seaborne empty chair is the reactor star attraction at g7 ... · livemint.com new delhi, mumbai,...
TRANSCRIPT
LIVEMINT.COM
NEW DELHI, MUMBAI, BENGALURU, KOLKATA, CHENNAI, AHMEDABAD, HYDERABAD, CHANDIGARH*, PUNE* VOL. 13 NO. 205
TUESDAY, AUGUST 27, 2019
S E N S E X
37,494.12792.96
N I F T Y
11,057.85228.50
DOL LAR
₹72.02₹0.36
E URO
₹80.09₹0.02
GO LD
₹38,521.00₹922.00
O I L
$59.70$0.36
What trade deals werebandied around?
The agenda included discussions of the fires destroying the Amazon.Trump has been less vocal on the issue. He stands out from the rest of G7 in his friendship with Brazilian President Jair Bolsonaro, whose policies have made the country an agribusiness power—at huge cost to the environment. An even bigger issue is Trump forcing close allies into hard negotiations on market access and tariffs. UK PM Boris Johnson urged Trump to step back from trade wars. Trump said Johnson would untangle the Brexit mess and described EU as “an anchor around their ankle”. He then promised Johnson a trade deal “bigger than we’ve ever had”.
Was Iran the surprisepackage at the meet?
The presence of Iranian foreign minister Mohammad Javad Zarif at the summit wasn’t expected and it represented a gamble by French host Emmanuel Macron, who is seeking to ease tensions over a nuclear standoff between Iran and the US. Zarif didn’t meet Trump, French diplomats said, but held talks with Macron and British and German officials before returning home. Trump later said it was realistic to think that a meeting with Iran’s president Hassan Rouhani could happen in the coming weeks “if the circumstances were correct”. Trump said progress can be made, although not immediately.
Did PM Narendra Modihave a busy day?
Modi highlighted India’s large-scale efforts to eliminate single-use plastic, harnessing solar energy, saving water and protecting flora and fauna. He attended the summit on Macron’s special invitation. “... PM @narendramodi attended the dedicated session of #G7Biarritz summit on ‘Biodiversity, Oceans, Climate’. Underlined India’s contribution to address reducing biodiversity, climate change, water stress & ocean pollution,” tweeted external affairs ministry spokesperson Raveesh Kumar.
Did Trump have a change of heart?
Despite Macron spending two hours with Trump and all seven leaders discussing Iran, the US leader seemed not to have budged on easing oil sanctions. Trump, who had recently raised tariffs on Chinese goods, appeared to admit at the summit he had “second thoughts” about it. Hours later, his spokeswoman said he’d been misunderstood and that his regret was not to have raised tariffs even more. Trump and Japanese Prime Minister Shinzo Abe separately announced they had pencilled in a bilateral trade deal. AGENCIES
Was G7 help enough tosalvage the Amazon?
G7 countries pledged $20 million on Monday to help fight fires in the Amazon rainforest. It’s a small sum, but summit host France hopes it will bring more attention to the fires.
1
mintprimer
G7 leaders closed their summit on Monday with discussion of world problems including the fires ravaging the Amazon rainforest, but overshadowed by US President Donald Trump’s trade wars and questions over the group’s unity. A look at what happened in Biarritz.
Empty chair is the star attraction at G7 summit
QUICK EDIT
Despite the Chernobyl nuclearmeltdown and the recentexplosion at a military testingsite, Russia seems keen totempt fate again. On Friday, itlaunched the world’s first float-ing nuclear reactor on a journeyacross the Arctic to north-east-ern Siberia. Russia’s nuclearagency, Rosatom, wants to sellseaborne reactors globally, saysa report. Needless to say, thevery concept has a dangerousring to it. Is it a floating nucleardisaster waiting to happen?
Nuclear reactors, as theystand, produce nuclear wasteand there is always a likelihoodof accidents. This one is sus-ceptible to sea storms, too.Since potentially hazardousspent fuel will be stored onboard, there is the risk of anuclear spill that could irradi-ate the Arctic. It’s an environ-mental danger of a new kind,one that the world is ill-pre-pared to deal with. Russia andother Arctic countries may nothave the wherewithal for aclean-up in case somethinguntoward happens. However,perhaps the floating reactordeserves a chance before it’sjudged. Let’s keep our fingerscrossed and hope that the Rus-sians have taken proper stock ofthe risks involved, and are notblithely skating on thin ice.
Seaborne
reactor
2
3
4 5
MINT METRICby Bibek Debroy
Badminton’s dizzy height
Brings us delight,
As we behold
Sindhu’s world championship gold,
The Olympics are next in sight.
P.V. SINDHUBADMINTON PLAYER, AFTER WINNING THE GOLD AT BWF WORLD CHAMPIONSHIPS
I could not hold back my tears when I saw the Indian flag and heard the National anthem playing. Words can’t express my feelings about yesterday’s win at the World Championship.
QUOTE OF THE DAY
AFP
JAKARTA
Indonesia has chosen the eastern edgeof jungle-clad Borneo island for itsnew capital, President Joko Widodo
said Monday, as the country looks toshift its political heart away from con-gested megalopolis Jakarta.
The proposed location—near theregional cities of Balikpapan and Sama-rinda—is in the geographical centre ofthe Southeast Asian archipelago and anarea where the government already
owns some 180,000 hectares of land, headded. “As a large nation that has beenindependent for 74 years, Indonesia hasnever chosen its own capital,” Widodo
said in a televised speech.“The burden Jakarta is holding right
now is too heavy as the centre of govern-ance, business, finance, trade and servi-ces,” he added. He said the estimatedcost of the project was around 466 tril-lion rupiah ($33 billion). The movecomes as concerns about Jakarta’sfuture soar. The megacity—first estab-lished by Dutch colonists nearly 500years ago—is one of the fastest-sinkingcities on earth, with environmentalexperts warning that one third of it couldbe submerged by 2050 if current ratescontinue.
Move over Jakarta, Indonesia picks a new capital
Indonesian President Joko Widodo
MINT CURATORm
AP
US President Donald Trump skipped a discussion on climate with other world
leaders at the G7 summit, leaving an empty chair as global power brokers
debated how to help the fire-ravaged Amazon and reduce carbon emissions. AP
PEANUTS by Charles M. Schulz
DELHI’S HISTORY IS
BEING ENCROACHEDHOWINDIALIVES.COM
WHAT IS IT?
The number of protected historic sites inDelhi that are being encroached upon.
WHY DOES IT MATTER?
Delhi is ranked sixth among states that have most sites with
encroachments. It has 174 monuments and sites that are protected by the Archaeological
Survey of India. Of the 3,686 protected monuments and sites across the country, 321 have
been encroached, according to Prahlad Singh Patel, Union minister of state for culture
and tourism. In Delhi, Kashmere Gate, the northern gate to the historic walled city built
by Mughal emperor Shah Jahan; the tomb of Razia Sultan, Delhi sultanate’s first and only
woman ruler; Sarai Shahji, another Mughal era monument; and Purana Qila, one of the
oldest forts in the city, are among the sites that have been encroached. This is at a time
when there is a growing interest in historical sites for both cultural and economic reasons. For e.g., the Delhi
government’s archaeology department joined hands with the Delhi chapter of the India National Trust for Art and Cultural
Heritage (Intach) to conserve monuments. The plan is to take up 92 sites for conservation in phases. All these can push
tourism, which is one of the levers that government hopes will bring the economy back on track. Delhi government has been
aligning some of its other services, including a revamp of its hop on hop off buses—to make the state more tourism-friendly.
Howindialives.com is a database and search engine for public data
DELHI IN NUMBERS
11
Monumental problemEncroachments in protected monuments and sites
Source: Ministry of Culture
0
100
200
300
400
500
600
700
800 Number of monuments encroached
Total number of protected monuments
Uttar Pradesh
Tamil Nadu
Karnataka ChhattisgarhRajasthanMaharashtra Delhi
743
413506
285162 174
46 4722 11 775 74 48
Virtual beings get real with first Emmy award
Pavel Alpeyev
TOKYO
Creators of virtual beings can now thank the academyfor giving their work real-world recognition.
Fable Studio Inc.’s Wolves in the Walls is a virtualreality adaptation of a Neil Gaiman children’s book, and itjust won an Emmy for outstanding innovation in interactivemedia. The story uses virtual reality (VR) goggles and hand-held motion controllers to cast the player in the role of animaginary friend for 8-year-old Lucy as they investigate thesource of strange noises in her home. Lucy is a class of char-acter now referred to as a virtual being.
“This is the first virtual beings project to get an Emmy,”said Edward Saatchi, a co-founder of Fable, which was spunout of a VR movie studio owned by Facebook Inc. “It shouldreally help in Hollywood, get people thinking that maybe weshould put a virtual being in a movie or have a virtual beingsinger.”
But what are virtual beings? Saatchi’sdefinition is a digital character with whomyou can build a two-way relationship.While there is nothing yet that fully meetsthe standard, a number of companies havesprung up with attempts ranging fromcomputer-generated (CG) Instagram influ-encers to chatbots and AI-powered digitalcompanions. Millions of people alreadydeal with primitive virtual beings when they ask their smartspeakers for the day’s weather or cooking instructions,Saatchi contends.
“If the question is whether this is a real thing—for sure,’’said Sinan Aral, professor of information technology andmarketing at MIT Sloan School of Management in Cam-bridge, Massachusetts. “This market is being made now.’’
For now, most of the action happens on Instagram. It’sbeen well over a decade since people realized that even amodest social media following can be converted intoincome, because brands will pay for ads that come with apersonal touch.
Now, entrepreneurs have figured out you can also manu-facture micro-celebrities with computer graphics, and fanswill still follow. For brands, CG influencers offer messagecontrol and flexibility without the messiness of dealing withreal personalities.
“Because it is so blatantly a creation, the question ofauthenticity is moot,’’ said Sara Menouni, a creative directorat Ykone, a Paris-based agency that pioneered influencermarketing. “This completely changes the game.”
The most famous among Instagram’s virtual beings is Lil
Miquela, who has 1.6 million followers and in May showedup in a Calvin Klein commercial sharing a kiss with flesh-and-blood supermodel Bella Hadid. Miquela’s success hasinspired a number of imitators. Shudu, created by a formerfashion photographer, bills itself as the world’s first digitalsupermodel. Even KFC jumped on the bandwagon with asuave virtual version of Colonel Sanders.
Some of the most lifelike creations hail from Japan. Pink-haired Imma, a computer-generated face composited ontoa photo of a real human model, is mostly indistinguishablefrom a real person. Another one is Saya, a virtual schoolgirlthat debuted in 2015. The husband-and-wife team that cre-ated Saya said they made a habit of observing teenagewomen on the subway from behind the safety of sunglasses,considering what gives youthful skin a particular transpar-ency or how the back of an ear should look.
Liam, a rare male character, is looking to break into themusic business. The goal is to be the first virtual being to wina Grammy, said Hirokuni Genie Miyaji, a Tokyo-basedentrepreneur who sold his previous business managing real
influencers to fund the new venture. Liamplans to release its first song next monthusing a synthesized voice assembled, withthe help of artificial intelligence, from fivedifferent human audio samples, Miyajisaid.
Progress in making more believable vir-tual beings is a measure of how good thetech is getting, and there is a convergence
of technologies under way, according to Fable’s Saatchi.Advances in natural language processing, machine visionand real-time computer rendering are giving avatars moreagency, a persistent memory of earlier interactions and bet-ter understanding of their human interlocutors.
But these technologies are still in their early stages andadopting them too soon risks breaking the spell. There is areason why most CG influencers stick to still photos—ani-mating human hair, for instance, is notoriously tricky. Thenegative emotional response to artificial things that lookalmost but not quite human is common enough to have aname: “the uncanny valley.”
One bit of good news for the likes of Miquela is that theirfans can be surprisingly forgiving. Mika Iimori, a 37-year-oldliving in Hiroshima, follows Imma and Liam on Instagramand says lifelike perfection is not the key to their appeal.She’d like to see them speak and move around, even if thatmeans that occasionally they let the mask slip.
“I want to see them grow and change,” Iimori said. “If any-thing, that part is fun – you get to look forward to seeing whatthey can become. Same as a human. The incompleteness isattractive.” BLOOMBERG
Fable Studio’s ‘Wolves in the Walls’ won for outstanding
innovation in interactive media
FLIP SIDE
Gopika Gopakumar &
Shayan Ghosh
MUMBAI
The Reserve Bank ofIndia (RBI) will transfer₹1.76 trillion to the gov-ernment this fiscal, thecentral bank said after a
board meeting.The transfer includes ₹1.23 tril-
lion of surplus for 2018-19 and₹52,637 crore of excess provisionsidentified as per the revised Eco-nomic Capital Framework (ECF)adopted at the meeting, RBI saidin a statement on Monday. Thehigher surplus is due to the long-term forex swaps and the openmarket operations (OMO) con-ducted by the central bank overthe last fiscal.
The surplus transfer was final-ized in line with the recommenda-tions of the committee underformer central bank governorBimal Jalan. RBI’s central boardaccepted all the recommendationsof the committee.
The additional amount of₹86,000 crore that the govern-ment will receive this year aboveits budgeted ₹90,000 crore astransfers from RBI could be eitherused to provide fiscal stimulus to asagging economy, reduce off-bal-ance sheet borrowings or meet the
by RBI within the overall level ofits economic capital, the statementsaid.
The committee defines eco-nomic capital as a combination ofrealized equity and revaluationreserves. RBI’s realized equity,which is a form of contingencyfund for meeting all risks/lossesprimarily built up from retainedearnings, currently stands at 6.8%and the Jalan committee recom-mends it to be in the range of6.5-5.5% of the balance sheet.Keeping these recommendationsin view, the central board hasdecided to set the realized equitylevel at 5.5% of the balance sheet,while transferring the remainingexcess reserves worth ₹52,637crore to the government.
“Jalan committee has given arange of 5.5-6.5% for ContingentRisk Buffer. My worry is all gov-ernments will work at the lowerrange of 5.5%, like they have doneit for this year. It does not give RBIvery much space to manoeuvre.Keeping RBI at the rock-bottomlevel is not a sensible idea, but I amafraid that is what is going to hap-pen,” said Pronab Sen, formerchief statistician of India.
The central board has alsodecided to set the economic capi-tal level comprising the contin-
TURN TO PAGE 6
Synergy’s interest in Jet makes creditors extend bid deadline
inflated, they say that therun-up to the 2020 Olympicswill provide a big window ofmarketing opportunity.
Sindhu’s win is one of thebiggest in Indian sport, said
Indranil Das Blah, chief execu-tive of Kwan Sports. “I won’t besurprised if her overall com-mercials increase by at least25% in value. Also, brandscould hopefully ride on her
Bulls charge back as fiscal package, trade talks boost sentiment
a few relatively old planesappear to be the only assetsbefore a potential bidder.
The lenders had receivedjust three EoIs before thedeadline—from billionaireAnil Agarwal’s family trustVolcan Investments, Panama-based Avantulo Group andRussian fund Treasury RACreator.
Soon after, Volcan Invest-ments withdrew its interest,while Avantulo was not short-listed, leaving only TreasuryRA Creator in the fray.
Some are, however, not con-vinced that Jet Airways can berevived with a new investor.
“There is hardly any valueleft in the airline,as most of its tal-ent has alreadyleft the carrierafter its ground-ing. At present,the only valuepotential buyerscan get from JetAirways is its slotsat busy airports, a
stake in its frequent flyer pro-gramme and a few planes,”said an industry executive,who requested anonymity.
“The lenders will be askedto take a huge haircut if some-one really bids for the airline,”the person added.
Meanwhile, the committeeof creditors for Jet Airwaysthat met on Monday could notdecide on an interim fundingplan.
“The lenders have informedthe resolution professionalthat it shouldn’t be made man-datory for banks to participatein the interim funding proc-ess,” said the first person citedearlier.
Gopika Gopakumar &
Rhik Kundu
MUMBAI/NEW DELHI
Lenders to Jet Airways(India) Ltd have extendeduntil Saturday the dead-
line for submitting expres-sions of interest (EoIs) to investin the grounded airline toaccommodate a potential bid-der, which submitted an EoIafter the expiry of the dead-line, a person with directknowledge of the matter said.
“The deadline has beenextended to 31 August after aforeign conglomerate showedinterest to invest in the airlinepost the dead-line,” the personsaid on conditionof anonymity.
South Ameri-can conglomer-ate SynergyGroup Corp.,which owns amajority stake inColombian car-rier Avianca Holdings, the sec-ond-largest airline in SouthAmerica, has shown prelimi-nary interest in Jet Airways,according to media reports.
Synergy submitted an EoIafter the deadline expired on10 August.
The EoIs are technically notbids, but they have helped len-ders gauge the level of interestin the debt-laden airline. Theconsortium of banks led by theState Bank of India is, how-ever, expecting these entitiesto put in bids, as the deadlinewas extended to accommodateEoIs from some of them.
Access to prime slots at keyairports, a stake in a profitablefrequent flyer programme and
The South American
conglomerate submitted an EoI after the
deadline expired on 10 August
ECHOES OF THE 1930ECHOES OF THE 1930ss IN IN THE US-CHINA TRADE WARTHE US-CHINA TRADE WAR uuP2P2
PLAINFACTS
A MESSAGE FROM THE A MESSAGE FROM THE KHAN MARKET GANGKHAN MARKET GANG uuP8P8
The chemistry between Prime Minister Narendra Modi and US President Donald Trump was on
display on Monday. When Modi asked reporters to let the two speak in private, Trump joked that
the Indian Prime Minister speaks very good English, but doesn’t want to talk. The two clasped
hands while those present in the room burst into laughter. TWITTER@NARENDRAMODI
US-China trade war intensify-ing. Stock markets in China,Japan, Hong Kong and Koreafel l 1 -2% after Chinaannounced it would imposeadditional 5-10% import tar-iffs on $75 billion of USimports in phases between 1September and 15 December.Trump’s comments that Bei-jing had reached out to the USto resume trade talks calmedinvestors globally, with Euro-pean indices gaining in earlytrading.
That Sitharaman didn’tannounce an economic stim-ulus along the lines thatIndian businesses were clam-ouring for reassured bondinvestors. The government’s10-year bond yield fell over
nine basis pointson Monday astraders expectedthe measuresannounced onFriday to have alimited impact onIndia’s fiscal defi-cit. The 10-yearg o v e r n m e n tbond yield closedat 6.48%.
“There wasrelief in bond markets that thegovernment announcedmeasures without touchingfiscal deficit,” said K. Harihar,head of treasury at FirstRandBank. “Also, there were hopesamong traders of a higher-than-expected surplus trans-fer by the Reserve Bank ofIndia to government.” Thecentral board of RBI on Mon-day decided to transfer ₹1.76trillion to the government.
The Indian rupee paredlosses after hitting an eight-month low of 72.25 a dollar,tracking gains in local equitymarkets and anticipating
TURN TO PAGE 6
Nasrin Sultana
MUMBAI
Indian stocks surged morethan 2% on Monday, thebiggest gain in three
months, as investors cheeredthe government’s fiscal pack-age and US President DonaldTrump claim that China hadreached out to Washington torestart trade talks amid fearsthat a prolonged trade warcould trigger a global reces-sion.
The BSE’s benchmarkSensex rose 792.96 points, or2.16%, to 37,494.12, while theNational Stock Exchange’s50-share Nifty index gained2.11% to 11,057.85 points. Onthe BSE, 1,705stocks advanced,w h i l e 8 1 1declined and 123r e m a i n e dunchanged.
On Friday,finance ministerNirmala Sithara-man scrapped acontroversial taxsurcharge on for-eign portfolioinvestors (FPIs) andannounced measures to stokedemand, including a rejig ofits spending programme byfront-loading it, addressingsupply-side bottlenecks andeasing bank credit rules, evenas she promised to end “taxterrorism” that has left com-panies jittery.
Banking stocks led therally, with the BSE Bankex ris-ing 3.57% because of the gov-ernment’s proposal to front-load its ₹70,000 crore capitalinfusion into state-run banks.The government’s decision toroll back the tax surcharge onFPIs is expected to reverse theinvestment outflow fromIndian stocks.
Indian markets also buckedMonday’s fall in global mar-kets, roiled by fears of the
The Sensex’s 793-point rise
on Monday was the biggest in three months
T H E I R V I E WC Y R I L S H R O F F
See Page 15
M U S I N G M A C R OA J I T R A N A D E
See Page 14
B A R E T A L KV A N A N T H A N A G E S W A R A N
See Page 14
Barely a month after 27 IRS officers were given early retirement, 22 senior Central Board of Indirect Taxes and Customs officials on Monday were told to put in their papers over corrupt practices. See Page 16
Govt compulsorily retires 22 tax officials over corruption charges
BoB will buy NBFC assets worth ₹5,600 cr, co-originate loans of ₹1,000 cr, provide loans of ₹3,575 cr for on-lending to the agri sector and has set aside ₹500 cr for “high-ticket balance sheet takeover”. See Page 6
Bank of Baroda plans ₹10,675 crfresh exposure to shadow banks
So far this year, the auto components sector has witnessed just two deals worth $29 million, compared with eight deals worth $712 million in 2018, according to deal tracker Venture Intelligence. See Page 3
PE investments, exits in auto components space grind to a halt
DON’T MISS
The National Restaurant Association of India has written to food delivery platforms listing concerns over discounts and other clauses, urging them to change the way they on-board and remunerate eateries. See Page 7
Restaurants look to rebalance relationship with delivery apps
A CBI court on Monday extended till 30 Aug the custody of former finance minister P. Chidambaram in the INX Media case, even as the SC extended interim protection from arrest by the ED. See Page 17
No relief for Chidambaram as CBI court extends custody till Friday
Elizabeth Roche
NEW DELHI
Prime Minister NarendraModi on Mondayrejected US President
Donald Trump’s earlier offerto mediate the dispute withPakistan over Kashmir, whilesaying the two South Asianneighbours can resolve allissues bilaterally.
Modi made the remarkswhile interacting with report-ers, sitting next to Trump,ahead of a formal bilateralexchange between the twoleaders. Trump in his earlycomments to journalists saidIndia and Pakistan couldresolve the issue themselves, adeparture from his earlierstand.
The two leaders were inter-
TURN TO PAGE 16
Modi trumps Imran on J&K mediation
Banking stocks led the rally, with the BSE Bankex rising 3.57% on
govt’s plan to front-load ₹70,000 cr capital infusion into banks.
Hope back but shadow of
uncertainty remains >P4
expected shortfall in revenue col-lections.
“It is a surprise to a certainextent because we had expected itto be a staggered payment to thegovernment instead of everythingin one shot. The budget expecteda ₹90,000 crore surplus transferand this extra ₹80,000 crore, tomy mind, will act as a cushionagainst the possible shortfall inrevenue collection in FY20,” saidMadan Sabnavis, chief economist
at CARE Ratings. “Overall, I do notthink that this will have inflation-ary pressures on the economy,since firstly, the current inflationlevels are quite low and secondly,the government might not use thisfor spending and could instead useit to meet the possible revenueshortfall.”
The RBI committee has recom-mended a surplus distributionpolicy, which targets the level ofrealized equity to be maintained
m MINT GRAPHITI
WINDFALL GAINS
Surplus transfer to government (in ₹ crore)
RBI’s reserves
*Includes ₹52,637 crore of excess provisions identified as per the revised Economic Capital Framework
Source: RBI
FY13 FY14 FY15 FY16 FY17 FY18
Contingency fund
Asset development
fund
Currency and gold revaluation
account
Investment revaluation
(in ₹ trillion)
FY17
33,010 52,67965,896 65,876
30,65950,000
2.28
0.23 0.57
5.36.92
0.23 0.13
2.32
The record �1.76 trillion payout to the Centre is more than treble what was transferred in the previous fiscal year.
FY18
FY19*
1,76,051
Shaktikanta Das RBI governor
PHOTOGRAPH BY BLOOMBERG; GRAPHIC BY PARAS JAIN/MINT
MINT
Saumya Tewari
NEW DELHI
Ace shuttler P.V. Sindhu,who became the firstIndian to win gold at
the BWF World Champion-ships, is expected to witness asurge in her brand endorse-ment fee and value, said sportsmarketing executives.
Sindhu’s annual brand fee isexpected to double from ₹1-1.5crore to ₹3 crore, said TuhinMishra, managing director andco-founder of Baseline Ven-tures, which manages herportfolio.
“Because to this win, there’sa lot of interest, but Sindhu isalready the No. 1 woman ath-lete in India. She has been
commanding a certain pricebecause of what she hasachieved in the last threeyears,” Mishra said. “Wealways ensure that her dealscomplement her personality.Moreover, deal size is alsodependent on market dynam-ics.”
Sindhu, with 14 deals wortharound ₹40 crore in her kitty,endorses a wide variety ofbrands, including Yonex, JBL,Bridgestone, Moov, Bank ofBaroda and Gatorade. In Feb-ruary, she had signed a four-year sponsorship deal worth₹50 crore with Chinese sportsbrand Li-Ning.
Although some sports mar-keting executives said the24-year-old’s current com-manding price looks a little
potential to win a gold medal atthe Olympics, which seems adistinct possibility now.”
With total earnings of $5.5million, Sindhu is tied for the13th place in The Highest-PaidFemale Athletes2019 list releasedby Forbes thatincludes prizemoney, salaries,b o n u s e s ,e n d o r s e m e n t sand appearancefees betweenJune 2018 andJune 2019.
Although Sindhu is India’smost successful female athlete,her brand value doesn’t comeclose to cricketer Virat Kohli,who is worth ₹200 crore.Experts said marketing oppor-
tunities have opened up inrecent years for female athletesdue to the growth of socialmedia platforms.
With over 5 million follow-ers on Instagram, Twitter and
F a c e b o o k ,Sindhu strikes adeep connectionwith fans. “Indianeeds sportsicons such asSindhu. She’sy o u n g a n dauthentic onsocial media plat-forms, which
helps her connect well withher fans, which brands want toleverage,” said Jigar Rambhia,national director for sports andentertainment partnerships atWavemaker India.
SINDHU NOW SET TO STRIKE GOLD WITH ENDORSEMENTS
The brand standings Virat Kohli led Indian sportspersons with the highest earnings from endorsement deals in 2018.
(in ₹ crore)
200 100
40Virat Kohli M.S. Dhoni
Sachin Tendulkar
P.V. Sindhu
35
Source: GroupM sports sponsorship report
482 WHAT INDIAN sportspersons earned in endorsement deals in 2018.
The ace shuttler’s annual brand fee is likely to double to ₹3 crore as she has clinched the
badminton world championships
NAVEEN KUMAR SAINI/MINT
Govt’s ₹1.76 tn RBI bonanza raises fresh stimulus hopes
Govt gets an additional ₹86,000 crore above the budgeted ₹90,000 crore from RBI
LIVEMINT.COM
NEW DELHI, MUMBAI, BENGALURU, KOLKATA, CHENNAI, AHMEDABAD, HYDERABAD, CHANDIGARH*, PUNE* VOL. 13 NO. 205 Rs 5.00 IN DELHI-NCR; Rs 6.00 OUTSIDE DELHI-NCR. PRICE WITH HINDUSTAN TIMES Rs 9.50 (FOR DELHI & NCR) 20 PAGES
TUESDAY, AUGUST 27, 2019
02 TUESDAY, 27 AUGUST 2019NEW DELHI
FOR ANY QUERIES/DELIVERY ISSUES CALL: 60004242, Monday-Saturday, 10am-6pm (Delhi, Mumbai, Bengaluru, Kolkata, Chennai, Hyderabad, Ahmedabad, Pune and Chandigarh) MAIL: [email protected] TO SUBSCRIBE: Give a missed call on 7039035039 or visit www.mintreaders.com or write to us at [email protected]
the arsenal in the ongoing tradewar.
As in the 1930s, whenanother crash led to a tariff war,followed by a currency warwhich played out even asadvanced economies werereeling under the effects of theGreat Depression, a similar setof circumstances, though lesssevere than that era, have cometogether to ignite recessionaryfears (See chart 2).
During the trade-cum-cur-rency warfare of the 1930s,
those countries which aggres-sively loosened their monetarypolicy fared relatively better,according to the Americanmacroeconomist BarryEichengreen. While “the own-country impact of unconven-tional monetary policies in the1930s was unambiguously pos-itive”, such policies also oftenhad negative spillovers forother countries, he wrote.
