The number of Indian billionaires grew from 102 to 142, while 84 per cent of households in the country suffered a decline in their income in 2021, which was also a year marked by tremendous loss of life and livelihoods, according to non profit Oxfam India’s latest report published on Monday.

The report ‘Inequality Kills’ comes ahead of the World Economic Forum’s Davos Agenda.

It indicates that the collective wealth of India’s 100 richest people hit a record high of Rs 57.3 lakh crore in 2021.

In India, during the pandemic (since March 2020, through to November 30th, 2021) the wealth of billionaires increased from Rs 23.14 lakh crore to Rs 53.16 lakh crore.

More than 4.6 crore Indians, meanwhile, are estimated to have fallen into extreme poverty in 2020 (nearly half of the global new poor according to the United Nations).

The stark wealth inequality in India is a result of an economic system rigged in favour of the super-rich over the poor and marginalised, the report said

It advocates a one per cent surcharge on the richest 10 per cent of the Indian population to fund inequality combating measures such as higher investments in school education, universal healthcare, and social security benefits like maternity leaves, paid leaves and pension for all Indians.

“The ‘Inequality Kills’ briefing shows how deeply unequal our economic system is and how it fuels not only inequality but poverty as well. We urge the Government of India to commit to an economic system which creates a more equal and sustainable nation,” Amitabh Behar, CEO, Oxfam India said in a statement.

Further, Behar said that Oxfam’s global briefing points to the stark reality of inequality contributing to the death of at least 21,000 people each day, or one person every four seconds.

Moreover, the pandemic set gender parity back from 99 years to now 135 years. Women collectively lost Rs 59.11 lakh crore in earnings in 2020, with 1.3 crore fewer women in work now than in 2019, the report showed.

“It has never been so important to start righting the wrongs of this obscene inequality by targeting extreme wealth through taxation and getting that money back into the real economy to save lives,” Behar said.

“India can show the world that democratic systems are capable of wealth redistribution and inclusive growth where no one is left behind. India’s fight against inequality and poverty must be supported by the billionaires who made record profits in the country during the pandemic,” he suggested. (IANS)

In a trend unprecedented since economic liberalisation, the annual income of the poorest 20% of Indian households, constantly rising since 1995, plunged 53% in the pandemic year 2020-21 from their levels in 2015-16. In the same five-year period, the richest 20% saw their annual household income grow 39% reflecting the sharp contrast Covid’s economic impact has had on the bottom of the pyramid and the top.

This stark K-shaped recovery emerges in the latest round of ICE360 Survey 2021, conducted by People’s Research on India’s Consumer Economy (PRICE), a Mumbai- based think-tank.

The survey, between April and October 2021, covered 200,000 households in the first round and 42,000 households in the second round. It was spread over 120 towns and 800 villages across 100 districts.

While the pandemic brought economic activity to a standstill for at least two quarters in 2020-21 and resulted in a 7.3% contraction in GDP in 2020-21, the survey shows that the pandemic hit the urban poor most and eroded their household income.

Splitting the population across five categories based on income, the survey shows that while the poorest 20% (first quintile) witnessed the biggest erosion of 53%, the second lowest quintile (lower middle category), too, witnessed a decline in their household income of 32% in the same period. While the quantum of erosion reduced to 9% for those in the middle income category, the top two quintiles — upper middle (20%) and richest (20%)— saw their household income rise by 7% and 39% respectively.

The survey shows that the richest 20% of households have, on average, added more income per household and more pooled income as a group in the past five years than in any five-year period earlier since liberalisation. Exactly the opposite has happened for the poorest 20% of households — on average, they have never actually seen a decrease in household income since 1995. Yet, in 2021, in a huge knockout punch caused by Covid, they earned half as much as they did in 2016.

How disruptive this distress has been for those at the bottom of the pyramid is reinforced by the fact that in the previous 11-year period between 2005 and 2016, while the household income of the richest 20% grew by 34%, the poorest 20% saw their household income surge by 183% at an average annual growth rate of 9.9%.

Coming in the run-up to the Budget, the task for the Government is cut out.

“As the Finance Minister is finalising her budget proposals for 2022-23 to give shape to the roadmap for economic revival of the country,” said Rajesh Shukla, MD and CEO, PRICE, “we need a K-shaped policy too that addresses the two ends of the spectrum and a lot more thinking on how to build the bridge between the two.”

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This couldn’t be more timely. Said PRICE founder and one of the authors of the survey Rama Bijapurkar. “Or else, we are back to a tale of two Indias, a narrative we thought we were rapidly getting rid of. The good news is that we have built a far more efficient welfare state for the disbursal of benefit be it DBT or vaccination for all.”

The survey showed that while the richest 20% accounted for 50.2% of the total household income in 1995, their share has jumped to 56.3% in 2021. On the other hand, the share of the poorest 20% dropped from 5.9% to 3.3% in the same period.

As for India Inc, it has been in a better position to weather the disruption. The pandemic accelerated further formalisation of the economy with large companies benefitting at the cost of smaller ones. The survey also shows that while job losses were quite evident among Small and Medium Enterprises in the casual labour segment, large companies did not witness much of that.

Even among the poorest 20 per cent, those in urban areas got more impacted than their rural counterparts as the first wave of Covid and the lockdown led to stringent curbs on economic activity in urban areas. This resulted in job losses and loss of income for the casual labour, petty traders household workers.

Data shows that there has been a rise in the share of poor in cities. While 90 per cent of the poorest 20 per cent in 2016, lived in rural India, that number had dropped to 70 per cent in 2021. On the other hand the share of poorest 20 per cent in urban areas has gone up from around 10 per cent to 30 per cent now.

“The data reflects that the casual labour, petty trader, household workers among others in Tier 1 and Tier 2 cities got hit most by the pandemic. During the survey we also noticed that while in rural areas people in lower middle income category (Q2) have moved to middle income category (Q3), in the urban areas the shift has been downwards from Q3 to Q2. In fact, the rise in poverty level of urban poor has pulled down the household income of the entire category down,” said Shukla.

