Weekly Current Affairs

Welcome to the Endeavor Editors’ Weekly Current Affairs Choicest Blog series. Get a weekly roundup – of news from business, economy, markets, policy, and more. A quick capsule format news summary and update to keep you abreast with all the latest current affairs.

1) International News and Global Economy

Fed hikes 75 basis points a second time, signals third is possible

Federal Reserve officials raised interest rates by 75 basis points for the second straight month and Chair Jerome Powell said a similar move was possible again, rejecting speculation that the US economy is in recession. Policymakers, facing the hottest cost pressures in 40 years, lifted the target for the federal funds rate to a range of 2.25% to 2.5%. That takes the cumulative June-July increase to 150 basis points — the steepest since the price-fighting era of Paul Volcker in the early 1980s. While many are worried that the economy is verging on recession, Fed officials see the glass as half full, with the strong labor market allowing the economy to withstand rapid monetary tightening. Bloomberg Economics thinks there’s little chance that the Fed will pause its rate hikes later this year, as markets currently expect.

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Badrinivas NC speaks on US Fed Rate Hike, Global Growth Concerns & more | Indianomics | CNBC-TV18

Badrinivas NC of CITI South Asia shares his perspective on the U.S Fed rate hike, global growth concerns, and much more.

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US economy contracts in the second quarter, deepening recession fears

The US economy contracted for a second straight quarter between April and June, government data showed, fueling recession fears just months before key midterm elections in a blow for President Joe Biden. Gross domestic product declined at an annual rate of 0.9 percent in the second quarter, following a bigger drop in the first three months of the year, according to the Commerce Department. Two-quarters of negative growth is commonly viewed as a strong signal that a recession is underway, and a downturn in the world’s largest economy would have global consequences, as well as domestic political costs.

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IMF cuts global growth forecasts; warns high inflation threatens recession

The International Monetary Fund cut global growth forecasts again on Tuesday, warning that downside risks from high inflation and the Ukraine war were materializing and could push the world economy to the brink of recession if left unchecked. Global real GDP growth will slow to 3.2% in 2022 from a forecast of 3.6% issued in April, the IMF said in an update of its World Economic Outlook. It added that world GDP actually contracted in the second quarter due to downturns in China and Russia. The Fund cut its 2023 growth forecast to 2.9% from the April estimate of 3.6%, citing the impact of tighter monetary policy. The IMF cut its eurozone growth outlook for 2022 to 2.6% from 2.8% in April, reflecting inflationary spillovers from the war in Ukraine. But forecasts were cut more deeply for some countries with more exposure to the war, including Germany, which saw its 2022 growth outlook cut to 1.2% from 2.1% in April.

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China backs away from growth goal, sticks to virus controls

China’s leaders effectively acknowledged the struggling economy won’t hit its official 5.5% growth target this year and said they will try to prop up sagging consumer demand but will stick to strict anti-COVID-19 tactics that disrupted manufacturing and trade. The announcement after a Communist Party planning meeting reflected the high-cost President Xi Jinping’s government has been willing to incur to stop the virus in a politically sensitive year when Xi is widely expected to try to extend his term in power. The party promised to “strive to achieve the best results” in the second half. It didn’t directly address the growth goal but dropped references in earlier statements about targets, effectively acknowledging the economy will fall short after growing just 2.5% over a year ago in the first half.

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China Evergrande falls short of the promised restructuring plan

China Evergrande Group, the world’s most indebted developer at the center of a broader debt crisis in the country’s property industry, had for months vowed to deliver a ‘preliminary restructuring plan’ by the end of July. But when the beleaguered property giant made an exchange filing in Hong Kong late on the night of the final business day of the month, it presented instead what it called ‘preliminary restructuring principles.’ While the builder said it would try to announce a specific restructuring plan within 2022, it made no reference to the previously promised preliminary proposal, which investors had hoped would provide clarity on plans to sell assets and extend debt maturities.  Evergrande’s failure to deliver on its preliminary plan could fuel concern about the future of a firm whose fate has broader implications for China’s $50 trillion financial system and millions of homeowners. Other builders have added to record defaults since last year after a government crackdown on excessive leverage and speculation on housing. Liquidity crunches have prompted developers to stall projects and leave fees unpaid. Unprecedented mortgage and loan boycotts have erupted from angry homebuyers and suppliers.

