India's cash-rich 1%, 4 Times wealthier than Poorest 70%

Releasing the study ‘Time to Care‘, ahead of the 50th Annual Meeting of the World Economic Forum (WEF), rights group Oxfam says that India’s richest 1 per cent hold more than four-times the wealth held by 953 million people who make up for the bottom 70 per cent of the country’s population. The total wealth of all Indian billionaires is more than the full-year budget.

Crux of the Matter
  • Oxfam said its calculations are based on the latest data sources available, including from the Credit Suisse Research Institute’s Global Wealth Databook 2019 and Forbes’ 2019 Billionaires List.
  • The findings also revealed that the world’s 2,153 billionaires have more wealth than the 4.6 billion people who make up 60 % of the planet’s population.
  • Oxfam India CEO Amitabh Behar has said that “The gap between rich and poor can’t be resolved without deliberate inequality-busting policies, and too few governments are committed to these.”
  • Reportedly, it would take a female domestic worker 22,277 years to earn what a top CEO of a technology company makes in one year.
  • Getting the richest one per cent to pay 0.5 % extra tax on their wealth over the next 10 years would equal the investment needed to create 117 million jobs in sectors such as elderly and childcare, education and health.
  • Governments must now prioritise care as being as important as all other sectors in order to build more human economies that work for everyone, not just a fortunate few.

Time to Care report talks about Unpaid and underpaid care work and the global inequality crisis. This great divide is based on a flawed and sexist economic system that values the wealth of the privileged few, mostly men, more than the billions of hours of the most essential work – the unpaid and underpaid care work done primarily by women and girls around the world. Tending to others, cooking, cleaning, fetching water and firewood are essential daily tasks for the wellbeing of societies, communities and the functioning of the economy. The heavy and unequal responsibility of care work perpetuates gender and economic inequalities, which has to change. Governments around the world should invest in national care systems to address the disproportionate responsibility for care work done by women and girls. Thereby progressive taxation, including taxing wealth and legislating in favour of carers, must be introduced. More Info

Zomato acquires India's Operations of Uber Eats

Online food delivery platform Zomato acquired the Indian operations of Uber Eats, the food delivery platform run by Uber, for around $350 million (Rs 2,485 crore). The merger will consolidate the market and will give a strong competition to Swiggy.

Crux of the Matter
  • Uber Eats will cease to exist as a separate brand locally. and its users on its platform will be redirected to Zomato’s app.
  • Zomato will not absorb Uber Eats’ team in India resulting in reallocation or laying off of around 100 executives.
  • Both combined Zomato and Uber Eats India is expected to cover nearly 50-55% market share in terms of the number and value of orders.
  • Uber Eats had a stronger hold compared to Zomato in parts of Tamil Nadu, Kerala, and Madhya Pradesh, with about 30% market share.
  • Uber Eats had tried selling the business to Swiggy but the deal could not be completed.
  • Uber had projected an operating loss of Rs 2,197 crore in its food delivery business for the five months through December 2019.
  • Uber had halved its annual cash allocation to the food-delivery business in India to $90-120 million, which had a direct impact on the order numbers.
  • Uber had relied heavily on discounting to acquire and retain users. While it could only establish market leadership in some small towns and cities. 
  • Also, at the same time, Uber’s India rival Ola too had pulled its focus away from its food-delivery business, Foodpanda, and started to sell private brands on marketplaces.

Zomato is an Indian restaurant aggregator and food delivery start up founded by Deepinder Goyal in 2008. Zomato provides information, menus and user-reviews of restaurants, and also has food delivery options from partner restaurants in select cities. Zomato has acquired 12 startups globally. In July 2014, Zomato made its first acquisition by buying Menu-mania for an undisclosed sum. The company pursued other acquisitions such as and for a combined US$3.25 million. In September 2014, Zomato acquired Poland-based restaurant search service Gastronauci for an undisclosed sum. Zomato also acquired Seattle-based food portal Urbanspoon for an estimated $60 million in 2015. More Info

FDI limit raised to 100% for Bharti Airtel

The Department of Telecommunications (DoT) on 20th January approved the increase of Foreign Direct Investment (FDI) limit for Bharti Airtel from 49% to 100%.

