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Showing posts with label Livemint. Show all posts
Showing posts with label Livemint. Show all posts

Friday, January 15, 2021

A positive step forward in the regulation of fantasy sports (Livemint)

Arun Prabhu , Amrit Mathur

Niti Aayog’s draft guiding principles on their regulation have the potential to drive innovation and growth of the industry and enable India to emerge as a global hub for fantasy gaming.

The draft ‘Guiding Principles for the Uniform National-Level Regulation of Online Fantasy Sports Platforms in India’ proposed by Niti Aayog have fuelled much discussion around the regulation of online fantasy sports.


As they are played online, usually on mobile devices, online fantasy sports tend to be confused with a diverse category of activities loosely termed online gaming, which practically range from games of chance to sports betting.


Driven by increased mobile internet penetration and user engagement during the pandemic, the focus on this space has increased of late. Unfortunately, as in many cases where dissimilar things are lumped together, not all of this attention has been positive. Incidents motivated by short-term profit and unconcerned with legality or protection of users have been witnessed, highlighting the urgent need for intelligent regulation.



Fantasy sports as a concept originated in academia as informal baseball fan leagues and have evolved into effective means for continuous fan engagement and growth of real-world sports. They serve essentially as a technology-enabled platform, offering sports enthusiasts a more engaging experience by elevating them from being mere viewers to active participants in the sport. Fuelled by improved internet connectivity and rapid proliferation of smartphones, fantasy sports today boasts of a massive user base of over 100 million.


Their appeal also stems from their unique propensity to encourage users to test their knowledge and acumen of their favourite sport against fellow enthusiasts. The players are required to rely on their adroitness to be able to create a team that they think will perform the best in the upcoming real-life match. Statistics show that 80% users of fantasy sports participate in contests for free, purely as a means of entertainment and to engage in their favourite sport. Even for users who participate in paid contests, the average ticket size is as low as ₹35 and more than half of such users win back their fees or more. Interestingly enough, more than 99% of all fantasy sports users have either won or lost less than ₹10,000 net in their lifetime. Fantasy Sports are intrinsically non-addictive and are consumed by a relatively more mature audience base, between the ages of 25 and 40. A report by Kantar and the Federation of Indian Fantasy Sports (FIFS) reveals that 60% of the users of fantasy sports started watching and following more sports than before and 59% of the users started watching new types of sports. This increase in viewership and revenue has also made sports a far more remunerative and appealing prospect for athletes.



Fantasy sports put the fans back at the centre-stage of all sporting events. They ensure that the interest of viewers drives the growth of the sporting industry in India. Recently, Dream11, the biggest fantasy sports platform in India, sponsored the Indian Premier League, which is the most prestigious cricket league hosted in the world today. This is an example of how the collective strength of sports enthusiasts and fans can drive the entire sports industry and empower it to become self-sufficient.


This unique nature of fantasy sports has also resulted in their recognition as a differentiated category under law. While legislation in the space is notoriously antiquated, inconsistent, and focussed on prohibiting gambling, the actual playing of sports and games involving skill has long enjoyed protection. Recent legislative initiatives in south India, driven by concerns around online gambling and their effect on youth, have blurred some of these lines.



Fortunately, online fantasy sports have been examined at length by various courts, and the evident requirement of skill, knowledge and adroitness to play them has resulted in their being classified as a protected category under the law.


Additionally, the existing self-regulatory regime to which a vast majority of online fantasy sport operators have committed themselves is sufficiently protective of user interests. The all too often quoted bogey of fantasy sports being used as a proxy for sports betting has also been soundly refuted by these self-regulation rules.


Similar to their physical counterparts, the operators of online fantasy sports have been early movers in ushering in responsible and effective self-regulation.


The Niti Aayog’s discussion paper, which proposes several important guardrails around advertising, gameplay formats, responsible gaming, independent evaluation, grievance redressal, and perhaps most importantly, regulatory certainty and consistency, is a welcome step in the evolution of this industry.



The emergence of fantasy sports and their increasing popularity have also made India a very attractive proposition for investors. The industry has already received ₹1,000 crore in foreign investment and is expected to attract an additional ₹10,000 crore in the next five years. Furthermore, the industry is projected to cumulatively contribute ₹13,500 crore in taxes to the Indian government and create additional 12,000 jobs through direct and indirect employment in the next few years.


Niti Aayog’s guiding principles come at a timely juncture and propose progressive reforms that will accord fantasy sports a national and uniform safe harbor that is conducive to innovation and growth of the industry. Under a supportive and facilitating regulatory framework, fantasy sports have the potential to drive tremendous economic growth and enable India to emerge as a global hub for the industry.



Arun Prabhu and Amrit Mathur are, respectively, partner, Cyril Amarchand Mangaldas and former general manager, Board of Control for Cricket in India.

Courtesy - Livemint.

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Wednesday, January 13, 2021

The tangled balls of untruths that too many Indians harbour (Livemint)

Anurag Behar

The May heat had penetrated the thick stone walls and double-height ceiling, melting all restraint. The tale telling began with how his stone-studded rings, one on each finger, ensured that he was never transferred out of that one school. Another teacher followed, swelling with pride on his own ingenuity in averting the evil eye by shutting down his school on every eclipse. The heat glued my eyes shut.


I awoke to an assertion that Dalits and Muslims were in general bad people, with a few exceptions like the wonderful colleagues present, while the depravity of Christians was of another order, most evident in their drinking of blood, preferably cow blood, on Sundays in the darkness of their churches. The teacher sitting next to me challenged him, “How many Muslims do you know?" He responded, “Two families." Are they bad people? “Very honourable," he said. How many Christians did he know? None. Had he ever seen a church? No. He got the drift quickly and closed the conversation with, “This is the problem with all of you; silly argumentation to refute fundamental truths."

The identifiably Muslim teacher felt obliged to diffuse the tension. He was a master raconteur. The last leg of his journey to the Yogi’s cave, along with his brother, was an on-foot trudge of 13km. The Yogi had foreseen their quest and made the brother lie on a boulder. In one flowing movement, his hand went into the brother’s chest and took out his heart. He held the heart up for 9 minutes, uttering incantations. The hand went back in, inserting the heart in its rightful place. Since that day, all of the brothers’ multiple debilitating diseases have vanished. Even Gautam, my colleague and the instigator of this session of tale-telling to excavate the beliefs of teachers, was left nonplussed by the heart suspended in mid-air.



Since that scorching day 10 years ago, I have heard similar notions from countless teachers. At their core are untruths and falsehoods. Manifesting often in the form of prejudice, superstition, and discrimination. And also acting as a filter for judging other things to be true or untrue. Each untruth readily gathers a tangled ball of other untruths. Neither this phenomenon nor this bunch of common untruths is particular to teachers. Indians typically share them in equal measure. Equally, there are a notable number of teachers who are uninfected by these untruths, nor is their mental apparatus to judge truth corrupted, like many other Indians. These two things are entwined: the capacity to sift truth from untruth, and the truth of one’s beliefs. Let’s call them ‘epistemic capacity’ (‘epistemic’ is merely a fancy word for ‘relating to knowledge and its validation’).



The insurgent mob that overran the Capitol in Washington DC capped eight weeks of a dramatic demonstration of how poor, fragile and corruptible is the epistemic capacity of large swathes of US citizenry. Millions of Americans are unable to grasp the simple truth that Donald Trump lost the election. The incendiary role of the President and his feckless cheerleaders, not just in the past few weeks, but over the past four years, cannot be overestimated. However, that doesn’t reduce the culpability of each individual involved in this crazy movement, nor explain the woeful failure of their epistemic capacity.


The institutional guardrails of US democracy are strong. Most other countries would not have survived such an assault from within. Indeed, both history and the present are strewn with the corpses of democracies felled by systematically unleashed untruths, or, withered to a charade of democracy only in name.



So, what of Indian teachers and their tangled balls of untruths?


Education is the only systematic way to develop the epistemic capacity of a people, of a country. Without doubt, along with the courts and media, the US education system has been central to its institutional guardrails—far from perfect, but delivering. But we are familiar with the state of Indian education—everything must improve.


