Boulevard of broken dreams
Also in today's edition: China's Indian Ocean problem; Account aggregator logjam; What rally?; All the news ChatGPT can use
Good morning! The Indian Express reports that many Goans are in deep trouble over a 2022 Ministry of External Affairs circular. Post Goa’s independence in 1961, Goans and their next two generations were allowed Portuguese citizenship. Naturally, Goans opted for this, but when some 100 of them surrendered their Indian passports, the travel documents were revoked because India doesn't allow dual citizenship. And without a surrender certificate, they could not apply for an Overseas Citizen of India card. The government has been urged to give them interim relief. Fingers crossed for a speedy resolution.
🎧 Netflix’s math isn’t mathing. Also in today’s edition: China is planning to grow an army of lawyers with expertise in international law and foreign affairs. Listen to The Signal Daily on Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.
Dinesh Narayanan and Roshni Nair also contributed to today’s edition.
The Market Signal
Stocks & Economy: A sense that global central banks now have some grip on inflation, and that investors will regain access to low-cost funds soon, is fuelling a rally in equities in all major markets, including the US and India.
Indian and US shares surged to record highs on Thursday after the Federal Reserve indicated that it would cut rates in 2024. The European Central Bank as well as the Bank of England are rather cautious about rate cuts, although investors believe they’ll follow sooner or later.
Asian equities elsewhere too joined the mid-December jamboree. Only Singapore was subdued in Friday morning trade. Equity analysts in India are trying to shepherd more retail investors into putting money in stocks.
The fall in the value of the dollar has given a fillip to oil prices, which rose this week.
GEOPOLITICS
Ocean Of Inconvenience
Never mind the String of Pearls—the hypothesis that China is ramping up military presence and regional influence in the Indian Ocean Region (IOR). As far as the military analysts and attaches quoted in this Reuters report go, Beijing is vulnerable in the IOR, at least when it comes to defending its commercial interests.
China’s projects from Djibouti to Bangladesh belie the fact that the country has just one dedicated military base in the IOR, which itself has no air cover from sea or land. In the event it invades Taiwan, then the US, Japan, and Australia—which all have significant presences in the IOR—could probably capture or sink Chinese oil vessels that traverse the geopolitically-critical region.
That said, China has been diversifying oil and commodity imports and increasingly sourcing from countries such as Myanmar, Kazakhstan, and Russia.
FINTECH
It’s Not Adding Up For Aggregators
After payment aggregators, another critical piece in the jigsaw of India’s digital financial architecture is falling out of place.
What: The business of account aggregators (AA), tech-enabled entities that act as the information bridge between financial information users and providers, largely lenders, is unravelling, Mint reports. AAs collate (with consent) potential borrowers’ transaction data scattered among multiple entities, helping fast due diligence and loan sanction by lenders.
What now: There are so many (~80) AAs crowding the nascent market that rates for pulling data have fallen steeply from up to ₹50 ($0.60) for every data pull two years ago to an average ₹5 per extraction now, making unit economics unviable. Although part of the network, many information providers are inactive. Some heavyweight banks are tightfisted with data.
Impact: Lack of data will slow down financial inclusion, especially initiatives such as the Open Credit Enablement Network.
ECONOMY
Not Working Wonders
Nearly a century ago, two men in their twenties dropped non-lethal bombs in British India’s Central Assembly. They distributed pamphlets and raised slogans demanding freedom from colonial rule. The leaders of the HSRA who planned the attack had referenced French anarchist Valiant: “It takes a loud voice to make the deaf hear.”
This week, two people, inspired by Bhagat Singh and Batukeshwar Dutt’s 1929 protest, jumped into the well of India’s brand new Lok Sabha building, dropping fluorescent smoke bombs.
The six people who are allegedly involved—all in their twenties and thirties—represent diverse caste, education, and work backgrounds. But what brought them together was their frustration with the struggle for work, prompting them to storm the Lok Sabha the same day as the 2001 Parliament attack.
The Signal
An act of violence like this, however symbolic, is a step few take unless facing insurmountable odds. Unfortunately, India’s youth are facing exactly that. Unemployment rates in FY23 for Indians aged 15-24 years was at 45.4%, six times higher than the national rate of 7.5%. As of September, it was 42%.
Traditional job creators for the young—IT firms and small enterprises—are cutting jobs or shutting down, leaving aspiring young job seekers disillusioned. Don’t forget: 800 million people still depend on the government for free food.
