MUMBAI, NEW DELHI, BENGALURU, KOLKATA, CHENNAI, AHMEDABAD, HYDERABAD, CHANDIGARH*, PUNE* VOL. 3 NO.

145

TUESDAY, JUNE 16, 2020

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mint primer
QUICK EDIT
The importance Job scene
of forex reserves brightens
for RBI, economy India’s job market seemed dis-
mal for weeks. But could it be
perking up? Data from the Cen-
BY KARAN BHASIN tre for Monitoring Indian Econ-
omy suggests that unemploy-
India’s forex reserves recently crossed the $500-billion mark for the
first time in history due to higher foreign direct investment, foreign ment has fallen sharply. A sur-
institutional investment. Low oil prices also helped reduce outflows. vey conducted by job portal
Mint explains this development and the importance of forex reserves. Naukri.com has revealed that
most recruiters expect hiring to
Recent spike return to pre-covid levels in
The weekly data of India’s forex reserves from April 2012 till May 2020 shows
three to six months, while only
increased inflows over the past few weeks due to the Jio deals and higher FII 15% see it taking more than a
inflows. This spike in inflows is responsible for the jump in India’s reserves. year. Just 15% of the 1,600 exec-
40 37.32 utives and recruiters surveyed
Foreign exchange reserves (in  trillion) confirmed layoffs; and about
35
one-fifth admitted salary cuts at
30 their organizations.
What such surveys report
25
and what actually happens
20 need not display too strong a
14.96 correlation. Some businesses
15 may have adopted a skeleton-
10
staffing policy to get through
6 Apr 2012 29 May 2020 the lockdown, and these might
Sourcr: DBIE, RBI need fresh recruits just to oper-
PARAS JAIN/MINT
ate at their usual pace. But
What are forex (foreign Why are the reserves other companies might not
1 exchange) reserves?
Forex or foreign exchange reserves
2 so important?
All international transactions are
want to raise their salary bills till
such time that they see their
are essentially assets held by the settled in US dollars and are revenues rebound. How long
central bank in foreign currencies therefore needed to support our this will take remains unclear
as a reserve. They are usually used imports. More importantly, they because the pandemic has still
for backing the exchange rate and are needed to support, maintain not been brought under con-
influencing monetary policy. In the confidence for central bank action, trol. Yet, it seems clear that the
case of India, our forex reserves whether monetary policy action or
employment market is on the
include dollars, gold, and the any exchange rate intervention to
International Monetary Fund’s support the domestic currency. It mend. Joblessness is no longer
quota for Special Drawing Rights. also helps limit any vulnerability as bad as it was in April and May.
Most of the reserves are usually because of a sudden disruption in Now we need clearer signs of an
held in US dollars given the foreign capital flows, which could economic uptick.
currency’s importance in the happen during a crisis. Holding
international trading and financial liquid forex thus provides a
system. Some central banks also cushion against such effects and
hold reserves in British pounds, gives the confidence that there
euros, Chinese yuan, or the
Japanese yen, in addition to their
would still be enough forex to
support the country’s crucial
MINT METRIC
US dollar reserves. imports in case of external shocks. by Bibek Debroy

Octogenarian Mr Tyres has a cat

3 Have other nations also seen
an increase in reserves?
Countries witness significant cash
Into the well it fell—splat.
outflows during an economic crisis,
He rescued the kitty,
resulting in a reduction in dollar reserves. But fell in himself, a great pity.
This causes a devaluation of domestic
currencies forcing central banks to deploy
Then rescued by his dogs—take that.
reserves to support their currencies. Bank
of America said Emerging Markets burned
$240 billion in reserves to support
domestic currencies. QUOTE OF THE DAY
Indo-Nepal ties are not
4 How did India increase
its reserves amid crisis? 5
The increase in India’s reserves is
Does this mean India’s
economy is healthy?
The increase in reserves does give
ordinary, we are bound
an outcome of an increase in FDI. India adequate cushion to combat
together by ‘roti-beti’
This comes along with FIIs pouring external shocks. India is one of the and no power in the
money into markets expressing few nations whose forex reserves
confidence in the economy. The are more than forex debt. The
world can break it
increase in FDI, however, is increase in FDI signals faith in the
primarily an outcome of the future of the economy, rather than
successful capital raise by Reliance a commentary on its present state.
Industries’ Jio Platforms amidst Lower imports are a result of lower
this global pandemic. Another domestic demand, but currently, RAJNATH SINGH
reason is that a slowdown means it is due to the lockdown too. It is, UNION DEFENCE
lower domestic consumption, therefore, difficult to consider the MINISTER
which implies lower imports. increase in reserves as a direct sign
This coincides with low crude oil of a healthy economy.
prices which further help on the Karan Bhasin is a New Delhi-based
current account front. policy researcher.

m MINT SHORT

FB rejects call to share revenue with Oz media

BLOOMBERG
AFP to boycott local news companies.
feedback@livemint.com “Given the social value and benefit to
SYDNEY news publishers, we would strongly
prefer to continue enabling news pub-

F
acebook on Monday rejected calls
from the Australian government
and news companies that it share
advertising revenue with the media,
suggesting it would rather cut news
content from its platform.
The US tech giant said in a submis-
sion to Australia’s competition watch-
dog that news represents a “very small
fraction” of the content in an average
user’s news feed. “If there were no news
Australia is set to unveil plans to force
Facebook to share advertising revenue.
content available on Facebook in Aus-
tralia, we are confident the impact on
Facebook’s community metrics and
revenues in Australia would not be sig-
nificant,” it said in a thinly veiled threat
lishers’ content to be available on our
platform,” it said. In an effort being
closely watched around the world, Aus-
tralia is set to unveil plans to force Face-
book and Google to share advertising
revenue they earn from news featured
in their services. The initiative has been
strongly pushed by Australia’s two big-
gest media companies, Rupert Mur-
doch’s News Corp and Nine Entertain-
ment.
 FLIP SIDE
T
U RA L E
O
Y SV
N E W m
Mint Lite
A daily wrap of news and views, opinions and talking points, to get you started on your day

M
umbai’s famed local trains returned to the tracks on Monday, after two and a half months. Only essential service provid-
ers are allowed to ride, and services are limited to the main line. The Maharashtra government has also said that schools
will restart in July in areas without infections. In Kerala, the government announced a new set of guidelines for visitors,
and they can’t stay longer than a week. To bring you up to speed on the rest of the news in five minutes, here’s Mint Lite.

SECOND WAVE FEARS HIT MARKETS

FEARS OF the possibility of a second wave of covid-19 infections sent
jitters across global markets on Monday. Indian benchmark equity
indices closed nearly 2% lower led by heavy selling in banking and
financial stocks. The rising covid-19 numbers, a second wave of infec-
tions in China, and weak Asian markets weighed down investor senti-
ment. Globally, stocks and oil were under pressure while investors
bought into safe havens such as German government debt. Futures on
the S&P 500, the Stoxx Europe 600 index as well as Japan’s Nikkei
dropped. Crude futures were also down, but India raised fuel prices for
the ninth day in a row. They’re now at their highest in more than a year.
Petrol prices were hiked ₹0.46 a litre, and diesel ₹0.59 a litre. Since 7
June, when oil firms resumed revision of fuel prices following an
82-day break during the lockdown, petrol prices have gone up ₹4.98 a
litre and diesel by ₹5.23 a litre.

STRANDED CREW RETURN HOME

MORE THAN 600 stranded Indian seafarers who have spent
the past few months working on board merchant ships arrived on
Monday on chartered flights from Singapore. Many crew mem-
bers have worked several months beyond their contracts due to
travel restrictions because of the covid-19 outbreak. Globally,
over 150,000 seafarers are stranded at sea in need of crew
changes, according to International Chamber of Shipping. The
routes home are circuitous as many countries have barred crew
from disembarking at ports. Bringing in replacement crew is an
issue for the same reasons. This will affect international shipping
as commercial vessels shoulder about 80% of world trade. Ship-
ping companies and trade unions are urging countries to recog-
nize merchant crews as essential workers and allow them to
travel. For the cruise industry, at least 40,000 crew are stranded
at sea three months after they stopped sailing due to covid-19.

RECOVERY RATE RISES Covid-19 recovery rate in worst-

affected countries
FOR THE past five days India has recorded more than Percentage of infected people who have recovered
10,000 new coronavirus cases a day, though the health
Country Total confirmed Recovery rate (in %)
ministry has said the recovery rate has risen to 50.59%. cases
This is higher than many of the worst-affected countries
US 2,094,069 27.9
in the world (see chart). The recovery rate has been
improving steadily from mid-May, though the case Brazil 867,624 44.8
numbers are rising rapidly, and India now has the Russia 536,484 52.9
fourth highest number of cases in the world. The aver-
age doubling time of cases in India is 19.1 days, but in India 332,424 50.6
about 19 states, the cases are doubling faster than the UK 297,342 14.1
national average. Though doubling time is slowing in
Maharashtra, the state continues to have the highest Spain 243,928 10.4
number of cases. The recovery rate in Delhi (38.4%) and Italy 236,989 74.4
Mumbai (45.7%) is high, compared to global cities like
Source: Johns Hopkins University as at 3.30pm 15 June, Reuters tracker
New York (21.2%), the worst-affected city in US.
SARVESH KUMAR SHARMA/MINT

AUTO DEALERS IN TROUBLE

THE SUPREME Court has asked Federation of Automobile
Dealers Associations for details of BS-IV vehicles sold from 27
March. The court said it allowed sale of only 105,000 BS-IV vehi-
cles, or 10% of inventory, but dealers had flouted norms and sold
255,000. After 31 March, carmakers were to transition to the less
polluting BS-VI standard, but the court granted an extension in
view of the lockdown. The automobile industry is facing a liquid-
ity crunch due to the pandemic, and recorded near zero sales in
April. Industry bodies estimate that auto sales could drop 35% in
some segments as people put off expensive purchases. Auto deal-
ers employ about 4 million people directly and indirectly coun-
trywide. The lockdown is likely to push many dealerships, most
of them family-run, out of business. Buyers are likely to adopt
digital routes and virtual tours as physical distancing is observed.

INDIA TO BENEFIT FROM CHINA’S BAN

CHINA HAS taken scales of the pangolin, the world’s most trafficked
animal, off its 2020 list of approved traditional medicines. Pangolin
scales, made of keratin, were integral to traditional Chinese medicine,
fuelling poaching of the nocturnal mammal found in Asia and Africa.
The meat is considered a luxury in China and Vietnam. India is home
to two pangolin species, and about 6,000 were poached from 2009 to
2017, despite being listed in Schedule I of Wildlife (Protection) Act, and
as endangered on IUCN Red List. China has now listed pangolins as
Class 1, on par with pandas, which prohibits most domestic trade and
use of the animals. China’s decisions follow speculation that pangolins
sold in Wuhan were the source of the SARS-CoV-2 outbreak. Most evi-
dence suggests the virus came from bats, but it’s not yet confirmed if an
intermediary species like pangolin transmitted it to humans. The ban
on pangolin use may help India protect its population.

For more short takes on the news, and

quick updates to bring you up to speed
before you start your day, follow our
daily podcast Mint Lite Morning Shot
on htsmartcast.com
Curated by Shalini Umachandran. Have something to
share with us? Write to us at businessoflife@livemint.com
or tweet to @shalinimb

PEANUTS by Charles M. Schulz

 MUMBAI, NEW DELHI, BENGALURU, KOLKATA, CHENNAI, AHMEDABAD, HYDERABAD, CHANDIGARH*, PUNE* VOL. 3 NO. 145 Rs 6.00 16 PAGES

CHENNAI GOES INTO

LOCKDOWN FROM 19 JUN
Tamil Nadu chief minister E.K. Palaniswami on
Monday declared a total lockdown of Chennai and
its suburbs from 19 to 30 June amid a surge in covid
infections. Palaniswami also announced cash relief
of ₹1,000 to ration card holders and workers in the
TUESDAY, JUNE 16, 2020 unorganized sector in the affected areas. >Page 7
LIVEMINT.COM

Jobs Market Shows Signs Of Life

National unemployment rate sees sharp decline as offices, shops and self-employment avenues reopen after the Centre lifts nearly all lockdown curbs
m MINT GRAPHITI
Prashant K. Nanda
prashant.n@livemint.com
Division of labour
The rural job loss rate saw a GETTING BACK ON TRACK GLOBAL CASES NEAR
8-MILLION MARK
One-third of
NEW DELHI steeper drop than the overall
unemployment figures.
firms fail to pay

I
ndia’s labour market
INDIA
showed surprising strength
Unemployment rate in week to:
Overall (in %)
April PF dues
in the second week of June,
restoring many jobs that
22 Mar
5 Apr
8.41
23.38
338,046 9,669 Prashant K. Nanda
17 May 24.01 Total cases Deaths
were lost to the economic prashant.n@livemint.com
upheaval caused by the nation- 14 Jun 11.63
173,182 155,155 NEW DELHI
wide lockdown, and offering Urban Recovered Active cases
22 Mar 8.66

A
some substance to the hope bout a third of all
5 Apr 30.93
that the worst may be over. 17 May 26.95 GLOBAL employers registered
The national unemployment 14 Jun 13.10 with India’s retirement
rate fell sharply to 11.63% in the fund manager have not submit-
week ended 14 June from 22 Mar
Rural
8.29
7,949,973
Total cases
ted statutory provident fund
17.51% in the previous week, 5 Apr 20.21 dues for April, highlighting the
bringing the job loss rate closer 17 May 22.79 broad deterioration in com-
to the levels prevailing before
the lockdown, a survey by the
14 Jun 10.96
Note: Lockdown began on 25 March 434,181 pany finances as revenues
dried up overnight because of
Centre for Monitoring Indian Source: CMIE Deaths the nationwide lockdown.
PARAS JAIN/MINT
Economy (CMIE) found. Only 321,800 companies
The improvement comes as 10.96% in the week to 14 June 3,799,143 3,716,649 paid their statutory employees
Recovered Active cases
offices, shops and self-employ- from 17.71% in the previous provident fund dues in April,
Source: Union health ministry, states
ment avenues reopened after week. That compares with the almost 178,000 fewer than
the government lifted nearly all job loss rate of 8.29% in rural those that paid in the previous
lockdown curbs after more India and 8.41% nationally in the month, latest data from the
than two week to 22 March, FULL COVERAGE INSIDE Employees’ Provident Fund
months. The three days before ˜ Plain Facts: 139 million people Organisation (EPFO) showed.
ongoing summer the lockdown was across Indian cities likely to run When compared with Febru-
crop planting implemented. out of savings by month-end P2 ary, a period when India was
season and the The urban ˜ For policymakers, wholesale unaffected by the pandemic,
rural job guaran-
VIRUS EFFECT unemployment inflation is another warning of a 199,000 fewer firms paid dues.
tee plan also pro- rate at 13.1% is recession P4 “The companies have got
vided employment opportuni- higher than both the rural and ˜ Long Story: Caught between some exemptions due to the
ties to people in the villages. overall job loss rate, CMIE said. China and US, Hong Kong lockdown, but you must realize
Consequently, the rural job Economists and job market shrugs at another obituary P8 that such a high number of
loss rate saw a steeper drop than experts, however, warned that ˜ Opinion: A redesigned social companies not submitting dues
the overall unemployment fig- People on board a suburban local train at the Chhatrapati Shivaji Maharaj Terminus after the Central Railway resumed local train contract for altered
ures, CMIE said, declining to TURN TO PAGE 11 services for essential staff, in Mumbai on Monday. ANSHUMAN POYREKAR/HT post-pandemic realities P13 TURN TO PAGE 14

DON’T MISS
INDIA GETS FIRST GAS EXCHANGE
Liquefied natural gas terminal owners—
state-run GAIL (India) Ltd and Petronet LNG
Ltd—have joined the Indian Gas Exchange,
which went online on Monday. >P3
SAUDI FUND TO BUY STAKE IN JIO
Saudi Arabia’s Public Investment Fund is set to
pick up a 2.33% stake in Jio Platforms Ltd for an
estimated $1.5 billion, Gulf News reported late
on Monday.
DATA USAGE SURGES AMID CURBS
The coronavirus lockdown has fast-tracked
internet usage in India by two-three years, with
average monthly data usage rising by 30% to
cross 11GB, a study said. >P7
TRADE BASKET SHRINKS AGAIN
India’s trade basket plummeted in May
though at a slower pace than the preceding
month as countries sealed their borders to
arrest the spread of the coronavirus. >P9
ONUS IS ON SOCIAL MEDIA USERS
Centre for Internet and Society’s Amber Sinha
says social media is not in a position to control
the flow of content, including hate speech, but
the onus is on users to report such content. >P11
INDIA TO STICK TO TALKS ON NEPAL
India has not ruled out talks with Nepal to
resolve tensions over a new map of the
Himalayan country that incorporates three
areas that are part of Uttarakhand. >P14

Tata firms entered JLR sees green Clix eyes 45% stake in Junk bonds FM asks pvt lenders
shoots of sales may not find
into related-party revival in China Lakshmi Vilas Bank takers for now to support small biz
PRIYANKA PARASHAR/MINT

deals, Mistry tells SC Amit Panday

amit.p1@livemint.com
MUMBAI
Gopika Gopakumar
gopika.g@livemint.com
MUMBAI
Swaraj Singh Dhanjal
swaraj.d@livemint.com
MUMBAI
Shreya Nandi & Shayan Ghosh
NEW DELHI/MUMBAI

F
inance minister Nirmala
Jayshree P Upadhyay

board of Tata Sons by virtue of
jayshree.pyasi@livemint.com being the largest shareholder in
MUMBAI the holding company.
In the affidavit filed on Friday
T L M
ata Motors Ltd on Mon- akshmi Vilas Bank Ltd has ore than two months Sitharaman on Monday
day said its luxury car unit received a non-binding after the coronavirus reached out to private sec-
Jaguar Land Rover (JLR) offer from Pramod Bha- pandemic shut all eco- tor lenders and non-banking
is seeing green shoots of sales sin-promoted Clix Capital Ser- nomic activity, offshore bond financial companies (NBFCs),

C
yrus Mistry, the ousted in response to Tata Sons’ peti- recovery in China, one of its top vices Pvt. Ltd and Clix Finance markets have begun opening urging them to join public sec-
chairman of Tata Sons tion challenging his reinstate- three global markets, even as India Pvt. Ltd to buy a 45% up for Indian issuers, but junk tor banks in scaling up lending
Ltd, has accused the ment by the NCLAT, Mistry the company announced plans stake in the troubled private bond sellers will have to wait. to small businesses.
Tata group of related-party cited alleged related-party deals to cut costs after posting a con- lender, two people familiar Clix is likely to infuse nearly Indian firms have aggres- She told private sector banks Union finance minister Nirmala
transactions that he claimed involving purchase of aircraft by solidated loss of ₹9,894 crore for with the matter said. Clix will ₹2,300 crore into Lakshmi sively tapped offshore bond including ICICI Bank, HDFC Sitharaman. RAMESH PATHANIA/MINT
were designed to benefit a select the Tata group without appro- the March quarter. infuse nearly ₹2,300 crore into Vilas Bank. markets this year, raising more Bank, Yes and Kotak Mahindra
few. priate approvals and award of While the demand scenario the bank, resulting in the amal- than $10 billion so far, showed Bank, and NBFCs such as Edel- small businesses.
Mistry made the allegations “regulatory and corporate remains challenging, there are gamation, they said. meeting on Monday, the Chen- data from financial markets weiss and Tata Motors Finance Most of the lenders said they
in his affidavit submitted to the affairs liaising” work for AirAsia early signs of a revival in key The bank’s board has nai-based lender said in a regu- tracker Refinitiv. Most of this Solutions in a video conference have already implemented the
Supreme Court, where he is India, a joint venture between JLR markets such as the US, decided to consider for further latory filing. It said the pro- was raised before the pandemic that they should implement the scheme, a senior government
fighting a protracted legal battle Tata group and Malaysia’s AirA- Europe and China, said P.B. processing the preliminary and posed transaction is subject to hit. Last year was equally busy, recently announced emer- official told Mint.
with India’s largest conglomer- sia Bhd, to HNR Trading PTE non-binding offer from Clix gency credit guarantee lending
ate over his ouster in October Ltd, a Singapore-registered TURN TO PAGE 3 Capital and Clix Finance in its TURN TO PAGE 11 TURN TO PAGE 11 scheme (ECGLS) to help out TURN TO PAGE 11
2016 from the group’s holding entity. He alleged that the firm
company. was paid ₹22 crore for its servi-
The Tata group and Mistry’s ces through a “sham contract”.
investment firms—Cyrus “It appears till date no action
Investments Pvt. has been taken to
Ltd and Sterling Mistry has accused recover monies
Investments Pvt. the Tata group of paid to HNR Trad- Wary of infections, Paisabazaar Sebi may allow WFH for brokers
Ltd—have been related-party deals ing,” the two Mis-
sacks 1,500 as
involved in the lit-
igation since
December 2016.
that he claimed
were designed
to benefit a
try firms said in
their reply to the
Supreme Court.
people shun ATMs lending dips
Jayshree P Upadhyay
jayshree.pyasi@livemint.com
MINT

and should not be reliant on

location of things or people.
The investment The Mistry firms MUMBAI “Perhaps there was a time
firms, which select few also pointed out Shayan Ghosh doubled to 87 million. Cash Tarush Bhalla when these restrictions were

T
together own that “losses at Air shayan.g@livemint.com withdrawal volumes at point of tarush.b@livemint.com he stock market regulator relevant, but the experience of
18.4% of ordinary Asia have become MUMBAI sale (PoS) terminals grew 21% BENGALURU is planning to scrap an old trading from other than regis-
shares in Tata Sons, had filed a over four times in the last finan- between March and April to 4 rule preventing brokers tered locations during the lock-

A P
petition alleging oppression and cial year, necessitating lengthy lockdown and million, with customers aisabazaar, an affiliate of from operating trading termi- down suggest that we should
mismanagement. The firms increased investments than the fear of infections restricting themselves to a unicorn Policybazaar, nals from locations other than revisit these,” said one of the two
won relief from the National what was agreed upon”. from mass-use ATMs more controlled environment has fired about half of its those reported to the exchange, people, a regulatory official.
Company Law Appellate Tribu- Cyrus Mistry and Tata Sons prompted many Indians to turn and with several housing socie- 3,000 workforce to cut costs two people aware of the matter Currently, whenever a stock
nal (NCLAT) on 18 December, did not respond to queries to Aadhaar-enabled Payment ties arranging for cash with- as loan demand at the digital said, raising the possibility of broker operates a terminal from
which said that there was a case emailed on Monday. System (AePS) and point of sale drawals at their doorsteps. lending marketplace has many brokers working from Exchanges allowed brokers to a particular location, that place
of oppression at Tata Sons and In the court submission, the (PoS) terminals to withdraw To be sure, the rise in alter- reduced to a trickle because of home over the longer term. trade from alternative locations is considered his branch office
reinstated Mistry as the execu- Mistry firms also alleged Tata cash, central bank data showed. nate cash channels are from a the pandemic, according to The change comes after com- from March. and will require display of name
tive chairman of the company. Motors Ltd was forced by the Cash withdrawals from lower base as compared to three people aware of the pliance relaxations given to bro- boards and stock broker’s certif-
Subsequently, Tata Sons moved group’s chairman emeritus ATMs in April fell 47% from ATMs, a more mature with- development. kers during the coronavirus without a glitch and are likely to icate. They are also required to
the Supreme Court on 2 Janu- Ratan Tata to sign a joint ven- March to 286 million, data from drawal system. AePS also found The layoffs were predomi- lockdown allowed them to continue till at least June end, register such location in the
ary. Earlier in June, the top ture with Jayem Auto, where the Reserve Bank of India (RBI) favour in cash being pulled out nantly in roles that involved operate terminals from home or the people cited above said on exchange system. On 20 March,
court agreed to hear the Mistry the automaker’s management showed. In the same period, from Jan Dhan bank accounts operations and business acqui- other remote locations. condition of anonymity. This, as the pandemic spread,
firms on offering additional was compelled to grant addi- cash withdrawals from Aad- when the government’s direct sition as Paisabazaar has seen These relaxations given by they said, has strengthened the exchanges allowed trading from
relief, mainly their scope to haar-enabled Payment System the Securities and Exchange argument that modern trading
nominate a director on the TURN TO PAGE 11 (AePS) terminals more than TURN TO PAGE 11 TURN TO PAGE 11 Board of India (Sebi) worked systems are entirely electronic TURN TO PAGE 11
02 TUESDAY, 16 JUNE 2020
MUMBAI
PLAIN
FACTS

CURBS HIT URBAN POOR THE HARDEST

At least 30% of India’s urban population may deplete their lifetime savings by the end of June and would find it difficult to meet essential consumption
Ganesh Rao, Praveen Ravi & m MINT GRAPHITI Chart 2a
fell by 66%. These scenarios Chart 1a
Vishnu Padmanabhan are based on different studies Urban poor spend much more on essentials
A significant share of urban population is Monthly per capita expenditure for each percentile (in )
that all report income losses
fast running out of savings...

