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An Oxfam survey revealed that the income of 84% of Indian households dropped in 2021. And in contrast, the rank of billionaires swelled from 102 to 142 during the same period. Clearly, the pandemic wasn’t that bad for those with a cushion of wealth. And the effect of this trend was clearly visible in key sectors of the economy. In the auto sector, sales of two-wheelers have nosedived, while SUVs are selling like hotcakes. FMCG is struggling due to weak demand, but the aviation sector is seeing a jump in traffic. Take a dive into the key sectors to find out how the Indian economy is trying to get back on its feet.   Pandemic also reinvented philanthropy in India. Asia’s richest man, Gautam Adani, last Thursday pledged to donate $7.7 bn to social causes. With that, he joins the global league of philanthropists. But is the family philanthropy by ultra-rich Indians making the desired impact? And if so, in which areas? And are there areas that are not receiving enough attention? Should the billionaires be donating more to address funding gaps and how can they ensure their wealth makes a mark?  Individual donations jumped by 43% during pandemic years. Meanwhile, during the same period, prices of crude oil also climbed drastically. According to Reuters, in mid-April 2020, the price of a barrel of West Texas crude went below $0 and sellers had to pay to get rid of it. It is beyond $100 now, thanks to the Russian war also. Companies across the value chain, especially crude refiners, have seen material gains in tandem with record high prices of crude oil. Our next report throws light on companies that are likely to seize the most gains. After the markets, let us move on to the ongoing political turmoil in Maharashtra. The ruling Maha Vikas Aghadi government -- led by Shiv Sena -- is in crisis as one of their own leaders, Eknath Shinde, has rebelled. Reports say that he is claiming the support of at least 40 MLAs. In the entire political drama, anti-defection law has come into focus. This episode of the podcast explains it in details.  Watch video

Defection in politics predates Gaya Lal -- the Haryana MLA who switched party thrice in a day in 1967. After finally securing his loyalty, senior Congress leader Rao Birender Singh had then famously told a press conference in Chandigarh, ‘Gaya Ram ab Aaya Ram hai’. Little did Singh know that the phrase, with some changes in word orders, will turn into a cliché in Indian politics. About 18 years later, In 1985, in a bid to curb defection, the then Rajiv Gandhi government had brought the anti-defection law through the 52nd Amendment Act of 1985. This amendment is known as anti-defection law. An anti-defection law calls for disqualification of elected representatives if they switch political parties on the lure of executive office or other gains. The aim is to bring political stability and demand accountability from the legislatures. Under the anti-defection law, members of a political party can be disqualified and removed from the membership of the House if they voluntarily resign from the party after being elected or defy the direction or whip of the party leadership in the House. Independent lawmakers may also stare at disqualification for switching political parties. However, if two-thirds of members of a political party intend to shift to another party, the law exempts them from disqualification. In 2021, 12 out of 17 Congress MLAs jumped ship to join Trinamool Congress in Meghalaya and were exempted from the anti-defection law. Despite the anti-defection law, political defections are a common phenomenon and related proceedings have been going on in various courts. The role of the adjudicating authority --- usually the speaker of the House --- is under scrutiny in most of the anti-defection cases. There were several instances of delays in the disqualification process as the speaker is not time bound to decide on any case. For instance, during 2014-18, multiple opposition MLAs defected to the ruling TRS party and no action was taken by the speaker against these defectors. Experts argue that the speaker may not be the objective authority to decide on anti-defection cases. And also, the whip of a political party forces lawmakers to toe the party line and undermines their judgement on important issues. This essentially kills inner-party democracy. Given numerous loopholes, experts have urged the government to revisit and reform the anti-defection law.  