Children learn from untruths in their teachers’ behaviour as well as from their pedagogical capacity for, and attention to, developing the ability of their students to parse inputs for truth. All three dimensions must grow: the teachers’ own epistemic capacity, her educational capacity, and the emphasis on developing the epistemic capacity of children as an aim of education. Also urgent is the firewalling of teachers’ behaviours based on untruths, which must stay outside school precincts.



From 2021, let us recommit ourselves to improving Indian education. Not with the narrow goals of literacy, numeracy, subject knowledge, or employability—all of which are necessary. But as a mechanism for guarding and nurturing democracy by enhancing our epistemic capacity as a people.


We should do this without the hubris that education can solve all, or is fail-proof. For it is not. Nor even with the illusion that epistemic capacity is sufficient. The senators in the US chamber defending the mob as it surged did not lack that. What they lacked is empathy and ethics. Education must be dedicated to what is true, what is right, and what is good. As also the wisdom to weigh the three before acting, and then the fortitude to live with those choices.



Anurag Behar is CEO of Azim Premji Foundation.


Courtesy - Livemint.

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Monday, January 11, 2021

Stability in focus (Livemint)

While the covid crisis is widely expected to leave our economy scarred in various ways, one big question is whether it would also leave us with worse risks of overall instability. The Reserve Bank of India’s latest financial stability report offers an assessment. Loans going bad are one point of worry. While gross bad loans as a proportion of total loans are seen as benign for now, the pandemic’s effect is projected to show up with a lag. In a severe scenario, this ratio could spike to a 25-year high of 14.8% by this September. Even a baseline case puts this figure at 13.5%, with state-run banks watching their asset quality fall more than private lenders.

Another major cause for concern arises from asset values being inflated by all the extra liquidity sent sloshing around the world by central banks in their effort to stimulate economic activity. Indian asset markets have seen huge inflows from abroad and equity prices in particular may have already run ahead of levels that we can justify on the basis of expected corporate earnings. This poses a risk not just of a sudden reversal of capital flows, but also of money ending up where it should not and distorting India’s growth.

Courtesy - Livemint.

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Saturday, January 9, 2021

For Biden to solve inequality, he’ll need good Wi-Fi (Livemint)

Determining precisely who in the country has internet and who doesn’t would greatly improve upon the scattershot approach employed thus far, but it’s still an unknown


Last year was painful for many. Along with those who lost loved ones to Covid-19, perhaps no one felt that pain more than the essential worker, the low-income single parent, the isolated, the marginalized. Often they were the same person. Whether Black and poor in a densely populated city, or White and secluded in a rural area, large numbers of Americans who were already struggling before the pandemic came under even further strain. Adding to the distress, these people were deprived of a lifeline that allowed many of the rest of us to endure the lockdowns and limitations on our routines without undue difficulty: internet access.  


Compared to health care and running water, internet connectivity may not seem so vital. But the pandemic showed why that thinking is wrong. Quarantined households have relied on laptops and tablets to stay connected to work, school and other humans — as well as file for unemployment, search for and apply to jobs, visit a virtual doctor appointment or schedule a Covid-19 test. Those who can’t connect are at a severe disadvantage. While the lucky ones treat the new year as a milestone — celebrating the end of 2020 through TikTok dances and Instagram memes — the virus and the economic gaps it blew wide open haven’t resolved just because the calendar changed. The story of kids without Wi-Fi doing homework from a Taco Bell parking lot that went viral in August shouldn’t be thought of as a snapshot in time, but rather a constant.


When Joe Biden takes office as president later this month, the four policy areas that he and his White House transition team have said they’ll prioritize are Covid-19, the economic recovery, racial equity and climate change. Tackling these interconnected yet discrete crises depends in part on ensuring that every American has access to high-speed internet. This is achievable, but it will require a high degree of collaboration between the public and private sectors as well as careful planning of resources — both of which are lacking from the US government’s effort now. Biden has the opportunity to change that. 


To begin with, officials actively working to close the so-called digital divide need to be able to answer this most fundamental question: Where is it? Determining precisely who in the country has internet and who doesn’t would greatly improve upon the scattershot approach employed thus far, but it’s still an unknown. Biden has already promised $20 billion for rural broadband infrastructure (and related job creation), and that’s a good thing; however, “rural" ignores half the problem, which is that plenty of urban dwellers don’t have affordable access, either.


The need for more accurate broadband mapping has been a continuing frustration for the industry and its regulators. The Federal Communications Commission estimates that 18 million people in the country don’t have broadband access, and yet almost no one believes that number to be correct. It relies on census-block-level data that by the FCC’s own admission is flawed. Even if just one household in a census block has internet, that counts. And even if an internet provider doesn’t offer service somewhere but says it “could" in the future, that counts, too. BroadbandNow dug into this discrepancy, and after checking service availability for more than 11,000 random addresses, it estimates that 42 million Americans don’t have a way to purchase broadband internet. That’s more than double the FCC’s count.


The cohort that probably has the best sense of the true picture are companies with which the government has a notoriously tenuous relationship: technology giants whose devices and software are ubiquitous. The Justice Department sued Google’s parent Alphabet Inc. last year over antitrust violations, while another lawsuit was brought by dozens of state attorneys general. Likewise, the Federal Trade Commission sued Facebook Inc., alleging that it, too, is an illegal monopoly. House lawmakers have also accused Amazon.com Inc. and Apple Inc., along with Google and Facebook, of anti-competitive behavior. 


Data from Microsoft Corp. (which hasn’t found itself in the same regulatory crosshairs of late) has provided the most eye-opening look at the digital divide. Rather than access, Microsoft pulled anonymized data from its various consumer services — such as Windows, Office, Bing, MSN news, sports and weather — to study usage. As of November 2019, it found that about 157 million people in the US weren’t using the internet at broadband speeds of 25 megabits per second. That’s roughly half the population. 


Last year, Congress passed the Broadband Deployment Accuracy and Technological Availability (DATA) Act, requiring the FCC to collect more granular data to be able to make better funding decisions while calling for a crowdsourcing process that can challenge service providers’ claims. But that’s only the tip of what needs to be done. The urgency of the country’s broadband needs, especially during the pandemic, calls for appointing a czar dedicated to this mission, according Bhaskar Chakravorti, dean of global business at Tufts University’s Fletcher School and founder of its Digital Planet research initiative. 


Blair Levin, who directed the writing of the 2010 National Broadband Plan for the FCC, agrees that someone needs to supervise the effort more directly. “For every problem there has to be someone who goes to bed thinking about the work and feeling like their professional reputation is on the line if good things don’t happen. I don’t know who that person is today," said Levin, who is now policy adviser to New Street Research LLP.


The effectiveness of a digital czar or any such strategy may be helped by this week’s Senate runoff election in Georgia, where Democratic victories flipped the chamber, leaving fewer roadblocks to Biden’s policies. That said, internet access is largely a bipartisan issue, and red states have some of the biggest holes to fill. Alabama, Arkansas, Georgia, Louisiana, Mississippi, Missouri, New Mexico and Texas each had at least seven “internet desert counties" where more than half of residents don’t have broadband and at least 30% of families with school-age children live below the poverty line, according to a July report from BroadbandNow.


Individual states and tech and communications companies have their own projects aimed at getting more Americans online, and all of that helps. But a more collaborative approach utilizing technologies from a variety of industry sources would be better. The costly process of running a fiber-optic cable to every home in the US is an impractical solution, according to Microsoft President and Chief Legal Officer Brad Smith. “That’s how you turn a $15 billion problem into an $80 billion problem," he said. Microsoft’s Airband initiative uses television white space, the unused frequencies between channels, to transmit signals that travel far enough to cover spread-out rural communities. Other technologies include low-Earth-orbit satellites, which Amazon and Apple have invested in. Google also has fiber assets.


The political pressure on tech companies gives lawmakers and regulators unique leverage to make a harder push in these directions. While the concerns of tech overreach are legitimate, framed differently, there’s a substantial portion of the country for which those issues are beside the point because they don't have internet. “You’ve got these tech companies under a microscope right now, and each one has the capability to close a significant portion of the broadband gap in the US," Chakravorti said. “Start these conversations now."


This is hardly a thorough list of what the next administration could do better — there’s also the chance to fix the shortcomings of federal subsidy programs such as Lifeline (that’s a story for another day). But ending digital inequity has the potential to be the most meaningful pursuit of the Biden White House, as it would ensure more equal access to education, employment, health care and ultimately, wealth. The process can be patchwork, but it needs to start with honest data showing the areas of biggest need and then not just reaching across the aisle, but across the entire tech landscape.


