1 India growth faces cash crunch heat (Sheetal Agarwal in Business Standard) India’s move withdrawing Rs 500 and Rs 1,000 currency notes, popularly referred to as demonetisation, has dashed expectations of a pick-up in consumption in the second half of the current financial year.
Led by multiple reasons like a normal monsoon after two weak years, higher pay for government employees, increased infrastructure spending and so on, economists and market participants were hoping for a pick-up in India’s gross domestic product and corporate earnings. On the contrary, experts now believe GDP growth in the second half could be lower than that in the first half of this fiscal by a mile, and have lowered their estimates for FY17.
“We estimate that over a year, economic growth can fall by 70-100 basis points, with the maximum impact in the immediate two-quarters, which will see a large contraction in effective money supply,” says Pranjul Bhandari, Chief India Economist, HSBC Securities and Capital Markets.
Sajjid Z Chinoy, Chief India Economist, JPMorgan, says, “Before demonetisation, 10 per cent of GDP came from high-value notes. If even 20 per cent of these do not get returned, the first-round negative wealth shock would be 2 per cent of GDP.” Any such negative wealth shock, however, is expected to depress consumption behaviour, prices of certain asset classes (e.g. real estate), and therefore have secondary wealth effects, he adds.
The cash-heavy sectors such as real estate, jewellery, amongst others could be worst hit from demonetisation and may take a longer time to revive. Though demonetisation will benefit the economy via increased number of tax payers, lower rates which in turn can aid demand and growth, higher financial savings, amongst others; these will accrue on a gradual basis.
The jury is out on the extent of impact demonetisation will have on India’s GDP growth. A lot will also depend on the government and RBI’s reform and policy action to cushion the impact.
2 New age of robots around the corner (Andrew Staples in Gulf News) Robots designed to mimic people are now on the verge of commercial-scale production, UAE University assistant professor Dr Massimiliano Cappuccio says.
Dr Cappuccio said the cost and capabilities of prototype anthropomorphic robots were such that they were almost ready to leave the tech labs and enter the world as luxury items. “There is the promise of reaching critical mass to start mass production, because you will need at least 100,000, even better one million pieces sold, in order to justify the initial expenses to being mass production.
“When we reach that threshold, then industry will have such an interest that any kind of investment — it doesn’t matter how many zeroes — is justified. At that moment, the technology will spiral.
“It’s a matter of a few years. Already the prices of production are going down, little by little, there are a few thousand units, and it’s just about finding an application in everyday life when people really need that robot and that would justify the scale.”
But the development and use of humanoid robots on such a scale posed moral and ethical questions, said Dr Cappuccio, a philosopher who specialises in cognitive science.
“Do we want robots to be anthropomorphic? How anthropomorphic do we want them to be? There is a debate that we don’t want robots to look like humans for different reasons — one reason is that robots are slaves,” Dr Cappuccio said.
“Interacting with robots that act as slaves, there is a moral issue because, even if they don’t have rights, you as a user are putting yourself in a position as if you were exploiting a human agent. The experience is comparable to that of a human exploiting another human, because it looks like a human. That poses ethical questions.”
3 Virtual love beats the real thing (Tracy McVeigh in The Guardian) Japan’s apparently waning interest in true love is creating not just a marriage crisis but a relationship crisis, leading young people to forgo finding a partner and resort to falling for fictional characters in online and video games.
New figures show that more than 70% of unmarried Japanese men and 75% of women have never had any sexual experience by the time they reach 20, though that drops to almost 50% for each gender by the time they reach 25.
According to Professor Masahiro Yamada, a sociologist at Chuo University in Tokyo, who has coined the phrase “stranded singles” for the phenomenon, the rise in virginity rates is matched by a rise in the lack of interest in having any kind of “real” relationship.
Recent research by the Japanese government showed that about 30% of single women and 15% of single men aged between 20 and 29 admitted to having fallen in love with a meme or character in a game – higher than the 24% of those women and 11% of men who admitted to falling in love with a pop star or actor.
The development of the multimillion-pound virtual romance industry in Japan reflects the existence of a growing number of people who don’t have a real-life partner, said Yamada. There is even a slang term, “moe”, for those who fall in love with fictional computer characters, while dating sims allow users to adjust the mood and character of online partners and are aimed at women as much as men.
But Yamada says this is only a small part of the problem, which has its roots in traditional culture. Young people want conventional marriage and will wait for it. They don’t want to cohabit or have children outside marriage – Japan has the lowest rate of babies born outside marriage in the world at 2.2%, compared with Britain’s 47%.
Professor Adrian Favell, a sociologist at the University of Leeds, cautioned against the idea of a dysfunctional generation in Japan, saying that the west liked to exaggerate the “oddness” of young Japanese people. He said that a declining population was not necessarily “bad news”. “Is it unique to Japan for young people to obsess over pop, film stars, and the rest? Or to ‘fall in love’ on the internet? I don’t think so,” he said.