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Good morning. Monday saw a massive crash at the stock market along with unrest in Bangladesh, with Sheikh Hasina resigning as prime minister of the country. What is the common thread that ties the two? Read on to know more. 

In other news, if you’re someone who likes to travel business, you will soon have another option with IndiGo. Meanwhile, billionaire Gautam Adani has a succession plan. 

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THE TAKE

Unemployment Is Fuelling Chaos Worldwide, Including In The Stock Market

There is one thing that links Monday’s stock market crash, the massive unrest in Bangladesh leading to the unseating of Prime Minister Sheikh Hasina and the recent riots in England. It's jobs and youth, or restless youth, in that order.

The unemployment rate in the US went up to 4.3% in July, the highest since 2021. Meanwhile closer to home, in Bangladesh, protests erupted last month after a high court ruling in June reinstated the 30% quota in government jobs for family members of freedom fighters of the 1971 Bangladeshi Liberation War. The move was seen as discriminatory.

And riots broke out in England last week with violence on the streets as youth protested against immigrants. The reasons for this may not be only jobs but it has a role. In many countries, immigration leads to job insecurity for locals.

Two years ago, students stormed and occupied the president’s house in Colombo in a move similar to the storming of Sheikh Hasina's home in Dhaka on Monday. 

In India, the government is now effectively throwing everything but the kitchen sink when it comes to jobs, from incentives for manufacturing to incentives for hiring to nudges for internships.

Youth unemployment is high the world over, including in India. Meanwhile, frustrations are rising. The manifestations of this frustration will vary from country to country, from voting in ballot boxes to outright violence as in Bangladesh or Sri Lanka.

There is no silver bullet for solving job challenges in this complex economy.

We can’t be a China but we can’t not be a China either. And to be sure we are trying both approaches, including that of heavy public spending-led employment generation.

But our needs are greater.

The solutions often lie in looking at the problem bottom up and working on the plumbing of policy to ensure businesses feel encouraged and motivated to set up or expand their capacities.

While the industry can rightfully focus on being lean and mean, it cannot run from the larger problem of disaffected youth or socio-economic stress. That perhaps is the moral of the story. If the solution does not belong to everyone, then the problem will belong to everyone.

PODCAST

The Markets Crack 2,300 Points And Could Fall Further

On Episode 356 of The Core Report, financial journalist Govindraj Ethiraj talks to Deepak Shenoy, Founder of Capitalmind, a Sebi registered portfolio manager as well as Abid Hassan, CEO of Sensibull.

• The Take: Jobs and Youth

• The Markets Crack 2,300 points and could fall further.

• Japan sees highest fall in 50 years.

• Oil prices slide and so does gold.

• Will Indian markets follow global cues all the way down or delink?

• Indigo finally launches business class

CORE NUMBER

Rs 73,000 Crores

Is the value of all the unsold inventory remaining with passenger vehicle dealers, according to the Federation of Automobile Dealers Association (FADA). This equates to a historic high of 67-72 days, and poses a huge risk for dealer sustainability, FADA warned. The industry body has urged manufacturers to remain vigilant about possible dealer failures. The high inventory levels were caused by a drop in sales in the last few months.

HOW INDIA’S ECONOMY WORKS

India Before 1991 And How The Reforms Changed It with Shruti Rajagopalan

In this conversation, Puja Mehra talks to Dr. Shruti Rajagopalan about the historical context of the 1991 Economic Liberalisation of India. She illustrates how the economy in india worked through the manufacture of a bicycle and goes on to explain the impact of those economic reforms, the careful planning that went into it, the people who brought it to fruition, the political turmoil at the time and much more.

FROM THE PERIPHERY

—💼 Speaking of unemployment, it looks like yet another bad year for the information technology (IT) industry. Once a coveted for cushy jobs, the IT industry has seen thousands being laid of this year, yet again. Cost reduction has led to 1,24,517 job losses this year globally, and more is likely to come. Intel led the charge with a large 15% employment reduction, around 15,000 job reductions, with intentions to complete the majority of these layoffs by the end of the year. UKG also made headlines for their 2,200 layoffs. Microsoft, Intuit and Dyson all reduced their workforce by around 1,000 to 1,800 employees.

—✈️ IndiGo, India’s largest domestic airline is widely referred to as a budget or ‘no-frill’ airline but it now wants to cater to the premium market by introducing ‘IndiGo Stretch’ a business class tier from mid-November. The business class offering will be available on 12 routes which can be booked from August 6 onwards at an introductory price of Rs 18,018. The airline also announced that they will be launching a loyalty programme too, ‘IndiGo BluChip’ to reward its frequent fliers.

—👬 Who will be Adani’s heir? The Indian billionaire spilled the beans on his succession plans for his $213 billion empire. The 62-year-old told Bloomberg that he plans on handing over the reins by early 2030s and retiring at the age of 70. The family fund will be equally split between his sons, Karan and Jeet and his brothers’ sons, Pranav and Sagar. All four of the heirs to the conglomerate currently hold key positions in the various businesses in it including ports, cement, media, airports, finance, logistics, consumer products etc. 

—💹 Japan’s yen surging might have a direct impact on Indian infrastructure companies. Yen carry trade rates were damaged last week as the Bank of Japan raised interest rates, forcing investors to liquidate their positions. Indian companies benefited from the near-zero interest rates in Japan, raising cheap funds to pump into capex in roads and highways, power and steel. Now, the yen carry trade might bump up the debt serving cost for Indian companies who have raised long term yen loans in the last ten years. 

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