Many who had their jobs, incomes, and savings ravaged by the pandemic are still trying to recover. Retail inflation, which was making their lives a tad more difficult, eased marginally in May after touching an eight-year high of 7.79% in April. But it is still above the RBI’s tolerance band of 2-6 per cent for a fifth month in a row. Most companies too are feeling the heat of soaring input costs. Hindustan Unilever Chairman Nitin Paranjpe last week said that India is currently going through “probably the most difficult economic situation”. He also said that the company would continue to increase prices even as FMCG market growth rates moderate and volume growth rates become negative in the short term. A closer look at the sales of products across different price ranges throws a disturbing trend. HUL, Dabur India, Asian Paints, and Parle Products have all seen consumers buying cheaper and smaller packs. Meanwhile, according to Bloomberg, HUL saw its premium portfolio grow at twice the pace as the rest of its portfolio in 2021-22. Marico Ltd's premium personal care range also grew in high double digits in FY22.   HUL, Britannia, and Parle Products get 30 per cent, 55 per cent, and 70 per cent of their business, respectively, from one, five and 10 rupee packs. As a result, FMCG firms have opted for making products smaller while still maintaining the same price -- a phenomenon called 'shrinkflation'. A NielsenIQ report has also found that the FMCG industry saw a decline in volume in the January-March period. In fact, rural India witnessed a 5.3 per cent fall in volume, the highest consumption slowdown in the last three quarters. The report said that a decline in consumption was echoed across all zones and the town classes, but was more prominent in rural markets. Meanwhile, a national daily reported that 12 million passengers took domestic flights in May, almost six times the number for the same month last year that was hit by the second wave of Covid-19. ICRA said that domestic air travel in May was only 7% lower than pre-Covid levels. ICRA also said that international air traffic has surpassed pre-Covid levels by around 24 per cent, with fares seeing a spike. The number of domestic and international flights operated by Indian airlines is also back to pre-Covid levels. All of this has come against the backdrop of several rounds of airfare hikes due to all-time high jet fuel prices. Let us now gauge the trend in auto sector. The Federation of Automobile Dealers Associations has said that passenger vehicle retail sales in May 2022 were 11 per cent higher compared to the pre-Covid month of May 2019. But, two-wheeler sales in May 2022 were down 13.91 per cent compared to May 2019. However, according to FADA, the two-wheeler segment has seen a slight improvement in overall sales when compared with April this year. According to Maruti Suzuki India Executive Director Shashank Srivastava, the sale of SUVs and MPVs is expected to jump 63.93% in FY23 from FY19. The real estate segment also showed a divergent trend. According to ANAROCK Research, there has been a 230% jump in new launch supply in the luxury real estate segment, priced over 1.5 crore rupees, across India’s top seven cities in Q1 2022 as against Q1 2020. Out of the overall housing sales in the top seven cities in Q1 2022, the luxury segment's share was nearly 12 percent compared to about seven per cent back in the pre-Covid period of 2019. ANAROCK Research added that before Covid, the affordable and mid segments were the most in-demand categories. However, given that the pandemic affected the affordable buyer-class the most, sales in the category went down from their earlier peak.   Clearly, the divergent performances in various sectors is betraying the K-shaped recovery in the Indian economy. The pandemic seems to have no effect on the affluent class, which continues to splurge. While those at the bottom of the pyramid don’t have m

Asia’s richest man celebrated his birthday a bit differently this year. To mark his 60th birthday, Adani Group Chairman Gautam Adani and his family, whose net worth is estimated at $98.1 billion by Forbes, have pledged to donate Rs 60,000 crore or $7.7 billion to a series of social causes. The donation will be managed by the Adani Foundation, which is led by his wife Priti Adani.  With this Adani joins the ranks of billionaires like Mark Zuckerberg and Warren Buffett, who have committed large parts of their wealth for philanthropy. Philanthropist Azim Premji said this should set an example that entrepreneurs can try to live Mahatma Gandhi’s principle of Trusteeship of Wealth at the peak of their business success. Indeed, the average age of giving in India is dipping every year and stands at 66 now. In FY21, Premji donated $1.3 billion or Rs 9,713 crore to charity. His foundation has an endowment estimated at $21 billion. The family of HCL Technologies founder Shiv Nadar was the second biggest donor according to a 2021 Hurun India report. Adani’s pledge is almost half of what Bill Gates and Melinda French Gates donated to their foundation in 2021, while the former couple’s total donations are valued at $74.6 billion.  