“The elephant in the room is investment,” said Bijapurkar. “Inspiring confidence through long-term policy stability and improving ease of doing business should make the tide rise again and sweep small business and individuals up along with it. Most big companies are doing well and don’t need more help but we need to work the economy for the bottom half.”

Prices in the US are rising at their fastest rate in almost 40 years, with inflation up 7% year-on-year in December. Strong demand and scarce supply for key items such as cars are driving the increases, which are putting pressure on policymakers to act.

The US central bank is expected to raise interest rates this year. The rise in borrowing costs is aimed at reducing demand by making purchases such as cars more expensive.

December’s increase marked the third month in a row that the US annual inflation rate has hovered above 6% – well north of policymakers’ 2% target. The last time the pace of inflation exceeded that level was 1982.

Housing costs were up 4.1% year-on-year, while the cost of groceries rose 6.5% – compared to a 1.5% annual average over the last 10 years.

Wednesday’s report from the Labor Department showed signs that some of the pressures may be easing. The cost of energy dropped 0.4% from November to December – its first decline since April. But over 12 months energy costs are up by nearly 30% and have returned to their upward trend in recent days.

“Overall, this is every bit as bad as we expected,” Paul Ashworth, chief economist at Capital Economics, said of the December inflation report.

Reacting to the latest report, President Joe Biden said that it “demonstrates that we are making progress in slowing the rate of price increases”.

He added that there is “more work to do” in the US and noted that “inflation is a global challenge, appearing in virtually every developed nation as it emerges from the pandemic economic slump”.

The price pressures occurring in the US have been seen to varying degrees around the world.

The Organisation for Economic Cooperation and Development, which represents more than 30 of the world’s largest economies, said this week that inflation among its members had hit its highest rate in 25 years in November.

Further rises

In the UK, inflation hit a 10-year high in November, while globally, prices are rising at their fastest pace since 2008, according to the World Bank.

While many countries are grappling with higher food and energy costs, the US has seen an unusually large pick-up in inflation.

That’s due in part to strong demand from households, whose spending got a boost from government coronavirus aid and shifted suddenly from things like travel to furniture during the pandemic.

Economists in the US were initially hopeful that the pressures would ease as the pandemic faded. But ongoing production snarls and the emergence of virus variants have made the price increases more persistent than expected.

“It’s proving more difficult than we had hoped to end the pandemic,” the head of America’s central bank, Jerome Powell, told Congress on Tuesday.

Sarah House, economist at Wells Fargo, said it is no longer likely that inflation will fade naturally as the pandemic abates, pointing to worker shortages and wages, which have also been rising – though not as fast as prices.

“Although the exceptional pace of goods inflation and momentum in shelter costs are still firmly rooted in the pandemic, the increasingly tight labour market and ensuing wage pressures will make it difficult for inflation to fall back on its own,” she said.

The issue has put pressure on the Biden administration, eroding consumer confidence despite other signs of a strong economy.

Mr Powell has pledged to keep inflation in check by raising interest rates. But on Tuesday he warned those moves would only go so far to address the problem if supply chain issues persist, pointing to risks from new shutdowns in China.

“Omicron, particularly if China sticks to a no-Covid policy, Omicron can really disrupt the supply chains again,” he said.

Official inflation figures from China on Thursday showed prices rose less than expected in November, with producer prices up 10.3% and consumer prices up 1.5%.

But that easing is not necessarily an indicator of what will happen elsewhere, said Gian Maria Milesi-Ferretti, senior fellow at the Brookings Institution, a Washington think tank.

“Indicators of what is happening [in China] to the labour market, to wage demands and to the supply bottlenecks that have pushed up some prices … those are more important indicators,” he said.

Visa Inc has complained to the U.S. government that India’s “informal and formal” promotion of domestic payments rival RuPay hurts the U.S. giant in a key market, memos seen by Reuters show.

In public Visa has downplayed concerns about the rise of RuPay, which has been supported by public lobbying from Prime Minister Narendra Modi that has included likening the use of local cards to national service.

But U.S. government memos show Visa raised concerns about a “level playing field” in India during an Aug. 9 meeting between U.S. Trade Representative (USTR) Katherine Tai and company executives, including CEO Alfred Kelly.

Mastercard Inc has raised similar concerns privately with the USTR. Reuters reported in 2018 that the company had lodged a protest with the USTR that Modi was using nationalism to promote the local network.

Alfred Kelly, Jr., CEO, Visa Inc. speaks at the 2019 Milken Institute Global Conference in Beverly Hills, California, U.S., April 29, 2019. REUTERS/Lucy Nicholson/File Photo

“Visa remains concerned about India’s informal and formal policies that appear to favor the business of National Payments Corporation of India” (NPCI), the non-profit that runs RuPay, “over other domestic and foreign electronic payments companies,” said a USTR memo prepared for Tai ahead of the meeting.

Visa, USTR, Modi’s office and the NPCI did not respond to requests for comment.

Modi has promoted homegrown RuPay for years, posing a challenge to Visa and Mastercard in the fast-growing payments market. RuPay accounted for 63% of India’s 952 million debit and credit cards as of November 2020, according to the most recent regulatory data on the company, up from just 15% in 2017.

Publicly, Kelly said in May that for years there was “a lot of concern” that the likes of RuPay could be “potentially problematic” for Visa, but he stressed that his company remained India’s market leader.

“That’s going to be something we’re going to continually deal with and have dealt with for years. So there’s nothing new there,” he told an industry event.

Modi, in a 2018 speech, portrayed the use of RuPay as patriotic, saying that since “everyone cannot go to the border to protect the country, we can use RuPay card to serve the nation.”

When Visa raised its concerns during the USTR gathering on Aug. 9, it cited the Indian leader’s “speech where he basically called on India to use RuPay as a show of service to the country,” according to an email U.S. officials exchanged on the meeting’s readout.

Finance Minister Nirmala Sitharaman said last year that “RuPay is the only card” banks should promote. The government has also promoted a RuPay-based card for public transportation payments.

While RuPay dominates the number of cards in India, most transactions still go through Visa and Mastercard as most RuPay cards were simply issued by banks under Modi’s financial inclusion program, industry sources say.

