The BRICS summit: Bloc expansion on the cards; And, why AI is not doomsday for jobs

Market Watch

• Indian benchmark indices ended the day in the green, with the Sensex increasing 3.94 points at 65,220.03 and the Nifty rising 2.85 points at 19,396.45.
• Sectorally, Nifty PSU Bank (-0.49%) and Pharma (-0.20%) shed the most, while Metal (+0.85%) and Consumer Durables (+0.69%) gained the most.

Four things:

• Titan upped its stake in CaratLane, valuing the platform at Rs 17,000 crore, leading to EPS cuts .
• GQG Partners expanded its Indian investments , buying into JSW Energy, Patanjali Foods, and more beyond Adani Group.
• Large corporate groups are under scrutiny after SEBI mandated detailed disclosures for FPIs .
• FPIs’ Indian share purchases hit a five-month low in early August amid US interest rate fears and concerns over China’s economy.

PM Modi leaves for BRICS summit today; Bloc expansion on the cards

Prime Minister Narendra Modi’s visit to Johannesburg for the BRICS (Brazil, Russia, India, China, and South Africa) summit has brought the India-China relationship into focus.

The big picture:?The possibility of a meeting between PM Modi and Chinese President Xi Jinping has not been confirmed , as the foreign office stated that the PM’s schedule is being finalised.

• If such a bilateral meeting occurs, it would be the first since the India-China border standoff began in May 2020 — which is when the relationship between the two neighbours started deteriorating.
• While military and diplomatic talks have led to disengagement in several areas,?certain friction points remain unresolved .?

What else:?On Monday, Congress leader Rahul Gandhi, who is in Ladakh, expressed concerns over China grabbing India’s land in the region, preventing locals from grazing their cattle.

Between the lines: China and Russia are backing the expansion of the bloc , while India has reportedly expressed hesitance, but the government put out a statement rubbishing these reports .

• So far, over 40 countries have sought to sign up for BRICS membership — most notably, Saudi Arabia , the UAE, Argentina and Iran.
• While China views BRICS expansion as a strategic alignment opportunity with its Belt and Road Initiative, India fears that rapid expansion could lead to the bloc adopting an “anti-Western” stance.?
• India and Brazil have stressed the importance of reaching a consensus on admission guidelines, criteria and procedures before an expansion can take place.

The intrigue: Despite concerns, India is likely to advocate for the inclusion of countries like Indonesia and other democracies that would align with its leadership priorities.

• However, it may oppose expanding BRICS to nations like Venezuela and Iran, which could steer the group in a direction favoured by Beijing.?
• Ultimately, India has to play a careful balancing act between its ambitions to become a voice for the Global South and countering the influence of the China-Russia bloc.?

Why this matters: One of the aims of BRICS is to promote an alternative financial system that can challenge the dollar’s hegemony in trade; a more geographically inclusive coalition would accelerate this push.?

• The expansion of BRICS would also empower the New Development Bank (AKA the BRICS Bank), increasing its lending capacity and its influence in the global financial system.
• Furthermore, Jim O’Neill — the Goldman Sachs economist who coined the term ‘BRICS’ — has argued that the bloc has thus far failed to live up to its potential . Expansion could change its fortunes, giving the group more global clout as a coalition of emerging economies.?

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UN says AI unlikely to destroy jobs as companies struggle to implement automation

Despite the promise and potential of generative AI, large companies are facing challenges in deploying the technology due to cost and data management issues.

The details: While companies are optimistic about the productivity boost from generative AI, over 50% of AI decision-makers in major companies encounter cost barriers when trying to deploy the latest AI tools, according to S&P Global’s 2023 Global Trends in AI report.?

• The top challenges identified in the survey are data management (32%), security (26%), and accessing adequate computing resources (20%).
• A major obstacle for many businesses is that their data isn’t structured enough to use with AI — it exists in different formats, is spread across multiple datasets, or is still in paper form.?
• Additionally, AI’s extensive computing power requirements are impacting companies’ energy consumption targets, according to 68% of respondents.?

The big picture: Though 70% of the survey respondents have at least one AI project in production, 31% are still in the pilot or proof-of-concept stage, while only 28% have achieved enterprise scale.

• About 50% of IT leaders believe their organisations aren’t AI-ready and expect it might take five years or more to achieve fully AI-integrated operations.?

Meanwhile, a UN study concluded that generative AI will likely automate a portion of jobs , but not replace them entirely.

• The UN’s International Labour Organization warns that clerical work, where a quarter of tasks are highly exposed to potential automation, will be the hardest hit by automation .?
• This could disproportionately impact female employment, given women’s over-representation in this sector, especially in wealthier countries.
• Furthermore, automation will affect a higher proportion of jobs in high-income countries (5.5%), when compared to low-income countries (0.4%).

The big picture: The UN study calls for policymakers to harness policy to address the technological changes brought by AI.

• Generative AI, capable of generating text, images, sounds, animations, 3D models, and other data, is expected to automate a portion of most jobs, but not replace them and hence complement, rather than substitute, human labour.?
• Despite the potential benefits, the impact on affected workers could still be “brutal”, necessitating a proactive approach from policymakers, the ILO concluded.

ICYMI

• SoftBank-owned chipmaker Arm Holdings has filed for a Nasdaq listing as it gears up for what’s expected to be the biggest IPO of the year.
• Donald Trump has announced that he will turn himself in to the authorities in Georgia on Thursday.
• AI is being used to digitally resurrect deceased actors for new film roles, raising concerns about the rights of individuals after death.
• A leaked draft document details the extreme surveillance measures proposed by the US government to scrutinise TikTok’s operations over national security concerns.
• Indian Grandmaster R Praggnanandhaa will face World No. 1 Magnus Carlsen in the chess World Cup final after beating Fabiano Caruana.
• Eight people including six children were left stranded in a cable car over a deep valley in Pakistan, when a cable broke mid-journey while they were on their way to school.
• Chinese smartphone brand Honor is set to relaunch in India , partnering with a local company and with plans to initiate domestic manufacturing.
• An Indian man living in Mexico was tragically killed and another injured after a robbery in Mexico City.