Jamsetji Tata, who set up Tata Trusts, is the most generous individual of the last century, with total donations of over $102 billion at current value. Private giving in India stems from four sources -- foreign, corporate, retail and families. CSR, family philanthropy and retail giving account for approximately 84% of overall private giving, with foreign contributions making up the rest, according to the India Philanthropy Report 2022 by Dasra and Bain & Company. Family philanthropy overall forms about one-third of total private giving and is expected to grow at a robust 13% per year until FY26, driven by increasing wealth and a rise in the number of technology entrepreneurs. Family philanthropy has fewer constraints than other sources, enabling a broader impact on the social sector. These donors have a greater ability to innovate, influence public policy, build institutional capacity, and experiment with new forms of funding. They can also go far beyond grant-making as most funders come with extensive and technical knowledge in their respective fields, and have deep networks across functions and industries. But family philanthropy has its biases. Of the three major sources of private giving, CSR is the most widely distributed across sectors, while family giving is majorly concentrated in education and healthcare even as India lags in several other sectors. India also lags on gender equality indicators than on indicators related to health and education. Similarly, funding is concentrated in Tier-1 cities. Adani’s donation will be utilised in the areas of healthcare, education and skill development with a special focus in rural regions.  India’s ultra-rich could potentially increase their donations by 8 to 13 times if they can match the giving as a percentage of wealth of their UK, Chinese and US counterparts. Anant Bhagwati, Partner, The Bridgespan Group says, over the next 5 years, family philanthropy could grow to 40% of total private giving. Unlike CSR or retail, family giving can back causes that deliver long-term results, he says.  How the Adani family deploys its large $7.7 billion donation is also key. While a good number of family philanthropists engage with NGOs through grant-making, not all NGOs can absorb scale funding of the sort offered by these families.  Gautam Adani has said that three expert committees will be formed to formalise strategy and decide allocation of funds, with a plan to add one or two more focus areas in the coming months. Adani Foundation will have to build the right talent, enhance its institutional capabilities further, and develop strategies to drive change in the targeted areas.

Sri Lanka’s economy is in a free fall for a while now, it is hurtling fast towards bankruptcy. Its food inflation has soared to 57%, and the nation is left with no reserve to import essentials. This crisis is having a crippling effect on its apparel and famous tea industries also -- the mainstays of Sri Lanka’s economy. Meanwhile, traders in India are looking to fill the void left by the South Asian neighbour. But some spillover of the Lanka crisis is hurting Indian businesses too, like the auto sector. Try to gauge the overall effect of the crisis on India.   The trouble in Sri Lankan economy had started with the onset of pandemic. A large number of people who anticipated this crisis had started exploring options to stay afloat. Some even turned to cryptocurrency too, which is still unregulated in Sri Lanka. Meanwhile, India too is slowly but firmly moving ahead to regulate it. Recently it had announced to impose 1% TDS crypto assets. And on Wednesday, the government came out with a detailed clarification to address concerns raised by the industry. So as the TDS regime is slated to come into effect from July 1, will it be smooth sailing for domestic crypto exchanges and traders?  Like the cryptocurrencies, the shares of housing finance companies have been falling for quite some time now. And most of them nosedived after the RBI hiked repo rate on May 4. While analysts believe that robust real estate demand may outweigh rate hike impact, there’s a section of firms that may be vulnerable to interest rate hikes.  After Dalal Street, let us now turn our focus to the President’s Estate in Delhi. The race to Rashtrapati Bhavan has become interesting. NDA’s presidential nominee Draupadi Murmu is facing opposition’s Yashwant Sinha. She has an edge over Sinha due to the support of a majority in the electoral college. But how does India elect its President? This episode of the podcast shares more.    Watch video