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US Senate passes bill to boost chip production and counter China’s dominance

The US Senate has approved a bill to bolster the domestic manufacture of semiconductor chips and counter China’s share in the global chip production, a USD 280 billion legislation that President Joe Biden said will create jobs and lower prices on everything from cars to dishwashers. The bill, known as the Chips and Science Act, passed in a 64-33 vote on Wednesday. It will now head to the House, where lawmakers hope to pass it and send it to the White House for Biden’s stamp of approval. Biden said passage of the “historic bill” will lower costs and create jobs.

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The US plans to counter Chinese chip makers with a new bill in the global semiconductor race

On Wednesday, the US Senate approved the CHIPS and Science Act of 2022, a bill that aims to boost semiconductor manufacturing and counter competition posed by China. In ThePrint #World360, Pia Krishnankutty explains the contours of the bill and how the global semiconductor race has become all the more significant in a post-pandemic world.

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India-UAE-France hold their maiden trilateral meet

India-UAE-France on Thursday held their maiden trilateral meet to explore potential cooperation in the Indo-Pacific region including in maritime security, blue economy, and regional connectivity, and food & energy security. The three sides exchanged perspectives on the Indo-Pacific region and explored the potential areas of trilateral cooperation including Maritime Security, Humanitarian Assistance and Disaster Relief (HADR), Blue Economy, Regional Connectivity, Cooperation in Multilateral Fora, Energy and Food Security, Innovation and Startups, Supply Chain Resilience and Cultural and People-to-People Cooperation, officials said, adding, they also discussed the next steps to be taken for furthering the trilateral cooperation in the Indo-Pacific region.

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Russia to quit International Space Station ‘after 2024’

Russia has decided to quit the International Space Station “after 2024”, the newly-appointed chief of Moscow’s space agency told President Vladimir Putin. The announcement comes as tensions rage between the Kremlin and the West over Moscow’s military intervention in Ukraine and several rounds of unprecedented sanctions against Russia. Russia and the United States have worked side by side on the ISS, which has been in orbit since 1998. “Of course, we will fulfill all our obligations to our partners, but the decision to leave this station after 2024 has been made,” Yury Borisov, who was appointed Roscosmos chief in mid-July, told Putin.

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S&P downgrades outlook on Pakistan’s long-term ratings to ‘negative’

Rating agency S&P Global has revised Pakistan’s long-term ratings from ‘stable’ to ‘negative’ as the cash-strapped nation continues to grapple against the backdrop of higher commodity prices, the rupee’s depreciation, and tighter global financial conditions. The New York-based agency on Thursday affirmed its ‘B-‘ long-term and ‘B’ short-term sovereign credit ratings on Pakistan, as well as ‘B-‘ long-term issue rating on the country’s senior unsecured notes and Sukuks, which are Islamic financial certificates equivalent to bonds in Western finance.

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Banks far from hitting Paris climate targets, groups warn

The world’s most influential banks need to substantially accelerate climate efforts if global temperature rise is to be kept within the targets of the Paris Agreement, an assessment released by an institutional investors group warned. The efforts of 27 giant banks in North America, Europe, and Asia to align their policies with global warming of no more than 1.5 degrees Celsius is falling far short in every area measured in the pilot study, obtained exclusively by The Associated Press. The report said no major bank has committed to ending financing for new oil and gas exploration, and only one has promised to cut all coal financing in line with International Energy Agency guidelines. The evaluation is significant because it comes from within the financial community, echoing the idea that fossil fuel investments must wind down, which environmentalists, climate scientists, and energy experts have argued for years.

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Global coal demand to match record high this year, IEA says

Global coal demand is set to rise slightly this year to match a record high reached nearly a decade ago, the International Energy Agency (IEA) said, as gas prices have soared. In a coal market update report, the IEA said global coal consumption is forecast to rise by 0.7% in 2022 to 8 billion tonnes, assuming the Chinese economy recovers as expected in the second half of the year. That would match a record high set in 2013 and coal demand is likely to increase further next year to an all-time high. Coal consumption rebounded last year by around 6% as economies started to recover from the COVID-19 pandemic, contributing to the largest ever annual increase in carbon dioxide emissions.

