June '23
First Cut
American Senate Passes the Much-
Awaited Bill to Raise Debt Ceiling,
Averts What Could Have Been A First-
Ever Default by Uncle Sam
The US Senate passed a bill late
evening on June 1 to suspend the
nation's debt limit through January
1, 2025, averting what could have
been a first-ever US de- fault just days
ahead of the deadline, reported CNN.
President Joe Biden, just moments after
the Senate passed the debt limit bill,
praised Congress for its efforts.
Full Article ...
PREMIER
India
GDP Growth Beats Estimates
Asia's third-largest economy beats estimates, grows at a better-than-expected 6.1% in Q4, while FY23 growth
data too springs a positive surprise.
Asia's third-largest economy
sprang a surprise as it posted
better-than-expected gross domestic
product (GDP) growth of 6.1% in
the just-concluded January-March
quarter of 2022-23. It not only beats
analysts' estimates of 5.5%, but is also
a much improved performance compared
to the preceding December quarter
when it clocked a growth rate of
4.4%. For the whole of FY2023, the GDP
growth came in at 7.2%, compared to
9.1% in the previous fiscal year, provisional
national income data released
by the National Statistical Office
(NSO) showed. It is to be recalled that
the Reserve Bank of India (RBI) had in
an earlier forecast projected Q4FY23
real GDP growth to be at 5.1%, while SBI Research had forecast the GDP to
grow at a much better 5.5%.
Full Article ...
BANKING
Withdrawal of 2,000 Currency
Demonetization 2.0?
The RBI's move to withdraw 2,000 notes has come more as a shake than a shock.
- ByAjay Chandra Pandey,AGM, and Faculty, State Bank of India, State Bank Academy, Gurugram
Memories of long queues in
front of ATMs and banks
during the 2016 demonetization
came alive in the minds of the
common people the moment Reserve
Bank of India (RBI) announced the
withdrawal of India's highest denomination
2,000 currency note, and this
painful memory was accentuated by
the alarm raised in the media. But the
facts and the truth are much different,
as there is no commonality between the
two. This withdrawal cannot be
equated with the demonetization of
2016, as the current exercise is different
not only in nature but in size too. It
is a withdrawal of 2,000 note, not an
outright ban as was done through the
exercise of demonetization in 2016, whereby 500 and 1,000 notes lost
their legal tender status. Even if we
compare the size only, the 2016 exercise
involved the exchange of 86% of the currency
in circulation, whereas the current
one involves only 10.8% of the currency
in circulation and that will be affected
over 130 days. Further, this is an RBI
decision, while the demonetization of
2016 was a Government of India decision.
Full Article ...
INTERNATIONAL
USOf Debt Default, Perils and Pitfalls
A default by the US, which looks more likely than ever before, could imperil the domestic economy, jeopardize
global growth, roil global financial markets, and create chaos.
- ByMichael Robert, Economist, London
As I write, the impasse between
the Democrats and Republicans
over the so-called United
States debt ceiling is yet to be resolved.
Chances are, it may be by the time you
read this. But if not, then it will mean
that the US economy is facing paralysis,
and that will hit many other countries
too.
What is this 'debt ceiling'? The debt
ceiling is a legal limit on the total
amount of federal debt the US government
can accrue. The limit applies to
almost all federal debt, including the
roughly $24.5 tn of debt held by the public
and the roughly $6.9 tn the government
owes itself as a result of borrow-ing from various government accounts,
like the Social Security and Medicare
trust funds.
Full Article ...
TECHNOLOGY
Google I/O 2023 AI, Bard Steal the Show
The annual developer conference has always given Google the chance to let the world get a clear vision and
better understanding of the company and the direction they, and we are heading. Alphabet did not let us down
this year.
- ByJeff Kagan,Wireless and Technology Industry Analyst Atlanta, Georgia, USA
This year at the annual Google I/O
Developer Conference, everyone
was watching with one thing on
their mind, Artificial Intelligence (AI)
and chatbot technology. This brand-new
area has quickly become the fastestgrowing
new tech trend of all time. And
even though AI has been around for decades,
chatbot is just beginning. So,
let's take a closer look at the event and
how AI and their chatbot called Bard
will impact our world.
Full Article ...
BUSINESS ENVIRONMENT
IndiaNew Factory of the World?
