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246

MONDAY, OCTOBER 12, 2020

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mint primer
QUICK EDIT
A surging money Call out
supply is behind dud loans
MPC’s status quo In an affidavit filed in the
Supreme Court, the Reserve
Bank of India (RBI) has warned
BY VIVEK KAUL of risks to our banking sector if
the stay on the classification of
The monetary policy committee (MPC) of the Reserve Bank of India
(RBI) let the repo rate stay at 4%. Repo rate is the rate at which RBI bad loans isn’t lifted right away.
lends to banks. A major reason is that the money supply has risen It has also refused to extend its
rapidly in the last few months. Mint takes a look. moratorium on loan repay-
ments. This robust defence of
Accommodative stance banks’ interests is welcome.
RBI, in its fourth bi-monthly monetary meet held on 9 October kept the repo rate Lenders have already been
unchanged, as currency in the system continues to grow. This is the second time in pushed heavily into covid relief,
a row that RBI kept key rates unchanged. and their regulator is best
7 placed to judge how much fur-
Repo rate (in %)
6.8 ther their finances can be
6 stretched. As it is, banks are
expected to see dud loans spike.
The sooner these are acknowl-
5
edged and provided for, the less
pain there will be in store later.
4 Lending in India was
4.0 haunted by asset-quality wor-
ries even before the covid crisis.
3
Oct 2015 Oct 2020 Economic conditions have
Source: Reserve Bank of India worsened. For a sustainable
SATISH KUMAR/MINT
recovery, we must now refrain
What has happened Why are the sources from patch-ups that postpone a
1 to the money supply?
Money supply in the economy has
2 of money supply?
The non-food credit growth of
reckoning with reality. Not all
business borrowers can sur-
increased over the months. We can banks as of 25 September stood at vive. Our insolvency addressal
look at money supply from the a very slow 5.1%. This primarily system, designed to re-assign
component side and the sources reflects the reluctance of banks to assets and keep zombie firms
side. One of the ways of measuring lend and hesitance on part of both from soaking up more money,
money supply is M3, which is a individuals and firms to borrow. will need to get active again. In
sum of the currency with the However, the lenders seem to be
general, unless banks are
public, the demand deposits with happy to grant loans to the
the banking system, which include government. The government has strengthened by 2021, they may
current deposits and savings in turn spent this money on lack the wherewithal to support
deposits, the time deposits with policies such as the Mahatma a growth revival. We mustn’t
the banking system, such as fixed Gandhi National Rural endanger their future.
deposits, recurring deposits, and Employment Guarantee Scheme
other deposits of RBI. The (MGNREGA). It has also put
currency with the public has money into 20 crore female Jan
grown by more than 21% since Dhan accounts. These efforts by
June and so have bank deposits.
This has led to M3 growing by over
the Centre have led to an overall
increase in currency with the
MINT METRIC
12% since June. public. by Bibek Debroy

In Ireland do not be misled

3 Are there any other reasons
for rising money supply?
Foreign money continuously keeps
Into asking for Subway bread.
coming into India, leading to an increase
With such sugar intake
in demand for the rupee against the dollar. It is more like cake,
To prevent the rupee from appreciating,
RBI sold rupees and bought dollars,
Courts have ruled the aforesaid.
adding to the increase in M3. Also, in order
to drive down interest rates, RBI has
pumped money into the financial system
by buying bonds from institutions. QUOTE OF THE DAY
We are just barely scratching
How is this linked to Explain food inflation
4 MPC not cutting rates?
There is too much money floating
5 seeping into overall?
An IMF paper titled Food Inflation
the surface. Digital healthcare is
still very small. So, for firms like
around in the financial system. in India says: “Food inflation us, there is a long way to go.
Until now, this excess money has [feeds] quickly into… core
not really chased goods and inflation.” This happened between But, next five years will see
services in the economy and has 2009 and 2013. RBI expects food exponential growth in
thus not led to higher inflation inflation to fall in the second half
rates. A lower repo rate can lead to of the year. Nevertheless, it has no digital healthcare.
a further lowering of the interest control over food inflation. What it
rates. This can then result in some has control over is the amount of
of the money chasing goods and money floating around in the
services and thus cause higher financial system. By keeping the
inflation. There is also the danger repo rate constant, it is trying to SHASHANK N.D.
CO-FOUNDER AND CEO,
of food inflation seeping into the control the currency supply.
PRACTO
overall inflation as has happened
in the past. Note that inflation is Vivek Kaul is the author of
already above MPC’s comfort zone. Bad Money.