I
n the best of times, India’s within these ranges. Percentile / Rural-Urban
Share of households with no savings (% of urban households)
poor lead a fragile exis- Taking a moderate scenario Essential
tence but in the worst of of incomes falling by 62% in 30 Rural
10th Non-essentials
times, their situation urban areas and 50% in rural Worst case Urban and taxes
becomes extremely pre- areas, close to 92 million urban Moderate case
carious. The lockdown over Indians (20% of the urban pop- Rural
20
20th
the past few months has dis- ulation) and 89 million rural Urban
comfited everyone, but it has Indians (10% of the rural popu-
Rural
hit the urban poor the hardest. lation) ran out of savings to Best case 30th
Measuring vulnerability fund essential consumption 10 Urban
accurately is difficult, but an after the first 21-day lockdown. Rural
analysis based on data from Given the government’s 40th
official sources suggests that support to farmers and Urban
even in the most optimistic quicker reopening of the 0 Rural
scenario, close to 30% of economy in rural areas, we Day 0 Day 21 Day 40 Day 54 Day 68 Day 75 Day 82 50th
India’s urban population could estimate rural Indians would Residual savings are calculated after accounting for consumption on essential items (like food and fuel) Urban
and loss in incomes from the lockdown. In the best-case scenario, incomes for the poorest 50% are
be out of savings and unable to be able to cover essential con- estimated to fall by 67% in the first phase of the lockdown and 27% by the end of the lockdown. In the 0 500 1,000 1,500 2,000 2,500 3,000
cover essential sumption till worst-case scenario, incomes fall by 100% in the first phase and 67% in the last phase. Essential expenditure includes spending on food, fuel, rent, health and education.
Chart 2b
expenditure by According to a June-end. But in Chart 1b
June-end. In con- survey, 84% of urban India, ...but rural households are more resilient The poor in cities have little savings, and those savings have been depleted
trast, the rural about 139 million Share of households with no savings (% of rural households) Savings of poorest 50 percent households before and after lockdown (in )
households Percentile
poor—though hit suffered a loss Indians would
hard—are rela- still run out of sav- 10 10th Savings
in income since pre-lockdown

RURAL
tively better off ings by the end of 20th
with still some the nationwide this month (see 8
30th Estimated savings
covid lockdown Worst case
savings and wel- charts 1a and 1b). 40th at June-end
6
fare support to These esti- 50th
fall back on. mates are based Moderate case
4
According to a survey, 84% on inflation-adjusted con- 10th
URBAN
of households suffered a loss in sumption data from the 2
20th
income since the lockdown. As National Sample Survey (NSS) Best case 30th
incomes fell, Indians had to on Household Consumer 0 40th
rely more on their savings to Expenditure (2017-18) and sav- Day 0 Day 21 Day 40 Day 54 Day 68 Day 75 Day 82 50th 10,897
cover essential expenditure. ings data from the 2013 All Residual savings are calculated after accounting for consumption on essential items (like food and fuel) and
But for the poorest in cities, India Debt and Investment loss in incomes from the lockdown. In the best-case scenario, incomes for the poorest 50% are estimated to -2,000 0 2,000 4,000 6,000 8,000
fall by 48% in the first phase of the lockdown and 21% by the end of the lockdown. In the worst-case scenario,
these savings rapidly dried up. Survey (AIDIS). Both datasets incomes fall by 80% in the first phase and 53% in the last phase.
The savings here only includes assets that are easily liquidated
(so doesn't include assets like real estate) Source: NSS 2017-18, AIDIS 2013, RBI, Authors' calculations
To estimate how quickly sav- present the latest official
AHMED RAZA KHAN/MINT
ings are running out, we con- accounts of consumption and
sider different scenarios of savings at the national level. ernment support (both in-kind parts but still spend much urban households between the PDS and cash transfers. rural households, the govern- been critical in preventing the
income losses for the poorest Population figures are based and DBT), and taking into more on essentials. Compar- the fourth and fifth urban dec- There have been well-docu- ment support includes subsi- rural poor from entering desti-
50% (rural and urban sepa- on World Bank projections. account the income shock. ing pre-lockdown savings to iles, savings fell by 37% during mented issues in implementa- dized cereals through the PDS tution. The national figures
rately) during the lockdown. We generate measures of Poor urban Indians have the estimated balance at June- the lockdown. Little wonder tion. But in our analysis, we and the ₹500 cash transfer per however mask significant
For instance, in the worst-case vulnerability by calculating been hit harder because they end shows that the bottom then that the lockdown trig- assume that all the poor (poor- month to women with Jan state-level variations, given
scenario, we assume incomes how much of the monthly spend much more on essen- 30% of urban households gered such an exodus from cit- est 50% of the population) Dhan accounts. But rural that lockdown and relief meas-
in cities fell by an average of essential consumption (which tials while having much would have to either cut down ies (see charts 2a and 2b). receive the central govern- households got additional ures have varied significantly
82% across the three phases of includes spending on food, smaller savings to fall back on. essential expenditure or bor- The rural poor have been ment’s support to arrive at support through an advance across states.
lockdown, while in rural India, health, rent, education, power Data suggests that the poorest row to cover it. Even for oth- less affected because they have conservative estimates of payment of ₹2,000 under the The authors are development
which was less affected by the and cooking gas) can be cov- 20% in cities have lower sav- ers, there has been a signifi- seen some amount of govern- income and consumption PM Kisan scheme. We find this and public policy professionals.
curbs, we assume that incomes ered by existing savings, gov- ings than their rural counter- cant erosion of savings. For ment support such as help via shocks. For both urban and government support may have feedback@livemint.com

m POLITICAL TWEET DASHBOARD Contact-tracing apps are weak on privacy

Who are the most influential Indian political leaders on Twitter? How active were they last week? What resonated with their Sneha Alexander
followers the most? Presenting the Mint dashboard of Twitter activity, which uses data extracted from the micro-blogging
meant for real-time alerts and
website to answer these questions for 20 most followed leaders across four categories in the political firmament
sneha.a@livemint.com monitoring isolation and quar-
MUMBAI antine through location-based
Tweets and retweets Followers (in million) tracking.

G
Most retweeted Last Weekly Last Weekly overnments across the Six Indian apps were part of
Politician Party topic week change week change world have turned to the study, including the ones
mobile apps for con- released by the governments
MEMBERS OF PARLIAMENT - TREASURY
tact-tracing. However, a study of West Bengal, Chhattisgarh,
NARENDRA MODI Increase in population of Asiatic lions in Gujarat 23 -59.6% 58.40 0.5%
BJP in the Nature journal, based on and Punjab. The central gov-
@narendramodi
the analysis of 50 such apps on ernment’s Aarogya Setu app
AMIT SHAH* PM on increase in population of lions in Gujarat 54 74.2% 20.80 1.0%
BJP Google Play Store, reveals that was not part of the study.
@amitshah
several of them do not ensure Out of the 50 apps, 48%
RAJNATH SINGH the privacy of were meant to be
BJP Ghalib's verse to deflect Rahul Gandhi’s criticism on China 22 15.8% 17.40 0.6%
@rajnathsingh
users’ data.
SMRITI IRANI The research-
m SNAP FACT amation, tool for infor-
34% for The lack of privacy checks on government covid-19 apps across
BJP Rajnath Singh, on deflecting criticism from Rahul Gandhi 217 -45.9% 11.11 0.0%
@smritiirani ers, Tanusree tracking, 10% for the world could pave the way for violation of civil liberties. AP
SUBRAMANIAN SWAMY Sharma and Masooda Bashir, assessment of infection status,
BJP Congratulating the UP CM on handling of covid situation 230 -22.3% 9.11 0.0%
@Swamy39 found that 30 of the 50 apps and 8% for scientific research. is inevitable in the current sit- way to future violation of civil
MEMBERS OF PARLIAMENT - OPPOSITION demand access to phone fea- Of the 50 apps, 20 were uation, but it is equally impor- liberties, the authors say.
RAHUL GANDHI* tures, such as contacts, photos, built by governments and tant to draw a framework that They cite the example of the
INC Graphic on covid cases since the start of lockdown 13 0.0% 14.60 0.7% call information, and audio other official sources. governs data privacy, the September 2001 terror attacks
@RahulGandhi
settings. Only 16 apps promise A major concern is how the researchers say. in the US to say that it is hard to
SHASHI THAROOR Native Americans singing near a fallen statue 94 -36.5% 7.57 0.0%
INC anonymity and encryption of apps could use this data after The use of technology to regain lost liberties.
@ShashiTharoor
personal data and say that they the pandemic. This includes save lives in the face of the Also read: Use of apps in the
KAPIL SIBAL Questioning the Centre on declining economic growth 6 0.0% 2.51 0.0% will use the information only risks of surveillance by gov- pandemic is justifiable, but covid-19 response and the loss of
INC
@KapilSibal
in an aggregated format. ernments. without transparency and privacy protection
SHARAD PAWAR Touring Konkan to assess damage by Cyclone Nisarga 35 34.6% 1.77 0.0% Most of these apps are Disease-related surveillance accountability, it could give (go.nature.com/2YyPlk5).
@PawarSpeaks NCP

DEREK O’ BRIEN TMC Mamata Banerjee on launch of IT jobs portal 67 31.4% 1.21 0.0%
@derekobrienmp
CHIEF MINISTERS
YOGI ADITYANATH Announcing sops under scheme for child labourers 12 -76.5% 9.90 1.0%
@myogiadityanath
BJP m NEWS IN NUMBERS CORRECTIONS AND
NITISH KUMAR*
JD(U) Review of Bihar’s preparations to prevent floods 4 -63.6% 5.70 0.7% CLARIFICATIONS
REUTERS
@NitishKumar
11,964 200 Mint welcomes comments,
MAMATA BANERJEE TMC Launch of jobs portal for IT professionals in Bengal 6 -33.3% 4.31 0.0% What is it? The number of coronavirus What is it? The suggestions or complaints
@MamataOfficial cases in Ghana as of 15 June. number of games about errors.
VIJAY RUPANI BJP PM on the increase in population of Asiatic lions 31 -61.3% 2.67 0.0% Why is it important? Fifteen days ago, Real Madrid has
@vijayrupanibjp Readers can alert the
the African country with a population of played so far with
newsroom to any errors in the
UDDHAV THACKERAY SHS Shiv Sena, on the helpline for people in Konkan 1 -88.9% 0.66 4.8% 29.8 million had 8,070 infections. As the Zinedine Zidane paper by emailing us, with your
@OfficeofUT country relaxes restrictions on people’s as the head coach. full name and address to
PARTY CHIEFS movement and gatherings, it has made Why is it feedback@livemint.com.
ARVIND KEJRIWAL face masks compulsory in public. In a important? The
AAP Challenge posed for Delhi covid patients by L-G order 16 -48.4% 19.40 0.5% televised address, President Nana Akufo- 200 games include It is our policy to promptly
@ArvindKejriwal respond to all complaints.
AKHILESH YADAV
Addo said the virus was still spreading, 149 in Zidane’s first stint (2016-18), during Readers dissatisfied with the
SP Criticizing BJP for focusing on polls, and not on covid 17 13.3% 12.10 0.8% and not using masks would be an offence. which the club won 69.80% of the matches
@yadavakhilesh response or concerned about
Tell me more: Ghana joins at least 50 played. His second hasn’t been that great. Mint’s journalistic integrity may
CHANDRABABU NAIDU Wishing actor-politician Nandamuri Balakrishna  34 -33.3% 4.70 0.0%
TDP other countries that have mandated The team has played 51 games, winning 28 write directly to the editor by
@ncbn sending an email to
masks in public, even though some of of them, or a win percentage of 54.90%.
NAVEEN PATNAIK ‘Bande Utkala Janani’ chosen as Odisha state song 15 50.0% 2.82 0.0% them require citizens to wear them only in Tell me more: No head coach in the past asktheeditor@livemint.com
BJD
@Naveen_Odisha
specific places such as public transport five years has managed to match the Mint’s journalistic Code of
KT RAMA RAO Issue of electricity bills with state power minister 34 78.9% 2.40 1.3% systems, malls and religious facilities. performance of the previous five coaches.
TRS Conduct that governs our
@KTRTRS newsroom is available at
*Appear in multiple categories, included in most relevant role. www.livemint.com
Data for the week to midnight of 13 June Data compiled by howindialives.com Data and text compiled by Howindialives howindialives.com is a search engine for public data

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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 DINESH MITTAL (Interim) ON BEHALF OF HT MEDIA LTD, 9th Floor, Tower 3, Indiabulls Finance Centre, Senapati Bapat Marg, Elphinstone Road (West), Mumbai-400013
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RNI Registration MAHENG/2018/76720; 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 letters@livemint.com. ©2020 HT Media Ltd All Rights Reserved
 NEWS TUESDAY, 16 JUNE 2020
MUMBAI 03

GAIL, Petronet join India’s Unilever to

mint

SHORT TAKES invest €1 bn in

climate fund,
Jaishankar to meet Chinese and
Russian foreign ministers on 22 Jun
New Delhi: External affairs minister S. Jaishankar is expected
to join his Chinese and Russian counterparts at a virtual confer-
first gas trading platform targets net-zero
emission by ’39
ence of the Russia-India-China trilateral on 22 June, against the
backdrop of a tense border standoff between Indian and Chinese
militaries, diplomatic officials said on Monday. The meeting, Kalpana Pathak
being convened at the initiative of Russia, is expected to deliber- The exchange will revive stranded gas-fuelled power projects, reduce fertilizer prices kalpana.p@livemint.com
ate on a range of key issues like ways to collectively tackle the cor- MUMBAI
onavirus pandemic and address common security threats, they
Kalpana Pathak & Utpal Bhaskar

C
said. PTI onsumer goods major
MUMBAI/NEW DELHI Unilever is set to invest
€1 billion in a climate

L
Energy company BP takes a iquefied natural gas (LNG) fund, which would back pro-
terminal owners, state- jects ranging from landscape
$17.5 bn hit as demand slides Facebook run GAIL (India) Ltd and restoration and carbon cap-
BLOOMBERG would
rather cut
Petronet LNG Ltd (PLL), ture, to wildlife protection and
news have joined India’s first water preservation, over the
content natural gas exchange that went next decade.
then share online on Monday, said Rajesh Unilever Plc. said it will
revenue
with media
Kumar Mediratta, director, Indian achieve net-zero emissions
Gas Exchange. from all its products by 2039, 11
bit.ly/3fnVkPF
With others such as Manikaran years ahead of the Paris Agree-
Power, Torrent Power and Adani ment deadline.
Gas on board, the exchange will “Climate change, nature
help revive stranded gas fuelled degradation, biodiversity
power projects and reduce fertil- decline, water scarcity—all are
izer prices and subsidy, Mediratta interconnected, and we must
said. address them all simultane-
London: Energy company BP is writing off as much as $17.5 The other members and clients ously. In doing so, we must also
billion from its oil and gas assets and will review its plans to of the exchange are Geeta Power, recognize that the climate cri-
develop oil wells as the covid-19 pandemic accelerates its GMR Group, Piramal Glass, Asahi Manikaran Power, Torrent Power, Adani Gas, GMR Group, Piramal Glass, Gujarat State Fertilizers & Chemicals Ltd sis is not only an environmental
goal of decreasing its reliance on fossil fuels. Chief execu- Glass, Gujarat State Fertilizers & are some of the other members and clients of the exchange. REUTERS emergency; it also has a terrible
tive Bernard Looney said the pandemic is forcing the com- Chemicals Ltd, Gujarat Narmada impact on lives and livelihoods.
pany to face the long-term impact on the economy, Valley Fertilizers & Chemicals, weekly, weekday, fortnightly and cant driver of demand for natural electricity is one and gas is the We, therefore, have a responsi-
together with the likelihood of weaker demand for a longer Krishak Bharati Cooperative Ltd, monthly, at three physical hubs in gas post 2021. Being the biggest other and there could be many bility to help tackle the crisis: As
period of time. REUTERS Saint Gobain, Kajaria Ceramics, Dahej, Hazira in Gujarat, and emitter of greenhouse gases after similar players of energy baskets,” a business, and through direct
Bhagyanagar Gas, Maharashtra Odoru in Andhra Pradesh to begin the US and China, India aims to said Rajiv Srivastava, managing action by our brands,” said Uni-
Natural Gas Ltd, Haryana City Gas, with while it plans to add more achieve its emission reduction director and chief executive offi- lever CEO Alan Jope.
In landmark ruling, US SC bars and Gujarat Borosil. cer, IEX. Unilever’s target is to have
discrimination against LGBT staff The natural gas trading CREATION OF GAS-BASED ECONOMY The government has zero carbon emissions from its
platform, which has been been pushing for a gas- own operations, and to halve
Washington: The US supreme court on Monday delivered a set up by Indian Energy SET up by the Indian THE Exchange will INDIA consumes IEX desires to play in based economy. Gas the greenhouse gas footprint of
watershed victory for LGBT rights and a defeat for President Exchange, will also help Energy Exchange, the offer six products
platform will help in beginning from
around 45 mmscmd
of gas, and is likely to
the overall energy
basket of the
accounts for around 6.2% its products across the value
Donald Trump’s administration by ruling that a longstanding discover market prices of discovering the day-ahead market drive natural gas country, which is of India’s primary energy chain by 2030. “In response to
federal law barring workplace discrimination protects gay and gas on the exchange, market price of gas to forward contracts demand post 2021 beyond electricity mix against the global aver- the scale and urgency of the cli-
transgender employees. The landmark 6-3 ruling represented launched by petroleum age of 24%. The govern- mate crisis, we are additionally
the biggest moment for LGBT rights in the United States since minister Dharmendra ment plans to increase this committing to net zero emis-
the Supreme Court legalized same-sex marriage nationwide in Pradhan. hubs soon,” the company said. commitments through the use of to 15% by 2030. India’s gas sions from all products by 2039
2015. REUTERS “The Indian Gas Exchange will India consumes around 145 mil- natural gas and green fuel. demand is expected to be driven – from the sourcing of the
offer six market products begin- lion standard cubic metres a day “We as IEX desire to play in the by fertilizer, power, city gas distri- materials we use, up to the
ning from day-ahead market and (mmscmd) of gas. India, along with overall energy basket of the coun- bution and steel. point of sale of our products in
Maharashtra govt clinches FDI forward contracts, including daily, China, is expected to be a signifi- try, which is beyond electricity. So, kalpana.p@livemint.com the store,” Unilever said.
deals worth ₹16,000 crore
PTI

JLR sees early signs of revival in key markets It’s hard to predict
FROM PAGE 1
the recovery path:
REUTERS

said that the management is European Technical Center.

looking to refinance existing Balaji said Tata Motors is
Balaji, chief financial officer at debt competitively. Tata looking to cut as much as
Tata Motors. JLR said May sales
rose 4% to 8,068 units from a
year ago in China, where the
Lakshminarayanan Motors had a net debt of ₹6,000 crore in costs in its
₹48,000 crore as of 31 March. domestic business this fiscal.
India’s largest commercial The steps are expected to
Mumbai: Amid an economic crisis arising out of the lock- economy has gradually opened vehicle maker and the owner of help JLR turn cash positive by Goutam Das
down induced by the covid-19 pandemic, Maharashtra gov- after months of restrictions JLR reported a consolidated FY22, while the PV business, goutam.das@livemint.com
ernment on Monday said it has signed agreement for for- aimed at curbing the coronavi- profit of ₹1,117 which was NEW DELHI
eign direct investment worth ₹16,000 crore. CM Uddhav rus pandemic. crore in the year- Sales in the March recently hived off

Thackeray said that small and big industries coming to the “Evoque and Discovery
state will not face any difficulty in setting up their indus- Sport are seeing strong
tries. Thackeray said that in the coming days the state demand; Defender has a sizable
expects to sign FDI agreements worth ₹10,000 crore more. order book of more than
ANIRUDH LASKAR 22,000 units. Meanwhile, our
Read the full story on livemint.com PV (passenger vehicle) portfo-
lio in India with cars such as
Altroz (premium hatchback) is
Tata Power arm to develop a promising and we expect grad-
ual recovery in sales,” he said.
120MW solar project in Gujarat The weak financial perform-
New Delhi : Tata Power on Monday said its subsidiary Tata ance has led the Mumbai-based
Power Renewable Energy Ltd will develop a 120MW solar automaker to unveil major
project for Gujarat Urja Vikas Nigam. “Tata Power announced plans to trim costs in a bid to
that Tata Power Renewable Energy Ltd (TPREL), the company’s stage a recovery. That includes
wholly owned subsidiary, has received a Letter of Award from a near halving of JLR’s capital
Gujarat Urja Vikas Nigam Ltd (GUVNL) on 12 June 2020 to expenditure to £2.5 billion this
develop a 120MW solar project in Gujarat,” it said in a regulatory year as against the original plan
filing on the exchanges. PTI of £4 billion. The India busi-
Cost-cutting at Tata Motors
includes rollback of capex
across JLR and its India biz.
ness will see a 66% cut to ₹1,500
crore for FY21.
“The Tata Motors board is
working on a strong delever-
age plan, which is a strategic
shift to ensure sustainable
businesses going forward. If
any business won’t have long-
term value, we will deleverage
it,” Balaji told reporters. He
A
ago quarter. quarter fell 28% as a separate fter Amur Swaminat-
Sales in the to ₹62,493 crore entity, is esti- han Lakshminarayanan
three months as the pandemic mated to turn cash took over as the manag-
ended 31 March positive by FY23, ing director and chief executive
triggered an
fell 28% to Balaji added. of Tata Communications last
₹62,493 crore as economic crisis Guenter But- October, he made some funda-
the pandemic and worldwide schek, chief exec- mental changes to the way the
related lock- utive and manag- ₹17,000-crore digital infra-
downs triggered ing director, Tata structure company works, pri-
an economic crisis worldwide. Motors, said the “auto industry marily to boost sales and cut Tata Communications’ MD,
Losses soared as the company faced strong headwinds in costs. In an interview, CEO Amur Lakshminarayanan.
wrote off assets from its units . FY20 amid a slowing economy Lakshminarayanan shared his
It made a one-time provision due to multiple factors views on the changing priori- continuity — how they could
of ₹1,419 crore towards impair- —liquidity crisis, high fuel pri- ties of customers and new enable work from home. Not all
ment of its PV business, fol- ces, changes in axle load norms opportunities due to covid-19. enterprises were fully pre-
lowed by ₹777 crore from ven- and BS-VI transition—all lead- Edited excerpts: pared. The results of working
dor contracts and ₹353 crore as ing to weak consumer senti- Can you take us through the from home is pretty obvious.
provision for impairment in ments and subdued demand restructuring exercise the The usage of collaboration soft-
units including Tata Motors across segments.” company has undertaken in ware, of the internet, the con-
recent times? sumption of B2C (business to
From a strategy point of consumer) content went up.
view, we are We had to
making several m INTERVIEW enhance the
shifts. We want capacity of our

DGCA begins probe Petrol, diesel prices hiked for 9th day in a row to be more solutions- and plat- network in a short order of time
forms-oriented rather than to respond. Now, as far as
selling point products. We reversing work from home is

into AirAsia pilot case Utpal Bhaskar

utpal.b@livemint.com
world slowly opening up for
business.
want to serve the customer concerned, that is not going to
more holistically. From an happen in a hurry. In our opin-
organization point of view, we ion, if 90% people are working
NEW DELHI The cost of the Indian bas- want to get our operating from home now, it will come to
ket of crude comprising model right. We are an interna- some kind of an equilib-
Rhik Kundu

airline for flagging serious safe-
rhik.k@livemint.com ty-related violations. Taneja
NEW DELHI accused AirAsia India, a joint
venture between AirAsia Ber-
S
tate-run oil marketing Oman, Dubai and Brent crude tional company. We want to rium—50%-60% will continue
companies in India averaged $56.43 and $69.88 deliver the right experience to work from home. Enter-
raised petrol and diesel per barrel in FY18 and FY19, and, second, get the cost struc- prises will have to re-think
prices for the ninth straight respectively. It was $19.90 in ture right. We are trying to use what this means. How do they

