In an exclusive interview with N Janardhan Rao, Deputy Editor, The Global ANALYST, Soumyajit Niyogi, Director, Core Analytical Group, India Ratings & Research (Fitch Group), Mumbai, talks about factors behind the current inflationary environment in the economy. Does he see the recent correction, albeit not to a major extent, in global commodity prices to sustain? If not, then will it force the RBI to continue with its recent hawkish stance? Does he see it going slow on the same after a sudden bout of repo rate hikes recently in order to avoid engendering stagflation? What are his views on the so-called K-shaped recovery in demand and the impact of 'imported' inflation on the economy? And what is his outlook on liquidity in the system, repo rate and the headwinds before the economy, besides a range of other issues? Read on...

Core inflation continues to be way above RBI's comfort zone. Given that, what options does it have right now to bring headline retail inflation within the targeted 2-6% band?

The dynamics of domestic inflations are mixed, and apparently, there is a limited risk of overheating the economy. The drivers of inflation are globally broken trade channels, supply-side disruptions, a consumption boom in the US, and an unprecedented stimulus by monetary and fiscal authorities in advanced economies during the pandemic.

RBI has taken a hawkish stance and strategy to address inflation, which has resulted in the sharpest hike in three months by 140 bps. That has been further complimented by the normalization of liquidity contour by hiking CRR and bringing back the Repo-Reverse Repo corridor to 25 bps. As a result, short-term money market rates are up by around 300 bps and

For the individual consumer, ubiquitous high-speed connectivity when combined with high resolution videos on larger screen smartphones will deliver great experience. However, it is actually in the enterprise area that 5G is expected to create a big difference. With high speed and low latency and concurrent technological progress in AI and ML, 5G has the potential to transform medical, robotics, digital and analytics sectors/services.

The recently concluded 5G auctions generated 1.5 lakh cr spectrum revenue for the government, the highest ever. Reliance Jio emerged as the top bidder, buying up 59% of total value of spectrum; Bharti was a distant second buying spectrum with 29% share and Vodafone-Idea came a poor third with 12.5% share. Adani Data Networks' surprise entry into the fray created some excitement, though in the end they settled for an inconsequential 0.15% share, consistent with their stated intent of captive use. The immutable principle in telecom is that network/spectrum capacity share will determine the market share. Reliance Jio has 46% share of the Pan-India spectrum. More importantly, with the debilitated financial health of Vodafone and Airtel to a limited extent, the incumbents do not seem to have any chance of punching above their financial weight by buying spectrum resource to bridge the gap.

Core inflation continues to be way above RBI's comfort zone. Given that, what options does it have now to bring headline retail inflation within the targeted 2-6% band?
As per our estimates, core inflation in the last few months has moved within the RBI's target band, though it is still close to the upper end of the band. The central bank has already been taking measures to reduce inflationary expectations by front-loading policy interest rate hikes and reducing liquidity in the system as required. Inflation controlling measures taken by the government/RBI and the reduction in global commodity prices has helped reduce CPI inflation in the last few months.

However, global commodity prices are still at elevated levels. Fear of global recession has resulted in a fall in commodity prices in the last few months. But given that the global supply bottlenecks are still prevailing, it is difficult to predict the future trajectory of the global commodity prices. In the given scenario, RBI and the government would remain cautious and take future actions depending on the evolving domestic and global economic scenario.

A widely held view is that core inflation even over a longer period such as a decade has sustained around 5% and above, notwithstanding periods of economic sluggishness in between. Hence, can it be concluded that it will remain the stickiest part of retail inflation and thus dash any hopes of headline inflation providing succor anytime soon?
The critical factor that had pushed up India's retail inflation strongly in the last few months has been the high global commodity prices. While inflationary pressure started from high global commodity prices, it gradually became broad-based resulting in all components of inflation, including the core, rising sharply. While the inflation pressure has been mainly because of supply-side factors, with economic recovery gathering pace the demand-side is also gathering strength. Core inflation generally tends to be sticky. But the demand-side pressure on inflation is still not very strong as economic revival is still at a nascent stage. Hence, if there is a further correction in global commodity prices on

India looks all set to realize a long-held dream: to emerge as the destination next for global semiconductor manufacturers, courtesy the Modi government's ambitious India Semiconductor Mission.