This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

Courtesy - Livemint.

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Tuesday, January 5, 2021

The politics of Covid-19 just got even more hellish (Livemint)

Tyler Cowen , Bloomberg

New strains of the virus mean the world is about to face some of the most difficult trade-offs yet

A new strain of Covid-19, more contagious than previous strains, is now circulating in dozens of countries. Other new strains, such as one first detected in South Africa, will almost certainly emerge. Aside from the challenges these mutations pose to public health, they will also be a test of our moral and political principles. As exhausted as we all are from making stressful judgments throughout this pandemic, we are about to face some of the most difficult trade-offs yet.


Preliminary data indicate that the new strain in the U.K. allows the virus to spread from one person to another more easily. The practical upshot is that even the strict lockdowns of early 2020, such as the one just ordered in the U.K. by Prime Minister Boris Johnson, may not be enough to reverse the spread of the virus.

It is far from obvious that politicians will be able to sell voters on strict lockdowns if they still allow the virus to spread. Furthermore, vaccine distribution has been sufficiently slow that a full lockdown would have to last for many months, and that probably isn’t feasible or desirable. Yet not having lockdowns would lead to a much more rapid spread of the virus, overloading hospitals and public health facilities.


It’s hard to come up with the moral language to compare those outcomes when all of them are unacceptably bad. Trust in elites is already weak in the U.S., and it is likely to wane further. Whatever one might think is the correct course of action, how exactly would or should a President Joe Biden present and defend it to the public?

A further set of moral dilemmas comes from the interaction of viral spread and the vaccine process. If the virus is spreading more quickly, then so should vaccinations. The U.K. will be vaccinating a greater number of people with a single dose, and giving them the second dose somewhat later, rather than reserving second doses for a rapid follow-up within two to three weeks. The Brits also might experiment with giving a first dose of one vaccine, and a second dose of a different vaccine, to stretch the available supply. That might work, but it is also untested and thus it involves some risk.


Whatever you think of those approaches, the public health establishment is not well-geared to evaluate and present them to the public. The common mentality and message in public health is “safety first." Yet none of the available approaches increases the level of safety or avoids major additional risks.

One option would be for public health experts to speak explicitly in terms of “expected value" and medical triage, and to be upfront about how many lives are being sacrificed and according to which standards. An alternative would be to retreat into a defense of status-quo vaccine allocation procedures, insisting that major changes would involve risks, and maximizing blame avoidance rather than seeking the best outcome.

Either way, the public health bureaucracy doesn’t appear to have much ability to negotiate such treacherous shoals. Perhaps more condescension is what should be expected.

The biggest moral dilemmas might come in those countries that to date have been fairly successful at containing the spread of the virus. Apart from restrictions on foreign travel, life in Taiwan has been normal for some time now, and Covid-related casualties have been miniscule. Other successful examples of virus containment can be found throughout Asia and the Pacific.


But how will those countries deal with the new strain? It has already appeared in both Taiwan and China. So far it has not taken over, but the previous tactics of quarantine and tracing may no longer suffice, should the new strain become more active. It is already spreading in Denmark, which did a good job against Covid-19 early on.

Imagine being a leader of a country that has successfully contained Covid, and now realizing that a single mistake could undo almost a year of very hard work. You also know that, precisely because your country has been so effective at fighting the virus, it is not on the verge of vaccinating your entire population. What if you let a single returning citizen pass through customs taking one Covid test rather than three? What if you then cannot control the subsequent spread of the strain that person is carrying?


When was the last time that stakes for such apparently minor decisions were so high? How will leaders deal with the extreme moral anxiety that their decisions will likely induce?


It is like we are living in a horror movie, and just when we think it’s over, the monster comes back, stronger than ever.


This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.


Tyler Cowen is a Bloomberg Opinion columnist.


This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

Courtesy - Livemint.

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Monday, January 4, 2021

Leadership is often about getting out of your own way (Livemint)

Jeffrey Pfeffer , M. Muneer

Whenever people make statements about wanting to meaningfully change the trajectory of their lives, organisations, or the world, they tend to converge on one topic: Power. This is a fundamental dimension of organisational and social life. Yet, as Rosabeth Kanter noted years ago, power is a topic that makes people uncomfortable—one that they sometimes shy away from. Is this a reason that so many otherwise promising careers get derailed by political setbacks?

Power is one of the most important social forces, and is essential for major accomplishments. It often involves challenging assumptions and taking people out of their comfort zones. But it shouldn’t make us uncomfortable. It’s foundational to success at work—for chief executive officers (CEOs), political leaders, managers and new recruits alike. Research by a Florida State professor shows that possession of a political skill, the ability to develop and wield power effectively, leads to better performance, employee support, and superior outcomes on compensation, career success, life satisfaction, etc. Having worked with a multitude of people around the globe, we are convinced that people themselves are often their own biggest barrier to achieving the power and positions they seek.

One, pay attention to how you define yourself. We know of an Indian Institute of Technology gold medalist who went to Stanford to do his masters in artificial intelligence and had landed a top-notch job, but his LinkedIn profile and biodata were matter-of-fact. He felt he could have done more courses at Stanford and that he was not much of an expert in his chosen field despite the fact that he was chosen as a research assistant in his first term by a top professor for a coveted project. He also had two patents under his belt before taking up a cushy job at a global corporation. He underplayed his achievements because, as it appeared, he was misled by the notion of modesty, given his Indian middle-class background. Modesty is fine once your accomplishments are well recognised, but not early in your career. He has since then redone his profile since for others to get a better-rounded view of his abilities.

Those who believe modesty is a virtue often use self-deprecate, fail to promote their accomplishments and act in ways that give away their power. Don’t be one of those people. Self-handicaps are harmful.

Two, don’t accept constraints imposed by others. We closely know at least three women leaders who broke the glass ceiling to run their respective global conglomerates at a young age. What’s common to them is their resolute unwillingness to conform to gender-norm expectations—or to let others impose constraints on who they are and what they can (and will) do.

As one of them said in a recent email: “I don’t choose to be relegated to a lower status role. I have no problem challenging people or making them rethink their assumptions. There are many examples—you are a woman or you are a surgeon. I don’t feel like I have to ‘stay in my lane’. The head honcho who hired me asked me, ‘Do you not see the boundaries between disciplines?’ I replied, ‘No, why should I?’" This leader is currently running an adaptive drug design study for covid-19, although she is a breast cancer surgeon. If you have something you think you can contribute to a decision, refuse to let others keep you out of it.

Three, stop worrying about being liked. People worry too much about this. Look at most leaders you see around today. If you want to be liked as a leader, get a pet that will love you unconditionally. Enterprises do not hire executives for them to win popularity contests. Your responsibility is to get things done and make the business successful. Many CEOs of startups, including those of Zomato and Tesla, never feared taking hard decisions and have said in public that they aren’t worried about being disliked by many.

In one study, we saw that when people’s outcomes—their rewards and success—depended on the overall success of the group, they were willing to prioritise competence over sociability (or niceness) in choosing people to work with. Fundamentally, people love to be part of a winning effort. Your first responsibility as a leader is to produce success, not to be loved.

Four, don’t let unfairness become an excuse. There are at least two ways in which to respond to any unjustness—gender- and race/caste-based discrimination, for instance—that remains all too pervasive. One is to use being unfairly treated as an excuse for under-performance. Reframe things in ways that tell you what to do, instead. If being an “only" makes you stand out, use that uniqueness to your advantage.

It may be comfortable to make excuses and impose self-handicaps, but it diminishes the likelihood of achieving power. Power is leverage—allowing you to change things for the better. Power accelerates careers, permits bold accomplishments, and increases life satisfaction.

Yet, one of the biggest barriers to acquiring and using power is our own feelings, and our reluctance to acquire and use influence. Remember, the first rule of power is to get out of your own way. The most powerful people describe themselves as fearless, shameless, bold and brave. They have gotten out of their own way by dropping the scripts that hold them back.

Jeffrey Pfeffer & M. Muneer are, respectively, chair professor of organisational behaviour at Stanford University, and co-founder of Medici Institute.

Courtesy - Livemint.