T
he Directorate General of
Civil Aviation (DGCA)
has initiated an enquiry
into AirAsia India after one of
its pilots alleged safety viola-
tions by the airline, the aviation
regulator, said on Monday.
“DGCA has taken note of the
concerns raised by some stake-
holders against a particular air-
line and its approach to safety.
DGCA has already started an
investigation into the issues
flagged and shall take appropri-
ate action based on the out-
come of the said investigation,”
it added.
“We will take action based on
the outcome of the said
enquiry,” said a senior DGCA
official requesting anonymity.
Earlier in the day, Gaurav
Taneja, a pilot with AirAsia
India, alleged on twitter that he
has been suspended from the
had (49%) and Tata Sons (51%),
of violating safety protocols,
which endangered lives of pas-
sengers on board.
However, he didn’t elaborate
on most of his accusations
labelled against his employers.
He said the airline manage-
ment had asked him to work
during his off day on 9 June as
he had taken a sick leave on 7
June. “When I started protest-
ing against this, the chief of
flight safety said in an email
that I report sick and fatigue
frequently. They (manage-
ment) also suggested undergo-
ing lifestyle counselling and
medical,” Taneja said in a video
message on Twitter.
“Sick or fatigue report is a
non punitive policy, which is
documented by the regulator.
This is not followed at the air-
line,” he added.
day on Monday amid a recov-
ery in global fuel prices and
the gradual opening up of the
economy.
After a pause between 16
March and 6 June, petrol and
diesel prices have risen a total
of ₹5 and ₹4.87 per litre,
respectively, since 7 June.
On Monday, the price of
petrol in Delhi rose by 48
paise per litre to₹76.26, while
diesel was raised by 23 paise
to ₹74.26 per litre. Demand
for automobile fuels has dou-
bled in May from April mir-
roring relaxations in lock-
down restrictions that were
first imposed on 25 March.
Retail prices of petrol and
diesel in India track global
prices of the auto fuels, and
not crude, though they are
broadly linked to crude oil
price trends. The three state-
Demand for automobile fuels increased in May mirroring the
relaxations in lockdown restrictions that were first imposed on
25 March.
run OMCs—Indian Oil Corp.
Ltd (IOCL), Bharat Petroleum
Corp. Ltd (BPCL) and Hindu-
stan Petroleum Corp. Ltd
(HPCL)—have however
refrained from raising prices
during national and state
elections.
The international bench-
mark, Brent crude, was trad-
ing at $38.02 per barrel on
Monday, and West Texas
RAMESH PATHANIA/MINT
Intermediate (WTI) was at
$35.07 per barrel at the time
of going to press. While Brent
crude hit a 21-year low, US oil
futures had slumped to nega-
tive territory for the first time
in April with bare demand
from a world under lock-
down, and limited storage
facilities, triggering a wave of
selling by traders. Oil prices
have stabilised since with the
April and $30.60 in May,
according to data from the
Petroleum Planning and
Analysis Cell. The price was at
$40.09 a barrel on 11 June.
Following the easing of the
world’s strictest lockdown
measures on 1 June, India’s
power and energy demand,
which had nosedived, is also
slowly getting to the pre-lock-
down levels.
Energy consumption, espe-
cially electricity and refinery
products, is typically linked to
the overall demand in an
economy.
Domestic cooking gas pri-
ces also saw an increase in
June. Effective 1 June, the
price of non-subsidized lique-
fied petroleum gas (LPG) cyl-
inder in Delhi was increased
by ₹11.50 by Indane-the LPG
brand of Indian Oil.
the India base much more give more industrial strength,
effectively. So, some of the secure, digital experience? Sec-
international roles have shifted ond, even the B2C customers
to India. We started that move now have to re-think. Retailers
in November-December. won’t get the same levels of
How has selling pivoted footfall. They have to sell prod-
considering the covid-19 sit- ucts through e-commerce a lot
uation? better. Customers are looking
All the customer communi- for security, but also scalable
cation is happening remotely solutions.
through video workshops and What sort of recovery do
video meetings. To that extent, you see in the market? Will
both customers and we are it be a V or an U?
handicapped. When it comes to It would be more contingent
deployment, there are some on how the health situation,
zero-touch implementations. how covid cases rise or fall.
But in traditional solutions, That would determine the
where you have to install client recovery path for many indus-
site equipment, those are being tries. There is a second wave of
hampered at the moment. cases coming in some of the
What has been the response countries that had seen stabil-
of your clients to the pan- ity. This seems to be unfamiliar
demic? territory and it would be
In the early days of covid, slightly hard to predict the
customers wanted business recovery path.
04 TUESDAY, 16 JUNE 2020
MUMBAI

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33,228.80 -1.63 9,813.70 -1.60 8,086.45 -1.34 24,793.30 -0.90 10,005.80 -1.50 12,454.95 -1.15 11,844.85 0.00
PREVIOUS CLOSE OPEN PREVIOUS CLOSE OPEN PREVIOUS CLOSE OPEN PREVIOUS CLOSE OPEN PREVIOUS CLOSE OPEN PREVIOUS CLOSE OPEN PREVIOUS CLOSE OPEN

33,780.89 33,670.55 9,972.90 9,919.35 8,196.40 8,171.75 25,018.75 25,053.30 10,158.30 10,113.40 12,600.15 12,639.91 11,845.27 11,901.08
HIGH LOW HIGH LOW HIGH LOW HIGH LOW HIGH LOW HIGH LOW HIGH LOW

33,670.55 32,923.74 9,943.35 9,726.35 8,196.40 8,030.40 25,203.35 24,698.50 10,141.15 9,924.10 12,684.16 12,433.29 11,984.56 11,807.57

Lower costs bolster Hindalco’s Q4

mint

SHORT TAKES
Yield turn
Bond yield fell in June, ending a surge that
began that month.

0
10-year German bond yields
numbers; FY21 growth may falter
-0.1 Clifford Alvares As a result, domestic standalone at full capacity during the lockdown.
-0.2
Second wave fears
clifford.a@livemint.com Ebitda expanded by about 13% q-o-q This will limit production loss in Cost factor Ebitda ( cr) (Left-hand scale) Ebitda Margin(%)
Lockdowns began to lift While total operating 1800 18
in Q4. Ebitda is earnings before inter-FY21.

H
-0.3 1,574
indalco Industries Ltd est, tax, depreciation and amortiza- A slack in domestic demand con- income shrunk on 1,733
-0.4 results were marginally tion. tinues to hamper prospects. As such, lower volumes in Q4, 1500 15
Gold prices ahead of the Street In the coming quarters, input costs the company has turned to exports to Hindalco’s India
-0.5
business saw 15.7
-0.48 -0.44 today fall
expectations, despite are likely to remain tepid as prices ofboost revenue. The management said a sharp improvement 1200 12
-0.6 ₹600, silver 13.9
tumbles marginal dip in revenue. aluminium supplies have come off that it exports about 80% of its pro- in margins due to
-0.7 ₹1,500 in The Q4 figures came on the back of significantly. duction.
20 Apr 12 Jun significant cost 900 9
two days strong improvement in domestic “We expect input costs to stay To conserve cash, Hindalco has cut reduction.
Source: Bloomberg
bit.ly/37tS8PK operations, shored up back on capital
600 6
SARVESH KUMAR SHARMA/MINT by a lower cost of pro- SAVED BY COST expenditure by about
duction of aluminium. ₹800 crore in FY21.
The stock held flat, REVENUES were INPUT costs may SMELTERS working However, its Utkal Alu- 300 3
Conundrum among bond though, in trade on marginally lower in remain tepid for near at full capacity during mina expansion is on
Q4 , but fall in input term as aluminium the lockdown will
investors over safest asset Monday, despite a costs shored up prices have come off limit production loss course and is expected
Source: Emkay Global
0
Q4 Q4
0
steep fall in the Hindalco’s Ebitda much amid covid of Hindalco in FY21 to be commissioned in Financial Services FY19 FY20
The rally in German bonds in the past week has broader market. the last quarter. This
SATISH KUMAR/MINT
reminded fund managers why betting against Revenue was mar- will help reduce pro-
Europe’s safest assets is a risky business. The debt ginally lower, by about 2% quarter- benign for the near term. Aluminium duction costs further. the debt profile of the company, but it depends, though, on how aluminium
slid last month as economies showed signs of on-quarter (q-o-q) in Q4, because of has been strengthening owing to an Hindalco’s consolidated net-debt- should be able to service the debt prices move.
recovering from the ravages of the coronavirus lower prices. apparent recovery in China and fears to-Ebitda, which had increased by comfortably. Hindalco’s stock nosedived by
epidemic, leading some analysts to predict yields However, a significant reduction in of covid-19’s impact on aluminium about 300 basis points to 2.7 times in “Hindalco appears not only much about 60% in 2020 till March on cov-
would soon turn positive after a year below zero. input costs boosted Hindalco’s supplies in South America, which FY20, is a worry. better placed than sector peers in lev- id-19 selloff. But it clawed back and is
Instead, worries over a second wave led investors Ebitda. contribute 1.4-1.7% to global produc- The increase was primarily erage ratios, as its profitable out-of- now down 33% this year. Further
to dump stocks and turn to havens such as bunds. The cost of production of alumin- tion,” analysts at Emkay Global because of higher capex in Novelis India business favours it since domes- gains may be muted because of an
Now, funds are in a quandary. An economic ium fell by a substantial 5% sequen- Financial Services said in a note. Inc. and the domestic business. Aleris tic demand is sketchy at best,” said expected dip in earnings in FY21 as a
recovery, increased German borrowing and tially, said analysts at ICICI Securities. The firm’s smelters were operating Inc.’s acquisition will further add to analysts at ICICI Securities. Much result of the slowdown.
regional stimulus are all factors that suggest
higher bund yields down the road. But those
shorting bunds in the past have been badly
burned, and for some, German debt just isn’t
worth touching. BLOOMBERG

Biotech shares soar, leaving

some investors wary
Health-care firms that are trying to develop treat-
ments or vaccines to fight covid-19 have produced
some of the best stock market performances in
Europe this year. Odds are, investors will end up
disappointed. The urgent need to tame the virus
that has crippled economies worldwide has
For policymakers, WPI deflation Bhel closes FY20 on a miserable note;
is another warning of a recession FY21 does not look promising either
Aparna Iyer Pallavi Pengonda Covid-19 led to around ₹4,000 quarter, activity levels are likely to
Early warnings
aparna.i@livemint.com pallavi.p@livemint.com crore estimated revenue loss. Exe- drop due to the monsoon. Eventu-
The wholesale price index showed a drop in May, showing signs
of deflation as most components indicated a fall in prices. cution was also impacted owing to ally, some meaningful recovery can

spurred a flurry of companies to announce
research into a vaccine or treatments. Investors
have piled into those companies’ stocks, driving
fourfold gains in small-caps such as Tiziana Life
Sciences Plc and Bergenbio ASA. Many of the
companies have taken advantage of the surges to
sell new shares. BLOOMBERG
Positive attitude
The Bank of England (BoE) has so far resisted
cutting the interest rates below zero.
1
BoE benchmark rate ECB deposit rate
0.8
0.6 0.5
0.4
0.2
0.3
0 index for manufactured prod- power prices, too, fell from a The Central Statistical Organi-
-0.2
-0.4
-0.6
30 Sep 2009
Source: Bank of England, European Central Bank (ECB)
SARVESH KUMAR SHARMA/MINT
BoE gets negative rates
advantage as others go first
The Bank of England (BoE) has one big advantage
when it comes to the contentious topic of negative
interest rates: it’s no pioneer. Experiences else-
where provide the UK central bank with options
on how to navigate one of the boldest monetary
experiments in the 21st century. It’s long been
controversial in the euro area, where banks, poli-
ticians and savers have criticized it. And while
meant to be temporary, the European Central
Bank’s record shows that reversing course isn’t
easy. All that makes BoE governor Andrew Bailey
reluctant to cut the key rate—now at 0.1%—below
zero, and he’s got other policy options that he can
pursue first. But he also won’t rule it out. Given
the UK is facing the worst slump in centuries, plus
a potentially hard Brexit hitting the recovery in
2021, Morgan Stanley and Barclays say he may
ultimately have to go there. BLOOMBERG
Next US jobs report may
be even more confusing
If you thought the US jobs report for May was con-
fusing, June’s could be even worse. The US
Bureau of Labor Statistics, which publishes the
widely-watched monthly figures on the world’s
largest economy, is taking additional steps to
solve data-collection issues that since March have
resulted in an official unemployment rate that
appears to understate the true scale of joblessness.
Fixing one problem may create another, though.
The official June jobless rate would be tricky to
compare with May’s. And if the unemployed are
counted properly, it could very well result in an
increase in the official rate from the previous
month—even if the reality is that joblessness fell
in June, as many economists expect. BLOOMBERG
T I
he first reading of the Figures (in %)
t’s not as if investor optimism was supply chain disruptions on be expected from the second half of
January February March April May
wholesale price index running high on Bharat Heavy imports even before the covid-19 FY21. But it will hardly be a smooth
Wholesale price
(WPI) inflation since the index inflation Electricals Ltd’s (Bhel) stock lockdown in March. Overall, Bhel ride. Labour availability issues
lockdown shows a grim pic- Food
prior to the March quarter results. made a loss of about ₹562 crore at could hurt execution.
ture. WPI measures prices at articles The shares had already declined by the earnings before Kotak Institutional
the producer level and is a good Crude petroleum a third from their year-to-date interest, tax, deprecia- The March Equities said: “Against
& natural gas
gauge of the pricing power of highs in January. High receivables tion and amortization quarter the requirement of
companies. Fuel &
power
and execution challenges were key (Ebitda) level. In last performance ₹8,000 crore-₹9,000
At a -3.21%, this is the worst concerns surrounding the state- year’s March quarter, showed covid’s crore of fixed costs and
Manufactured
print in roughly five years and owned capital goods company. the company’s Ebitda
products
impact, as Bhel’s ₹500 crore-₹1,000
far lower than the -1.2% -50 -40 -30 -20 -10 0 10 20 On Monday, the stock lost stood at ₹1,385 crore. crore of maintenance
expected by economists. To be Note: Data for April was not released for headline WPI and manufactured another 7% following Bhel’s utterly The fact that the revenue halved to capex/dividend pay-
sure, the deflation at the pro- products inflation discouraging numbers announced receivables were at ₹5,049 crore out, odds are in favour
Source: CMIE
ducer level was anticipated. on Saturday. The standalone about ₹36,500 crore, of FY2021 being
But the subgroups in WPI SATISH KUMAR/MINT reported net loss for the quarter was or more than three another year of cash
shows some segments saw petroleum and natural gas, As the lockdown had also at ₹1,534 crore. This weighed on its times Bhel’s market capitalization, loss.” The 4QFY20 gross margin
steep price cuts, probably to which showed a fall of 46.21%, a made data collection a chal- 2019-20 performance, with Bhel did not help either. profile would require a meaningful
shed inventory, as the lock- fallout of the crash in global pri- lenge for ministries, the WPI reporting a net loss of ₹1,473 crore. After a miserable end to FY20, revenue growth to obviate such an
down was eased in May. The ces. By extension, fuel and release was suspended in April. Of course, the March quarter per- outlook for this financial year is event, added Kotak’s analysts in a
0.1
formance shows covid-19’s impact subdued as well. The lockdown report on 14 June.
ucts fell 0.42%. year ago. Food, which has a zation (CSO) has not released with Bhel’s revenue halving to would weigh on its June quarter Meanwhile, last month, in a bid
-0.5 Details of subgroups show high weightage in the index, the headline retail inflation ₹5,049 crore, lower than estimates. performance. In the September to put its idle assets to work, Bhel
Indians mostly showed an infla- print for two months now. had sought global partners who
12 Jun 2020 shopped for The biggest tion print of 1.13%. Inflation at subgroup levels has
No respite wish to manufacture in India. This
essentials during contributor to Does this mean been made public. move is expected to help leverage
Bhel's receivables remain high despite a marginal decline seen in Q4FY20.
the 70-day lock- WPI deflation was Indians would get What they show is that defla- assets and unlock shareholder value
Receivables (in  crore)
down and even crude, petroleum deep discounts tion at the wholesale level may 38,600
in the long run.
when it was pro- once they restart not necessarily translate into “We believe near-term earnings
and natural gas, 38,100
gressively relaxed
which showed a
d i s c r e t i o n a r y deflation at the retail level. 37,900 will remain patchy and are inconse-
from April. Food spending? Histori- Should policymakers then 37,600 quential to the broader theme of
processing, phar- fall of 46.21% cally, wholesale respond to WPI deflation at all? working capital release and asset
maceuticals and and retail inflation To be sure, WPI has long monetization/diversification
36,500
tobacco products trajectories have stopped being the nominal through partnerships,” said Emkay
showed inflation, though lower diverged. Ergo, WPI deflation anchor for monetary policy as Global Financial Services Ltd ana-
than before. Textiles, leather may not necessarily translate the central bank adopted CPI in lysts in a note on 14 June.
and other non-essential items into deflation at the retail level. 2014. Nevertheless, with CPI In short, in the near term, there
slipped into deflation. In 2014-15, WPI showed defla- data hard to come by, WPI data Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 are fewer reasons for the stock to
The biggest contributor to tion, but the consumer price can give some early warnings Source: Company data, ICICI Securities
reverse its underperformance seen
WPI deflation was crude, index (CPI) indicated inflation. for policymaking. over the last one year.
SARVESH KUMAR SHARMA/MINT
Eicher endures a weak Q4 but Royal Enfield sales recovery is a silver lining
R. Sree Ram May due to the covid-19-induced dence,” Siddhartha Lal, managing still facing supply chain head-
sreeram@livemint.com shutdown. Losing strength director, Eicher Motors, said, add- winds and will take some time to
“While Royal Enfield has been Eicher Motors Ebitda margin (in %) ing that the recovery is led by return to full capacity,” Dolat Cap-
R
oyal Enfield maker Eicher facing demand concerns since last profit margins northern and southern states. ital Market Pvt. Ltd said.
31.8 30.3
Motors Ltd reported weak 12-15 months, inability of the com- dropped to 29 “There would be an element of Many fear that the economic
March quarter results, but pany to maintain the margin pro- lowest in
27.4 25.8
24.7 25 pent-up demand and Eicher slowdown and pressure on con-
said motorcycle sales were wit- file comes as a negative surprise,” recent years, 19.6 acknowledged that sustainability sumer income will impact discre-
hit by negative
nessing a good recovery. The JM Financial Institutional Securi- operating
needs to be seen, but we find the tionary spends.
company’s revenue and operating ties Ltd said in a note. leverage. initial trend encouraging,” ana- While sales trends in the com-
earnings fell 12-37%, steeper than Volumes for trucks and buses lysts at Jefferies India Pvt. Ltd said ing months will provide the cru-
Street estimates. Operating profit under VE Commercial Vehicles in a note. The company’s cus- cial insights, the company is
margins dropped 7.8 percentage Ltd—the joint venture with Volvo Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 tomer support campaign provid- maintaining its focus on the
FY19 FY20
points to 19.6%, the lowest in Group—dropped 45% from the ing extended warranty and acces- expansion of its product portfolio
Source: company, Motilal Oswal Financial Services
recent years. year-ago quarter. Consequently, sories may also help sales. and market reach. It added 600
PARAS JAIN/MINT
Negative operating leverage the commercial vehicles unit Capacity utilization of manu- “studio” stores last year and plans
due to low sales volumes and posted a loss of ₹26 crore. With bile sector and low volumes can now operational and initial facturing plants is still low at 40%. to add a similar number of stores
expenses on vehicle recalls the covid-19 outbreak restricting pull down Eicher Motors’ earn- demand trends are encouraging Normalization of vendor opera- in the current fiscal year. Studio
adversely impacted its perform- trade, and schools and colleges ings in FY21. That said, easing with bookings back at pre-cov- tions and logistics, too, will be stores are smaller than large-for-
ance. Royal Enfield’s manufactur- shut, the sales outlook for buses lockdown restrictions are provid- id-19 levels. “As the lockdown is important. “These are early mat stores. It plans to launch one
ing and retail operations were sus- and trucks remains dim. ing a ray of hope. More than 90% easing out, we see strong initial trends and sustainability of the new product in the next quarter
pended between 23 March and 5 The slowdown in the automo- of Royal Enfield’s retail network is customer interest and confi- recovery is the key. Production is (Q2 FY21).

Mark to Market writers do not have positions in the companies they have discussed here
06 TUESDAY, 16 JUNE 2020
MUMBAI CORPORATE
VIRUS EFFECT
Govt asks states to engage Corporate India is
busy preparing a
pvt sector on health infra covid-ready army
Sohini Sen
sohini.s@livemint.com
Fix reasonable rates, publicize them, says ministry amid reports of shortage, overcharging NEW DELHI

We have predicted over 3,500
hotspots in the country, said
Amitabh Kant.
W
hen the lockdown
Neetu Chandra Sharma was first announced
neetu.s@livemint.com on the evening of 22
PTI NEW DELHI March, over 10,000 employ-
ees were undergoing training

A
Aarogya Setu mid reports of an emerg-
ing shortage of healthcare
at Infosys’ Mysuru campus.
The company had to immedi-
infrastructure and alleged ately come up with a plan to
has flagged overcharging by private
healthcare providers, the
ensure the staff reached their
homes safely and quickly. So,
likely risk Union health ministry Monday asked
states and union territories to engage
within hours, a number of
teams were formed to handle
with private entities to facilitate the situation.
to 140,000 enhanced bed availability and critical
care health facilities, and ensure fair
“We looked at multiple IT services major Infosys
aspects. The core team con- has formed a rapid response
people: Kant and transparent charges for services.
In this regard, some states have
ducted a briefing for all the team for the management
educators on the methodology of covid-19 cases. BLOOMBERG
already taken an initiative, it said, add- for evacuation and continua-
ing they have reached agreements with tion of training. An HR help- overlooked some small detail.
Gireesh Chandra Prasad & the private sector on reasonable rates desk was set up to provide sup- Like, what do you do with the
Neetu Chandra Sharma and arrangements to provide critical port round the clock. Teams umbrella and windcheater
care for in-patient admissions. had to closely work with multi- that people will bring to office
NEW DELHI The government said that in order to ple stakeholders to ensure pol- – do we let them take it to their
ensure that patients receive prompt, icies were amended and cabins? Or should we keep

C
ontact tracing applica-
tion Aarogya Setu
launched early in April
has so far alerted 140,000 peo-
ple of potential risk of infection
through bluetooth contact
tracing and has shown high
efficacy in flagging the require-
ment to get tested for covid-19,
said Amitabh Kant, chief exec-
utive officer of federal policy
think tank NITI Aayog.
good quality and care at reasonable streamlined according to the them all outside in a common
rates, it has been suggested to states to requirements,” said Richard area?” said Hitesh Koli, head
have consultations with local private Lobo, executive vice-presi- (environment health and
healthcare providers and arrive at rea- dent, head (HR), Infosys Ltd. safety), VIP Industries.
sonable rates, while factoring in cost A banquet hall, which usually plays host to weddings, has been converted into a makeshift covid hospital in New Delhi. AP While many companies are Infosys has formed a rapid
elements for personal safety equip- still figuring out ways to tackle response team for the manage-
ment for healthcare providers. The antigen test kit is developed by “Sensitivity of the test (i.e. ability to patients, elderly patients (>65 years of the covid-19 crisis, some have ment of covid-19 cases. Each
It has been suggested that the rates, South Korea’s SD Biosensor and made detect true positives) ranged from age) with co-morbidities as mentioned already started thinking ahead member of the team has a des-
once fixed, must be widely publicized in Gurugram. 50.6% to 84% in two independent eval- in the containment zones can be tested. and are training employees to ignated role to play based on
so that both patients and service pro- Called Standard Q covid-19 Ag detec- uations, depending upon the viral load India on Monday recorded 11,302 ensure they are prepared for the situation and involves rep-
viders are fully aware and capacities are tion kit, it checks for specific antigens of the patient. Higher viral load corre- new coronavirus cases, taking the total any contingency. resentatives from cross-
used optimally. States have also been to SARS-CoV-2. The maximum time lated with higher sensitivity,” the tally to 333,326. As the disease is evolv- At VIP Industries, for U S I N E S S O functional teams such as