Had all countries eased mon-etary policies and depreciatedtheir currencies to the same
extent, it was possible for theworld to be reflated quickly,Eichengreen contended. Butthe then prevailing policy oftrade restrictions and capitalcontrols delayed a global recov-ery.
Given the apparent lack ofcoordination between the twobiggest economies today, arepeat of 1930s cannot be ruledout. The situation now is notentirely the same though, withrisks of capital flight fromemerging economies compli-
borrowing (ECB) exposures.Indian stock markets have inthe past reacted strongly andnegatively to rupee deprecia-tion.
The ride won’t be easy foremerging markets if the globaltrade war morphs into a cur-rency war. According to esti-mates of real effectiveexchange rates (REER), the US,UK and Eurozone have alreadysucceeded in weakening theircurrencies in 2019, i.e. render-ing their currencies more com-
petitive even as most emergingmarket currencies, includingthat of India, have becomeovervalued compared to theprevious year (See chart 3).
Even if an all-out currencywar is averted, volatility in cur-rency markets will add anotherlayer of uncertainty to emerg-ing market investments, mak-ing it more difficult for coun-tries such as India to attract for-eign funds.
More worryingly, a renewedround of global monetary eas-ing could risk inflating assetbubbles, sowing the seeds ofthe next crisis. Stanford Uni-versity economist John Taylorhas famously argued that the2008 US recession could partlybe attributed to the excessivelylow interest rates in the 2003-2005 period, which encour-aged risky lending and exces-sive borrowing (See chart 4).
Economists at the Bank forInternational Settlements (BIS)have often warned against cre-ating credit bubbles, arguingthat they result in money flow-ing to the least productive sec-tors such as real estate, sowingthe seeds of economic crises.Credit-to-GDP in 11 advancedeconomies accounting for 55%of global GDP remains at abloated level of 270% (Decem-ber 2018), up from 240% on theeve of the 2008 crisis. Furthercredit expansion will only takethem to uncharted territoryand may quicken the eventualbust.
Even if there is no suddencrash as bond markets are fear-ing, and there is a slower butequally painful deleveraging,the spillover effects will be feltacross the globe.
We should be prepared forthe storm.
ECHOES OF 1930s IN THE TRADE WARThe ride ahead will not be easy for emerging markets such as India if the escalating trade tensions between US and China morph into a currency war
AHMED RAZA KHAN/MINT
cating the situation. WhileChina recently did devalue itsyuan, it is not clear if it is a sus-tainable path. The last timeChina had sharply devalued itsyuan in 2015, it suffered capitalflight and stock market losses.
Also, devaluing its own cur-rency will undermine years ofChina’s efforts to international-ize its currency. Similarly, aweak currency in India triggersmany concerns, ranging fromcapital flight to inflation to cor-porates’ external commercial
m MINT GRAPHITIChart 1
Across the developed world, yield curves have inverted or flattened10 years-1 year government bond yield gap (bps)
Chart 2
Competitive devaluation and monetary easing led to sharp fall in interest rates in 1930s
Chart 3
Currencies of US and Europe weakened in real terms in 2019 so far, while EMs became more expensive
Short-term safe interest rate (in %)
% change in REER* since Dec 2018
Chart 4
Excessively low interest rates in the 2003-05 period is often blamed for the subsequent 2008 crisis
US Fed funds rate (target)
IndiaIndonesiaSouth AfricaBrazilJapanChinaGermanyUSUK
Taylor Rule-implied rate*
WW1Interest rates fell in 1930s
2003-05: according to economist John Taylor, US Fed deviated from rule which had worked well earlier.
WW2
US
Source: Jordà, Knoll, Kuvshinov, Schularick, and Taylor (2019) “The Rate of Return on Everything, 1870–2015", Bank for International Settlements, Bloomberg, Mint calculations
350
300
250
200
150
100
50
0
-50
12
10
8
6
4
2
0
8
6
4
2
0
-2
-4
2003 2009 2019
4.624.023.97
2.92.38
0.09
-0.36-0.38-1.61
-6.75
5.29
2.25
Data refer to monthly averages. Data for 2019 is till 15 August.
*Real Effective Exchange Rate (REER): It measures the value of currency against a basket of other currencies, adjusting for inflation-difference across countries. India's REER (as provided by BIS) is a weighted average against forty currencies. Data till July 2019. Data for Germany refers to euro, adjusted for German inflation and trade-weights.
Jerome Powell, US Fed chairman, has been under pressure from Donald Trump to cut interest rates.
US Taylor equation: nominal interest rate = real natural interest rate (2%) + inflation rate + 0.5 X (inflation gap) + 0.5 X Okun's coefficient (2) X (5% - actual unemployment rate); * using core-PCE inflation, where PCE stands for ‘personal consumption expenditure’; Rule-implied rates are 2-quarter moving averagesData for US and Japan refer to deposit rate; money market rate for UK and Germany.
US
1890 1900 1910 1920 1930 1940 1950
1998 2000 2005 2010 2015 2019
UK
UK
Japan
Japan
Germany
Germany
Sep 2008: Lehman collapse
PLAINFACTS
TWITTER DASHBOARDm
Who are the most influential Indian political leaders on Twitter? How active were they last week? What resonated with their followers the most? Presenting the Mint dashboard of Twitter activity, which uses data extracted from the micro-blogging website to answer these questions for 20 most followed leaders across four categories in the political firmament
Politician
Tweets and retweets Followers (in million)
Data compiled by howindialives.com*Appear in multiple categories, included in most relevant role. **Working party president.Data for the week to midnight of 24 August 2019 Arun Jaitley passed away on 24 August.
NARENDRA MODI@narendramodi
ARUN JAITLEY@arunjaitley
AMIT SHAH*@amitshah
MEMBERS OF PARLIAMENT - OPPOSITIONRAHUL GANDHI*@RahulGandhi
SHASHI THAROOR@ShashiTharoor
KAPIL SIBAL@KapilSibal
SHARAD PAWAR@PawarSpeaks
DEREK O’ BRIEN@derekobrienmp
CHIEF MINISTERS
PARTY CHIEFS
NITISH KUMAR*@NitishKumar
ARVIND KEJRIWAL@ArvindKejriwal
AKHILESH YADAV@yadavakhilesh
CHANDRABABU NAIDU*@ncbn
NAVEEN PATNAIK@Naveen_Odisha
KT RAMA RAO**@KTRTRS
Party
BJP
BJP
BJP
INC
INC
INC
NCP
TMC
JD(U)
AAP
SP
TDP
BJD
TRS
Most retweetedtopic
Thisweek
Weeklychange
Thisweek
Weeklychange
MEMBERS OF PARLIAMENT - TREASURY
SMRITI IRANI@smritiirani
BJP
RAJNATH SINGH@rajnathsingh
BJP
Tributes to Arun Jaitley on his demise
NA
Tributes to Arun Jaitley on his demise
Pakistan's reaction to removal of Article 370
PM lauding Chandrayaan-2's entry into lunar orbit
84
NA
42
25
193
8
56
4
22
22
5
21
179
51
52
19
7
27
19
34
23.5%
NA
-27.6%
56.3%
-36.9%
-27.3%
-46.7%
300.0%
-37.1%
-26.7%
-44.4%
31.3%
-18.6%
-22.7%
-44.7%
-54.8%
40.0%
12.5%
58.3%
-12.8%
0.3%
0.9%
0.8%
0.6%
0.4%
0.7%
0.1%
0.2%
0.1%
0.3%
0.2%
1.7%
0.3%
0.4%
0.2%
0.2%
0.3%
0.2%
0.1%
0.4%
49.56
15.38
14.94
13.92
9.74
10.44
7.02
2.16
1.21
1.24
5.00
4.98
3.70
3.51
2.44
15.33
9.82
4.40
2.59
1.84
Criticizing Modi govt for P.Chidambaram's arrest
Rahul Gandhi's response to guv Malik on J&K visit
Questioning the BJP over demonization of the oppn
Sharing a news article on social media hate
Condolences on Arun Jaitley's demise
Condolences on Arun Jaitley's demise
BJP's tributes to Arun Jaitley
PM Modi's tributes to Babulal Gaur
Praying for restoration of human rights in Kashmir
PM Modi's message to Bhutan on his state visit
Asking Centre to hand over land for Ravidas temple
Criticizing UP govt over law and order situation
Birthday greetings to actor Chiranjeevi
Plan to develop Puri into a world heritage city
Amazon's biggest campus in Hyderabad
VIJAY RUPANI@vijayrupanibjp
DEVENDRA FADNAVIS@Dev_Fadnavis
YOGI ADITYANATH@myogiadityanath
MAMATA BANERJEE@MamataOfficial
BJP
BJP
BJP
TMC
2003-12, when investmentrates increased, and during2012-17, when investmentrates correspondingly fell.
The inflated growth inGFCF created an upward biasfor GDP growth estimates in2003-12, while there was adownward bias for the 2012-17period, he argues.
Excluding GFCF from GDPresults in a more regular pat-
tern of GDP growth, accordingto Mallik. He concludes thatIndia needs to pursue policiesthat facilitate business activityand use better methods tomeasure this activity.
Also read: Can India RaiseIts GDP Per Capita to $5,000 by2030? (bit.ly/2ZdFq6O)
Snap Fact features new andinteresting reads from theworld of research.
58What is it? The number of times that at least one of the big three in tennis—Roger Federer, Rafael Nadal and Novak Djokovic—reached the finals in the 61 major tournaments since Wimbledon 2004.Why is it important? This underlines their dominance in the world of men’s tennis, even as the US Open started on Monday. Between them, they have won all the US Open titles since 2004, except for 2009, 2012, 2014 and 2016.Tell me more: Even though the US Open has had relatively more diverse winners, these three are expected to dominate the 2019 edition, too. In the women’s singles, Chris Evert and Serena Williams share the record for most number of wins.
Data and text compiled by Howindialives howindialives.com is a search engine for public data
Nikita Kwatra
MUMBAI
With the economy inthe grip of a slow-down and questions
over India’s gross domesticproduct (GDP) calculations, anew study suggests thatanother component of thegross domesticproduct (GDP)measurement mayalso be distorted.
The currentmethod of measuring grossfixed capital formation(GFCF), which is regularlyused as a proxy for investmentactivity, needs more scrutinyand could be biasing overallGDP growth estimates,according to an Economic andPolitical Weekly study by Jay-anta Kumar Mallik of theReserve Bank of India (RBI).
GFCF, as estimated by theministry of statistics and pro-gramme implementation(Mospi), is heavily swayed by asingle factor—the price ofsteel—according to Mallik.
The estimates of pucca con-struction, which form themain building block of GFCF,are prepared from limitedinformation on “basic” con-
struction materialand use of improperweights, he argues.
With two-thirdso f t h e w e i g h t
assigned to basic constructionmaterial, Iron and steel occu-pies a key position in the esti-mation. So, the impact of theincrease in steel prices is likelyoverplayed in the calculationof GFCF.
Mallik shows how changesin GFCF track the movementin steel prices. For instance,steel prices surged between
How changes in steel prices affect GDP data
The movement in investment rates are rooted in fluctuations in
steel prices, says a new study. MINT
SNAP FACT
m
NEWS IN NUMBERSm
65What is it? The number of cabinet members in the coalition government announced by DR Congo President Félix Tshisekedi.Why is it important? Forty-two posts went to former president Joseph Kabila’s Common Front for Congo coalition, while the rest were given to Tshisekedi’s party members. Tell me more: Tshisekedi had won the polls in December. This was the first peaceful transition of power in DR Congo since its independence in 1960.
REUTERS
CORRECTIONS AND CLARIFICATIONS
Mint welcomes comments, suggestions or complaints about errors.
Readers can alert the newsroom to any errors in the paper by emailing us, with your full name and address to [email protected].
It is our policy to promptlyrespond to all complaints. Readers dissatisfied with the response or concerned about Mint’s journalistic integrity may write directly to the editor by sending an email to [email protected]
Mint’s journalistic Code ofConduct that governs our newsroom is available at www.livemint.com
CORRECTIONS AND CLARIFICATIONS
Mint welcomes comments, suggestions or complaints about errors.
Readers can alert the newsroom to any errors in the paper by emailing us, with your full name and address to [email protected].
It is our policy to promptlyrespond to all complaints. Readers dissatisfied with the response or concerned about Mint’s journalistic integrity may write directly to the editor by sending an email to [email protected]
Mint’s journalistic Code ofConduct that governs our newsroom is available at www.livemint.com
Tadit Kundu
Even as some Indianinvestors cheer therollback of conten-tious budget proposalsby the finance minis-
try, an escalation of theUS-China conflict seems tohave spooked markets world-wide. The latest trigger appearsto be the new set of tariffs onAmerican products imposed byChina, and statements from USPresident Donald Trump thathe would retaliate and mightconsider asking US firms to exitChina under a “national emer-gency”.
The escalatingconflict betweenthe two globaleconomic giantsseems to havetaken a toll oninvestor senti-ments, and inten-sified fears of aglobal recession.Bond markets inadvanced economies havebeen signalling rising stress forsome time, and the latest sabre-rattling will only add to thebond market jitters.
The yield curves, or at least apart of the yield curves, haveinverted in many of theadvanced economies, includ-ing the US, UK, and Japan.Under normal circumstances,yield curves tend to be upward-sloping—indicating that len-ders need to be paid more(higher yields) for longer termbonds compared to bonds withshorter maturity.
But when uncertainty aboutthe future or fears of recessiongrip the markets, this relation-ship between term (time until
maturity) of bonds (or borrow-ing) can crumble, as has hap-pened over the past month (Seechart 1).
As the monetary stimulusprovided by central banks ofadvanced economies have runtheir course without lifting thereal economy significantly, andthe two major global powershave continued to escalatetheir trade-cum-currency war,we are back in the zone of “unu-sual uncertainty”, a phrase usedoften by central bankers in thewake of the global financialcrash of 2008.
Both the US and China seemto be adopting similar tools ofmonetary easing to edge out
the other in thish i g h - s t a k e sdrama. US Presi-dent Trump hasoften chided theFed for not lower-ing interest ratesenough, in theface of cuts byother countries,and it is possible
that he might get his way.Meanwhile, China too cut oneof its managed interest ratesrecently and indicated that itcould do more to stimulate theeconomy.
Thus, these two economiesare embracing looser monetarypolicy at home to stimulate theeconomy even as they continueto engage in a tariff war. Whilethe US threatens to imposemore tariffs, China could notonly impose further retaliatorytariffs but could also offset theeffects of American tariffssomewhat by devaluing its cur-rency. Lowering of interestrates at home also often acts asa tool to weaken one’s own cur-rency, and thus forms a part of
A weak rupee triggers many
concerns, ranging from corporates’
exposure to ECBs, capital flight and
inflation
First published in February 2007 to serve as an unbiased and clear-minded chronicler of the Indian Dream. VAMAN VASSUDEV KAMAT (EDITOR); PUBLISHED/PRINTED BY SHARAD SAXENA ON BEHALF OF HT MEDIA LTD, 18-20 Kasturba Gandhi Marg, New Delhi 110001
Printed at HT Media Ltd presses at •Plot No. 8, Udyog Vihar, Greater Noida, Distt Gautam Budh Nagar, Uttar Pradesh 201306; •MNSPrinters Pvt. Ltd, 345/4, Bhatrahalli, Near KR Puram RTO, Old Madras Road, Bangalore 560049; •Saraswati Print Factory Pvt. Ltd, 789, Chowbhaga (W), Near China Mandir, Kolkata 700 105; •MNSPrinters Pvt. Ltd, 76/1, Poonamallee High Road, Velappanchavadi, Chennai 600077; • Bhaskar Print Planet, Survey No. 148P, Changodar Bavla Highway, Sanand (Tal), Distt Ahmedabad, Gujarat. •Jagati Publications Ltd, Plot No. D75 & E52, APIE Industrial Estate, Balanagar, Rangareddy Distt. Hyderabad 500037 *Also available in Chandigarh and Pune. RNI Registration DELENG/2007/22485; Mint welcomes readers’ responses to all articles and editorials. Please include your full name, address and telephone number. Send in your views to the editor at [email protected]. ©2019 HT Media Ltd All Rights Reserved
DEALS TUESDAY, 27 AUGUST 2019NEW DELHI 03
Ridhima Saxena
MUMBAI
The slowdown in India’sautomotive industry andconcerns over a switch toelectric mobility, havedried up private equity
investments and exits in the autoancillary units as well, adding to thecredit crunch in the market.
Domestic sales of passenger vehi-cles have fallen for nine straightmonths. In July, passenger vehiclesales fell about 31%, making it theworst month in nearly two decades,according to data from the Society ofIndian Automobile Manufacturers(Siam). Sale of commercial vehicles,too, fell about 26% during themonth.
So far this year, the auto compo-nents sector has witnessed just twodeals worth $29 million, comparedwith eight deals worth $712 millionin 2018, according to deal trackerVenture Intelligence.
“Unpredictable future growth ofauto parts’ suppliers due to theongoing slowdown in the sectorboth in India and globally is keepingmost private equity firms away fromthe segment,” said Aalok Shah, MD,Rothschild and Co, an investmentbanking firm. “Also, there is a risk ofhow forging and casting firms,which presently supply componentsto internal combustion engines,would make the switch to high-endparts and technology for electric andautonomous vehicles.”
Traditional auto parts makers,who form a big chunk of the seg-ment, are unlikely to attract inves-tors unless they start making non-engine related parts, such as plastics,interiors, lights and wiring har-nesses. They must also invest infuture technologies for EVs and
BPCL to invest up to ₹1,700 crore in building floating LNG terminal in AP
bit.ly/2Zr0mCs
PE investments, exits in auto parts sector dry upLack of deals in the sector adds to the woes of an existing credit crunch in the market
One of the first companies I had invested inas an angel investor was GoMechanic. Thecompany today is a household name in
supplementary auto services with a network span-ning 125 workshops.
When the company recently raised $5 millionfrom venture capital firm Sequoia Capital, I wasproud to have been part of its journey.
As one of the first investors who discovered andbelieved in the company, it was great to see thetraction and scale it had achieved.
It also led me to possibly one of my biggest les-sons as an angel investor so far. I had an opportu-nity to reinvest in GoMechanic shortly after myfirst round of investment.
However, at that time, I could not pursue theinvestment as the valuation was five times the pre-vious round.
Shortly after this, the company went on to raisecapital at a 3x value in nine months.
This led to my learning that short-term focus cancannibalize long-term returns.
As investors, while we need to have a strong gripon numbers, term sheets and look at investmentswith a data-driven approach, it’s also key to sometime making bets beyond the norm.
My instinct had guided my first investment in thecompany and I wish I had continued to listen to itand made the follow-on investment.
Having learnt a valuable lesson, I have nowdeveloped a framework, which allows a certainpercentage of my investment to be based purelyon instinct.
Sometimes it works, and sometimes it doesn’t.The onus to make these bets is on us as investors.
As part of a bustling startup ecosystem, it’s ourduty as investors to encourage and nourish smallideas that could end up becoming massively scala-ble startups.
A section where investors talk about missed opportunities in start-up investments.
ANTI-PORTFOLIO
DHIANU DASAlfa Ventures
“While investors need
to have a strong grip
on numbers, it’s also
crucial to making
bets beyond norm. ”
autonomous vehicles, which are rel-evant to PE firms as they have a 5-10year investment horizon, Shahadded.
A section of industry experts,however, said that though the vehi-cle component makers are lookingto switch over to manufacturingelectric vehicleparts, the creditcrunch coulddampen thoseplans. “Theliquidity crunchis choking upmarginal andsubscale firms inthe auto component sector, who didnot strengthen their balance sheetor could not attract investments lastyear when the sector was consoli-dating in a big way,” said MaheshSinghi, founder and managingdirector, Singhi Advisors.
Market volatility has also madeexits difficult for PE firms. So far thisyear, Nifty Auto fell about 24% to7,207 level, compared with a 1.8%rise in Nifty index to 11,057 in thecorresponding period of last year.
Three PE-backed auto compo-nents firms, which had filed for an
initial public offering last year, havenot hit the market due to lower valu-ation. The companies include TheRohatyn Group-backed SanseraEngineering Ltd, Craftsman Auto-mation Ltd, which had receivedfunding from Standard Chartered
PE, and PineBridge Capital Part-ners-backed Uniparts India Ltd.
“While promoters are expectingan enterprise value of 10-12 timesEbitda, global players are offeringsingle-digit multiples. So, exits aredifficult as valuation expectationsare not being met,” Shah added.
“We will continueto see control dealswith businesses thatare not dependent ontraditional combus-tion engines. We alsosee growth invest-ments going into thevarious aspects of EV
market and investors rummagingthrough the pile to identify winnersin a space where technology is prov-ing to be a great disruptor,” saidPreet Singh, managing director,Lincoln International, a US-basedfinancial advisory firm.
SLOWDOWN BLUES
IN July, PV sales fell 31%, making it the worst month in two decades, according to Siam data
AUTO parts makers are unlikely to attract new investors unless they invest in tech for EVs, say experts
SO far this year, the Nifty Auto index fell 24% to 7,207 level against a 1.8% rise in the Nifty index
Nandita Mathur
NEW DELHI
FreshtoHome, a Bengaluru-based online fresh fish andmeat retailer, Monday
raised $20 million in a Series B funding round that was led by Iron Pillar and also included Japanese investor Joe Hirao.
The startup also announcedthat it crossed $30 million in annualized sales, making it thelargest such venture in the fishand meat e-commerce space inIndia. Also at 30% month-on-month growth, FreshtoHome isamong the fastest-growing e-grocery companies in India.
Iron Pillar is a specialist ven-ture growth fund investing in startups beyond Series A in India. Speaking on the invest-ment, Anand Prasanna, manag-ing partner of Iron Pillar said: “FreshtoHome’s brand propo-sition has been to provide 100%fresh food with 0% chemicals, not an easy thing to achieve in India at a large scale. They havethoughtfully created the largestand fastest perishable supply chain for fish and meat in Indiato make this happen. This pat-ent-pending, direct sourcing commodities exchange plat-form is a game-changer in the industry and is very hard to rep-licate.”
FreshtoHome will utilize thefunds to expand into other citiesin India and the UAE. It will alsouse the funds to diversify their product offerings in various other fresh and chemical-free food categories, such as fruits and vegetables, cold-pressed oils, organic cow and buffalo milk, dairy products, organic staples and other healthy food products. These products will eventually be distributed acrosse-commerce platforms, retail outlets and other channels across multiple geographies.
FreshtoHome raises funds in fresh round led by Iron Pillar
In the slow laneSo far this year, the auto components sector has witnessed just two deals worth $29 million, compared with eight deals value at $712 million in calendar year 2018, according to data.
PE investments in auto components firms PE investments in auto components sectorCompany/investors Amount ($ mn) Date
Tata International DLTADV Partners
Autoline IndustriesIndiaNivesh VC
Sona BLW Precision ForgingsBlackstone
Sunbeam AutoKedaara Capital
ComstarBlackstone
Unitech MachineEdelweiss Private Equity
Happy ForgingsMotilal Oswal
Divgi TorqTransfer SystemsOman India Joint Investment Fund
Amount (in $ mn)No. of deals
CY
19*
CY
18
24 May
Jan
Oct
Jun
Mar
Mar
Sep
May
352
2933
5
712
150158127
125
59
CY14 CY15 CY16 CY17 CY18 CY19*
27
15
5
*As of 26 August Source: Venture Intelligence
22 855 7
MINT GRAPHITIm
PARAS JAIN/MINT
04 TUESDAY, 27 AUGUST 2019NEW DELHI MARK TO MARKET
S&P BSE SensexCLOSE
37,494.12PREVIOUS CLOSE
36,701.16HIGH
37,544.48
PERCENT CHANGE
2.16OPEN
37,363.95LOW
36,492.65
Nifty 50CLOSE
11,057.85PREVIOUS CLOSE
10,829.35HIGH
11,070.30
PERCENT CHANGE
2.11OPEN
11,000.30LOW
10,756.55
Nifty 500CLOSE
8964.70PREVIOUS CLOSE
8790.55HIGH
8973.20
PERCENT CHANGE
1.98OPEN
8933.05LOW
8735.30
Nifty Next 50CLOSE
25,813.55PREVIOUS CLOSE
25,345.10HIGH
25,849.55
PERCENT CHANGE
1.85OPEN
25,749.00LOW
25,174.25
Nifty 100CLOSE
11,152.65PREVIOUS CLOSE
10,925.90HIGH
11,164.05
PERCENT CHANGE
2.08OPEN
11,098.75LOW
10,852.45
S&P BSE Mid-capCLOSE
13,409.51PREVIOUS CLOSE
13,202.08HIGH
13,422.45
PERCENT CHANGE
1.57OPEN
13,379.29LOW
13,144.28
S&P BSE Small CapCLOSE
12,387.10PREVIOUS CLOSE
12,186.11HIGH
12,395.45
PERCENT CHANGE
1.65OPEN
12,327.32LOW
12,713.05
Mark to Market writers do not have positions in the companies they have discussed here
valuations remain high, evenwhile earnings have lagged farbehind. “The Nifty trades close toits historical average valuations(12-month forward price-to-earnings of 16.4 times), but we seedownside risks to Bloomberg con-
of companies. The feeling in theindustry is that much more needs tobe done for a revival.
According to Prayesh Jain, execu-tive vice president at Yes Securities(India) Ltd, “Announcements canboost short-term sentiment. Depreci-ation benefits may boost CV (com-mercial vehicle) demand to someextent, but ground realities of weakeconomic environment need to
R. Sree Ram
Shares of Tata Steel Ltd andJSW Steel Ltd hit new52-week lows on Monday.
These stocks have been under pres-sure for some time now, trackingweak demand and subdued marketprices. But the concerns intensifiedas steel prices in the domestic mar-ket continued to slide.
Domestic steel prices have fallenfor the 11th straight week, markingthe longest stretch of decline sincethe first quarter of FY16, said ana-lysts at Edelweiss Securities Ltd.Hot-rolled coil prices are at a multi-year low. As a consequence, the dif-ference between prices in the spotmarket and raw material costs,known as spreads, dropped to levelslast seen in December 2016, theyadded.
Not surprisingly, investors are
Railway-linked infrastructure stocks struggling to stay on track
Steel makers are in a tough spot on sliding prices and softening demand
Why is China’s yuanfalling?
bit.ly/2NuCoE9
SHORT TAKESm
worried. The fall in spreads in a sea-sonally slow quarter (July-Septem-ber) will intensify the pressure onearnings. But, that is not the onlyconcern. The bigger challenge isdemand growth.
Global headwinds notwithstand-ing, the steady growthin demand in Indiahave been a source ofstrength for domesticsteel companies. Thishelped them deriverelatively better pricesin the local market.However, the currentdeceleration in auto-mobile sales and theslowdown in construction of resi-dential houses, both large users ofsteel, have begun impactingdemand in the country.
Domestic growth in steeldemand slowed to 3.5% in July,from 6.5% expansion in the June
quarter, showed data compiled bySBICAP Securities Ltd.
“FY20 to date demand growth isnow at 5.7%, much lower than FY19growth of 7.5%. This steel demandgrowth print now reflects contrac-tion in end-user sectors like auto-
mobile sales and slow-down in infrastructurespending, as high-lighted by steel compa-nies’ commentary,”said analysts at the bro-kerage firm in a note.
The softening of rawmaterial costs can miti-gate the impact of fallin steel prices. But, it
can provide only limited relief.Weak steel demand in global
markets is driving cheap importsinto India. The steady growth in thedomestic market helped absorb theimports till now. But a prolongedweakness in domestic demand canfurther suppress steel prices, wor-sening the profitability of domesticproducers.
“The downturn this time is moreconcerning as in FY09 and FY16,domestic consumption growth hadremained robust,” said analysts atEdelweiss Securities.
“This time around, we may seeproduction cuts in Q2FY20 even formajor steel players as domesticdemand, particularly in the autosector, is concerning. We expectprofitability of steel companies totake a hit in ensuing quarters,” theyadded.
Current slump in auto sales and the slowdown
in construction of houses have
begun impacting demand for steel
Clifford Alvares
For railway-linked infra-structure stocks, it hasbeen a grind much like
the commute in some ofIndia’s crowded trains.
Shares of Rites Ltd fell 10%from their highs in early July,while others such as Rail VikasNigam Ltd (RVNL) and IrconInternational Ltd declined asmuch as 16.6% and 19.6%,respectively, from end-Maylevels.
