Wednesday, August 14, 2019

Messages of the day

Message #1: We had a blast! Yes, the ‘say hello and chill’ party for our Bangalore ambassadors was awesome and the photos are here. Message #2: Save the date, Mumbai ambassadors! We are coming to town with our party hats on. The deets: August 24, 5-7 pm, Khar Social. Please RSVP here. Message #3: We’re taking I-Day off to channel our inner patriot. See you Friday!

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The biggest news story today, explained.

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The alarmingly frugal Indian consumer

Indians are not spending enough money. One big indicator is today’s dire news about auto sales. But there is plenty of evidence that shows consumption expenditure tightening across the board—and that’s bad news for the economy.


What’s up with auto sales? They sank to a 19-year low in July, falling 18.7% in a month. This is the biggest one-month decline since December, 2000. Plunging sales, in turn, have led to the loss of 3.45 lakh jobs due to closed dealerships and cutbacks across the auto manufacturing industry. 


Why is this happening? Auto industry execs cite a number of reasons:

  • A prohibitive 28% GST that the industry wants reduced to 18%.

  • Higher emission standards which in turn drive up the pricetag for the buyer.

  • A crisis in Non-Banking Financial Companies (NBFCs offer most of the same financial services like loans, but don’t accept deposits so aren't called banks. Think Muthoot Finance, Bajaj Finance et al). A great chunk of auto purchases are funded by personal loans taken from NBFCs, especially in Tier 2 and smaller towns.

  • And most significantly, a dip in consumer demand—people simply aren’t spending money.


Ok, so why is this a big deal? Auto sales are one of the key indicators that economists look at in order to gauge the health of an economy. Why? Think of the GDP as a measure of economic activity. A very big part of that activity is consumption expenditure—i.e. people buying stuff from other people who then use that money to buy other stuff etc. So if we aren’t spending on cars, trucks, tractors and motorcycles, what else aren’t we buying?


Ok, what else aren’t we buying? Many of us aren’t buying new homes. Real estate has been in a slump for a while which has left builders holding large numbers of unsold units. The top 30 cities had 1.28 million unsold housing units as of March 2019. We also aren’t making everyday purchases—i.e. fast-moving consumer goods (FMCG). The growth of FMCG companies like Hindustan Lever has dropped from 12% last year to 5% this year (in the April-June quarter). Dabur India slowed from 21% to 6%.  This shrinking in consumer demand is unprecedented in recent decades.


Why is it happening? Economists are still trying to figure it out. But here are the favourite culprits:

  • The NBFC crisis. These institutions account for one-third of personal loans used to buy vehicles, consumer durables and homes—and many have run out of money. 

  • The long-term damage inflicted by GST and demonetisation on the informal sector—which ran mainly on cash.  Financial and job losses triggered by this double whammy have not been recovered. 

  • Rural distress. Farmers—who have been besieged by falling food prices and natural calamities like floods and droughts—simply don’t have money to spend. 


So what now? In the midst of all the bad news, today’s Economic Times has a lead story on an imminent stimulus package (based on quotes from unnamed “official sources”). It claims that the Finance ministry is “working overtime” to arrest the slowdown. Measures being considered include “raising consumption by providing more money into the hands of consumers & reducing the prices of consumables by reducing indirect tax rates of a host of consumption items.” The language is vague—and it is unclear how the government plans to pay for it without running up the deficit. Also rumoured: personal loans approved in 59 minutes. 


Bottomline: The bustling malls and restaurants we see around us are deceptive—funded mainly by rising credit card debt and shrinking savings. As Harish Damodran explains in The Indian Express, “The diagnosis is clear: There is a fundamental problem of demand today—a devil India has never encountered before… When jobs and incomes are under strain, how much can loan-pushing by NBFCs help? A two-wheeler loan has to ultimately be paid from one’s salary or wages.”


Learn more: We learned the most from Mint’s list of 15 ways to define a slowdown. Also in Mint: the bleak prospects for auto industry workers. The Telegraph has the best analysis of the auto sales slump. We also recommend checking out Harish Damodran’s thought-provoking op-ed on consumer demand in The Indian Express. And this excellent breakdown in Times of India of the “vicious cycle” created by dipping consumer demand, industry cutbacks, and job losses—which in turn lead to lower demand.