B
This comes against the back- asked to proactively engage with the taken for the test result is 30 minutes, ICMR said. ing, public health experts have said that instance, select HR, security and facili-

drop of Indian policymakers
exploring ways to use technol-
ogy to help more people access
healthcare and insurance.
Aarogya Setu flagged the
testing requirement to so many
people by tracing their proxim-
ity to 30,000 application users
who tested positive for corona-
virus, Kant said at a webinar on
next generation healthcare
organized by Hero Enterprise
and Mindmine Institute, a
think tank set up by it.
“We have predicted more
than 3,500 hotspots in the
country at sub post office levels,
which has had a tremendous
impact in India as far as contact
tracing is concerned,” said
Kant. “We have a dedicated
pool of 100 doctors and Aar-
ogya Setu has been providing
the safety net of requisite medi-
cal advice for those who have
assessed themselves as high
risk,” he added.
The government has been
using technology to bolster
health care services, especially
in the wake of the coronavirus
outbreak. The data that may be
F
private sector health providers and which can be read with the naked eye
consider pooling in public and pri-
vate healthcare facilities, as this will NEW TESTING PROTOCOL
The ICMR further said that all symp- without a drug or vaccine, precautions
are the only solution.
“We can protect susceptible
employees are taking
an online “Covid War-
rior” course by manage-
Life ties.
At Bosch India,
training is being given
help in providing prompt, good population by giving a vaccine— ment consultancy BYLD to security and facilities
quality and reasonable healthcare ICMR has called THE suggestion was SENSITIVITY of the AIM should be which we do not have, or decrease Group, which aims to “prevent personnel and covid-19 volun-
to covid-19 patients. for the use of made due to the test, the ability to treatment of all infectiousness of a person by medi- people from doing things teers from across departments
Korean-made rapid test’s high specificity, detect true positives, those who need
Separately, the Indian Council of antigen tests in which is the ability to ranged from 50.6% to hospitalization, said cations—which also we do not based on WhatsApp Univer- to take preventive care of their
Medical Research (ICMR) on Mon- hotspots, hospitals detect negatives 84% in evaluations ICMR scientist Kant have. Since vaccine is not yet any- sity and also to take precau- colleagues. The volunteers
day recommended rapid antigen where around, the only way open tions while travelling, when assist the security team in per-
tests to diagnose covid-19 in hot- to us is prevention: using masks, reaching office and when forming tasks such as health
spots and hospitals, in combination and needs no specialized equipment. tomatic ILI patients in hospitals and are keeping physical distance, washing coming back home, while buy- screening and checking health
with the regular RT-PCR tests. An The apex biomedical research body suspected of having covid-19, asympto- hands often. As numbers of cases ing groceries”, said Ronald declarations for employees
ICMR advisory said every suspected said it has made the recommendation matic patients who are hospitalized or increase, it would be very resource-in- Soans, senior vice-president, coming from containment
individual testing negative by the rapid due to the antigen test’s high specificity seeking hospitalization, in the high- tensive to do contact tracing and quar- BYLD Group. These employ- zones or showing symptoms.
antigen test should be mandatorily and relatively low sensitivity. risk groups such as patients undergo- antine. The aim should be mitigation— ees now form the emergency The facilities team also looks
tested with RT-PCR to rule out infec- The test, ICMR said, has very high ing chemotherapy, immunosup- treatment of all which need hospitali- response team for covid-19 in after waste management (like
tion, whereas a positive result should specificity i.e. ability to detect true neg- pressed patients including those who zation,” said Lalit Kant, a scientist and the company. used masks and gloves) at din-
be considered a true positive and does atives. Specificity ranged from 99.3% to are HIV positive, patients diagnosed former head of epidemiology and com- “Sometimes we think we are ing halls during breakfast and
not need reconfirmation. 100% at the two sites. with malignant disease; transplant municable diseases at the ICMR. prepared, but we may have lunch.
Maha to reopen schools in virus-free districts Hiring activity likely to pick up in
Anirudh Laskar
anirudh.l@livemint.com
“Parents’ opinions about
online education have been
The government said child
guards and teachers will visit
second half of the year, say recruiters
MUMBAI considered. The children of homes of children of out-of-
first and second standard s are school and migrant workers so Ayushman Baruah “Many small and medium human resource (HR) heads

T
generated by the use of tech- he Maharashtra govern- younger; they will not be given that they can be updated with ayushman.b@livemint.com retail businesses are planning and recruiters confirmed they
nology could also help policy ment on Monday an online option,” he said. simple systems and get student BENGALURU to automate various processes have completely paused hiring,
planners. decided to reopen Gaikwad informed that it is Aadhaar numbers filled in; set as part of digital transforma- while only 10% said hiring is

In 2018, India rolled out the
Ayushman Bharat—Prime
Minister’s Jan Arogya Yojana,
which offers ₹5 lakh a year
health cover for secondary and
tertiary care hospitalization to
more than 107.4 million fami-
lies with roughly 500 million
beneficiaries. Data generated
from these patients could help
not only in policy planning but
also in developing new thera-
pies. As on Monday, India has
more than 150,000 active cov-
id-19 cases, with over 9,500
people losing the battle to cov-
id-19. More than 160,000
infected people have either
been cured or been discharged.
gireesh.p@livemint.com
schools in districts untouched
by coronavirus, and set out
guidelines for online learning.
Education should start even
if schools do not reopen imme-
diately, chief minister Uddhav
Thackeray said after a meeting
with school education minister
Varsha Gaikwad and other top
officials.
In areas, which are not red
zones, classes for 9th, 10th and
12th standard and colleges will
begin in July. Classes for 6th to
8th standard are planned to be
started from August, while 3rd
to 5th standard classes are
likely to begin in September.
Classes for 1st and 2nd standard
will be started later with the
Education should start even if
schools do not reopen, said
CM Uddhav Thackeray. HT
approval of school manage-
ment committees.
“Corona could disrupt edu-
cation and harm students, but
we cannot play with students’
health,” Thackeray said, adding
he has approved the start of this
academic year. Students’
health should be taken care of
where schools start operating,
he said.
planned to impart online and
digital education to the chil-
dren of 3rd to 5th standards for
one hour daily and to the chil-
dren of higher standards for
two hours daily.
In order to start schools,
especially in villages, first a
meeting of the school manage-
ment committee will be held.
They will then have discussions
with the covid prevention com-
mittee in the state’s villages, as
well as the local office bearers,
sanitation, disinfection, water
supply authorities, etc.
“Fear in the minds of parents
will be reduced by holding par-
ent meetings in groups,” said
Thackeray.
up TVs and radios with the help
of gram panchayats and help
children without education.
On Monday, the chief minis-
ter discussed matters related to
setting up of Google Class-
rooms; launching webinars on
digital experimental basis; pro-
duction of e-educational mate-
rials; cyber security; use of Dik-
sha mobile app; and keeping
students informed about
health through school speak-
ers.
Thackeray said a pilot
project of education would be
started immediately with the
help of services by Tata Sky and
Reliance Jio in places where
schools will not open now.
H
iring activity is likely to tion. We are already seeing a continuing as usual.
pick up in the second disruption in this trend,” said According to the report, the
half of the year even as Anne Soumya, HR most affected sec-
many organizations continue director at staffing India’s IT and tors from a hiring
to cut pay and reduce staff to firm Adecco IT-enabled standpoint are
survive the coronavirus crisis. Group India. services sector is hospitality, avia-
India’s information technol- The majority of expected to see tion, banking,
ogy (IT) and IT-enabled servi- recruiters said it financial services
more hiring of
ces (ITeS) sector, for instance, is will take 3-6 and insurance,
expected to see more hiring of months for hiring contractual construction and
contractual employees as the to return to pre- employees staffing. Pharma-
end of the lockdown leads to a covid levels, while ceuticals and
gradual rise in demand, staffing 15% said it could healthcare are the
firms said. take more than a year, a survey least impacted.
Post-covid, many businesses by job portal Naukri.com The survey also found that
will also have to restructure and found. only 15% of recruiters and HR
innovate for higher productiv- Currently, hiring is frozen at heads confirmed layoffs are
ity and profitability, and will most organizations as they try being announced whereas one-
need to hire critical talent, to manage their existing work- third assured there will be no
especially in technology. force. Overall, one-third layoffs.

mint technologies while 81% of enterprises are re-skilling their exist- Snacks industry stares at ₹35,000
ing workforce to increase digital penetration, signifying major
Govt sets up feedback call
SHORT TAKES changes on the horizon for IT infrastructure.The report provides
a multi-dimensional view of how the covid-19 pandemic will
impact IT infrastructure trends in the immediate future“With
centres for covid grievances
RAMESH PATHANIA/MINT
crore revenue loss in FY21
Indore: The country’s snacks and
sweets industry would suffer an
REUTERS

65% of the elderly lost livelihoods
during covid lockdown: Survey
New Delhi: Elderly people
appear to have borne the brunt
of the lockdown. About 65% of
the workforce above 60 years
lost their livelihood during the
period and of these 61% were
from rural India, according to a
survey by HelpAge India.
NEETU CHANDRA SHARMA
Read the full story on live-
mint.com
75% organizations keen to upgrade
old infrastructure: Wipro report
Bengaluru: Wipro Ltd, in its State of IT Infrastructure 2020
report released on Monday, said that 75% organizations find the
need to upgrade their outdated infrastructure and invest in new
uncertainty in demand, there is a rapid shift in channel prefer-
ence ,” Wipro said. AYUSHMAN BARUAH
Read the full story on livemint.com
156 citizens flown back from Sri
Lanka under Vande Bharat Mission
Colombo: As many as 156 Indian nationals stranded in Sri Lanka
were flown back home on Monday under the third phase of a
PTI mega evacuation exercise.
National carrier Air India
brought back the citizens in its
AI-1202 flight from Colombo
to Kochi and Bengaluru, the
Indian High Commission said
in a press release.The flight
was scheduled as part of the
phase-III of Vande Bharat Mis-
sion’ to repatriate Indians
stranded abroad due to the
outbreak. PTI
estimated revenue loss of ₹35,000
crore in the current financial year
due to the pandemic, an industry
official said on Monday. Sweets
and namkeen (snacks) manufac-
turers have reduced the produc-
tion capacity due to the shortage of
labourers in the midst of a slowdown, experts said. PTI
Mumbai airport set to operate
New Delhi: As many as 1.28 lakh covid-related public
100 flights daily from today
grievances have been filed with the government. Call cen- New Delhi: Mumbai International Airport Limited (MIAL),
tres in different cities and languages to seek feedback on which operates the country’s second busiest airport, Chhatrapati
such public grievances was launched on Monday by minis- Shivaji Maharaj International Airport (CSMIA), on Monday said
ter of state for personnel, public grievances and pensions, that the government has allowed the airport to double its flights
Jitendra Singh, who also interacted live with citizens from 16 June. “GVK MIAL managing CSMIA starting 16 June is
whose grievances have been successfully redressed. This permitted to cater to a total of 100 domestic commercial passen-
is the first time that a senior minister has interacted live ger flight movements which includes 50 departures and 50 arriv-
with citizens, said the personnel ministry. PTI als.,” MIAL said RHIK KUNDU
Read the full story on livemint.com
 CORPORATE TUESDAY, 16 JUNE 2020
MUMBAI 07
VIRUS EFFECT
Contraction
in GDP will Chennai to be under intense Pandemic pushes
average monthly data
hit MSMEs,
warns Crisil
lockdown as covid cases rise usage beyond 11GB
Shayan Ghosh Lata Jha
shayan.g@livemint.com lata.j@livemint.com
MUMBAI TN govt imposes restrictions in four districts, including Chennai, for 12 days starting 19 June NEW DELHI

T T
he expected contraction he coronavirus lock-
in the Indian economy in Sharan Poovanna down fast-tracked inter-
FY21, brought by cov- sharan.p@livemint.com net usage in India by
id-19 pandemic will signifi- BENGALURU two-three years, with average
cantly hurt micro, small, and monthly data usage rising by

F
medium enterprises (MSMEs),
said rating agency Crisil.
India Inc. is headed for 15%
decline in revenue and 25% fall
in earnings before interest,
taxes, depreciation and amorti-
zation,
For small businesses, the fall
in revenue will be steeper at
17-21%, while Ebitda margin
will shrink to 4-5% as weak
demand gnaws away gains
from lower commodity prices.
“A sharp decline at the oper-
ating level will hit creditworthi-
ness, aggravating the liquidity
stretch these units have been
grappling with, particularly on
the working capital front. In the
process, average interest ser-
vice coverage ratio could slide
to 1-1.5 times from 2.4 times
seen between fiscals 2017 and
2020.” This, after factoring in
the benefits of the RBI’s mora-
torium on interest payments.
Without the moratorium,
the ratio would have gone
below one. “The challenges
would be the hardest for micro
enterprises, which account for
our districts in Tamil Nadu, 30% to cross 11GB, an Ernst
including Chennai, will be and Young study said.
under intense lockdown for 12 The survey by professional
days, starting 19 June, to con- services firm Ernst and Young,
tain the spread of covid-19, titled Digital Consumer Sur- Remote working has raised
chief minister Edappadi K. Palanis- vey: Shaping The New Nor- demand for productivity tools
wami said on Monday. The other dis- mal, surveyed over 2,600 con- and video-conferencing.
tricts are Tiruvallur, Kancheepuram sumers to study the changing
and Chengalpattu. behaviour and perception user per week. Further, 60%
“...Considering the spread of the towards digital services. As respondents prefer subscrip-
virus and based on recommendations many as 76% of the respon- tion-based video-on-demand,
of health and medical experts, an dents were high-data users, while 20% prefer TV enter-
intense lockdown will be in force from while 24% were basic users. tainment. Nearly 50% of
00.00 hours on 19 June and midnight One-third of the respon- respondents who prefer TV
of 30 June,” the Tamil Nadu govern- dents upgraded broadband are spending more time
ment said in a statement. plans, with unlimited plans, watching movies, shows and
These four districts account for accounting for 40% of total news telecast.
almost 39,000 out of the more than upgrades. Many basic users, or The integration of digital
46,500 cases recorded so far in the Ambulances are parked in front of the Victoria Public Hall building in Chennai, where coronavirus cases are surging. PTI those using data only for thin with education has led to the
state, according to government data. web-browsing, chatting and emergence of a new breed of
With several cities, including New Chennai, has consistently seen a surge calling, are migrating to the digital learners who are adopt-
Delhi and Mumbai, witnessing a sharp in covid-19 positive cases, which has
rise in covid-19 cases, respective local revived fears of the pandemic spread- Tamil Nadu govt’s move to high-user bucket. Nearly 11% ing technology faster than
of basic users upgraded exist- ever. Nearly 59% respondents
administrations may be forced to rein- ing far and wide. ing packs to are learning
force lockdown restrictions, which
may add to the confusion
The chief minister said that ₹1,000
monetary support will be
impact plans of automakers either unlimited
or 50-100%
Nearly 38% of online and almost
the respondents 50% respondents
and chaos. FRESH given to all ration card hold-
Malyaban Ghosh
higher data for started using prefer learning
However, Delhi chief CURBS ers in areas under intense facturer, is likely to face significant more content digital payments on edtech plat-
minister Arvind Kejriwal lockdown. malyaban.g@livemint.com disruption as it was planning to streaming, gam- forms over
for the first time, accessing learn-
cleared the air in a Twitter ALL ration card People will be allowed to NEW DELHI ramp up production of its popular ing and video
post on Monday: “Many holders in areas move only for emergencies Venue (compact SUV) and Creta calling. according to ing material scat-
under the lockdown the EY survey

32% of the overall MSME debt,
and are facing material stress in
terms of revenue growth,
Ebitda margins and working
capital stretch.”
Amish Mehta, chief operat-
ing officer, Crisil, said a three-
pronged strategy is essential.
One, improve the sentiment
around job security for formal
and informal workers to boost
consumption. “Two, hasten
implementation of the ₹3 tril-
lion Aatmanirbhar scheme to
ensure flow of liquidity to
MSMEs. Three, lenders will
have to go beyond traditional
credit processes because they
have to play a seminal role in
recovery.”
T
people are speculating will get monetary with an e-pass, while con- he lockdown announced by (mid-size SUV) in the coming Remote work- tered on web por-
whether another lockdown support of ₹1,000 struction and other activi- the Tami Nadu government weeks. ing has raised tals.
in Delhi is being planned. ties will be allowed in situ, in four districts, including Operations of Eicher Motor- demand for video The report said
There are no such plans.” PEOPLE will be he said. Chennai, may adversely impact owned Royal Enfield might also conferencing and productivity that scaling network connec-
allowed to move
Karnataka chief minister only for emergencies Ration shops will be the production of some automak- get impacted as the carmaker has tools. The survey reveals that tivity and access to technolo-
B.S. Yediyurappa, too, with an e-pass, the allowed to function from ers and component manufactur- started manufacturing recently. as many as 76% respondents gies in far-flung rural hinter-
allayed fears saying, if any- state govt said 8am to 2pm, while grocery, ers. Most automakers started oper- According to a senior industry are either first-timers to these lands is an opportunity to
thing, the government will provisions and petrol ating their manufacturing units in executive, automakers are still try- tools, or have increased the drive radical socio-economic
ask the Centre to relax pumps, will be open from the first week of May, after the ing to come to terms with the new time they spent on video calls. gains.
more restrictions. 6am to 2pm. lockdown was eased. reality and it is unlikely that they 90% respondents are The pandemic has also
However, Tamil Nadu had to rein- The government said that people Factories of leading vehicle can continue to ramp up produc- spending more time on digital accelerated the transition to a
force lockdown measures weeks after can only walk to buy essential provi- manufacturers such as Hyundai tion as planned, since many of the activities such as content cashless ecosystem. Digital
it had eased certain restrictions. sions within a radius of 2 km from their Motor India Ltd, Eicher Motors L supply chain ecosystem may not streaming, e-learning, info- platforms are gaining strength
In its seven-page guidelines, the houses. Hotels will remain open only ord Motor India Pvt. Ltd, Renault be able to function seamlessly tainment and social media. as a preferred medium for
state government detailed the nature of for takeaway orders. India Pvt. Ltd and Nissan Motor after the lockdown is imple- Nearly 61% consumers are most purposes. Nearly 38%
activities that will be allowed, but man- All state and central government India Pvt. Ltd, are based out the mented. streaming more content than respondents started using dig-
dated certain restrictions to avoid peo- offices will operate with 33% strength state. Some, such as Renault, Nissan they were before the lock- ital payments for the first time.
ple’s movement in the wake of a sharp and those living in containment zones Hyundai Motor India, the coun- and Ford, were yet to start produc- down with time spent on video Digital wallets stand strong,
rise in cases in the southern state. will not be expected to be at work, the try’s second largest vehicle manu- tion citing lack of demand. streaming surging 1.2 times to with 53% respondents making
Tamil Nadu, especially its capital government added. an average of 4.2 hours per payments through e-wallets.

Confusion reigns as filmmakers prepare to shoot again Retailers tap WhatsApp to woo
Lata Jha
lata.j@livemint.com
customers wary of stepping out ically reducing opportunities Lamba recommends mock
for people when several have shoots before actual schedules
NEW DELHI already sat at home for close to start to recognize drawbacks.
three months now. “We will all eventually get to it Suneera Tandon & “It’s really like royal treat- stores by interacting with store

G
overnment guidelines “Ads and TV shows are easier but, right now, most people are Shuchi Bansal ment. Customers take a virtual managers, who share cata-
for filmmaking, includ- as they work with small crews waiting to see how someone tour of the store, pick their logues of curated collections.
ing cast and crew age and within contained environ- else manages it,” he said. NEW DELHI pairs, which are then home Once the customer selects,
limit requirement for medical ments. However, a lot of this is Film shoots usually follow a delivered by staff of local payment and delivery is orga-

personnel and other hygiene
measures on sets, have thrown
Bollywood into disarray. Film-
makers are trying to figure out
what is feasible as limited teams
will mean escalation in costs,
infrastructure and resources
with shorter workdays.
“Everyone is as confused as
everyone else. Some of these
guidelines are not practical at
all and what’s even more wor-
rying is that we don’t know who
is going to supervise or permit
shoots,” said Navdeep Singh,
director of films such as NH10
and Laal Kaptaan.
The draft guidelines obvi-
ously don’t consider that movie
Filmmakers ask if the entire team will be put under quarantine
when a unit goes to a green zone, and someone falls ill.
shoots are extremely chaotic
and it would be impossible to
manage things such as separate
make-up equipment or cos-
tumes for everyone, Singh said.
Having one person to wait on
every actor is hugely impracti-
cal, especially when there are a
handful of assistant directors
HT
often rushing to do everything
from actors’ hair in the middle
of shots to setting up props and
lights and giving out sheets of
dialogue. The mandate also for-
bids people above the age of 65
and those who are pregnant
themselves or have a pregnant
spouse from working, automat-
A
easier said than 12-hour shift but sharp fall in store foot- stores. The staff also carries nized by the store manager
done for film Some directors the work days will fall has led offline additional sizes and designs locally,” Bata said last month.
shoots that often have suggested now be shorter retailers to take cus- for their com- Several retail
go outdoors to conducting mock given the sanitiza- tomer orders on WhatsApp fort,” said Alisha Brands are brands are
real locations,” shoots before tion and disinfect- and offer virtual tours of their Malik, vice-presi- evaluating hybrid prompting shop-
said Mrighdeep
schedules start to ing rules. The stores to shoppers. dent, e-com- models that will pers with links to
Singh Lamba, number of days A clutch of footwear retail- merce, Metro. let them service their websites
director of the recognize real will thus increase ers, jewellery chains and sell- Bata India and are evaluat-
drawbacks shoppers in a
Fukrey franchise. and that will have ers of consumer durables and plans to scale up a ing various
Filmmakers ask an impact on bud- electronics are taking to alter- pilot run using given city or hybrid models
if the entire team gets when pro- native channels to push sales WhatsApp as a neighbourhood that will let them
will be put under quarantine ducers are already dealing with as consumers remain wary of medium to reach service shoppers
when a film unit goes out of dwindling revenues. visiting stores on fears of con- out to shoppers. in a given city or
Mumbai, say to a green zone, The government has also tracting infection. “The WhatsApp shopping ser- neighbourhood. This will also
and a member falls ill or tests recommended having the Footwear retailer Metro vice is available to both new help the brands build a direct
positive. They also ask who is to whole unit quarantined for the Brands Ltd, which has opened and existing Bata Club mem- relationship with customers
bear the cost of all of this entire duration of the shoot and half of its 500 stores, is using bers. It allows customers to instead of relying on market-
because there are no provisions filmmakers are keenly consid- WhatsApp to communicate remotely interact and shop places to sell their products.
for insurance as of now. ering options such as resorts. with its loyal customers. from their neighbourhood suneera.t@livemint.com

mint costs, many small businesses (14%) said that they are contemplat- Punjab CM urges PM to review
ing shutting down their companies due to the slowdown in busi-
Will mitigate covid’s impact on
SHORT TAKES ness, while 16% said they were unsure of the future and have 3-6
months of cash runway, according to the latest survey by online
community-based social media network LocalCircles. Around
talent abroad, says Jaishankar
HT
farm sector-related ordinances
New Delhi: In a significant
move, Punjab chief minister
HT

Beijing locks areas down as new
virus outbreak gathers pace
AFP Beijing: China’s capital city
raced Monday to control a fresh
outbreak, with 75 cases linked
to a single wholesale food mar-
ket in Beijing where authorities
have locked down neighbour-
hoods and launched a massive
test and trace programme. Offi-
cials reported 49 new cases
nationwide on Monday. AFP
Cash-strapped startups consider
shutting shop despite cost cuts
Bengaluru: Startups and small and medium-sized businesses
(SMBs) have been cutting marketing spends, human resources
and operating costs in the last three months as covid-19 continues
to wipe out their revenues. Even after cutting fixed and operating
35% of the businesses surveyed, however, expects growth in busi-
ness. While around 80% of startups surveyed said that they cut
or deferred fixed costs to sustain themselves SALMAN S.H.
Read the full story on livemint.com
Airlines can allow passengers in
middle seats of flights, says HC
Mumbai: The Bombay high court on Monday permitted all flight
operators to allow passengers to occupy middle seats in flights,
but said they should strictly comply with guidelines of the Direct-
orate General of Civil Aviation (DGCA) on measures to prevent
the spread of covid. A division
PTI
bench of Justices S.J. Katha-
walla and S.P. Tavade refused to
accept the contentions raised in
a plea filed by Air India pilot
Deven Kanani, who said the
middle seats of all international
and domestic flights should be
kept vacant to curb virus. PTI
New Delhi: India has been engaged with foreign govern-
ments to ensure the welfare of prospective migrants, and
is currently focussed on mitigating the negative economic
consequences of the pandemic on Indian talent abroad,
External affairs minister S. Jaishankar said on Monday.
Addressing the third edition of the Annual Conference of
Protectors of Emigrants via video-conferencing, he said
the protectors of emigrants must also rise to the challenge
of reviving the post-covid economy.
Captain Amarinder Singh wrote
to PM Narendra Modi high-
lighting the need to review set
of three farm sector-related
ordinances cleared by the
Union cabinet this month.
Singh has said review should be
made in the “spirit” of coopera-
tive federalism. ANUJA
Read the full story on livemint.com
‘Cine-goers eager to go to theatres
within 15-90 days of reopening’
New Delhi: Owners of theatres shut since the middle of March
would be happy to know that 54% of Indian entertainment lovers
are eager to get back to cinemas within 15-90 days of the lock-
down lifting while the rest would prefer to step out after 90 days.
98% of Indians expect cinemas to implement strict safety and
PTI hygiene measures, as per a survey by BookMyShow. LATA JHA
Read the full story on livemint.com
08 TUESDAY, 16 JUNE 2020
MUMBAI

REPORTAGE | TALKING POINTS | IDEAS | INSIGHT | THE BOTTOMLINE

HONG KONG SHRUGS

OFF ONE MORE OBITUARY
Despite a new Chinese security law and the inevitable US pushback, it seems set to make money in the middle

Grafting a law devised in communist China

upon what has been hitherto the most
liberal city in Asia is a journey into the
unknown; no one will really know how things
will work till the courts and police in Hong
Kong start administering the new law. REUTERS

Rahul Jacob duit for Chinese foreign investment into
feedback@livemint.com India—which, in recent weeks, has begun
BENGALURU receiving greater scrutiny due to regula-
tory changes by New Delhi.
lawyers and journalists in the city while
Hong Kong’s bankers remain optimistic
that it will be business as usual. “I think
that the enforcement will remain under
ence, remains unbridgeable. The flash
mint
SHORT mob, leaderless strategy of the young pro-
STORY testers inspired by the Bruce Lee films of
the 1970s made it difficult for the local
effective public relations agency. The city
has accounted for the most money raised
via initial public offerings by any financial
centre globally in seven of the last 11 years.