Visa told the U.S. government it was concerned India’s “push to use transit cards linked to RuPay” and “the not so subtle pressure on banks to issue” RuPay cards, the USTR email showed.

Mastercard and Visa count India as a key growth market, but have been jolted by a 2018 central bank directive for them to store payments data “only in India” for “unfettered supervisory access”.

Mastercard faces an indefinite ban on issuing new cards in India after the central bank said it was not complying with the 2018 rules. A USTR official privately called the Mastercard ban “draconian”, Reuters reported in September.

While most economic indicators deteriorated in 2020, house prices largely defied the pandemic in over 57 of the 60 countries surveyed by the International Monetary Fund. India, Philippines and the UAE bucked the housing bite reported in the IMF Global House Price Index released Monday. Three quarters saw increases in house prices in 2020. The trend has largely continued in countries with more recent data.

The increases in house prices relative to incomes makes housing unaffordable to many segments of the population, as highlighted in the Fund’s recent study of housing affordability in Europe. The post-pandemic working arrangements could also exacerbate inequality concerns as high-earners in tele-workable jobs bid for larger homes, making homes less affordable for less affluent residents, IMF researchers said.

The surge in house prices has also had an impact on headline inflation in some countries and could contribute to more persistent inflationary pressures. IMF research indicates that low interest rates contributed to the boom in house prices, as did policy support provided by governments and workers’ greater need to be able to work from home.

In many countries, including the US, online searches for homes reached record levels. The American home-sales market has been on a historic rally during the pandemic and well into the current Fall season. Along with these demand factors, house prices also increased as supply chain disruptions raised the costs of several inputs into the construction process.

While fundamentals of demand and supply can account for much of the buoyancy of housing markets during the pandemic, policymakers are nonetheless keeping a close watch on developments in this sector. Over a decade ago, a turnaround in house prices marked the onset of the Global Financial Crisis. However, the twin booms in household credit and house prices in many countries before that crisis-and many previous housing crashes-appear less prevalent today.

Hence, in a plausible scenario, a rise in interest rates, a withdrawal of policy support as economies start to recover, and a restoration of the timely supply of building materials, could lead to some normalization in house prices, the researchers said.

Newswise — Despite President Biden’s announcement of round-the-clock operations at key West Coast ports and expanded operations by the likes of Walmart and UPS – plus pledging further federal government efforts — to alleviate the U.S. supply chain backlog, Maryland Smith supply chain expert Martin Dresner says federal government involvement will be most effective long term — through infrastructure spending.

“The President is proposing making better use of our current infrastructure by increasing working hours and spreading business more evenly throughout the day,” says Dresner, professor and chair of the logistics, business and public policy department at the University of Maryland’s Robert H. Smith School of Business. 

“Although this may help at the margin, there is only limited warehouse, rail and trucking capacity,” he adds. “It is difficult to expand this capacity in the short run. Although the backlogs will eventually work their way out of the system, this may take some time. It is unlikely that the backlogs will be alleviated by the holiday season.”

Dresner, also an associate editor for the Journal of Business Logistics, points to the complexity of the current supply chain problems. Significantly, the pandemic “created increased demand for products shipped from Asia that arrive via container at major U.S. ports, putting pressure on shipping, port, truck and rail capacity.”

In the meantime, work rules designed to curtail the spread of the coronavirus and some port shutdowns reduced the throughput of the shipping industry — especially in Asia, he says. “This was coupled with a decline in the workforce as people retired and quit lower-paying jobs, including transportation and warehousing positions. And, finally, government policies pumped considerable cash into the economy increasing consumer spending, thereby further increasing demand for consumer goods.”

Regarding the federal government’s role in solving the crisis, Biden this week said, “If federal support is needed, I’ll direct all appropriate action, and if the private sector doesn’t step up, we’re going to call them out and ask them to act.”

But Dresner, in response, says such federal support is best channeled through infrastructure spending: “The Biden Administration has plans to spend on infrastructure. In the long run, better infrastructure should improve the functionality of supply chains.”

In the short run, “the Administration should leave it to businesses to work out the backlogs, he adds. “Prices are already adjusting and these prices will cause adjustments in consumer demand. And higher interest rates, should they be forthcoming, will also curtail consumer demand.” However, Dresner cautions that the Biden Administration and the Fed “need to tread a fine line.”

“If interest rates are too low and too much money is pumped into the economy, consumer demand could stoke inflation,” he says. “If rates are hiked too quickly and government spending is curtailed, then we could get pushed into a recession.”

Prime Minister Narendra Modi on Thursday commenced his visit in Washington D.C. with meetings with the top brass of the multinational companies based in the United States, hard-selling his government’s initiatives to draw more foreign investments to revive the Covid-hit economy of India, including the recently launched Production Linked Incentive scheme.

On the first leg of his visit to the United States, Prime Minister Narendra Modi Sept. 23 met leading American CEOs here, including Indian American executives. He held one-on-one meetings with the CEOs of semiconductor and wireless technology manufacturer Qualcomm, software major Adobe, renewable energy firm First Solar, arms manufacturer General Atomics and investment management company Blackstone.

India has great potential for attracting investments and manufacturing under the various programs introduced by Prime Minister Narendra Modi as companies try to diversify their global footprints, according to hi-tech CEOs who met him. “Because of the necessity to diversify and build a very resilient supply chain for semiconductors, we believe India could be an important destination for manufacturing,” Qualcomm CEO Cristiano Amon told reporters in Washington after his meeting with Prime Minister Modi on Thursday.

Prime Minister Modi’s “approach to drive economic growth in making India, a destination for investment for investment has been very successful,” said the CEO of the $150 billion company that is a leader in the manufacture of chips used in everything from cameras to aircraft and a pioneer in 5G technology. The high level of optimism for India comes as the US and several other countries rethink their supply chains and their manufacturing bases, while also keeping an eye on China, which is set on trying to get a stranglehold on future technologies with strategic goals.