I P L P L A Y B O O K
HEAD TO HEAD*
KKR pulled off a heist against Punjab while RCB pummeled
CSK into submission in Saturday’s doubleheader. Karthik’s
also firing now which makes KKR’s batting formidable. RCB VS
are not too far behind though. Kohli’s sizzling 90 n.o. against
CSK rates among this year’s finest knocks. Narine among
wickets gives more teeth to KKR’s bowling, but watch out 1 4
for Washington Sundar. With both teams level on
points, expect a fierce contest. Place
Sharjah
Key players: Virat Kohli (RCB), Sunil Narine (KKR) 12 October at
AYAZ MEMON 07:30pmIST
Senior sports columnist
@cricketwallah *Last five matches
 T
U RA L E
O
Y SV
N E W m
Mint Lite
Stories, views, opinions and talking points that matter, from around the world

INDIA’S CONFIRMED covid-19 toll crossed 7 million on Sunday. Daily new infections have dropped from a high of over
90,000 to 74,383 on Sunday, but experts are worried people are not taking precautions. India is expected to be the worst-hit
country in coming weeks, surpassing the US, where over 7.7 million infections have been reported. In Brazil, the third worst
affected, deaths crossed 150,000 on Saturday, despite signs that the virus is slowly retreating. Over the last month and a half,
the viral curve has dropped in Brazil. India has reported more than 100,000 deaths. For more updates, here’s Mint Lite.

Digital payments up 55% every year

IN THE past four years, the volume of digital payments has
grown nearly 55% every year, from 593.6 crore transactions in
the year ending March 2016 to 3,434.5 crore in the year to
March 2020, according to new data from the RBI. This is also
the period, soon after demonetization of ₹500 and ₹1,000
notes, when the Reserve Bank doubled down on its efforts to
move to a less-cash-driven economy by pushing digital
payments. In terms of absolute value, it’s grown from ₹920.38
lakh crore in 2016 to ₹1,623.05 lakh crore in 2020, an annual
compounded rate of 15.2%, the data shows. From 2018-19, the
value and volume of transactions climbed faster, but in
FY2020, the volume spike though the value of transactions
slipped. This is attributed to the steep fall in the overall
economy and the massive job losses, forcing people to spend
less and preserve more cash.

Public ire forces rich French to give

OF THE world’s billionaires, with the exception China, the
French have enjoyed the most lucrative decade, shows a UBS-
PwC study. LVMH boss Bernard Arnault and his ilk saw their
wealth rise fivefold to $443 billion between 2009 and 2020,
fuelled by Asia’s hunger for luxury and a global realty boom,
Bloomberg reports. But covid-19 had its impact. Arnault’s for-
tune year-to-date has fallen $19 billion as tourism and shopping
take a beating, though he is the world’s fifth richest man.
L’Oreal’s Francoise B. Meyers (in photo) may lose her title as
world’s richest woman to Mackenzie Scott, Jeff Bezos’ former
wife. Covid-19 and public ire have woken the ultra-rich up to
the need to give: Hermes donated $24 million to Paris’ hospital
association in May and LVMH gave ventilators and made masks.
Public opinion can’t be ignored as the backlash over billion-
aires’ donations to rebuild Notre-Dame last year showed.

WFH may not save that much No takers for offices

Demand for office space was negligible in Apr-June quarter.
MOST INDIAN firms have institutionalized working
from home, and whether we return to the office as we 4.2 Transactions in office space (million sq ft)

knew it remains a question, but real estate office deals Jan-Mar 2020 Apr-Jun 2020
offer a glimmer of hope. Between April and June, the
worst of the lockdown months, transactions for office
space fell 84% compared to previous quarter, says 2.5
Knight Frank (see chart). From July to September, net 2.2
2.0
absorption of office space increased 64% over the
previous quarter, according to Jones Lang Lasalle. In 1.3 1.3
the long run, work from home (WFH) may not save
firms cash. Knight Frank’s calculation for 119 IT firms 0.6 0.5
shows if they move half their staff to permanent WFH, 0.1 0 0 0
the net cost saving is only 0.7% of operating income.
Bengaluru Chennai Hyderabad Kolkata Mumbai NCR
Other disincentives: data vulnerabilities, loss of tax
Source: Knight Frank
benefits, and work culture. For more, see Plain Facts.
SATISH KUMAR/MINT

Giant vacuum cleaner to eat plastic

BELGIUM’S GALGESCHOOR nature reserve has started
testing a purpose-built, giant “vacuum cleaner” to suck up
particles of plastic that are too small to pick by hand. Every year,
the Antwerp port organizes a clean-up at the 100-hectare mud-
flat reserve, with close to 500 volunteers clearing nearly eight
tonnes of plastic, but many particles are too small to pick. These
microplastics, smaller than 5mm, are transported by the 350km
Scheldt river and wash up at the reserve. The industrial plastic
pellets accumulate in mud and salt marshes. Last year, the port
launched a competition to find a solution, and the winner is a
giant vacuum cleaner, Nul-o-Plastic, developed by environ-
mental firm Envisan. The machine’s rubber tyres limit soil
disruption, and its suction mechanism is designed to avoid
damaging plants. The aim is to suck 7.5 tonnes of plastic pellets
out of the reserve. The first test concludes later this month.