S
ummer is typhoon season in Considering the financial heft of Hong the Hong Kong regime, under Hong Kong Hong Kong government to negotiate with This huge lead will be sustained or dam-
Hong Kong. The city of more Kong, ignoring it is not a viable option in judges,” said a senior investment banker WHAT them, even if it were inclined to do so. aged depending on how wide-ranging
than 7 million is accustomed to the long-term for any country. Naturally, who has been in the city since the 1990s. Despite this backdrop over the past China’s security laws for Hong Kong prove
warnings of black rainstorms China’s decision to impose a national The truth is grafting a law devised in com- A new Chinese security law year, a bellwether underlining the belief to be. As one banker says, if the laws help
and typhoons. This year, the security law on Hong Kong is being widely munist China upon what has been hith- aimed at Hong Kong has invited that the financial system would carry on Hong Kong deal more strictly with politi-
gale-force winds have been geopolitical seen as an abrupt and worrying departure erto the most liberal city in Asia is a jour- the ire of the Donald Trump much as before is that in Hong Kong, the cal protests, this would not alarm its finan-
rather than weather-related. But amid the from the autonomy that was originally ney into the unknown; no one will really administration, which wants to majority of deposits with local banks cial industry unduly. If the enforcement of
thundering threats from the Donald promised to the city in the 1990s. know how things will work till the courts revoke special privileges that the remain in Hong Kong dollars. This is the laws went further and extended to
Trump administration to revoke Hong China’s laws on freedom of expression and police in Hong Kong start administer- city enjoys as a financial centre despite the fact that residents have the censoring the vibrant media, this could be
Kong’s special privileges and a flood of and the right to protest are indeed very ing the new law. freedom to switch out of the local cur- got around with virtual private networks.
articles about Beijing’s decision to enact different from those prevailing in Hong As the bar association points out, to rency at any time to currencies such as the But, many hedge funds, whose offices
new security legislation for the city defin- Kong, where a liberal common law system comply with Hong Kong’s mini constitu- AND US dollar or the euro or transfer the could be quickly wound up, are contem-
ing anti-national behaviour, the $4 bn sec- protects free speech. Local police arrested tion, definitions of what constitutes sedi- money elsewhere if they were nervous plating a plan B, according to the Finan-
ondary listing of JD.com, China’s largest about 9,000 people on charges such as tion or terrorism and the judicial and Much of the Western media is about capital controls being imposed or cial Times, if the new laws impinge heavily
e-commerce company after Alibaba, was rioting after last year’s protests for univer- police enforcement of these new laws once again forecasting Hong the city’s prospects as a financial centre. on the judiciary and the media. Hedge
massively oversubscribed on Hong Kong’s sal suffrage in Hong Kong, but only a frac- must comply with international cove- Kong’s impending doom as a funds in Hong Kong manage $91 bn in
stock exchange last week. tion have been convicted. Beijing now nants on human rights. Given Beijing’s financial hub. Newsweek’s latest THE US-CHINA TENSIONS assets, more than what is managed in
cover story is ominously titled
Dating back to the months leading up to
the handover of the colony in June 1997
from Britain to China—when a property
appears to have lost patience with the
Hong Kong government’s inability to leg-
islate such laws in the past two decades.
current belligerent mood, it is hard to see
its new law and proposed new constabu-
lary in the city doing so.
‘The end of Hong Kong’ I was a junior writer at Fortune in New Singapore, Japan and Australia combined.
York in the mid-1990s when the maga- There also remains the risk that the
zine printed a cover story by the late Louis Trump administration could seek to hurt
bubble grew bigger and bigger just as the The draft document for the new law is On 15 June, the deputy head of China’s Kraar provocatively titled, “The death of China by damaging Hong Kong as a finan-
global press parachuted into the city to scant on details, but there is enough to Hong Kong and Macau office said: “[The MOREOVER Hong Kong.” Hong Kong’s occasionally cial centre. This might involve imposing
pronounce Hong Kong’s last rites—there alarm Hong Kong’s Bar Association. It central government’s jurisdiction over hysterical elite reacted as if it were a curse financial sanctions in the way the US has
has never been a city in the world less points to worrying language such as “rele- such cases] would not affect the inde- The unfolding saga may also have from the heavens, but the city carried on on Russia and Iran. Most observers believe
impressed by political punditry. Much of vant national security organs of the Cen- pendent judicial and final adjudication implications for India. Hong Kong undaunted till the Asian financial crisis in that China’s role as the second-largest
the Western media is now once again fore- tral People’s Government will set up agen- enjoyed by Hong Kong in accordance with has long been suspected to be a the second half of 1997 took the city’s economy in the world means that it is too
casting Hong Kong’s impending eclipse as cies in (Hong Kong) to fulfil relevant the Basic Law.” But he also said Beijing safer conduit for Chinese property market down with it. There was large for this to work. But, China has vul-
a financial centre. Newsweek magazine’s duties to safeguard national security.” would retain control over certain cases investment into India, which political turbulence again in 1999 when nerabilities.
latest cover story is ominously titled “The that involved national security. recently has come under scrutiny Beijing overruled a landmark decision by Chinese companies have hundreds of
end of Hong Kong”. THE UNKNOWNS Christine Loh, a former local legislator the city’s de facto supreme court. billions in US-dollar debt and its banks
Yet, in late May, the Hong Kong
Exchange also received a somewhat less- U nder the ingenious “one country two
systems” principles devised by the
publicised boost when MSCI switched the late Chinese leader Deng Xiaoping to ease
and a former minister in the Hong Kong
government, made the point that Singa-
pore also has security laws—and indeed
derivatives and market capitalization. On
each of these, Hong Kong was in the top
Yet, on a visit to North America in 1999, have large US-dollar exposure. This
former premier Zhu Rongji, who spear- makes China very dependent on Hong
headed the critical reforms that led to Kong because the city acts as a $10-trillion
trading of a swathe of equity futures from Hong Kong back to Chinese sovereignty, courts tough on political dissent—and the five (typically among the top three). As a China’s accession to the World Trade clearing house for such US-dollar-denom-
the Singapore Exchange to HKEX. The Hong Kong’s courts, local administration financial industry does not object to them. financial centre, Hong Kong has jumped Organization in 2001, praised Hong inated transactions. “That would be like
licensing agreement means 37 futures and and police have hitherto been autono- “If people are not put off doing business in ahead on global tables since 2000 as Chi- Kong’s Securities and Exchange Commis- the nuclear button,” said a senior execu-
options contracts based on Asian and mous. But as a foreign journalist based in Singapore with its national security laws, nese state-owned enterprises and private sion for training their counterparts in tive at a US investment bank who believes
emerging market indi- the city, who chose not they are unlikely to freak out over the companies have sought listings overseas. communist China. Two that it is unlikely to be
ces, including an India to be named, pointed Hong Kong version.” There has been a peculiarly schizo- decades on, China is a used.
index, will now be China’s decision to impose a out, once the new laws phrenic narrative about Hong Kong since manufacturing giant but China’s firms have billions in Indeed, US policy on
traded in Hong Kong national security law on Hong are in place, it remains to THE LACK OF ALTERNATIVES before the handover: while the data tells a the gap between China debt and its banks have large China often seems mud-
rather than Singapore. be seen how China
The products have Kong is being widely seen as a would react if a Hong
not been hugely suc- worrying departure from the Kong court was adjudi-
T he gap between the two Asian cities
cast as rivals is so wide on just about
every yardstick that in conversation after
mostly positive story, the worries overseas
about its political future under China tell
an entirely different story. “One of the iro-
and Hong Kong in secu-
rities law, the adjudica- US-dollar exposure. This
dled. By cutting interest
rates, the US Federal
tion of commercial con- makes it dependent on Hong Reserve inadvertently
cessful in Singapore and cating on a demand to conversation with bankers, the oft-re- nies of the Chinese takeover is that Hong tracts, and the independ- helped ease what had
may not prove to be in autonomy that was originally seize assets, say, of an peated view was that there is no alterna- Kong has grown by leaps and bounds. The ence of the Hong Kong Kong as the city acts as a loomed as China’s dollar
Hong Kong either, but out-of-favour mainland tive to Hong Kong for investors seeking to market is many step functions larger than judiciary relative to squeeze a few months
the move is richly sym- promised to the city Chinese political leader invest in and investment banks seeking it used to be 23 years ago,” said Nirgunan China’s, not to mention a clearing house for such deals ago. The administra-
bolic: At a high-point in who had accounts with, to service the capital raising requirements Tiruchelvam, head of consumer sector dense ecosystem of tion’s threatened trade
China-US tensions, an American financial say, HSBC (which is headquartered in of China, the world’s second-largest econ- research at Tellimer in Singapore. bankers and traders, remains as wide as it sanctions against Hong Kong would be
services company has cast its vote in Hong Kong). omy. “The question to ask is ‘where would On its part, business in Hong Kong is was. Beijing has astutely used Hong Kong pointless; the US enjoys a trade surplus
favour of Hong Kong. Similarly, secondary In the past fortnight, Hong Kong’s pre- you go’ (from Hong Kong),” said a Hong mostly reacting with relief to the prospect for the past two decades as an efficient with Hong Kong of about $30 bn. “The US
listings, such as JD.com’s or NetEase’s $3 vious de facto mayor vociferously Kong banker. “You are not going to go to of a security law because last year’s politi- conduit for global capital. It well under- and China are going to have to work things
bn fundraising, also in Hong Kong this demanded HSBC signal its support for the Singapore. You can’t go to Tokyo to ser- cal protests, which sometimes ended in stood, from Deng to Zhu, the capitalist out,” the executive quoted above said.
month, demonstrate that Hong Kong may new laws. Both HSBC and Standard Char- vice China. There is a bit of ongoing relo- violence, unnerved many and pushed the city’s true worth. And, Hong Kong’s Euro- “Things are not going to come to a head
actually benefit from the tensions tered quickly did so—in jarring contrast cation (to Singapore) but its back-office city into a deep recession even before the pean and US investment banks have been over Hong Kong.” As always, Hong Kong
between US and China. to Standard Chartered’s support for the staff. It’s not brokers or traders.” pandemic. enthusiastic ambassadors for China, a remains confident it can continue to make
The unfolding Hong Kong saga may civil rights protests currently raging The Economist recently charted a matrix The chasm between Beijing and the good housekeeping seal despite question- money in the middle.
also have implications for India. The city across the US. based on criteria such as initial public young protesters, who demanded univer- able corporate governance at Chinese Rahul Jacob is a former Hong Kong
has long been thought to be a safer con- Beijing’s proposed new law has shocked offerings, currency trading, interest rate sal suffrage and in some cases independ- companies, and a fawning but highly bureau chief for the Financial Times

Mobility restrictions hurt
India’s trade basket in May
Trade deficit of $3.2 bn after merchandise exports plunged 36.5%, imports fall 51.1%
Asit Ranjan Mishra
asit.m@livemint.com
NEW DELHI
I
ndia’s trade basket plummeted
in May though at a slower pace
than the preceding month as
countries sealed their borders
to arrest the spread of the coro-
navirus and supply chains broke
down because of mobility restric-
tions.
Merchandise exports plunged
36.5% and imports fell 51.1% in May,
resulting in a trade deficit of just
$3.2 billion, data released by the
commerce ministry on Monday
showed.
In April, merchandise exports
and imports had declined by 60.3%
and 58.7%, respectively. Among
major developing economies,
India’s exports fell the most in April
only behind a 61% dip in overseas
shipments by South Africa, accord-
ing to calculations by the United
Nations Conference on Trade and
Development.
However, trade minister Piyush
Goyal on Monday tweeted that
exports in the first week of June at
$4.94 billion have bounced back to
almost the same level ($5.03 bil-
lion) during the same period a year
ago.
The decline in exports in May
have been high, but there is a dras-
tic arrest in fall of exports com-
pared to April, said Federation of
Indian Export Organisations
(FIEO) president Sharad Kumar
Saraf. “This is because of the partial
start of businesses across the coun-
try and orders from markets like
the US and the European Union.
Revival still seems a very slow proc-
ess as the global business senti-
ments are at their lowest,” he said.
The Organization for Economic
Business of Life
Daily articles on the workplace,
and how it is evolving.
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NEWS
THE VIRUS CRISIS IS PUSHING
US INTO A ‘NEW ABNORMAL’
STRAIGHT
F O R WA R D
SHASHI SHEKHAR
Respond to this column at
feedback@livemint.com
L
ast Friday, when Gulabo Sitabo, starring
Amitabh Bachchan and Ayushman Khur-
rana, was released on Amazon Prime, it was
welcomed as an unprecedented event and pro-
jected as an example of the ‘new normal’. The
Bytedance post-covid era has begun to change everything;
to shut
down Vigo
on the other hand, it has shaken the faith, will
Video in and intention of the people.
India, tells The virus crisis has started to change society.
users to Let me give an example. In early May, a woman
download
TikTok
with a child was crying loudly on the main road
of Sector 18 in Noida. Her husband, a factory
bit.ly/37v1Tgu
worker, had lost his job due to the lockdown.
There had been no food in the house for several
days. After walking for a few miles, she some-
how managed to reach one of her relatives, who
gave her ₹5,000. While she was returning, a
pair on a two-wheeler snatched her money.
There was no one to listen to her screams.
Among major items, only exports of rice, spices, iron ore, and drugs and pharmaceuticals recorded growth in This is not the only case where a morsel of
May. Among major imports, iron pyrites and project goods grew during the month. BLOOMBERG food has been snatched from a hungry mouth.
During the past two months, more than half-a-
Cooperation and Development last export of rice, spices, iron ore, and exceed the trade slump brought on dozen such snatchers have been caught, people
week said the world economy may drugs and pharmaceuticals by the global financial crisis of who don’t have a criminal history. Till the end
contract by 6% or 7.6% in 2020, recorded growth in May. Among 2008-09,” it said in April. of March, they were in some small-time jobs,
depending on a single-hit or a dou- major imports, iron pyrites, project India could report a current but when the lockdown snatched their jobs,
ble-hit scenario, respectively. It goods grew during the month. account surplus of $12-15 billion in they could not find any other way to satisfy their
expects India’s economy to con- The World Trade Organization FY21 based on the expectation of a hunger. Now, they are in police custody, but will
tract by as much as 7.3% in FY21 if a has projected global merchandise gradual normalization in trade lev- they be able to return to their old lives?
second wave of coronavirus sweeps trade to drop by 13% to 32% in 2020 els in the coming months, a stabili- This is happening not only in NCR; there are
the country. zation in crude oil many such stories from the rest of the country.
As major econo- PANDEMIC WOES prices at a moder- When we talk about the ‘new normal’, the script
mies try to reopen, ate level, a revival of a ‘new abnormal’ is also being written.
demand would be DECLINE in exports INDIA could report WTO has projected in demand for gold So, why did I start this column by citing
restricted towards is high but there’s an
arrest in fall of
a current account global merchandise
surplus of $12-15 bn in trade to drop by 13%
closer to the festive Gulabo Sitabo? The cine industry feeds millions
the most essential exports compared FY21 if conditions to 32% in 2020 on the season, and the of mouths directly and indirectly. This trend of
items, said Ravi to April, say experts stabilize, says Icra back of covid-19 continued adverse directly releasing a movie on a digital platform
Sehgal, chairman , impact of eco- may throw many of them out of jobs. Mumbai
Engineering nomic uncertainty suffered this tragedy in the 1980s. In 1982, when
Export Promotion Council of because of the pandemic. “The on remittances, said Aditi Nayar, trade union leader Datta Samant began his
India. “Even within engineering wide range of possibilities for the principal economist at Icra, a credit famous textile mill workers’ strike, it resulted in
exports, we need to rework our predicted decline is explained by rating agency. “However, if the the closing of mills. This time around, newspa-
strategy. Sub-sectors such as medi- the unprecedented nature of this domestic demand recovers faster pers have been full of news about prostitution
cal devices would be doing well health crisis and the uncertainty than global demand, the size of being on the rise in the city of glamour. These
while core infrastructure indus- around its precise economic India’s current account surplus were the hard-working women from families of
tries may take time to recover,” he impact. But WTO economists may be limited below $10 billion,” labourers whom distress has forced to compro-
said. Among major items, only believe that the decline will likely she said. mise with their self-respect. The film industry
is not limited to Mumbai, it contributes to the
TUESDAY, 16 JUNE 2020
MUMBAI 09
economy of the entire country. Any change can
disturb the equilibrium, and we are witnessing
change all around. This may prove costly for
lower- and middle-income groups.
This catastrophe is taking shape not only in
India, but all over the world. The lava of discon-
tent is erupting in various ways. The series of
protests in the US after the brutal killing of
George Floyd by the police is not going to come
to a standstill soon. On 31 May, the situation
deteriorated to a point where President Donald
Trump was forced to take shelter in the White
House bunker. Such violence, hatred and social
cracks have not been seen in this dreamland for
decades. And now, it’s not limited to the US;
such protests have reached Europe also.
At such a time, criminals and anarchists have
come out to take advantage of the situation.
News channels showed live videos of arson and
looting in major US cities. They came, broke the
windows and doors of shopping arcades and
began to loot; the police were nowhere. The
IMF predicted in mid-April that this pandemic
may lead to anarchy. Its experts were of the view
that many African countries are drifting from
bad to worse. But they could not even imagine
that such things may happen in the US also.
Covid-19 brought America on par with Africa.
Two decades ago, when I first time visited South
Africa, I was warned
The lava of that in Johannesburg
discontent is and Durban, anyone
can be mugged on
erupting in the streets. At that
various ways in time, Johannesburg
India and all was considered the
over the world most dangerous city
in Africa; now it is
ranked fourth.
Now, let us talk about Chicago. The last day of
May in this metropolis was bloody. Eighteen
people were murdered in just 24 hours, which
is a record for the past six years. Prior to that,
more than 50 people were shot there, and seven
were murdered over 48 hours. The intelligent-
sia of Europe is worried that the same situation
may happen on their continent. The economy
of Europe was already in the doldrums, and now
covid-19 has hurt it badly at a time financial
institutions are predicting that we are going to
enter a period of unprecedented slowdown.
Whatever may be the truth, one thing is
sure—we are approaching the ‘new abnormal’.
In this case, the entire world is on an almost
equal plane. It’s not possible to imagine what
shape it will take. How can people descending
downhill think of heights?
Shashi Shekhar is editor-in-chief, Hindustan.
His Twitter handle is @shekarkahin
10 TUESDAY, 16 JUNE 2020
MUMBAI PERSONAL FINANCE

Irdai betters covid health Lenders focus on gold loans as

cash flow problems spur demand
plan but it still falls short Tinesh Bhasin
tinesh.b@livemint.com
ISTOCK

A
s small businesses
and individuals face
cash flow problems
and seek liquidity,
Insurance regulator’s benefit-based plan doesn’t address high treatment costs lenders are renewing focus on
gold loans. Last week, ICICI
ISTOCK Home Finance started offering
Disha Sanghvi gold loans, while last month,
disha.s@livemint.com Canara Bank launched a gold
loan vertical.