First Solar’s CEO Mark Widmar said that what Prime Minister Modi has done to “create a really strong balance between industrial policy as well as trade policy” makes it an ideal opportunity for companies like First Solar to establish manufacturing in India. “His commitment to ensuring domestic capabilities and ensuring his long term climate goals and objectives with focus on energy independence and security”, Widmar said is an alignment that “couldn’t be better for companies that are looking to manufacture in India. And I think the enablement of an environment that is pro-business, this is more opportunity for us to be successful to help India achieve its climate goals.”

First Solar is one of the world’s largest developer and financier of photovoltaic solar power systems connected to grids. The “very laudable policy prescriptions and reforms” introduced by Prime Minister Modi “will certainly catalyse a lot of interest and investments in India,” Vivek Lal, the CEO of General Atomics, said in the series of video interviews posted on twitter by the Ministry of External Affairs. “Many of my colleagues at US companies see India as a very promising destination,” he said.

He said that the reforms in both India and the US have created a “win-win” situation and both countries can benefit from their collaboration. General Atomics is a defence and technology company and a leader in the development and manufacture of drones. Shantanu Narayen, the CEO of Adobe, said he was “a huge supporter, and fan of what the Prime Minister’s doing” to improve the business and investment climate in India. He said the ecosystem for startups in India is “awesome”.

“As Indian Americans, I mean, what could be more inspiring or a matter of pride than seeing what the Prime Minister is doing to really encourage startups, to really encourage investment in India,” he said. “What’s really inspiring, is that these Indian startups are actually having as their growth the entire world,” he said. “So their aspirations are not restricted to India, they’re actually thinking about how they conquer the world.”

Adobe is the maker of ubiquitous document software and the leader in multi-media solutions.

Prime Minister Modi met with Stephen Schwarzman, the CEO of the investment company, Blackstone.

A tweet from the Prime Minister’s Office said that “giving greater momentum to investments in India,” they discussed “various investment opportunities in India, including those arising due to the National Infrastructure Pipeline and National Monetisation Pipeline.” (The two programmes provide for privatisation with time limits for some national resources or government enterprises.)

About his meeting with Modi, Amon said, “We talked about incredible opportunity to advance the industry not only domestically in India but Indian as an exporter of technology as we think about the digital transformation.”

“Very pleased with the conversations and we’re very, very happy with everything we’re doing together with India,” he added. Narayen said that the key topic was “continued investment in innovation, because he certainly believes that technology is the way to help move things forward.”

They also “talked about artificial intelligence and what might happen with artificial intelligence, we talked about creativity, the importance of creativity and how media, the ever-changing nature of video,” he said.

About his company’s plans, he said, “India is a big area of investment for us. Adobe has three growth initiatives: Everything around creativity, document productivity and powering digital businesses, and artificial intelligence is going to change how all those three solutions are delivered. So we intend to continue to invest heavily in it.”

Widmar said, “One of the things we want to do in India is not only to be there to support the domestic market, but we want to be a technology leader in leveraging capabilities that India can provide. And then also compete on a global platform and to participate in export into international markets.” He said that India’s goal of producing 450 gigawatts of renewable energy by 2030 was of global significance in dealing with climate change and “we would want to be part of this.”

TCS reported that its employee headcount crossed the 500,000-mark in the quarter ending June 2021, even though close to 43,000 people left the IT major.Indian IT major Tata Consultancy Services (TCS) reported an 8.6% attrition in the past year, in its results for the first quarter of the 2021-22 financial year.

According to the report, it rose from 7.2% in the previous quarter—ending on March 31, 2021 – even the attrition rate is pegged to be the lowest in the county. IT companies such as Accenture announced their attrition rate for the first quarter of 2021-22 fiscal at 17% against 11% in the year-ago quarter., while Infosys and Wipro’s attrition rates were reported to be 15.2% and 12.1% in the fourth quarter of 2020-21 financial year.

The trend in employee attrition is a concern the IT firms were plagued by. However, TCS reported that its employee headcount crossed the 500,000-mark in the quarter ending June 2021, when the company hit a total workforce of 509,058. In July, TCS announced a 29% rise year-on-year in quarterly profit, powered by higher demand from businesses ramping up digital services during the coronavirus disease (Covid-19) pandemic crisis, Hindustan Times’ sister publication LiveMint reported. The IT giant’s net profit rose to ₹9,008 crore, between April and June, up from ₹7,008 crore a year earlier, while its revenue from operations jumped 18.5% to ₹45,411 crore.

Even as some of the big IT firms were expecting the attrition rate to inch up in the financial quarters to come, riding on the back of a talent war, outgoing employees make direct and indirect impacts on a company and its resources. Industry experts often pointed out that attrition is an important human resources metric that indicates a lot about the direction of a company’s business, as well as the possible problems that need the attention of the HR managers.

One of the major causes behind the strong attrition at TCS is its remuneration, said a Kolkata-based tech analyst who recently left TCS for another major IT firm. “Compared to the industry standards, the remuneration is less when compared with lateral recruits,” the techie told HT, adding, “The effort by TCS to retain an employee after they put in their papers do cut it. It often offers an onsite opportunity to an employee in a bid to retain them but such opportunities do not work, especially when an employee has made up their mind to leave over remuneration concerns, as people want to earn a standard salary staying home.”

In A move aimed at diversifying its entertainment business, Amazon India is learnt to be in discussions with multiple players in the film and media distribution segment, including Mumbai-based movie theatre chain Inox Leisure Ltd, for potentially picking up stakes in them, sources told The Indian Express. With its over-the-top (OTT) content business not growing as fast as the company expected — Amazon India launched its OTT platform Prime Video in 2016 — and with movie theatre chains impacted by lockdowns over the last year-and-a-half, Amazon India is said to be looking at acquiring interest in some of these businesses. Inox, a source said, is a likely candidate.

“After the initial growth of the first six months last year, the OTT content business has not grown as fast as the company expected. There are three to four deals in this space being evaluated currently, including some distressed assets. Amazon India is in advanced talks with some of them,” a source close to the development said. Inox Leisure, one of the largest movie theatre chains in the country with 153 multiplexes and 648 screens, has been hit by the pandemic-induced lockdowns across the country. To a specific query on the issue, a spokesperson for Amazon India said, “We do not comment on speculations about what we may or may not do in future”.