It is our collective aim to establish India as one of the key partners in global semiconductor supply chains.
- Narendra Modi, Prime Minister, India

Semiconductors, along with Lithium-ion, inarguably are among the most-sought after materials today. And why not? After all, they power literally every single modern gadget we see around us-from the humble TV remote control to the connected cars to pacemakers, smartphones to drones to aeroplanes and what not. Hence it is not surprising to see why everyone wants a piece of this crucial component. But unfortunately, the technology to produce them is neither easily available nor does everyone can procure it or develop in-house in a jiffy. For, it calls for massive investments in building R&D capabilities and state-of-the-art facilities, and not to forget a vast talent pool comprising of engineers and designers, in order to produce those powerful yet ever-shrinking tiny transistors. In a latest development, IBM claims to have developed chips measuring only 2 nanometer (nm)-'narrower than a strand of human DNA', according to newatlas.com; most processors are currently based on chip size of 10nm or above-the chip size refers to the gap between transistors which are etched on a tiny thing called processor; smaller the gap, higher the processing size and hence the rush for making smaller chips. But, globally, only a handful of firms and countries could boast of dominance in manufacturing of these diminutive components called microchips. Unfortunately, India has so far remained as a fringe player, notwithstanding its phenomenal success in technology arena and its uncontested status as the world's IT outsourcing powerhouse. However, this will change soon as Prime Minister Narendra Modi-led NDA government at the center launches an ambitious project to woo the new fab (an acronym for fabrication units) capital of the world.

The opportunities for a contrarian investor can be rare and hence patience is a virtue here. However, this investment style is suited only for the sophisticated investors (institutional and high net worth), who can appreciate the risk inherent in the strategy.

The world's best contrarian investor is none other than Warren Buffet. A contrarian investor will be greedy when others are fearful and vice versa. It simply means going against the grain and prevailing wisdom and doing things contrary to what others are doing. While, as a concept, it may appear simple, it is difficult to go against the grain in real life. Buying a stock when others are selling requires a different investing approach and involves behavioral biases. Though the concept aligns mostly with value investing, there are subtle differences between the two. While value investing almost always involves buying stocks 'cheap', contrarian investing sometimes can buy stocks even when it is not cheap. A classic global example would be Volkswagen which lost 46% of its value in 2015 (from €250 in March 2015 to €109 in October 2015 before recovering to € 180 by January 2018) based on the news that it was untruthful about emissions tests in the US. A contrarian investor would have ignored the negative hype and instead would have bought it given the brand strength of such a stock. But that would have involved swimming against all the negative news surrounding the stock. While traditional portfolio management involves a top-down approach, where one checks the economy and industry before committing to a stock, a contrarian investor is a bottom-up person that ignores the broader macro environment and even the industry setting and instead focuses on the stock to the exclusion of its economic and sector environment.

If one has to pursue this investment style, there are some required traits. Most importantly, it includes patience, discipline, conviction and communication. The opportunities for a contrarian investor can be rare and hence patience is a virtue

The Russian invasion of Ukraine and the resulting West-imposed sanctions on Moscow are redrawing trade routes in Asia. Amidst this, a lesser-known North-South Transport Corridor is emerging as a credible, new alternative global trade route. Can it become India's Silk Route?

Amidst the supply chain bottlenecks like the Suez Canal blockage and the skyrocketing prices of shipping containers from Asia to Europe, export-driven nations are searching for alternative routes. Besides, as global trade is revitalizing in the post-Covid world, connectivity projects are gaining more momentum. One such project is the lesser-known International North-South Transport Corridor (INSTC). It is a 7,200-km-long (4,474-mile) network of railroads, highways, and maritime routes that connects Russia and India through Iran. The foundation of INSTC was laid on September 12, 2000 to promote transportation cooperation among the Member States. To the credit of its stakeholders, unlike the China-sponsored Belt and Road Initiative (BRI) projects, the development of the North-South corridors follows a more multilateral and multi-stakeholder approach.

