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Nothing cheerful in Q3 GDP figures

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While government data claims that GDP growth in the third quarter has stayed at 7%, a closer look at the figures brings to fore the adverse effects of demonetisation

[vc_row][vc_column][vc_column_text]7 per cent growth rate new bottom line

By Parsa Venkateshwar Rao Jr

It is surprising that anyone should be surprised, shocked, elated, satisfied that that Quarter 3 economic indicators have not really gone down, and therefore infer that the November 8, 2016 demonetisation has not had any negative impact on the economy. A closer look at the figures shows that the numbers reveal no good news.

First, Q3 figures are lower than those of Q1 andQ2 for 2016-17. At constant prices (2011-12), the growth rate for Q 1 was 7.2 per cent, for Q2 it was 7.4 per cent and for Q3 7 per cent. At current prices, the figures are: Q1 (10.8 per cent), Q2 (11.8 per cent), Q3 (10.6). The sense of relief seems to arise from the fact that it was not as bad as expected. But in absolute terms, there is a distinct slip in Q3 compared to Q2, and a little less when Q3 figure is juxtaposed with Q1. To infer from this that demonetisation has not dampened growth figures is permissible indulgence but it does not speak well for the economy.

There is also need to compare the figures with 2015-16. The revised growth rate for 2016-17 is projected to be 7.1 per cent, compared to 7.9 per cent for 2015-16. The new measure for growth rate, the Gross Value Added (GVA) figure at constant prices shows that the projected growth rate for 2016-17 will be 6.7 per cent compared to the GVA growth rate of 7.8 per cent in 2015-16. It can once again be argued that this has nothing to do with demonetisation.

The other crucial indicators also show that the economy is not really picking up, demonetisation or no demonetisation. The mining and quarrying sector is set to grow at a GVA of 1.3 per cent in 2016-17 compared to 12.3 per cent in 2015-16. In the manufacturing sector, the estimated GVA growth rate for 2016-17 is 7.7 per cent compared to the 2015-16 growth rate of 10.6 per cent. The wholesale price index (WPI) for manufactured has moved from the negative territory of – (1.3) per cent in April-December 2015-16 to 2.3 per cent in April-December 2016-17.

The only positive growth figures, apart from agriculture, are in electricity, gas, water supply and other utility services, where a 6.6 per cent growth rate is expected for 2016-17 compared to the 5.1 per cent growth rate figure for 2015-16.  The Index of Industrial Production (IIP) figure for electricity for April-December 2016-17 is 5.1 per cent compared to 4.5 per cent for April-December 2015-16.

Construction, one of the drivers of growth, is expected to grow at GVA rate of 3.1 per cent in 2016-17 compared to 2.8 per cent in 2015-16. Cement consumption during April-December 2016-17 has increased by 2.8 per cent, and steel consumption by 3.3 per cent. It can be seen that there is no great spurt in growth as such.

In the service sector, comprising trade, hotels, transport and communication as well as broadcasting, the GVA growth rate for 2016-17 is expected to be 7.3 per cent compared to 10.7 per cent in 2015-16. The figure of 10.7 per cent growth in the sales tax collection in the states’ accounts between April-December 2016-17 is neither here nor there.

Growth in financial, insurance, real estate and other professional services is estimated to grow at the GVA basic prices (2011-12) by 6.5 per cent compared to 10.8 per cent growth rate in 2015-16.

The only area where there has been a spurt in growth in government spending (public administration, defence and other services) where it is expected to grow at 11.2 per cent in 2016-17 compared to 6.9 per cent in 2015-16.

The difference in growth rates in Q3 of 2016-17 compared to Q3 of 2015-16, especially in case of Private Final Consumption Expenditure (PFCE) and Government Final Capital Formation (GFCF) for Q3 in 2015-16 and 2016-17, is interesting but not puzzling. The PFCE in Q3 of 2016-17 stood at 58.7 per cent compared to 57.1 per cent in 2015-16, and the GFCF for Q 3 in 2016-17 is 29.1 per cent and in Q3 of 2015-16 it stood at 30.0 per cent.

The expectation that the effects of demonetisation should have been conspicuously evident in the Q3 figures is slightly misplaced. Demonetisation came into effect on November 9, 2016 and as Q3 is concerned its effects till December 31, 2016 are to be measured. But remember that Q3 begins on October 1, 2016, and a lot of expenditure would have occurred in the festival month of October, and whatever the downward slide in the second half of Q3 will not be too visible. We need weekly measures between November 9 and December 31, 2016, to get a measure of the effects of demonetisation.[/vc_column_text][/vc_column][/vc_row]

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Google announces country-specific domain names for its search page

This transition to a centralised domain may help Google optimise AI performance in delivering relevant search results.

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In a significant move aimed at unifying its search experience, Google has announced plans to phase out country-level domain names, such as google.ng for Nigeria and google.com.br for Brazil. Instead, the tech giant will redirect users globally to a standardised domain, google.com. This decision aligns with Google’s ongoing effort to enhance search functionality and accessibility, building on the improvement in local search capabilities introduced in 2017.

In a recent blog post, Google explained that it will begin redirecting traffic from these country code top-level domains (ccTLDs) to google.com. This transition will be implemented gradually over the coming months. Users may be prompted to adjust their search preferences during this process, as the company works to streamline the user experience.

“Historically, our approach to delivering localised search results relied on ccTLDs,” Google stated. “However, our capability to offer localised experiences has evolved significantly, making these distinctions unnecessary.” The company reassured users that the core functionality of its search platform will remain unchanged and that compliance with various national regulations will continue.

This initiative reflects Google’s commitment to improving how search results are tailored to individual users without the need for separate country-specific domains. While the official rationale emphasises enhancing global user experience, some industry experts speculate that the change may also be motivated by a desire to better integrate artificial intelligence (AI) into search results, potentially leading to reduced operational costs.