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Thursday, December 24, 2020

Smaller startups are poised to drive social commerce in India (Livemint)

Shuchi Bansal

According to a report, social commerce in India is set to touch $16-20 billion in GMV by 2025


When Sonakshi Nathani saw her father struggle with WhatsApp orders for his grocery store in Raipur in Chhattisgarh, she decided to come to his rescue. The young software developer founded a startup and launched an app, Bikayi, to help sellers like him increase their business. “I saw his WhatsApp chats and noted his requirements to shape the product where merchants can showcase their products," she said.


Barely one-and-a-half years old, Bikayi suffered a brief lull in the initial days of the lockdown but has been growing 100% thereafter, onboarding a range of merchants from electronics retailers to apparel makers to grocery stores, mostly from tier-3 and tier-4 towns.


As a WhatsApp integrated commerce platform, Bikayi facilitates sellers in creating their online stores and even helps them manage their businesses.



The company, which raised $2 million as a part of its seed round from a clutch of international investors, claims it has more than 200,000 merchants on board doing daily transactions worth more than ₹2 crore on the platform.


India is witnessing the rise of many more social commerce startups and KIKO TV is another one that recently pivoted from being a short-format video-sharing app to a commerce platform.


Its founder Shivam Varshney, however, is targeting tier-1 sellers and buyers for now as its main offering is live-streaming and assisted shopping.


“High internet speed in these regions and presentable selling skills of sellers in tier-1 towns is the twin logic behind preferring this demographic at present," he said. The social commerce opportunity was much bigger than short videos in terms of a clear market size, Varshney said.



A recent report by Bain & Company and Sequoia India quantified the market opportunity. Social commerce, where consumers use a host of social networking platforms (Facebook, Instagram) and reselling apps (Meesho, GlowRoad) to buy and sell products, is expected to touch $16-20 billion in gross merchandise value (GMV) in the next five years, it said. In 10 years, it projected social commerce to become two times the size of the current e-commerce market estimated at $30 billion GMV.


The report also cited a consumer survey where the respondents said they consider WhatsApp, followed by Facebook and Instagram, as the most preferred platforms for commerce.


However, internet business experts do not feel that social commerce will remain restricted or confined to the US social media major.



Ankur Pahwa, partner at EY in the strategy and transactions practice and also the national leader for the e-commerce and consumer internet sector, believes that Facebook and its platforms are already the top enablers of social commerce in India and their massive user base certainly provides an advantage.


“However, considering it is still an evolving and nascent segment, homegrown startups are certainly capitalizing on the growing trend," he said.


Social commerce channels provide trust and reach and have been able to scale at lower customer acquisition cost. It also helps democratize online commerce and connect brands and consumers through social media platforms that are increasingly gaining significance as businesses make the shift from offline to online, Pahwa noted.


The time spent on and the growth of social media make a case for the emergence of newer platforms.



“Social commerce firms are uniquely positioned to overcome barriers of trust, offering personalized touch and convenience, elements critical for businesses looking to grow in tier-2 cities and beyond," he said.


Bikayi reported that between July and October 2020, 53% of sales on the platform came from tier-2 and tier-3 towns such as Guwahati, Surat, Bahraich and Dhenkanal, indicating a preference for buying products over WhatsApp from local merchants in small-town India.


However, startups will face stiff competition from large global social media platforms.


Varshney says that the big players are already identified and strongly positioned as free, social and “timepass" brands. “This brand extension won’t work. Startups with a vision as an e-commerce platform and an innovative tech-piece, supported by accurate content and go-to-market strategy, will win the game nationally and hopefully worldwide," he said.

Nathani said WhatsApp and Facebook may be betting big on social commerce, but will need support from local startups with their deep on-ground insights on customer behaviour to penetrate India’s local markets.


“Our customers (sellers) need spoon-feeding, support and understanding and not just the do-it-yourself model of the bigger players," she said.


Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pressing issues related to all three. Or just fun stuff.

Courtesy - Livemint

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Wednesday, December 23, 2020

WFH divides real estate into the good, bad and ugly (Livmint)

The resulting split into the good, the bad and the ugly presents a challenge for investors who expect diverging valuations to revert to historic averages in 2021.

“Work from home" and lockdowns have carved up the real-estate sector into a handful of winners and many more losers. The resulting split into the good, the bad and the ugly presents a challenge for investors who expect diverging valuations to revert to historic averages in 2021.

As the pandemic took hold, investors hoovered up shares in warehouses and logistics centers that facilitate the socially distanced economy. Mall owners were abandoned. Between the two extremes, offices suffered, but not as much as feared.

Many workers in finance, law and professional services adapted to remote working. Their firms’ revenues proved surprisingly resilient. That’s meant haggling over the rent hasn’t been a top priority.

Still, the Sunday atmosphere that persists in financial centers during the working week makes it hard to be overly optimistic for offices just yet. Real-estate stocks focused on London offices have fallen by about a third, and they trade close to a 25% discount to their most recent reported net asset value. A discount below 20% would be more usual, so the valuations anticipate office values will fall further, but not collapse.

The new strain of Covid identified in the U.K. has reinstated tougher lockdowns and closed restaurants and non-essential stores again. That makes it harder for mall operators to vacate the ugly spot on the podium. The curbs will immediately turn off tenants’ income and hit rent collections.

Even with the U.K. and Europe embarking on Covid-19 vaccine campaigns, mall owners such as Unibail-Rodamco-Westfield — owner of the popular Westfield sites — and Hammerson Plc trade at discounts of about 50%-80% of NAV. That too anticipates further asset writedowns — savage ones.

How might these valuations revert back to real estates’ historic low double-digit (or smaller) discounts to NAV? Either share prices must adjust, or underlying values must move — or a mixture of both. It’s hard to assess what might happen because there are two big unknowns.

One is whether people will simply head back to the office when the pandemic is under control. The longer governments have pushed a WFH-where-possible policy, the more expectations have risen that flexible arrangements will stick. Some corporate tenants are already seeking less space, to turn homeworking into a cost cut. Still, the savings aren’t huge as a percentage of total staff expenses, and some employers will probably see a drop in the person-per-square-foot ratio as good for morale. Frustratingly for investors, long leases mean the picture will remain fuzzy for a while.

The other uncertainty is the sustainable level of rents in retail and leisure. The pandemic forced shoppers online, diners to takeaways and fitness fanatics to home gyms. Existing trends rapidly accelerated. The resumption of office working would support city centers, but malls have a harder job preventing the online journey becoming one way. Their owners face the cost of making locations more attractive while servicing high debts. But if vaccines truly bring back some semblance of normal life, an indication of where consumer habits are settling could emerge in 2021.

It’s easier to see rents and values of offices and retail premises getting worse before they get better. But expectations for these sectors are low already. Indeed, “safe haven" logistics properties could lose some appeal if investors buy back into malls and offices, Bloomberg Intelligence analyst Susan Munden points out. Such a rotation could gain pace if investment strategists are right in predicting investors will shy from from chasing pricey growth stocks next year and buy equities that look cheap and are exposed to a recovery.

The gap between share prices and actual property values will narrow eventually. But with the virus becoming more menacing, and vaccine distribution slow, equity investors’ pessimism is going to be hard to turn.

Courtesy - Livemint.

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Tuesday, December 22, 2020

Mark Zuckerberg has another answer to bitcoin. It is called Diem (Livemint)

No one should underestimate Zuckerberg’s determination to launch this product. In the face of widespread criticism, not only is he coming back for more, but his top financial-services executive David Marcus is asking for ‘the benefit of the doubt’ from regulators.

Last year’s backlash against Facebook Inc.’s planned digital currency Libra would have been most CEOs’ worst nightmare. Governments and regulators linked arms to repel a perceived threat to monetary sovereignty, financial stability and data privacy. The more Mark Zuckerberg tried to reassure politicians by talking up financial inclusion and innovation, the more he came across like a tobacco boss denying cigarettes are addictive. He even acknowledged the problem: “I get that I’m not the ideal messenger for this."


That hasn’t deterred him. Given Zuckerberg’s tendency to issue half-hearted apologies before going back to breaking things, it’s not surprising that he’s gearing up for a second attempt to launch Libra next year.