Initially, there was a fair bitof excitement about thesestocks, on hopes that capitaloutlay for Indian Railways willgrow in the coming years. It isa segment that analysts say isas important as roads, with thegovernment planning ₹8.5trillion in capital expenditureover five yearsuntil FY20.
Additionally,two dedicatedfreight corridors,where about 60%of constructionhas been com-p l e t e d , a r eexpected to beoperational by2021. The railways has alsobeen electrifying its tracks,and about 51% of its network isnow electrified.
Railway lines are also being
constructed more rapidly thanin the past, inching up to11.2km a day at present,according to analysts.
“The Indian Railways aim tocomplete 4,100km, including1,000km of gauge conversionand 2,100km of doubling of
lines. The rate ofconstruction inFY16 was 7.75km aday; in FY17,7.82km and, inFY18, 5.10km,”said analysts atAntique StockBroking Ltd in aclient note.
In the recentpast, order flows to railways-focused companies have beenrising as new tenders havebeen floated. This explainswhy some railway-linked
For these railway-focused stocks,
much depends on actual execution. Railway capex has in the recent past lagged estimates
Vatsala Kamat
The government’s variedrelief measures for theautomobile sector turnedout to be a damp squib.While the broad markets
rallied around 2% on Monday onhopes of a better tomorrow, the NiftyAuto index closed only0.49% higher from theprevious trading ses-sion. Stocks of leadingautomobile manufac-turers Maruti SuzukiIndia Ltd, Bajaj AutoLtd and Hero Moto-Corp Ltd fell.
Here are seven reasons why thereis scepticism among investors thatthe slew of measures, which financeminister Nirmala Sitharamanannounced last week, will revive autosales.
One, the increase in depreciationrate by an additional 15% (existing15%) for vehicles purchased from nowtill 31 March 2020, will not boost
sales. For passenger cars, there issome confusion whether the higherdepreciation is for vehicles boughtfor personal use or by businesses.
As for commercial vehicles, nearly75% is owned by small operators orsingle-truck owners. Given the inces-sant fall in truck rentals and weakcapacity utilization, the owners arestruggling to even clock profits. This
makes higher depreciation, whichlowers taxable profits, meaningless.
Two, the decision to withhold themultifold (8 to 40 times) hike in vehi-cle registration fees has no materialimpact. In any case, the increase hadnot been implemented yet.
Three, the auto industry’s biggestdemand—a cut in the goods and ser-vices tax—was not met. This would
directly lower the price of a vehiclefor the consumer and drive sales. Butgiven the fiscal position of the gov-ernment, this was too much to expect.
Four, there is no incentive to boostdemand for two-wheelers, whichcomprise 80% of domestic auto sales.
Five, the rate cut transmission mayhelp sectors such as real estate to alarger degree than the auto sector in
stimulating demand.After all, the reductionin EMIs (equatedmonthly instalments) ismore meaningful forhouse purchases,which are much largerin terms of value.
Six, lifting the ban onbuying vehicles to replace old ones ingovernment departments is unlikelyto translate into big orders for origi-nal equipment manufacturers. Thissegment’s contribution to overallsales is limited.
Seven, the auto sector is still reel-ing under the slowdown and facingjob losses, high inventories, dealer-ship closures and drop in profitability
Seven reasons why govt’s steps may fail to boost auto demand
HALF-HEARTED MEASURES
SINGLE-TRUCK owners have little to gain from the 15% additional depreciation
NO INCENTIVES to boost two-wheeler purchases that form about 80% of total auto sales
GIVEN THE weak economic environment, much more needs to be done for a revival
change for a tectonic shift indemand.”
Perhaps, a scrappage policy toreplace old vehicles with new onesmay drive sales of both commercialvehicles and passenger vehicles.
Ultimately, auto sales go hand-in-hand with growth in gross domesticproduct, estimates for which havebeen scaled down for fiscal year2020.
Hitting the skids
Source: BloombergBase value taken as 100
27 Aug 2018 26 Aug 2019
The Nifty Auto index has been racing downhill, with vehicle sales falling steadily over the last 12 months and after the June quarter performance showed auto firms in poor light.
Nifty Auto index
63.88
94.58
60
65
70
75
80
85
90
95
100
105
Nifty 50 index
SATISH KUMAR/MINT
Losing steam
Source: Joint Plant Committee, SBICAP Securities
Jul 2018 Sep Nov Jan 2019 Mar May Jul
Aug Oct Dec Feb Apr Jun
Growth in steel consumption has slowed considerably in July, reflecting the demand weakness in automobile and construction sectors.
Change in steel consumption (year-on-year in %)13.2
6.87.7 8.2
6.5
9.5
7.79.1
6.47.9
4.53.5
12.6
SATISH KUMAR/MINT
infrastructure stocks havebeen swelling order books.Ircon’s order book is about sixtimes FY19 revenue, whileRVNL’s order book is aboutseven times.
While all this sounds fine forthese stocks, much dependson actual execution. IndianRailways is faced with many ofthe same issues as road-build-ing companies such as landacquisition and right of way,which means there could bedelay in project execution.Besides, railway capex has inthe recent past often laggedestimates.
As it turns out, first quarterearnings growth has beenmixed. Rites and RVNL havereported improved earningsin the past year, while Irconreported lower earnings.
Off the rails
Source: BloombergBase value taken as 100
27 May 2019 26 Aug 2019
Shares of some Indian Railways-linked infrastructure companies have been under pressure lately.
100.8
82.6380
85
90
95
100
105
110
115Rites Rail Vikas Nigam Ircon International
87.05
SATISH KUMAR/MINT
sensus estimates (Nifty estimatedearnings per share growth: ~21%in FY20 and ~14% in FY21). The1QFY20 earnings season waslacklustre and high frequencyindicators suggest income uncer-tainty and, hence, weak spending
Harsha Jethmalani
Finance minister NirmalaSitharaman’s announce-ments after market-hours
on Friday gave traders and inves-tors one thing they were lookingfor—hope. The combination ofmeasures to improve short-termliquidity and demand hasimproved sentiment for equities.
In line with the upbeat mood,key benchmark indices, the Niftyand Sensex, ended Monday’s ses-sion up more than 2% each. Con-sequently, the fear gauge, NSE’sIndia volatility index (VIX) fellnearly 4% to 16.75.
But this bounce is likely to beshort term. This is simply
because the current slowdown inthe Indian economy is not merelya cyclical one, but also structural,according to economists.Although the government’smove is said to be well-timed,coming ahead of the festive sea-son, the slowdown won’t fadeaway in a hurry, said analysts.Also, note how auto stocks hardlyshared any of the excitement onthe Street, even though thefinance minister announced aslew of measures for the sector.
Besides, Abhiram Eleswarapu,head of equity research at BNPParibas Securities India Pvt. Ltd,said in a note to clients on 24August: “A revival in earningsgrowth is needed for a more sus-tainable rally.” This is because
intentions among consumers,”he added.
As things stand, June quarterearnings have not been veryimpressive, with a number ofdowngrades.
Further, in the absence of ade-quate tax collections, a big-bangstimulus is not something thatthe market would like since thatwould require compromising onthe fiscal position. This raises thedownside risks to growth.
“While the government hasreaffirmed its confidence ofmeeting its fiscal deficit target forFY20, we remain concerned dueto the slip on revenues in a weakgrowth environment. On themargin, the measures should bepositive for sentiment and
growth, although we continue toretain our gross domestic prod-uct (GDP) growth projection of6.5% for FY20,” economists atNomura Financial Advisory andSecurities (India) Ltd said inreport on 23 August.
Meanwhile, on the globalfront, until Friday, things weregloomy with China announcinganother round of retaliatory tar-iffs on US goods. However, latestdevelopments of renewed tradenegotiations between the twonations have calmed the nervesto some extent. That said, goingby past experience, it may befoolhardy to bank on a quick res-olution to the trade war, till thereis concrete development on asolution.
Hope is back for Indian markets, but the shadow of uncertainty remainsFear factor
Source: Bloomberg31 Dec 2018 26 Aug 2019
The volatility index, both in the US and in India, has risen in the past one month.30
25
20
15
10
5
0
16.75
16
25.42
India VIX CBOE VIX
(As of 6pm IST)19.92
AHMED RAZA KHAN/MINT
Source: Comex, Bloomberg
12-month forecast
Six-month forecast
UBS has raised gold price forecasts as the trade war escalates.
Stay (long) with me
2 Jan 2013 26 Aug 2019
Gold futures (in $/ounce)
1,687.9
1,524.3
1000
1200
1400
1600
1800
SATISH KUMAR/MINT
UBS says staying long gold as price set to touch $1,600
Gold will extend its winning ways as theUS-China stand-off harms growth, risking adeeper slowdown and inviting more central-bank easing, according to UBS Group AG,which jacked up price forecasts with a predic-tion that the precious metal may hit $1,600within three months.
“The trade war between the US and Chinahas escalated to a new level,” Giovanni Staun-ovo and Wayne Gordon, analysts at the wealthmanagement unit of the investment bank, saidin a report. “Gold has demonstrated its safe-ha-ven qualities and we stay long the metal, atrade we initiated in mid-May.” UBS has athree-month trading range of $1,450-1,600 anounce, plus a six-month forecast of $1,600 and12-month view of $1,650. BLOOMBERG
China’s firms have foreign debt that’s maturing fast
The foreign debt built up by Chinese compa-nies is about a third bigger than official datashows, adding to the pressure on the country’scurrency reserves as a wave of repayment obli-gations approaches in 2020. On top of the $2trillion in liabilities to foreigners captured inofficial data, mainland Chinese firms havearound another $650 billion in debts built upby subsidiaries overseas, as per Bloomberg.
The amount of maturing debt will rise incoming quarters, with $63 billion due in thefirst half of 2020 alone. The prospect of Chi-nese firms rushing to find dollars to service lia-bilities comes at a time when authorities havealready allowed the yuan to sink below 7 a dol-lar amid a trade war with the US. BLOOMBERG
Commodities ensnared again as trade war grows
The latest escalation in the trade war betweenthe world’s biggest economies roiled commod-ities once again after China announced it willimpose tariffs on $75 billion of US goods andthe White House retaliated. Soya beans will seean added duty starting 1 September, as Chinaseeks to put more pressure on the US farm belt,a crucial voter base for President DonaldTrump as he seeks re-election next year.
US oil imports into the Asian nation will alsoincur levies for the first time as Xi Jinping’sgovernment runs out of ammunition in a dis-pute that’s been raging for over a year and isthreatening global commodity demand. Cop-per also extended declines. Soya bean andrapeseed meal prices rallied in China onprospects that supplies will tighten.BLOOMBERG
German biz confidence worsens on recession risks
German business confidence extended itsdecline, falling to the weakest level in almostseven years, as a deepening manufacturingslump put Europe’s top economy on the brinkof recession. The export-centered economy isstruggling as global trade tensions worsen.
GDP contracted in the second quarter andthe Bundesbank predicts it could shrink againin the third. Blue chips including Henkel andSiemens have predicted weaker earnings, andthe German government has signalled it’s opento fiscal stimulus if the current downturn turnsinto a more severe crisis. BLOOMBERG
Source: Ifo, Bloomberg
German companies are suffering badly from geopolitical uncertainity.
Confidence slides
31 Aug 2012 31 Aug 2019
German Ifo business climate
95 9492
96
100
104
108
SATISH KUMAR/MINT
06 TUESDAY, 27 AUGUST 2019NEW DELHI CORPORATE
I feel Webchutney is still adeveloping story; moreover,from the ecosystem perspec-tive, digital advertising is a sub-set of the overall picture. It wasimportant to focus on entrepre-neurs such as Sanjeev Bikh-chandani (Naukri.com), DeepKalra (MakeMyTrip), Ajit Bala-krishnan (Rediff) and BrijeshAgarwal (IndiaMart) amongothers who have been in themedia spotlight the most.
How do brands create
from entrepreneurship thatintroduced angel tax in 2012did cause huge panic. The Cen-tral Board of Direct Taxation(CBDT) did assure thoseaffected previously would getsome relief. So, that bit contin-ues to suck and, hopefully, willblow over.
Why have you decided tohighlight the journey ofmultiple digital entrepre-neurs in your first bookinstead of Webchutney?
Shayan Ghosh
MUMBAI
Public sector lender Bankof Baroda (BoB) plansadditional exposure of₹10,675 crore to non-banking financial com-
panies (NBFCs) in the secondquarter of FY20. BoB is looking topurchase NBFC assets worth₹5,600 crore, co-originate loans of₹1,000 crore, provide loans of₹3,575 crore for on-lending to theagri sector and has set aside ₹500crore for “high-ticket balancesheet takeover”, according to aBoB proposal reviewed by Mint.
Of the total sanctions, the bankexpects to disburse ₹5,337.5 crorein the September quarter.
BoB is planning to buy loansworth ₹5,600 crore from sevenNBFCs during the quarter, thedocument showed. In certaincases, it said, the bank will obtainpartial guarantee cover from thegovernment.
In July, finance minister Nir-mala Sitharaman announced thatthe government will provide aone-time six-month partial creditguarantee to public sector banksfor the first loss of up to 10% forpurchasing high-rated assets fromNBFCs. The guidelines, releasedearlier this month, said the pool ofassets should have a minimum rat-ing of AA, or equivalent, at a fairvalue prior to the partial creditguarantee.
The BoB document said the
Former Apple employees heard 1,000 Siri conversations a day—each
bit.ly/2NIzs79
Bank of Baroda plans ₹10,675 crfresh exposure to shadow banks
Lender seeks to purchase ₹5,600 crore loans from seven NBFCs and extend ₹3,575 crore agri finance
higher future dollar inflows.Earlier, the local currency fellover 0.8%, tracking the fall inits Asian peers following anescalation of the US-Chinatrade war. The local currencyended at 72.02 against thedollar, strengthening 0.5%from its previous close.
Arun Thukral, managingdirector and chief executiveof Axis Securities, said themarkets reacted positively toa slew of measures announcedby Sitharaman at the end oflast week, while financialmarkets rejoiced the much-awaited withdrawal of sur-charge on FPIs. The measurestaken to improve liquidityand help the ailing auto sectorare likely to augur well for theeconomy.
“The measures announcedhave minimal impact on thefiscal deficit, thus bringingmuch relief to the debt mar-ket,” Thukral said. “Also, themonsoon is inching closer tonormal, and a good harvestseason, along with the festiveseason, is likely to set thedomestic market back on itslong-term growth trajectory.”
However, analysts said theeconomic slowdown in Indiais because of a combination ofcyclical and structural issues.“The latest announcementsshow the intent of the govern-ment to remove some of theseirritants and structural issues,which will go a long way inpreventing incremental dam-age,” analysts at brokeragefirm Prabhudas Lilladher saidin a report on 23 August.“Although we don’t expectthese measures to boost sag-ging rural demand and theimpact of widespread floods,it raises hopes of a recoveryfrom the December quarter ofFY20.”
Others concur. “Theabsence of any fiscal stimulusin the form of goods and servi-ces tax cuts may disappoint asection of the market. Thegovernment would do well tofollow up the recent measureswith structural reforms toturn an increasingly adverseglobal situation into an
FROM PAGE 1
opportunity,” said KotakInstitutional Equities,another brokerage firm.
Among commodities, MCXGold rose 2.45% on Mondayand hit a fresh high of₹38,521/10gm, adding to lastweek’s 0.35% rally. In theinternational market, goldsurged to a six-year high of$1555.27/oz on Monday aftera 0.89% gain last week.
Ravindra Sonawane con-tributed to this story.
SHORT TAKESm
Of the total sanctions, the state-run bank expects to disburse ₹5,337.5 crore in the September quarter. MINT
bank is in discussion with non-banks for asset purchased underthe direct assignment route, amethod for securitization. It plansto purchase loans worth ₹3,000crore from PNB HousingFinance Ltd, ₹800 crorefrom India InfolineFinance Ltd, ₹900 crorefrom Fullerton IndiaCredit Co. Ltd, ₹400crore from FullertonIndia Home Finance Co.Ltd, ₹200 crore fromIndiabulls Consumer Finance Ltd,₹100 crore from MAS FinancialServices and ₹200 crore fromAnnapurna Microfinance Pvt. Ltd.
While email queries to six of
these NBFCs remained unan-swered till the time of going topress, an Indiabulls spokespersonsaid it “does not have any com-ment”. The bank has already tied
up with two NBFCs for co-origina-tion of loans, while 14 more are inthe pipeline. It has also startedworking with Edelweiss FinancialServices, discussions with Chola-
mandalam Investment andFinance Co. Ltd, and talks withIndiabulls Housing Finance Ltdare in advanced stages, the docu-ment showed. Moreover, another
12 companies, including AdaniCapital, U GRO Capital and AvanseFinancial Services Ltd, are in thepipeline.
In September 2018, the Reserve
Bank of India (RBI) had allowedbanks to co-originate priority sec-tor loans with non-banks, pro-vided NBFCs had at least 20%exposure in the joint loan. PapiaSengupta, executive director, BoB,said on Monday that the RBI hasallowed the bank to use co-origi-nation in non-priority sectors aswell. “RBI has never said it is notavailable for non-priority sectors.In fact, our policy is covering bothpriority and non-priority sectorsand, when we asked for a clarifica-tion, RBI said very clearly that itnowhere bars us (the bank) fromtaking it for non-priority sectors,”said Sengupta.
Under the co-originationmodel, borrowers get a blendedrate of interest for fixed-rate loansand a weighted average of thebenchmark interest rates, in pro-portion to the respective loan con-tribution, for floating rate loans.
“It will be a win-win situationfor the customer. Were they totake the loan directly from anNBFC, they would have had to pay
a higher interest on theentire loan,” she said.
Mint reported on 30June that BoB hadentered into a transactionwith Dewan HousingFinance Corp. Ltd toacquire loans worth₹3,000 crore against its
exposure to the non-bank lender.BoB acquired the loan pool fromDewan Housing and adjusted itagainst its loans to the non-banklender.
ASSET PURCHASE PLAN
THE bank is in talks with non-banks for asset purchased under the direct assignment route
IT plans to buy loans worth ₹3,000 crore from PNB Housing Finance, ₹800 crore from India Infoline
LENDER has already tied up with 2 NBFCs for co-origination of loans, while 14 more are in the pipeline
RBI has allowed the bank to use co-origination in non-priority sectors, a BoB official said
Sidharth Rao, co-founder and CEO of Webchutney. MINT
capitalize on.Do you notice an appfatigue among consum-ers?I read somewhere that in
2014, the average top-30 apphad been available in the appstore for less than two years.
Today, the aver-age a top-30 apphas been sitting inthe app store for ismore than fiveyears—gamingapps being anexception as userstend to move on tothe next hot appfairly quickly.
That said, those top 30 or say50 apps that are solving for realconsumer use cases, like com-munication, food ordering, cabhailing, fatigue is pretty muchout of the question. I think theway to look at it is that it’s muchharder now to have a breakoutapp than it was just a few yearsago.
more engagementonline?Social platforms have treated
achieving higher engagementas a direct function of new for-mats. Photo sharing app Insta-gram, for instance, while thefeed remained one of the toporganic engage-ment drivers forbrands and crea-tors alike, theengagement hasshifted drasticallyto Instagram Sto-ries. Twitterworks purely ontrends. Withinagencies, any new‘tweet format’ is seen as anopportunity to be a part of theconversation and brands mustcapitalize on those since theflow of information is faster onTwitter and moments areshorter. Therefore, it’s vital toensure that agencies andbrands stay on their toes whenit comes to newer formats to
landscape in India and theimportance of native advertis-ing. Edited excerpts:
How has the digital plat-form evolved over thepast two decades?
I marvel at how things havechanged for good. Internetsubscriber base was just aboutreaching 100,000 in Indiaaround the end of 2000 andnow we are talking about half a
billion users in thenext few months.Most of the entre-preneurs whostruck out early in
the 1990s in India hadn’t heardof venture capital, forget aboutraising capital outside of familyand friends, and now the mar-ket is flush with capital. So,things have changed dramati-cally, to put it mildly. Withopportunities and excitementlike never before, India is one ofthe best countries for startups.
Having said that, a council ofbureaucrats, disconnected
Saumya Tewari
NEW DELHI
Sidharth Rao, co-founderand chief executive ofdigital marketing agency
Webchutney, in his first book,How I almost blew it, narrateslessons from the country’s mostsuccessful entrepreneurs whocreated brands such as Zomato,FreeCharge andBookMyShow. Aserial digital entre-preneur, Raoco-founded Web-chutney at the age of 19, whichwas acquired by Japaneseadvertising giant Dentsu in2013.
An angel investor in startupssuch as ScoopWhoop, Loan-zen, InVideo and CoHo, Raotalks about 20-year old Web-chutney, which has clientsincluding Airtel, Maruti Suz-uki, Tata Sons, Bacardi, Swiggyand Flipkart, changing digital
It’s much harder to have a breakout app today, says Webchutney’s Rao
‘It’s vital that agencies and
brands stay on their toes when it comes to newer
formats to capitalize on.’
mint
INTERVIEW
Gopika Gopakumar
MUMBAI
Volatility in theforex marketleaves RBI with
no option but to inter-vene and restore order,deputy governor B.P.Kanungo said on Mon-day. He said forex inter-vention is solelydirected at curbing sud-den turbulences notbacked by economicfundamentals.
“Exchange ratedynamics in India formore than a decade hasbeen driven by capitalflows rather than cur-rent account balances.Though long-term flowsrelated to FDI and long-term debt have beenfairly stable, keeping intandem with the eco-nomic fundamentals,portfolio flows havetheir own dynamicsdepending as much onattractiveness of returnsof Indian assets as globalfactors determiningtheir risk appetite. Gyra-tions in the forex marketin these circumstancesleave no option otherthan market interven-tion to restore orderli-ness,” he said.
‘Intervention required in forex market’
M. Sriram
MUMBAI
Digital payments aggre-gator BharatPe hasraised a $50-million
round led by US’s Ribbit Capi-tal and hedge fund SteadviewCapital. Existing investorsSequoia Capital, Beenext Cap-ital and Insight Partners alsoparticipated in the round,BharatPe said on Monday.
It claims to have an annual-ized total payment volume of$1 billion, and facilitates 18 mil-lion United Payments Inter-face (UPI) payments everymonth. Founded by AshneerGrover and Shashvat Nakrani,former executives at groceryfirm Grofers, BharatPe offersdigital payment options andloans to small businessesacross 20 cities, includingBangalore, Delhi, Hyderabad,Pune, Mumbai, Jaipur andAhmedabad, and caters to over1.45 million merchants.
BharatPe raises $50 mn from Ribbit, others
DHFL appoints KK Mankeshwar and Co. as new auditor
New Delhi: Cash-strapped hous-ing financier Dewan HousingFinance Corp. Ltd (DHFL) onMonday said it has appointed KKMankeshwar and Co. as its statu-tory auditor.
DHFL’s move comes after theresignation of auditors DeloitteHaskins and Sells, and Chaturvediand Shah this month. As per a BSEfiling, the appointment of the newauditor comes into effect from 26August. The decision was taken atthe company’s board meeting held on Monday. PTI
Maruti Suzuki looks at CNG to fill space vacated by diesel cars
New Delhi: The country’s largest carmaker, Maruti SuzukiIndia Ltd, is looking at compressed natural gas (CNG)option to fill the space vacated by small diesel engine carsin future, said C.V. Raman, senior executive director (engi-neering).
Presently, Maruti Suzuki offers its popular models Alto,AltoK10, Celerio, WagonR, Dzire and Ertiga in the CNGoption along with light commercial vehicle, Super Carry.The firm had announced that it would stop selling dieselcars from April 2020, when BS-VI is implemented in thedomestic market, citing feasibility issues after cost escala-tion due to the new emission norms. PTI
Google bets big on India market, launches smart display Nest Hub
New Delhi: Google is betting big on the Indian market andbringing in hardware products from its global portfolio to thecountry to cash in on the growing demand for smart devices. TheSundar Pichai-led firm—which on Monday launched its Google
Nest Hub in India—already offersdevices like Pixel smartphones,Chromecast, Google Home andGoogle Daydream View.
“India is a very important mar-ket. That’s why this is a marketwhere we are launching a portfo-lio of Google hardware productsfrom phones to assistant device toHome device and hopefully moreproducts will come here in thefuture to India,” said Mickey Kim,Google’s director of Asia Pacificbusiness. PTI
ANIRUDDHA CHOWDHURY/MINT
RAMESH PATHANIA/MINT
BLOOMBERG
Bulls charge back as govt stimulus, trade talks boost sentiment
Sensex rose 2.16% to 37,494.12, while the rupee closed at 72.02 to a dollar. Brent was trading at $59.6/bbl as of 4pm on Monday.
Market movement
Source: Bloomberg
5 Jul 26 Aug 5 Jul 26 Aug
64.23
72.02
68 (Inverse scale)
69
70
71
72
73 56
58
60
62
64
66
68
�/$
Brent crude (in $/bbl)Rupee
36,0005 Jul 26 Aug
36,500
37,000
37,500
38,000
38,500
39,000
39,50039,513.39
37,494.12
40,000
Sensex
68.42
59.6
PARAS JAIN/MINT
already received ₹40,000crore during FY19. In Febru-ary, RBI hadannounced a₹28,000 croreinterim dividend,taking the totaldividend transferto the govern-ment to ₹68,000crore. The RBIcentral board isyet to approve the₹28,000 crore interim divi-dend.
The government has set afiscal deficit target of 3.3% of
gency fund and revaluationreserves as on 30 June at24.5-20%.
In turn, the board has nottouched the revaluationreserves, which comprisesperiodic marked-to-marketunrealized/notional gains/losses in values of foreign cur-rencies and gold, foreign secu-rities and rupee securities, anda contingency fund.
“As financial resilience waswithin the desired range, theentire net income of ₹1,23,414crore for the year 2018-19, ofwhich an amount of ₹28,000crore has already been paid asinterim dividend, will be trans-ferred to the Government ofIndia. This is in addition to the₹52,637 crore of excess riskprovisions, which have beenwritten back and consequentlywill be transferred to the gov-ernment,” said the statement.
The six-member panelheaded by Jalan wasappointed in December toreview the ECF for RBI.
The government has
FROM PAGE 1 gross domestic product for thecurrent fiscal, revised down-ward from 3.4% pegged in theinterim budget in February.
Sen said the sensible thingfor the government would beto reduce the balance sheetand off-balance sheet borrow-ings using the additionaltransfer from RBI, such as therecapitalization bonds issuedfor public sector banks andhuge borrowing by the FoodCorporation of India from thesmall savings fund.
Aditi Nayar, principal econ-omist at Icra India, said thetransfer of surplus from RBI
should help offsetthe expectedshortfalls in vari-ous tax revenuesin 2019-20 andaid the govern-ment in meetingits fiscal deficittarget. “As aresult, G-Secyields are likely to
ease in the immediate term,”she added.
Asit Ranjan Mishra in NewDelhi contributed to this story.
Govt gets ₹1.76 tn RBI bonanza
The RBI central board is yet to
approve the ₹28,000 crore
interim dividend.
The government has set a fiscal
deficit target of 3.3% of gross
domestic product for the current
fiscal
ANIRUDDHA CHOWDHURY/MINT
CORPORATE TUESDAY, 27 AUGUST 2019NEW DELHI 07
Steep discounts among 8 concerns in NRAI’s list
Forced usage of fleet services, lack of data transparency are other concerns
Ex-Cummins India MD Sandeep Sinha joins TAFE as CEO
bit.ly/2ZiNVxz
Rhik Kundu & Kalpana Pathak
NEW DELHI/ MUMBAI
Public sector oil marketingcompanies (OMCs) Indian OilCorp. Ltd, Bharat Petroleum
Corp. Ltd, and Hindustan Petro-leum Corp. Ltd, will not resume fuelsupply to Air India (AI) unless thenational carrier assures them in awritten communication about itspayment plan, according to twopeople with direct knowledge of thematter.
The public sector OMCs on 22August restricted jet fuel supply toAir India Ltd at six domestic tier-IIairports, including Kochi, Pune,Patna, Ranchi, Mohali, and Visakha-patnam, because of non-payment of₹5,000 crore of dues by the nationalcarrier.