Google employs AI Overviews, a tool designed to aggregate information from a broad range of online sources to provide concise responses to user inquiries. This transition to a centralised domain may help Google optimise AI performance in delivering relevant search results.

Overall, as Google implements this shift, users can expect a more unified search experience. While changes in browser addresses may occur, Google emphasises that the way search operates and its compliance with national laws will remain consistent. This strategic shift signifies Google’s ongoing efforts to adapt to the evolving digital landscape and user needs globally.

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In HUL vs HCL defamation case, Delhi HC orders take down of Lakme sunscreen ad disparaging Derma Co

Honasa, in its plea to the Delhi High Court, argued that HUL’s claims are misleading and disparage competitors, damaging their reputation. In retaliation, HUL filed a countersuit against Honasa in the Bombay High Court, escalating the corporate feud.

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A legal showdown between Honasa Consumer Ltd. (HCL), the parent company of Mamaearth, and Hindustan Unilever Ltd. (HUL), which owns Lakmé, reached the Delhi High Court this week, with both FMCG giants filing defamation lawsuits against each other. On Thursday, the court ordered HUL to pull its current Lakmé sunscreen advertisements, prompting the company to agree to revise its campaign by removing references to “online bestseller” and altering the depicted packaging colours.

The dispute centres on Lakmé’s recent “SPF Lie Detector Test” campaign, which HCL alleges unfairly targets its Derma Co. sunscreen by questioning the efficacy of rival products.

In the ads, HUL claims that some “online bestseller” sunscreens, marketed as SPF 50, provide protection closer to SPF 20, based on in-vivo testing data from the past decade. While no brands are explicitly named, visuals juxtaposing yellow bottles—resembling Derma Co.’s packaging—against Lakmé’s sparked Honasa’s ire.

Honasa, in its plea to the Delhi High Court, argued that HUL’s claims are misleading and disparage competitors, damaging their reputation. In retaliation, HUL filed a countersuit against Honasa in the Bombay High Court, escalating the corporate feud.

The controversy erupted when Ghazal Alagh, co-founder of Honasa, took to LinkedIn to criticise the FMCG sector’s lack of competitive drive, suggesting that legacy brands like HUL have grown complacent. Her comments were seen as a direct jab at Lakmé’s campaign, which challenges the SPF claims of newer sunscreen brands dominating online markets. “The industry needs fresh competition to shake things up,” Alagh wrote, igniting a public spat.

Lakmé’s campaign asserts that some top-selling sunscreens falsely claim in vivo testing—a method involving live organisms like humans or animals—while delivering subpar protection. In a social media statement, Lakmé doubled down, saying, “Certain online bestsellers advertise SPF 50, but their in-market samples test closer to SPF 20.”

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Sensex and Nifty jump nearly 2% as US suspends additional 26% tariffs on India until July 9

Foreign Institutional Investors (FIIs) had sold equities worth ₹4,358.02 crore on Wednesday, signaling caution, but Friday’s momentum suggested a shift in sentiment.

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Indian stock markets staged a robust rally on Friday, with the BSE Sensex skyrocketing 1,310.11 points, a 1.77% gain, to close at 75,157.26. The NSE Nifty followed suit, climbing 429.40 points or 1.92% to settle at 22,828.55, breaching the 22,900 mark during intra-day trading. The surge came on the heels of a White House announcement suspending additional tariffs on India for 90 days until July 9, offering a reprieve amid global trade tensions.

The US decision, detailed in recent executive orders, pauses levies that President Donald Trump had imposed on April 2, targeting India and roughly 60 other nations. Those duties threatened Indian exports ranging from steel to shrimp, raising concerns about competitiveness in the US, the world’s largest economy. The temporary suspension sparked optimism among Indian investors, propelling gains across major sectors.

Leading the charge among Sensex constituents were heavyweights like Tata Steel, Reliance Industries, Power Grid, NTPC, Kotak Mahindra Bank, and Adani Ports. However, not all stocks joined the rally—Asian Paints and Tata Consultancy Services lagged behind, unable to capitalize on the upbeat mood.

Vinod Nair, Head of Research at Geojit Investments Limited, attributed the market’s buoyancy to the tariff relief. “The unexpected pause on US tariffs provided a much-needed breather amid global uncertainties,” Nair noted. He added that while a major IT firm’s recent results fell short of expectations, its robust order book signaled potential growth in the latter half of FY26.

The Indian markets’ performance stood in stark contrast to global trends, where fears of a US-China tariff war cast a shadow. On Friday, China escalated its trade spat with the US, hiking tariffs on American imports to 125% in response to Washington’s 145% levies on Chinese goods.

Asian markets reflected the unease, with Tokyo’s Nikkei 225 plunging nearly 3% and South Korea’s Kospi slipping, though Shanghai’s SSE Composite and Hong Kong’s Hang Seng bucked the trend with gains. European markets traded lower, while US indices had closed sharply down on Thursday, with the Nasdaq tumbling 4.31%, the S&P 500 falling 3.46%, and the Dow Jones shedding 2.50%.

Back home, the rally followed a lackluster Wednesday, when the Sensex dipped 379.93 points to 73,847.15 and the Nifty fell 136.70 points to 22,399.15. Thursday’s market holiday for Shri Mahavir Jayanti gave investors a pause before Friday’s surge. Foreign Institutional Investors (FIIs) had sold equities worth ₹4,358.02 crore on Wednesday, signaling caution, but Friday’s momentum suggested a shift in sentiment.

Elsewhere, global oil prices edged up, with Brent crude rising 0.32% to $63.53 a barrel, reflecting ongoing volatility in commodity markets.

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