Attracted to the trade potential of East Europe and the Persian Gulf, India began to be actively engaged, especially after the formation of the Eurasian Economic Union (EAEU) Free Trade Agreement (FTA) in 2015, led by Russia. Though the progress of the corridor had been sluggish during the last two decades, it is picking up momentum, of late, driven by several geopolitical and geoeconomic developments. Interconnecting with its East-West counterpart, the North-South routes bring greater cohesion and economic dynamism to the continent. By linking the four poles of Europe, China, India, and Russia plus the EAEU, the North-South corridors can boost a new wave of global trade, in turn, generating positive spillovers for neighboring countries.

The Account Aggregator (AA) business model has the potential to revolutionize the digital lending segment and bring more people and businesses into the formal credit system. It facilitates speedier access to consented data of prospective borrowers, which, in turn, makes assessing a potential applicant's credit risks and processing/sanctioning additional loan applications easier and faster, without actually compromising on safety and due diligence. However, on the flipside, the framework carries the risk of allowing and sharing a huge amount of personal sensitive data and information to a large number of entities, and that too for no definite purpose.

The Account Aggregator framework was introduced sometime back by the Reserve Bank of India (RBI) to make financial data more accessible by creating data intermediaries called Account Aggregators (AA). Their task is to collect information from the entities called Financial Information Providers (FIP), which hold customers' data, and share the same with various entities called Financial Information Users (FIUs) that are looking for consumer information and data. However, those data and information can only be shared after obtaining the required consent from the consumer. For instance, if a customer wants to apply for a loan, then it will be essential for the lender, FIU, to access the previous financial information/statements of the concerned customer. This previous information is with the customer's existing bank/financial institution, FIP. It is said this will transform the way the whole lending process currently works.

Here's how an AA will help in checking the creditworthiness of the customer and will facilitate the flow of information:

• The FIU will call upon the AA to provide and share the required financial information;
• The AA will ask for consent from the customer for sharing the financial information with the FIU. The AA must interact with the customer using either a mobile app-based or a web-based client;
• If the user gives his or her consent, then AA will request the FIP (the user's bank in this case) to share the financial information;
• The FIP will transfer the encrypted information to the AA; and
• AA will then transfer this information, again encrypted, to the FIU.

While foldable smartphones are an interesting segment and look promising, I don't see it becoming anything more than just one slice of the larger smartphone pie, opines leading international wireless analyst and tech guru Jeff Kagan.

When the first 'Foldable Phone' hit the market a few years ago, it was thought to be the next, big step in the smartphone revolution. All the noise and excitement led us to believe that by now every smartphone maker would have their own foldable phone and most of us would have one. However, while this is an interesting segment and it is growing, I don't see it becoming anything more than just one slice of the larger smartphone pie. That raises several interesting questions.

So far, the foldable smartphone is not proving to be as impactful as the original introduction of the iPhone and Android when launched more than a decade ago, or even the Blackberry, Nokia and Motorola devices years earlier.

Important lesson to understand about future of smartphone
That being said, there is something important and long-lasting we need to understand about the smartphone segment moving forward. First, let's take a longer-term, historical perspective on the smartphone and wireless industry. When iPhone and Android launched more than a decade ago, handset leaders were Blackberry and Nokia. A decade earlier, the leader was Motorola, thanks to its much popular StarTac model, and later Razr. The Motorola StarTac was hot, for a while, then it faded. Years later, when it launched Razr, it too was an instant hit almost immediately. But soon it too went into oblivion. It was the same story in the case of both Blackberry and Nokia: they led the space for a decade, then faded.

It seems the marketplace attention is captured for a limited period of time by whatever is new and exciting. It likes new features and functionality. It likes

Central banks globally have resorted to hiking policy rates to rein in runaway prices. But the problem is this also increases the cost of borrowing for consumers and companies, and could drive weaker companies into bankruptcies and suppress demand across the board. Sure, that may finally reduce inflation but only through a slump!

