculated that a change of US administration is a good time to strike... M23 rebels control increasingly large areas of eastern Congo, with its reserves of minerals needed by the world’s electronics giants. It has been an open secret for years that gold and metals such as coltan, used in smartphones and other devices, come from militia-controlled mines in eastern Congo but are retagged as Rwandan exports. Kinshasa says it is losing $1bn a year in smuggled minerals, claims that have been at least partly substantiated by UN expert reports...Felix Tshisekedi, DRC’s president, who has vowed to retake Goma, has contrasted the west’s indulgence of Rwanda with its condemnation of Russia. It is true the west has gone easy on Kagame, Rwanda’s gifted, ruthless and autocratic president. Guilt over inaction during the 1994 genocide — in which up to 1mn Tutsis and moderates from the majority Hutu ethnic group were slaughtered by Hutu extremists — has made western governments reluctant to criticise Kagame, whose arrival ended the slaughter. They have sympathised with his view that eastern Congo is lawless and overrun with militias, some of which threaten Rwanda’s security.
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