A start to end flooding in Venice

VENICE HAS had seasonal floods, or acqua alta, from October
to March since the 5th century, but in the past decade it’s a real
threat due to rising sea levels. Last November, the worst floods
in over 50 years left St Mark’s Square (in photo) submerged
under a metre of water. Mose—a solution delayed 17 years by
bureaucracy and corruption—passed a test earlier this month,
giving Venetians hope that their city may not be “unliveable by
the end of the century”. A network of 78 bright yellow remote-
control-led barriers at the entrance to the Venetian lagoon
lifted from the sea bed to stop high tides from entering and
flooding the city. St Mark’s Square, which would have been
knee-deep in water from the 135cm high tide, just had puddles.
Right now, the barriers are raised when tides cross 130cm, but
many parts of Venice, including the Square, flood at 90cm—and
residents are fighting to have the barriers raised earlier.

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

 NEW DELHI, MUMBAI, BENGALURU, KOLKATA, CHENNAI, AHMEDABAD, HYDERABAD, CHANDIGARH*, PUNE* VOL. 14 NO. 246 Rs 5.00 IN DELHI-NCR; Rs 6.00 OUTSIDE DELHI-NCR. PRICE WITH HINDUSTAN TIMES Rs 9.50 (FOR DELHI & NCR) 16 PAGES

TRUMP CLAIMS HE IS
IMMUNE TO COVID-19
US President Donald Trump on Sunday declared
himself immune from covid as he prepares to
return to the campaign trail. “It looks like I’m
immune for, I don’t know, maybe a long time...,” he
said in an interview, a day after his doctor affirmed
MONDAY, OCTOBER 12, 2020 he was no longer a transmission risk for the virus.
LIVEMINT.COM

Startups to move GST meeting

sets stage for
DON’T MISS
PROPERTY OWNERSHIP CARD IS A
STEP AHEAD FOR INDIA: PM MODI
Centre-states
CCI against Google
Prime Minister Narendra Modi on Sunday
launched a property card scheme called
confrontation ‘SVAMITVA’ (ownership) saying it will give
people, particularly those living in villages, legal
documentation of their property. The move is
Asit Ranjan Mishra a step forward for ‘Aatmanirbhar Bharat’. >P13
Firms complain to antitrust watchdog about tech giant’s ‘arbitrary’ policies asit.m@livemint.com
NEW DELHI
m MINT GRAPHITI REGULATOR PLANS RULES TO
Tarush Bhalla & Prasid Banerjee

T
he Goods and Services AVERT FRANKLIN-LIKE CASES
BENGALURU/NEW DELHI CLOSING RANKS Harshil Mathur, chief executive and co-founder of Razorpay.
The fintech firm has raised $100 million in its latest funding round.
Tax (GST) Council’s
meeting on Monday is
Sebi seeks to ensure debt funds have sufficient
Google has faced criticism over its practices, especially its plan to take a 30% liquidity to meet redemption stress, dissuade

A
group of 15 startup cut of revenue generated through apps. A look at popular apps on Play Store. set to witness a face-off excessive redemptions by imposing an
founders held a virtual
meeting with the Com-
petition Commission
TOP FREE AND PAID
APPS IN INDIA
Worldwide downloads in September 2020
TOP GROSSING APPS
BY REVENUE IN INDIA
In September 2020
Razorpay is latest between the Union govern-
ment and states ruled by par-
ties outside the National Dem-
additional fee on withdrawal in stressed plans,
and install a mechanism where asset managers
can take up illiquid paper on their books. >P3
of India (CCI) on Satur-
day to apprise the regulator about
Google’s anti-competitive policies
Free apps

Downloads
Among Us

WhatsApp 39
54
Net revenue from Play Store, in $ mn
(Worldwide downloads, in mn)

Coin Master
56
fintech unicorn ocratic Alliance (NDA) over the
constitutionally mandated
GST compensation to state CENTRE TAPS IITs, ACADEMICIANS
in India, two founders aware of the (in mn) governments for fiscal 2021. TO ATTRACT FOREIGN STUDENTS
meeting said. (6) Tarush Bhalla which were all valued at over $1 The Centre is in a dilemma as
Google Meet 39 The Union education ministry, along with IITs
The discussion involved Google’s Garena Free tarush.b@livemint.com billion in 2018. around 10 non-NDA states have and top academicians, is exploring ways to
recent imposition of its Play Store Snack Video 39
Fire: BOOYAH BENGALURU Paytm entered the unicorn rejected the Union finance attract foreign students to Indian higher
billing system on Indian develop- 30 club back in 2014 and is the ministry’s proposal that the education institutions. These include asking