Markets have been on a wild ride ever since the Reserve Bank of India announced a surprise rate hike on May 4.  While the benchmark Nifty50 index has shed around 9% since then, individual housing finance companies have cracked up to 36%. Investors have shunned housing finance companies, or HFCs, amid fears that sharp rise in interest rates, and higher inflation can dent the housing demand in the near-term. This, in turn, may have a trickle-down effect on the demand for home financing. Yet, analysts believe fundamentally strong HFCs would be able to tide over the rate hike cycle better even as they partially absorb increased interest rates.  Speaking to Business Standard Parag Jariwala – Director (Investments), WhiteOak Capital Management] said, bigger HFCs like HDFC, LIC Housing have pricing power. They can pass on rate hikes as cost of funds stay competitive. Some HFCs have floating rate assets and fixed rate liabilities, he said. Margins may be protected.  Home loan rates stood at around 6.5% in April 2022, and have risen above 7% now.  However, analysts believe they are still within comfortable limits, thus protecting buyers’ interest. That said, analysts warn that HFCs, which cater to the price-sensitive segment of affordable housing, may see some margin erosion in the short-to-medium term. Ashish Khandelia, Founder, Certus Capital & Earnnest.me said, home loan business is highly competitive. Many players shift their books towards retail from corporate lending, he said. Some HFCs may partially absorb rate increase, impacting margins.   Kotak Institutional Equities expects affordable HFCs under their coverage to witness 10 to 70 bps YoY decline in net interest margin in FY23, and further 20 to 100 bps in FY24. According to the brokerage, “While there is headroom for increased rates, most affordable HFCs did not pass on the benefit of lower rates to borrowers. Hence, they may be slow in passing on rate hikes” Overall, financials will remain on investor radar in the immediate future, as credit recovery will be a keenly watched to gauge the health of the economy. On Friday, Japan’s inflation data, US home sales data and stock-specific action, back home, will guide the markets.

Sri Lanka is in a crisis. Covid-19 has sent the economy into a tailspin, and it is in free fall now. Its Prime Minister Ranil Wickremesinghe recently said that the country’s economy has “collapsed”. The spillover of the crisis has reached Indian shores too. ITC has said that its first foreign venture in the hotel space has been hit. Earlier, the 300-million-dollar project in Colombo saw construction being impacted due to the 2019 terror incidents and then the pandemic. In April, a financial daily had reported that automotive firms like Tata Motors, Mahindra & Mahindra, Ashok Leyland, and TVS Motors had stopped exports of vehicle kits to Sri Lanka and halted production at their Sri Lankan assembly units due to its precarious forex reserves and fuel shortages.   According to an India Briefing note by Dezan Shira & Associates, instability in Sri Lanka could affect Indian Oil, Airtel, Taj Hotels, Dabur, Ashok Leyland, Tata Communications, Asian Paints, and State Bank of India. Meanwhile, Sri Lanka’s share in India’s total exports has declined from 2.16 per cent in FY15 to just 1.3 per cent in the first 10 months of FY22. India’s export to Sri Lanka is now nowhere near the 6.7 billion dollars seen in 2014-15. Till January 2022, it stood at 4.49 billion dollars in FY22.   But there is a silver lining too. Since Sri Lanka has been the world’s largest supplier of orthodox tea, calls to Indian planters and exporters from foreign buyers of the commodity are pouring in. Big Sri Lankan importers from Iran, Turkey, Iraq, and Russia are reportedly visiting Kolkata and tea plantations in Assam. As a result, at recent Kolkata auctions, the average price for orthodox leaf saw an increase of up to 41 per cent compared to corresponding sales last year. And, the fuel shortage in Lanka is crippling its apparel sector too. According to the US International Trade Administration, the apparel export industry accounts for about 44% of the country’s total exports. Many apparel orders from the UK, EU, and Latin American countries are now being diverted to India. Several orders have been given to companies in Tirupur, the hub of the textile industry in Tamil Nadu. Sri Lanka has been a strategically important partner for India. Even as some of our businesses are hit, and some try to fill the void created by the Sri Lankan crisis, India’s assistance in this time of need will only lead to better ties with the island nation that has long been leaning towards the Chinese camp.  