Is the global inflationary spiral peaking? If it is so, then the indicator is set to fall over the next year. Does that mean the inflation scare was just a momentary blip and that prices will fall enough to return to the levels witnessed before the virus outbreak? Well, that seems to be the view of some investors in financial assets in the US, where the stock market has rallied by as much as 20% from lows in mid-June, while both government and corporate bond yields have steadied. Markets seem to believe in what is called the 'Fed pivot', where the US Federal Reserve, having hiked its policy rate aggressively since April, will now start to end its hikes going into 2023 as inflation subsides.

Certainly, there is evidence to suggest inflation in the US peaked, led by a drop in the Consumer Price Inflation (CPI) rate, which slowed more than expected in July to 8.5% year-over-year from a 40-year high of 9.1% in June. But looking beneath the headline rate, it is less convincing that it is heading downwards, at least at any significant pace. The fall in July was mainly due to falling gasoline prices, although food inflation (10.9%) and electricity price inflation (15.2%) continued to accelerate. Thus, stripping out food and energy, the so-called 'core' inflation rate stayed steady at 5.9%.

Inflation in Europe and elsewhere
Outside the US, there is still little sign of peaking. The Eurozone inflation rate rose in July to 8.9% y-o-y, while the UK rate hit double-digits (10.1%), which prompted the Bank of England to forecast a peak of 13%-plus by early 2023; other forecasters are calling a peak of 15% rate. In Japan, which has endured periods of stagnation and deflation for decades, inflation rose year-on-year to 2.6% in the month of July. This was the 11th straight month of increase in consumer prices and the fastest pace since April 2014.

There is a lot of uncertainty in the technology segment in general, but the high concentration of manufacturing capacity in Taiwan makes the potential conflict between that country and China the biggest near-term potential risk of supply collapse. This builds on top of existing concerns surrounding the pandemic(s) and existing conflicts to create an almost unheard-of level of market uncertainty in the tech segment with chips, microprocessors, SOCs, FPGAs, etc., at high risk of additional disruption, writes Rob Enderle, President and Principal Analyst of the US-based technology advisory firm, Enderle Group.

Analog Devices, a leading US chip manufacturer, recently shocked Wall Street by predicting that economic uncertainty is beginning to impact bookings. However, like most tech firms, it continued to report that demand is outstripping supply, suggesting this is less about a market downturn and more part of the continued logistics problems that the industry is dealing with. Let's talk about why no chip maker is safe from anticipated coming market disruptions.

Chip market exposures
The combined impact of the war in Ukraine and the pandemic has done ugly things to the technology market by substantially reducing the manufacturing capacity of the industry due to worker and raw materials supply shortages and factory shutdowns. Part of the problem was that industry had anticipated a softening of demand that is yet to occur and reduced orders. Spinning up new microprocessor manufacturing lines is neither quick nor easy. On the demand side, there is far more

Today's customers value speed, convenience, seamless and end-to-end experience of availability of funds which will, even if at a marginally higher cost, drive them to the digital lending market, but they need to be educated continuously about the risks involved.

India's digital and fintech revolution is widely appreciated and applauded as it has transformed the banking, financial services, and insurance sectors in the last few years. Starting with the Unified Payments Interface (UPI), India is continuously increasing its digital financial infrastructure, which is considered a public good, to take its benefit to the grassroots level. The impending rollout of fifth-generation (5G) mobile services and fiberization of villages by 2025 will further boost India's steps toward a $1 tn digital economy. The government is actively encouraging this revolution and focused the Union Budget 2022-23 on enhancing the digital ecosystem in the country which is important for driving financial inclusion further to the bottom of the pyramid. The proposed 75 digital banking units in 75 districts, digital currency, and other digital enablers like Open Banking and Open Credit Enablement Network (OCEN) will help India become the digital finance leader nation. Digital advancement has disrupted the lending landscape all over the world including India and the emerging lending business model is based on faster turnaround time and superior customer experience. Digital lending is a remote automated lending process that utilizes digital technology for the complete loan process i.e. customer acquisition, credit underwriting, loan approval, disbursement, and recovery. While the availability of services such as video-KYC, Aadhaar-based KYC and online verification of the Central Registry of Securitization of Assets Reconstruction and Security Interest (CERSAI), tax returns and GST filings have made digital lending smooth, efficient, less cumbersome, and convenient for both the lenders and borrowers, increasing utilization of cutting-edge technologies such as AI, ML, and Big Data analytics by lenders is helping them collect and evaluate data from multiple sources to assess the creditworthiness of an applicant more quickly and efficiently.