There have been a few changes: Libra is now called Diem – as in Carpe — and its membership council is headed by Stuart Levey, whose stints at the U.S. Treasury and HSBC Holdings Plc make him a blend of Beltway and banking. There’s no more talk of rewards for members in the form of “investment tokens."



The biggest concession to regulators is that Facebook will no longer create a single global currency. Rather than craft a synthetic Libra out of a basket of euros, dollars and yen — like the IMF’s Special Drawing Rights — Diem will be made up of multiple single-currency stablecoins, pegged to each one. Converting a dollar or euro into a digital Diem would be a one-to-one transaction, with little chance of wild Bitcoin-level volatility or an overnight disruption of fiat currencies. Facebook is even proposing that central banks one day use the Diem blockchain to issue digital currencies, similar to China’s testing of a digital yuan.


This plea for legitimacy suggests Facebook is leaning more toward the kind of electronic cash offered by PayPal Holdings Inc. or Alibaba Group Holding Ltd., than the revolutionary crypto dreams of Bitcoiners. A digital dollar that’s transferable anywhere and at any time could in theory be a draw for consumers (even if in practice it’s regulation, rather than technology, that’s the cause of transaction slowness). Teunis Brosens, a senior economist at ING, reckons Diem may end up like a plain-vanilla “e-money" wallet. Blockchain expert David Gerard has called it “Paypal-but-it’s-Facebook."



It’s the “it’s-Facebook" part that should keep governments on their guard. E-money firms are often start-ups with Visa cards. Facebook, together with its WhatsApp and Instagram platforms, boasts three billion monthly users. If they each generate $6 in sales, Diem would represent an $18 billion revenue stream overnight. After U.S. regulators this month accused Facebook of unfairly abusing its market power to monopolize social media, will it compete fairly in this new arena or squash the competition? Imagine if Facebook’s ad contracts were one day tied to Diem, or if it abused its access to customers’ financial data. Trustbusters will be glad Libra didn’t lift off earlier.


It’s likely more regulation is needed. As German Finance Minister Olaf Scholz put it, referring to Libra’s name change, “a wolf in sheep’s clothing is still a wolf."



The noose is already tightening around such stablecoins with Europe imposing more bank-like capital requirements, says Simon Polrot, head of crypto-development non-profit ADAN. If it takes off, regulators might also want an inside peek into how Diem manages its cash reserves. As for money-laundering risks, Zuckerberg will no doubt sign up to know-your-customer rules, but how effective will Facebook be in tackling bad actors? And will it enforce the U.S.’s extraterritorial sanctions?


Lawmakers may very well wonder if Facebook needs a banking license, something it really doesn’t want. Zuckerberg will no doubt argue Diem is an association, independent of his empire. But it resembles a Potemkin village populated by payments firms, non-profits and venture capital funds. There are no banks, and none of the other FAANGs. Those who left Libra, such as PayPal, haven’t returned.


No one should underestimate Zuckerberg’s determination to launch this product. In the face of widespread criticism, not only is he coming back for more, but his top financial-services executive David Marcus is asking for “the benefit of the doubt" from regulators. That line wouldn’t work in a car-repair shop, let alone a bank. Still, Facebook deserves a fair hearing, given Zuckerberg has changed Libra’s message. If it falls on deaf ears, maybe the problem is the messenger.

Courtesy - Livemint.

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Monday, December 21, 2020

Love jihad laws are a backlash to India’s own progress (Livemint)

Shruti Rajagopalan

The ‘love jihad’ ordinance looks like the latest weapon of the Uttar Pradesh government in its battle to further Hindu nationalism. A few other states led by the Bharatiya Janata Party (BJP) are considering the UP model. Naturally, this morally and constitutionally abhorrent law has been criticized by many Indians. While I agree with the criticism, the diagnosis offered of anti-interfaith-marriage and anti-conversion sentiments has left me unconvinced. Most believe that the underlying cause is religious bigotry and hatred. But this bigotry was always prevalent in Indian society. In my view, the current angst is driven by social and economic change, and long-present bigotry manifests itself through such laws.


Historically, ‘love jihad’ was never a movement, because the possibility of interfaith marriage, in particular Hindu-Muslim marriage, was so limited. India is infamous for marital endogamy, especially caste endogamy, which maintains social control in an otherwise pluralistic society. Even during Nehruvian secularism, interfaith marriages, though allowed by the law, were not commonplace. Much of this had to do with society and parental emphasis on marrying not just within the same religion, but the same caste (jaati). The law of that generation also reflects this social control over marriage. The Special Marriage Act, 1955, allows individuals of different faiths to marry, but only after a month’s notice period. The couple’s personal details, address, intentions, etc., are widely publicized. It is almost as if the law was written by parents who needed some time to intervene and discipline their errant children. These procedural hurdles sometimes drove interfaith couples to convert their religion and elope.



Secularism to most Indians only meant living together peacefully in the aftermath of a bloody Partition, but it didn’t translate to intermarriage. Think of Amar Akbar Anthony (1977), that beacon of secularism nicely wrapped in Bollywood masala. Three sons, each raised in a different faith, can mainline blood to their mother. But each “hero" has the good sense to fall in love with a girl (Lakshmi, Salma, Jenny) of his own faith. This was the Indian pluralism model for decades: Bloodlines and mother’s love can transcend religion, but marriage is a step too far.



India always had religious hatred and bigotry without movements like ‘love jihad’, because religious endogamy was rarely threatened. Interfaith couples were few and far between and the state was not involved beyond the oppressive Special Marriage Act. But the fact that ‘love jihad’ is now a movement that’s changing laws means India has come a long way from the Amar Akbar Anthony model.


I don’t intend to look for a silver lining in this abhorrent law and practice, but that Hindu-Muslim marriages are a political issue is proof that India has made progress in weakening religious endogamy. A world where groups feel threatened enough to stop interfaith marriage is, perversely, progress for India, because it is also a world where interfaith marriages are increasing and socially accepted. Reactions to the UP ordinance—interfaith couples are sharing their wonderful love stories—confirm this trend.



India is stepping away from the world of Amar Akbar Anthony, and into the world of Mani Ratnam’s Bombay, where a young Muslim girl befriends a Hindu girl in school, elopes with her friend’s brother, and moves to a big city to raise secular children. The movie, released in 1995, was a sign of a liberalizing and urbanizing India.


Indian girls now are more likely to go to school and college than their grandmothers. More women migrate to cities for education and work. Their grandmothers scarcely had an opportunity to meet a man of a different religion or caste, let alone interact enough to fall in love; but this generation of young women can and do. Relative to their grandparents’ generation, fewer Indian parents exercise control over their children’s choice of partner. These are small steps, but it represents progress.



And this newly-gained exposure, education and choice (however limited) for women also means men must compete in the marriage market. India’s current mobs are not just against interfaith marriage, but more specifically against Muslim men marrying Hindu women. The reverse, Hindu men marrying Muslim women, is frowned upon but not as unacceptable.


The UP ordinance is not only about social control, but also a method of reducing competition for Hindu men in the marriage market. Unlike their grandfathers, who were born with a certain caste and land status and were assured a bride selected for them, this generation of Hindu men find themselves without jobs, and with the burden of status and aspirations that do not match their lived reality. Add to this the skewed sex ratio and “missing women" of India, and competition from Muslim men becomes the last straw.



It is telling that Bajirao Mastani (2015), where a Hindu man is in an interfaith relationship, was received very differently from Padmavat (2018), where even a hint of interaction or attraction between a Muslim warrior and a Hindu princess was considered intolerable. Both movies were based on historical figures, had the same lead pair of actors, and also the same director, but the aftermath was quite different.


Indians must fight the UP ordinance of social control. But it is also important to pause and understand that the turmoil is part of a larger social and economic change that’s positive. It’s not simply about hate.


Shruti Rajagopalan is a senior research fellow with the Mercatus Center at George Mason University, US

Courtesy - Livemint.

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Monday, December 14, 2020

Steps that will help India stay in the crypto race (Livemint)

Ramani Ramachandran

One of the things that 2020 will be remembered for is when the cryptocurrency creed emerged from its corner and took centre stage in discussions around technology, policy and finance. Bitcoin prices have breached highs last seen in late 2017. Multiple governments across the world are investing in developing Central Bank Digital Currencies (CBDCs), which are digital versions of national currencies. The incoming Joe Biden administration in the US has announced its intent to invite crypto experts. China is a global crypto leader, and a good chunk of the leading crypto companies, including exchanges and mining, are from the mainland or are founded by Chinese-origin entrepreneurs based out of Hong Kong and Singapore.