NDA’s presidential nominee Draupadi Murmu met Union home minister Amit Shah on Thursday. If elected, 64-year-old Murmu will become the first tribal President of the country. And the second woman president after Pratibha Patil. President Ram Nath Kovind’s tenure is coming to an end on July 25. And an election to fill his post will be held before that, on July 18. And we will know the name of the new President on July 21 if an election takes place at all. So how is the President of India chosen? Unlike that of MLAs and MPs, it is not a direct election. The President is elected by an electoral college. And who all are the members of this electoral college? They are from Lok Sabha and Rajya Sabha, Legislative Assemblies of the states and Legislative Assemblies of the Union Territories of Delhi and Puducherry. Nominated members to Rajya Sabha and state legislative councils are not part of the electoral college. The votes of electoral college members have a certain larger value. For instance, each MP’s vote carries a value of 700.  In the case of MLAs, the value of vote is calculated based on the population of each state and the value differs from one state to another. In highly populated states like Uttar Pradesh, an MLA carries a vote value of 208, while less populated states like Arunachal Pradesh and Sikkim, the value of vote for an MLA is 8. According to the Article 55(2) of the Constitution, every elected member of the Legislative Assembly of a State shall have as many votes as there are multiples of one thousand in the quotient obtained by dividing the population of the State by the total number of the elected members of the Assembly. To win the Presidential election, the candidate has to bag over 50% of the votes. The Presidential candidate filing for the nomination has to secure signed approvals from 50 proposers and 50 seconders. The proposers and seconders could be members from the electoral college.

The troubles for India’s crypto industry seem to be never-ending. On February 1st, in the Union Budget, the government decided to impose a 30% tax on income from cryptocurrencies from the new financial year and a 1% TDS on all crypto transactions starting July 1st. The move in a way quelled the uncertainty surrounding the fate of cryptocurrencies in India, and suggested that it may not be banned as feared earlier. But, by then, cryptocurrencies had already entered the bear market territory.  The crash was worsened by the recent collapse of algorithmic stablecoin TerraUSD. Now, the oldest and the largest cryptocurrency Bitcoin is trading at its lowest level in 18 months after falling 70% from its record highs in November 2021. The overall crypto market capitalisation is roughly $914 billion, down from a peak of $2.9 trillion. Globally, crypto exchanges are trimming their costs and laying off hundreds of employees as trading volumes take a major hit. Amid these trying times, Indian exchanges have a reason to cheer. While the government disregarded the demand to lower the TDS rate to 0.01% or 0.05%, the Central Board of Direct Taxes on Wednesday came out with long-awaited clarifications over the applicability of the TDS provisions.  It addresses some of the concerns raised by the industry and helps exchanges and traders navigate the burdensome TDS provisions, removing the cloud of uncertainty. The 1% TDS is applicable on payments toward cryptocurrencies beyond Rs 10,000 in a financial year or Rs 50,000 a year for specified persons, which includes individuals and HUFs who are required to get their accounts audited. Amanjot Malhotra, Country Head - India, Bitay says the biggest point of concern has been addressed regarding crypto-to-crypto trades. It's good for user experience but exchanges will have a lot of work to do, he says. People will move towards long-term investing. In a peer-to-peer transaction, the buyer is required to deduct the tax before paying the consideration. In case the transaction is taking place through an exchange, the exchange can deduct the TDS.  Exchanges are required to furnish a quarterly statement for all such transactions and include them in their income tax returns. CBDT also removed doubts on how crypto-to-crypto trades are treated for TDS. In such cases, the exchange will have to deduct 1% TDS on both the assets in the pair. The tax deducted in kind must be immediately converted into either bitcoin, ethereum or stablecoins namely tether and USD Coin. This accumulated balance should then be converted to Indian rupee at midnight every day.  The trail of transactions for every TDS deduction on crypto-to-crypto trades must be maintained by the exchange. The compliance burden for exchanges as well as taxpayers is bound to go up.  