“The situation is still the same.The oil marketing companies arenot supplying fuel to Air India at sixairports,” said one of the peoplecited above, who is also an officialwith a state-run OMC. The OMCshave been told that the national car-rier will respond to them in a writ-ten communication explaining itspayment plan. “We are waiting forcommunication from them before
OMCs not to supply fuel to AI without written commitment on payment plan
Air India had earlier offered to clear about ₹60 crore of its ₹5,000 crore dues,
but this offer was rejected by oil marketing companies. MINT
Navadha Pandey
NEW DELHI
OnePlus, which leadsthe premium smart-phone market in India,
plans to invest ₹1,000 croreover the next three years tobuild a research and develop-ment centre in Hyderabad.
The facility will handle thedevelopment of artificial intel-ligence and machine learningfor OnePlus to boost thebrand’s position in India, the
company said in a statement onMonday.
“In three years, we plan togrow the newR&D centre inHyderabad intoour biggest glo-bally,” said PeteLau, founder andchief executive,OnePlus. “Weplan to re-focusour R&D effortson a large scaleand drive innovations in Indiafor the global product, espe-
cially on the software side withspecial emphasis on artificialintelligence, 5G and IoT”.
OnePlus said itplans to leveraget a l e n t f r o mHyderabad for thenew centre butdid not say howmany workersw o u l d b eemployed at thefacility.
The move iscrucial for OnePlus as Indiacontributes nearly 40% of its
global revenue. “India is ourlargest and most importantmarket. The potential forgrowth, expansion andimprovement that we see hereis huge,” Lau said.
OnePlus currently has R&Dcentres in China, the US and Taiwan. India, the world’s sec-ond-largest smartphone mar-ket, is also home to R&D centresof other phone brands. Chinesebrands OPPO and Realme sharea R&D unit in Hyderabad. South Korea’s Samsung has fivesuch units in India.
OnePlus plans ₹1,000 cr investment in R&D unit
The Hyderabad unit will handle the
development of AI and machine learning for the firm to boost its position in India
The restaurants said the creation of private labels and dark kitchens by food apps was in
direct conflict of interest between their role as a marketplace and that of a brand owner.
Suneera Tandon
NEW DELHI
The National Restaurant Associa-tion of India (NRAI) on Mondaywrote to several food deliverycompanies listing out their con-cerns over steep discounts,
forced usage of fleet services and otherclauses laid out by these platforms, urgingthem to change the way they on-board andremunerate eateries.
Representatives of NRAI wrote to topexecutives at UberEats, Swiggy, Zomatoand Foodpanda listing eight broad issuesthey feel need to be addressed and urgedthem to stop predatory practices withimmediate effect.
The move comes days after the NRAI ledthe de-listing of several restaurants acrossIndia from dining-membership drivenapps such as Zomato Gold, Dineout andEazyDiner, among others over concernsthat complimentary offers doled out bythem was hurting business at restaurants.
Among some of the concerns raised byNRAI against delivery services, the associa-tion noted, is discounting. “In the currentenvironment, deep discounts, rangingfrom 30% to 70%, are being deployed 365days of the year on delivery platforms. Thisdistorts the market and hinders profitablegrowth of the sector,” theNRAI said in its letter to thefood aggregators.
It also raised concernsaround the lack of unifiedcommission structures acrossrestaurants. This, according toa top member of the associa-tion, creates distortion in theway different restaurants are charged forthe aggregator’s services.
“What is missing is transparency andconsistency of policies and commercials. Itis very arbitrary because we feel there is nomechanism on why someone pays 12% ver-sus why someone pays 30% commission,”
said Anurag Katriar, head of NRAI MumbaiChapter. Aggregator platforms, NRAIclaims also force restaurants to use theirdelivery services. In fact, NRAI has beenasking aggregators to unbundle these ser-vices and give restaurants the freedom tochoose what services they wish to opt for. Italso asked aggregators to build more stan-
dardized and structured contracts.That is not all. NRAI also pointed out the
need for better transparency around shar-ing data of deliveries that can help restau-rants build their own customer database. Iteven added that the creation of privatelabels and dark kitchens by food aggrega-
tors was in direct conflict of interestbetween their role as a marketplace andthat of a brand owner.
NRAI’s move comes at a time whenonline food delivery services have beengaining popularity in India. On a monthlybasis some 80 million orders are ferried byonline food aggregators indicating that
such services have nowbecome indispensible to usersin the country. While the twosides have been warring for afew months, the issue pickedpace after 300 restaurantslogged out of membership anddining programmes earlierthis month in a sign of protest
against complimentary offers. The protestsoon grew to over 2,500 restaurants.
Uber declined to comment. E-mailedqueries sent to Zomato did not elicit anyresponse. Swiggy representatives areexpected to engage in talks with NRAI, saida person on the condition of anonymity.
ON THE PLATE
NRAI listed out 8 major issues to food delivery firms Swiggy Zomato, UberEats and Foodpanda
THE association said deep discounting (30-70%) offered by these platforms was hurting sector’s profit
NRAI raised concerns around lack of a transparent, unified commission model across restaurants
HT
we decide on the nextcourse of action,” saidthe official.
Air India had earlieroffered to clear about₹60 crore of its ₹5,000crore dues, which wasrejected by the OMCs,said an official fromanother OMC, con-firming the developments.
“We have given a lot of extensionto the national carrier in the pastfew months and are not in a positionto give another one now,” said the
second person citedabove.
Air India may find itdifficult to pay off itsdues as the airline isfacing a cash crunch.
The national carrieris not in a position topay off its entire dues toOMCs and had thus ear-
lier offered OMCs about ₹60 croreto clear a part of its dues, an Air Indiaofficial had earlier said on conditionof anonymity.
The oil firms have been told that AI will respond
in a written communication,
explaining its payment plan
08 TUESDAY, 27 AUGUST 2019NEW DELHI
with the fashionable tag ‘neo’ attached. Youfound them among shock-jock radio hostswho influenced far-right nationalists in theUS, who then mowed down people whodidn’t look like them at shopping malls, orwho read screeds on the internet and wentto a mosque in Christchurch, New Zealand,to shoot worshippers, or at a summer campfor children outside Oslo, Norway. Or inIndia, spreading their hatred insidiouslyand quickly through WhatsApp forwards,through distorted history, as the sales ofHitler’s autobiography, Mein Kampf,remained buoyant.
But it is facile to assume that liberalismhas become obsolete or is going to disap-pear. Ideas don’t die. Ideas that make peo-ple free, which make people believe theyare free, which empower people to act inways to protect their freedom, don’t vanish.
In 1983, the French philosopher JeanFrancois Revel wrote a book called HowDemocracies Perish, which argued that thediscipline of the Soviet Union would ulti-mately prove superior over the cacopho-nous nature of democracies. The Sovietsknew what they wanted; they had a long-term plan; they went about to achieve it;they did not tolerate internal dissent thatcould derail their one-way journey towardssuccess. Democrats, on the other hand,kept arguing and challenging one another;they refused to let one leader take all deci-sions; they bickered over possible out-comes; and they slowed down responsemechanisms. In Revel’s universe, theNorth Atlantic Treaty Organization woulddither while the Warsaw Pact wouldmarch. So ran the fear. And then Gor-bachev happened—and the rest, as Fukuy-ama might say, is history.
However, history has taken a differentturn now. Pessimism is once again back infashion. The gloom across liberal intelli-gentsia is palpable. We are returning to the1920s and 1930s is a favourite leitmotifacross Europe. Boris Johnson may indeedredraw the map of his disunited kingdom.Donald Trump may win again. NarendraModi has won again, and the paralysis thathas struck the Congress Party makes somethink that in 2024 the BJP might even winmore than 400 seats. (As Harold Wilsonsaid in another context, a week is a longtime in politics; predicting what might hap-pen in five years is a fool’s errand or anastrologer’s prerogative).
Is there, then, a historic inevitability andis civilisation’s future going to be the Hob-besian nightmare—short, brutish, andnasty? What are the Jeremiahs and Cassan-dras (gods in Greek mythology who have
the gift of prophecy) saying that we aren’tlistening to?
RESISTANCE TO STRONGMEN
Who knew that a man jailed on anisland and forced to break rocks at a
limestone quarry for more than two dec-ades would not only emerge out of that jail,but cast aside personal bitterness and makepeace with his erstwhile tormentors,stressing reconciliation? And Nelson Man-dela did just that. Who would have thoughtthat a pipe-smoking playwright, jailed fordisturbing the peace, would one day wavefrom a balcony in his city’s main square,and draw a heart on a piece of paper foranyone who asked, and bring about a velvetrevolution? And that’s what Vaclav Haveldid in Czechoslovakia.
A few decades earlier, who would haveimagined that a 61-year-old vegetarian,wearing loincloth and not much else, carry-ing a walking stick would stand on a beachand lift salt from that coast and sink anempire? And yet, that’s what MohandasGandhi did. Who would have imaginedthat students who saw their revolution in
Enough obituaries have been written for liberalism, but ideas of openness and dissent will always remain relevant
A MESSAGE FROM
THE KHAN MARKET GANG
REPORTAGE | TALKING POINTS | IDEAS | INSIGHT | THE BOTTOMLINE
mint
SHORTSTORY
Across the world, and in India, the flag of liberalism and the ideas
associated with it is going down as people lend their support to
the ideology on the other end of the spectrum—the right.
WHAT
It is facile to assume that liberalism has become obsolete, or is going to disappear. Ideas do not die. Ideas that make people free and empower them do not
vanish.
BUT
History teaches us that whenever a regime has pushed its subjects against the wall, it is
the liberal school of thought that has led the resistance—from
Gandhi to Mandela.
HOW
Salil Tripathi
How many divisions did you saythe Pope had?” At the Pots-dam Conference in 1946, theSoviet dictator Josef Stalinreportedly said this, rhetori-
cally and scornfully, to British prime minis-ter Winston Churchill, at a time when Sta-lin was facing criticism from many, includ-ing the Pope, because he had begun tomerge orthodox churches forcibly in theSoviet Union. The arrogant certitude withwhich Stalin spoke resurfaced in Junewhen Vladimir Putin, the Russian leader,told Financial Times with similar self-as-surance that liberalism as an idea was obso-lete.
Putin pointed out the “overwhelmingmajority” now opposed ideas that promotethe rights of refugees, migrants, and sexualminorities. In so doing, Putin was strikingright at the heart of the central pillar ofhuman rights—everyone is equal andeveryone has rights. And states have anobligation to make sure that those rightsare protected and not harmed either by thestate or by others, and the state has to takeproactive steps so that the rights are safe-guarded and people are able to exercisethose rights.
That idea is progressive (but hardly left-ist) and what underpins it is universalism,not western values. Those are core founda-tions of the universal declaration of humanrights and that declaration encompassesthe values of the world, not any specificregion, and nor are they drawn from anyreligion.
Earlier in June, in the pages of this news-paper, numerous opinion pieces haveexcoriated Indian liber-als. As the argumentgoes, liberals have trulylost the plot and theresounding victory of theBharatiya Janata Party inthe parliamentary elec-tions only confirms this.India seems to be one ofthe chapters in an ongo-ing saga—with the kindof leaders elected in theUS, the UK (selected in that case, notelected), Hungary, Turkey, Israel, the Phil-ippines, and Myanmar, besides the RussianFederation and the unelected leadership ofChina.
It would seem that the liberal idea, whichwas on the ascendance with the fall of theBerlin Wall in 1989 and the collapse of
Communism, has finally run out of steam.Older, meaner, atavistic ideas—of national-ism and fascism—are rising again; neo-Na-zis were gaining votes in elections and pop-ularity, and the architecture that heldtogether the international order is beingassaulted. Putin seemed certain it wouldcrumble soon.
To be sure, the liberal triumphalism inthe late 1980s was irrationally exuberant,and probably unwarranted. Granted,Mikhail Gorbachev had unveiled his idea ofperestroika (restructuring) and called forglasnost (openness) with the hope ofreforming Soviet Union, but his aim wasnot necessarily to usher in democracy. Itwas to make the Soviet Union less harshand more efficient. Instead, his reforms ledto its disintegration. At that time, historianFrancis Fukuyama exultantly declared theend of history, saying that humanity wasreaching the “end point of ideological evo-lution and the universalization of westernliberal democracy as the final form of gov-ernment.” Samuel Huntington pouredsome cold water on the exuberance, sayingthat a clash of civilizations was inevitable.
The attacks in New York and Washing-ton on 11 September, 2001, shattered thegloating. In attempting to protect the rightsof civilians against terror, western govern-ments—once at the forefront of liberal-ism—began restricting personal freedoms,making illiberal ideas attractive. Surveil-lance returned; privacy was violated;search-and-seizure warrants were sought;discrimination between types of foreignvisitors, immigrants, and refugees began;dissent stamped; and free speech wasattacked. It was all allegedly temporary...only to protect the people.
But as Benjamin Franklin had warnedonce, those who wouldgive up essential libertyto purchase a little tem-porary safety deserveneither liberty nor safety.(To be fair, Franklin waswriting about arcane pro-visions in Pennsylvaniaover the ability of a legis-lature to impose taxesand not necessarily aboutupholding privacy, but
his words have become the clarion call forall those who defend personal freedoms.)
REBIRTH OF FASCISM
Ideas like fascism and Nazism wereassumed to have died in 1945—its body
mutilated in Rome, or dead in a bunker inBerlin. But they resurfaced in ugly forms
It would seem that the liberal
idea, which was on the
ascendance with the fall of
the Berlin Wall in 1989 and the
collapse of Communism, has
finally run out of steam
an umbrella would bring one of the mostdynamic cities in the world to a standstill,insisting on change? We don’t yet know theoutcome, but that’s what the leaderlesspeople in Hong Kong are doing.
We will never know the name of the manwho stood in front of a tank in Beijing, atTiananmen Square, who forced a tank tomove sideways on that day in June 1989.What became of him, nobody knows, butthat image is etched in our minds as aniconic memory, inspiring others to carrythe torch of freedom.
Think of Alaa Salah, the 22-year-oldSudanese journalist, wearing white, whoclimbed atop a car this April and told thegeneral who had ruled her country for aquarter century to leave. (Within days, hequit). And remember Olga Misik, who is 17,who sat in front of riot police in late-July,reading aloud the Russian Constitution.The power of an individual facing themight of weaponry. Think of Sudha Bhar-adwaj, Varavara Rao, Anand Teltumbde,Arun Ferreira, Stan Swamy, and others,jailed for speaking out for the vulnerable.
These are the heroes of our time. Theyafflict the comfortable and comfort theafflicted, in the words of Arundhati Roy.They keep the idea of liberalism and indi-vidual rights alive. They defy the state,stand in front of tanks, wave Constitutionsin the face of riot police, harangue a leaderby standing atop cars. They dissent; theydisagree; they challenge, they refuse tocompromise; and they remind us about theneed to debate and argue.
THE POWER OF OPENNESS
In Salman Rushdie’s 1990 novel, Harounand the Sea of Stories, the Prince of
Silence and the Foe of Speech is calledKhattam-Shud. He rulesthe land of Chup(silence). It is a land that’soutwardly peaceful butconceals an inner fragil-ity. Such societies, thenovel shows, force thecitizens to live a life full oflies. The cheer is con-trived, the harmony isforced—like in a NorthKorean mass parade.
Open societies look unruly and messy,where everyone contradicts everyone else,where nothing is sacred. But that anarchygives those societies an inner resilience, acertain strength. That strength is built onthe courage that each individual has tospeak without fear—not through swallow-ing words, not by looking around to see if
someone is watching.When Morarji Desai became prime min-
ister in 1977 after Indira Gandhi’s defeat, hesaid he wanted an India free from fear. Hisgovernment itself collapsed due to a set ofinevitable internal contradictions, but onthat day in March 1977, those wordssounded so pure and so true... like thewords of Indian-born writer Ved Mehta’syoung niece, who told her uncle, “mainelection se badi khush hun” (I am so happywith the elections), as they saw rapturousIndians celebrate the end of the Emer-gency.
Rushdie writes in his novel: “All thosearguments and debates, all that openness,had created powerful bonds of fellow-ship…. The Chupwalas (those from thesilent land) turned out to be a disunited rab-ble, suspicious and distrustful of oneanother. The land of Gup (talk) is bathed inendless sunshine, while over in Chup, it isalways the middle of the night.”
Liberalism helps cast aside the dark cob-webs of ignorance and lifts a society fromits meaner instincts which insist that theold order must prevail; old hierarchiesmust continue; that might is always right;and those who speak differently, think dif-ferently, eat differently, pray differently,love differently, or look different mustcomply, obey, and follow the rules set bythose with power, those in majority.
Majoritarians may strut and fret theirhour upon the stage as though there is notomorrow, but there is always a tomorrow.Recall what Gandhi said: “When I despair,I remember that all through history, theway of truth and love has always won.There have been tyrants and murderers,and for a time, they can seem invincible,but in the end, they always fall. Think of it—
always.”In the 150th year of
Gandhi’s birth , and soclose to India’s own dayof independence, thosewords have a special res-onance to the land of hisbirth—and even for theworld. Gandhi wasn’tperfect. He wasn’t infalli-ble. But there are few bet-ter paths towards free-
dom than the one he walked on, oftenalone. This is not the time, nor the place, forliberals to throw their hands up in despairand surrender and accept fate. Doing sowould be profoundly illiberal. Walking onthat path of peace and non-violence is hard,but sometimes it is the only way.
Salil Tripathi is a writer based in London.
Liberalism helps cast aside
the dark cobwebs of
ignorance and lifts a society
from its meaner instincts
which insist that the old order
must prevail
Older, meaner, atavistic ideas
of nationalism are rising.
VIRENDRA SINGH GOSAIN/HT
TUESDAY, 27 AUGUST 2019NEW DELHI 09B
US I N E S S O
F
Life
Sohini Sen
As one of the earliest hires inthe marketing departmentof apparel startup LimeR-oad in 2014, HiteshRathee, 32, saw up close
how the company grew from scratch.The learning opportunities andresponsibilities were immense, and in2016, armed with online expertise,Rathee left the company to start hisown offline boutique in Gurugram.
“I tried to take it online as well butthe e-commerce space was difficult. Ineeded to learn more,” he says. Earlierthis year, he returned to LimeRoad as adigital marketing manager to learn thenuances of e-commerce. His wife con-tinues to look after the boutique.
“The feeling of having ownership ofthe vertical has really taught me a lot,”he says. Rathee hasn’t yet decided if heplans to return full time to being anentrepreneur.
More than 1,200 new startups cameinto being in 2018, according to indus-try body Nasscom, but, depending onwhich study you believe, 50- 90% of allstartups fail. So it’s likely many of theentrepreneurs return to the workforce.Some of them try to start again, but afair number tend to return to theirformer workplaces or choose to work inanother startup.
Startups have an entrepreneurialculture, and this is what formerfounders returning to a job look for. Forthe company too, an employee whoreturns after trying to be an entrepre-neur is a boon.
“If we have two candidates with thesame qualification, and one has tried todo something on his or her own, we willchoose this person. They not only showan entrepreneurial mindset, but havegreater risk-taking ability, which per-colates down to the team,” explainsYuvaraj Srivastava, group chief humanresource officer, MakeMyTrip.com.
He explains that such an employeebrings insights into what works andwhat doesn’t for the company. “Theyhave perspective that someone withinthe company may not—how it haschanged, what is required to make itsuccessful. We do not have to spendmuch time teaching him or her aboutthe company. That said, we do check ifhe is still in touch with the reality of theorganization, if he is still a cultural fit,”says Srivastava.
LESSONS LEARNTMany rejoin companies within thesame space so that they’re able to applytheir learnings while picking up moreexpertise. Manyata Malhotra, 27, set upThe VR Project, an edutech companythat attempted to use virtual reality forteaching in low-income schools, in2016. But the expensive technologyand logistical challenges forced her toclose it after a year.
Malhotra did not want her learningsfrom The VR Project go to waste, andshe joined Meraki Foundation, a socialimpact startup that focuses on trainingparents in low-income households. Sheused her experience of dealing withthese families to create the content forthe Meraki website and also gave sug-gestions on various projects.
“I felt that I was more comfortable
with uncertainty because I had tried toset up something on my own. A few ofmy colleagues at Merkari, on the otherhand, would always worry about wherethey were headed,” says Malhotra, whonow plans to return to university.
A BREAK FROM RESPONSIBILITYAnother reason to return to a salariedjob after shuttering a venture is to takea break from being responsible forevery decision. Harkirat Singh, 35, leftMakeMyTrip in 2011 and co-foundedWe Are Holidays, an online holidaysmarketplace. He went through thestartup’s lifecycle: building a team, rais-ing funds, expanding the business andfinally sold the business to Cox & Kingsin 2017. “It would have been easy tostart another venture, but I thoughtabout the time it would take—six toseven years—and I did not want toinvest so much time in another venture.I decided to come back to MakeMyTripas director (online products) in March
this year,” says Singh. The comfort heshared with the team that made himchoose to return, he adds.
Nikhil Agarwal, 33, spent three yearsrunning his home décor startup, butsoon realized growth had hit a plateaubecause he lacked the expertise tobuild a better tech product.
Rather than letting it get him down,he decided to develop this skill set, andwent back to a job at logistics startupDelhivery, where he’d earlier workedfor two years.
“I had learnt operations and manage-ment of a large number of people, but Ineeded to learn about tech, and I knewmy job at Delhivery would be the per-fect place to learn,” he explains. Agar-wal also had to prepare himself forchanges in the workplace, and the factthat peers would be his bosses.
“I had adjusted my expectationsbefore coming back. Some of myformer colleagues had moved ahead,but we still hung out,” he says. Those
colleagues gave him insights into thecompany’s environment and changesin culture. This is key information, andhelped him make decisions.
Agarwal says the learning in one’sown startup is “very horizontal”: onepicks up a variety of skills, especiallypractical business skills. In a job, onefocuses on a single area of expertise. Aregular salary is an added bonus.
“I like the financial stability, predict-ability, and controlled learning envi-ronment in a job. But what I miss is thethrill and promise that comes withrisk,” adds Agarwal. The feeling that hecan control his future makes him wantto start another venture someday.
POWER OF NETWORKS Should one look to return to the work-force, staying in touch with the industryas well as with employers and peers isimportant. Singh, for instance, madesure he stayed in touch with the Make-MyTrip founding team while at hisstartup. This ensured that his returnwas smooth and did not require chasingback and forth with human resource orrecruitment teams.
Suchi Mukherjee, founder of LimeR-oad, says founders returning to regularemployment often worry that theirpeers would have moved ahead.“Instead they should focus on workingon any skill gap that could impact theiremployability,” she says. “Companiesare moving away from human bias, ofhiring someone because of only theirloyalty, and replacing it with objectiveassessment,” she says.
Companies don’t shy away from hir-ing entrepreneurs, whether the ven-ture was successful, because foundershave gained management and otherskills, often showing an all-roundunderstanding of how business works.
“When someone comes back fromstarting their own venture they bringthat shared ambition back. Startupfounders know how to work with lim-ited resources, which is a benefit evenin an employee. In a job I might havemore resources, but I will make themlast longer because now I am wired thatway,” Singh says.
RETURNING TO THE
STARTUP PITCHFormer startup founders often look for work in ventures in which they can leverage
the skills and knowledge they gained while running their own companies
Knitting a new career with hill communities
The Color Caravan’s Swati Seth (extreme left) works with the artisans of Naggar.
Nikhil Agarwal (top) returned to a 9-to-5 job to learn new skills. Manyata Malhotra
(below) looked for work that needed the expertise she gained while running an
edtech startup.
Shail Desai
While studying commercial arts atthe South Delhi Polytechnic forWomen, Swati Seth realized two
things: She wanted to run her own enter-prise, and make the mountains her home.
Her plans changed after she finished herdiploma course in 2001. The next nineyears were spent in the corporate world,working in the fields of design, marketingand content. Whenever she needed to takea break from the corporate grind, likemany, Seth would travel, often to the hills.It was around then she developed an inter-est in traditional handicrafts.
“I was overwhelmed by the beauty ofhandmade products, and met a lot of crafts-persons on my travels. What I later realizedwas that these crafts were dying becausethe artisans weren’t getting the money theydeserved. The next generation was hesi-tant to take up the work because incomeopportunities were less,” says the 40-year-old.
Change is hereIn 2010, Seth quit her job in Delhi to workwith the traditional crafts and set up herenterprise, The Color Caravan. She startedcollaborating with artisans and weaversacross nine states, who cre-ated everything from homedécor, furnishing, fashionaccessories, handicrafts andapparel.
Seth knew establishing aventure with her own savings and somefinancial help from family would require afair share of sacrifice. “I knew that I wouldhave to make adjustments to the kind oflifestyle that I led. The income wouldn’t besteady for sometime. I realized that I wouldbe leaving behind a very comfortable life,”she says. Her greatest fear, however, wasn’tthe fear of failure. I worried that I wouldhave to go back to the corporate world andwork for somebody if it all didn’t go as perplan,” she explains.
In 2012, she moved back to her home-town of Lucknow, where she planned tosell the products created by the artisansthrough an online store and exhibitions.
But after four years, she was forced toshut operations. “There were mass pro-duced, cheap imitations in the market.Quality control was difficult because thecraftspersons were too scattered and theoverheads were very high. So I took timeoff to introspect and moved back to Delhi,”she says.
The road to success After some stints with non-governmentalorganizations and social enterprises,besides teaching at a design school, Sethdecided to move to the mountains.
Before making the move, she made a tripto Sarmoli in Uttarakhand to meet socialentrepreneur and activist Malika Virdi, andunderstand how she could start an enter-prise with the hill communities. Finally, inthe summer of 2016, she shifted to Manali,despite objections from her family. “Whilemy family supported my decision to leavethe corporate world and start my own ven-ture, they couldn’t understand why I wasmoving to a village from the city, whenmost were transitioning the other way,”Seth recalls.
Once she reached Manali, she saw theugly side of tourism. “The town was takenover by greed. My landlord suggested Imove to the nearby town of Naggar, whichwas more community driven.”
There, she learnt that almost everyone inthe village was into knitting and crochet.They mostly did this for their own familiesand were unsure how it would pan outcommercially.
Seth decided to work with them to maketheir creations popular. She worked onrefining their skills so that the productswould match the retail market. For starters,they only made sweaters and woollenessentials that would cater to the urbanmarket in the winter.
“They were all very eager to work. How-ever, it was hard to get them tounderstand that they had tostick to measurements and thekind of finishing that wasneeded to compete,” she says.Seth was unsure of how long
her savings would last, considering that shehad not only invested money in the ven-ture, but also had cover the cost of living inNaggar.
Another challenge was that the winterapparel season lasted about two monthsand it was hard to keep the women busyand motivated for the rest of the year.That’s when she arrived at what she con-siders to be the game-changer for TheColor Caravan.
“We introduced crochet toys to keep theventure sustainable. They got really popu-lar over time and started retailing in themetros. In fact, we’ve got a few exportorders as well, besides making toys forother brands,” she says.
Since the introduction of the toys, thefinances have stabilized at The Color Cara-van and Seth hopes to get into corporategifts and nursery décor in the months tocome.
“It’s been slow but it’s working out for us.And with the festive season coming up,busy days are ahead of us,” Seth says.
Detour features people who quit their 9-to-5jobs and made their passion work.
Write to us at [email protected]
Detour
Life
PRADEEP GAUR/MINT
RAMESH PATHANIA/MINT
Rajeshwari Sharma
Anew batch of Generation Z, those born intothe burgeoning of the digital age, is joiningthe workforce. The transition from college
campus to the corporate world could be a dauntingone and may result in several questions relating tothe first job.
Mint raised some common dilemmas faced byfirst-time employees with Dan Schawbel, who,besides being a New York Times best-selling author,is a career and workplace expert, startup adviser,and partner and research director at HR advisoryfirm Future Workplace. He’s also the founder ofresearch and consulting firm Millennial Brandingand WorkplaceTrends.com, an advisory member-ship service for HR professionals. Edited excerpts:
How does one approach salary negotiation?The best way to negotiate your salary or a raise is
to bring data to the table. To do this, conductresearch on various compensation websites, suchas PayScale.com or Paycheck.in, a research initia-tive by the Indian Institute of Management Ahmed-abad that is connected to the international WageIn-dicator Network, to see what the average salary isfor someone in your industry with your job title.
Besides that, talk to people who already havethe job you are applying for at the company, or insimilar positions at other companies, to see howmuch they are being paid. By doing your due dili-gence, you will know how much you could ask forduring a salary negotiation and be able to point todata to back up your claims. When you are physi-cally in the room trying to negotiate a higher sal-ary, you should act confidently by using eye con-tact, sitting up straight and being firm in how youcommunicate.