Against this backdrop, it is surprising and disappointing to see the government of India drag its feet on clarifying laws around cryptocurrencies. For the thriving crypto community in India, progress has come in fits and starts. While the Supreme Court revoked the Reserve Bank of India (RBI) ban on rupee transactions, there is still uncertainty. Given the importance of this emerging technology, here are a few things that the Indian government needs to do immediately so that it does not get left behind in the crypto race.

Clarify position on virtual currencies

Cryptocurrencies are here to stay. Regulators need to benchmark policies against those in geographies such as Singapore, Switzerland and the US and work with bodies like the G-20 to address common concerns around money laundering, taxation and potential criminal usage. Corporations and crypto firms with Indian stakeholders should have a say in the policy and regulatory development process.

Set up a sandbox

Sandboxes provide safe spaces for experimentation, and crypto sandboxes are active in multiple jurisdictions across Asia. Nodal agencies such as Startup India can work with accelerators as well as corporations that are already heavily active in this space. In addition, the banks and payment giants can get involved, attract entrepreneurs from India and the world to come in and address use cases that solve real problems. Building a thriving ecosystem can potentially shorten product development life cycles.

Commence a rupee-CBDC project

Cryptocurrencies are a heady mix of technology, politics, economics and game theory. CBDCs exemplify this the best. China’s digital yuan project is being rolled out across the country and over platforms such as Alibaba and WeChat. It is also expected to be extended to its belt-and-road initiative partners as the main currency in place of the dollar.

Iran and Russia, among others, have been working on CBDCs to attempt to wriggle out of the straitjackets of a dollar-centric world where access to the SWIFT network is paramount. Crypto puritans abhor CBDCs for the centralization that it implies, but it would behove any progressive government to explore CBDCs as fiscal policy tools. Even the International Monetary fund (IMF) has acknowledged the potential for CBDCs to address key problems with cross-border remittance, currency substitution and transparent public book-keeping. Closer to home, Pakistan’s Securities and Exchange Commission recently published a draft regulation on its stand.

Crypto is not a panacea. However, it is a powerful technological, political and cultural phenomenon. Based on conversations with lawmakers and regulators, it does seem like things are moving ahead, albeit glacially. Surely it is time to expedite the crystallization of a clear approach to cryptocurrencies.


Ramani Ramachandran is a crypto-investor and entrepreneur, and the author of an upcoming book.


Courtesy - Livemint.

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Monday, December 7, 2020

A market for jabs (Livemint)

As the race to make a covid vaccine available widely enters its final stages, US pharmaceutical major Pfizer has sought approval from the Drugs Controller General of India for emergency use of its jab in the country. If the regulator is satisfied with its foreign trial results, it may decide to give the company a go-ahead. The caveat: such a clearance should be available to all candidates in the fray that clear the same bar.


As of now, Pfizer’s vaccine, developed in alliance with German firm BioNTech, is seen as an upper-crust choice. It’s likely to be more expensive than other vaccines being produced domestically in bulk. Also, it needs to be stored at a temperature between -60 and -80 degrees Celsius, though Pfizer claims its vials last five days under 2-8 degrees refrigeration at the point of use. Both factors mean its vaccine may not be able to reach much beyond hospitals and clinics in our big cities. There will be demand for it, all the same, and we should allow this to be fulfilled without any price cap. While the Centre might pick an alternative for mass vaccination that’s cheaper and easier to distribute, we should let a private market freely do its bit, too.

Courtesy - Livemint.

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Friday, December 4, 2020

RBI Monetary Policy: Continued commitment to support growth (Livemint)

Siddhartha Sanyal

Macroeconomic backdrop had been complicated for the monetary policy committee (MPC) ahead of the December meeting. In the previous policy meeting in October, the guidance to “continue with the accommodative stance of monetary policy as long as necessary – at least during the current financial year and into the next year – to revive growth on a durable basis" came in as an unusually strong and explicit commitment to support growth recovery. The MPC decided to look through the current inflation hump which it believed to be transient.


Since then, a number of high frequency indicators demonstrated greater strength, along with better-than-expected corporate results during Q2 FY 20-21 and considerable narrowing in GDP contraction. This emboldened the RBI to revise their FY 20-21 GDP forecast to a contraction of 7.5% (from a projection of 9.5% contraction with downside risks in October). However, the CPI trajectory sprang fresh upside surprises since the last MPC meeting with the latest print coming in at 7.6%, markedly higher than the RBI’s upper tolerance band of 6%. This has prompted the RBI to materially revise their CPI inflation target upwards for H2 FY 20-21, from their previous forecasts.


Against this backdrop, it was nearly certain that the key policy rates would stay unchanged in December along with no change in the “accommodative" policy stance of the MPC. However, given the discernible upside surprise in inflation of late and given that now the MPC is dealing with the first spell of “failure" (i.e., failing to maintain CPI inflation within 6% for three consecutive quarters or more) since the adoption of the inflation targeting framework in 2016, there was a concern if that could lead to a dent in the RBI’s support towards growth.



However, it is heartening to note that the central bank’s commitment to growth recovery stayed equally strong in today’s policy as well. The MPC clearly stated that while inflation is likely to remain elevated and has constrained monetary policy space at the moment to support growth, recovery in the economy is still not broad-based and are dependent on sustained policy support. Accordingly, governor Shaktikanta Das made it explicit that his paramount objective at this moment is to support growth despite revising the forecasts of both inflation and GDP materially higher in today’s policy. Despite large systemic liquidity, the RBI’s commitment to continue with liquidity support was emphatic and encouraging as the central bank reassured that it stands ready to undertake further measures as necessary to assure market participants of access to liquidity and easy financing conditions.



After introduction of the “on-tap" TLTRO in October, it is encouraging that now the central bank allowed the 26 stressed sectors identified by the Kamath Committee to benefit from the same. This should help the TLTRO be more effective with a wider reach. The RBI also rightly allowed Regional Rural Banks to participate in LAF, MSF and call money markets as both lenders and borrowers – this should help better liquidity management for them and, in turn, better credit flow at the lower end of the pyramid.


While growth turned out to be better than expected of late, one feels that It might be prudent to continue watching some of the high frequency indicators closely, and an uneven pace of recovery remains more likely in the near future. Several on-ground anecdotes – such as uneven festive season sales momentum, inventory position with dealers in various industries, packaging industry demand – support that view. Overall, the RBI has rightly pointed out that growth recovery needs continued policy support and today’s policy statement once more emphatically reiterated their commitment in this regard.



The author is chief economist and head of research in Bandhan Bank. Views are personal.

Courtesy - Livemint.

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Tuesday, December 1, 2020

Cashback vexation (Livemint)

That brick-and-mortar retail outlets have been badly hit by e-commerce is no secret, especially with covid-19 keeping us indoors. But have regular old shops been put at an unfair disadvantage? This is what the Confederation of All India Traders (CAIT) has reportedly complained of to India’s finance minister, alleging that banks have colluded with e-com majors in offering cashback on purchases that aren’t available to offline shoppers.


The last time retailers were up in protest, some years ago, it was over what they saw as predatory pricing in the deep discounts offered by e-com websites. That issue was partially resolved, it seemed, by online outlets giving up on their game of burning cash for market penetration; they needed to stanch losses. The current dispute may prove harder to settle. Large companies always have an advantage in arranging finance deals and suchlike. Online outlets sell far larger volumes on a relatively small base of overheads. It’s hard for regular shops to compete with them on prices. But banks should consider reaching out to these shops via CAIT with proposals to help them try. Consumer finance deals should reach all.

Courtesy - Livemint.

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Saturday, November 28, 2020

Phew! Second quarter GDP wasn't as bad as we feared (Livemint)

India’s gross domestic product (GDP) contracted by 7.5% in the July-September quarter, which is not as bad as the 8.6% contraction predicted by our central bank’s “nowcast" model, and much less worrisome than the double-digit shrinkage some global analysts had projected. This decline comes on the back of a nearly 24% scrunch-in officially recorded in the first quarter of 2020-21, the period that bore the brunt of India's covid lockdown. With two successive quarters of shrinking output, it's now official that our economy was in a technical recession during the first half of this fiscal year.