P
ers, as well as the 30% commission Josh 15 (21) ayments gateway Razor- most valuable startup in the state governments should bor- faculties to develop short-duration courses
the company charges for selling Google One pay has raised $100 mil- country at $16 billion. row to meet the shortfall in GST and marketing of the education sector. >P12
digital goods and services through Paid apps 300,000 Minecraft 30 lion in its latest funding Bengaluru-based Razorpay, revenue and have demanded
the system, they said on the condi- (0.4) round led by Singapore’s sover- with 1,300 employees, will be the setting up of a dispute set-
Downloads RFS: Real Flight
tion of anonymity. (number) 70,000 Simulator Clash of Clans eign wealth fund GIC and exist- using the funds to launch prod- tlement mechanism. VEDANTA SEEKS EXTENSION OF
The founders said that phones
Grand Theft Auto: 11 ing investor Sequoia India, ucts for its neo-banking busi- States such as Kerala, West BUYBACK AS DELISTING FAILS
with Google’s Android operating 50,000 San Andreas (4) joining the exclusive club of ness Razorpay X and lending Bengal, Punjab and Delhi want
Vedanta Ltd’s delisting went from almost-a-
system (OS) are preloaded with the startups valued at more than a business Razorpay Capital, the central government to success to failure due to a large quantity of
30,000 Hitman Sniper Tinder
Play Store app distribution plat- billion dollars. seeking to double their growth fully borrow the GST revenue
form, giving it an inherent advan-
10 Existing investors Ribbit Cap- in the coming year. shortfall amount and compen-
unconfirmed orders, forcing the firm to look
20,000 Grand Theft Auto: (4) for options to extend buyback period by a
Source: Sensor Tower Vice City
tage over rivals. ital, Tiger Global, Y Combinator It will also hire 500 people sate them. day. Unconfirmed bids and technical glitches
SARVESH KUMAR SHARMA/MINT
Because of its dominance in app and Matrix Partners also partici- across functions of growth, Kerala finance minister may have contributed to the failure. >P3
discovery and distribution, Google over other app stores and operating startup ecosystem will send a single pated in the Series D round. It product and technology. Thomas Isaac said in an inter-
forces Indian developers to build systems. Hence, we have requested letter to both the government and has raised $206.5 million since “GIC is a good long-term view earlier this month that if
and change apps based on its OS them to look into this matter,” said CCI, the founder said. inception in 2014, including $75 investor to have. Their knowl- the central government BEIJING GRANTS $90 MILLION
and app store, they alleged, adding one of the founders present at the Last week, Mint reported that 120 million in the previous round of edge about public markets and presses to get the borrowing FINANCIAL AID TO SRI LANKA
that the company’s “arbitrary poli- meeting. Indian startup founders were look- fundraising last year. investment in firms like Bajaj options cleared by vote and
China announced that it was providing a
cies” illustrate this behaviour. The founders are now planning ing to form an independent non- Razorpay is the fifth Indian Finserv Ltd and Bandhan Bank $90 million grant to Sri Lanka, two days after
“With more than 95% of India’s to send a written communication to profit lobby to take on Google in fintech firm to achieve ‘uni- Ltd will help us in our journey to TURN TO PAGE 12 the island nation’s president sought help from
digital population accessing the both the ministry of electronics and India. corn’ status after online pay- go public. With this fundraise, a visiting Chinese delegation in disproving a
Internet through Google, this strat- information technology (MeitY) as In an interview on Friday, Muru- ment gateway BillDesk, Flip- we will focus on going deeper Why the GST saga is a perception that China-funded megaprojects
egy of having an OS and Play Store, well as the CCI, this week after col- kart-owned PhonePe and terrible low point >P8
are ‘debt traps’. >P12
together gives Google an advantage lating views from the industry. The TURN TO PAGE 12 insurtech startup PolicyBazaar, TURN TO PAGE 6

In cost-cutting mode
India Inc. opted for steep cost rationalization in the June quarter
of FY21 to protect margins.
QIA in talks to invest Delivery biz sees Capex plans shelved
Raw material cost
Various costs as a percentage of total cost
Employee cost Other operating expense Other expense in Mumbai airport spike in attrition again as covid rages
Nifty50
(June 2019) Tanya Thomas & Kalpana Pathak & when restaurants had to sus- Nasrin Sultana &
Deborshi Chaki Romita Majumdar pend operations. Food delivery Ashwin Ramarathinam
Nifty50 platform Zomato, for instance,
(June 2020)
MUMBAI MUMBAI is hiring more than 5,000 MUMBAI
delivery partners a week in

A H T
NSE500
(June 2019)
dani Airport Holdings igh turnover in India’s India. It is looking to increase he pandemic has created
Ltd is in advanced talks gig workforce ahead of the number of riders by 40% to a perfect storm for corpo-
NSE500
with Qatar Investment the festive season has meet the growing demand. rate India, which was
(June 2020) Authority (QIA) to sell a minor- left internet companies scram- “We believe this is going to sta- already pruning its capital
ity stake in Mumbai Interna- bling for new hires even as bilize over the next few months expenditure plans to cope with
0 5 10 15 20 25 30 35 40
tional Airport Ltd that it they devise incentives to retain and may witness growth due to sluggish growth when the cor-
Source: PhillipCapital India Research
acquired last month, two people a restless workforce where the order volume exceeding onavirus crisis struck in March.
SATISH KUMAR/MINT
aware of the matter said. Billionaire Gautam Adani is in annual attrition levels have the pre-covid levels in certain A Mint analysis of 150 firms in Capex by 150 of BSE200 firms

