In this week's wrapup, we will talk about the US unemployment experience, the economic cost of oil spills, the RBI's balance sheet conundrum, the Mastercard tax saga, and how in-app advertisements may change forever.
What's wrong with ITC?
Before we get to the wrapup, you might want to read this week's market edition. It's on ITC and we try and explain why the company's share price continues to be in limbo. If you're a market enthusiast, this is a must read.
Lessons from the American Unemployment Experience
On Monday, we looked at some stunning conclusions from a blockbuster paper on unemployment. When it comes to understanding unemployment post-COVID, policymakers are having a hard time making decisions. You see, their estimation of economic activity mostly depends on systematic, recurring surveys of businesses and households. Collecting, aggregating and making sense of this data takes time. And when it comes to a pandemic, time is of the essence.
But what if you could use real-time transaction data from private companies to measure economic activity? Like credit card information of a large group of people or a job-portal? Well, you'd find some very interesting things. Read all about them here.
The Economic Cost of Oil Spills
On Tuesday, we spoke about the economic cost of oil spills. A few days ago, a cargo vessel MV Wakashio ran aground off Pointe d’Esny, on the south-east coast of Mauritius and started spilling oil. So what do you do when thousands of gallons of oil pour into a water body?
Well, your first order of business is to contain and clean up the spill — in that order specifically. Because when oil does spill, it forms a thick film that floats on top of the water body slowly spreading out and thinning as time progresses. More time means a more elaborate cleanup effort. So if a cleanup crew can reach a spill quickly, they could contain it more efficiently.
But with the MV Wakashio oil spill, things didn’t exactly go as planned. Find out why here.
The Big Balance Sheet Conundrum
On Wednesday, we talked about the RBI's balance sheet. The Reserve Bank recently released its annual report and there was only one thing that dominated the headlines. It read — “RBI’s balance sheet expanded by 30.02 % to ~Rs 53 trillion in FY20”. For context, that’s a quarter of our country’s GDP.
Now, the premise here is simple. The RBI has been trying to mitigate the impact of COVID-19, and that involves creating new money. Creating new money means an expansion of the balance sheet. And as the balance sheet expands, RBI’s reserves expand in tandem (in most cases). But the question is, what should the RBI do with these excess reserves? Find out here.
The Mastercard Tax Saga
On Thursday, we talked about MasterCard, Permanent Establishments and the Equalization levy.
I know it seems complicated. But it all starts with a simple question. How do you tax a business which operates in your country? Well, ideally you see where it’s incorporated and let the tax authorities there take care of matters. But then again, if a company is incorporated elsewhere but still does a lot of business in your country, they should pay their dues here.
So, as long as businesses have a fixed place of business in your country through which they carry out the business of a foreign enterprise, their income will be taxed. Most countries also sign Double Taxation Avoidance Agreements (DTAAs) in order to avoid taxing the same business at home and on foreign ground.
This was the case with Mastercard in India. But in 2014, things got tricky. Find out what changed here.
How a single update might change the face of in-app advertising forever?
On Friday, we discussed how a potential change in Apple's operating system could affect Facebook's revenues. Now, if you're an advertiser, you'll want as many users to install your app and you'll want to see which ads worked, why they worked, and how to optimise them.
However, if you are planning to run these ads more than once across multiple avenues, you can’t liaison with all the platforms yourself. So you get a broker to do it for you. Enter Ad Networks- They connect you to news apps or other apps and help you run your campaign in more place than one. And as a side benefit, they get access to tons of information about users. But now, this whole system might be in jeopardy. Find out why here.
And so another weekly wrapup comes to an end. We'll see you soon!