With respect to promotion time-frames,what is a reasonable period of time? It is most common to ask for a raise once a year
during a set period of time, based on your com-pany’s fiscal year. When you start your job, youshould ask your manager when the annual evalua-tion is so that you know when to ask for a raise.
The one exception for asking multiple times in ayear is if you have over-delivered on one of yourgoals and it has made a significant impact on yourteam and/or company by increasing revenue ordecreasing costs.
On an average, it takes someone six months to bea fully productive worker because they needenough on-the-job training to learn and master askill or procedure. Then, you need several more
months to be able to replicate those skills on real-life projects to have measurable results to proveyour mastery.
How necessary is it to clear one’s doubtswith the manager? Since we spend so much time at work, having
strong relationships with co-workers is critical toour productivity, well-being, and satisfaction.
Team relationships impact your ability to getthings done at work. While your current or futuremanager has power over your salary, your team-mates can impact your ability to produce high-quality work that will put you in a better position toask for raise.
Having a manager who believes in you, alongwith supportive team members, can make a majordifference in how successful you will be at work.
Team and managers’ relationships are especiallyimportant in India. In a study conducted with Kro-nos, a human resource technologies firm, we foundthat India is the hardest working country. Sixty-nine percent of full-time workers in the countrysay they would still work five days a week even ifthey had the option to work fewer days for thesame pay.
In a toxic work environment, poor team relation-ships can be hazardous to your health and make
you spend more time searching for your next jobrather than performing at your current job.
Where, when and how should one draw theline when it comes to making friends atwork?In a study I led of over 2,000 managers in 10
countries, we found that 7% of the global workforcehas zero friends at work and half have five or fewer.
In India specifically, we found that 5% have zerofriends and just over one-fourth have five or fewer.
Friends at work are important because we spendhalf of our lives working and friends make the workwe do much more bearable even if we dislike ourjob.
But we have to draw a line when it comes to mak-ing friends at work so that we do not let interper-sonal issues get between us and doing our bestwork.
Set boundaries based on what works best for you.This could be not accepting your co-workers’ Face-book friend request or not going out to party out-side of office hours.
You should set your own boundaries as thefriendship is taking form so that you are on thesame page with each other.
Write to us at [email protected]
A TIP FOR GEN Zs: KEEP SALARY DATA AT HAND WHILE ASKING FOR A RAISE
Dan Schawbel is a best-selling author and
workplace expert.
10 TUESDAY, 27 AUGUST 2019NEW DELHI GLOBAL
EXCLUSIVE FROM
Latha Venkatesh &
Prashant Nair
CNBC-TV18
We are in the midst ofa “Made In India”crisis, says Shankar
Sharma, vice chairman andjoint managing director, FirstGlobal. Edited excerpts of aninterview:
What did you make of theannouncements and nowof course the marketreaction that we had?Both were kind of expected.
The first one, which is theannouncements by the gov-ernment, when stuff like FPIsurcharge was announced inthe budget that very eveningthe minister and other officialswere pretty clear that nothingwas going to be rolled back andthat people should form sort ofcorporations and corporatesinstead of remaining a trust ifthey want to go back to lowertax regime and avoid the sur-charge. That was the generalmessage we had heard thatevening.
The next day we heard thatthese are anyway collateraldamage. By the fifth day, wewere hearing that they don’tmatter because they are all justbuyers and sellers in the sec-ondary markets.
So the market, they basicallycompelled the government tocome around to their line ofthinking. So it was basicallythat the market forced thegovernment’s hand with thislarge huge crash that you haveseen in the last month and ahalf and then the pull out ofthe monies that happened, allof that basically forced thegovernment to reconsider its
economy itself, like posi-tive auto sales numbers,maybe around October?Let me clarify one thing
first. There is no crisis in thisworld. No matter what any-body wants or at least mostIndians want to convincethemselves that the US is in acrisis, China is in a crisis, Ger-many is in a crisis, there is nocrisis. There at best could be aslowdown and a moderaterecession. India is in a differentleague in terms of corporatenumbers. It is just of a differentorder.
So, let us not start pattingourselves on the back that weare in middle of a global melt-down. This is not 2008 or1997-98. This is more like 1991equivalent. I am not saying it isas bad as that. All I am saying isthat it was a crisis unique toIndia. So, this is a made-in-In-dia crisis.
To answer the second partof your question, when num-bers start to tick up, they willtick-up, you cannot keep fall-ing 30% permanently but thatis a palliative, when you arerunning a company justbecause your numbers are-30% and then in one monthyou have a positive growthdoesn’t mean you are going togo back to 100. You have togrow 50% to reach 100 andthen to start growing is a tallorder. So that is little bit downthe road and little bit of areach.
I don’t think any of thesemeasures are addressing thoseaspects. These are moreaddressing the stock marketand I don’t think the stockmarket beyond a point reallywags the tail of the economy.
‘We are in the middle of a Made-In-India crisis’
Atul Suri, CEO, Marathon
Trends–PMS.
Arvind Sanger, managing
partner, Geosphere Capital
Management
Markets are at record oversold levels, says Marathon’s Atul Suri
Shankar Sharma, vice-chairman and joint MD, First Global. MINT
they are absolutely fine.What is the impact on the profitand loss (P&L)? You are sayingthat approval from all thestates should come in a fewweeks. Should we expect it inthis quarter and therefore,what is the impact on the P&L?Is it on this quarter, is it on nextquarter and what isthe impact?I expect that it will
happen in some of thestates in this quarter andin some of the states itwill possibly move to thenext quarter because wedo have elections in twoof the states but we aretrying to work with theconcerned departmentsand government to seethat how this can be done within thisquarter itself but to be cautious onthis, I would say that possibly by nextquarter we should be through.
Now you are already Ebitdapositive, you will become evenat a net level positive on Mun-dra, right?Absolutely and when we look at
Mundra, we also look at Mundra andthe coal companies. So on a consoli-dated basis for Mundra and coal com-panies, we have always been positive,but with HPC recommendation get-
ting accepted it will add to that bene-fit. Therefore, as I mentioned earlier,we expect nearly 50% of our under-recovery to be covered based on theHPC recommendation.
On the coal business itself, theIndonesian coal joint venture(JV) losses have expanded thisquarter and because of the new
regulations as far asIndonesian coalmines are concerned,there is an expecta-tion that there couldbe further losses. Canyou just explain to uswhat the outlook ofthe coal businesscould be?
We have two minesover there. One is theKPC mine which will go
for renewal in December 2021 and asfar as that is concerned, we have beenin constant touch with the govern-ment and our partners in Indonesia.
All of them have confirmed thatthis extension should not be a chal-lenge. This is under the earlier law of2009 and all these coal mines whichwere allocated under 2009 shouldget extended because there is noimpediment.
The new law that is expected willbe basically for the new allotmentswhich were done since 2009 and
‘We are looking to divest from our
South Africa operations, where
we have wind plants, and our hydro plant in Zambia within
this year.’
position.Having, done that I am not
convinced that was the realreason for the fall. I think thereal reason was really that theheadline newscoming out ofIndia has beenextremely nega-tive and I liveabroad and I cantell you it hasnever been asnegative as what Ihave seen in thelast few weeks ormonths. Whetherit is geopolitical,or whether it is economic, ithas dominated headlines. Ispeak to foreigners, they haveasked what is happening. Thatis the kind of the message Ihave got. So I think the market
really fell because of thoseaspects rather than just an FPIsurcharge.
The global uncertainty israther overpowering
nevertheless ifwe assume thatwe will be buf-feted by DonaldTrump’s pro-China and thena n t i - C h i n acomments. ifwe just lookedat the domesticscene, do youthink a mix ofgoading PSU
banks to cut rates, RBIcutting rates and inven-tory ultimately kind ofwinding down, do youthink we will see somereturn of positivity in the
‘Let us not start patting ourselves
in the back that weare in the middle of a global melt-down. This isn’t
1997-98 or 2008. It’s more like a 1991
equivalent.’
Over a period oftime, we expect to have a very healthy debt and also a debt-equity ratio. We are looking at a sub 2 debt-equity ratio.
Praveer SinhaManaging director and chief executive officer, Tata Power
ment and I expect in the next fewweeks we should be able to get somegreen light on the Mundra issue.
Gujarat Urja Vikas Nigam Ltd(GUVNL) had approached theCentral Electricity RegulatoryCommission (CERC). Wechecked with the bankers andthey said that the compensa-tory tariff should not be givenbecause they are in breach ofsome covenant. So, even if thisis, it is a specific issue to Adani
Power, right? You allhave not faced anyopposition from any ofthe discoms?
As far as the GUVNL story is con-cerned, I have gone through the doc-uments and what we find is that therewas another case which was pendingin the Supreme Court in which theyhad asked for retrospective impact ofthe tariff benefit which has beenallowed and that is where the GUVNLand Gujarat government felt thatwhile they have agreed as per HPCrecommendation on a prospectivebasis, this has happened with retro-spective. So there is a very differentcase as far as Adani case is concerned.
As far as we are concerned, we haveonly asked for prospective impactand our understanding with GUVNLand Gujarat government is that theyare going ahead with this proposal,
Latha Venkatesh & Sonia Shenoy
CNBC-TV18
Tata Power Ltd is expectingan early resolution of thecompensatory tariff imbro-glio around its MundraUltra Mega power Project,
managing director and chief execu-tive officer Praveer Sinha said. In aninterview, he said the companyexpects the five states involved todecide on the new tariffs latest by thenext quarter. Edited excerpts:
I wanted an update on what’shappening with Mundrabecause the Adani ruling camelast year but things have stillbeen delayed quite a bit. Sowhat is the latest there?The Mundra issue has been going
on, as you know that we have 5 stateswith whom we need to get theapproval. We definitely got theapproval from Gujarat which was thefirst off the block and subsequently,we have been discussing with theother states. The good thing is that allthe states are now on board.
We had a review meeting in minis-try of power last month on 17 July andwe found that all the states have verycategorically said that they want thispower and they are okay with therevision that is proposed becauseeven with the revised tariff, the powerthat we will be supplying will be in themerit order in the first quadrant ofthe tariff that they have and they arevery comfortable with the supply thattakes place from this plant.
There has been a good movement.Maharashtra, I am told has approvedit at the bureaucratically level, it hasbeen approved by energydepartment and thefinance department andthe cabinet proposal isready to go to the government forfinal approval. I am told that even inPunjab things have moved forward;initially there were some reluctancebut they have subsequently discussedand modified the high-powered com-mittee (HPC) recommendation andbased on that we expect in the nextfew weeks it will go to the cabinet forapproval, it has got all the bureau-cratic approval. It is in good shape.
In the other states also, people havebeen working on it, the proposal typi-cally goes from the state distributioncompanies (discoms) to the stateenergy department and then tofinance and then to the cabinet. So inall the states, it has gone from the dis-com to the concerned energy depart-
hence, they will be the ones whichwill be going through the changesthat is proposed. Notwithstandingthat, the new law also is expected tobe approved possibly by first quarterof next year. We expect that based onthe performance and consideringthat Indonesia exports nearly 450million tonne of coal and this is one ofthe biggest mines over there with 60million tonne, we do expect that theextension will happen and we will beable to continue the operation of this.
As far as the prices are concerned,the global prices of coal has comedown and also in South Asia and thatstress is there but the companies con-tinue to make profit. Only thing isthat profit numbers have reduced butotherwise they are all profitable com-panies.
In terms of asset monetization,there were some reports sug-gesting that you are looking toraise about ₹2,500 crore interms of asset sale to pare downyour debt. Is there any truth tothose reports, anything in thiscalendar year itself that you arelooking at?We are going for some of the assets
which will get monetized and espe-cially some of the non-core assetswhich are outside India.
So, we are looking at divesting fromour South Africa operations, wherewe have the wind plants. We are alsolooking at divesting from our hydroplant in Zambia and these areexpected to happen within this year.In fact, the South African should hap-pen in next few weeks and Zambianshould happen in this financial year.
What happens to your net debt,at the moment it is ₹49,100crore I understand?It will come down to that extent.
We are also expecting that some ofthe other non-core assets which wehave, we will be able to divest some ofthe lands that we had acquired for fewprojects where we are not goingahead with those projects and thatwill happen.
We also have some receivablesfrom Arutmin sale; that also weexpect to happen in next one year. So,we expect that over a period of time,we will have a very healthy debt andalso a very healthy debt-equity ratio.
Any target number you areworking at in terms of debt-eq-uity ratio or net debt level in12-18 months?We are definitely looking at sub 2
debt-equity [email protected]
Tata Power looking to monetize overseas non-core assets: CEO
INTERVIEW
are areas to buy now?I think some of the midcap
high-quality companies havecertainly got thrown out in away that looks oversold, bothfrom historical relative valua-tion and absolute valuationand given where Indian bondyields are and where interestrates are likely to continue tohead. I think one of the thingsthat makes some of these com-
panies interestingis just from valua-tion standpoint.
So I think the key missingingredient has been domesticgrowth. Clearly, it has disap-pointed significantly, but Ithink, both on an absolute andon relative basis, Indiangrowth potentially in the next12 months, could be one of thebetter signs in the worldbecause it will be coming offthe bottom while the rest ofthe world could be going intoa slowdown and India may seeless of that effect. So, in that
Latha Venkatesh,
Sonia Shenoy & Anuj Singhal
CNBC-TV18
The government’s moveto roll back the FPI sur-charge will help fund
inflows, says Arvind Sanger,managing partner, GeosphereCapital Management. Editedexcerpts from an interview:
Do you think there wasenough in the Fridayannouncement (FMannouncements) for youto pull out a buying list?Certainly, it helps tremen-
dously to have seen that taxrollback (reversal of FPI sur-charge) as well as some incen-tives announced for the over-all economy is positive, but inthe middle of what looks like areal meltdown in the trade warsituation; it’s not an India-spe-cific issue but there is a globalrisk-off issue going up.
Therefore, in this growinglikelihood of a global reces-sion, we are not jumping inwith both feet anywhere. Indiaobviously is rela-tively less affectedby global trade warthan other markets. So, on arelative basis, it is better. But, Iam not sure this is the time tobe a hero in any market givenwe have, you know, such a bigpotential blow up coming interms of global trade.
We have seen prettymuch a bear market overthe last one year, stocksdown 30-40%, in certaincases more than 60%.Going by valuation com-fort, do you think there
sense, yes, it would be some ofthe higher quality midcapswhere we would find some ofour best opportunities.
Since you spoke aboutdomestic growth, I wantyour views on autosbecause what has comethrough of course arepositive statements butthat would not necessa-r i l y m e a n h i g h e rdemand because there isno clarity on things likescrappage policy, thereis nothing for 2-wheelersbut the damage has beenhighest and these autostocks have rallied quitea bit this month. What doyou do with this spacenow?I do not think the auto
stocks that we would like tobuy have gotten to the levels ofvaluation that arescreamers for usyet. So yes, auto isone of the sectorthat has seen thebiggest slow-down but it’s nota sector wherevaluations havecome down to alevels wheremaybe some ofthe auto part sup-pliers with more global foot-print have gotten a little moreinteresting and could be get-ting close to those levels butthe auto stocks themselves, Idon’t think are at levels wherewe are excited with the valua-tions. Yes, the cycle shouldgradually turn not because ofany steps that were dramati-cally announced on Friday but
you cannot have double-digitdecline forever in an economywhich still is very underpene-trated.
Therefore, there is more of acyclical recovery that we see.The Friday announcements,where we are very modestlypositive, but it’s more bettingon the long-term economiccycle of India and the likeli-hood of growth in auto sales.
When you said high qual-ity midcaps, I mean afterall the midcaps havefallen almost 30% at anindex level, what are youreferring to?As I said, one of the areas
could be some of the autocomponents companies likeMotherson Sumi or a BharatForge. We could be talkingabout the real estate sector,some of the companies we like,
although that sec-tor has also beenvery badly beatup.
Some of thehigh qualityNBFCs that havebeen sold off ormaybe not asmuch as some ofthe lower qualityones, but some ofthem are not in
that bad a shape as much asthey have been sold off andthat could be interesting.Some of the banks could beinteresting. In an economicrecovery, banks and NBFCsare always a good way to playthe cycle. So, those would besome of the areas that I wouldemphasise.
India’s growth could spike while the world slows down, says Geosphere’s Arvind Sanger
‘The cycle should turn, not because of steps dramati-cally announced
on Friday; but you can’t have double-digit slump forever in an underpene-trated economy.’
INTERVIEW
more likely to outperform.You said it could be arange bound market.What makes you so confi-dent that there won’t be adeeper sell off?What I feel is that at the
moment it is not just India.Even if you look at the Dow, youwill find that 25,200 or so is thelower level and we are justabove that. So you will find that
markets have beenin a range. It is notthe first time wehad 600-point fall
in the Dow. It was on Independ-ence Day and fortunately wewere shut and were saved theblushes. So what you reallyhave is twitter thing andDonald Trump moves the mar-kets and what he tweets hon-estly he is not very accountablefor and if you look at the his-
tory, you will findthat not every-thing has cometrue or whatever.So, this is veryu n p r e d i c t a b l eand it has itsr e p e r c u s s i o n sglobally. I knowthat we are sittingon 600-pointsplus Dow, wedon’t know whatis going to happen
overnight.The headline news is very
volatile but at the same timewhen I look at India or I look atthe US.
I find that it is extremelyoversold. So, I feel there will beshort covering rallies but theimportant point is that whetherthese rallies are going to begood enough to reverse thetrend I have my doubts.
Latha Venkatesh,
Sonia Shenoy & Anuj Singhal
CNBC-TV18
The market is at recordoversold levels, says AtulSuri, chief executive offi-
cer, Marathon Trends, portfo-lio management service. Editedexcerpts of an interview:
Today the market doesnot look like it is in a mar-athon mode. It had asprint and it is tiring a bit.In fact, the Nifty is up only56 points. Has the lowbeen made at 10,600?I don’t think you can call that
as a low. Again for someone likeme who has been bullish in thepast, it has been very disap-pointing to see the Nifty evenbelow 11,000. So, I think thateven if you have spikes, spurts,even if 100-200 points rallyheld in the morning, till we donot take out somelevels, whichessentially for me isaround 11,200, I donot think we are out of thewoods.
We will have oversold, over-bought phases, For example Ifind contradiction not just inIndia but globally. The head-line news is poor everywhere.Yet if you look at the marketthey are extremely oversold.Even in India,when I look at themarket, when Ilook at oversoldindicators, I thinkwe are at recordoversold levels. Sowhat you willhave is, you willnot have a runa-w a y o n t h eupside, and I donot think you aregoing to have animmense collapse also. So, youwill have these range boundlevels.
What is important is that inthis range, the selection ofstocks is what is going to matterand here too, it may sound likean old record, but quality isgoing to still stand out. It is stillwhere you find that when themarket corrects, you fall rela-tively less and as and when themarket will reverse, you are
‘The headline news is very
volatile but at the same time
when I look at India or I look at the US, I find
that it is ex-tremely oversold.’
INTERVIEW
12 TUESDAY, 27 AUGUST 2019NEW DELHI PERSONAL FINANCE
Incomplete projects continue to reel under liquidity crisis
bit.ly/2ZwVZGg
Archit Gupta
For a person of Indian origin(PIO), what is the tax treat-ment for income generatedfrom selling multiple proper-ties?
—Vani KhemkarCapital gains on a property situ-
ated in India are always taxable inIndia. Whether a person has to paytax in India also depends upon theirresidential status. Assuming thisPIO is non-resident in India (NRI),he or she will not have any tax liabil-ity in India regarding sale of proper-ties situated outside India. This alsoapplies to those who are residentbut not ordinarily resident in India.
For properties situated in India,capital gains have to be computedseparately for each. Capital gainsmay be long term or short termdepending upon the period forwhich these were held. If a propertyis sold after being held for two years,such gains are considered as long-term capital gains and taxed at 20%(plus applicable surcharge and cess)
after indexation of cost. The NRItaxpayer may choose to invest long-term capital gains in another houseproperty or purchase capital gainsbonds to prevent taxation of capitalgains and claim an exemption onthem. If properties are sold withintwo years of holding, gains are con-sidered as short-term capital gainsand are taxable according to taxpay-
ers’ slab rate. Such an NRI may also be subject
to TDS (tax deducted at source)which is deducted from the pay-ment for sale of property. TDS isdeducted at 20% (plus applicablesurcharge and cess) from sale pro-ceeds in case of long-term capitalassets and at 30% (plus applicablesurcharge and cess) in case of short-term capital assets for NRIs.
Archit Gupta is founder and chiefexecutive officer, ClearTax. Queriesat [email protected]
If PIO is non-resident, no tax needs to be paid on sale of foreign properties
ISTOCK
Luxury high-rise flats now in Delhi. Should you buy?
Those with a fat budget can consider ongoing and upcoming high-rise projects
Data as on 31 July. List contains all equity-oriented funds except sector and thematic funds. Passively-managed funds and closed-end funds are excluded. Look out for value-added mutual fund data
in this space once a week, such as turnover ratio, cash holding levels of funds, concentration ratio, expense ratio and market capitalisation. SL: Sun Life
Source: Value Research
Fund As % of
assets
SBI Contra 22.50
ICICI Prudential Retirement 21.17
HDFC Retirement Savings 19.81
Axis Bluechip 18.44
Axis Multicap 18.11
Shriram Multicap 17.36
Axis Midcap 17.33
Tata Small Cap 17.25
Axis Small Cap 16.40
Shriram Long Term Equity 15.74
LIC MF Large & Mid Cap 15.45
HDFC Small Cap 14.98
Quantum Long Term Equity Value 14.79
Quantum Tax Saving 14.71
Parag Parikh Long Term Equity 14.63
BNP Paribas Long Term Equity 12.71
Aditya Birla SL Pure Value 12.19
IDBI Long Term Value 12.13
BNP Paribas Large Cap 11.63
LIC MF Large Cap 11.47
Sahara Super 20 10.72
ICICI Prudential Focused Equity 10.48
ICICI Prudential Midcap 10.31
IDBI Midcap 10.12
Aditya Birla SL Small Cap 10.01
Fund As % of
assets
BOI AXA Tax Advantage 9.84
L&T Focused Equity 9.83
LIC MF Multicap 9.78
Sahara Wealth Plus 9.71
Taurus Discovery (Midcap) 9.69
ICICI Prudential Value Discovery 9.67
BNP Paribas Midcap 9.66
Taurus Starshare (Multi Cap) 9.39
Aditya Birla SL Bal Bhavishya Yojna 9.29
UTI Children's Career 9.26
IDBI Small Cap 9.23
JM Core 11 9.15
LIC MF Tax Plan 9.08
HSBC Small Cap Equity 9.04
BNP Paribas Focused 25 Equity 9.00
Taurus Tax Shield 8.99
Tata Retirement Savings 8.96
Baroda Large Cap 8.87
L&T Emerging Businesses 8.68
Franklin India Focused Equity 8.64
PGIM India Long Term Equity 8.49
Franklin India Taxshield 8.42
ICICI Prudential Long Term Equity 8.34
Tata Midcap Growth 8.34
IDBI Focused 30 Equity 8.32
Every mutual fund scheme comes with a mandate to invest in certain type of securities, but it is allowed to have a small part of its portfolio in cash to meet redemptions or make use of any ‘buy’
opportunities. Usually, equity funds hold 1-5% of a fund’s corpus in cash, though some funds can hold as much as 7-10%. Some funds have higher levels because their mandate allows them to, if—as per their analysis—good stocks are not available at desirable valuations. Whether or not a fund ought to hold cash is a subjective call. Here’s a list of funds with the highest cash levels.
Is your MF holding too much cash?
In the last month or so, several professional associations fromacross India have raised issues with the finance minister aboutthe manner in which certain procedures, including online sys-
tems, followed by the tax department are causing difficulties forcommon taxpayers, instead of making life easier for taxpayers.At times, the systems cause insurmountable difficulties at thetime of filing their income tax returns (ITR).
One of the significant items pointed out is the late availabilityand constant changing of the ITR filing utility, which is an excelor java software that you fill in, and upload on the tax filing web-site. Earlier, the ITR formats for the year were notified sometimein May. Due to a high court order, these are now notified in thefirst week of April. However, you cannot file your ITR until the
ITR filing utility is available, which generally (for most forms)does not come out till June.
The problem does not end there. The tax utility often throwsup mistakes like incorrect computation. For instance, till the firstweek of July, the tax utility did not compute the correct long-term capital gains (LTCG) on the sale of listed shares. Taxpayerswith such LTCG had to wait till then to file their ITR. Further, theutility changes at frequent intervals, of a few days each. There-fore, if you download a utility, fill it partly and complete it aftera week of getting all the relevant details, which most taxpayers do,you may not be able to upload the same utility. You will have tofill up a new utility all over again, and then upload it.
The worst part is that there are many provisions in the tax utili-ties, whereby the income is computed in a particular manneronce the details are fed in, which is at times inconsistent withcourt decisions. You are, therefore, forced to compute your taxa-ble income in a particular manner, which follows the views takenby the tax authorities, though the law has been interpreted differ-ently by the courts. When you had manual returns, you couldchoose to follow the views taken by the courts, and append a noteexplaining your stand. There is unfortunately no facility availableto make such claims in the ITR, or to give an explanation regard-ing your view while computing your income.
One, therefore, has to figure out an ingenuous way of filling in
changes made in such a hurried manner is borne by the taxpayer.Perhaps, with the new direct tax law coming in, it is time thatchanges in tax laws and the format of tax return forms are carriedout only once in five years, instead of every year. This will stabi-lize the systems and reduce the problems substantially.
The other major problem is that the tax department is seekingto extract too much information from taxpayers, all of a sudden,or introducing such complicated provisions in laws that the soft-ware is not able to compute the income properly in the firstinstance. A classic case being LTCG computation for listedshares, with substitution of fair market value as of 31 January2018. There are so many permutations and combinations attimes, as in the case of capital gains for different types of assets,that bugs in the software are inevitable in the first instance. Whatwe need, perhaps, are simpler and clearer laws, which again onehopes that one will soon have, with the new income tax law.
Add to this, the penalties and the horrendous provisions forprosecution if you are lax in filing your ITR—that makes for a clas-sic painful story for taxpayers. As Chanakya rightly said, “Theruler should act like a bee which collects honey (tax) withoutcausing pain to the plant.” One hopes the government under-stands the underlying problems, and takes care to address these,rather than focusing on superficial issues.
Gautam Nayak is a chartered accountant
COMMON TAXPAYERS SUFFERED THIS TAX FILING SEASON DUE TO FREQUENT CHANGES
B E Y O N D T H ET A X B O O KG A U T A M N A Y A K
Respond to this column at
mASK MINT
N R I T A X A T I O N
the ITR utility, whereby the income computed is in accordancewith the stand that you adopt. Therefore, a taxpayer now has tounderstand tax laws, and also rack his brains to figure out a waywhereby the utility computes income and taxes correctly. Thismakes tax filing a fairly complex and daunting experience formost taxpayers, who opt to outsource this task to professionals.
The story does not end here. Many taxpayers receive noticesfrom the Centralised Processing Cen-tre stating that their ITR is defectiveand asking why they should not betreated as invalid since they are notcorrectly filled in, or threatening toincrease their taxable income and theirtax liability. Very often, such defects ormistakes are on account of the fact thattaxpayers have used earlier versions ofthe tax filing utility, while the software
processes all the returns on the basis of the latest utility. A clearcase of early worms being penalized, instead of being rewarded.
One of the major reasons for these problems is the fact thatevery year, so many changes are made in our tax laws, that the taxreturn forms necessarily have to be amended. Amendment inITR requires amendment in tax filing utilities, often in a shortperiod of time. The brunt of the defects in the software due to
New tax law should ensure that laws and ITR formats are not changed every year
Ashwini Kumar Sharma
Delhi’s skyline couldresemble Mumbai’s orGurgaon’s in the nottoo distant future.While the concept of
skyscrapers came to Mumbai wayback in the ’70s, Delhi is only tak-ing its first steps.