Yet, output figures for the first and second quarters offer a sharp enough contrast for some of our gloom to lift. At this rate of recovery from the depths plumbed earlier, hopes have strengthened that our economy will exit its contraction mode in the current quarter. Consumer demand has been observed to be showing signs of revival in recent months. Supply chains, snapped off by covid curbs, have been restored to a large extent. High-frequency indicators, such such as fuel and electricity consumption, apart from rail freight and mobility, have looked up. And festive season sales were buoyant, though much of the shopping could be attributed to a spring back of pent-up demand.


Order books in the manufacturing and service sectors have also made for optimism that the third quarter might mark an end to the recession. But it would be too early to conclude that the economy is well on its way back. As RBI Governor Shaktikanta Das observed on Thursday, we must be watchful of demand. There's reason to fear that it may slump after the festive season is over. Economists have also warned of second-order effects of our recession. Households reeling under its impact would naturally compress expenditure, even as a precautionary cash preference goes up across the country. This would make it harder to achieve normalcy. Another risk is that of a second wave of corona infections arising, as has happened in the US, before a vaccination drive can squash the virus's spread. But for now, it would seem that the government's gradual recalibration of its clamps-versus-commerce trade-off was reasonably well calculated.

Courtesy - Livemint.

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Friday, November 27, 2020

A family that pays together, stays together, but the key is to set the limits (Livemint)

Priya Sunder

 

Many parents are financially supporting their adult children in a meaningful way in the aftermath of the covid-19 pandemic that has resulted in rampant job losses, pay cuts and professional uncertainty.


Take the case of X, whose son had quit his job to start an organic farming business two years ago. The pandemic disrupted the business’s demand, supply and distribution chains, leaving the son struggling to meet his family’s routine expenses. Or the story of Y, whose son could not meet his daughter’s undergraduate fees for a foreign university because of a huge dip in his portfolio value. Lastly, Z, whose lawyer son was suddenly diagnosed with brain cancer, leaving the son struggling to earn an income to meet his instalments.


In all the above situations, the parents stepped forward to bail out their children with financial support. X created a trust fund, which provided the son’s family a monthly income that met their routine expenses. The son was, therefore, able to focus on bringing his business back on track, knowing that his parents were meeting his family’s basic needs. Y offered his son an interest-free loan for three years to pay the undergraduate fees so he would not need to redeem his portfolio at a loss. Z shook off the loan collection leeches by paying down the home loan entirely and securing the home papers for his son.



But parents must wear their safety belts first before helping others. If their assistance towards their children negatively impacts their financial independence or goals, they must desist from offering such support. While the child can find employment in the future and earn an income, parents do not have that luxury if they exhaust their assets, leaving them eventually dependent on their children.


Hence, even if parents offer financial assistance, they must structure a broad framework of such financial support and set limits in terms of money, time or emotional involvement. This framework is crucial to establish expectations, else it may lead to unhealthy dependence or friction on both sides.


Generally, the financial assistance offered can be of four types: income, expense, asset and liability.



Income: Income support comes by way of providing a fixed inflow each month. One of my clients redirected her rental income to her daughter. Other sources of income may be in the form of trusts, dividend from stocks or interest from bonds and deposits, or systematic withdrawal plans (SWPs) from mutual funds.


Expense: Parents can take over a part of the children’s expense, such as equated monthly instalments (EMIs), rent, school fees or routine expenses. It is important to ensure that the expense commitment is fixed and predetermined so that expense spikes do not cause steep outflows on certain months or extend beyond the decided time limit.


Assets: Parents may decide to fund an asset, such as a car or a house, partially or fully. In some instances, parents may find it prudent to gift a property during their lifetimes rather than bequeath it after their death. If parents have the financial wherewithal to transfer wealth during their lifetimes, it may be more beneficial for their children now, than to leave behind a large inheritance when the need is not so dire. In fact, transfer of wealth during the parents’ lifetime offers them immense satisfaction when they see that the money is being put to good use, such as educating a grandchild, buying an asset, or closing a loan. However, such transfers must not materially affect the financial independence or lifestyle of the parent.



Liabilities: Though taking over a liability is not advisable for retirees, parents can choose to pay down a child’s liability, such as a credit card bill for the month, or car and home loans, if their finances are healthy. They may also choose to pay down a loan entirely or partly instead. But parents must refrain from taking on loans as a co-signee, since the responsibility for repaying the loan then shifts to them, at least partially.


Financial advisers play an integral role in deciding whether elders have the wherewithal to support their children. They can project expenses into the future and ensure the existing corpus is able to weather inflation, taxes, market disruptions and unplanned expenses. Such calculations must be arrived at after factoring a very conservative return on assets, or in some instances, even writing off a part of their assets. After leaving an adequate buffer, any remaining surplus can be used to help their children financially. Advisers can also act as an objective third party, highlight the consequences of certain financial decisions on both parties, intervene between the child and parent, and enforce discipline when financial boundaries are crossed.


It is natural for parents to help their children in distress just as children would want to do so for their parents. This support is what binds families together, and strengthens and nurtures relationships. Parents need to walk the fine line between supporting an otherwise hardworking child who has fallen into bad times; and supporting an entitled child and creating an ongoing dependency. If it is the former and you have put on your oxygen mask, go ahead and strap it on for your child too.


Priya Sunder is director and co-founder, PeakAlpha Investments.

Courtesy - Livemint.

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Thursday, November 26, 2020

Maradona’s divine goal and worthy absurdities (Livemint)

No goal has riveted eyeballs quite like the “Hand of God" one scored—or stolen—by Argentine football legend Diego Maradona, whose life was claimed by a heart attack on Wednesday. He was 60, loved for his mastery of the game, admired for his art as much as artifice, and a rare player who could send up a great groan across the globe each time he took a fall, his fandom mostly intact through a run of latter-day addictions (and all that befell him thereafter). The goal for Argentina that appears to have granted him immortality was against England in a 1986 FIFA World Cup quarter- final, a match fraught with the fallout of their 1982 Falklands War, which saw the former fail to wrest control of islands off its coast long held under British colonial rule. On the field that day, Argentina won 2-1, thanks to a ball fisted into the net by a leaping Maradona. Mistaken as a header by the Tunisian referee, the goal was awarded, though our impish master of sleight would later admit divine intervention. It was scored, he said, “a little with the head of Maradona and a little with the hand of God". It was absurd, of course, but an absurdity that had popular endorsement all the same. For, it was his second goal, struck four minutes later with a delightfully-dribbled run all the way from the Argentine half to the English goalpost that wowed us enough to call it the “Goal of the Century" and hail his greatness. That strike alone was seen to be worth two on the scoreboard. Surely, it deserved as much, did it not?


What seems bizarre to some could be just another shrug-and-move-on matter for others. Think of the endless loop of Argentina’s sovereign debt, its defaults, and its tango with the International Monetary Fund (IMF). As it happens, the country is back trying to defer its dues to the lender, some $44 billion of it this time, having won an IMF package to avert a default just two years ago. It routinely imports more than it exports, watches its peso fall, sees local prices of imported goods soar, runs short of dollars, has tight-money and fiscal-austerity plans imposed, then reopens public coffers to quell unrest and ends up staring at its next crisis. Arguably, what its economy needs is export competitiveness, a ground-up exercise, rather than periodic fixes of macro policy.


Speaking of absurdity, perhaps the world’s most apparent one nowadays is the price inversion seen in financial markets, where investors have been piling into negative-yield bonds. In effect, borrowers are getting paid to borrow money. As debt issuers, Europe and China have both been beneficiaries of this. A closer look, however, reveals an explanation. For one, it is a direct outcome of the super-cheap lending done by major central banks to stimulate covid-crunched commercial activity. Once official interest rates are pushed to negligible levels, they could drop below zero in real terms anyway (if inflation is higher). For another, market rates on debt can go into the minus zone if there’s a rush for overpriced bonds, and there currently exists robust demand for negative-yield paper that is not irrational. Such securities are usually secure, backed as they are by governments, and thus serve as safe havens in uncertain times. They also act as a deflation hedge. Moreover, if downward pressures on rates persist, they can even be sold off for more money. All said, if the usual rules of play can bend so easily in the credit arena, why not in a football stadium?