Speaking to Business Standard, Meyyappan Nagappan, Leader, Digital Tax, Nishith Desai Associates says, good clarification, lets ecosystem be legally compliant. Whether TDS provision applies to foreign exchange is not known. TDS on products like P2P transfer over a platform needs addressing. Enforcement against decentralised exchanges is still a big issue Compliance requirements going up for exchanges should provide comfort to banks, which have been reluctant to work with crypto companies. They have in many instances denied services to crypto businesses as RBI remains vehemently opposed to cryptocurrencies.   Bitay’s Amanjot Malhotra says it’s surprisng that banks are still not comfortable doing buinsess with crypto companies despite a taxation regime setting in and regulations evolving for the asset class.  He says one will find compliance to be very strong with crypto exchanges in India.  It is hoped that the latest clarifications on TDS and the soon-to-be-issued FAQs on crypto taxation will bring a sense of stability to traders and domestic exchanges in a turbulent year.

We always took them for granted. They were the sidekicks in tetra packs, glued somewhere on the back. But, suddenly, the humble straw has taken the centre-stage. If the government doesn’t relax its July 1 deadline to phase out single-use plastic from the country, you are going to miss the straws badly. And so will FMCG companies-- which are now scrambling to find a replacement, their paper version. Our next report offers an insight into the world of plastic straws and tells why small packs of your favourite Frooti and Real juice might disappear from markets for now  Meanwhile, let us turn our focus to a case which might turn out to be a straw in the wind. A labour court in Chennai recently asked IT giant Tata Consultancy Services to reinstate a former employee and clear all his past dues of seven years. Some experts believe that this case could become a reference point in performance-related unlawful terminations in the IT industry.  After the labour laws, let us move on to markets. Will the policy-makers in a move to catch up with reality and surging inflation may overdo things and cause much more damage to the economy and markets than what is needed? Will the next six months be even more painful for the Indian economy and markets? Business Standard’s Puneet Wadhwa caught up with Nilesh Shah, Group President & MD, Kotak Mahindra AMC on his interpretation of the developments and how investors should approach the markets. Like the markets, some dark clouds of uncertainty are hanging above the country’s economy too. But, beams of sunlight shining through the cracks are offering hope too -- that good days are ahead. The finance ministry recently said that India is at low risk of stagflation. But it also cautioned about a twin deficit problem that the country may face. This episode of the podcast tells more about it.    Watch video

The impending ban on single-use plastic will deal a death blow to the humble straws from July 1. And it has left FMCG companies selling small packs of juices and dairy products in a tizzy. With just a week to go for the ban to come into effect, intense lobbying is still underway by some stakeholders to get the deadline extended.  Every year, six billion small packs between sizes of 75-250 ml with juice, milk, coffee, buttermilk, lassi and other beverages are sold with plastic straws attached to them, a market that’s estimated to be worth Rs 6,000 crore.  Such integrated plastic straws account for just 0.05% of the total single use plastic in terms of volumes. Yet, the stark reality is that plastic straws take up to 200 years to decompose, and they break into smaller plastics and can be ingested in marine life. In contrast, paper straws decompose within two to six weeks. The companies that are impacted most are the big ones like Coca-Cola, PepsiCo, Parle Agro and Dabur India. Their concern is that India does not produce the required paper straws. Action Alliance for Recycling Beverage Cartons or AARC, an industry group that represents some of the major beverage producers, had demanded that plastic straws be exempted from the ban on single-use plastics from next month but changed its stance in May. Still, it sought an extension of 18 months for the transition. Most consumers are familiar with the experience of using paper straws for cold coffees and milk shakes. They become soggy even before the drink is over. So making resilient paper straws of smaller diameters is another challenge.  