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India’s eRupee pilot is rigged
Also in today’s edition: A bleak economic forecast; Vietnam’s Cold War re-up
Good morning! The heat wave in north India is giving bats a beating. According to The New Indian Express, scores of bats in Kanpur's Nana Rao Park are dying because of the mercury levels. The carcasses are piling up so fast that locals have started complaining about the stench. And it's not just Kanpur. New Delhi is also witnessing bat fatalities. Experts fear that too many bats dropping dead like flies will disrupt the ecosystem. Great, as if we needed another reason to hate this season.
🎧 Indian banks are inflating metrics and cooking the books. Also in today’s edition: Putin’s bonhomie with Kim Jong Un. Tune in to Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.
Soumya Gupta, Anup Semwal, and Roshni Nair also contributed to this edition.
The Market Signal*
Stocks & Economy: Asian currencies are having a tough time. The rupee fell to a record low on Thursday as the dollar gained in strength across the board. Softer interest rates in Europe, combined with growth in the US economy, added strength to the greenback.
The Japanese yen has been sliding too. It lost value for the sixth consecutive day even as speculation rose that the central bank could intervene if it falls any further. The US has, meanwhile, added the yen to the list of currencies it is tracking for manipulation.
The Chinese yuan, which is a managed currency, recovered after the People’s Bank of China propped it up. It is still at its lowest level in eight months.
Asian equities were mixed in morning trade with Japan’s Nikkei 225 the only green patch on a red board. The GIFT Nifty indicates a flat opening for Indian shares.
BANKING
Federal Schemes In Fudge-Making Folly
An Article 14 investigation — part one of two — reveals that the Centre’s financial inclusion schemes, including eRupee and the Kisan Credit Card (KCC), are little more than smoke and mirrors. As with the ATM crisis, the rot here is of the Centre’s own making. Government and RBI pressure to showcase digital schemes as success stories pushed managers and employees to commit fraud for metrics’ sake.
Explosive: Canara Bank (CB) and Bank of Baroda staffers were coerced to make a fixed number of eRupee transactions daily. This resulted in eRupee transactions hitting the one million mark on December 27, 2023.
CB, alongside Punjab & Sind Bank, Bank of Maharashtra, and several rural banks also allegedly sanctioned KCC loans to ineligible individuals and forged documents to whitewash non-performing asset numbers. Customers were enrolled in schemes such as the Atal Pension Yojana and Pradhan Mantri Suraksha Bima Yojana without their consent.
ECONOMY
The Have-Nots Have No Hope
Pandemic over, a historic third term for Narendra Modi. Isn’t this India’s time to shine? No. In a poll of independent economists, Reuters found a majority have little (or no) confidence that India’s historically high economic inequality will reduce in the coming years.
Almost all respondents said unemployment is India’s biggest economic challenge. Besides, India’s official 3.2% unemployment rate is probably incorrect; the Centre for Monitoring Indian Economy says it is likely closer to 7%.
No respite: What about all that free food going to 80 crore households? Mint found that such welfare policies have had little to no impact in most states. The gap between the top and bottom 10% households is getting frighteningly wide in richer states and is lower only in already poorer states like Bihar and Chhattisgarh.
Reminder: The World Inequality Lab reported we are more unequal today than we were under British rule.
GEOPOLITICS
Bros In Arms
The year 2024 is likely to be a landmark one for global relationships, as they get remoulded and restructured amid intense superpower rivalry.
Russian President Vladimir Putin signed a defence agreement with North Korean leader Kim Jong Un during his first visit to that country this week. The two countries have pledged to help one another should they face attacks from a third nation.
On the second leg of his tour, Putin visited Vietnam and sealed a slew of energy deals, including one to build a nuclear technologies centre. Russia will also supply military equipment to Vietnam.
The Signal
Russia has stitched up close relations with a bunch of countries inimical to its arch rival, the US. The list includes Iran, which helped build an armed-drones factory in Russia’s Tatarstan region, China, with which it has pledged unlimited friendship, and Kim’s North Korea, also an arms supplier to Moscow.
But Vietnam is different. It has hosted US President Joe Biden, Chinese President Xi Jinping and now Putin within 10 months. Despite territorial disputes with its neighbour, it is a key connector economy and is building faster connectivity with Chinese industrial centres. Vietnam hosting Putin has not gone down well with Washington, but Hanoi has ignored its concerns. As more countries choose to prioritise national self-interest and cooperate with Russia and China, the West’s ability to financially weaken the two will erode, blunting the sanctions regime and trade shackles.
FYI
Leaky Binders: The question paper for the UGC NET exam held on June 18 had been circulating on Telegram and the ‘dark net’, education minister Dharmendra Pradhan said; a high-level committee will probe the National Testing Agency for this and other competitive exam leaks.
Freed: A Delhi court granted bail to Delhi chief minister Arvind Kejrwal in the excise policy corruption case.
Fat profits: Indian pharma firm Biocon is looking for a partner in China to test generic versions of weight-loss drugs Ozempic and Wegovy, Reuters reported.
🤝: Silicon Valley VC firm General Catalysts has acquired local counterpart Venture Highway to invest $500 million - $1 billion in India.
Level up: With Rs 18,000 crore in the bag, Vodafone-Idea is strengthening its 4G coverage in Uttar Pradesh and Uttarakhand, among its top priority markets.
THE DAILY DIGIT
51°C+
The temperature in Mecca this week. Scorching heat in Saudi Arabia has claimed hundreds of lives during Haj season, with 530 Egyptians alone dying during pilgrimage. Heat waves across the Northern Hemisphere have also resulted in Arizona and Serbia forecasting highs of 45.5°C and 40°C, respectively. (Reuters)
FWIW
Date jugglers: Ethiopians are living it up in 2016. No joke. They're truly seven years and eight months behind the rest of the world. Why? Blame it on ancient church shenanigans. Back in 500 CE, the Roman church tweaked its maths, but the Ethiopian Orthodox Church shrugged that off. Besides, unlike the Gregorian calendar, the Ethiopian version is elegantly simple: 12 months of 30 days each, with one extra month accommodating the remaining 5 or 6 days of the year. The sole challenge of having a unique calendar arises for those in urban areas who interact with international businesses. They must simultaneously navigate two different dates daily. While this may seem daunting, Ethiopians consider it a routine aspect of life.
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