The Indian manufacturing sector is gaining momentum, with many major players eyeing the country as a
potential hub for production and innovation. Amidst uncertainty in the global markets, there is an opportunity for
India to grab more of the manufacturing share.
Leveraging a strong, stable
economy, access to a large labor
supply, and policy reforms,
India aims to topple China and emerge
as the new factory of the world. Such
efforts are boosted further by new recognition
and accolades. For example, the
Economist Intelligence Unit (EIU) predicts
major improvements in areas like
infrastructure, taxation, and trade
regulation, which will reduce the risks
associated with manufacturing investment
in the country. It is also accelerated
by the geopolitical tensions between
the United States and China, the
Russia-Ukraine war, the rapid adoption
of e-commerce, and the Covid-19
pandemic, which have led to a rethinking
of strategies for re-shoring sourcing, the diversification of supply routes, and
the localization of manufacturing. In its
wake, many foreign manufacturing giants
have increasingly become wary of
their supply-chain overdependence on
China, the de facto factory of the world.
Most Western companies are implementing
or considering 'China plus one'
(also known simply as Plus One or C+1,
the business strategy to avoid investing
only in China and diversify the business
into other countries) strategies aimed
at building manufacturing across multiple
markets.
Full Article ...
Germany
Recession Blues
Germany becomes the first major economy to officially slip into recession, hit hard by runaway prices caused
primarily by Russia's invasion of Ukraine.
Germany, the world's fourthlargest
and Europe's largest
economy, slipped into recession
as the country's GDP recorded its
second quarterly contraction in the
January-March quarter, hit hard by
high energy and food prices. Households
decreased their spending in the first
quarter as the persistence of high price
increases continued to be a burden on
the economy. Besides, factory orders,
retail sales, and exports also suffered
significant declines. Europe's largest
economy's GDP from January to March
quarter fell by 0.3%, the second consecutive
drop from the last quarter of
2022, which showed a GDP fall of 0.5%.
Full Article ...
COVER STORY
Go First Get, Set, Ground!
Go First, one of India's leading ultra-low-cost air carriers, which recently filed for voluntary
insolvency proceedings, taking its stakeholders, notably creditors, by surprise, blames faulty
P&W engine spare part shortages for facing what appears to be an existential crisis. Can it
bounce back?
The company has been crippled by the recurring Pratt & Whitney engine troubles. Pratt & Whitney's
defiance in not supplying spare engines as instructed by the Emergency Arbitrator has ground your
company to a halt.
- Kaushik Khona,CEO, Go First wrote in a note to employees
Flyers of Go First voke up to a rude shock as
the Wadias-owned (of Britannia fame) air
car-rier, in a communique dated May 2,
announced that owing to operational reasons, its
flights scheduled for May 3, 4, and 5 were cancelled;
the flights were later suspended for a few
more days, before extending to May 30 (there were
no further announcements by the airline at the
time of going to press). The Mumbai-headquartered
air carrier, which began its journey as GoAir
in November 2005, some six months before its
bete noire and the current market leader IndiGo,
promoted by industry stalwarts Rahul Bhatia and
Rakesh Gangwal (the latter has now
parted ways with the air carrier after
a bitter legal battle with his friend
turned foe early last year), was
among only a handful of the so-called
ultra-low-cost air carriers to dot
Indian skies until it announced its
bankruptcy proceedings early this
May; the other ultra-low-cost-carrier
(ULCCs) include SpiceJet and the newbie Akasa
Air (of Jhunjhunwala fame). With no visible signs
yet about whether it has on-boarded investors so
as to raise fresh capital and restart operations,
concern grows, concern grows if the Mumbaiheadquartered
air carrier too is headed for the
similar fate met by the likes
Full Article ...
M&A
Microsoft's Activision Acquisition
A Potential Game Changer
The European Union recently approved Microsoft's acquisition of Activision, making the merger far more likely; however, the United States and the UK are opposing the deal, and their opposition needs to be overcome before it can go through. Let's talk about why this deal is important to both Activision and Microsoft, why the merger will be successful, and what the ultimate result will likely be. Full Article ...
MARKET MONITOR
Over half of NSE500 stocks delivered multibagger returns in 20
years, says a new study from Goldman Sachs
According to a new study, India has delivered the most number of multibaggers in the last two decades. The study
by investment banking biggie Goldman Sachs noted that more than half (54%) of the NSE500, or 269 stocks,
have generated multibagger returns over the past 20 years-the largest proportion of multibaggers among the 10
markets versus 30% and 20% averages for EM and DM, respectively.