Inox Leisure did not respond to a request for comment. On Monday, the movie exhibition company’s share on the BSE ended trading at Rs 302.90, 1.87% higher than its previous close. Inox Leisure, one of the largest movie theatre chains in the country with 153 multiplexes and 648 screens, has been hit by the pandemic-induced lockdowns across the country. For the year ended March 2021, the company posted a net loss of Rs 257 crore, against a profit of Rs 141 crore for 2019-20 (April-March). Around 40 per cent of Inox Leisure’s screens are present in the western part of the country, followed by north, south and east. As of June 30, Inox Leisure’s promoters held 43.63% stake, while 56.23% is public-owned.

The biggest player in the space, PVR Ltd, reported a net loss of Rs 665.64 crore for 2020-21 as against a profit of Rs 131.04 crore in the previous year. PVR has 176 cinemas and 842 screens across the country. Shares of Inox Leisure were at Rs 328.5 on January 28 and traded in the Rs 305-335 range till March 18, after which it started declining and reached a low of Rs 251 on April 19 — when the second surge of Covid-19 peaked. Shares of PVR followed almost a similar trajectory over the period, trading at levels of Rs 1,450 on January 28, and then slipping to Rs 1,015.25 on April 19. As of Monday, PVR’s scrip ended trading at Rs 1,329.90.

In 2019-20, US-based Amazon is learnt to have invested $1.5 billion in its Indian business, bulk of which was pumped into the e-commerce business. Experts tracking the sector pointed out that a major deal by Amazon in the entertainment space could see the company increasing its focus on this side of its business, away from e-commerce, where the company is battling policy changes and large players such as Walmart-backed Flipkart and Reliance Retail. Last year, Amazon began discussions to acquire ailing US-based theatre chain AMC, but the talks reportedly fell through. “In India, the film exhibition market is quite different from the US because the average revenue generated by movie theatres in the US per customer is much higher than in India,” a Gurgaon-based consultant said.

Stocks are falling sharply Monday as worries sweep from Wall Street to Sydney that the worsening pandemic in hotspots around the world will derail what’s been a strong economic recovery. The S&P 500 was 1.9% lower in morning trading, after setting a record high just a week earlier. In another sign of worry, the yield on the 10-year Treasury dropped close to its lowest level in five months. It sank below 1.20% as investors scrambled for safer places to put their money. The Dow Jones Industrial Average was down 769 points, or 2.2%, at 33,918, as of 10:17 a.m. Eastern time. The Nasdaq composite was 1.7% lower.

Airlines, hotels and stocks of other companies that would get hurt the most by potential COVID-19 restrictions were taking some of the heaviest losses, similar to the early days of the pandemic in February and March 2020. Mall owner Simon Property Group tumbled 7.8%, and cruise operator Carnival lost 7.5%. The drop also circled the world, with several European markets down nearly 3%, on worries new, more infectious variants of the virus are dragging particularly hard on economies where vaccination rates are low. The price of benchmark U.S. crude, meanwhile, sank more than 5% after OPEC and allied nations agreed on Sunday to eventually allow for higher oil production this year.

Experts are saying Indonesia has become a new epicenter for the pandemic as outbreaks worsen across Southeast Asia. Meanwhile, some athletes have tested positive for COVID at Tokyo’s Olympic Village, with the Games due to open Friday. “The more transmissible delta variant is delaying the recovery for the ASEAN economies and pushing them further into the doldrums,” said VenkateswaranLavanya, at Mizuho Bank in Singapore. Even though vaccination rates are higher in the United States and some other developed economies, the tightly connected global economy means hits anywhere can quickly affect others on the other side of the world.

In Japan, the world’s third-largest economy, the vaccine rollout came later than in other developed nations and has stagnated lately. Japan is totally dependent so far on imported vaccines, and just one in five Japanese have been fully vaccinated. Financial markets have been showing signs of increased concerns for a while, but the U.S. stock market had remained largely resilient. The S&P 500 has had just two down weeks in the last eight. The bond market has been louder in its warnings, though. The yield on the 10-year Treasury tends to move with expectations for economic growth and for inflation, and it has been sinking from a perch of roughly 1.75% in March. It was at 1.19% Monday morning, down from 1.29% late Friday.

Analysts and professional investors say a long list of reasons is potentially behind the sharp moves in the bond market, which is seen as more rational and sober than the stock market. But at the heart is the risk the economy may be set to slow sharply from its current, extremely high growth. Besides the new variants of the coronavirus, other risks to the economy include fading pandemic relief efforts from the U.S. government and a Federal Reserve that looks set to begin paring back its assistance for markets later this year.

Worries about a possible sharp slowdown have particularly hurt stocks whose profits are most closely tied to the strength of the economy. Stocks of smaller companies, for example, have been scuffling since hitting a peak in March even though many reports on the economy still show it’s growing at a very healthy rate. The Russell 2000 index of smaller stocks slumped 2.3% Monday, outpacing losses for their larger rivals on Wall Street. The selling pressure was widespread, with more than 90% of the stocks in the S&P 500 lower. Even Big Tech stocks were falling, with Apple down 3.1% and Mircosoft 1.5% lower. During earlier hiccups for the stock market, investors would often big up such stocks further on expectations they will continue to grow almost regardless of the economy’s strength.

Among the few gainers on Wall Street were potential winners of a return to a stay-at-home economy. Clorox rose 1.2%, and Campbell Soup gained 1%. In Europe, Germany’s DAX lost 2.9%, and France’s CAC 40 fell 2.9%. The FTSE 100 in London slumped 2.6%. In Asia, Japan’s Nikkei 225 lost 1.3%, Hong Kong’s Hang Seng fell 1.8%, South Korea’s Kospi dropped 1%. Australian stocks sank 0.9%.