Decision-making within organizations is a far more complex, convoluted, mixed-up, tangled, and unpredictable series of processes rather than just being a linear process based on logic and rational analysis. Of course, clear thinking, logic and rational analysis will form part of executives' repertoire of decision-making tools. However, if executives have been schooled to believe that executive decision-making is essentially a logical-rational activity, they are likely to be ill-prepared to cope with, and adjust to, the complexity of the factors involved in the real world, argues Michael Walton, Visiting Professor, Prague University of Economics and Business, and Visiting Research Fellow, Liverpool John Moores University, England. He offers insights into some major influences and also into what he calls the three key perspectives, which he avers can help in effective decision-making.

Whilst conventional business practices may profess that logic and analysis shape business decisions, the fact is that there are also non-logical factors which too exert a significant influence. In spite of this, much of the business literature, leadership studies and the media continue to construe organizational behavior as being predictable, logical-rational in approach and characterized by top-down 'command and control' leadership. This results in a presumption-perhaps even a delusion-of organizational behavior as being characterized by relative stability, transparency, predictability and order. The experienced reality for many, however, is somewhat different and peppered with episodes and instances of behavioral volatility, operational confusion, internal tension, rivalry, disorganization, and instances of unpredictable executive behavior. Such episodes may have their origins in: (i) internal organizational dysfunctions; (ii) the underlying motivations and psychological predispositions of individual executives and/or (iii) response to the tensions generated because of volatile and uncertain local and global trading conditions.

Political instabilities, global economic uncertainty, the impact of military incursions, environmental catastrophes, health emergencies and pandemics as well as the risk of global recession characterize the uncertain and volatile state of the wider global environment at this point in time. Given such factors, those involved in corporate decision-making need to consider with care the following three perspectives relating to:
1. The organizational world, i.e., the internal priorities and external objectives of the organization.

Today, despite the pandemic and oft-occurring natural disasters, the global insurance protection gap is one of the most pressing issues facing economies.

The pandemic, no doubt, has increased the levels of curiosity among the public about the need for insurance. The kind of havoc that it has caused in the lives of billions of people across the globe has made the industry work overnight to redefine and refine the ways of its functioning with a view to not only expanding the coverage in all types of insurance, but also introducing ways and means to bridge the 'protection gap'. Despite the increased curiosity about the need for insurance cover post the Covid-19, insurance remains underpenetrated in most of the countries, more so in India, and requires the combined effort by industry, regulators and the government to ensure people value it more. Similar to life insurance, there exists a significant protection gap in other types of insurance too, and on an average, only one-third of economic disaster losses are insured. In addition, the digital transformation of modern economies has created a major gap between cyber risk exposure and available risk management. The major reasons for the prevalence of insurance protection gaps vary widely across the globe, reflecting different stages of economic development as well as social, institutional and cultural peculiarities in different geographical areas. Insurance protection gaps are most striking in developing and emerging markets where combined insurance premiums still fall significantly short of their share in global GDP. We will look into these issues and probable solutions in a comprehensive way in this article.

Protection gaps
What and why: The most appropriate definition of insurance protection gaps is the difference between the amount of insurance that is economically beneficial and the amount of coverage actually purchased by the customer. This gap is smaller than the broader risk protection gap that describes the difference