India Inc may see Adani Airport, a unit of

Adani Enterprises Ltd, is look-
ing to raise $750 million from
talks to sell a minority stake in
the Mumbai airport. REUTERS
risen to as much as 250% in
some segments.
The problem is the most
cities,” said a Zomato spokes-
person in an emailed response.
“The blue-collar market nor-
BSE 200 showed that capex by
these companies declined 5.31%
from a year ago to ₹4.15 trillion
had declined 5.31% from a year
ago in FY20. MINT

a decline in cost
the stake sale, the first of the
two people said. The Qatar
fund prefers to invest directly
in the Mumbai airport opera-
remained unanswered. acute in the food and miscella- mally sees circular migration, in FY20. Of this, capital spend- from covid have added more
The sovereign wealth fund of neous delivery segment where and the logistics sector especially ing by 20 of the 30 members of pressure on capex plans of
Qatar is already an investor in business activity has picked up continues to grapple with any- the BSE’s benchmark Sensex firms in the first half of fiscal
Adani Mumbai Electricity Ltd, significantly, resulting in a where between 150-250% attri- had fallen sharply by 12.3% to 2021, according to analysts.

savings from Q2 tor, but alternatively, it may

Harsha Jethmalani
harsha.j@livemint.com
buy a stake in parent Adani Air-
port, the person said on condi-
tion of anonymity.
inching up. Besides, as eco- Emails sent to the Adani
nomic activity picks up pace group and Qatar Investment
and business resumes, some
a division of Adani Transmis-
sion that distributes power to 3
million customers in Mumbai.
The sovereign fund invested
TURN TO PAGE 3
spike in blue-collar wages as
the supply of manpower
remains muted.
Manpower supply had
dropped to 40% of pre-covid
levels during the lockdown
tion,” said Pravin Agarwala,
co-founder and chief executive
of Betterplace, a blue-collar life
cycle management startup.
TURN TO PAGE 3
₹2.07 trillion in the year to
March. The review excludes
banks, financial services and
“Companies were already
under stress even before the
covid outbreak. Consumer
insurance companies as they demand was hit after goods and
have a different revenue model.
The widespread disruptions TURN TO PAGE 12

M
oney saved is money variable costs are bound to
earned. India Inc. has increase.
followed this mantra “If prices of raw material
resolutely during the pan- increase, there isn’t much that
demic, as was evident in the companies can do about it.
June quarter earnings season. Overall, they are still left with
Of course, some economists some more room to save costs.
Loan defaults take worrying turn Ecom rides finance wave
had pointed out that the sharp However, the cost-savings led
cost cuts result in a so-called improvement in margins, Shayan Ghosh from a bank account. Tarush Bhalla credit products.
paradox of thrift. When every- which we saw in the last quar- shayan.g@livemint.com Although the formal mora- tarush.b@livemint.com Amazon India aims to reach
one is busy saving, this may ter, may not go higher from MUMBAI torium ended on 31 August, BENGALURU more than 50 million buyers
come back to bite companies where they currently are,” said many borrowers view the through its credit schemes.