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making plans to call in sick on Friday 😉💃

Your Kashmir update is here: and it includes the following:

  • The Supreme Court nixed a petition to lift the lockdown in Kashmir citing a “very sensitive” situation on the ground. It said the government should be given more time to stabilise the state.

  • The Election Commission held its first post-Section 370 meeting to figure out the new configuration of seats, and indicated that state elections in the are unlikely before March. 

  • An Alt News investigation shows that some news outlets tweeted out photos claiming they showed Eid prayers in Srinagar. They were actually photos of Jammu.

  • Washington Post has a story on the detained Kashmiri politicians—whom no one else seems to be talking about.


Is the Zomato strike a BJP plot? Quint uncovers clear links between the striking delivery workers in Kolkata and the local BJP leader. But as per Huffington Post’s reporting, the BJP link hides a more important story about employee anger at Zomato’s exploitative practices.


Et tu Placido Domingo: The world-famous opera singer has been accused of sexual harassment by eight singers and a dancer. Allegations include groping, intimidation and punishing those who rejected his advances. (Associated Press)


Bananas are on the verge of disappearing: A devastating fungus has been ravaging banana plantations across the globe—from Southeast Asia to Africa. Now it has turned up in Colombia. “Once you see it, it is too late, and it has likely already spread outside that zone without recognition,” says an expert. That’s terrible news for Latin America which contains four of the five top exporters of the fruit. Yes, we googled: Yup, it is also destroying bananas right here at home. Outlook Magazine has that story. (National Geographic)


Cricket may become an Olympic sport: ICC honchos are doing their best to ensure that cricket will be included in the 2028 Olympic Games in Los Angeles. Another bit of good news: women’s cricket will be part of the Birmingham Commonwealth Games in 2022. A related read: This Bloomberg News column on the rise of Willow, America’s only 24X7 cricket channel that is getting ready to kickstart an American T20 tournament. 


Modi-ji’s adventure with Bear Grylls: The reviews of the ‘Man Vs Wild’ episode are in. A blistering takedown in News Laundry notes: “This was definitely the most relaxing episode Grylls has ever shot. I’m surprised we didn’t see them open a tiffin carrier and start eating samosas and chutney at the end of it.” A poker-faced Quint flags one of Modi’s anecdotes about living rough: “He also said that deprivation did not allow him to buy soap for bathing or washing clothes, that he used salt that crystalised after dew drops evaporated. This was used as soap and detergent.”  But, hey, Indian Express has five life lessons your kids could learn from Modi-ji’s rendezvous with nature.


Did Netflix cut your fave original series? Don’t get too attached to any new Netflix series. The brutal economics of streaming platforms and increased competition may send it to an early grave. The Verge explains why.


Your daily quota of sunshine items: include the following:

  • Hong Kong protesters singing their new anthem: ‘Do You Hear the People Sing?’ from ‘Les Miserables’.

  • This heart-melting story of Naushad, a garment street vendor who nearly emptied his warehouse to supply relief camps in Kerala—on Eid!

  • This group of teenage ‘Tech Witches’ from Delhi who are finalists in a prestigious Silicon Valley competition called Technovation Girls. And the app they’ve created is just as awesome as their achievement.

  • Richard Gere on a humanitarian ship carrying migrant refugees, urging EU countries to give them safe harbour.

  • This runaway ostrich booking through the streets in China.

  • This lovely story about Assamese farmers donating part of their land to create elephant meal zones.

  • These photos of the worst design/architecture you’ve ever seen. Think… actually they’re far too hilariously awful to describe. 

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Everything we don't know about human desire

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Couple moments to cherish forever

Here’s a very funny and short list of those key turning points that mark the beginning of true intimacy—and make present-day romance oh so special. Our favourite: ‘Admitting You Didn’t Watch His/Her TV Recommendation’.

Read: All the Define-the-Relationship (D.T.R.) Moments in a Modern Romance | New Yorker


Sex, Love etc 2

Breakup specialists are on the job!

Every kind of human suffering has an industry that is geared toward profiting from it. Say hello to breakup products and services of every kind—wellness retreats, apps, concierge services etc. Wanna go on a Renew Breakup Bootcamp to be healed by its ‘chief heart hacker’?

Read: A New Industry Is On The Rise, Thanks To Your Breakup | Ozy

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