Can we afford to dismiss this Parliament attack as only the stupidity of some misguided kids?
ECONOMY
The Shape Of 70K
The BSE’s Sensex, which has been mirroring India Inc’s mood, if not the nation’s economy for 37 years, settled above 70,000 for the first time.
The surge began on December 4 when the Bharatiya Janata Party won three state assembly elections.
India story: The stocks rally anticipates imminent growth forecast by multiple sources, ranging from economists to global business leaders. Yet, a large section of the economy appears to be falling into distress. Wages are stagnant and people are forced to borrow more to catch up with inflation.
Global story: The cost of living squeeze is not limited to India. In fact, the rally that pushed the Sensex past the 70K peak is partly fuelled by expectations of interest rate cuts in the US early next year following cooling prices. A recent survey showed that US consumers prefer lower inflation to higher wages.
ARTIFICIAL INTELLIGENCE
Have I Got News For You
If you’re a ChatGPT user, you’ll soon be able to read summaries of select articles from Axel Springer publications (Business Insider, Politico, Bild, Welt). OpenAI has reached an agreement with the news publisher to licence articles to train its generative AI models. The sum is undisclosed, though what’s known is that the deal will last “several years”.
It’s an unprecedented agreement because unlike OpenAI’s deal with the Associated Press—which is limited to licensing archives only and not summarising news within ChatGPT and directing to the original articles—this one will effectively turn the AI vendor into a quasi-publisher. In the past, media organisations have accused Big Tech (especially Facebook and Google) of cannibalising news distribution, reducing traffic to their sites, and eating into their digital ad revenue.
Fwiw, Axel Springer will use OpenAI’s tech to improve its products and “explore the opportunities of AI-empowered journalism”.
FYI
Fresh dough: Indian B2B e-commerce company Udaan has raised $340 million (~₹2,833 crore) in fresh capital in a Series E round led by British retail banking company M&G Prudential.
Join the party: Footpath Ventures, an American investment firm, is reportedly in talks to invest in Indian Premier League franchise Rajasthan Royals. Tata Capital is looking to buy a 13% stake in Indian premium fashion brand Rare Rabbit for about $40 million (₹333 crore).
Papal plea: In a letter to world leaders, Pope Francis has called for a “binding international treaty” to regulate artificial intelligence. He also warned against the use of AI in weapons systems.
Nope, not now: In a blow to Tesla’s India ambitions, the Indian government is not considering reducing import taxes on electric vehicles, per its junior commerce minister Som Parkash.
It’s here: Four months after Meta launched Threads, Instagram users in the European Union will have the ability to browse and use the Twitter rival. The move could potentially add hundreds of millions of users to the service.
Your turn, Joe: The US House of Representatives voted along party lines to open an impeachment inquiry into US President Joe Biden, over his family’s alleged dealings during his tenure as Barack Obama's vice-president.
THE DAILY DIGIT
44,016
The number of species that are at risk of extinction, according to the International Union for Conservation of Nature’s Red List. (IUCN)
FWIW
Just text please: It’s not exactly fun being a Gen Z. After all, this is the generation that grew up with social media, suffered the pandemic in formative years, and will probably experience the worst of climate change. With so much going on, something has to give. In Gen Z’s case, it seems to be socialising. A new survey found that Gen Z are unable to talk to strangers anymore. This manifests the worst in restaurants where they avoid talking to servers. Add inflation to the mix, and going out to eat becomes Gen Z’s worst nightmare. Relatable AF!
Vibe check: Every online platform seems to develop its own aesthetic. With YouTube it was bedroom videos, Instagram had the colourful backgrounds, and it looks like TikTok has finally found its aesthetic too: car backgrounds. Yup, people seem to really love making Toks in their cars. The background is home to every sort of video, from food reviews to makeup, skits, singing, etc. The car provides the perfect privacy and lighting to make these videos. More importantly, it lends the videos a casual/laid back vibe, which is what TikTok is all about.
Loony toons: We all know that creativity fuels innovation but in the case of Korean company KT&G, it’s igniting rebellion. An activist investor in the company is rallying young investors against KT&G’s mismanagement by drawing out webtoons. For the uninitiated, webtoons are the most popular form of entertainment in South Korea. So, it makes sense to use it to spread information about the board’s mismanagement. Under pressure, the board has issued a statement explaining their side of things but c’mon, you don’t fight meme wars with bland ‘statements’. Release your own webtoons!
 | A guest post by
|