Global rating agency Sta­ndard and Poor’s has affirmed India’s sovereign rating at “BBB-” and maintained a stable outlook on gradual recovery in the economy. India’s recovery will gather pace through the second half of FY22 and into the following year, helping to stabilise the country’s overall credit profile, S&P said in a statement. It, however, warned the country’s fiscal settings were weak, and the deficits would remain elevated over the coming years even as the government undertook some consolidation.

India’s strong external settings help to buffer the risks associated with the government’s high deficits and debt stock. India’s economy is recovering from a deep contraction in FY21 and a subsequent severe second wave of Covid. “We ex­pect real GDP growth to rebo­und to 9.5 per cent in FY22 on continued. India’s long-term rating was affirmed at ‘BBB-‘ with a stable outlook while the short-term rating was held at ‘A-3’. The stable outlook reflects our expectation that India’s economy will recover following the resolution of the COVID-19 pandemic,” analysts at the rating agency wrote. “And that the country’s strong external settings will act as a buffer against financial strains despite elevated government funding needs over the next 24 months”.

S&P said, however, it may lower the country’s ratings if the economy recovers significantly slower than expected from fiscal year 2021/22, or if the general government deficits and associated indebtedness materially exceeds its forecasts. The rating agency said India continued to outperform its peers and it expected economic activity to begin to normalise throughout the rest of the year and the economy to grow 9.5% for the full year after a contraction of 7.3% in 2020/21. “The pace of India’s ambitious COVID-19 vaccination campaign will be crucial to the mitigation of adverse outcomes from future pandemic waves,” analysts wrote.

The agency, however, expects the country’s fiscal position to remain weak and only sees a gradual deficit consolidation over the next three years. S&P said there was a risk that some damage to the real economy from India’s deep economic downturn last year, and the more recent coronavirus outbreak, could be enduring but implementation and acceleration of key reforms could help to address this risk over the next few years.

“The government’s ability to deliver and execute additional economic reforms, especially those that spur investment and job creation, will be important for India’s ability to recover from the economic slowdown,” it said. “Existing vulnerabilities, including a relatively weak financial sector, rigid labour markets, and sluggish private investment, could hamper the economic recovery if not meaningfully addressed”.

Bitcoin recovered from a five-month low on Tuesday, June 22nd in volatile session in which it fell below $30,000, extending losses sparked a day earlier when China’s central bank deepened a crackdown on cryptocurrencies. But its outlook remained tilted to the downside, analysts said. As per Reuters, the world’s largest cryptocurrency dropped to $28,600, its lowest since early January. It was last up 3.7% at $32,802, and remains about 13% higher so far this year.

Bitcoin had fallen below $30,000 for the first time in more than five months, hit by China’s crackdown on the world’s most popular cryptocurrency on June 21st. The digital currency slipped to about $28,890, and has lost about 50% of its value since reaching an all-time high of $64,870 in April. China has told banks and payments platforms to stop supporting digital currency transactions. It follows an order on Friday to stop Bitcoin mining in Sichuan province.

On Monday, China’s central bank said it had recently summoned several major banks and payments companies to call on them to take tougher action over the trading of cryptocurrencies. Banks were told to not provide products or services such as trading, clearing and settlement for cryptocurrency transactions, the People’s Bank of China said in a statement. China’s third-largest lender by assets, the Agricultural Bank of China, said it was following the PBOC’s guidance and would conduct due diligence on clients to root out illegal activities involving cryptocurrency mining and transactions. China’s Postal Savings Bank also said it would not facilitate any cryptocurrency transactions.

Chinese mobile and online payments platform Alipay, which is owned by financial technology giant Ant Group, said it would set up a monitoring system to detect illegal cryptocurrency transactions. The latest measure came after authorities in the southwest province of Sichuan on Friday ordered Bitcoin mining operations to close down. Authorities ordered the closure of 26 mines last week, according to a notice widely circulated on Chinese social media sites and confirmed by a former Bitcoin miner.

Sichuan, a mountainous region in southwest China, is home to many cryptocurrency mines – basically huge centers with racks upon racks of computer processors, owing to the large number of hydroelectric power plants there. China accounted for around 65% of global Bitcoin production last year, with Sichuan rating as its second largest producer, according to research by the University of Cambridge. “Concerns mount over China’s ongoing clampdown and fears that widespread acceptance of Bitcoin and other digital currencies will be delayed because of concerns about their environmental impact,” noted analyst FawadRazaqzada at trading site ThinkMarkets.

Last month China’s cabinet, the State Council, said it would crack down on cryptocurrency mining and trading as part of a campaign to control financial risks. Some analysts have warned of potential further falls in the price of Bitcoin due to a price chart phenomenon known as a “death cross”, which occurs when a short-term average trendline crosses below a long-term average trendline.

Other cryptocurrencies also fell as investors worried about tougher regulation of digital currencies around the world.Separately, the auction house Sotheby’s said that a rare pear-shaped diamond that is expected to sell for as much as $15m can be bought at an auction next month using cryptocurrencies. It is the first time that such a large diamond has been offered in a public sale with cryptocurrency.

Digital currencies like Bitcoin often make headlines for the massive swings in their value, but beyond the intrigue of skyrocketing and plummeting prices the rising popularity of cryptocurrencies poses serious questions for financial institutions and monetary policy. Eswar Prasad joins David Dollar for a conversation on the digitalization of money and what digital currencies could mean for the future of cash, international payments, and the strength of the U.S. dollar. Prasad also explains why some central banks have hesitated to introduce digital currencies while others have embraced them.

DAVID DOLLAR: Hi, I’m David Dollar, host of the Brookings trade podcast Dollar & Sense. Today, my guest is Eswar Prasad, an economics professor at Cornell and a senior fellow in the global development wing at Brookings. Eswar has recent op-eds in The New York Times and The Washington Post about digital currencies, and he has a new book coming out in September, “The Future of Money.” So that’s our topic today. Thanks for joining the show, Eswar.

ESWAR PRASAD: Thanks for having me, David. Always a pleasure talking to you.

DOLLAR: So let’s start with Bitcoin because it has gotten so much attention recently with the wild swings in prices. What’s going on with that? Is Bitcoin money? Is Bitcoin the future of money?