A handful of developers havelaunched upmarket high-riseapartment projects, equipped withmodern amenities in Delhi (seegraph) as of now, but a recentannouncement by the Delhi Devel-opment Authority (DDA) is likely toboost the supply of such residentialprojects in the national capital. At ameeting headed by LieutenantGovernor of Delhi Anil Baijal lastweek, DDA approved the disposalof residential plots for group hous-ing societies through e-auction toindividuals, partnership firms, pri-vate and public limited or consor-tium, having the financial where-withal to purchase the land anddevelop the project.
At present, among existing resi-dential buildings in the city, DLF’sCapital Green in Moti Nagar andM2K Victoria Gardens at Azadpurare the tallest, both at 111 metreswith 30 floors each.
Until now, homebuyers whoprefer modern apartments overindependent houses or builderfloors and are willing to move outof Delhi head out to the NationalCapital Region (NCR), but thattrend may change with the launchof new high-rise projects. Evenamid the lull in the real estate mar-ket, there is some demand from thesection who can afford it. Read onto know more.
THE DEMANDSanjay Tuli, 59, a businessmanfrom Sadar Bazaar, a wholesalemarket in old Delhi, booked a5,250-sq.ft apartment, consistingof five bedrooms, a hall and akitchen in The Amaryllis, a resi-dential project by Unity Group, aDelhi-based developer, when it waslaunched last year. The project islocated in central Delhi’s KarolBagh area and is close to Tuli’sbusiness establish-ment.
“ W e a l w a y sthought of living inhigh-rise building buthad no options in thenearby locality. Thisproject offered uswhat we were lookingfor like modern amen-ities and security forfamily and children,” said Tuli. Theproject is expected to be deliveredin the first quarter of 2020.Remember that given the liquiditycrunch in the realty market, youshould be cautious when investingin under-construction projects.
Like Tuli, a lot of homebuyers inDelhi would prefer to live in apart-ments with various modern facili-ties, but moving to NCR is not anoption for them. “There’s no deny-ing that Delhi remains a sought-after destination for aspiringhomebuyers, especially since newinventory has been limited formany years. We have seen a revivalin interest in Delhi’s luxury pro-
jects,” said Mani Rangarajan, groupchief operating officer, Elara Tech-nologies Pte Ltd, which owns prop-erty portals Housing.com, PropTi-ger.com, Makaan.com and Fast-fox.com.
Mint went through the details ofsome of the new projects and foundthat most of them are offeringamenities like swimming pool,gym, spa, tennis court, children’splay area, jogging track and so on.The apartments are also accoutredwith human sensors and gadgets tocontrol temperature and light,among other facilities.
The facilities are aimed atattracting high networth buyers.
“These are meant forindustrialists, busi-ness honchos, NRIswho want a luxurioushome in south Delhi,in many cases, thosewho earlier lived infarm houses but nowfind maintaining thesame a problem. Theappeal of community
living is also a positive factor whichdraws buyers towards projects likeKing’s Court (only nine out of 57units are vacant in the project,” saidAkash Ohri, senior executivedirector, DLF Home DevelopersLtd.
“Our customer is a Delhi-basedresident who would not want tomove away to NCR. Also, the majorchunk of our customer base wouldbe people who would want to live ina luxury gated community with allfeatures facilities that can walk tothem,” said Li Qiongjia, director,Risland (North India), a HongKong-based multinational realestate conglomerate planning to
Many homebuyers
would prefer to live in modern
apartments, but moving to NCR is
not an option
launch Sky Mansion project inChhattarpur, Delhi, in October.
THE SUPPLYTo assuage concerns surroundingunder-construction properties,most developers have launched theprojects only after the completionof a significant part of construction.“We feel that the market is fastevolving towards ready-to-move-in and almost-ready-tomove-in apartments. Customerstoday are ready to pay a premium ifthey see that the project is alreadyunder construction,” said KunalBehrani, vice-president, sales andmarketing, Unity Group. Risland,too, has completed asignificant part of theconstruction work onSky Mansion. “We areat level 14 in terms ofconstruction, whichmeans about 40%structures has beencompleted,” saidQiongjia.
While most of theupcoming or ongoing projects costupwards of ₹3 crore, you will findsome mid-segment projects inL-zone of Dwarka, a Delhi suburb.“L-zone, strategically locatedbetween Dwarka, Gurugram andIGI airport, was one of the pre-ferred spots,” said Anuj Puri, chair-man, ANAROCK Property Consult-ants Pvt. Ltd. The firm’s researchshows over 20,900 units in high-rise projects were launched inL-zone between 2013 till date in2019, with maximum supply in themid segment (₹40-80 lakh), saidPuri. However, as many as 10,830units are currently lying unsoldand only 200 units have been com-
pleted, added Puri. “Because ofdelays in approvals from the gov-ernment and DDA, the site has lostits attraction,” said Honeyy Katiyal,founder, Investors Clinic, a Noida-based property brokerage firm.
WHAT SHOULD YOU DO?Experts said since constructionwork on most of the upmarket pro-jects launched has already started,they are relatively safer to buy.How the new DDA projects pan outis still to be seen. While a few of theDDA land parcels are situated incentral Delhi, most of them arelocated in suburbs like Dwarka,Rohini, and so on. Overall, the new
supply is unlikely toimpact property pri-ces, said SamantakDas, chief economistand head of researchat JLL India, a realestate consultancyfirm. “New projectswill be able to com-mand high prices onlyif they justify the price
with amenities that will providelifestyle change to homebuyers ofDelhi, ” said Das.
In terms of pricing, projects inDwarka’s L-zone may be attractivefor a larger section, but investmentin the area may be risky and home-buyers need to be cautious. “Apartfrom being realistic about deliverytimelines, buyers must do a back-ground check on developers andensure the project is Rera-regis-tered and has a registration num-ber,” said Rangarajan.
However, experts said the mar-ket is still not conducive for invest-ments in real estate—whether inDelhi or elsewhere.
Most developers have launched
the projects only after the
completion of a significant part of
construction
Things to consider
Only consider Rera-regis-tered projects
Visit construction site and get papers verified by experts
Look at existing social and civic infrastructure, don’t believe in future infra promises
Don’t get taken in by the bells and whistles, find out the difference per sq.ft in nearby properties
Demand is slow, bargain hard for a good deal
What's availableHere are the details of some available and upcoming residential housing projects within Delhi
Developer
Unity Group
The Amaryllis Karol Bagh, central Delhi
2-, 3-, 4- and 5-bedroom apartments
Approximately 2,600
230 out of 1,150 units that have been launched so far
₹1.85 crore onwards
DLF Ltd
King's Court Greater Kailash II, south Delhi
4- and 5-bedroom apartments
57 9 ₹27.5 crore onwards
Project name Location Type of units Total number of units
Available units
Price
List is not exhaustive. *Project yet to be officially launched; NA: Not available Source: Mint research
Risland Holdings
Sky Mansion Chhattarpur, south Delhi
3- and 4-bedroom apartments and penthouses
160 160 ₹7-12 crore for apartments, ₹22-25 crore for penthouses 1
Godrej Properties*
NA Okhla, south Delhi
NA NA NA NA
NA NA NAParsvnath Developers
La Tropicana Civil Lines, central Delhi
3-, 4- and 5-bedroom apartments, penthouses and villas
Available projects
Upcoming projects
GRAPHIC: SANTOSH SHARMA/MINT; PHOTO: ISTOCK
ISTOCK
PERSONAL FINANCE TUESDAY, 27 AUGUST 2019NEW DELHI 13
How millennial investing trends differ from their parents’
bit.ly/2ZkEkpO
1 WEEK* 1 YEAR 3 YEARS 5 YEARS
Data as on 23 August 2019; Look out for returns on various asset classes in this space. Rate of return for fixed deposits is for the future. For other asset classes, returns indicate past performance.
Source: SBI, Bloomberg, Value Research
Equity is the benchmark index return; Cash refers to the average return for liquid funds category as defined by Valueresearchonline; Gold refers to returns from domestic MCX gold prices; and fixed income is SBI fixed deposit rate. *Other than fixed deposits all returns are absolute. Returns above one year are annualised.
Returns on my investmentsBuilding a portfolio is a complex exercise, and it has to be maintained too. A person’s portfolio holds different types of assets based on her financial goals, and each asset class gives different types of returns, which is why a portfolio must have an ideal mix of financial products. One must also keep in mind the volatility risk of the asset class, liquidity, lock-in rules and taxation. Here's a look at how four commonly used asset types—equity, cash, gold and fixed income—have done in different periods.
Fixed income (fixed deposit)
Returns (in %)
Gold
Cash (money market mutual fund)Equity (Sensex)
SANTOSH SHARMA/MINT
26.20%
The return that
gold has given
over a 1-year
period
-1.75
0.11
5.00
-1.13
-4.26
6.77 6.80
26.20
12.37
6.74
3.7
6.60 6.79 7.32
3.17
6.70
Surya Bhatia
I am 28 years old and earnabout ₹1 lakh a month. I investaround ₹30,000 in mutualfunds via systematic invest-ment plans (SIPs), of which amajority are equity schemes. Ialso have a life insurance pol-icy. I plan to get married in thenext one year for which Iwould need around ₹30 lakh.Could you suggest an invest-ment plan?
— Muskan LalwaniYou have been mainly on the right
path. However, maximize your sav-ings. The first step is to check yourcash flows. Surplus of income overexpenses should be invested. Whilethe savings amount of ₹30,000 permonth is good in relation to yourincome, at a young age you can savemore as the expenses are limited atthis stage. With marriage, responsi-bility goes up and so do expenses. It isrecommended that you increaseyour investments at this age. The sec-ond point is asset allocation. Equity isa recommended asset class for longterm and debt should be consideredfor short-term goals. Your equityallocation is high and you need alarge sum for your wedding in ayear’s time. So you need to stopequity investments and for the nextone year, invest in an ultra-shortterm debt fund. However, thisamount alone will not suffice. Hence,you need to either dip in your exist-ing investments or take a loan againstthe same. You can even check if you
can borrow funds from your family.Lastly, if nothing works out, then gofor a personal loan. This should bethe last option and the intent shouldbe to repay it at the earliest. If you gofor the loan, ensure that your savingsare channelized to pay off the debt.Avoid credit card trap, i.e., payingfrom credit cards and converting thesame in an EMI. This is an easy way ofgetting into a debt trap and is also avery expensive way of funding.
I plan to work In Europe for afew years. I have an Employ-ees’ Provident Fund (EPF)account that is nine years old.Should I withdraw the money?
— Raghu Vamsi K.
EPF is an investment avenue forretirement planning. With years ofcontribution both by the employerand the employee and along with theinterest, the benefit of compoundingstarts working and accumulating to asizeable corpus. On top of it, the tax-free status given to PF makes it anattractive option as it is a secureddebt offering assured tax-free return,typically in line with inflation. ThePF account continues to earn interesttill your retirement whether or notyou are employed.
However, remember that theinterest earned in the EPF accountbecomes taxable prospectively incase there is no fresh contribution tothe account, thereby diminishing thereturns net of taxes.
Surya Bhatia is managing partnerof Asset Managers. Queries and viewsat [email protected]
Will a lower cover mean higher returns from insurance plans?
The recently introducedproduct guidelines are
very customer friendly,largely improving flexibil-ity and continuity options.
Reducing the minimumcover required under a sav-ings product to seven timesthe annual premium versus10 times earlier is interest-ing. It may be noted thatthis was the case for cus-tomers of age 45 and aboveeven under the previousguideline. So the change isonly for customers underage 45. The only reason fora customer to opt for thiswill be not having a highmortality charge eat intotheir investment portion atan older age. But it has notbeen a popular choiceamong customers aboveage 45 even now.
Further, insurance is atax-efficient and long-termrisk management tool thathelps one save in a disci-plined manner while enjoy-ing a certain risk cover.Lowering the coveragemakes the maturity pro-ceeds taxable and hencethe option less attractive.
Hence, I see this optionhaving limited uptake andimpact, especially on cus-tomers under age 45.
Limited uptake, impact likely, especially on those under 45
As the new regulation bythe Insurance Regula-
tory and Development Au-thority of India (Irdai) pre-scribes only the minimumamount, customers cancontinue to choose themultiple as per their needs.
Customers get a widerchoice and more flexibilityto decide their life cover.For instance, a unit-linkedinsurance plan (Ulip)holder, who has insuredhim/herself sufficiently viaexisting insurance policies,will have the choice to takelower cover in new prod-ucts compliant with the re-vised product regulations.
Additionally, 10 times an-nualized premium is re-quired for tax exemption,as per the current incometax laws. Given this, cus-tomers will tend to take 10times annualized premium,especially those who arelooking for tax benefits.
So, the change by itselfshouldn’t lead to underin-surance. Yes, this can leadto better or higher returns.This will be the case, if thecustomer decides to takelower insurance coverbased on his or her needs,the cost of life insurancecover will come down.
Isee the changes in mini-mum sum assured as a
simplification of productstructures that are easier tounderstand. Previously,sum assured levels differedby age. These have nowbeen collapsed into a sin-gle, minimum prescribedrate. The changes shouldbe viewed in entirety.
The lower sum assuredshould result in better re-turns because less mortal-ity charges will be de-ducted. The impact will notbe significant because thereduction is small.
There is significant un-derinsurance but the solu-tion to that is in sellingterm insurance rather thaninvestment-oriented prod-ucts, which will not be ableto bridge the protectiongap cost effectively.
However, I am con-cerned about how thelower sum assured will betreated from a tax perspec-tive. If products with a sumassured multiple of pre-mium less than 10 buthigher than the new mini-mum of seven are not pro-vided tax benefits on pre-mium payment and matur-ity, then that is likely tolower the overall returns.
When you are buyingan investment prod-
uct, you should first evalu-ate if the plan is effective inhelping you achieve yourlong-term (more than 10years) goals within yourrisk appetite. One should,therefore, look at charges,fund allocation, ratings andpast performance againstthe benchmark.
Investment productsshould not be bought withthe primary purpose ofbuilding financial securityfor your family. The mini-mum 10 times or seventimes cover on the pre-mium amount should belooked at only as a supple-mentary insurance coveron your financial goal.
You should also keep inmind that a life insuranceinvestment product withless than the stipulatedcover will not be eligible fordeduction under Section80C. Hence if you have asecondary purpose of get-ting tax deduction, youmust ensure that you takethe minimum cover re-quired for that. But reduc-tion of cover in an invest-ment plan will only help re-duce charges and improveyour long-term returns.
EXPERTSPEAK
The new product regulation for life insurance policies has reduced the minimum sum assured requirement from a minimum of 10 times the annual premium to seven times the annual premium. While this makes the minimum life insurance cover more uniform across age groups, it raises some concerns.
The reduction in life insurance cover may translate into better returns for investment-linked products, but it could be counterproductive given that these policies won’t enjoy tax benefits if the sum assured is not
at least 10 times the annual premium. Disha Sanghvi asks experts how the new rules help
R.M. VISHAKHAManaging director and chief executive officer, IndiaFirst Life Insurance
KAPIL MEHTACo-founder, SecureNow Insurance Broker
MAHAVIR CHOPRADirector of health, life and travel insurance, Coverfox.com
TARUN CHUGHManaging director and chief executive officer, Bajaj Allianz Life Insurance
This change by itself won’t lead to instances of underinsurance
Concern over tax benefit on plans with low sum assured
Reducing cover in investment plan will bring down charges
Neil Borate
Last week, India’s mutual fundindustry witnessed an extraordi-nary U-turn. Sundaram AssetManagement Co., which hadannounced the creation of segre-
gated portfolios (through side-pocketing)in its schemes exposed to the securities ofthe beleaguered DHFL group of compa-nies on 16 August, reversed its decisionfive days later on 21 August. Four schemesof Sundaram MF—Sundaram Low Dura-tion, Sundaram Short Term Debt, Sunda-ram Short Term Credit Risk and Sunda-ram Debt Hybrid—were exposed to DHFLsecurities. On 16 August, the asset man-agement company (AMC) wrote off itsentire exposure to the stressed securities.
The U-turn exposes a broader problemin the industry that has been hit hard bydebt defaults. AMCs have shied from cre-ating side-pockets and that gives a windowto speculators to enter open-ended fundsthat have written off exposure to troubleddebt and benefit from windfall gains whenrecoveries are made. These gains come atthe cost of the original investors in thefund. Collectively, mutual funds had anexposure of ₹5,336 crore to DHFL on 30April, according to data from ValueResearch. Out of this, around ₹550 crorewas in closed-end funds, which specula-tors can’t enter. Some open-ended funds
have closed fresh inflows and, hence,speculators can’t enter them either. Butmany others have only hiked exit loads,which is not the perfect deterrent, andsome other funds have done nothing at all.
THE SUNDARAM MF STORYDHFL defaulted on 4 June, and SundaramMF was supposed to create a side-pocketon the same day as the default, accordingto a plain reading of the Securities andExchange Board of India’s (Sebi) rules.
However, Sundaram MF first announcedits intention to side-pocket on 31 July byamending its scheme information docu-ments (SIDs). It then went ahead with spe-cific side-pocketing proposals for itsDHFL-hit schemes on 16 August, which itsubsequently withdrew on 21 August.
Talking about the same-day rule, a per-son with knowledge of the matter said thata subsequent event of default cannot besufficient condition to side-pocket. “Forexample, some AMCs did not hold the
debt in default on 4 June but instead faceddefaults on their paper subsequently.However, this does not make them eligi-ble for side-pocketing on the dates onwhich they faced default on their paper.This inflexibility in Sebi’s circular hasaccentuated the problem faced by anindustry that failed to react in time,” theperson said, requesting anonymity.
Meanwhile, Sundaram MF’s exposureof ₹52.21 crore to DHFL may be small inabsolute terms but is large as a percentageof assets and that has showed up in thereturns of the affected schemes. Sunda-ram Low Duration, Sundaram Short TermDebt, Sundaram Short Term Credit Riskand Sundaram Debt Hybrid gave one-week returns of -4.08%,- 4.84%,-5.52%and -2.34%, respectively, as of 21 August,according to data from Value Research.
RESPONSE TO SIDE-POCKETINGSebi came up with the side-pocketingsolution in December 2018. It involves thecreation of a separate portfolio in lieu oftroubled debt. Only existing investors inthe concerned scheme are allotted units inthis segregated portfolio. When there isrecovery in debt, the investors holding theside-pocketed units get their money. Readmore at bit.ly/323EVJD.
It is unclear why mutual funds haven’tresorted to side-pocketing. An industryprofessional, who spoke on the conditionof anonymity, said that the same-day rule
How lack of side-pockets benefits speculators
The failure of debt funds to create a segregated portfolio or side-pocket stressed securities benefits speculators at the cost of the original investors
mASK MINT
F I N A N C I A L P L A N N I N G
for side-pocketing leaves fund houses lit-tle time to deliberate the decision.
Two executives from two different fundhouses, which have taken smaller hits orhave not yet been affected, said on thecondition of anonymity that there was noneed for side-pocketing. One of them saidone of the reasons why the fund houseswere not side-pocketing was that changesin SIDs involve sending emails and lettersto investors and giving them an exit load-free window. This may alarminvestors, the person added.
Some AMCs such as TataMutual Fund have imple-mented side-pocketing,while others such as MotilalOswal Ultra Short Term Fundand Edelweiss CorporateBond Fund have stoppedfresh inflows. Some otherssuch as UTI Mutual Fundhave chosen only to hike their exit loads.As the recovery process in DHFL length-ens, these exit loads will lose their effec-tiveness and speculators, with a littlepatience, can pocket windfall gains. Stillothers have chosen to do nothing, leavingthe field open for opportunists.
“Sebi should make it compulsory forfund houses to amend SIDs and insert anenabling clause for side-pocketing. It doesnot mean the AMCs would be forced tocarry out the actual procedure if an eventof default happens, but it creates the nec-
essary conditions for them to do so,” saidSuresh Sadagopan, founder, Ladder7Financial Advisories.
WHAT SHOULD YOU DO?For mutual funds hit by DHFL, it may betoo late to side-pocket under existing Sebirules since the credit event has come andgone. Investors who exit the affectedschemes give up any chance of recovery inthe bad debt. They may also have to pay
exit load and capital gainstax. Those who stay face therisk of their profit beingshared with speculators andfresh investors—futurerecoveries go to the originalinvestors and fresh investors,while the loss was only borneby the original investors.
Mrin Agarwal, founderdirector of Finsafe India Pvt.
Ltd, said, “The investor’s decisionshouldn’t be about whether staying orleaving will affect chances of recovery ofmoney in bad debt. Rather it should beabout whether the investor is willing tostay with a scheme that has taken suchhigh risks and may continue to sit on otherrisky papers.” Each investor should weighthe cost and benefits of exit, taking intoaccount the percentage exposure to baddebt in the scheme, the chance of recov-ery and tax or exit load payable. There isno foolproof solution.
Without side-pockets,
speculators can enter funds and share profit with original investors from recoveries
ISTOCK
When you are young, maximize savings as you may have fewer responsibilities
ISTOCK
14 TUESDAY, 27 AUGUST 2019NEW DELHI VIEWS
MY VIEW | BARE TALK
MY VIEW | MUSING MACRO
The Business Roundtable, an associa-tion of CEOs of America’s top compa-nies, recently issued a statement that
redefines the purpose of a corporation.Signed by nearly 200 top CEOs, includingthose of J.P. Morgan, Apple, Walmart andAmazon, it essentially says that Americashould move from shareholder to stake-holder capitalism. That is, corporationsshould not just focus on maximizing share-holder value, but also include the well-beingof employees, environment, suppliers andcommunities at large. While share-valuemaximization is a clearly defined metric, thestatement does not clarify what metrics willbe used for maximizing the welfare of otherstakeholders. This statement is dramaticallydifferent from one made by the Roundtablejust two decades ago, when it had articulateda doctrine that the duty of a company’s man-agement and board was only towards itsshareholders. Indeed, this has been theunderlying principle of all reforms in corpo-rate governance laws, both in America and
rate market, and sterilize their interven-tions only partially. Even developed countries cut rates along with the US Federal Reserve to prevent their currencies from appreciating too much. That is what happened between 2001 and 2003, precipitating a global bor-rowing binge. It has happened again, post 2008.
Conversely, when America raises interest rates, risk appetite falls and dollar liquidity shrinks. Emerging economy borrowers now feel the pain as their currencies depreciate against the dollar. Therefore, their central banks, trying to defend the currencies, sell dollar reserves and raise interest rates. Thus, the world operates as though it is still on a dollar standard and the Fed monetary policy is the de facto monetary policy for others too.
Notwithstanding claims that the share of American gross domestic prod-uct is down to 15% of the world’s, the factis that most exporting economies rely on demand from G-3 regions—the US, eurozone, and Japan—to generate eco-nomic growth. Within G-3, America dominates. Thus, the American eco-nomic cycle becomes the global eco-nomic cycle, and it is no surprise, there-fore, that American monetary policy becomes the global monetary policy.
As the liquidity and flow of money isthe biggest driver of short-run trends in asset prices, bond and stock market returns around the world are corre-lated, for the most part, with US stocks and bonds. The correlation is much stronger, tighter and persistent when asset prices decline. In truth, there is no real diversification in global financial markets, when needed. In the second half of 2008, the only two assets that would have saved global investors from losses were the dollar and Japanese yen.
This is not a desirable state of affairs.The world economy should be asynchronous and so should financial markets. Enter Donald J. Trump. He is desperate for re-election. He has been haranguing the Federal Reserve chair-
person no end, creating an unprece-dented platform for a far bigger show-down next year. Trump is rather sore with Jerome Powell, the current chair-person of the Federal Reserve, for having raised interest rates so much (well, in real terms, it is less than 1% for an economy growing at a real rate of around 2% to 2.5%). He laments the fact that Germany is able to borrow at nega-tive rates and America is not able to. The negative rates in much of Europe are a symbol of all that has gone wrong with the monetary policy of the Euro-pean Central Bank and the growth potential of the eurozone. Negative rates create far bigger problems for the economy and society than they repre-sent answers for a president seeking re-election.
Not content with that, Trump has compared the Fed chairperson to Xi Jinping, president of China. That is way over the top and breaches all norms of decency. In his desperation for re-election, he may become even more frustrated with the Federal Reserve as 2020 rolls in. China has figured out how and where to hurt him. It slapped tariffs on American imports on Friday. That was unexpected. American stocks fell sharply. Trump will hammer the Fed-eral Reserve more. As this gets worse, there is the real risk of confidence in the dollar getting eroded in 2020.
Usually, when stock markets declineand the global economy slows, the US dollar strengthens. The dollar has elements of a countercyclical currency, strengthening into American reces-sions. That could happen in 2020 again. However, Trump may change all of that with his mindless criticism of the Fed-eral Reserve. He may end up severely damaging the hegemony of the dollar. That would be the first step to the multi-polar world that Carney wants. There are no immediate alternatives to the dollar, and, therefore, uncertainty, chaos and mayhem may step in to fill the void.
These are the author’s personal views
Mark Carney may not haveknown that he has a reliablefriend in the American presi-
dent. Recently, at the annual Jackson Hole symposium, the Bank of England governor made a speech about the “exorbitant burden” that the dollar is for emerging economies. Some said that his speech was aimed at winning friends and influencing people in the develop-ing world to nominate him as their can-didate for the post of managing director of the International Monetary Fund. Maybe. We will never know.
Well before he made this speech, in our book, The Rise Of Finance: Causes, Consequences And Cures, Gulzar Natarajan and I had written extensively on how the global economy, for the most part, operates on a dollar standard even now, nearly five decades after the end of the Bretton Woods system of exchange rates, which was an official dollar standard system.
For all practical purposes, there is one exchange rate (the dollar exchange rate), one monetary policy, one econ-omy and one financial market. Most investors in emerging markets and emerging market borrowers take advantage of lower rates in the US by investing there or borrowing in dollars, respectively. There is pressure on emerging currencies to appreciate. Their central banks cut their domestic policy rates, intervene in the exchange
Bank of England governor may have an unlikely ally in Trump
Trump may damage the dollar’s hegemony, a first step to the multipolar world that Carney wants
V. ANANTHA NAGESWARANis the dean of IFMR Graduate School of
Business, Krea University
Even in a country of widespread depri-vation, it is no longer odd to think ofthe smartphone as an “essentialitem”. This notion began as a joke,transformed into a social observa-tion, and is now conventional wis-
dom. There exists data to back the assertion, most recently from the International Data Corp.’s Asia-Pacific Quarterly Mobile Phone Tracker, the findings of which have revealed smartphone sales as a bright spot amid the overall gloom in Indian markets for consumer products. In the second quarter of calendar year 2019, the domestic market for these devices scaled a figure of 36.9 million units, up 9.9% over the same quarter in 2018. In the quarter from January to March this year, 32.1 million units were sold. That this product category should show such buoyancy, while vehicles, other durables and regular-use items suffer either sharp declines or sagging growth, is remarkable for what it says about this won-derful gadget that nobody lets out of sight, whether at home or outside. When the times get tough, the tough rough it out. But what consumers won’t stop buying, evidently, are smartphones.
Smartphone dependence spans income andoccupation groups across the country. From professionals and pushcart vendors to stu-dents and daily-wagers, connectivity is a life-line. Even the least privileged of users spend much time online now. Unlike in the West, demand for these gadgets here has moved along two escalators of upgradation: One, of feature-phone users moving to the “smart” version, all the better to access audio-visual content and other razzle-dazzle; and two, existing users of touch-screen devices replac-
ing old models with new, a reflection of the need to keep pace with every new innovation in this field. Few would be surprised to hear that expenditure on smartphones is largely unaffected by recessionary trends visible else-where. In this, India stands out among large emerging markets. China, in contrast, has seen its market shrink over the past two years, as its economy slowed down.
India’s smartphone exuberance, however, masks a potential that could go unfulfilled if usage patterns drift along. While phone pene-tration deepens and the internet reaches even remote corners of the country, thanks partly to Centre-run programmes to get as much of the country online as possible, a new kind of “digi-tal divide” has been uncovered by researchers. Phone usage findings display a wide variation. Most Indian users make only minimal use of these devices. Vast numbers are unaware of how they can aid work. Even within the same socioeconomic cluster, gaps have been found between men and women, as also the young and old. Smartphones today can be loaded with apps that can help people perform highly sophisticated tasks. Not everything these gadgets can do is relevant to everyone, but there are dozens of elementary tools that can aid individual productivity in any kind of occu-pation, no matter how highly or lowly paid it is. Mobile connectivity, in itself, is only the tip of the “ICE-berg” created by information, com-munications and entertainment. A concerted effort by the government to train India’s multi-tudes in maximizing the utility of smartphones could achieve effects that ought to show up in the country’s economic performance over the years. Everyone doing more with less—time, for example—is a worthy objective.