Crux of the Matter
  • RBI granted approval for FPls (Foreign Portfolio Investors)/Flls (Foreign Institutional Investors) to invest in up to 74% of the paid-up capital.
  • Currently, foreign ownership in Bharti Airtel is 44.28%
  • Bharti Airtel is seeking the government’s approval to raise ₹4,900 crores from SingTel and other overseas companies.
  • The decision comes at the time when there is a decline in promoter and promoter group holding in Airtel to 58.98% from 62.70%.
  • It is after the company raised $2 billion through a private placement of shares to investors including Citigroup, GIC, Fidelity, Goldman Sachs, BlackRock, Schroder, Warburg Pincus and Segantii Capita, reports say. 
  • Bharti Airtel has pending dues of more than Rs35,000 crores to be paid to the government before a January 23 deadline for license fees and spectrum dues.

Bharti Airtel Limited, also known as Airtel, is an Indian global telecommunications services company based in Delhi, India. It operates in 18 countries across South Asia and Africa, and also in the Channel Islands. Airtel is credited with pioneering the business strategy of outsourcing all of its business operations except marketing, sales and finance and building the ‘minutes factory’ model of low cost and high volumes. The strategy has since been adopted by several operators. It is the third-largest mobile network operator in India and the second-largest mobile network operator in the world with over 411.42 million subscribers. More Info

RBI to release Minutes of Central Board Meetings

RBI Governor Shaktikanta Das decided to disclose minutes of the meeting of RBI central board directors which improve public awareness about the functioning of RBI and bring accountability to the directors.

Crux of the Matter
  • The Minutes of Meetings would be placed on the RBI’s website in terms of provisions of Section 4 of the RTI Act.
  • The step to publish minutes of the meeting may also help the government and the RBI to preempt difficult questions on various issues such as transfer of surplus RBI capital reserves to the government.
  • RBI central board meetings have been controversial in recent times, especially after the previous RBI governor Urjit Patel resigned due to alleged difference of opinions on policy matters with the government.
  • RBI routinely publishes the minutes of the Monetary Policy Committee’s bi-monthly meetings on monetary and credit policy. However, now RBI will release the minutes of the meetings of the central board, which has members representing the government as well.
  • The central bank on January 19 released minutes of the meeting held between RBI central board members held in Chandigarh.
  • The Board discussed the role of Payment Banks and Small Finance Banks in enhancing financial inclusion, annual activity reports of Local Boards, the various sub-committees of the Board.

The Reserve Bank of India (RBI) is India’s central bank, which controls the issue and supply of the Indian rupee. RBI is the regulator of entire Banking in India. RBI plays an important part in the Development Strategy of the Government of India. RBI regulates commercial banks and non-banking finance companies working in India. It serves as the leader of the banking system and the money market. The RBI carries out India’s monetary policy and exercises supervision and control over banks and non-banking finance companies in India. More Info

Pakistan lobbies the US to get out of FATF grey list

Pakistan is strongly lobbying with the United States to remove itself from the grey list of the Financial Action Task Force (FATF). Pakistan also has urged the US to review its travel advisories for Pakistan and encourage foreign investment. If not removed from the list by April 2020 Pakistan may face a severe economic blacklist.

Crux of the Matter
  • The FATF in 2019 had decided to keep Pakistan on its ‘Grey’ list for failure to curb funding to terror groups LeT, JeM and others.
  • A Pakistani delegation arrived in Beijing for the 3-day face-to-face talks with the FATF Working Group that would start on January 21.
  • The briefing will review whether Pakistan has complied with an earlier agenda presented to it.
  • Pakistan has submitted a 650-page review report to the FATF on January 8
  • This FATF meeting in Bejing is important as it leads to a plenary meeting in Paris in April where the world body will decide whether Pakistan remains on the list or is taken off.
  • Blacklisting by FATF would result in a freeze of capital flowing to Pakistan, slow progress in the refinancing of loans from major bilateral creditors, and increased headwinds from a weaker global economic backdrop.
  • Pakistan foreign minister Shah Mehmood Qureshi met the US Secretary of State Mike Pompeo and National Security Adviser Robert O’Brien and hoped that the US would back their efforts to get out of the grey list.

The Financial Action Task Force is an intergovernmental organization founded in 1989 on the initiative of the G7 to develop policies to combat money laundering. In 2001 its mandate expanded to include terrorism financing. It monitors progress in implementing the FATF Recommendations through “peer reviews’ of member countries. The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. More Info