Welcome to Weekend Bites. We will try something different this weekend. No, this Bite does not have two “Stories of the Week”. That was the trick pulled in last weekend’s Bites. Today, we offer you a platter of our opinion pieces, not news reports, for the Story of the Week. Tuck in!
Story of the week: To believe or not to believe
Before we begin, a bit about T N Ninan.
Ninan has been the longest-serving Editor of this newspaper. He claims to be leading a life in retirement now, but his news sense remains sharp enough to etch the walls of our conference room if he happens to drop by.
In his Weekend Ruminations last Saturday, whose title was taken from Ogden Nash’s description of ketchup coming out of a bottle — “First a little, then a lottle” — Ninan pointed out that at the start of every systemic crisis the initial noises from regulators and commentators are soothing. That was the case in large-scale crises — the global financial crisis of 2008, the Asian financial crisis of 1997-98 — as well as the smaller ones such as the “Tequila crisis” that started in Mexico and swept through Latin America in the early 1980s.
In the early days of the current banking crisis that began with the fall of the Silicon Valley Bank (we delved into it in last weekend’s Bites), regulators and commentators have been telling us not to worry, no matter how many banks fall. To believe or not to believe is the question.
As you ponder the answer, keep two things in mind. As Ninan pointed out, the lessons of the previous crises are not comforting. Secondly, as James Grant once said: “Progress is cumulative in science and engineering, but cyclical in finance.”
Sajjid Chinoy, Chief India Economist at JP Morgan, is more upbeat in his article. He says the current resilience of the global economy is not appreciated enough. US labour markets remain red hot, and the country’s growth is again tracking a healthy 2.5% this quarter and global growth 3.5%. Where is the much-anticipated slowdown, he asks.
A BS Editorial said the US banking system had idiosyncratic flaws, caused in part by Washington’s decision to regulate only certain banks as systemically important. One bank in Europe, however, stood apart from the description. And that was Credit Suisse. Its collapse is not necessarily a reflection of a broader contagion, but the nature of its end will have repercussions for the banking sector globally.
So, what can regulators do? T C A Srinivasa-Raghavan says the West can learn from India before adding, in true TCA-style, that it won’t.
Maybe TCA should not be so despondent. Another BS Editorial said the US Fed’s rate-setting body made the right decision in increasing the target range for the federal funds rate by 25 basis points on Wednesday.
Is all this making you think hard? If that is the case, our opinion pieces have done their job.
In other news…
This is hot off the press. The Finance Bill, 2023, cleared the Lok Sabha without a discussion on Friday, giving effect to tax proposals for 2023-24. A total of 64 amendments were proposed to the Bill, including the one that seeks withdrawal of long-term tax benefits on certain categories of debt mutual funds and increasing securities transaction tax on selling option and future contracts. The finance ministry had a clarification on STT, though.
Congress leader Rahul Gandhi was disqualified as an MP after he was convicted and handed a two-year jail term in a criminal defamation case. In a rally in Karnataka ahead of the 2019 Lok Sabha elections, Gandhi had said, “Nirav Modi, Lalit Modi, Narendra Modi… how come they all have Modi as a common surname? How come all thieves have Modi as the common surname?”
The UN’s IPCC issued its final warning: Climate efforts by nations are not enough to limit global warming to 1.5 degrees Celsius above pre-industrial levels and it is becoming harder to contain the average temperature rise below 2 degrees Celcius.
Tech that: Word from the world of technology and start-ups
India’s IT professionals are pouring out their “Panic, anxiety” on a community app after Accenture said on Thursday it will lay off 19,000 globally.
The Tata group plans to inject $2 billion into its super-app Tata Neu, which allows users to buy groceries and gadgets as well as flight tickets and restaurant bookings from brands under Tata.
Five senior executives left Nykaa — the company called it business as usual — at a time it is facing increased competition and its stock price has plummeted.
Watch it: Bisleri’s unquenched thirst
Still on the subject of the Tata group, it was reported to be in talks to acquire Bisleri, the popular water brand, in a deal that could be worth up to Rs 7,000 crore. It was not to be. Both companies said they had ended all talks. The deal would have made Tata Consumer Products the largest FMCG company in India, overtaking HUL. So, what are Bisleri’s options now? Watch it on The Morning Show.
What is Suveen obsessing over these days?
Founders really need to put more thought in naming their start-ups. What sort of a name is PhysicsWallah? However, to be fair to its founder and CEO, Alakh Pandey, he did not name the company Alakh’s.
Nomenclature is not the only area where PhysicsWallah, the unassuming underdog, seems to be outdoing Byju’s, the world’s most valued EdTech company founded by Byju Raveendran. While all the signs point to Byju’s tottering, PhysicsWallah looks better than steady.
It said at the end of January it planned to hire 2,500 employees in the first quarter of this year (EdTech in general is strewn with laid off employees). A month later, it announced a joint venture with Jodhpur-headquartered Utkarsh Classes. And now it is said to be in talks to raise $250 million at a valuation three times that in its last funding round.
If PhysicsWallah succeeds, it will be quite a feat in today’s funding scenario. There have been 231 funding deals worth $2.14 billion for start-ups this year, between January 1 and March 21. But this has failed to perk up sentiment, with entrepreneurs as well as investors believing the so-called funding winter, marked by a sharp decline in money flowing into start-ups, is here to stay awhile.
For one, the funding this year pales in comparison to the $10.5 billion that poured in through 696 deals during January 1-March 21 last year. Secondly, there has been no unicorn — start-ups valued at more than $1 billion — that would grab headlines and fire public imagination. In fact, there has been none since November.
However, on current form, PhysicsWallah appears to be a beacon of brightness among EdTech start-ups that began to get enveloped in gloom once students returned to physical classrooms.
Have a fun weekend and a productive week ahead. This is Suveen Sinha, Chief Content Editor, Business Standard, signing off. See you next Saturday. Please send comments, news, or views about anything — from disqualified MPs to start-ups with eponymous names — to firstname.lastname@example.org.