PRASAD: So Bitcoin is an interesting form of money. When it was created back in 2009, the objective of its creator or creators—whoever that might be, we don’t know yet—was to create a medium of exchange that could bypass a trusted authority, such as a central bank or a financial institution, and allow people to transact using just their digital identities. This was a very alluring prospect at the time because right after the global financial crisis it seemed like trust was shaken in both central banks and commercial banks as well.

The remaining portion of the interview is available at: https://www.brookings.edu/podcast-episode/digital-currencies-are-transforming-the-future-of-money/?utm_campaign=Brookings%20Brief&utm_medium=email&utm_content=135351819&utm_source=hs_email

Amazon founder Jeff Bezos paid no income tax in 2007 and 2011. Tesla founder Elon Musk’s income tax bill came to zero in 2018. And financier George Soros went three straight years without paying federal income tax, according to a report from the nonprofit investigative journalism organization ProPublica. Overall, the richest 25 Americans pay less in tax — 15.8% of adjusted gross income — than many ordinary workers do, once you include taxes for Social Security and Medicare, ProPublica found.

An anonymous source delivered to ProPublica reams of Internal Revenue Service data on the country’s wealthiest people, including Warren Buffett, Bill Gates, Rupert Murdoch and Mark Zuckerberg. ProPublica compared the tax data it received with information available from other sources. It reported that “in every instance we were able to check — involving tax filings by more than 50 separate people — the details provided to ProPublica matched the information from other sources.’’

Using perfectly legal tax strategies, many of the uber-rich are able to whittle their federal tax bills down to nothing or close to it. Soros went three straight years without paying federal income tax; billionaire investor Carl Icahn, two, ProPublica finds. The findings are sure to heighten the national debate over the vast and widening inequality between the very wealthiest Americans and everyone else. ProPublica reports that the tax bills of the rich are especially low when compared with their soaring wealth — the value of their investment portfolios, real estate and other assets.

The Biden administration said it is investigating how tax information from several of the world’s richest people — including Jeff Bezos, Elon Musk and Warren Buffett — was leaked to the public. “The unauthorized disclosure of confidential government information is illegal,” said Treasury spokeswoman Lily Adams. “The matter is being referred to the Office of the Inspector General, Treasury Inspector General for Tax Administration, Federal Bureau of Investigation, and the US Attorney’s Office for the District of Columbia, all of whom have independent authority to investigate.”

The investigation comes after a report that showed new information from a trove of never-before-seen IRS records. Earlier Tuesday, ProPublica reported on exclusively obtained IRS documents which showed how the likes of Bezos, Musk, Buffett, Bill Gates, George Soros, Mark Zuckerberg and Michael Bloomberg have legally avoided paying income tax.”Any unauthorized disclosure of confidential government information by a person of access is illegal and we take this very seriously,” White House press secretary Jen Psaki told reporters during Tuesday’s briefing.

Psaki also reiterated the Biden administration’s stance on having wealthy Americans pay more taxes to fund the President’s proposals.  “I’m not going to comment on specific unauthorized disclosures of confidential government information. I can tell you that, broadly speaking ,we know that there is more to be done to ensure that corporations, individuals who are at the highest income are paying more of their fair share. Hence, it’s in the President’s proposals, his budget and part of how he’s proposing to pay for his ideas,” Psaki said.

Bitcoin, the original cryptocurrency, was launched in 2009. Today, there are thousands of cryptocurrencies with a total value of about $2 trillion. The surge in their prices earlier this year minted tens of thousands of cryptocurrency millionaires—at least on paper. Cryptocurrencies might turn out to be a massive speculative bubble that ends up hurting many naive investors. Indeed, many cryptocurrency fortunes have already evaporated with the recent plunge in prices. But whatever their ultimate fate, the ingenious technological innovations underpinning them will transform the nature of money and finance.

Myth No. 1

A cryptocurrency is real money that can be used for payments.

Cryptocurrencies such as bitcoin and Ethereum were designed as a way to make payments without relying on traditional modes such as currency notes, debit cards, credit cards or checks. The bitcoin white paper, which set off the cryptocurrency revolution, envisions an electronic payment system that allows “any two willing parties to transact directly with each other without the need for a trusted third party,” cutting governments and banks out of the financial loop. The website Pymnts claims, “Blockchain IS the future of the payments industry,” a reference to the computational technology that undergirds cryptocurrencies.

In fact, it has become very expensive and slow to conduct transactions using cryptocurrencies. It takes about 10 minutes for a bitcoin transaction to be validated, and the average fee for just one transaction was recently about $20. Ethereum, the second-largest cryptocurrency, processes transactions slightly faster but also has high fees.

Moreover, wild swings in the values of most cryptocurrencies make them unreliable as a means of payment. In late April, the price of a Dogecoin was 20 cents. It tripled in the next two weeks and then fell to half that peak value ten days later. It is as though a $10 bill could buy you just a cup of coffee one day and a lavish meal at a fancy restaurant just a few weeks later. Even on a calmer, more typical day, the value of a major cryptocurrency such as Ethereum might fluctuate by 10 percent or more, making it too unstable to be practical. Recently, Elon Musk announced that Tesla would no longer accept bitcoin as a form of payment, reversing a policy it had implemented earlier in the year. The value of a single coin almost immediately plummeted. A Chinese crackdown on cryptocurrencies then briefly took another one-third off the price in just one day.

Myth No. 2

Cryptocurrencies are a good investment.

Investment funds in bitcoin and other cryptocurrencies have proliferated. Even major banks such as Goldman Sachs and Morgan Stanley are getting into the game. And you would certainly have made a fantastic return if you had bought any of the major cryptocurrencies last year. A typical article in the Motley Fool debates not whether cryptocurrencies are a good investment but “which one is right for you.” The website Business Mole claims: “Even with adjustments made, Bitcoin and Ethereum are very profitable. It’s simple.”

But beware. Part of the allure seems to be that, like gold, the supply of most cryptocurrencies is tightly controlled (by the computer programs that manage them). For instance, about 18.5 million bitcoin have been created so far, and there will eventually be a maximum of 21 million bitcoin. This is a cap set by the computer program that manages the supply of the currency.