The study, as per a Mint report, comprised 10 major markets across emerging and developed markets and covered 6,700
stocks to identify multibagger stocks-those which generated at least 10x total returns within a rolling 5-year period over the
past two decades.
Full Article ...
VIEWPOINT
Another Airline Goes Bankrupt
Can Go First make a comeback?
Chances look slim going by the ever-growing list of
bankrupt domestic air carriers and the likelihood of a
prolonged legal battle with creditors and lessors.
To a certain extent, the Go First bankruptcy filing sounds interesting. For, the
bankruptcy was filed voluntarily by the airlines under Section 10 of IBC 2016 for
the Corporate Insolvency Resolution Process (CIRP) instead of Financial Creditors
(FC) filling it under Section 7 of IBC for CIRP or operational creditors filing it under Section
9 of IBC for CIRP, which took its lessors and creditors by surprise (as they stand to lose).
The CIRP process can be initiated by an FC, OC (operational creditors), or CD (corporate
debtor). In most cases, which we have seen in the Indian context, FC or OC has filed for CIRP, but here the management
of the CD itself has filed for bankruptcy and sought protection for payment of overdue amounts to the different creditors.
Full Article ...
PERSPECTIVE
Go First's Bankruptcy
Why are some air carriers struggling even as the industry is flying high?
- By Shail Apte, Founder & CEO, Airtham, Ahmedabad
Founded in 2005 by Jeh Wadia,
son of Nusli Wadia, Chairman
of the Wadia Group, Go
First, formerly known as GoAir operated
a fleet of Airbus A320 aircraft in
an all-economy configuration. The company
prioritized profitability over market
share expansion, earning recognition
as the "Best Performing Airline" by
Airbus in 2011.
Full Article ...
US Banking Crisis
Is Shadow Banking on a Comeback Trail?
The recent crisis at US regional banks has highlighted the importance of a strong and resilient banking system.
The Federal Reserve is taking steps to support the banking system, but regulators need to continue to monitor
the situation closely.
- By Surbhi Singhal, Senior Research Analyst, Advance ThinkTank, New Delhi
In any major economy of the world,
there's mainstream banking at the
top-rung, regional and cooperative
banks in the middle, and shadow banks
at the bottom. What happens when
there's a major disturbance in any of
these layers? Naturally, some other
layer expands to fill in the void.
Full Article ...
MACRO MATTERS
JP Morgan Raises India's
Outlook for 2024
JPMorgan recently increased its
2024 economic forecast for India
-although only marginally-
saying the country's growth will be
affected by a slowdown in global
growth momentum. The world's leading investment bank expects
Asia's third-largest economy to grow
5.5%-instead of 5% it had forecast
earlier-in 2024. The revision follows
the Q4 and FY23 gross domestic
product data which the government
released recently. As per the official
statistics, the Indian economy grew at
a much healthier 6.1% in the January
to March quarter, compared to 4.5%
the previous quarter.
Full Article ...
LEADERSHIP
Organizational Metaphors and Leadership BehaviorThe Good, Bad, and Ugly!
Metaphors reveal new ways of seeing and thinking about organizations, about people, about situations, and
about the nature of the work itself. However, on the flip side, using metaphors to simplify such complex entities
as commercial organizations and people has dangers if too simplistic perspectives are adopted.
- By Michael Walton,Business Psychologist and Visiting Professor, UK
The purpose of this article is to
illustrate how metaphors can
enrich and enhance understandings
about the nature of organizations
as institutional entities succinctly and
'capture' the individual behavioral
characteristics and conduct of leaders.
Such understandings provide insights
about the type of organization in which
a person may be working and about the
type of leadership under which they are
expected to be successful and thrive.
Full Article ...
STARTUP XPRESS
Shilpa Shetty Invests in Agritech Startup KisanKonnect
Bollywood Diva Shilpa Shetty Kundra recently made an investment in the Mumbai-based startup Kisankonnect. The actress has invested an undisclosed amount in the company. She has been contributing to the startup by providing essential fitness elements, particularly focusing on "Fresh Food." Kisankonnect, founded in 2020, stands out in the agricultural ecommerce industry due to its unique approach. The company operates through a vast network of 5,000 members and village-level collection centers, directly sourcing agricultural produce from farmers. Full Article ...