L E-
in terms of lower demand for Mookim. oan defaults in Septem- Supreme Court’s recent orders commerce firms Flipkart In partnership with Sam-
their goods. In the June quarter, a large ber remained way above for status quo in downgrading and Amazon are offering sung, Flipkart has introduced a
In Q2, companies are part of the savings was on the the pre-pandemic rates loans as an extension of the a slew of fintech and ‘Smart Upgrade’ plan, where
expected to raw material despite the loan moratorium moratorium. credit products to make pur- users can buy a Samsung Gal-
have continued B E H I N D front. In the case having ended in August, indi- The Supreme Court on 3 chases even more affordable than axy smartphone by paying 70%
with the tight
m
T H E N E W S of Nifty50 com- cating the prevailing eco- September ordered an the discounted offers in the com- through EMIs, with the
leash on costs. panies, raw nomic distress and the contin- interim stay on classifying bad ing festive sales. Businesses are offering new remaining 30% taken off the
“Cost rationalization is likely material costs fell to 23% of ued effect of the six-month loans if not declared so by 31 These include partnerships credit products to make price of the next smartphone
to remain the focus in the Sep- total expenditure, from 36% in moratorium on repayment Lenders are divided on the August. with banks for broader cover- purchases easier. MINT upgrade. After a year, custom-
tember quarter as well. Com- the year-ago period, analysts at behaviour. repayment delinquency after “This is a tad disconnected age of debit card EMIs, allian- ers can upgrade to a new phone
panies will continue to aim to Phillip Capital India Pvt. Ltd Repayment bounce data the moratorium. PRADEEP GAUR from our feedback from ces with digital non-banking which has partnered with more on Flipkart and return the ini-
keep a curb on costs,” said San- said in a note. from the National Automated banks and non-banking financial companies (NBFCs) than 20 banks and financial tial phone purchased, and if the
jay Mookim, head of India But prices of crude-based Clearing House (NACH) repaying. In value terms, 32% financial companies (NBFCs) for no-cost EMIs and boosting institutions, will be targeting customer wishes to retain the
research at JP Morgan. derivatives such as petroleum showed 41% of auto-debit of auto-debit transactions and may be partly due to buy-now-pay-later offers. nearly 70 million customers
But a repeat of cost-led mar- coke, monomers and coal have transactions by volume in Sep- failed in September, same as stalemate around the Walmart-owned Flipkart, this festive season with its TURN TO PAGE 3
gin growth is unlikely in the risen in recent months. tember have failed against 31% August but higher than the Supreme Court verdict. Len-
September quarter, and A reduction in advertise- in February. 25% in February. ders may need to pursue For short takes on the news Listen to Mint Evening
expenses are expected to rise ment and promotional While the default rate is a These are recurring pay- recoveries; clarity in Q2 before you start your day, Market Wrap for Nasrin
on various fronts in the quar- expenses was another key con- tad higher than August, this ments where the borrower has results will be key,” said a note follow our daily podcast Mint Sultana’s detailed analysis of
ters to come. tributor to cost savings. Had was the first month after the agreed to an auto-debit man- by Jefferies on 7 October. Lite Morning Shot with the day’s news from Dalal
Shalini Umachandran on Street and other markets on
Raw material prices for moratorium and banks were date, and the loan instalments htsmartcast.com htsmartcast.com
some sectors have started TURN TO PAGE 6 expecting borrowers to start are drawn on a monthly basis TURN TO PAGE 12
02 MONDAY, 12 OCTOBER 2020
NEW DELHI DEALS
PLAIN
FACTS

Signs of resilience in Indian cities

Workplaces wear a deserted look as many office-goers are still working from home but new companies and jobs are sprouting across the country
DURING LOCKDOWN DURING UN LOCK

Mumbai’s Chhatrapati Shivaji Terminus (CST) was desolate due to curbs on citizens’ movement to contain the pandemic. HT There’s movement outside CST again. Workplace mobility in September was the highest since April for Mumbai. MINT

Rangoli Agrawal,
m MINT GRAPHITI
loss of tax benefits for organi- affairs (MCA) shows. In Janu- Chart 1a Chart 1b

howindialives.com zations in special economic ary, 8,691 companies and lim- Demand for new office space collapsed Hardly any new office buildings were completed in the
zones, and work culture as dis- ited liability partnerships were
NEW DELHI incentives to WFH in the long incorporated with the regis-
in the June-ended quarter June-ended quarter due to poor demand and the lockdown
Transactions in office space (million sq. ft) New office-space completions (million sq. ft)
run. tration authority in these six

I
ndian cities are trying to For now, though, organiza- cities. In April, this number Bengaluru 4.2 Bengaluru 4
0.6
reclaim what they once tions have adapted to the new collapsed about 75% to 2,125. It 1.3 3.3
Chennai 0.1 Chennai
took for granted after normal. According to technol- stayed subdued in May. It
Hyderabad 2.2 Hyderabad 2.7
struggling with a once-in- ogy research firm IDC, for picked up in June. However, in
a-lifetime event. Much of Indian firms with more than July, the number shot past the Kolkata 0.5 0.1
Kolkata
our urban life revolves around 500 employees, shipments of January 2020 number, with Mumbai 2.5 2.5 January to
1.3 Mumbai 1.1
work and commutes, and the laptops increased 106% on a 10,524 new entities being 2.1 March
NCR NCR 0.3
lockdown imposed to contain year-on-year basis in the April- incorporated. August was even 0.04 0.5 April to
covid-19 derailed both. Many June quarter. Smaller firms better, with 10,704 incorpora- Chart 2 June
offices in the country’s biggest also saw an increase, of 12%. tions. Zoom was downloaded more than leading social-media apps in the June-ended quarter
cities have institutionalized Another indication of how Some of the surge in July- Downloads in India (in million)
work-from-home (WFH) WFH has grown is the big August could be activity that
norms to ensure business con- spike in the use of video-con- would have otherwise hap- 18.1 38.9
Zoom Facebook
tinuity even as workplace ferencing apps such as Zoom, pened in the lockdown 68.4 37.9
mobility gradually recovers Microsoft Teams and Google months. However, it is worth Video- Google 0.8 Social-media
WhatsApp 88
across India. Meet. In the June noting that registrations can conferencing Meet 27.2 applications 36.6
applications
Offices con- In Sep, workplace quarter, down- be done online, and the July Microsoft 1.5 39.6
Instagram
tinue to wear a mobility was the loads of Zoom tri- and August numbers are bet- Teams 9.4 29.5
desolate look but highest since Apr, pled over the pre- ter than January numbers in
other indicators but is still 34-47% vious quarter (see all of the six biggest cities. The Chart 3 Chart 4

