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Why are Horlicks, Complan on sale? An Amitabh Bachchan tweet might explain

On May 31, veteran film star Amitabh Bachchan tweeted: “I am taking the 1st step by joining the biggest movement to fight malnutrition @MissionPoshan, @Network18Group and @Horlicks_india to support India’s Rashtriya Poshan Abhiyaan.”

Bachchan’s tweet kicked off a controversy. A national-level advocacy group called Nutrition Advocacy in Public Interest wrote an open letter to Bachchan, asking him to withdraw the endorsement. It claimed that Horlicks was a high-sugar product and its claims of making children healthier were not scientifically backed. It also claimed that the consumption of the product was “harmful for children as it may contribute to childhood obesity and non-communicable disease in later life”.

GSK Consumer, which has put its consumer nutrition business, including Horlicks on the block, said that Bachchan would be the ambassador for its “Horlicks Mission Poshan” campaign, supporting the government’s Rashtriya Poshan Abhiyaan. According to a report, Bachchan clarified he was endorsing Mission Poshan and not any particular brand.

Horlicks and Complan, another iconic malt-based drink, might be on sale today for different reasons, but they are operating in a segment which is in decline. Increasing Health consciousness is driving the consumer away from such drinks. Volume growth in the health food drinks segment reached – 6.8% in 2016-17, according to an ET report. More alarming could be the fact that the fall in volume in this category happens to be the first in a decade in India. A steep fall in the prospects of the estimated Rs 7,000 crore health food drinks (HFD) segment might pose a challenge for the new owners of Horlicks and Complan.

The past three years, reckon analysts tracking the segment, have been challenging for most HFD players in India. Apart from intense competition, rising popularity of substitute products such as syrups has also affected growth, says Abneesh Roy, senior vice-president at Edelweiss Financial Services. Roy, however, is quick to point out that there’s light at the end of the tunnel. The companies, he says, need to focus on health, rather than taste.

Besides increasing health consciousness, there is a host of other challenges HFDs face. One is from startups offering health foods and snacking options. As parents now pay more attention to product labels, many products claim to be healthier, for example by claiming to be free of any preservatives.

What’s also adding to the woes of HFD players is competition from an unexpected quarter: PediaSure. The brand from Abbott has been the sole bright spot in the HFD category. It has even eaten into the market share of top HFD players, says a Motilal Oswal report. Brands from pharma companies entering the nutrition segment would appeal more to a health conscious consumer.

HFDs also face competition from breakfast cereals. HFDs were used to get kids to drink milk. There is now a growing preference to have cereals with milk, so parents don’t bother about HFDs.

ET Explains: What is helicopter money and why is it in news?

With no quick escape in sight for Covid-ravaged economies, authorities the world over are going back to the drawing board to find strategies to deal with this nightmare.

One such strategy doing the rounds is ‘helicopter money‘. It basically means non-repayable money transfer from the central bank to the government. It seeks to goad people into spending more and thereby boost the sagging economy.

Here we attempt to answer a few relevant questions about helicopter money.

  1. What is helicopter money?
    This is an unconventional monetary policy tool aimed at bringing a flagging economy back on track. It involves printing large sums of money and distributing it to the public. American economist Milton Friedman coined this term. It basically denotes a helicopter dropping money from the sky. Friedman used the term to signify “unexpectedly dumping money onto a struggling economy with the intention to shock it out of a deep slump.”Under such a policy, a central bank “directly increase the money supply and, via the government, distribute the new cash to the population with the aim of boosting demand and inflation.”
  2. Why is helicopter money in news now?
    With the coronavirus-hit economy falling deeper and deeper into a chasm with each passing day, Telangana chief minister KC Rao today said helicopter money can help states comes out of this morass. He asked for the release of 5% funds from GDP by way of quantitative easing (QE).QE, a policy followed all over the world, is the only way to deal with the situation, Rao said. “To counter (economic crisis) this we need a strategic economic policy. RBI should implement quantitative easing policy. This is called Helicopter Money. This will facilitate the states and financial institutions to accrue funds. We can come out of the financial crisis. Release 5 percent of funds from the GDP through Quantitative Easing Policy,” he suggested.
  3. Is helicopter money the same as quantitative easing?
    Quantitative easing also involves the use of printed money by central banks to buy government bonds. But not everyone views the money used in QE as helicopter money. It sure means printing money to monetise government deficits, but the govt has to pay back for the assets that the central bank buys.It’s not the same as bond-buying by central banks “in which bank-owned assets are swapped for new central bank reserves.”Helicopter money is also different from a central bank directly financing the debt of a government.
  4. Is Japan deploying helicopter money?
    According to some analysts, the yield curve control that Japan is resorting to is basically a type of helicopter money only. That is because this strategy lets the government spend more without having to worry about bond yields jumping.BoJ, however, rejects the allegation on the basis that the “BoJ still buys bonds from the market and does not directly underwrite debt from the government, something that could undermine confidence among investors.”The line, however, is blurred as BoJ buys roughly the same or bigger amount of bonds issued by the government.