Companies are compelled to import paper straws, which are four to seven times more expensive than their food-grade plastic counterparts. Frooti and Appy maker Parle Agro’s CEO Schauna Chauhan said that extending the deadline by six months was “critical” for developing local manufacturing capacities. While the company has started importing paper straws for now, she said it’s an unsustainable option and the “economics just does not match up for a Rs 10 product”. She said that 80% of integrated straws are recycled, and countries like China and Thailand have allowed their use. Chauhan further said it was not clear what would happen to the current stocks if the ban was enforced. Dairy giant Amul, which clocked sales of Rs 61,000 crore in FY22, also urged the government to delay the ban by one year saying the move will have a “negative impact” on farmers and milk consumption, while also warning of sales disruption. Citing global capacity constraints and logistical drawbacks, Parle Agro warned that that the industry might have to close factory operations if the deadline is not extended. There is a global shortage of paper straws. Only China, Indonesia and some European countries make paper straws and India comes low on their priority list. And for those who are trying to import machines to make paper straws locally, it is a one-year wait. The CEO of Action Alliance for Recycling Beverage Cartons (AARC), Praveen Aggarwal, estimates that imports can meet only 25% of the country’s demand by this year’s end. Can companies choose to ship the products without a straw or change the packaging to spout pouches instead? AARC's Aggarwal says there is going to be massive disruption if deadline isn’t extended. He says, changing packaging design is a time-consuming and costly process. Shipping products without straw compromises hygiene.  Environmentalists on the other hand argue that ample time has been given to the industry to find the appropriate substitutes for plastic straws. The phasing out of these straws was initially notified by the Central Pollution Control Board way back in 2018, fixing 2020 as the deadline for doing so. The present deadline of July 1 was set almost a year ago in August 2021. Compostable straws made of paper and corn starch-based polylactic acid are now being commonly used in ma

Thirumalai Selvan Shanmugam was told to leave TCS in 2015. The reason cited for his termination was underperformance. But Shanmugam wasn’t convinced. He moved the labour court in Chennai against the IT giant, seeking reinstatement. And after seven years of trial, he got what he wanted. Principal Labour Court in Chennai, directed TCS to reinstate Shanmugam. This case might have some long-term effect. It shows that unions and workers are evolving in the new set up and asserting their rights in IT companies too. And, as a result, the IT firms could face greater push-back from employees in future cases of performance-related or large-scale terminations. In setting aside Shanmugham’s termination, the Chennai court did not accept the IT giant’s argument that he was not covered under the Industrial Disputes Act’s ‘workman’ definition because his role had been supervisory in nature. A legal expert told a financial daily that the Shanmugham ruling suggests that employees of IT companies are not automatically exempt from the purview of the Industrial Disputes Act. Another legal expert said that the law has quite a wide definition of workman. This definition does not change under the new labour codes and exclusions to this definition are also limited. At present, the IT industry is more concerned with incredibly high attrition rates. Retaining talent is the topmost priority. However, there are many who have not forgotten the mass layoffs seen in the past decade.   In 2021, the Indian IT sector employed around 16 million workers. As recently as June last year, the National Association of Software and Services Companies had to allay fears of job losses in the IT sector.  In response to a report projecting massive IT job losses, the IT industry body had said that the sector would continue to be a net hirer of skilled talent and that the top five IT firms had plans to add over 96,000 employees during FY22. A Bank of America report had said that with automation taking place at a much faster pace across industries, Indian software firms would slash jobs by a massive 3 million by 2022.   So going forward, this Chennai court ruling, combined with the upcoming labour codes, will make the employees’ position in IT companies much stronger. It will also force IT firms to improve their handling of performance-related exits or mass layoffs in a better way.