The great distraction as a productivity tool
As sales of smartphones buck wider recessionary trends, it is clear that these are essential
items now. We need a way to turn them into devices that help Indians achieve more
OUR VIEW
www.livemint.com
EXCLUSIVE PARTNER
+ 4 PAGES MARKETS WATCHNew Delhi, Mumbai, Bangalore, Kolkata, Chennai, Chandigarh*, Pune* Thursday, August 27, 2009 Vol.3 No.204 Rs. 3.00 24 PAGES
SENSEX 15,769.85 Æ 81.38 NIFTY 4,680.85 Æ 21.50 DOLLAR Rs48.93 Æ Re0.17 EURO Rs69.63 æ Re0.28 GOLD Rs15,075 Æ Rs45 OIL $70.94 æ $2.65
What’s inside
MONEY MATTERS
ECONOMY & POLITICSCORPORATE NEWS
VIEWS
There have been severalways to classify people:
communists and capitalists,believers and atheists,coffee drinkers and teadrinkers—and now Facebookusers and Twitter users.
The former form the largercommunity, but the latter aregrowing in numbers. Onlinemeasurement firm comScoresaid on Wednesday thatmicroblogging site Twitter gotmore than 50 million uniquevisitors in July, making it oneof the 50 most visited Internetsites. Twitter’s tipping pointseems to have been thepost-election protests in Iran,
when it became a rallyingpoint and the main source ofinformation; traffic shot upfrom 9.8 million to 19.1million in March.
Twitter is pure informationin small bites of up to 140words. It is a personalizednews service more than a toy.Facebook is self-indulgent,telling people what you justate or the state of your dog’shealth. Twitter’s popularity isnot due to attention deficitdisorder, but rather due toinformation excess syndrome.Its brevity is a reprieve.
So, what’s your poison:Twitter or Facebook?
The foreign trade policy will be presented today. Thecommerce ministry is expected to announce anincentive-laden policy for the next five years to help ex-porters, especially in labour-intensive businesses. Com-merce and industry minister Anand Sharma hinted atcheaper bank loans and less red tape. >P19
Wockhardt willget less thanhalf the $130million pro-ceeds from thesale of its nutri-
tion business. The remain-der will be shared betweenits subsidiaries. >P6
***BP Plc has awarded partsof a five-year outsourcingcontract, valued at around$1.5 billion, to TCS, Wiproand Infosys. >P8
LEADING THE NEWS
Maoist activity in the east-ern coastal districts givesAP’s CM a fresh headache,even as the state adminis-tration’s sticks-and-carrotspolicy elsewhere remainspatchy, says SudeepChakravarti. >P6
***Australia on Wednesdayapproved a massive energyproject that will supplynatural gas worth tensof billions of dollars toChina and India, givingnew impetus to itsresources boom. >P3
Vikram Malhotra, vice-president of marketing atKingfisher Airlines Ltd, hasquit the firm, said two ex-ecutives at the carrier. >P8
***GR Gopinath’s air cargoventure, Deccan 360, is setto enter the small parcelsbusiness, with Nagpur as ahub, from 15 October. >P8
Nothing so farsuggests thatBen Bernankewill budgefrom the sta-tus quo soon.But the inertiacould infect markets anddistort incentives. >P22
QUICK EDIT
Twitter or Facebook?
A Mint analysis of 1,125firms shows capital expen-diture growth remains veryhigh in the current down-turn. What could explainthis behaviour? ask RaviAnathanarayanan and Ash-win Ramarathinam. >P14
***BSE on Wednes-day got marketregulator Sebi’snod to launch in-terest rate futurestrading. >P15
Mint is also available for Rs5.50 with Hindustan Times under a combo offer
ASIA: Downturn marspoverty reduction goals >20-21
WSJ:Edward Kennedy dies after battlewith brain cancer >17
VENTURE CAPITAL:Private equity dealsslide in first half >10
LOSING PROPOSITION
KMBirlaexitsentertainmentbusiness
STAKE SALE
USE intalkswithBoA,Goldman, StanChart
Dockers to exit;other brandsdoing a rethink
FMC chief slamsproposal onmerger with Sebi
HC nixes legalchallenge onairport levies
Old is gold asbrands tap intoheyday ads
BY BAIJU KALESH
[email protected]·························MUMBAI
Kumar Mangalam Birlahas pulled the plug onApplause Entertain-
ment Pvt. Ltd, a movie andtelevision software productioncompany he promoted in April2003, according to two peoplefamiliar with the development.
The closure of Applause En-tertainment, personally fund-ed by Birla, highlights the per-ils of the entertainment busi-ness, say experts.
Applause Entertainment,best known for producing Hin-di movies Black and Dev, bothstarring Amitabh Bachchan,
also produced movies in Telu-gu and Bengali. It also pro-duced and supplied content totelevision channels Zee Cine-ma, Zee Television and VijayTelevision in Karnataka.
A spokeswoman for Birla,chairman of the Aditya Birla
TURN TO PAGE 2®
With personal funding,Birla wanted to makeApplause one of India’stop movie productionand distribution firms
BY RAVI KRISHNAN
[email protected]·························MUMBAI
United Stock Exchange ofIndia Ltd (USE) is in talks
with Bank of America (BoA)Merrill Lynch, Goldman Sachsand Standard Chartered BankPlc. (StanChart) to sell stakesin the bourse, said its manag-ing director and chief execu-
tive officer T.S. Narayanasami.“We are informally in talks
with them,” Narayanasamisaid. “We hope to finalize ourshareholding pattern by 10September.”
USE is India’s newest finan-cial exchange and will focus oncurrency futures and interestrate futures. It was incorporat-
TURN TO BACK PAGE ®
BY MADHURIMA NANDY
[email protected]·························BANGALORE
The fashionista dream hasbeen overtaken by reces-
sionista realities around theworld—and now in India aswell. For example, some 10years after its first launch in In-dia and four years after a re-launch, semi-formal brandDockers is again on its way out.
US-based Dockers, primarilya wrinkle-free cotton pants
TURN TO BACK PAGE ®
BY ANIRUDH LASKAR &
N . SUNDARESHA
SUBRAMANIAN
·························MUMBAI
The chief regulator of thecommodities derivatives
markets hit out at a proposal tomerge the Forward MarketsCommission (FMC) with capi-tal markets regulator Securi-
TURN TO PAGE 4®
BY MANISH RANJAN
[email protected]·························NEW DELHI
In a potentially trend-settingruling, the Delhi high court
on Wednesday dismissed a pe-tition challenging the right ofthe two private operators man-aging airports in Mumbai andDelhi to impose special levieson departing passengers.
A division bench comprising
TURN TO PAGE 2®
BY GOURI SHAH
[email protected]·························MUMBAI
There’s a new wave of ad-vertising sweeping over In-
dian channels, only it’s not re-ally new-new.
In fact, it’s old: Thus, there’s1990s pin-up girl Lisa Rayswirling in swathes of vivid flo-ral patterns in the originaliconic ad for Garden sarees,
TURN TO PAGE 3®
Painful decision? K.M. Birla.
KUNAL PATIL/HT
INTERVIEWmint
ISTOCKPHOTO
The most important impact on society and the world is the cell phone. Cell phones
have actually been one of the primary drivers in
productivity improvements.
FABRICE GRINDA
is an economist and
a senior fellow at The
Takshashila Institution
crashes, or if it suffers huge losses. Heads Iwin, tails you lose.
Concepts like fairness, justice and moral-ity are beyond the domain of economic anal-ysis. But if the Roundtable’s statement onthe purpose of a corporation has to have anyteeth, companies will need specific metricsfor the performance of top management. Forinstance, even if there is one fatality in thefactory, or even among contract workers, allvariable pay of the top boss should be cut off.Or an environmental breach would result inloss of bonus. Are we ready for such drasticincentive measures for CEOs? Will weaccept a cap on the ratio of the salary of theCEO to the lowest paid worker?
Finally, it must be said that both corporatebrand value and the sustained rise in share-holder value is correlated over the long termwith the company being a responsible cor-porate citizen, which invests in creatinggoodwill among its stakeholders. Thesecompanies have strong human resourcepractices and reduce pay disparity. They arealso supportive of suppliers and the environ-ment. So, do we then need to change thepurpose of a corporation from “creating longterm shareholder value”? Yes, because thecurrent times require companies to do muchmore to earn their right to operate in society.
societal wave of attitudes becoming hostiletowards businesses. There is resentmentabout increasing inequality of income andwealth in the Western world, manifested inmovements like “Occupy Wall Street”, andoutcomes like the election of PresidentDonald Trump and Brexit. There is a feeling
that fat cats at the top cor-ner most of the prosperitycake, while the earnings ofmiddle- and lower-incomeworkers stagnate. This issupported by data. Theratio of the top CEO pay tothat of the median workeracross all companies in theUS was a whopping 254 in2018. Elon Musk’s pay is40,668 times the medianTesla worker’s. Often, thetop management’s pay isalso linked to stock per-formance. And companies
have been buying back their own stock toshore up share prices. For the past fiveyears, buybacks have been close to $1 tril-lion every year, which also explains zoom-ing stock markets to a large extent. There is,of course, no clawback from a manager’ssalary in case a company’s stock price
putes and litigation? Why not just leavesocial spending to the exchequer or gener-osity of individuals? India has had a rich tra-dition of philanthropy by industrialists. Butwhy coerce it through company law? Thisquestion is now moot, since Parliament haspassed the original law and its amendment,and this position gets a shotin the arm thanks to theRoundtable’s latest state-ment. Look, America is alsoveering towards our visionof CSR, they will say.
An important question iswhether this is just a cos-metic statement withoutmuch substance? Is it aneyewash, couched in amotherhood statement, or,as some call it, “greenwash-ing”? Are not commit-ments to labour, suppliersand the environmentalready enforced through appropriate legis-lation? We do have fair wages and workplacesafety laws, and penalties for non-paymentto suppliers, and increasingly onerous envi-ronment related requirements. Why rede-fine the purpose of the corporation itself?
Presumably it is because of a much larger
abroad, including in India. To now say thatthe board and management are accountableto employees, suppliers and others as well, isa major shift. It also contradicts the philoso-phy articulated by Milton Friedman 50 yearsago, who pithily said, “The social responsi-bility of business is to increase its profits.” Ithad weight and logic which explains its lon-gevity. Many people still believe in it. For, ifcompanies focus on obeying laws and maxi-mizing profits, then governments can collecthealthy tax revenues from which generoussocial spending and provision of publicgoods can be done. Friedman’s exhortationwas to refrain from distracting a profit-maxi-mizing company.
The Roundtable’s revision has come at atime when there is considerable debate onIndia’s corporate social responsibility (CSR)legislation. India is possibly the only countrywhich mandates that 2% of after-tax profitsof companies be compulsorily spent on CSR.While harsh penalties have been held back,is the CSR insistence not a de facto tax onprofits? Why create a new bureaucracy thatwill determine what is and is not admissibleas CSR spending? Will it not lead to arbitragekind of behaviour? And given that possibil-ity, will we not have a plethora of rules,clauses and sub-clauses with attendant dis-
Stakeholder capitalism should not be a cosmetic shiftAJIT RANADE
Top US CEOs
have stated that
the purpose of
business must
go beyond just
shareholder
value
VIEWS TUESDAY, 27 AUGUST 2019NEW DELHI 15
Early readers of this column will knowthat I am an admirer of Stephen Harper,the former prime minister of Canada.During his tenure as the country’sleader, from 2006-2015, he managed the almost impossible task of moving a
political economy, which is firmly centre-left on economics and social policy, decisively toward the centre-right. But by 2015, the laws of politics had caught up with Harper, and Canadians returned to power the centrist to centre-left Liberals, Canada’s “natural” governing party according to its acolytes and establishment historians.
While I have never especially been an admirer ofthe Liberals, I am even less so of the current Prime Minister, Justin Trudeau. Indeed, those who fol-low India-Canada relations will be aware that I was at the forefront of critical commentary on Tru-deau’s disastrously failed visit to India in February 2018. I had predicted before the visit that in the absence of real substance, and Trudeau’s sancti-monious grandstanding on “progressive and femi-nist” trade policy on all his foreign travels, the India visit would be overtaken by the Khalistan issue, and, as the visit got underway, I described it as a slow-moving train wreck. Even Trudeau’s most ardent fans cannot deny that this is how things played out. Indeed, it was even worse than I myself had imagined it would be.
His India debacle perfectly encapsulates the failures of Trudeau. A second-generation political dynast, with little or no training in, nor under-standing of, economics, foreign policy or defence, what Trudeau offered the Canadian public in 2015, and what they lapped up until recently, was a polit-ical brand high on style and low on substance. The substance, such as it was, focused almost exclusively on what one would call progressive social policy. Thus, after nearly four years in office, the only tangible accomplishment one can put under Trudeau’s name is the legalization of mari-juana, an issue which animates some, but certainly not serious commentators on Canadian politics who have decried the absence of any intellectually coherent foundation to Trudeau’s governance.
For the first three years, really until the shine began to come off after the India visit, Trudeau was a darling of the international media, and became a veritable icon for the brand of liberal international-ist politics that was under siege in the US, UK and elsewhere in the Western world. In the way that the UK was under the then prime minister Tony Blair in the 1990s, Canada under Trudeau was cool, and seen as a beacon for the Davos crowd and globalists the world over.
In a sense, Trudeau managed to replicate the popularity and media savvy of his late father, Pierre, who was Canada’s prime minister for the very long tenure from 1968-1980, with a brief
interregnum in 1979-1980, when the hapless and witless Conservative, Joe Clark, was briefly prime minister.
But there is one crucial difference between Trudeau father and son, which is that whether you agreed with him or not (I did not), the former had an intellectually coherent vision of what he wanted Canada to be, and he managed to imprint his stamp on the nation to an extent that even his successor, the very successful and ideologically driven Con-servative prime minister Brian Mulroney, who was in power from 1984-1993, was not able to efface it. That vision was one that may be best described as solidly socialist on economic policy and firmly progressive on cultural policy.
Thus, Pierre Trudeau shrewdly converted the twin policies of bilingualism (English and French) and biculturalism (old stock Anglo-Saxon and French-Canadian) into the modern policies of bilingualism and multiculturalism (rather than biculturalism). One may laud the move, but, as many French Canadians will tell you, Trudeau’s real goal, and one in which he succeeded, was to bury the French identity in a welter of other com-peting identities of new immigrants to Canada, whether East European, Chinese or Indian.
Much like Napoleon III had some of the style andelegance of his uncle, Napoleon, but none of the
substance, Justin Trudeau has some of the style and elegance, but none of the substance of his late father, Pierre. This would not have mattered much, but, in the absence of substance, style can only take you so far when things go bad. And badly they have gone for the Canadian leader, with aserious corruption scandal involving the direct interference of the Prime Minister’s Office with the attorney general’s investigation into the activities of a well-connected and powerful Quebec firm, SNC Lavalin. Things are so bad that Trudeau has been officially censured by the government’s official ethics watchdog, although the latter’s office has no power to impose any sanctions on the prime minister or his government.
Still, the timing could not possibly be worse forTrudeau, with federal elections due in October. At the moment, according to most national polls, the Liberals are in a statistical tie with the opposition Conservatives, led by the soft-spoken, mild-man-nered, thoughtful and distinctly unglamorous Andrew Scheer, a devout Anglo-Saxon Roman Catholic, whose image is as different from the play-boy persona of Trudeau as one could possibly get.
Trudeau may yet be able to scrape by and form aminority government, but, in one way or another, his high-flying days are over: to which I can only say, “hallelujah”.
Justin Trudeau: the liberal icon who has fallen from grace
He may yet form a government in Canada, but as a political hero high on style over substance, his high-flying days are over
On 23 August 2019, finance ministerNirmala Sitharaman, whileannouncing the non-applicability
of Section 56(2)(viib) of the Income Tax (I-T)Act, 1961, popularly referred to as “angel tax”on startups registered with department forpromotion of industry and internal trade(DPIIT), reassured entrepreneurs that thegovernment was already sensitized to theimportance of the startup ecosystem andwas taking all possible steps to boost confi-dence of investors and other players in thestartup sector.
Recently, the I-T department’s suddenmove to deduct a substantial amount fromthe accounts of two startups, Babygogo andTravelkhana, caught media attention, set-ting off a debate over taxation under Section56(2)(viib) of the I-T Act.
We shall not get into the merits of theaforesaid case, or claim that the aforesaidrecovery was in relation to that section.However, irrespective of the factual positionor law involved, the Babygogo and Travelk-
THEIR VIEW
MY VIEW | IN THE MARGINS
VIVEK DEHEJIAis a Mint columnist
CYRIL SHROFFissue or proposed issue of shares, if any, doesnot exceed ₹25 crore and fulfils certain othercriteria given in the notification.
On 23 August, while briefing the media onthe steps taken by the government toaddress the financial slowdown in India,Sitharaman announced that section56(2viib) of I-T Act shall not be applicable tostartups registered with the DPIIT. Suchstartups will not have to fulfil any criteria asper the initial notification, other than DPIITrecognition, to avail of exemption fromangel tax. The finance minister also said thatno coercive action will be taken to recovertax demands and a dedicated cell will be setup under a member of the Central Board ofDirect Taxes to address the issues faced bystartups.
Indian startups have high growth poten-tial and need regulatory support for theirsteady growth. The recent announcementby the finance minister is a confidencebooster for the country’s startup ecosystem.As for the proposed panel, we will have moreclarity on its power and functions once anofficial notification is issued on it.
Abir Dey and Satyadarshi Kunal, principalassociate and senior associate, respectively, atCyril Amarchand Mangaldas also contrib-uted to this article
not capture the true value of a new company.The startup community got wind of the issueonce the income tax department startedsending some firms tax notices under Sec-tion 56(2)(viib) of the I-T Act.
The matter has been given a rethink. Instage one, the initial notification provided
that an entity, which is reg-istered as: (i) a partnershipfirm, (ii) a limited liabilitypartnership or; (iii) a com-pany; and (a) has not com-pleted 10 years of its incor-poration; (b) turnover ofthe entity for any of thefinancial years since incor-poration/registration hasnot exceeded ₹10 crore;and (c) the entity is workingtowards innovation, devel-opment or improvement ofproducts or processes orservices, or if it is a scalable
business model with a high potential ofemployment generation or wealth creation,could seek recognition as startup from theDPIIT. Further, such a startup is eligible forangel tax exemption only if the aggregateamount of paid-up share capital and pre-mium of the recognized startup after the
sum received and the fair market value shallbe considered “income from other sources”,and so the recipient company would have topay tax on the differential amount (which istaxable at a rate of up to 30%, plus the appli-cable cess and surcharge). It should be notedthat this angel tax is not applicable in caseinvestments are made byany non-residents or ven-ture capital funds. Theissue, which irked startups,was that for the purpose ofinvestment, the valuationof a startup’s equity is usu-ally done on the basis ofcommercial negotiationswith investors and, sincethis exercise is generallybased on projected earn-ings, the figure arrived atcould be higher than whatis obtained from the valua-tion formula stipulatedunder the Income Tax Act. If the differenceis held taxable, the burden could be veryhigh.
Startups have demanded that the dis-counted cash flow method of valuation beused to calculate angel tax, instead of the netasset value method, though even that may
hana fiasco attracted sharp criticism on levy-ing “angel tax” on India’s startups. Further,many startup founders have been asked topay a huge part of their funding as tax, angelshave also received multiple notices askingthem to furnish details of their sources ofincome, bank account statements and otherfinancial data. All these events created someanxiety for startups. In a measure to resolvethe issue, the ministry of commerce andindustry, through the DPIIT, issued an “ini-tial notification” on 19 February to exemptstartups from angel tax on fulfilling certaincriteria mentioned in the document, whichfollowed an announcement by the financeminister.
The angel tax was introduced in the Unionbudget of 2012 presented by the thenfinance minister Pranab Mukherjee, and itsobjective was to curb money laundering viasmall companies. It has come to be called byits name since it largely impacts angelinvestments in startups. Soon after, this taxbecame part of the I-T Act, under which,inter alia, if a company in which the publichas no substantial interest receives (in theprevious year) from any person, who is a res-ident, any consideration for an issue ofshares that exceeds their fair market value,then the difference between the aggregate
The decline of tax demons and the ascent of angels
Entrepreneurs
are relieved
that startups
registered with
the DPIIT can
avail of angel
tax exemption
REUTERS
is managing partner at Cyril
Amarchand Mangaldas
G L O B A L V O I C E S
S moke from the wildfires burning in the Amazon plunged São Paulo, 1,700 milesfrom the scenes of destruction, into an eerie darkness last Monday afternoon.
The temporary blackout made it impossible for residents of Brazil’s largest city toignore the ecological carnage taking place on the other side of their country. Butthe ruin of rainforest we are currently witnessing will reverberate far beyond theborders of Brazil in decades to come. Home to 3m species—one in 10 of all knownplants and animals on Earth—the Amazonian rainforest is the most biodiverse placeon the planet. Three-quarters of plant species there are unique to the rainforest.The Amazon is also home to a million indigenous people, thousands of whom havelost their lives in recent decades defending the forest against commercial interests.
[Brazil President Jair] Bolsonaro has thrown his support behind Brazil’s agricul-tural industry and the commercial exploitation of the Amazon. Enforcement actionaimed at protecting the forest has dwindled since his election. Emboldened, farm-ers have declared “fire days”,deliberately setting fire to chunks of the forest in orderto destroy it so it can be used to graze cattle... The current destruction takes therainforest closer to a tipping point... Strong-arming less affluent nations into actionthrough trade deals is not enough. Wealthier countries in Europe need to do farmore when it comes to stumping up proper resources for overseas conservation.
The Guardian, UK
Lessons from the Amazon wildfires
T wo years ago this weekend, the military in Myanmar began a campaign of eth-nic cleansing in Rakhine state against the Rohingya Muslim minority. Killings,
arson and sexual violence drove more than 745,000 Rohingya to seek refuge incamps across the border in Bangladesh, creating a human rights catastrophe. Afact-finding mission for the United Nations reported Thursday that the military,known as the Tatmadaw, had been responsible for hundreds of gang rapes duringthe cleansing campaign, and that the Myanmar government was culpable “underthe Genocide Convention for its failure to investigate and punish acts of genocide”.
Myanmar was run by the military after a coup in 1962. The military junta wasdissolved in 2011, and a civilian government was installed. The UN report on massrape noted that “Myanmar’s top two military officials remain in their positions ofpower despite the mission’s call for them to be investigated and, if appropriate,prosecuted for war crimes, crimes against humanity and genocide... The UN reportsshow that more could be done, including penalties and a boycott of the Tatmadaw’seconomic base... Two years after a wave of fire and violence consumed theRohingya, there has been too much impunity and too little accountability.
The Washington Post
Horrors of the Rohingya genocide
T he Group of Seven, comprised of leading democratic industrial nations, haslong looked past its prime. An intimate gathering of leaders of those countries
could be valuable if they forged a common front on issues of concern. Yet even thatis proving too big a challenge in the era of US President Donald Trump, whose“America First” agenda and mercurial temperament have proven virtually insur-mountable obstacles to joint action. The intimacy of the G7 is also a problem. Ifdiscussions among heads of state are to be meaningful and productive then partici-pants must be able to trust each other.
Fortunately, the G7 offers opportunities for bilateral conversations that can bemeaningful. At Biarritz, the sit-down between Prime Minister Shinzo Abe andTrump was one such get-together. When offered a chance to comment, Abe wasmore tentative. Macron also courted the ire of the White House, if not Trump him-self, with the surprise invitation of Iranian Foreign Minister Mohammad Javad Zarifto the meeting. Last year’s post-summit fracas is a reminder that little things canset Trump off and declaring the meeting “a success”—no matter how low the bar—isstill premature. Issues that dominated the discussion, the need to shore up theglobal economy as headwinds mount in particular, remain daunting. The contribu-tions that the G7 can make to that end appear to be shrinking.
The Japan Times
The Group of Seven limps on
S ince assuming office in May 2017, President Moon Jae-in’s administration haspushed an income-led growth policy, which it hopes will help narrow the
income gap between rich and poor households. However, official data released lastweek showed the misguided policy continuing only to widen income inequalityin the country.
The average monthly income of households in the bottom 20% income bracketremained at 1.32 million won ($1,083) in the second quarter of the year, unchangedfrom a year prior, according to data from Statistics Korea. In contrast, the figure forhouseholds in the top 20% range increased 3.2% to 9.42 million won in the April-June period. The widening income gap is attributable mainly to a growing differ-ence in earned income between poor and rich households. The monthly earnedincome for the lowest 20% bracket shrank 15.3% in the second quarter from a yearearlier, compared to a 4% increase for the top 20% range... Creating low-paid tem-porary jobs by using taxpayer money would do little to help prevent low-incomehouseholds from becoming poorer and reduce income inequality... The most fun-damental way to enable poorer households to earn more is to forge corporate-friendly conditions to encourage companies to increase investment and hire moreworkers.
The Korea Herald
The need for a policy correction
16 TUESDAY, 27 AUGUST 2019NEW DELHI POLICY
(Modi and Khan) and I’m here.I think they can do it (resolvethe issue) themselves,” headded.
Trump’s comments inModi’s presence almost coin-cided with Khan warning that“if conflict moves towards war,then remember both nationshave nuclear weapons and noone is a winner in nuclear warand it has global ramifica-tions”.
“Superpowers of the worldhave a huge responsibility...
also fight against them... I toldhim we should work togetherfor the welfare of our people,”Modi said.
On his part, Trump said heand Modi discussed the matteron Sunday and that “the PrimeMinister really feels he has it(the situation) under control.They speak with Pakistan andI’m sure that they will be ableto do something that will bevery good,” Trump said.
“I have very good relation-ship with both the gentlemen
spread that we have to keep put-ting in more efforts and, that too,at the entry level, not just at thegovernment level, and we need tokeep doing it continuously.”
The prime minister’s commentsassume significance after the pur-ported note by Café Coffee Dayfounder V.G. Siddhartha whoallegedly committed suicidespoke of harassment by tax offi-cials.
Echoing a similar view, financeminister Nirmala Sitharman onFriday said companies will not faceany harassment by tax officials andreiterated that the intention of thegovernment was not to take theprosecution route. Besides, a newsystem is being set up that willmake government officialsaccountable for their communica-tion with the assessee.
She assured that an oversight ora minor infringement will not betreated as a crime. The financeministry is also moving towardsfaceless scrutiny of matters relatedto income tax. Besides, she saidthat defaults on corporate socialresponsibility- related obligationswill be treated as ‘civil liability’instead of a criminal offence. VedJain, former president of account-ing rule maker Institute of Char-tered Accountants of India said thegovernment has sent out a strongmessage to the bureaucracyagainst corruption, and that theycan be shunted out if caught.“There are two messages overhere—one is against integrity andother is obedience,” he added.
India will not compromise on telecom security, data sovereignty: Sanjay Dhotre
bit.ly/2L7jCjd
Govt tells 22 IRS officers to put intheir papers over graft charges
Officers were accused of conducting unauthorized searches and accepting bribes, among other charges
global coalition of disasterresilient infrastructure and thecreation of a pool of trainedvolunteers to help peoplerecover after a natural disaster.
India and France have beenclosely cooperating in theglobal fight against climatechange and have also jointlyled the formation of the Inter-
national Solar Alliance lastyear.
Modi has maintained thatIndia would achieve, withinthe next two years, its climatechange goals set during the21st session of the Conferenceof the Parties (COP21). Thiswould be much ahead of theinitial target of 2030. The
Srishti Choudhary
NEW DELHI
Prime Minister NarendraModi on Monday high-lighted India’s efforts to
eliminate single-use plasticand harness solar energy at aspecial session on ‘Biodiver-sity, Oceans and Climate’ dur-ing the G7 summit in France,to assert the country’s com-mitment to build a sustainablefuture.
India is not a member of theG7, which includes the US, theUK, Canada, France, Germany,Italy, and Japan. However,Modi was extended a specialinvitation by French PresidentEmmanuel Macron.
Modi also spoke aboutIndia’s efforts to conservewater and also protect floraand fauna for a sustainablefuture.
The Prime Minister alsosought the setting up of a
COP21 of the United NationsFramework Convention onClimate Change was held inParis in 2015, in which 195nations participated.