suggest a gradual
lower than the chart 2). increase was the highest in In three months, Zoom adoption fanned Companies were looking to hire the most
return to nor- Search interest Kolkata and the least in Mum- out from the metros to cities across india in September in the last six months
malcy. In Sep- pre-lockdown for Zoom went bai, where the lockdown was
baseline In January, search in India for the video-conferencing app was Search interest from recruiters in top two job-search terms from April to September
tember, interest much beyond the the longest (see chart 5). concentrated in just eight metros... in six cities (scale of 0 to 100)
in hiring was the main metros dur- Many firms in India are set Java 100
highest in the last ing the pan- up with the intention of finan-
six months. In both July and demic, Google Trends data cial management or as shell 80
August, registration of new show. In January, search firms, rather than with the
companies exceeded the Janu- interest for Zoom was largely intent of starting a business. A 60
ary 2020 numbers. concentrated in only eight crude measure of intent is the New Delhi Sales
50 40
The concept of a physical Indian cities, led by Benga- percentage of new companies
office still remains in flux. In luru. In April, it had increased whose paid-up capital exceeds
20
the April-June quarter, which to 61 cities. In August, this the minimum requirement of
comprised the most stringent number reduced as cities ₹1 lakh. The share of such com- 6 Apr 2020 28 Sep 2020
Data for six cities: Bengaluru, Chennai, Delhi, Hyderabad, Kolkata and Mumbai. The highest value during the period
lockdown months, transac- unlocked, but still remained panies has remained around has been assigned a value of 100 and all other figures have been calibrated to it
tions for office spaces fell 84% at a significant level across 37 20% throughout, suggesting
Chart 5
and completion of new office cities (see chart 3). comparable quality in the
buildings declined by 87% The unemployment rate in August set. Number of new companies and LLPs in July
compared to the previous urban India increased from The pandemic seems to be Google Trends and August have exceeded January levels
Mumbai value for search
quarter, according to real 9.7% in January to 25% in influencing the kind of compa- 76 term ‘Zoom’ Number of new companies and limited liability partnerships Low High
estate consultancy Knight April, amid large-scale reverse nies that are being set up. Of (rebased to 100) incorporated (*rebased to January 2020 data)
Frank (see chart 1a and 1b). migration of blue-collar and the 20 sectors in the MCA clas- <40
Bengaluru Chennai Delhi Hyderabad Kolkata Mumbai
However, in the July-Sep- unorganized sector workers, sification, the top two sectors January 100 100 100 100 100 100
Bengaluru Chennai
tember quarter, net absorp- according to the Centre for that registered the highest 100 77 February 89 85 82 92 91 87
40-70
tion of office space increased Monitoring Indian Economy growth in new incorporations March 53 53 47 60 65 51
64% over the previous quarter, (CMIE). The in August over April 33 31 23 24 21 21
71-100
according to real estate con- unemployment How the January are agri- May 49 40 43 38 27 31
sultancy Jones Lang LaSalle. rate has been pandemic plays culture and allied Score June 93 90 82 91 76 62
...but in April, interest in Zoom fanned out
That offers some respite, but it reducing since out and when activities and to tier-II and tier-III cities across India July 128 115 123 141 131 106
100
still points to the increasing and was 8.5% in demand returns manufacturing of 50 August 122 124 121 130 137 118
vacancy compared to the pre- September. food items. Both 13
Jobs portal
to normal will cater to essentials
*Rebasing here means the January value has been assigned a figure of 100 and the values for all other months have
lockdown levels. Large tenants been calibrated to the January value.
typically have multi-year Naukri.com con- decide the state and demand for Chart 6