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2) India

India wheat prices jump to record high, limiting the scope for govt-to-govt deals

Indian wheat prices jumped to a record high, despite a ban on exports, amid strong demand and dwindling supply from a crop damaged by the heatwave. The price rally has reduced the chances of India supplying substantial amounts of wheat under government-to-government deals with countries struggling to secure shipments amid the disruption of the war in Ukraine. India, the world’s second-biggest wheat producer, harvested 109.59 million tonnes in 2021. The government estimated less output this year because of a heatwave in March and April. Lower supplies are also reflected in government wheat procurement, which so far this year is down 57% on the same period of 2021, at 18.8 million tonnes.

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3) Economy

IMF cuts India’s growth forecast, ups global inflation projection

The International Monetary Fund has slashed India’s growth outlook for FY23 to 7.4% from the 8.2% forecast in April saying that the revision reflects mainly less favorable external conditions and more rapid policy tightening. In April, the IMF had slashed the growth projection from 9% citing higher commodity prices. In its latest World Economic Outlook report, it lowered the global growth forecast to 3.2% for 2022 from 6.1% in 2021 led by downgrades for China, the US, and India but raised the global inflation to 6.6% in advanced economies and 9.5% in emerging market and developing economies this year- upward revisions of 0.9 and 0.8 percentage point, respectively. For India, the revision reflects mainly less favorable external conditions and more rapid policy tightening,” the multilateral agency said. It expects India’s economy to grow 6.1% in FY24.

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4) Markets, Banking, and Finance

Credit Suisse names new CEO as losses widen

Switzerland’s scandal-hit banking giant Credit Suisse said it was appointing a new chief executive as higher litigation costs, financial market volatility and rising interest rates worldwide pushed it deeper into the red in the second quarter. “Our results for the second quarter of 2022 are disappointing, especially in the investment bank division, and were also impacted by higher litigation provisions and other adjusting items,” outgoing chief executive Thomas Gottstein said in a statement. Gottstein is to be replaced by Ulrich Koerner, currently head of asset management, with effect from August 1. Koerner previously worked at Credit Suisse in different roles between 1998 and 2009 after which he worked at rival bank UBS between 2009 and 2020.

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Advent, Carlyle to invest Rs 8,898 crore in Yes Bank

The board of Yes Bank has approved Rs 8898 crore investment from private equity investors Advent and Carlyle, ending months of negotiations. The investment will be split into two: 59% of the total will be via an upfront payment of equity and the remaining 41% will be through issuances of warrants that get converted into equity shares after 18 months. However, since the warrants are also being issued on a preferential basis, as per law, the investors will upfront pay 25% of the warrants. The bank will get an immediate capital infusion of Rs 6044 crore.

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5) Business

5G spectrum sale nears Rs 1.50 lakh crore mark on Day 5; bidding to resume on July 31

The total value of bids in the telecom spectrum auction, which began on July 26, has come within striking distance of the Rs 1.50 lakh crore mark.  After a flying start on July 26 that saw players pouring in Rs 1.45 lakh crore on the first day, the numbers moved up only incrementally over July 27, 28, 29, and 30 as Jio and Airtel engaged in intense bidding in Uttar Pradesh East circle for 1800 MHz band in the last couple of days. In all, 72 GHz (gigahertz) of radiowaves worth at least Rs 4.3 lakh crore is on the block. Besides powering ultra-low latency connections, which allow downloading full-length high-quality video or movie to a mobile device in a matter of seconds (even in crowded areas), the Fifth Generation or 5G would enable solutions such as e-health, connected vehicles, more-immersive augmented reality, and metaverse experiences, life-saving use cases, and advanced mobile cloud gaming, among others. The reserve price fixed for spectrum is a “fair number” and the same is visible from the auction outcome, the minister said.