T
he Insurance Regulatory
and Development
Authority of India (Irdai)
is said to have withdrawn
the draft guidelines it
issued on a standard covid-19
health insurance product earlier in
June and has instead proposed a
benefit-based product. Mint has a
copy of the new draft guidelines.
The earlier product was a one-
year indemnity policy with the
option of two add-ons. The draft
was sent to all general and stand-
alone health insurers, who were
asked to offer the product from 15
June. Mint reviewed the draft
guidelines and found that it was of
little use. Read more at
bit.ly/3fgyARp and bit.ly/37pDJDW.
We review the new product for
you to understand what it is and
whether you should go for it.
WHAT IS THE PRODUCT?
The proposed product shall be
called “Covid-19 standard individ-
ual benefit-based health policy”
followed by the name of the insur-
ance company.
It is a one-year benefit-based
product. In other words, it will pay
a lump sum benefit equal to 100%
of the sum insured to the policy-
holder if he or she tests positive for
covid-19 and is advised hospitaliza-
tion. The minimum sum insured
will be ₹50,000. You can opt for
the sum insured in multiples of
₹50,000, up to ₹5 lakh.
So if you opt for a sum insured of
₹3 lakh, on hospitalization for cov-
id-19, you will get a lump sum of ₹3
lakh. If your hospital bill is higher,
you’ll have to bear the spillover.
The diagnosis has to be confirmed
by a centre authorized by the min-
istry of health and family welfare.
The policy can be bought for an
individual or on a family-floater
basis. The minimum entry age shall
be 18 years and the maximum 65.
Dependant children shall be cov-
ered from the age of three months
to 25 years.
It provides one add-on: a quaran-
tine cover. If the insured person is
quarantined due to suspected
infection, then 50% of the base sum
insured shall be payable. However,
if the policyholder is diagnosed
with covid-19 after the settlement
of the add-on benefit, then he or
she will be eligible only for the bal-
ance amount of the total policy
benefit.
Macaulay Duration may help match your investing period with debt MFs
Lenders say demand for
gold loans is rising as they, typ-
It’ll be tough ically, require minimal docu-
to buy a life
cover if
mentation. Most lenders claim khalai. As a special vertical, launched an at-home gold
you have that borrowers can get a gold there will be one officer at each loan service recently. It’s being
covid-19 loan within half an hour if they branch who will only look at rolled out in a phased manner.
symptoms have their KYC (know your gold loans.
bit.ly/3foTEoT customer) documents. Manimekhalai expects WHAT TO KEEP IN MIND
“There was a time when higher demand for gold loans Lenders, typically, give up to
people didn’t want to touch at least until September. 75% of the gold’s value as a
gold. People’s reluctance to “From May onwards, the num- loan. Higher the purity of gold,
pledge gold to meet their cash ber of loan accounts per day the higher will be the valuation
flow problems is slowly dimin- and amount have gone up. and the loan amount. Most
ishing,” said Anirudh Kamani, This will continue until things lenders ask for at least 18-carat
CEO at ICICI Home Finance. stabilize and the lockdown is purity.
While ICICI Home Finance entirely lifted,” she said. If you are looking to take a
is offering loans of up to ₹10 The non-banking financial loan against jewellery, the len-
lakh, Canara Bank is giving a companies der won’t con-
maximum of ₹20 lakh. Both (NBFC) focused Lenders give up sider the value of
have tenures of up to one year. on gold loans are to 75% of the the gems and
WILL IT BENEFIT YOU? affordable and will also ensure that Mishra. “If the cost of treatment ICICI Home Finance is already witness- gold’s value as a stones. Also, they
Insurers we spoke with believe that health insurance penetration continues to be as high as it is right offering only bullet repay- ing higher loan; higher the accept coins with
since the number of covid-19 infec- increases because unlike a benefit- now, a ₹5 lakh cover may not really ments for gold loans. Under demand. “There
purity of gold, the a purity of 99.99%
tions is spiking, a benefit-based based policy, people will want to help. The minimum of ₹50,000 this, typically, a borrower pays is certainly a and up to 50
policy could come at a high cost. renew it every year,” he said. sum insured doesn’t do anything the interest for the tenure of demand for gold higher will be the grams. Many len-
Also, the question posed on the ear- Insurers said since the commu- because the average cost of treat- the loan and repays the princi- loans, however, it loan amount ders don’t offer a
lier draft still remains unsolved: if nity spread of covid-19 is already ment is ₹2 lakh-2.5 lakh.” pal amount towards the end. will be sometime loan against gold
a regular health policy is covering happening, launching such a policy “In gold loans, borrowers pre- before we start bars.
the costs for covid-19, why is there now will only push the pricing MINT TAKE fer bullet repayments,” said seeing a notable surge in assets Usually, there is no prepay-
a need for a separate one? upwards (the government is main- The product will be helpful com- Kamani. under management (AUM) ment on gold loans. Banks can
“The guidelines have been rolled taining that India is still not in com- pared to the earlier draft policy, as Canara Bank has lowered growth. Markets are gradually charge up to 1% of the out-
out due to the fear around covid-19 munity transmission stage). it removes confusion in terms of interest rates on its gold loans opening up, and this may lead standing loan. Besides proc-
but my view is that this product still Note that Irdai has left the pric- what is covered and what isn’t. as it was pushing customers to to more demand for gold essing fees, lenders can also
does not address the real issues ing to the insurers. “Unless insurers Right now, policyholders are suf- other lenders, said A. Manime- loans,” said George Alexander levy valuation charges.
around the cost of are able to ride on fering because of inflated hospital khalai, executive director at Muthoot, managing director, Remember that if the bor-
treatment,” said Pra- Clarity is awaited large numbers, you bills and insurers not covering Canara Bank. The gold loan Muthoot Finance. rower is unable to repay the
sun Sikdar, managing on its pricing and will not see a benefit in costs of consumables such as PPE portfolio of Canara Bank, after According to Muthoot, loan on time, lenders have the
director and CEO, the waiting premiums,” said Sik- kits. A defined benefit will remove its merger with Syndicate micro, small and medium right to auction the gold. But
ManipalCigna Health period. Also, dar. the problem of different costs. Bank, is at ₹56,000 crore. enterprises will need instant this is done after reminders. A
Insurance Co. Ltd. Insurers also worry However, individuals with “We created a special gold credit facilities to revive and gold loan can help you tide
experts say the kick-start their businesses. A over temporary cash flow
Insurers said the about covering indi- co-morbidity should wait and loan vertical within our prior-
reason why disease- sum assured may viduals with co-mor- watch to understand how insurers ity credit as people have a cash gold loan works as the process- problems, but remember to
specific policies be inadequate bid conditions will underwrite the product. The flow mismatch,” said Manime- ing is quick. The NBFC keep the tenure short.
haven’t done well in because they have pricing will also play a big role in
the past is because higher chances of get- understanding whether the policy
most illnesses are covered under a ting infected. Sikdar said some makes sense or not.
regular indemnity policy. amount of underwriting will be For now, if you have adequate
However, Sikdar said this prod- required to deal with this. health insurance, there’s not too
uct is still better compared with the “The other concern is about much to worry because it will cover
covid-19-specific indemnity policy someone who has recovered from covid-19 treatment.
that was proposed earlier. Bhaba- covid-19. The clarification has been Insurers have been asked to
NRIs can remit up to $1 million from
tosh Mishra, director, underwrit- sought from the regulator on the compulsorily offer this product
ing, products and claims, Max Bupa applicability of pre-existing disease starting 30 June. But experts said
Health Insurance Co. Ltd, said, if waiting period,” added Sikdar. that it may not work given that they
their NRO accounts in a financial year
necessary, Irdai should’ve just Insurers said it is still unclear if have another deadline to meet by
asked insurers to offer a covid-19 there is a 48-month waiting period. the end of September—for stan- ISTOCK
benefit-based rider with regular The cap on sum insured, too, dardization of exclusions in health Sonu Iyer house situated in India may be con-
health insurance policies and the could become a problem, said policies. Watch this space! sidered as “nil” in case of a self-occu-
recently launched Arogya Sanje- I am a Canadian citizen and hold pied property. An individual may
evani product. an overseas citizenship of India consider up to two properties as
“From a policyholder’s perspec- For more stories about how to manage your (OCI) card. I own one house in self-occupied. A property is consid-
tive, I don’t think this product money life, listen to the podcast Why Not Mint India that is vacant and locked ered as self-occupied if it is: occu-
caters to the problem of high treat- Money with Mint’s Personal Finance team on and fixed deposits of above ₹1 pied by the owner for his own resi-
ment costs. Arogya Sanjeevani is a htsmartcast.com. Invest smartly to make every crore in non-resident ordinary dence; or cannot be occupied by the
better product because it caters to penny count. (NRO) accounts with an interest owner due to his employment, busi-
all the problems at large. It is income of over ₹2.50 lakh. Do I ness or profession carried on at any
need to file income tax returns other place, where he has to reside
(ITR)? Is the FD amount and its in a building not belonging to him.
interest repatriable? In any other case, the individual is
—KP liable to pay tax on notional rent in
ASK MINT
A non-resident Indian (NRI) is m respect of the vacant property, sub-
required to file ITR if the gross taxa- N R I TA X AT I O N ject to deductions. In that case, such
ble income exceeds the maximum
amount not chargeable to tax. For datory furnishing of ITR, in case an
income will also need to be included
in the total income to evaluate if it
FY21, the maximum amount not individual (among others) deposits exceeds the limit of ₹2.5 lakh, trig-
Renu Yadav weighted average Macaulay with higher duration are more chargeable to tax is ₹2.5 lakh. How- over ₹1 crore in one or more current gering the obligation to file ITR.
renu.yadav@livemint.com Duration of the debt securities sensitive to interest rate changes ever, for determining the limit of accounts in the financial year (FY); Under the exchange control law,
held in its portfolio. than short-duration funds. The ₹2.5 lakh, the gross taxable income incurs expenditure over ₹2 lakh for as an NRI, you are allowed to remit

M acaulay Duration gives the

time (in years) in which the
investor will be able to recover
the price of the bond paid in the
forms of interest payments and
principal repayment. The Macau-
lay Duration of a debt fund is the
Sebi has used Macaulay Dura-
tion to classify funds in seven debt
categories in order to help inves-
tors choose a debt fund in line
with their investment horizon.
When interest rates rise, bond
prices fall and vice-versa. Funds
NAV of a fund holding higher
maturity papers is, hence, more
volatile. An investor will have to
stay longer with funds having
higher Macaulay Duration to
even out the negative impact on
the NAV due to rise in rates.
should be computed before giving
effect to the deductions under
Chapter VI-A (such as under Section
80C) or capital gains rollover
exemptions (like under Section 54).
Even if the gross taxable income
is below ₹2.5 lakh, the income tax
law was recently amended for man-
himself or any other person for
travel to a foreign country in the FY;
and incurs expenditure over ₹1 lakh
towards the consumption of elec-
tricity. In your case, as the interest
income is more than ₹2.5 lakh, there
is a requirement to file ITR.
The taxable value of a residential
up to $1 million from your NRO
account on production of necessary
documentary evidence. Remittance
exceeding $1 million requires spe-
cial permission from the Reserve
Bank of India.
Sonu Iyer is tax partner and people
advisory services leader, EY India

IT’S HIGH TIME FOR THE MARKET REGULATOR TO REDEFINE DEBT FUND CATEGORIES
(AMC). It is good to give flexibility to the AMCs in portfolio con-
struction and the purpose of this point is not to say AA- or A-rated
POWER bonds are default candidates.
However, consider two illustrations of the issue. One, the case
POINT of ultra short-term funds, having A- and AA-rated bonds in the
portfolio. These funds are just next to liquid funds and are
JOYDEEP SEN expected to be “liquid” and, in the Indian context, liquidity in
bonds rated less than AAA is a question mark. Two, consider short
Respond to this column at
mintmoney@livemint.com
duration funds running a portfolio predominantly comprising
securities less than AA+. These funds mimic credit risk funds and
defeat the purpose of having a separate credit risk category.
managing the average portfolio maturity on the lower side, by
investing a part in shorter maturity papers. The longer maturity
end of the yield curve is more volatile, hence a barbell fund can
be more volatile than other comparable funds.
The issue here is deeper, in the context of the average portfolio
maturity or average Macaulay Duration. In an ultra short-term
fund, we now learn that only 50% of the invested quantum will
come back in one year, it will take five
Debt MF years to get back 100% of the money
categories need and one security is maturing after nine
to be revised as years. All this while the portfolio dura-
ries, instrument-wise maturity is defined as 91 days and one year.
In other categories, it is just the average.
HAVE A CATEGORY FOR MATURITY RUN-DOWN
In fixed maturity plans (FMPs), it is defined that the maturity of
any instrument in the portfolio cannot exceed the maturity of the
FMP. Accordingly, the remaining maturity of the portfolio comes
down every passing day.
Reducing portfolio maturity reduces volatility risk. Nothing
stops an open-ended fund from running this strategy, but there
is no category for this. Introducing this would lead to clarity. A

S
ince the time the Securities and Exchange Board of India
(Sebi) notified the mutual fund categories and rules in Octo-
ber 2017, the system has gone through a lot of empirical
events. In light of the learning curve we have had, willy-nilly, it
is high time we redefine the rules. This is an open letter to all the
stakeholders, including Sebi.
INCLUDE CREDIT RATING
Credit rating is a criterion in only two debt fund categories—cor-
porate bond and credit risk. In the corporate bond category, it is
minimum 80% in securities rated AA+/AAA and in credit risk, it
is at least 65% in securities rated AA and below. In other catego-
ries, it is at the discretion of the asset management company
INCLUDE PORTFOLIO MATURITY
In quite a few categories like corporate bond, banking PSU and
credit risk, the portfolio maturity is not defined. The fund man-
agement industry is disciplined in this respect; AMCs do not take
any undue long duration calls in these categories.
Still, it is better to define it in case a fund manager gets moti-
vated to become adventurous and takes a long duration call like
in a government security (G-sec) or a dynamic bond fund.
INCLUDE SECURITY-WISE MATURITY
In the fund management industry, there is a jargon “barbell”. It
means running a part of the portfolio with long maturity, but
tion is supposedly in the range of three
the system has to six months.
gone through a There is something technical here:
lot of changes for computation of Macaulay Dura-
tion, for instruments that have the put
and call options, the put-call date is
considered, not the “door-to-door” maturity.
Another technicality is that for floating rate instruments, the
interest rate reset period is considered. For example, for a five-
year maturity floating rate bond benchmarked to one-year Trea-
sury Bill yield, it is considered as one year. Sebi has to make life
simple for us. Over and above average maturity, security-wise
maturity should be defined. In liquid and money market catego-
certain number of funds may be allowed per AMC, say three or
five, where the AMC can define the initial and target maturity.
REDUCE CATEGORIES, SIMPLIFY NOMENCLATURE
Some categories like medium duration or long duration or floater
are not really used.
What are low, short or medium durations may not be clear to
lay investors. Calling it something like “six to 12 months” or “one
to three years” funds would make it clearer. Definitions also can
be made uniform. Instead of defining categories in terms or
maturity somewhere and Macaulay Duration somewhere and
duration somewhere, it may be kept uniform as maturity.
Joydeep Sen is founder, wiseinvestor.in
 NEWS TUESDAY, 16 JUNE 2020
MUMBAI 11

‘Onus is on users to report Unemployment rate

declines sharply as
vile social media content’ India exits lockdown
MINT
Saumya Tewari & Shuchi Bansal government stakeholders globally FROM PAGE 1
Cyrus Mistry, ousted chairman NEW DELHI and, also in India, have been in the
of Tata Sons. MINT form of sweeping generalizations, the improvement is largely

Tata firms
entered into
related-party
deals: Mistry
FROM PAGE 1
tional business to Jayem Auto.
The other charges include vari-
ous transactions entered
between the Tata group and
businessman C. Sivasankaran
(through his group companies),
which benefited Siva group to
the tune of ₹1,000 crore. “It is
pertinent to mention that Tata
Sons invoked arbitration against
Siva Group as late as 15 June
2017, i.e. 6 months after filing
the company petition,” accord-
ing to the affidavit.
Mint reported on Sunday that
in his affidavit, Mistry said that
three-and-a-half years later, the
concerns that he had expressed
T
he debate on regulating
big-tech companies has
been reignited by
US President Donald
Trump’s executive order
targeting social media platforms. In
an interview, Amber Sinha, execu-
tive director of Bengaluru-based
research think tank Centre for Inter-
net and Society, talks about the
impact of Trump’s move, the regula-
tory challenges and the need to
address hateful content on social
media platforms. Edited excerpts:
Will the Trump ordinance on
social media have implications
on other markets?
It is difficult to say if it will have a
direct impact. Most governments,
globally, including India, are look-
ing at regulations for internet inter-
mediaries, with a focus on social
media companies. Currently, there
is something called a safe harbour,
which most internet intermediaries How have these firms acquired
enjoy, and simply means that they size?
are not held responsible for the con-
tent displayed on their platforms a social networking platform, but it
because that content is crowd- has hived off to become many differ-
sourced. In different
Facebook, for instance, started as
ent things, including a
particularly when it comes to social
media platforms. A year-and-a-half
back, the IT minister said that we
must look at criminal laws on abet-
ment when it comes to social media
platforms. These arguments do not
have a clear legal basis. When the
Cambridge Analytica scandal hap-
pened, the problem highlighted that
existing laws on data regulation did
not provide any teeth to the govern-
ment to hold Facebook responsible
for leaking user data. For most tech
companies, with the size of the
Indian market becoming quite big,
the central government has become
a powerful stakeholder that these
platforms must listen to. What we
need in India quite desperately is
more rational ways to deal with hate-
ful and vile social media content
through effective regulation, which
hold platforms more responsible.
However, it should not translate into
I don’t think self-regulation is the greater power to law enforcement
way forward because it has clearly authorities to harass Indian citizens
failed, not just in case of social whether it is through provisions of
media, but also in traditional media the Indian Penal Code or banning
companies. It would not work to social media accounts of individuals
apply the rules of television for a certain time period. It must
because of a growth in casual
Mark your
work and self-employment
activities, and should not be
attendance
by taking a
selfie, Yogi
interpreted as growth in formal
sector jobs. Industrial activity has
started picking up, but wage
Adityanath
asks
teachers
employment and a recovery in
formal sector jobs will take a
bit.ly/37w3FxX much longer time, they argued.
“The lockdown had wiped
out the self-employment space, The summer crop planting
and when the unlocking has season and the rural jobs plan
picked up, this category of peo- gave employment to people.
ple are going back to earn their
livelihood, which is showing in the national rural employment
this survey findings,” said guarantee scheme has gone
Muralidharan Thyagarajan, up,” said Mehrotra, chairper-
chairman of TMI Group, a staff- son of the Centre for Informal
ing company. Sector and Labour Studies at
“If we analyze the available JNU. “But these are not formal
data points and the ground- jobs. We were talking about a
level interactions with people four decade-high unemploy-
and corporates, we can say ment rate before covid lock-
non-wage work is coming back. down, and if the job loss rate
At least 75% of people in the stays at 10-12%, think of the
labour market are in non-wage overall impact on people. It is a
work, earning a livelihood crisis for any labour-market.”
through self-employment, The lack of decent jobs,
including agricultural work experts argue, has the potential
and casual jobs,” to push more peo-

previously over value-destructive
acquisitions made by his prede-
cessor Ratan Tata, which he had
inherited, have become a reality.
Soon after he was removed as the
Tata Sons chairman, Mistry wrote
a letter to the board highlighting
certain investments done by the
previous chairman and this letter
has been the focal point of a bitter
exchange between the two war-
ring sides.
In addition to the related-
party transactions, Mistry has
also questioned the Tata group’s
continued presence in loss-
making ventures such as the
Nano minicar project and Tata
Steel Europe that has incurred
losses of $495 million as of 2019.
‘
government regula- m INTERVIEW primary platform to news channels and also be made clear Thyagarajan said. The improvement is ple to poverty.
tions there are differ- consume news. These newspapers to that who is held “The decent for- because of a growth “Those who
ent sources for safe harbours. Both platforms have been allowed to hor- social media plat- We need measures to accountable and mal sector jobs in casual work, and were earlier in
internet intermediary rules under izontally extend themselves because forms, because it is for what. We need will take over a should not be wage employment
the IT Act and case law talks about competition hasn’t caught up with different from tra-
reduce the power measures to reduce year to recover have gone back to
ditional media out- imbalance between the the power imbal-
interpreted as
certain thresholds, and if those are technology. This has not happened from the covid-19 villages and are
not met, then platforms can disclaim in other sectors so aggressively lets. The old regu- users and social media ance between the pain.” growth in formal now either in
liability. because data has been commodi- lations will not be platforms, and provide users and plat- There a r e sector, say analysts casual work or
Platforms are not in a position to tized and these services are available fit to apply to new- forms, and provide mainly three rea- agri-work. Drivers
control the flow of content, which for free. Therefore, we see Facebook age business mod- more power to users. more transparency sons behind the with monthly
may include copyright infringe- acquiring Instagram and WhatsApp, els of internet Amber Sinha and power to the sharp improvement, said San- wages or office support staff
ment, hate speech and fake news. and extending into businesses such firms. Perhaps we Executive director, Centre for citizens. At the gov- tosh Mehrotra, a professor at who have gone back due to job
The onus is on users to report such as digital payments and e-com- need a co-regula- Internet and Society ernment level, Jawaharlal Nehru University loss and wage loss will increas-
content and the platform is a dumb merce. The regulatory framework tory framework ways should be (JNU). “The sowing season is ingly get into informality. Tech-
conduit. Currently, one can only under competition law is broken where there could devised to deal on, which must be absorbing nically, they will be called
hold these platforms responsible if globally to address the horizontal be clear laws, which create mandate with the issue and then the mandate people; second, the unlocking employed but are they decently
they have knowledge of something, spread of a few large big tech compa- to govern them. should be provided to social media has resumed livelihood activi- employed,” asked Aroop Mitra,
and that is why they have devised a nies. Do you see the end of a free run platforms to create rules that satisfy ties that were thrown out of a professor of economics at the
rule on taking down fake or hateful What is the way forward to reg- for social media firms? that mandate. gear due to the lockdown; and Institute of Economic Growth,
posts, which are flagged by users. ulate social media? Some of the pronouncements by saumya.t@livemint.com third, demand for work under in New Delhi.

PaisaBazaar lays off Support small biz: FM to lenders Junk bonds may not find takers
over 1,500 employees
FROM PAGE 1
demand for new loans plunge
by almost 90% in some seg-
ments, the people said on con-
dition of anonymity.
“Laid-off employees have
been asked to serve a month’s
notice ending 30 June, and
close to 100 employees along
with some senior executives
have been absorbed into Poli-
cybazaar,” said one of the peo-
ple cited above.
Paisabazaar did not respond
to Mint’s queries.
Over the past two months,
the digital lending industry
has been in turmoil because of
the covid-19 pandemic. The
pandemic has also left most
digital lenders struggling to
raise fresh funds from banks
and non-banking financial
companies (NBFCs) for lend-
ing, resulting in a spike in bor-
rowing rates.
In addition, the extended
moratorium announced by the
Reserve Bank of India (RBI)
has made it difficult for several
lenders to collect payments
from borrowers, adding to the
woes of the industry.
In an interview last month,
Naveen Kukreja, chief execu-
tive and co-founder of Paisa-
bazaar, said the lending mar-
ketplace, which liaises with
several large lenders, has seen
fresh origination of new loans
drop to 10%-25% for partners.
“A large part of the impact
started right after India went
into lockdown. Since some-
thing of this scale hasn’t hap-
pened in the past, it became
clear that large lenders,
including digital lenders, were
unprepared for a situation like
this,” Kukreja said.
During the crisis, Paisabazaar
also saw customer acquisitions
on its platform drop by 80%.
FROM PAGE 1
“As many as 18 private sector
banks and 11-12 NBFCs have
rolled out the scheme. The rest
will do so in the next few days,”
the official said, adding that
some lenders have asked the
government to expand the
scope of the scheme so that
more borrowers are able to
avail it.
“Some bankers requested
the government to include pro-
fessionals and individuals
under the scheme. They also
requested the government to
revise the scheme as the new
revised definition of MSMEs,”
the official cited above said.
The finance minister told the
participants that they will have to
share the responsibility with the
public sector banks who have
been disbursing loans to small
businesses, said one person
present at the meeting.
The government has been
prodding banks to increase
credit disbursal to support
The govt scheme is expected to
enable small biz pay salaries,
rent, and meet restocking costs.
small companies battered by
loss of business and a severe
liquidity crunch due to the
prolonged nationwide lock-
down.
Announced as a part of the
government’s ₹20 trillion
financial package, the scheme
guarantees collateral-free loans
to help small businesses pay
salaries, rent and meet restock-
ing expenses. It also gives len-
ders 100% guarantee against
any loan default.
Two people present in the
meeting said the NBFCs asked
the government to allow the
benefit of the guaranteed loans
to individuals who run busi-
nesses but are not essentially
registered as MSMEs.
The government wanted to
know the challenges that non-
bank lenders and private banks
faced in implementing the
scheme, these people said.
“We conveyed that includ-
ing individuals who borrow
from non-bank financiers
would benefit a lot of borrow-
ers. The government seemed to
agree with the point of view,”
said the first of the two people
cited above.
“While large private sector
banks said in the meeting that
they have already started the
process and are disbursing
loans under the scheme, their
smaller peers are yet to catch
up,” the second person cited
above said.
shreya.n@livemint.com
FROM PAGE 1
with Indian firms raising $20.7
billion, the most in six years,
through offshore bond sales.
In March, though, only one
Indian company—real estate
developer Macrotech Develop-
ers—managed to tap the bond
market. However, in the past
month, two firms—state-owned
lender REC Ltd and agrochemi-
cals major UPL Ltd—raised
$500 million each overseas.
“The offshore bond market is
opening up for Indian firms.
Spreads in the secondary mar-
ket have narrowed considerably
in the last few weeks. We could
see some more investment
grade issuers, including PSU
firms, try to tap the markets in
the next couple of months. The
recent UPL deal will spur others
to look at the offshore debt mar-
ket,” said Anuj Kapoor, manag-
ing director and head of invest-
ment banking at UBS.
Yet, experts said in the near
term only investment-grade
bond issuers will be able to tap investment grade issuers raised
the market, and sub-invest- $10.8 billion out of the total
ment grade bonds or junk $20.7 billion raised by Indian
bonds will have to wait for a companies.
broader recovery in risk appe- Of the $10.2 billion total off-
tite. Junk bonds refer to bonds shore bond issuance this year,
rated below BBB minus. investment grade issuers have
“When the Asian markets raised only $3.9 billion. “If you
opened, it was the investment- extrapolate from the Chinese
grade, big regional brand names high-yield deals, it will probably
and the sovereigns that started be possible for the larger high-
to tap the market. yield Indian names
The Asian high Of the $10.2 bn to come to the
yield issuance has total offshore market first, which
been very quiet so bond issuance would be compa-
far. On an average, this year, nies in the BB rat-
25-30% of issuan- ing bucket and
investment-grade those that are from
ces in any week
tend to be high- issuers have defensive sectors,”
yield issuers in a raised just $3.9 bn said Sahai.
normal market. “Newer issuers
But in these mar- or names that are
kets, that number is 5-10%,” said lower down on the credit curve,
Shantanu Sahai, managing say B-rated bucket, those will
director and head of debt at need to see some more broad-
Nomura India. ening of investor risk appetite,”
A large part of the offshore he said, adding that new issuers
bond sales from India in the last and those in B-rated bucket
18 months was from sub-invest- might have to wait till August or
ment grade issuers. In 2019, September to tap the markets.