Scarcity by itself is not, however, enough to create value—there has to be demand. Since cryptocurrencies cannot easily be used to make most payments and have no other intrinsic uses, the only reason they have value is because many people seem to think they are good investments. If that changed, their value could quickly drop to nothing.

Myth No. 3

Bitcoin is fading. Meme coins are the future.

Bitcoin is now seen as the granddaddy of cryptocurrencies, and investors (or speculators, more precisely) are piling into other cryptocurrencies such as Dogecoin. In 2019, Investopedia claimed that bitcoin was “losing its power as the driving force of the cryptocurrency world.” “Bitcoin And Ethereum Are Being Left In The Dust ByDogecoin,” reads a recent Forbes headline.

Dogecoin and other such cryptocurrencies, which are simply built around memes (Dogecoin, with its ShibaInu dog mascot, references the “doge” meme), don’t even make a pretense of being usable in financial transactions. And there is no clear constraint on the supply of these coins, so their prices surge or crash on random events such as tweets from Musk. The valuations of meme currencies seem to be based entirely on the “greater fool” theory—all you need to do to profit from your investment is to find an even greater fool willing to pay a higher price than you paid for the digital coins.Bitcoin’s technology does seem outdated compared with some of the newer cryptocurrencies that enable greater anonymity for users, faster transaction processing and more sophisticated technical features that facilitate automatic processing of complex financial transactions. For all its flaws, however, bitcoin remains dominant: It accounts for nearly half of the total value of all cryptocurrencies.

Myth No. 4

Cryptocurrencies will displace the dollar.

Morgan Stanley’s chief global strategist, Ruchir Sharma, has argued that bitcoin could end the dollar’s reign—or at least that the “digital currency poses a significant threat to [the] greenback’s supremacy.” A Financial Times headline proposes, even more ominously, that “Bitcoin’s rise reflects America’s decline.”Cryptocurrencies are not backed by anything other than the faith of the people who own them. The dollar, by contrast, is backed by the U.S. government. Investors still trust the dollar, even in hard times. As one illustration, domestic and foreign investors continue to eagerly snap up trillions of dollars in U.S. Treasury securities even at low interest rates.

New cryptocurrencies called stablecoins aim to have stable values and therefore make it easier to conduct digital payments. Facebook plans to issue its own cryptocurrency, called Diem, that will be backed one for one with U.S. dollars, giving it a stable value. But the value of stablecoins comes precisely from their backing by government-issued currencies. So while dollars might become less important in making payments, the primacy of the U.S. dollar as a store of value will not be challenged.

Myth No. 5

Cryptocurrencies are just a fad and will fade away.

Warren Buffett has compared cryptocurrencies to the 17th-century Dutch tulip craze, while Bank of England Governor Andrew Bailey cautioned, “Buy them only if you’re prepared to lose all your money.” Economist NourielRoubini called bitcoin “the mother or father of all scams” and even criticized its underlying technology.

Cryptocurrencies may or may not persevere as speculative investment vehicles, but they are triggering transformative changes to money and finance. As the technology matures, stablecoins will hasten the ascendance of digital payments, ushering out paper currency. The prospect of competition from such private currencies has prodded central banks around the world to design digital versions of their currencies. The Bahamas has already rolled out a central bank digital currency, while countries like China, Japan and Sweden are conducting experiments with their own official digital money. The dollar bills in your wallet—if you still have any—could soon become relics.

Even transactions such as buying a car or a house could soon be managed through computer programs run on cryptocurrency platforms. Digital tokens representing money and other assets could ease electronic transactions that involve transfers of assets and payments, often without trusted third parties such as real estate settlement attorneys. Governments will still be needed to enforce contractual obligations and property rights, but software could someday take the place of other intermediaries, including bankers, accountants and lawyers.

After years of outright dislike for cryptocurrencies, India’s central bank appears to have had a change of heart. On May 31, the Reserve Bank of India (RBI) told banks and other financial institutions in the country that they should not cite its 2018 circular that barred them from dealing with cryptocurrencies while cautioning customers against virtual coins. The 2018 circular was struck down by the Supreme Court in March 2020, which made it invalid.

“It has come to our attention through media reports that certain banks/ regulated entities have cautioned their customers against dealing in virtual currencies… by referring to the RBI circular dated April 06, 2018 (pdf). Such references to the above circular by banks/ regulated entities are not in order as this circular was set aside by the supreme court,” the latest RBI circular read.

The cryptocurrency ecosystem in India is interpreting the RBI’s stance as a support for the industry. “This is positive news for the entire crypto industry—businesses, stakeholders, and investors. Investing in crypto has always been 100% legal in India and the new RBI circular clearly confirms the right to do business with crypto firms,” said AvinashShekhar, Co-CEO at ZebPay.

RBI’s cryptocurrency stance

India’s central bank as well as the country’s government have never supported virtual coins. Besides the 2018 circular that nearly stifled the cryptocurrency ecosystem in India, RBI has time and again issued warnings against investments into bitcoins and other virtual coins.

In 2017, India’s then-finance minister ArunJaitley had said the government “does not recognise Bitcoin as legal tender or coin and will take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payments system.”But the central bank perhaps thought it ethical to warn banks against illegally quoting an outdated circular.

RBI’s recent statement came after several leading Indian banks, including the State Bank of India and HDFC Bank, sent emails to their customers warning them against the use of cryptocurrency. The banks cited RBI’s 2018 circular in these emails stating that users who deal in virtual currencies may face account suspension.There have also been reports that WazirX, India’s largest cryptocurrency bourse, faced many issues with financial transactions with its banking partners due to the confusion related to the RBI’s earlier notification.

“The crypto industry has been facing a lot of issues when it comes to using formal banking channels for trades and this circular will clear the air. RBI’s stance on crypto asset trading was not changed since the supreme court order in March 2020 and it was highly unpleasant to see banks pulling the plug on crypto exchanges which impacted millions of investors across the country,” said ShivamThakral, CEO of BuyUcoin, a Delhi-based cryptocurrency exchange.