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Cabinet clears BSNL-BBNL merger, approves revival package worth Rs 1.64 lakh cr

The Union Cabinet cleared the merger of Bharat Broadband Network Limited (BBNL) into the state-owned telecom operator Bharat Sanchar Nigam Limited (BSNL) during the cabinet meeting. With the merger, BSNL will get an additional 5.67 lakh kilometers of optical fiber which have been laid across 1.85 lakh village panchayats in the country using the Universal Service Obligation Fund (USOF). Currently, it has an optical fiber cable network of over 6.83 lakh kilometers. In addition, Union Minister Ashwini Vaishnaw also announced a revival package of Rs 1,64,156 crore for BSNL during the cabinet briefing today. The last approval for such a revival package was given in the year 2019.

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Spotlight On 5G Auctions & BSNL Revival Package, Experts share senses | News Centre | Business News

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DGCA orders SpiceJet to operate only half of its flights for 8 weeks

In an unprecedented action, Indian aviation regulator DGCA has directed low-cost airline Spicejet to operate only 50 percent of its flights for eight weeks. This follows an unusually high number of incidents involving the airline, raising safety concerns. The curtailment of capacity is unlikely to have any commercial impact on the airline owned by entrepreneur Ajay Singh. SpiceJet already operates less than 50 percent of the flights it had filed for the summer schedule. After the DGCA order, the airline said in a statement that there would be no impact on the airline. DGCA had in the first week of July issued a show cause notice to SpiceJet for its failure to ensure safe, efficient, and reliable services after eight incidents within a month.

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ArcelorMittal buys Brazilian steel co for $2.2 billion

ArcelorMittal SA agreed to buy Brazilian steelmaker CSP from shareholders including Vale SA for $2.2 billion as the steelmaker continued to expand its operations in the Americas. ArcelorMittal, itself created through one of the steel industry’s biggest ever takeovers, has been a compulsive dealmaker under the leadership of billionaire Executive Chairman Lakshmi Mittal. In the past few years, it’s swooped to buy plants from the US to India and Italy. “In CSP, we are acquiring a modern, efficient, established, and profitable business which further enhances our position in Brazil and adds immediate value to ArcelorMittal,” Chief Executive Officer Aditya Mittal said.

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Ola to lay off around 1,000 employees; to hire aggressively for Ola Electric

Mobility unicorn Ola is in the process of laying off around 1,000 employees as the company shifts its focus towards Ola Electric, with reports that the latter may hire four people for every one person laid off at Ola. The move is considered a restructuring rather than a cost-cutting measure. Earlier this week, it was confirmed that Ola Electric signed an Rs 18,000 crore PLI agreement with the government regarding the manufacturing of indigenous cells.

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6) Technology

In a first, Agri Infra Fund will facilitate loans to SMBs to buy startup drones

In a historic move, the government-backed Agri Infra Fund (AIF) has facilitated loans for small businesses and individuals to buy agri-drones. Depending on the number of drones and accessories purchased, a single loan can go up to Rs 10 lakh with 5% interest. This announcement is seen as a vindication of the work done by Chennai-based drone manufacturer Garuda Aerospace. Its indigenous Kisan Drone has been selected as the product that will be covered under this pioneering loan program. “Garuda Aerospace has already pre-booked over 2,500 drones and firmly is on the path to manufacturing one lakh Made-in-India Kisan Drones by 2024,” Agnishwar Jayaprakash, Garuda Aerospace founder, said in a press release. It has been a good 12 months for the drone industry. After the Drone Rules, clarifying the government’s regulatory stance were published last August, the industry also benefitted from a Rs 120 crore PLI scheme and a 40%-100% subsidy scheme for drone purchases.

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7) Politics

Partha Chatterjee, arrested in jobs scam, removed from all party posts: TMC

The TMC has removed Partha Chatterjee from the post of General Secretary, National vice president & three other positions. TMC leader Abhishek Banerjee said that he has been suspended till the investigation is underway and he can come back if proven not guilty. Earlier, the minister, who is facing an investigation in a school jobs scam, was sacked from the Cabinet. Chief Minister Mamata Banerjee later said at a government event here that she will look after the portfolios held by Chatterjee for the time being. The ED arrested Chatterjee, who is also the Trinamool Congress secretary-general, on July 23 in connection with its investigation into alleged irregularities in the recruitment drives by the School Service Commission (SSC).