Sebi may allow WFH for brokers Clix Cap eyes stake in Wary of infection, people shun ATMs
FROM PAGE 1
Lakshmi Vilas Bank
locations other than the regis-
tered ones, following an exemp-
tion given by the regulator.
“Otherwise, allowing termi-
nals to be operated from loca-
tions other than registered
ones could have been misused
for illegal dabba (trades done
outside the exchange platform)
trading. However, the situation
assessed by Sebi shows dabba
trading has gone down during
lockdown,” said the second
person, an exchange official.
Many foreign broking firms
have demanded this relaxation
since 2018, when Sebi and the
exchanges began considering
extending trading hours. The
proposal to increase trading
hours had met with resistance
from smaller brokers as they
said such a move would require
more investment and depend-
ence on technology, which
they could not meet. trading. “This will be an exten-
In a blog post on 25 March, sion of what was allowed by
FROM PAGE 1 tions in a month, we are target-
ing a billion transactions per
J.R. Varma, a professor at IIM exchanges—such as, the policy benefit transfer (DBT) scheme day, and we are pushing for it,”
Ahmedabad and chairman of would need to list the users and FROM PAGE 1 restricts new lending, due to a got implemented. Kant said on 12 June, speaking
Sebi’s Secondary Market Advi- details of who will be permitted sharp rise in non-performing Fino Payments Bank saw through video-conference at
sory Committee, also made a to operate from such location,” due diligence and regulatory assets, insufficient liquidity and transactions on its business CII’s fintech and digitization
case for removing location curbs. said the exchange official. approvals. negative return on assets for correspondents’ network seminar.
“Securities regulators have Brokers also see business With Lakshmi Vilas Bank’s two consecutive years. through around 8,000 outlets The stringent lockdown that
made things sense in the pro- capital adequacy ratio shrink- According to norms set by of Bharat Petroleum Corp. Ltd began on 25 March had led to a
worse by compli- The change comes posal as this will ing to 3%, it has been in talks the banking regulator, inves- (BPCL), which is also a strategic fall in digital payment volumes
ance require- after compliance reduce realty with institutional investors and tors will have to seek RBI’s investor in the bank. Cash withdrawals from ATMs as e-commerce portals halted
ments t h a t relaxations during costs. “At some funds to raise equity. One of the approval if any transaction Rishi Gupta, chief executive, in April fell 47% to 286 million fresh orders and large retail
encourage inter- the lockdown point, the biggest investors, US-based fund house leads to the purchase of more Fino Payments Bank, said from March. MINT outlets, except those selling
mediaries to cen-
allowed brokers to cost was on tech- Tilden, even had a meeting than a 5% stake in a bank. The while transactions through essentials, remained shut.
tralise key func- nology, but now it with Reserve Bank of India new shareholders and directors these outlets fell in the first 15 RBI data also showed India’s “ATMs will innovate, keep-
tions in a single operate terminals is real estate. (RBI) officials in February. The will also have to meet the days of the lockdown, it has total digital payment volumes ing the public health angle in
geographic loca- from home Internet trading bank had also attempted a so-called ‘fit and proper’ crite- gradually picked up since. declined to 2.36 billion in April, mind and evolve quickly. QR
tion. Regulators solutions have merger with Indiabulls Hous- ria laid down by the regulator. “Roughly about 5-7% of our from 3 billion in March. code-based cash-out at ATM
forgot that we become easier to ing Finance, which was Shares of Lakshmi Vilas transactions happens through Amitabh Kant, chief execu- will have to come up faster.
must not create any single access. Perhaps the entire mar- rejected by RBI. The merger Bank surged 4.94% to ₹15.30 on BPCL outlets. The numbers tive of government think-tank People have stayed away from
point of failure in systemically gin reporting requirement was crucial for Lakshmi Vilas BSE after the announcement, declined in the first 15 days of NITI Aayog, recently said the ATMs to some extent because
important securities markets,” could be done via cloud to Bank, which needed to raise while the benchmark Sensex the lockdown because many of country is targeting one billion they did not want to use those
Varma wrote. ensure adequate transparency capital to lift curbs imposed on index fell 1.63% to 33,228.80. these outlets were shut, but it digital transactions per day in a services where the risk percep-
Under the proposed norms, to exchanges and regulator and it by the central bank. Clix Cap, founded by Bhasin has now recovered and is back push towards bringing more tion was high,” said Anand
exchange members would need reduce compliance burden for The private bank is currently and Anil Chawla, is 85% owned by to pre-lockdown numbers in people under the ambit of such Kumar Bajaj, chief executive of
to form a policy on controls and brokers,” said a broker who did under RBI’s prompt corrective AION Capital Partners, a Mum- May and we expect it to grow modes of payments. PayNearby, a firm that provides
checks to prevent unauthorized not want to be named. action framework, which bai-based private equity firm. 20-25% in June,” said Gupta. “From three billion transac- digital banking services.
12 TUESDAY, 16 JUNE 2020
MUMBAI VIEWS

OUR VIEW MY VIEW | BARE TALK

PIB

A better way to rescue MSMEs

from the tyranny of thresholds
Our new classification of businesses eligible for special concessions won’t incentivize them to grow

1 and 1.2. Perhaps, purely micro service
enterprises that rely on investment in
human resources rather than in plant,
machinery and equipment might have a
higher TIR. But it is doubtful if even
they would be able to achieve a revenue
of ₹5 crore with an investment of ₹1
crore or less. Similarly, small and
medium manufacturing enterprises
V. ANANTHA NAGESWARAN cannot achieve a sales revenue of ₹50
AND V. RAMAKRISHNAN crore and ₹250 crore with investments
ple, that revenue authorities follow one
definition and banks another. However,
the principle to follow when we opt for a
simple definition is to make it broad
enough to subsume finer distinctions so
that the purpose is not lost.
What is the purpose of classification?
It is to encourage businesses to grow,
generate employment, and be more
productive by investing in technology,
rather than focussing on remaining

New Delhi should offer

are, respectively, member of the Economic of ₹10 crore and ₹50 crore, respectively.
Advisory Council to the Prime Minister and As they stand, the policy changes may
managing director, ODPL, Singapore. achieve the perverse effect of keeping
manufacturing units micro and small,
while service-sector enterprises stand a
small to avail of special financing and
tax concessions. Therefore, the govern-
ment should wholeheartedly encourage
them to grow without their fearing a
loss of concessions consistent with their

our states a new deal A

s part of its Aatmanirbhar Bharat
package, the Indian government
announced several far-reaching
reforms. One of them was a change in
slightly better chance of achieving
growth without worrying about losing
the concessions that accrue to them
based on their micro or small or
status. The myopic mindset of worrying
about offering tax breaks or lower inter-
est rates on loans extended to these
enterprises for a longer period than
definition of micro, small and medium medium status. When the country is planned should be shed. The notional
enterprises (MSME). To the earlier aiming to become self-reliant, attract losses incurred because of these are
The Centre seems unable to fulfil its GST compensation promise to states, but it could push definition that relied solely on the book businesses seeking to relocate out of more than offset by the employment
value of investments to determine their China and create employment in, say, generated, technologies obtained and
for a compromise formula that would let them borrow upto 5% of SGDP without any riders MSME status, a sales turnover criterion light manufacturing industries, this pol- prosperity achieved. In general, the
was added. Second, the distinction icy change would achieve the opposite. government’s attitude should be not to
between manufacturing and service On their part, developed countries punish them for growing but reward
enterprises was abolished. Third, the adopt either employment criteria or them. In a post-covid world of scarce

T
he unprecedented collapse in
India’s economy has strained gov-
ernment finances. With business
activity brought to a standstill by
our lockdown and prospects of a
revival looking distant, both the
Centre and states have suffered gaping reve-
nue holes. This has worsened a pre-covid
tussle over central compensation for state-
level shortfalls in collections of the goods and
services tax (GST). Before it was launched in
mid-2017, the Centre had assured states of
enhanced intake year after year, and promised
to plug any revenue losses that arose from its
underperformance over the first five years of
its imposition. The GST mop-up of recent
months has only been a fraction of what it was
last year, and reports suggest that New Delhi
may cite the coronavirus outbreak as a “force
majeure”—an “act of God” in common par-
lance—to not honour its commitment. Natu-
rally, state administrations would be dis-
pleased. But the country’s economic circum-
stances have changed dramatically and the
Centre does not have sufficient resources.
Both parties to the dispute need to work out a
the impasse between the Centre and states threshold amounts were increased. sales turnover criteria, or both. Con- growth, policy experiments need to be
could be broken if all sides were to admit the Later, when the changes were notified, sider the policies of other jurisdictions. pursued with larger hearts and more
the government increased the invest- The European Union adopts a mix of open minds. That is what seems missing
current reality. Poor revenues today are ment and sales turnover thresholds for sales turnover and employment criteria. in India’s new MSME thresholds.
because of the covid crisis more than a switch- medium enterprises. These changes The United States, for all practical pur- What should the government do
over to GST. Other tax collections have taken a have the potential to be transformative, poses, has an employment yardstick. If now? Like Japan’s, the government of
severe hit as well. This being the case, our but they may not work out as expected. an enterprise has less than 500 employ- India should allow enterprises to
As things stand, an enterprise will ees, it is considered a SME. Otherwise, it remain MSMEs even if only one of the
states should be ready to accept significantly lose its status as a micro enterprise, for is large. Japan opts for investment and two criteria is met. Only when an enter-
reduced sums as compensation. example, if it either exceeds the invest- employment criteria. What’s important prise has a higher investment and has
This is not to say that state pleas for money ment limit or the sales turnover limit. In is that Japan does not make both criteria achieved a higher sales turnover than
can be brushed aside. Several administrations other words, the addition of the sales binding, as India has done. As long as defined should it graduate to the next
are in acute need of emergency funds to tackle turnover criterion is rendered largely one of the two is met, the enterprise can category, or out of the MSME frame-
infructuous by the insistence that enter- retain its SME status. work entirely in the case of medium
the pandemic. As part of the Aatmanirbhar prises migrate to the next higher cate- A casual look at the classifications enterprises.
Bharat package announced by finance minis- gory even if one of the criteria is met. Is that other developing countries like In short, India’s policy changes on
ter Nirmala Sitharaman last month, states were it possible for micro manufacturing Brazil, China and Indonesia have MSME classification are welcome, as
granted permission to enhance their borrow- enterprises to achieve a sales turnover adopted suggests that India has done they seek to end the tyranny of thresh-
ings. The finance ministry raised the cap on a of ₹5 crore with an investment of ₹1 better by keeping them simple and olds. But, they run the risk of falling
crore or less? eliminating the distinction between short in translating that intent into out-
state government’s debt from 3% to 5% of gross Data indicates the turnover to invest- manufacturing and services. Other comes. In the post-covid world, being
state domestic product (SGDP). By the govern- ment ratio, or TIR, ranges across Indian countries have different ratios for bold and large-hearted is the only
ment’s estimate, this move would create space industries and sectors between 0.08 different industries and for assorted option available to policymakers.
for additional borrowings by states to the tune and about 3, with an average of between purposes. The latter means, for exam- These are the authors’ personal views.
of ₹4.28 trillion. But not all states saw much
relief in it. Only the first half percentage point
worth of extra debt allowed was unconditional.
For states to borrow more than 3.5% of SGDP,
they had to achieve a set of reform conditions.
These ranged from action on the govern- www.livemint.com New Delhi, Mumbai, Bangalore, Kolkata, Chennai, Chandigarh*, Pune* Wednesday, June 16, 2010 Vol.4 No.142 Rs. 3.00 32 PAGES

compromise formula. ment’s “one nation one ration card” proposal WSJ: US Fed officials weigh
risks to growth >28

I would urge this House

IN DETAIL: Caste-based organizations retain

In retrospect, the original promise was
to complex initiatives in the power sector. EXCLUSIVE PARTNER
identity, go global >13
CAFÉ ECONOMICS: Design of policy should look
into behavioural decisions of individuals >30
EXPENSE ACCOUNT: Calvinball works for 2,
not 188 million >21

overly optimistic—and also flawed. Central Conceived as incentives for the states to per- SENSEX 17,412.83 Æ 74.66

TAX REFORMS
NIFTY 5,222.35 Æ 24.65 DOLLAR Rs46.56 Æ Re0.06

SMALL WONDER
EURO Rs57.06 Æ Re0.15 GOLD Rs18,580 æ Rs35 OIL $76.20 Æ $0.19

QUICK EDIT and through this House

calculations back then had projected an form better, these also meant that too few of DTC diluted; rate The micro machines
have arrived. Who’ll
The new old
tax code

annual 14% increase in GST intake, to be split them would be able to get the finance needed
cut chances fade
Revised proposals are
better received by
PRADEEP GAUR/MINT
get them to market?
B Y S EEMA S INGH
seema.s@livemint.com
·························
BANGALORE
two CENs at the Indian Institute
of Science (IISc) in Bangalore
and the Indian Institute of
Technology, Bombay funded
T his newspaper has
always cheered the
government’s efforts to
enforce a new direct tax
code and move to a
goods and services tax
(GST) regime from a
value-added tax one.
The direct tax code in
the entire country and
state governments that
n Maturity amount from insurance
some groups, but lower
rates look a lot less
policies and pension funds will not be
taxed
O ne is a handheld explosive
detector as good as a sniff-
er dog. Another is a cardiac dis-
primarily by MCIT under its
various programmes, have a
handful of technologies, partic-
particular promised to
bring a certain stability to
India’s tax rates, and
n Companies granted relief as MAT

between the Centre and states, and the former to pursue near-term goals related to the covid
order detector. From the func- ularly microelectromechanical make tax laws more
possible now will continue to be calculated on
tional point of view, there is systems (MEMS)-based devices, rule-based than
book profits
n Indian MNCs get a boost as
nothing unique about either. ready for licensing. The minia- exception-based. At first
B Y A S TAFF W RITER international norms to be used for
Yet, the two mark a milestone in ture machines—they range in sight, the second draft of
feedback@livemint.com establishing residence
Indian science. They are among size from 20 micrometres to a the direct tax code that
························· the first nanotechnology-based millimetre—behind sleeker and was released by the
NEW DELHI n NGOs get relief and govt arms
itself with discretionary power on
devices that have been licensed smarter phones today, MEMS government on Tuesday,

T he revised draft of the or are in the process of being li- are smart machines that con- disappoints on this

periodic review of obsolete

exemption from tax
new direct tax code di- n Profit-linked benefits for units in
censed out to companies for vert inputs such as sound, light, count. Many of the

had offered to make good anything that fell crisis. Since the Centre seems unable to keep
lutes proposals present
in the earlier version. While
this will significantly crimp the
government’s ability to lower
tax rates, it is likely to make
companies and a few other
categories of taxpayers happy.
Foreign institutional inves-
tors, in particular, have reason
SEZs will run their full course
commercial development.
n More clarity on international tax
The devices are the output of
treaty override
two Centres of Excellence in
n Dilution of anti-avoidance rules to
Nanoelectronics (CEN), set up
mitigate fears of harassment
by the ministry of communica-
n Tax break on home loans restored
tion and information technolo-
gy (MCIT) at a cost of Rs400
crore four years ago, partly in
response to criticism that the
motion and temperature into
digital signals that are detected
by a chip on-board.
“From the platform technolo-
gies that we’ve built in the first
phase, some sensors for auto-
motive, biomedical, aerospace
and other applications are be-
ing licensed to the industry,”
exemptions are back, as
are some of the
discretionary powers of
the government to decide
what is to be taxed and at
what rate. With more
iterations (read: more
dilution) likely, the direct
tax code, when it comes

short of these target numbers. At that time, few its GSP promise, it should now allow states to
to cheer because the revised government wasn’t doing says S. Mohan, chairman of into effect, could well be

and irrelevant laws

version of the tax code allows
them to continue to benefit
from double tax avoidance
agreements.
Tax rates haven’t been spec-
ified in the proposals. These
will be set only in the actual
legislation, which is to be in-
India.
The direct tax code was the
result of India’s attempt to in-
troduce some stability in its tax
regime. Tax rates tend to
change every year with Section
B of the Union Budget typically
dealing with such changes, al-
the first draft of the code re- enough to foster development CEN at IISc. as complex and nuanced
leased in August 2009, were of microelectronics in the coun- For instance, the explosive as the tax regime it
not received well by most cate- try. detector and the cardiac disor- replaces. Worse still, it
gories of taxpayers (other than Now, say scientists, the chal- der detector have been devel- might not achieve its
individual taxpayers). The re- lenge is to commercialize the oped on a microcantilever- desired objective of
vised version released Tuesday technologies, a task that is as based nanomechanical sensing bestowing India’s tax
was. “Overall it has a positive big as the science they are platform. The former is licensed laws with some degree of
tone; it is a better revised ver- based on is small. permanence.

had foreseen how the launch of this new tax, borrow freely. For this, pre-conditions on their
troduced in Parliament in the though the extent of these has sion,” said Mukesh Butani, After four years of toil, the TURN TO PAGE 2®
next session. come down in recent years. partner at tax advisory BMR
The earlier version of the The code was also expected Advisors.

must become a part of

code had said its provisions
would override these agree-
ments. Many FIIs are regis-
tered in tax havens that have
signed such agreements with
to simplify the tax regime and
address problems posed by a ALSO SEE
multiplicity of tax rates and
various exemptions. > FinMin reverses reform momentum >P3
Those attempts, evident in > Foreign investors may benefit >P3

designed to simplify taxation by subsuming debt expansion would have to be dropped Helping government rein in the deficit

good governance.
(Figures in Rs crore) Revenue from 3G 869
auction SBI 18.48%
1,066

many others, would coincide with a down- right away. The money that states borrow is at
67,715
(as against 30,000
budgeted)
653
Budget estimate Revenue from RIL 107.96%
of fiscal divestment so far 314
deficit in FY11
1,079 Figures in Rs crore
3,81,408 (as against 40,000
350 Q1 FY11
budgeted) ICICI Q1 FY10

trend in economic growth. But it did. The regular rates and it is up to them to manage
Bank 350 change
Revenue from
BWA auction
38,543 317
(as against 5,000 PNB 20.53%
* Estimate of finance ministry budgeted) 263
Source: Budget documents

Fiscal deficit as a % of
GDP in FY11
5.5% 315

R AV I SHA N K A R P R ASA D
HDFC

slump was bound to spell trouble. While GST their finances. In any case, fiscal limits have
Likely fiscal 26%
4.5% Bank 250
deficit in FY11* Source: Income-tax department

T he cabinet committee on economic af-

fairs has approved the sale of shares in
state-owned Coal India Ltd and Hindustan
Copper Ltd, as part of plans to raise
Rs40,000 crore from asset sales, money that
A dvance taxes filed by the top 100 com-
panies in Mumbai rose by one-fifth in-
dicating that India’s economic recovery is
likely to be sustained, helping the govern-
ment achieve its target of 8.5% growth in the

implementation has not been smooth, and the lost their validity under the extraordinary
will go towards trimming the deficit. Anoth- year to March. The increased revenue will
er cushion will be the Rs1 trillion raised in also help the finance minister stick to his
the 3G and broadband auctions. >P4 pledge of trimming the deficit. >P4

Mint is also available for Rs5.50 with Hindustan Times under a combo offer

tax system still has some operational glitches, pressures of today.

MY VIEW | MUSING MACRO

A bounced cheque should remain a criminal offence

or may not endanger national security or
AJIT RANADE public interest. A stiff penalty could serve as
a sufficient deterrent against law violations.
That is why many such wrongdoings or
breaches of law can be compoundable, and
need not be classified as criminal offences.
help further the ease of doing business. bathwater. Instead, it lies in simplifying the FAESI) Act was passed in 2003, but has not
Real estate developers who sell flats often enforcement and prosecution process. A been very successful in resolving debt
also arrange for housing loans. Such a trans- bounced cheque is equivalent to paying in defaults faster. Even with collateral, the
action is facilitated by the lender getting a set fake currency, a much more serious crime. banks are unable to liquidate it quickly. Too
of post-dated cheques from the home buyer It also amounts to cheating, since the many stay orders or other delaying tactics
(and borrower). Of course, the lender has the receiver is under the false impression that seem to succeed. Here too, it would be wise

T
he finance ministry has proposed to
decriminalize 39 different offences
across 19 separate Acts. This is a step in
the direction for improving the ease of doing
business. If even minor non-compliance of
rules or procedural lapses result in criminal
charges, then business is unfairly burdened.
The threat of imprisonment even for minor
Hence, it is broadly welcome that the gov-
ernment has taken the initiative to decrimi-
nalize several violations. A prominent exam-
ple last year was when non-compliance with
corporate social responsibility obligations
was relieved of criminal proceedings. That
was a needlessly draconian measure. If a
company did not spend 2% of its post-tax
flat as collateral, but the post-dated cheques there are sufficient funds in the issuer’s not to decriminalize the offences (i.e. Sec-
offer comfort too, because bank. Hence, cheque tion 29) under the SARFAESI Act.
if they bounce, the issuer bouncing cannot be The Insolvency and Bankruptcy Code
can go to jail. Taking pos- India needs equated with a minor non- (IBC) was an even bolder reform, expected to
session of the flat in case of compliance or a procedural instill discipline among borrowers and
a default is not as easy as to empower lapse. It should remain a empower creditors. Alas, it stands sus-
initiating a criminal case criminal offence. pended in covid times, probably for a year.
for a dishonoured cheque.
creditors and Its decriminalization will Lenders cannot initiate insolvency proceed-

is an economist and a senior

fellow at The Takshashila
Institution, an independent
centre for research and
education in public policy.
offences can impact business sentiment
negatively and may hinder investment, both
domestic and foreign.
Proving innocence in an Indian court of
law may take ages. The judicial system is
already clogged, with rising case pendency.
In a criminal case, the offence has to be
proved beyond reasonable doubt to secure
the conviction of the accused, whereas in a
civil case, the plaintiff has to prove a wrong-
doing only on the basis of preponderance of
probability. Imposing a civil penalty is easier.
Besides, numerous commercial courts
have been set up to fast-track commercial
civil cases. Many acts of non-compliance in
business may not arise from mala fide intent,
profits on a social cause, it had to pay a big
fine; otherwise, as per the original 2013 ver-
sion of the Company Law, a director on its
board faced prison time for a minor lapse.
The most famous such reform, of course,
was the decriminalization of offences under
the erstwhile Foreign Exchange Regulation
Act (FERA), which became the Foreign
Exchange Management Act (FEMA) in 1999.
Breaches under FEMA are compoundable
now and the consequences no longer harsh.
So far, so good. But one of the ministry’s
proposals is to decriminalize offences under
Section 138 of the Negotiable Instruments
Act, 1881. In common parlance, this is called
cheque bouncing. Doing this is not going to
The current procedure to
lodge a bounced-cheque
easing penalties harm business. The crime
of bouncing a cheque is
ings against their debtors. The government
may have done it to prevent courts from
case is too cumbersome,
though. A separate case has
on payment applicable even in the
paperless world. This is
being overwhelmed by bankruptcy cases,
but it may inadvertently make the creditors
to be initiated for each and failures could when an instrument is pre- themselves much worse off. Not having
every cheque. A mere sented that is backed by an recourse to the IBC might push some credit-
police complaint or first prove a setback insufficient balance. Sure, ors to the brink of bankruptcy themselves.
information report is not a grace period can be given Its suspension has meant that even compa-
sufficient to get the party for the payer in case of nies that would voluntarily restructure their
arrested, unlike in some other countries. No legitimate delays in clearing and settlement. debt are disallowed.
wonder the court system is overburdened But this offence should not be let off as civil. The ministry should note that we have an
with cheque-bouncing cases. There are India has seen slow and hard-fought insolvency crisis on our hands, not an illi-
more than 3.5 million pending cases of this progress on strengthening the rights of len- quidity one. So pouring liquidity and guar-
law violation alone. The solution is surely ders. The landmark Securitisation and anteed loans will not solve it. In the mean-
not to decriminalize it, since that would be Reconstruction of Financial Assets and time, it would help not to decriminalize
tantamount to throwing the baby with the Enforcement of Security Interest (SAR- SARFAESI offences and bounced cheques.
 VIEWS TUESDAY, 16 JUNE 2020
MUMBAI 13

GUEST VIEW M I N T C U R AT O R

A redesigned social contract for

altered post-pandemic realities
A new strategy must abandon the usual separation between pro-growth and social policies in favour of a common agenda

BLOOMBERG

The probe reaches its first perihelion to track the sun.