India had ratified the ParisAgreement on climate changein 2016. The country commit-ted to reduce greenhouse gasemission intensity of its grossdomestic product (GDP) by33-35 % below 2005 levels by2030, as part of its NationallyDetermined Contributions.
India also pledged that 40 %of its power capacity would bebased on non-fossil fuel sour-ces and that the country willcreate an additional “carbonsink” of 2.5 to 3 billion tonnesof carbon dioxide equivalentthrough additional forest andtree cover by 2030.
Modi had also discussedways to tackle climate change,in his earlier meeting withUnited Nations secretary gen-eral Antonio Guterres, on thesidelines of the G7 summit.
Modi flags India’s efforts to eliminate plastic
PM Narendra Modi spoke about India’s efforts to harness solar
energy at a special session during the G7 summit in France. REUTERS
Cong woos Vokkaliga community ahead of bypolls in Karnataka
Senior Congress leader
Siddaramaiah. MINT
Sharan Poovanna
BENGALURU
The Congress party inKarnataka has beguncourting the Vokkaliga
community in old Mysururegion in south Karnataka thathas rapidly shifted towards theBharatiya Janata Party (BJP)and Janata Dal (Secular), orJD(S) in the last few years,three people aware of thedevelopments said.
The party has asked workersto engage Vokkaliga voters onsocial media and its campaignsbeginning Saturday. The focuson the community comesahead of bypolls likely in atleast 17 constituencies.
“Since it’s back to being afight between Congress andJD(S), we have to reach out orlose out,” said one of the threepeople, all of whom requestedanonymity.
The coalition of Congressand JD(S) angered Vokkaligaswho were already upset aboutprevious Congress chief min-ister Siddaramaiah’s focus onminorities, Back-ward Classes andS c h e d u l e dCastes, besideshis own Kurubac o m m u n i t y .Granting a sepa-rate religiousminority status tothe Lingayatsworsened themood further. In the absenceof support from Vokkaligasand Lingayats, the party will beforced to depend on the highlyfragmented Backward Classes.
The collapse of the coalitiongives the Congress an oppor-tunity to win back disen-chanted workers and reachout to a community that hasbeen consolidating behindJD(S).
Congress had ceded severalseats in the Vokkaliga heart-land to partner JD(S) in theLok Sabha polls, pushingworkers from both parties todrift to the BJP, that won arecord 25 out of the 28 seats inthe state.
In a recent interview, JD(S)chief H.D. Deve Gowda saidworkers never accepted thealliance that not just led to thedefeat of the former primeminister but also H.D. Kumar-aswamy’s son, Nikhil fromMandya, believed to be a JD(S)bastion.
“But the anger is moretowards Siddaramaiah thanthe Congress,” said anotherperson associated with theCongress, requesting not to benamed.
The Congresshas brought informer legislatorslike N. Chaluvar-aya Swamy, A.B.Ramesh BandiSiddegowda andH.C. Balakrishnafrom the Vokkal-iga communityfor the campaign,
the people cited above said.The fact that Deve Gowda
and Kumaraswamy haveaccused Siddaramaiah of engi-neering the collapse of thecoalition by colluding withB.S. Yediyurappa of the BJPmay hurt the Congress in theeyes of a community thatfavours the JD(S), seen as aVokkaliga-backed party.
A section of party workershave suggested making D.K.Shivakumar the state presi-dent of the Congress to helpwin back Vokkaliga support—a proposal Siddaramaiah hasresisted due to the ongoingfight for the leader of Opposi-tion post within the party.
Congress has asked workers to engage Vokkaliga voters on social
media campaigns beginning Saturday
Finance minister Nirmala Sitharaman on Friday said companies will not face any harassment by tax officials
and reiterated that the intention of the government was not to take the prosecution route. BLOOMBERG
Shreya Nandi
NEW DELHI
Barely two months after27 senior Indian Reve-nue Service (IRS) offi-cers were given earlyretirement, 22 high-
ranking officials of the CentralBoard of Indirect Taxes and Cus-toms (CBIC) were forced to put intheir papers for corrupt practiceslast week, one person aware of thematter said.
The officials have been accusedof conducting unauthorizedsearches and accepting bribes,among other charges. Some ofthem are also being investigatedby the Central Bureau of Investi-gation (CBI), he added.
The CBIC officers were fromDelhi, Mumbai, Kolkata, Chen-nai, Bengaluru, Bhopal, Chandi-garh, Jaipur, Nagpur and Meerut.
In June, 15 CBIC officials and 12officers from the Central Board ofDirect Taxes (CBDT) were ‘com-pulsorily retired’ under the Fun-damental Rule 56(J) ofDepartment of Personneland Training (DoPT) oncharges of extortion,bribery and sexual har-assment, among others.
According to the rule,the appropriate authorityhas the absolute right toretire any government servant bygiving at least three months’notice in writing, or three months’pay and allowances.
Prime Minister Narendra Modihad recently referred to misuse ofpower by the ‘black sheep’ in taxadministration, who had been har-assing taxpayers by targeting hon-
est assessees or taking excessiveaction for minor violations.
In an interview with The Eco-
nomic Times newspaper, Modi had
said: “We have recently taken thebold step of compulsorily retiringa significant number of tax offi-cials, and we will not tolerate thistype of behaviour.” Wealth crea-
tors should not be doubted and theneed of the hour is to recognize,encourage and empower wealthcreators of the country, Modi had
added.The steps are in line with the
National Democratic Alliance(NDA) government’s attempt toproject itself as a party that fights
graft and takes toughaction on the corrupt.“Corruption and nepo-tism have damaged ourcountry beyond imagina-tion and entered into ourlives like termites. We arecontinuously trying toweed them out,” Modi
had said in his Independence Dayspeech. “There have been suc-cesses, but the disease is so deeplyentrenched, the disease is so wide-
GOVERNMENT CRACKDOWN
FIFTEEN CBIC and 12 CBDT officials were compulsorily retired in June on charges of extortion, bribery
PM had recently referred to the misuse of power by ‘black sheep’ in the tax administration
FM Sitharaman has assured that an oversight or a minor infringement will not be treated as a crime
SHE has also said that defaults on CSR obligations will be treated as ‘civil liability’
India is belatedly acknowledging that something’s gone wrongwith what was once billed as the world’s fastest-growing econ-omy. That’s the good news. The bad news is that New Delhi still
doesn’t have a cohesive strategy to reverse the slowdown. Finance minister Nirmala Sitharaman did offer a stimulus
package on Friday. The highlight was the rollback of a tax sur-charge on overseas investors that she herself had imposed inJuly’s budget.
It’s a welcome concession, though there’s no logic in givingglobal banks a break on derivatives they trade in India whiledenying the same tax benefit to local hedge funds.
This unfair discrimination against a nascent industry indomestic alternative assets is Exhibit A of the non-strategicthinking that’s clouding policymaking in India. Exhibit B is theso-called angel tax on startups, a much-hated levy that has finallybeen removed.
The tax was introduced by the previous Congress Party-ledgovernment and treated money raised by fledgling firms asincome. Why did this instrument for harassing private businessesstay on the statute books for seven years, when getting rid of itwas so simple?
The finance minister’s plan to deal with a long and painful slidein the auto industry, where July sales slumped 36%, is Exhibit C.The government will buy more cars for its fleet, she said. That,and an assurance that vehicles purchased now won’t become ille-gal when stricter pollution standards kick in next year, shouldhelp deal with some of the inventory buildup. But carmakers areunlikely to ramp up production until they see a sustainable return
to normal volumes. That will requiredealing with both depressed incomesof consumers and a financing funk.
Enter Exhibit D. Nirmala Sithara-man will hasten the injection of₹70,000 crore ($9.8 billion) of addi-tional capital into state-run banks, apolicy she announced in July. It’s notenough. Lenders still need to absorbthe full hit from ₹2.4 trillion of bad
debt accumulated in just 16 companies, which they’re trying toaddress outside the courts. Half of that reflects loans to troubledshadow banks, according to Credit Suisse Group AG. The figuresfor haircuts being discussed in the media are so large that bankswill have little spare capital to expand their balance sheets.
A parallel effort by the Reserve Bank of India to link loan ratesto its policy benchmark is a laudable move.
Here, though, lenders are bound to look for ways to avoid pass-ing on lower borrowing costs to existing customers. The govern-ment isn’t willing to face up to the strategic reality that most of itsinefficient public sector banks have no strengths beyond theirlarge branch networks, which don’t count for much in a digitalworld.
When you’re always fighting fires, it’s difficult to turn off thewater hose and start tending the garden. The desolate patch thatpromises the most potential is exports.
With US President Donald Trump coming very close to press-ing the tariff trigger on consumer goods made in China, the coun-try with the biggest claim to insert itself into global supply chainsis India, because of the size of its low-paid workforce. Hong Kong-based Li & Fung Ltd, the world’s largest supplier of consumergoods, says it’s helping one American retailer slash its reliance onthe People’s Republic to 20% from 70% in two years. Even ifTrump doesn’t deliver on his ultimate threat, a large opportunityfor India has opened up.
The three industries that hold the biggest promise for jobs andsuppressed wages are textiles, autos and electronics. The trio can,in turn, support a fourth domestic supply chain—constructionand real estate.
But Bangladesh is ahead in textiles, Thailand is stealing amarch in autos, and Vietnam in shining in electronics. If Sithara-man and her team can show some strategic thinking aroundexports, India will be on a roll when global demand eventuallysteadies and recovers.
Allowing larger firms to flourish, enabling smaller firms tosecure cheap financing and forcing the state to retreat from busi-ness would be the great news the private sector has been waitingfor. The wait is becoming interminable. BLOOMBERG
There’s no logic in giving global banks a break on derivatives they trade in the country
E X P E R TV I E WA N D Y M U K H E R J E E
GOVT’S STIMULUS
PACKAGE FALLS
SHORT ON VISION
Respond to this column at
ahead of a visit by Modi nextmonth, which could see irri-tants on the trade front ironedout, he added.
A statement from Trump’soffice said: “The two leadersdiscussed ways to broadentheir strategic partnership andgreatly increase trade between
the United Statesand India. Presi-dent Trump reaf-firmed the needfor dialoguebetween Indiaand Pakistan toreduce tensionsand acknowl-edged India’s roleas a critical part-ner in Afghani-
stan.” “Excellent meeting with
@POTUS @realDonald-Trump! We had useful discus-sions on bilateral matters. Weagreed to address trade issuesfor mutual benefit soon. Look-ing forward to expand cooper-ation as large democracies forthe benefit of our citizens andglobal peace and prosperity,”Modi said in a Twitter post.
whether they support us ornot, Pakistan will go to everyextent,” Khan was cited as say-ing by ANI news agency.
Briefing reporters at Biarritzon the Modi-Trump meeting,Indian foreign secretary VijayGokhale said the 40-minutemeeting focused on tradeissues and energyc o o p e r a t i o n .Trump has oftencalled India outfor what he termsunfair trade prac-tices includingthe imposition ofhigh tariffs—making the issuean irritant in ties.According toGokhale, Modi recalled thatIndia was importing $4 billionworth of fuel from the US andNew Delhi was hoping to stepthis up.
With elections behind him,Modi conveyed to Trump that“this was something we couldhave a constructive approachto”, Gokhale said. Commerceand industry minister PiyushGoel may travel to the US
Taliban in neighbouringAfghanistan. Pakistan has inthe past indicated that tensionswith India over Kashmir—especially after India revoked aprovision in its Constitutionthat gave special status toJammu and Kashmir—couldhamper its efforts to get theTaliban to the negotiatingtable.
“There are many bilateralissues between India and Paki-stan, and we don’t want totrouble any third country. Wecan discuss and resolve theseissues bilaterally,” Modi saidwhen asked if Trump’s media-tion offer was on the table.
In his comments, Modirecalled that India and Paki-stan were together before 1947and he was confident that thetwo neighbours could resolvetheir problems bilaterally.
“When I had called PrimeMinister (Imran) Khan afterthe elections (in July 2018), Itold him that Pakistan has tofight against poverty, India hasto also fight against it. Pakistanhas to fight against illiteracyand disease, and India has to
acting on the sidelines of theG7 summit in the French townof Biarritz. The talks were heldamid Pakistan Prime MinisterImran Khan dubbing himselfthe “ambassador of Kashmir”after India abrogated provi-sions of Article 370 of the Con-stitution, evoking a strongreaction from its westernneighbour.
Khan also warned that risingtensions with India couldspark a nuclear war—seen asan attempt to draw interna-tional attention and interven-tion in the matter given thatseveral countries have urgedboth sides to sort out their dif-ferences on their own.
Trump has in recent daysoffered to mediate betweenIndia and Pakistan on theKashmir dispute, despite Indiarepeatedly stating that it is abilateral matter between thetwo nations. Trump’s seeminginterest in the matter is seen asthe result of the US wantingIslamabad’s cooperation towork out an exit deal with the
FROM PAGE 1
Modi trumps Imran on Kashmir mediation issue at G7 summit
Pakistan Prime Minister Imran Khan warned that rising tensions
with India could spark a nuclear war. AFP
On Trump’s offer to mediate on Kashmir, Modi
said the two neighbours could
resolve their issues bilaterally
POLITICS TUESDAY, 27 AUGUST 2019NEW DELHI 17
SHORT TAKESm
Will raise Kashmir issue at every international forum: Pak PM Imran Khan
bit.ly/2ZlBsJt
Chidambaram to remain in CBI custody till 30 Aug
SC denies bail to former FM in INX Media case, extends interim protection from ED arrest
Srishti Choudhary
NEW DELHI
With excess rains inparts of the countrybringing the overall
deficit down to zero, the four-month southwest monsoon isinching closer to India Mete-orological Department’s(IMD’s) prediction of normalrainfall.
As on Monday, the countryreceived 681.3mm of rainfallcompared to the normal of674.7mm, recording an excessof 1%. Out of all the 36 sub-divi-sions, 21 have witnessed nor-mal showers, while excessrainfall was recorded acrosseight sub-divisions, primarilyin the western coast and partsof Rajasthan and Madhya Pra-desh. Rainfall has, however,been deficient in seven
remaining sub-divisions,which include parts of north-west India.
“When we issued the fore-cast in June, our assumptionwas that El Niño prevailingduring that time wouldweaken further and the IndianOcean Dipole (IOD) wouldturn positive. Both these anal-ysis came correct and helpedthe monsoon to strengthen inthe second half,” said D.S. Pai,head, climate research andservices at IMD, Pune.
In its first long-range fore-cast, IMD had predicted nor-mal monsoon, which it reiter-ated in the second-long rangeforecast in June. It had saidthat the country would receive96% rainfall of the long-periodaverage (LPA) with a modelerror of 4%.
However, it had predictedbelow normal rains for June,
due to the overarching influ-ence of El Niño, which nega-tively affects the southwestmonsoon. June indeed endedwith a staggering deficit ofnearly 33%.
The department had subse-
quently said that the rainfallscenario would improve dur-ing the second half of the sea-son, with rains at 100% of LPA.Consistent with the forecast,rainfall improved in July witha deficit of just about 9%,
caused rainfall over north-western states,” said Pai, add-ing: “This is part of monsoonvariability every year.”
The department’s monsoonforecast is aided by a dynami-cal model system, which hasenabled IMD to predict lowpressure systems forming overBay of Bengal and the ArabianSea seven days in advance.There is still one month to go,before the season comes to anend.
“The situation looks good asof now. It will not change dras-tically during the next month.The current forecast indicatesthat monsoon would be closeto normal at the end of the sea-son,” said Pai.
The monsoon normallybegins to withdraw fromRajasthan around 1 Septem-ber, while October marks theend of the monsoon season.
Excess rain in Jul-Aug makes up for early deficit, monsoon enters surplus territory
Cong in Kerala seeks action against Tharoorover ‘praise’ for Modi
Senior Congress leader and
Thiruvananthapuram MP
Shashi Tharoor. HT
Nidheesh M.K.
BENGALURU
Almost the entire Con-gress leadership in Ker-ala has lashed out at
senior leader and member ofParliament from Kerala’s Thir-uvananthapuram Shashi Tha-roor, seeking disciplinaryaction against him for “prais-ing” Prime Minister NarendraModi.
Tharoor and Congressleader Abhishek Manu Singhvihad recently voiced their sup-port for senior party colleagueJairam Ramesh, who had saidat a recent book launch thatModi’s governance model was“not a complete negativestory”. Singhvi had echoedRamesh’s views and said thatdemonizing Modi all the timewould not help.
Tharoor on Sundaydefended Ramesh’s act. “Jai-ram Ramesh is part of the mani-festo committee. Should he betaught a lesson?” he asked.“Modi should be praised when-ever he says ordoes the rightthing, whichwould add credi-bility to our criti-cisms wheneverhe errs,” Tharoorhad written onTwitter.
Kerala Con-gress is up in armsas it gears up for the crucialbypolls to six seats, includingthe assembly constituency ofVattiyoorkavu, which fallsunder Tharoor’s parliamentaryconstituency, and where theparty is engaged in a prestigebattle with the Bharatiya JanataParty (BJP).
“The politics in this isstraightforward. We don’t wantto look like praising Modi at atime when six by-elections areknocking at our doors,” said asenior leader from Kerala,requesting anonymity.
Congress state presidentMullappally Ramachandran,
leader of Opposition RameshChennithala, former Vattiyoor-kavu MLA K. Muraleedharan,who was elected in the recentLok Sabha polls and relin-quished the seat, and Congress-led United Democratic Frontconvener Benny Behanan haveopenly denounced Tharoor’sstatement.
T.N. Prathapan, the Con-gress MP from Thrissur, hasalso written to party presidentSonia Gandhi.
“Those whowant to praiseModi can go andjoin BJP. Theyneed not comeand campaign int h e c o m i n gby-election inVattiyoorkavu,”Muraleedharansaid.
“Some Congress leaders sayto criticize Modi, he needs to bepraised once in a while. Theseare all top leaders of Congress.I wonder what has happened tothem,” Muraleedharan added.
The comments by Tharoor,Singhvi and Ramesh have,however, been welcomed bythe BJP. “We take it as a happycoincidence. Politicians whocan think are understandingthat the national picture ischanging. Not just Tharoor,many other leaders in Keralahave similar views. Abdullak-utty for instance,” said KeralaBJP spokesperson S. Suresh.
Tharoor had defended Jairam Ramesh who said PM’s governance model was ‘not a
complete negative story’
Union minister Gajendra Singh
Shekhawat said the campaign
will inform people about the
importance of the decision.
Gyan Varma
NEW DELHI
The Bharatiya JanataParty (BJP) is going tolaunch a nationwide
outreach programme in Sep-tember on the recent decisionof the Centre to abrogate Arti-cle 370 and Article 35A.
The awareness programmewill also be carried out in thenewly formed Union territo-ries of Jammu and Kashmirand Ladakh, including Srina-gar, Jammu, Kathua, Udham-pur, Sopore, Anantnag, andLadakh, said BJP members.
These programmes wouldalso be carried out in Maha-rashtra, Haryana and Jhark-hand where assembly elec-tions will be held later thisyear.
Senior leaders of the partyhave identified 35 cities,mainly state capitals, wherepublic meetings and aware-ness programmes will be heldfrom 1 September and 370smaller cities, where Unionministers, chief ministers ofdifferent states, deputy chiefministers, and senior leadersof the party would holdawareness programmes.
This is the first time thatthe BJP leadership is holdingoutreach programmes toreach out to people on theabrogation of Article 370 and35A.
“We have to take the mes-sage of Prime Minister Naren-dra Modi to the peoplethrough this outreach pro-gramme,” Union minister forpetroleum and natural gasDharmendra Pradhan said onMonday.
“The outreach programmewill focus on informing thepeople about the importanceof the decision. The dream of‘one nation, one Constitution’has been fulfilled by PrimeMinister Narendra Modi,”said Gajendra Singh Shekha-wat, Union minister for JalShakti.
The people of the countryshould understand the impor-tance of the decision becausethree generations of peoplehave waited for the abroga-tion of Article 370 and Article35 A, Shekhawat said.
“The outreach programmewill inform people about thedecision and we will also talkabout the responsibility ofpeople of other states towardsthe people of Jammu andKashmir,” Shekhawat said.
BJP to launch campaign on Articles 370, 35A in Sep
Japnam K. Bindra &
Prathma Sharma
NEW DELHI
A Central Bureau ofInvestigation (CBI)court on Mondayextended till 30 Augustthe CBI’s custody of
former Union finance minister P.Chidambaram in the INX Mediacase, even as the Supreme Courtextended interim protection fromarrest by the Enforcement Director-ate (ED).
The Supreme Court, however,dismissed a separate anticipatorybail plea by him, saying it hasbecome “infructuous” as he hadalready been arrested by the CBI.
Chidambaram’s plea challengingthe remand order of the CBI courtwas not listed and, hence, could notbe argued.
The division bench of the apexcourt, headed by Justice R. Bhanu-mati and comprising Justice A.S.Bopanna, directed Chidambaram tofile a rejoinder to the brief reply affi-davit filed by ED. The hearing willcontinue on Tuesday.
The bench dismissed the plea inthe CBI case challenging the 20August order passed by Delhi highcourt rejecting the anticipatory bailpetition of Chidambaram. Itobserved that a regular bail petitionbefore the trial court shouldnot be influenced by Delhihigh court’s observations.
Senior advocates KapilSibal and Abhishek ManuSinghvi, representing Chi-dambaram, argued that heshould not have beenarrested as the bail applica-tion was pending before theSupreme Court. Sibal argued thatdue legal procedures have not beenfollowed in his arrest and the funda-mental rights under Article 21 grant-ing freedom of life and liberty havebeen severely violated.
“If something is found after prob-ing documents, it should be put
before the accused so that he cangive an explanation. Here, it’s a one-way street where documents areproduced in court but not before theaccused,” he argued. “He’s beingasked questions like ‘do you have aTwitter account...’ this is the qualityof investigation during custodialinterrogation.”
During the anticipatory bail pleain the ED case, Sibal submitted theallegations against Chidamabaram
and argued that there are lacunas inthe legal procedures. “P. Chidam-baram is being made vicariously lia-ble. The ED’s case seems to be thatsince he’s Karti’s father, he must beinvolved....there is no charge-sheetfiled naming him so prima facie nooffence has been committed,” Sibalargued.
Chidambaram was producedbefore special CBI judge Ajay KumarKuhar at the Rouse Avenue Courtcomplex on Monday. While solicitorgeneral Tushar Mehta sought a five-day extension of the custody, thecourt extended the former Unionminister’s CBI custody till 30August.
“…I am of the view that furtherpolice custody remained of theaccused P. Chidambaram is justified
and accordingly the accused isremanded to further police custodytill 30.08.2019,” the order read. Chi-dambaram was sent to CBI custodylast Thursday.
During the hearing, Mehta toldthe court that Chidambaram needsto be confronted by the co-accusedin the INX Media corruption case.
However, the CBI did not disclosethe names of the co-accused. Mehtaargued that some emails and docu-ments related to the case also needto be examined and, therefore, theCBI wanted Chidambaram in cus-tody.
Questions regarding the evidencecollected by the ED and handed overto the CBI will be put to Chidam-baram, so that he reveals the “largerconspiracy”, he added.
Sibal opposed the plea,arguing that no documentshave been shown so far toprove the allegations madeagainst the Congress leader,nor has he been asked any-thing about the alleged pay-ments. “If you don’t want toshow the documents to us, at
least show it to the court,” he added.The CBI had registered the case
against Chidambaram under theprovisions of Prevention of Corrup-tion Act and Indian Penal Code,while the ED registered the caseunder the provisions of Preventionof Money Laundering Act.
COURTROOM BATTLE
CHIDAMBARAM’S bail plea has become ‘infructuous’ as he has already been arrested, says SC
HIS second petition challenging remand order of CBI court was not listed; thus, it couldn’t be argued
CBI told the court that the ex-FM needs to be confronted by a co-accused during interrogation
SC also directed Chidambaram to file a rejoinder to ED’s affidavit. Hearing to continue today
Senior Congress leader P. Chidambaram outside a CBI court in New Delhi on Monday. RAMESH PATHANIA/MINT
The country has so far received 681.3mm of rainfall, compared to
the normal of 674.7mm, recording an excess of 1%. HT
before falling to zero in mid-August.
“The rainfall deficit hascome down from 33% in Juneto +1% excess in last twomonths. But we still have towait for one more month tofind out if the sea-son ends with anormal monsoon.Our forecast is96% LPA withmodel error of+/-4 %,” said IMDdirector generalM. Mohapatra.
As per IMD’sprediction, theoverall rainfall is likely to be94% of LPA over north-westIndia, 100% of LPA over cen-tral India, 97% of LPA oversouth peninsula and 91% ofLPA over north-east India, allwith a model error of 8% at theend of September.
While central India receivedthe maximum rainfall this sea-son as predicted, the rains oversouthern peninsula weremuch higher than expected, at106% of LPA. The states alongthe western coast experienced
extremely heavyrains. An extremerainfall event alsotriggered floodsin Punjab andadjoining areas.
“There arealways intra-sea-sonal variationsthat cannot bepredicted four
months in advance. This time,we witnessed strong low pres-sure activity. Systems formingover Bay of Bengal, whichreached up to Rajasthan,brought heavy rains. Theyoccasionally interacted withwestern disturbances and
Consistent with IMD’s prediction, rainfall improved
in July with a deficit of 9%,
before falling to zero in mid-Aug
RAMESH PATHANIA/MINT
Govt withdraws former PM Manmohan Singh’s SPG cover
New Delhi: The Special ProtectionGroup (SPG) cover given to formerprime minister Manmohan Singhhas been withdrawn following areview by multiple security agen-cies, officials said on Monday.
However, Singh will continue toget Z plus security. The govern-ment’s decision had been conveyed
to Singh, a home ministry official said. PTI
Paswan asks states to make use of Centre’s onion buffer stock
New Delhi: Food minister Ram Vilas Paswan on Monday urgedthe state governments to make use of the central buffer stock of50,000 tonnes of the kitchen staple, to boost supply in the localmarket and curb rising prices. Onion prices have been inching
HT
up in Delhi and select cities across the country on possible tightsupply, owing to crop loss because of floods in major-growingstates Karnataka, Maharasthra and Gujarat.
Retail onion prices on Monday were ruling the highest at ₹45per kg in Chandigarh, followed by ₹42 per kg in Delhi, and at ₹40per kg in six cities including Varanasi and Aizawl, according todata maintained by the Consumer Affairs Ministry. PTI
In a first, Karnataka government to have three deputy CMs
Bengaluru: The national leadership of the Bharatiya JanataParty (BJP) on Monday announced that Karnataka chief minister
(CM) B.S.Yediyurappa will havethree deputies in his govern-ment—a first for the state.
The three-CM model willlimit the powers given to Yedi-yurappa and ensure that alldecisions will be taken unilater-ally by the Centre. Govind M.Karjola, Ashwath Narayan andLaxman Savadi have beennamed deputy CMs in the cabi-net. SHARAN POOVANNA
MINT
Shah resolves to fight Naxal violence jointly with states
New Delhi: The Centre and the Naxalism-affected stateson Monday resolved to jointly fight Left Wing Extremism,with home minister Amit Shah declaring that the Maoistsare against the idea of democracy, officials said.
Chief ministers Nitish Kumar (Bihar), Naveen Patnaik(Odisha), Yogi Adityanath (Uttar Pradesh), Kamal Nath(Madhya Pradesh), Raghubar Das (Jharkhand), BhupeshBaghel (Chhattisgarh) and Y.S. Jaganmohan Reddy(Andhra Pradesh), attended the meeting where ongoingoperations against Naxals were reviewed. PTI
RAMESH PATHANIA/MINT
Delhi court extends Ratul Puri’s ED custody by four days in fraud case
New Delhi: A Delhi court Mon-day extended by four days theEnforcement Directorate’s(ED’s) custodial interrogation ofRatul Puri in connection with amoney laundering case.
The ED had arrested Puri,nephew of Madhya Pradeshchief minister Kamal Nath, on20 August. PTI
Govt invites bids to select agency for conducting spectrum auction
New Delhi: The government on Monday invited bids for selec-tion of agency that will conduct spectrum auctions in variousbands, including 5G, as it set the stage for mega sale of over 8000MHz of radiowaves.
Issuing the tender document, the department of telecommu-nications (DoT) said the deadline for submission of the bidswould be 25 September. PTI
PTI