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Amid probe, Delhi Deputy CM Sisodia rolls back liquor excise policy

Amid an ongoing police investigation into the Delhi government’s new excise policy and a faceoff with the Lt Governor who has sought a CBI probe, Deputy Chief Minister Manish Sisodia announced Saturday that the government is rolling back the new policy. From August 1, liquor will be sold only through government outlets in the Capital. The new excise policy was introduced in Delhi in November last year. It made sweeping changes to the nature and functioning of the liquor trade in the city. The government exited the customer-end of the trade entirely, shutting all government-run liquor vends, and the sale of liquor was handed over exclusively to private players. Before the policy was implemented, there were 849 liquor shops in the city. As reported by The Indian Express, an exodus of liquor vendors from nine zones in the city has led to the shutting down of 176 liquor shops between June and July this year. Another 108 shops could shut in the coming days.

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8) Sports

Commonwealth Games 2022: Mirabai Chanu wins gold, Bindyarani Devi grabs silver

Mirabai Chanu bossed the 49kg field as expected to defend her Commonwealth Games title and give India the first gold medal of the Birmingham edition on Saturday. The Olympic silver medallist aggregated a total of 201kg (88kg + 113kg) to stamp her authority in the competition and achieve a Commonwealth Games record in the process. Meanwhile, Bindyarani Devi won the silver medal in the Women’s 55kg category, raising India’s medal tally to 4.

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Commonwealth Games 2022: Jeremy Lalrinnunga bags 2nd gold medal for India

Young weightlifter Jeremy Lalrinnunga on Sunday bagged the second gold medal for India at Commonwealth Games 2022 by lifting 300 Kg in the men’s 67kg category, which is a record in itself. Lalrinnunga had achieved a record-breaking 140 kg lift in the snatch category and 160 kg in the Clean and Jerk category, which combined to give him a lift of 300 kg, a record at the Commonwealth Games. On Saturday, weightlifter Sanket Mahadev Sargar brought the first medal for India by winning silver in the 55 Kg weight. The 21-year-old lifted a total of 248kg (113kg 135kg) to come second. Meanwhile, Indian weightlifter Gururaj Poojary won a bronze medal in the Men’s 61 Kg weight category by lifting a total of 269 Kg in the Commonwealth Games 2022.

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44th FIDE Chess Olympiad inaugurated in Chennai, India

The 44th FIDE Chess Olympiad was inaugurated on July 28 at the Nehru Indoor Stadium in Chennai with fanfare, in the presence of Narendra Modi, the prime minister of India, and M.K. Stalin, the chief minister of the state of Tamilnadu, the main initiator of the event. The evening witnessed a march-past of the participating teams and was a sound and music spectacle to behold. A total of 187 teams in the open section will vie for the Hamilton-Russell Cup, and 162 teams in the women’s section for the Vera Menchik Cup, while the best-combined results of a nation in both the sections will decide the winner of the Nona Gaprindashvili Trophy. The open section of the Olympiad will feature a total of 187 teams, with the USA, India-1, and Norway as the top three seeds. The number of teams participating in the open section was lessened by one when Pakistan pulled out from the competition at the last minute, even after their team traveled all the way from Pakistan and reached Mahabalipuram itself.

For details visit here.

9) Opinion

New alliances in troubled times: Is it ‘anything goes’ for Biden and Putin? | To the point

Russia’s war in Ukraine was initially seen as a regional conflict but it’s having increasingly global repercussions, upending geopolitics and sparking tensions far beyond Europe. Both sides are forging new alliances with countries they only recently kept at arm’s length. Russia turning to an Iran still aspiring to be a nuclear power. Joe Biden swallowed his pride in a controversial visit to Saudi Arabia, which just three years ago he called a pariah.

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Is India Inc seeing the impact of a looming US recession?

The impending recession in the US is reflected in its domestic consumption. Indian exporters are already seeing a dip in new orders, while IT sector margins are declining. Should the exporters worry?