Europe’s Solar Orbiter is blazing close to the sun

E urope’s Solar Orbiter (SolO) probe makes its first close pass of the Sun on Mon-
day, tracking by at a distance of just over 77 million km. SolO was launched in
February and is on a mission to understand what drives our star’s dynamic behav-
iour. The close pass, known as a perihelion, puts the probe between the orbits of
DANI RODRIK & Venus and Mercury. In the coming years, SolO will go nearer still, closing to within
STEFANIE STANTCHEVA 43 million km of the Sun on occasions. As it stands today, only five other missions
are, respectively, professor of international have dived deeper into the inner Solar System: Mariner 10, Helios 1 & 2, Messenger,
political economy at Harvard University’s John and Parker Solar Probe. Earth orbits 149 million km (93 million miles) on average
F. Kennedy School of Government, and from the Sun. SolO is a European Space Agency craft that was assembled in the UK
professor of economics at Harvard University. by the aerospace company Airbus.
BBC

C
ovid-19 has exacerbated deep fault
lines in the global economy, starkly
exposing the divisions and inequali-
ties of our current world. It has also
multiplied and amplified the voices
of those calling for far-reaching
reforms. When even the Davos set is issuing calls
for a “global reset of capitalism,” you know that
changes are afoot.
There are some common threads running
through the newly proposed policy agendas: To
prepare the workforce for new technologies, gov-
ernments must enhance education and training
programs, and integrate them better with labour-
market requirements. Social protection and social
insurance must be improved, especially for work-
ers in the gig economy and in non-standard work
arrangements.
More broadly, the decline in workers’ bargain-
ing power in recent decades points to the need for
new forms of social dialogue and cooperation
between employers and employees. Better-de-
signed progressive taxation must be introduced to
address widening income inequality. Anti-monop-
oly policies must be reinvigorated to ensure
greater competition, particularly where social
media platforms and new technologies are con-
cerned. Climate change must be tackled head-on.
And governments must play a bigger role in foster-
ing new digital and green technologies.
Taken together, these reforms would substan-
tially change the way our economies operate. But
they do not fundamentally alter the narrative
about how market economies should work; nor do
they represent a radical departure for economic
policy. Most critically, they elide the central chal-
lenge we must address: reorganizing production.
Our core economic problems—poverty, inequal-
ity, exclusion, and insecurity—have many roots.
But they are reproduced and reinforced on a daily
basis in the course of production, as an immediate
by-product of firms’ decisions about employment,
investment and innovation.
In economist-speak, these decisions are rife
with “externalities”: they have consequences that
spill over to other people, firms and parts of the
economy. Externalities can be positive: think of
learning spillovers from research and develop-
ment, which are well recognized. Obvious nega-
tive externalities are environmental pollution and
the effects of greenhouse-gas emissions.
Such spillovers also include what could be called
“good jobs” externalities. “Good jobs” are those
that are relatively stable, pay well enough to under-
pin a reasonable living standard with some security
and savings, ensure safe working conditions, and
offer opportunities for career progression. Firms
that generate them contribute to the vitality of
their communities.
By contrast, a shortage of good jobs often carries
high social and political costs: broken families,
substance abuse, and crime. There are also clear
economic inefficiencies, as productivity-enhanc-
ing technologies remain bottled up in a few firms
and do not spread, contributing to anaemic overall
wage growth.
Firms’ decisions about how many workers to
employ, how much to pay, and how to organize
work do not affect only the bottom line. When a
company decides to automate its production line
or outsource part of its production to another
country, the local community suffers long-term
damage that is not “internalized” by its managers
or shareholders.
The implicit assumption behind much of our cur-
rent thinking, as well as that of the traditional wel-
fare-state model, is that middle-class “good jobs”
will be available to all with adequate skills. From this
perspective, the appropriate strategy to foster
inclusion is one that combines spending on educa-
tion and training, a progressive tax and transfer sys-
tem, and social insurance against idiosyncratic risks
such as unemployment, illness and disability.
But economic insecurity and inequality today
are structural problems. Secular trends in technol-
ogy and globalization are hollowing out the middle
of the employment distribution. The result is more
bad jobs that do not offer stability, sufficient pay,
and career progression, and permanently
depressed labour markets outside major metropol-
itan centres.
Addressing these problems requires a different
strategy that tackles the creation of good jobs
directly. The onus should be on firms to internalize
the economic and social spillovers they cause.
Hence, the productive sector must be at the heart
of the new strategy.
Put bluntly, we must change what we produce,
how we produce it, and who gets a say in these
decisions. This requires not just new policies, but
also the reconfiguration of existing ones.
Active labour-market policies designed to
increase skills and employability should be broad-
ened into partnerships with firms and explicitly
target the creation of good jobs. Industrial and
regional policies that currently centre on tax incen-
tives and investment subsidies must be replaced by
customized business services and amenities to
facilitate maximum employment creation.
National innovation systems need to be rede-
signed to orient investments in new technologies
in a more employment-friendly direction. And pol-
icies to combat climate change, such as the Euro-
pean Green Deal, must be explicitly linked to job
creation in lagging communities.
A new economic order requires an explicit quid
pro quo between private firms and public authori-
ties. To prosper, firms need a reliable and skilled
workforce, good infrastructure, an ecosystem of
I t’s a scene out of every parent’s—and teenager’s—worst nightmare: two adult-film
suppliers and collaborators, easy access to technol-
ogy, and a sound regime of contracts and property
rights. Most of these are provided through public
and collective action, which is the government’s
side of the bargain.
Governments, in turn, need firms to internalize
the various externalities their labour, investment
and innovation decisions produce for their com-
munities and societies. And firms must live up to
their side of the bargain—not as a matter of corpo-
rate social responsibility, but as part of an explicit
regulatory and governance framework.
Above all, a new strategy must abandon the tra-
ditional separation between pro-growth policies
and social policies. Faster economic growth
requires disseminating new technologies and pro-
ductive opportunities among smaller firms and
wider segments of the labour force, rather than
confining their use to a narrow elite. And better
employment prospects reduce inequality and eco-
nomic insecurity more effectively than fiscal redis-
tribution alone. Simply put, the growth and social
agendas are one and the same.
©2020/PROJECT SYNDICATE
A ‘hugging curtain’ for a comforting embrace
A retirement home in Brazil has come up with a creative solution to allow friends
and families enjoy personal contact with aging residents particularly vulnera-
ble to the coronavirus: a “hugging curtain.” The large plastic curtain, installed in
a retirement home in the city of Sao Paulo, allows residents on one side and visitors
on the other to engage in the sort of comforting hugs that covid-19 has made impos-
sible for months. The curtain has pockets through which a resident and visitor can
insert their arms, and they are outfitted with shoulder-length black gloves for added
protection. “It really feels good; I missed her so much!” 68-year-old Silvio Nagata
told AFP after enjoying a long, emotional hug with his sister, Luiza Yassuko, who
is 76, at a retirement home in the affluent Morumbi neighborhood.
AFP
Don’t write off old-fashioned incubation yet
A woman has hatched three ducklings called Beep, Peep and Meep from eggs
she bought in Waitrose. Charli Lello, 29, from Hertfordshire, put the Clarence
Court eggs in an incubator as an experiment to pass the time after being furloughed.
She said the ducklings would live “a very happy life” with her pet chickens. A Wait-
rose spokesman said fertilised eggs were safe to eat and “entirely indistinguishable”
from normal eggs, unless incubated. Lello, who normally works as an assistant man-
ager in a shop, got the idea after seeing a video on Facebook of someone hatching
quail eggs from a supermarket. “While I was in Waitrose, I saw the duck eggs and
thought maybe they would work as well. I was so excited for them to hatch but I still
had in the back of my mind that these are supermarket eggs...”
BBC
Adult film actors land at teen’s home in TV ad
actors turn up naked at the front door, to tell a stunned mother: “Hiya … your son’s
been watching us online.” The sudden appearance of a smiling but nude Sue and
Derek has become something of a sensation as part on an unusual series of TV ads
by the New Zealand government about internet safety for young people. In the lat-
est video for the Keep It Real Online series, pornography actors tell a woman played
by comedian Justine Smith that her son has been watching their clips “on his laptop,
iPad, Playstation, his phone, your phone, Smart TV projector”. “Yeah, and I’d never
act like that in real life,” the man, Derek, says, as the woman’s horrified son enters
the room holding his laptop.
The Guardian
Mum teaches barista coffee-grinding etiquette
A mother has taken to Reddit looking for support, after her husband told her
she “overreacted” when she complained about a barista in a cafe who woke up
her sleeping baby by grinding coffee beans. The mum explained how the coffee
shop near her house has recently reopened so she decided to go get a coffee, with
her 9-month-old daughter. “It wasn’t busy, but because there were only three baris-
tas (only two serving customers) working the service was slow. That’s fine, I wasn’t
in a rush,” she said in her post. “But the second I walked in, I was struck by how loud
their coffee grinder was. It wasn’t just shut off in a few seconds though, but kept
going and going, since the third barista was grinding a HUGE bag of coffee all at
once,” she added.
The New Zealand Herald

GUEST VIEW

Can interest rates in emerging economies go negative?

economies. The European Central Bank and
AJAY SAGAR central banks in Japan, Switzerland, Swe-
den, Denmark and a few others embarked on
negative-rate regimes. The US Federal
Reserve’s recent reduction of rates has also
brought US dollar interest rates close to
In India, the Reserve Bank of India (RBI) has
championed this. Borrowing by govern-
ments has shot up, and domestic public debt
as a proportion of gross domestic product is
hitting record highs. With more borrowing,
the associated interest costs also go up, but
Caution would be advisable. Each econ-
omy’s dependence on its interest rate struc-
ture varies, as also the way these rates move.
Unlike some advanced economies, a nega-
tive rate scenario is unlikely to be a market
phenomenon in emerging economies. In the
By and large, all the same, negligible
returns on bank deposits could alter people’s
saving behaviour. In time, depositors will
probably start looking for safe non-bank
deposit alternatives. They would need relia-
ble credit ratings of other debt avenues.

I
n school, we were taught concepts of bor-
rowing and interest rate calculations. We
learnt about lending and the parties
involved, namely a lender and a borrower.
We also learnt there’s a cost associated with
borrowing money: interest. You pay the len-
der for using his money for the term of your
loan. Similarly, when you deposit money in
zero, and they could go negative. A rush for
safe bonds in the current covid crisis has
seen their yields turn negative in the West.
In 2008-09, easy money policies meant
that funds flowed directly to businesses, risk
assets and private equity markets. In the
absence of interest-based returns, sovereign
wealth funds started investing offshore. In
resource-constrained governments cannot latter, we need to ask if it would create an Some may explore equity or other options.
afford much heavier bur- unstable equilibrium. For- Reducing the money that depositors are
dens. Governments thus eign portfolio investments paid is not without its social impact on the
favour a low interest-rate The possibility looking for better returns relatively risk-averse. What about retirees
scenario to save on these would be deterred. Banks and elderly people without pensions and
costs and not have them is no longer may find it hard to obtain social security benefits who depend on the
widen their fiscal deficits money for lending. A big interest earnings of their lifelong savings?
further. This becomes a
unthinkable risk is that depositors may They may need special higher rates.

Is a former senior advisor, Asian

a bank, it’s the bank that pays you interest.
We never learnt about the opposite possibil-
Development Bank ity of a borrower being compensated with
money for borrowing money, or a depositor
paying his bank a funds-parking fee, in a
negative rate environment. Nor did we think
of banks paying a fee on excess funds parked
with the central bank, instead of earning
interest. But we now see that interest rates
do indeed turn negative. What does this
imply? And could it act as a tool for monetary
policy transmission?
The global financial turbulence of 2008
changed the world of deposits. The quantita-
tive easing that followed led to low and even
negative interest rate regimes in advanced
emerging economies, both inflation and the
real cost of capital tends to be higher, and so
these have little familiarity with negative
interest rates. But now, might inflation vola-
tility or deflation combine with other factors
to turn rates negative even in these?
The covid pandemic has slowed economic
activity down dramatically. Countries are
witnessing deep recessionary trends, mas-
sive job cuts, demand destruction and low
inflation, relieving pressure on interest
rates, even as fiscal stimulus announce-
ments do not push them up. Central banks
worldwide are resorting to expansionary
monetary measures that create incentives
for interest-rate yield curves to be kept low.
push factor, as low interest
rates are not necessarily
now that easy
market-driven. The issue
gets compounded when
money policies
economies start printing are pushing
and devaluing their cur-
rency as an easy way out of the envelope
the crisis. To jump-start
the economy, central
banks would want more money going
directly into businesses, economic activity
and consumption, rather than sitting idle in
banks. Tough circumstances could possibly
take emerging economies into unchartered
territory on a matter that is not only com-
plex, but goes beyond monetary policy.
withdraw bank deposits in
favour of holding cash.
Perhaps a central bank
digital currency (CBDC)
could keep withdrawals
and cash hoarding down.
Globally, more than 50
central banks are working
on CBDCs, according to a
recent Bank for International Settlements
survey. In India, RBI may need to explore a
CBDC of its own. Multilateral institutions
such as the International Monetary Fund
and the Asian Development Bank could pro-
vide policy advice on the analysis that may
be needed for such a venture.
The trends right now are clear. Bank
deposit and lending rates are going down.
Shrinking interest margins for banks could
lead to low profitability, with its attendant
consequences, but that is not the principal
concern of policymakers at the moment.
Central banks around the world are unlikely
to withdraw their easy-money policies for
quite some time to come, given the eco-
nomic boost that cheaper availability of
funds is expected to provide.
While negative interest rates may seem
improbable in emerging economies, near-
negative rates, especially inflation-adjusted
real rates, are no longer unthinkable.
These are the author’s personal views.
 MUMBAI, NEW DELHI, BENGALURU, KOLKATA, CHENNAI, AHMEDABAD, HYDERABAD, CHANDIGARH*, PUNE* VOL. 3 NO. 145 Rs 6.00

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alerted 140,000’
The app warned 140,000
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Unilever is set to invest
€1 billion in a climate and
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I
ndia has not ruled out talks with
Kerala Nepal to resolve tensions over a
government
new map of the Himalayan
issues new
guidelines country that incorporates three
for areas that are part of Uttara-
travellers: khand. But New Delhi has put the
Rules to
onus on Kathmandu to create an
know for
entry into atmosphere that will be conducive
state to such a dialogue for restoring
bit.ly/3d4x7fx their “unique and natural partner-
ship,” two people familiar with the
matter said on Monday.
India also made it clear that it will
not pull back on any efforts that will
jeopardize people-to-people ties
between the two countries. Devel-
opment cooperation, connectivity
projects and medical aid for people
stricken by covid-19 in Nepal will
continue, one of the people cited
above said.
Signalling the underlying coop-
eration, India on Monday signed a
pact to build a sanitation facility
near the Pashupatinath temple
complex. India will extend assist-
ance worth Nepali ₹37.23 million
for the purpose, according to the
Indian embassy in Kathmandu.
“The bedrock of our relations is
people-to-people ties (besides) his-
torical and cultural and economic
linkages,” the first person cited
above said. “All this translates into
a unique and natural partnership
which transcends the economic
two foreign secretaries.
“We don’t know why Prime Min-
ister Oli did not tell the Nepalese
people and parliament about our
offer of talks because we always
keep hearing that we never offered
talks,” the person said. “It points to
the primary motivation that it (the
new map) is driven by domestic Arvind Kejriwal
political agenda,” the person added @ArvindKejriwal
Oli and his government “pre- Many people are
judged the outcome” and went speculating whether
ahead to get the map cleared by another lockdown in
parliament, this person said. The Delhi in being planned.
reference was to political challen- There are no such plans
ges faced by Oli within his Nepalese
Communist Party. According to
India-Nepal relations are under strain over Nepal’s inclusion of Indian territory in a newly-adopted map. AFP analysts, the stance against India is
an effort by Oli to get his detractors
and political scenario at any given that India did not respond to offers the 1,750 kilometre border has to back him on an issue seen as
point in time.” of talks from his government, this been delineated, two stretches one nationalistic. “It is up to them
The new map brought out by person said that India had told in Uttarakhand and another in (prime minister Oli and the Nepal
Kathmandu shows Lipulekh, Kala- Kathmandu it was ready for talks to Bihar—remain undemarcated. government) to create a conducive
pani and Limpi- New Delhi and positive atmosphere for fur-
yadhura, that are DIFFERENCES ASIDE offered talks last ther talks to take place.”
part of Uttara- year when Nepal On the road inaugurated by
khand as lying DEVELOPMENT INDIA on Monday NEPALESE Prime protested a new defence minister Rajnath Singh on Dharmendra Pradhan
within the bound- cooperation and
medical aid for the
signed a pact to build Minister KP Sharma
a sanitation facility Oli’s had said India
map brought out 8 May —that is seen as the trigger @dpradhanbjp
aries of Nepal. It covid-hit in Nepal by India, which for the current tensions – the per-
near Pashupatinath did not respond to
was cleared by the will continue temple complex offers of talks had shown the son said it had been under con- Measures under the
lower house of areas disputed by struction for almost a decade. #AatmaNirbhar Bharat
parliament on Sat- Nepal as part of Even before the road, the route have strengthened our
urday and given the go-ahead by sort out the issue. India. The offer was repeated was used by Indians going the Kai- MSMEs and paved the
way for them to become
the upper house on Sunday. In 2014, the two sides had agreed before the Nepalese government lash Mansarovar pilgrimage in
Responding to Nepalese Prime on a framework for talks to sort out tabled a constitution amendment China. “At no point any objection globally competitive.
Minister K.P. Sharma Oli’s charge the boundary issue. While 98% of bill to update its map this month, he was raised by Nepal,” he said.

Amit Shah urges all Covid triggers critical healthcare infra boost Many firms skip EPFO
parties in Delhi to Neetu Chandra Sharma ers with whom orders have dues payment in April
neetu.sharma@livemint.com been placed were Bharat Elec-
NEW DELHI tronics Ltd (in collaboration FROM PAGE 1 share and millions of their
fight virus together with Skanray), AgVa (in collab- employees’ share—tell us the

T
he covid-19 pandemic oration with M/s Maruti Suzuki shows that their revenue is in damage done to the formal sec-
has triggered an attempt Limited) and AMTZ (AP Med- bad shape,’ said Muralidharan tor,” said a person familiar with
to try and fast-track what tech Zone). Thyagarajan, chairman of TMI the development, requesting
Pretika Khanna India has been unable to Ventilators can be also used Group, a Hyderabad-based anonymity.
pretika.k@livemint.com achieve in the last 70 years— for patients of pneumonia, staffing company. There were 654,421 estab-
NEW DELHI building an extensive critical which killed over 127,000 The payment defaults, along lishments registered with the
care infrastructure equipped under-five children in 2018, with the massive withdrawals retirement fund body who sub-

U
nion home minister with enough ventilators. according to UNICEF. seen from the mitted PF deduc-
Amit Shah held an all- According to the government’s To be sure just procuring retirement fund The payment tions directly to
party meeting on Mon- own admission, on 1 May there ventilators will not do —India by employees defaults present a EPFO in the past
day to discuss the handling of were only 19,398 ventilators in will need enough trained since the lock- sombre picture of one year. Besides,
the covid-19 situation in Delhi the public sector. India’s current health infrastructure is inadequate to achieve health workers to use them down started on the extent of there are 2,557
and called for all political par- A study by the Centre for universal health coverage in the country. AFP properly. “50,000 ventilators 25 March, present exempted trusts
devastation
ties to work together to tackle Disease Dynamics, Economics have been procured but a core a sombre picture or firms that man-
the crisis. This comes just a day and Policy (CDDEP), a public to procure and manufacture The Centre said that as part challenge is on having the nec- of the extent of caused by the age their own
after the minister announced health research organization, ventilators. of its Make in India initiative, it essary expertise to maintain devastation lockdown retirement fund
measures for containing the A key decision at Amit Shah’s in April, shows that India had As a result, orders for 60,884 has identified local manufac- and use them to save lives. Early caused by the pan- corpus under the
spread of coronavirus in the meeting was to increase 47,481 ventilators in the public ventilators were placed by HLL turers and guided them about testing and admission to care demic and the guidance of
national capital. testing for covid. PTI and private sector. Lifecare Ltd, a public sector meeting specifications, finaliz- have a greater impact on lockdown. EPFO.
A key decision taken at the Both numbers fall way below unit under the health ministry ing training and other proto- patient survival than just the “Yes, EPFO had announced The May and June data will
meeting held to address con- under the leadership of Prime the health ministry’s projection which acts as the central pro- cols, creating new supply availability of ventilators. So, it won’t penalize those who perhaps reflect more pain in
cerns of low levels of testing Minister Narendra Modi, with- last month of the number of curement agency. Bulk of the chains, and helping them in we need to be working on mul- won’t submit dues on time, but the formal sector and jobs crea-
and the shortage of hospital out any political grudges. The ventilators that will be needed orders were with domestic logistics issues with suppliers tiple fronts to tackle this epi- you have to remember that tion, the person said. Subscrib-
beds, is that the government solidarity of political parties by June—75,000. This urgent manufacturers; only 1,000 are and state governments. demic,” said Dr Ramanan Lax- 178,000 fewer firms contribut- ers deposit ₹12,000- -14,000
will conduct 18,000 tests in a will increase public confi- need has sparked deliberations slated for imports. Major domestic manufactur- minarayan, director CDDEP. ing EPF dues—both their own crore a month with EPFO.
day and also increase dedi- dence and strengthen the fight
cated beds in government hos- against covid,” Shah said on
pitals by 20 June. Twitter after Tuesday’s meet-
Delhi has the third-highest ing. Earlier this year, the Aam
number of cases in India with Aadmi Party (AAP) formed the
about 42,000 covid-positive government in Delhi for a con-
people. The cases in Delhi are secutive term, winning 62 out
likely to see a sharp spike with of the 70 seats in the Assembly.
PM to meet CMs today and tomorrow to review unlocking strategies
the total likely to The Bharatiya
touch 1 lakh by Testing is to be Janata Party (BJP) Gyan Varma & Anuja been hit by the exodus of daily states in the region have strategies to continue eco-
June end and 5.5 raised to 18,000 a won eight seats. NEW DELHI wage workers. reported a little more than 900 nomic activity along with strict
lakh cases by July day by 20 June “There has Tuesday’s meeting will be total cases and just one death. lockdown measures in red

P
end, according to and a testing kit been a target of rime Minister Narendra attended by representatives of Modi’s second meeting is zones and containment zones.
government esti- increasing testing Modi is set to hold mara- six Union territories, North with the chief ministers of the The chief ministers of states
for ₹450 is to be capabilities to
mates. thon meetings with chief Eastern states and Uttarakhand most affected not ruled by par-
In Sunday’s introduced, a 18,000 a day by ministers on Tuesday and and Himachal Pradesh, among states, including The second round ties that are mem-
meeting, the gov- leader said 20 June. Beds will Wednesday to review strate- others, according to a list M a h a r a s h t r a , of Modi’s meeting b e r s o f t h e
ernment said it be increased gies to tackle covid and to shared by the Prime Minister’s Delhi, Gujarat, will cover states National Demo-
will triple the through hospi- decide on extent of economic Office last week. The worst and Tamil Nadu, worst hit by covid cratic Alliance are
number of tests in a week, con- tals, railway coaches and activity to be allowed in future. affected of these states are the four states expected to reiter-
duct door-to-door health sur- hotels. There is a new testing
and those that
Modi will on Tuesday meet Assam, which has a total of that have a total of ate their demand
veys in hotspots, and allot 500 kit for ₹450 that will be intro- the chief ministers and top offi- 4,000 total cases, Punjab with 210,000 total and have been hit by for more direct
railway coaches to Delhi to duced. Those who have recov- cials of 21 states and Union ter- over 3,000 cases, and Kerala CMs from non-NDA-ruled states are likely to reiterate demand thus account for returnee migrants financial assist-
increase the number of beds ered also need to volunteer. ritories, which account for only with over 2,400 cases. for direct financial assistance at their meeting with the PM. PTI nearly 65% of the ance from the
by 8,000. “Met with leaders of Work is ongoing on the cap- 5% of total cases in India. His The total number of cases in national burden. Centre to handle
various political parties in ping of facilities. We need to second meeting, by contrast, is these 21 states and Union terri- than 3.32 lakh, of which 1.69 Among the northeastern Maharashtra has reported fallout of the pandemic. The
Delhi regarding the fight work together in this fight,” with the chief ministers of a tories is more than 19,000, with lakh have recovered as of Mon- states, too, the figures skewed 3,950 deaths, Gujarat 1,477, Congress-ruled Chhattisgarh
against corona…At this time, Sanjay Singh, senior AAP handful of states that not only over 9,600 recoveries and 154 day. There have been 9,520 with Assam and Tripura and Delhi 1,327 deaths. has been asking to be allowed
all parties should work in the leader and Rajya Sabha mem- account for the most covid- deaths as of Monday. The num- deaths across the country till reporting 1,000 active cases The chief ministers are condition-free lending.
interest of the people of Delhi ber said after the meeting. positive cases but have also ber of cases nationally is more Monday because of covid-19. and one death. The other six expected to decide on their gyan.v@livemint.com