Courtesy - Livemint.

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Thursday, November 19, 2020

Will I&B ministry play moral police for OTT content? (Livemint)

Shuchi Bansal

 

Earlier this month, a gazette notification brought digital audio-visual content, such as films and web shows, on over-the-top (OTT) streaming platforms under the ambit of the ministry of information and broadcasting (I&B), sparking fears of censorship of video-on-demand (VoD) content.


The government had been pushing for self-regulation of the sector for two years, but sparring OTT firms were unable to agree to a common code. Eventually they signed one under the aegis of the Internet and Mobile Association of India (IAMAI), creating a framework for age classification, appropriate content description and access control. However, this was rejected by the I&B ministry, which hinted at an independent complaints redressal mechanism, and enumeration of prohibited content.


In India, covid-19 coincided with rising digitization and access to affordable internet. “In the last eight months, OTT or digital media and entertainment platforms have all but replaced television," said Sajai Singh, partner, J Sagar Associates. I&B ministry decided to step in, considering that unlike films and TV, digital content is not subject to censor certification.



Amber Sinha, executive director at research think tank Centre for Internet and Society, said that the current move represents a significant widening of the regulatory ambit of I&B ministry. “However, there’s still scope for self-regulation though there seems to be some intent to redefine the self-regulation code," he said.


Traditionally, the ministry has focused on broadcasting services where the viewer has limited control over what he can watch. Though viewers can choose from an array of channels, content is still being “pushed" to them as opposed to OTT streaming services where you ‘pull’ content from a repository. “Given this important distinction, the regulatory approach for OTT streaming media may have to be distinct from offline broadcasting media," said Sinha.


Yet growing fears about censorship are natural. “Currently, there are archaic criminal law provisions on blasphemy and sedition that have been used to target content by OTT players. If these considerations find their way into the regulatory framework, it will inevitably lead to private censorship by platforms. Even if the laws are vague, it may lead to platforms reducing risk by censoring content," Sinha said.



A filmmaker had earlier pointed out that the government’s intent to regulate OTT should not be confused with restriction on nudity, language or violence but on content that counters its ideology or policy, killing any contrarian narrative.


Sinha said the changes giving I&B ministry jurisdiction have been brought through administrative rules. “This should only give the ministry administrative authority over OTT content providers, and not regulatory authority. Regulatory authority can only be vested by legislation. However, it remains to be seen whether this important legal distinction will be observed," he said.


Globally, norms around OTT can be categorized under three models. The first seeks to regulate streaming providers in much the same way as broadcasting services and is being discussed or implemented in countries such as Australia, Singapore, and Turkey. The second seeks to create clear censorship and government control over OTT players in countries such as Saudi Arabia and Kenya.



“The third model that we see emerging in countries like the UK is a more cautious approach. This includes self-regulation and content rating system by OTT players or their association, while contemplating the modalities of a new regulatory framework for them distinct from the broadcasting laws," said Sinha.


However, to regulate the sector in India, Singh suggested that the current IAMAI Universal Self-Regulation Code for online curated content providers (OCCP), though rejected by the ministry, be read into the recommendations of the Shyam Benegal committee on certification of films and be adapted for digital media.


Among other things, this suggests that ministry’s role should be limited to only deciding who and what category of audience can watch a particular content, without acting as a moral compass. The age/maturity categorization and content descriptors should be a sort of statutory warning for audiences of what to expect in a particular film, and thereafter the viewing of the film should be considered a consensual act, and up to the viewers of that category.


The OCCP code and the Benegal committee recommendations may help the government come up with a code not only acceptable to all stakeholders but also “one that recognises the ground realities of today and stays away from playing the moral police (as aptly addressed by the Bombay High Court in the case of Udta Punjab)", Singh said.


Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pressing issues related to all three. Or just fun stuff.

Courtesy - Livemint.

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Wednesday, November 18, 2020

Moderna, Pfizer covid-19 vaccines: Side effects are next big challenge

Therese Raphael

The US Centers for Disease Control and Prevention plans to send daily texts to those who are vaccinated for the first week and then weekly texts for six weeks, while the Food and Drug Administration will also be monitoring side effects in real time.


Regulatory authorities are gearing up for a deluge in people reporting side effects when the new Covid-19 vaccines go into use. Even if the vaccines prove safe — a reasonable assumption based on current information — managing the reporting and follow-up of what are known as adverse drug reactions will be critical to keeping to the high levels of public participation needed for a vaccination program to be successful.


The US Centers for Disease Control and Prevention plans to send daily texts to those who are vaccinated for the first week and then weekly texts for six weeks, while the Food and Drug Administration will also be monitoring side effects in real time.


It’s not clear if the UK’s monitoring system will have similar capabilities by the time the vaccine is rolled out. The country’s Medicines & Healthcare Products Regulatory Agency issued an urgent tender notice (recorded last month in a European Union public procurement journal) for an artificial-intelligence software tool to help deal with the expected high volume of reported effects. (The roughly $2 million contract went to outsourcing firm Genpact.)


The agency didn’t mince words in explaining the reasons for the urgency: Its legacy system would be overwhelmed by the volume of reports and could not be retrofitted to cope with the new vaccine. The absence of a new tool would “hinder its ability to rapidly identify any potential safety issues within the Covid-19 vaccine." That in turn would represent a “direct threat to patient life and public health."


Even if the language may have been partly crafted to exempt it from normal EU tender requirements, it underscores what’s at stake for governments around the world as these brand new vaccines are rolled out with unprecedented speed to a far wider public than ever before. As with any new drug, the range of these adverse drug reactions — unintended, harmful events linked to the medication — will only be known when a very large number of people have been vaccinated.


A reported adverse effect doesn’t mean a vaccine isn’t safe, and in some cases it may not be related to the inoculation at all. But ADRs help doctors, pharmaceutical companies and regulators monitor the impact of licensed drugs. They can identify misuse of a drug, compromised batches or simply side effects that need to be disclosed even if it doesn’t change the safety profile.


Effective monitoring is especially important given these vaccines will be released with less safety follow-up than is typical for widely used shots. Having a robust system to log, analyze and allow for prompt feedback from reported side effects is essential to ensuring public safety. Combined with clear communication, it will also be central to building confidence in the new vaccines.


In general, most side effects appear soon after an injection and remain only for a short period. A small percentage of people will experience them from any well-established vaccine, or even your typical pain relief medication. Most people are willing to accept that small level of risk for massive benefit — to their children and public health generally — from vaccination programs.


The UK’s Yellow Card system might receive one report per 1,000 immunizations. But if you dramatically increase the number of people being vaccinated, the amount of reported effects can be expected to increase proportionately. With Covid vaccines likely to go to the oldest and most vulnerable first, there may be even more ADRs reported than usual. Even if they aren’t related to the vaccine, they can spook the public.


The side-effect reports have the potential to be a gold mine for anti-vaxxers. Vaccine skepticism is higher in the US, but the UK bears the scars of the now thoroughly debunked linking of the MMR vaccine to autism. In a survey last week by the London Assembly Health Committee, only three in five respondents said they are likely to or will definitely get vaccinated; almost half of those who said they wouldn’t or might not do so cited lack of trust in government guidance or drug companies.


Such concerns aren’t entirely irrational. If vaccines have traditionally taken up to a decade to win approval, people wonder how can we trust the safety of one produced in a small fraction of the time.


One answer is that in the battle against Covid, no effort, brainpower or resource was spared. That intense, global competition has borne impressive fruit. The technology has also advanced so rapidly that past timetables aren’t a very good guide. The so-called messenger RNA technology used by the two leading inoculation candidates from Moderna Inc. and the partnership of Pfizer Inc. and BioNTech SE, is already revolutionizing vaccine development, as my colleague Max Nisen explains.


With all of this in mind, it’s vital governments educate the public about what they might expect. The side-effect profiles so far seem nothing to be concerned about. Still, they may be a bit harsher than a typical flu shot, which is the only reference point most of us have. If people know what to expect, they’ll be less likely to worry or flood hotlines.


These may well be modern day miracles, but as the saying goes, vaccines don’t save lives, vaccinations do. With vaccines expected to cover as much as a third of the population by the first part of next year, effective monitoring and total transparency will be essential if we are to defeat not just this pandemic, but the next one too.


Courtesy - Livemint.

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