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Italy’s loss of Mario Draghi is a warning to progressives across Europe – and to the EU

In a summer overshadowed by the war in Europe, a pandemic, energy, and cost of living crisis, and climate chaos, Italy has decided to follow the UK and trigger a government collapse. Mario Draghi, the internationally admired former head of the European Central Bank, was never elected but was called upon in 2021 to lead a temporary government of national unity. That unity ended last week. Other European leaders are dismayed; many Italians are incredulous. The Draghi cabinet achieved consistently high approval ratings. And while Britain at least looks destined for a modicum of continuity as it switches Conservative leaders, Italy after a year and a half of apparent political stability is now heading for a September election where hard-right parties including the post-fascist Brothers of Italy party top the polls.

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Zomato Vs Swiggy: Will M&A Spree solve the profit puzzle for food delivery giants?

Zomato and Swiggy have more or less gone in a similar direction, but their experiments to grow revenue through acquisitions have come at a steep cost over the past two years. Despite the price increase for restaurant partners and reduced discounts offered to customers for deliveries, Swiggy and Zomato are not in the black yet. They are still looking for an ideal volume play that will push them out of the red. In the meantime, they are keen to explore new but adjacent revenue channels in the wake of a funding freeze and a global downturn where profit could be the only survival mantra. This largely explains why these heavily funded industry leaders are constantly exploring new service zones. Here, Zomato is seen as the more aggressive of the two, putting in more than $1.2 Bn for investments and acquisitions, while Swiggy has spent around $250 Mn on such deals.

For details visit here.

Can Netflix’s Ad-Supported model help it Navigate India’s OTT market?

For a long time, OTT giant Netflix’s CEO Reed Hastings continued to say that the streaming colossal would stay away from advertising as an ad-free experience was one of its core propositions for consumers. However, times have changed, and so have the market dynamics. Netflix, once a flag bearer of cord cutting and the growth of over-the-top (OTT) platforms, for the first time, lost subscribers during the last two quarters. After losing nearly 2,00,000 subscribers in the first quarter of 2022, Netflix lost nearly a million subscribers in the second quarter. While the streaming giant had already revealed its plan of bringing ads on its platform, it divulged the details of the plan in its Q2 shareholder letters. Netflix hoped to get the next 100 Mn subscribers from the Indian market but has not been able to achieve a strong market share yet. Although the propensity for paying has grown significantly among the Indian OTT audience, the advertising-based freemium model still leads the OTT market in India.

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10) Weekly special

Convenience and customer delight: Vikram Chopra of Cars24 reveals how the company grew

Speaking at The Success Edition, powered by Kotak Mahindra Bank in association with YourStory, Vikram Chopra narrated his lessons of success and failure in the fast lane.

Watch video here.

11) Did you know?

What is a spectrum and how does it work?

Airwaves are radio frequencies within the electromagnetic spectrum that can carry information wirelessly for a range of services including telecommunications. The government manages and allocates airwaves to companies or sectors for their use. Spectrum can be divided into bands ranging from low frequency to high frequency, which determines usage and is useful in allocation. A low-frequency wave is one that gets repeated a fewer number of times within a second, whereas a high-frequency wave is repeated more number of times within a second. High-frequency waves carry more data and are faster than lower-frequency waves but can be blocked or obstructed easily. Lower-frequency waves can provide wider coverage. 5G spectrum bands can be clubbed into low, mid, and high spectrum buckets. The low band spectrum, which is less than 1 GHz (600 MHz,700 MHz, 800 MHz, 900 MHz), offers blanket coverage suitable to serve thousands of customers over long distances with fewer towers. These bands are ideal for wide and in-building coverage and when bundled with high-spectrum bands can be used for commercial mobile and broadcasting services. The mid-band spectrum ranges from 1 GHz to 6 GHz (1800 MHz, 2100 MHz, and 2300 MHz) and provides coverage as well as the capacity to carry more data while traveling significant distances. The high bands range from 24 GHz to 40 GHz and are also known as the millimeter wave spectrum, which is ideal for speedy networks over short ranges. However, this range is subject to interference from dense objects.

For details visit here.

With that, we come to an end of our Weekly Current Affairs July 2022 -Week 5. We hope you have liked it. Write your feedback in the comments below and let us know if there is anything else you would like us to cover.

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