rental contracts and many are firms the grow- of jobs and biz them has been Noida The agriculture and food sectors registered the highest
100
waiting to see how the pan- ing inclination of much more growth in new incorporations in Aug over Jan
demic and business revival organizations to robust compared Number of new companies and limited Change between
play out. Google data shows hire. Data for the last six to other products during the liability partnerships incorporated in August Jan and Aug (%)
that workplace mobility in months for the top two pandemic (see chart 6). Agriculture and allied activities 534 110
September was the highest searched terms by recruiters In the next few months, 106
Manufacturing: food items 582
since April, but is still 34-47% on the portal, “sales” and where everything settles, such
Manufacturing* 568 46
lower than the pre-lockdown “Java”, show that recruiter as jobs, the physical office, and
baseline. interest was the highest in the new businesses, will largely Kolkata Trading 1,642 31
Google Trends data
62 Manufacturing: machinery and equipment 432 30
A calculation by Knight second and third week of Sep- depend on how the pandemic can be used to
Navi Mumbai gauge relative Business services 22
Frank for 119 IT companies tember. It was almost twice plays out and how soon 76 popularity of a
3,563
shows that even if they moved that seen in April and May, demand for goods and services search term across Community, personal and social services 1,277 15
cities. For a given
half their employees perma- which saw the worst of the lay- returns to normal. period, it assigns a Construction 511 10
nently to a WFH arrangement, offs. This was true for all the six Howindialives.com is a value of 100 to the
*metals and chemicals, and their products
Chennai city where the term
the net cost saving will amount main metros (see chart 4). search engine for public data. 53 is the most searched Data for six cities: Bengaluru, Chennai, Delhi, Hyderabad, Kolkata and Mumbai. MCA gives data by 20 sectors.
This graphic shows the eight sectors where at least 20 companies/LLPs were incorporated in each of the six
to only 0.7% of their operating New businesses, too, are This is the first of a three-part and calibrates search
cities in August 2020. Sectors arranged in descending order of growth.
interest in all other
income. The consultancy also seeing an increase, data from series on post-covid life in cities to this value. Source: Knight Frank, Sensor Tower, Google Trends, recruiter search trends from Naukri.com, ministry of corporate affairs
flags data vulnerabilities, the the ministry of corporate India’s biggest cities.
AHMED RAZA KHAN/MINT

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 DEALS AND STARTUPS MONDAY, 12 OCTOBER 2020
NEW DELHI 03
TOP ST RIES
Sebi crafting new rules to E-commerce
firms ramp
avert Franklin-like cases up credit
products
FROM PAGE 1

It wants to ensure that debt funds have sufficient liquidity to meet redemption stress initial device, they can pay the
30% after 12 months.
Adani said last month it would take control of India’s second-busiest Flipkart has also partnered
airport of Mumbai in its bid to become a top airports operator. HT
Jayshree P. Upadhyay with lenders like Federal Bank
jayshree.pyasi@livemint.com which have more tier-II cus-

Qatar fund in talks MUMBAI tomers, and with Paytm wallet

to expand payment options for

T
he abrupt closure of six this segment of users.

with Adani to invest Microsoft

alerts Android
users of new
ransomware
Franklin Templeton
credit risk funds in April
continues to reverberate
“We have expanded our
partnerships and have
launched a simpler way to avail
on mutual fund regula- credit for first-time and tier- II
in Mumbai airport
that could
render tion, with the Securities and shoppers. Through our part-
smartphone
useless
Exchange Board of India (Sebi) nership with Bajaj Finserv,
bit.ly/2GEH2i1 planning more changes to prevent customers can try availing
FROM PAGE 1 port being developed by GVK a repeat of the debacle. credit through their phone
Group. Also, with one of India’s The regulator is working on rules numbers instead of putting
₹3,220 crore (approximately two most profitable interna- to ensure debt funds have sufficient their debit card number,
$452 million) in the utility for a tional airports in its kitty and liquidity to meet redemption stress, which is a complicated process
25.1% stake in February 2020, having won the development dissuade excessive redemptions by for first-time digital users,”
including equity of ₹1,210 crore and operation rights over a imposing an additional charge on Smrithi Ravichandran, busi-
and subordinated debt of 50-year lease for the Ahmeda- redemptions in stressed schemes, ness head-payments, con-
₹2,010 crore. bad, Lucknow, Mangaluru, Jai- and install a mechanism where sumer and commercial lend-
Last month, the Adani group pur, Thiruvananthapuram, and asset managers could take up illiq- ing and insuretech at Flipkart,
said it would take control of Guwahati airports, Adani will uid paper on their books, a Sebi said in an interview.
India’s second-busiest airport be the biggest private sector air- official said. Flipkart rival Amazon has
of Mumbai, in its biggest move port operator in India. On 24 April, Franklin Templeton also been ramping up its afford-
yet to become a top airports The Adani group had begun wound up six credit risk schemes ability and EMI offerings and
operator. Adani Airport agreed talks with South Africa’s Bid- amid extreme redemptions and Since 1 May, Sebi has introduced no less than 10 rule changes to curb similar meltdowns. MINT has partnered with more than
to buy the debt of GVK Airport vest to buy out its minority severe illiquidity, stranding inves- 25 banks and financial institu-
Developers Ltd, stake in MIAL in tors, sparking lawsuits, and trigger- lier said on condition of anonymity. which needed to be filled, the regu- has introduced no less than 10 rule tions to provide no-cost credit
against which a Adani Airport had 2019. A deal was, ing massive outflows from similar “These frequent changes seem to lator is taking care of those now. changes to curb similar meltdowns. to tier-II customers.
50.5% stake in agreed to buy however, stone- schemes of other funds. In the aft- be a case of Sebi finding an oppor- Some of the changes are very tell- The first was allowing listing of the Amazon India said during
MIAL was the debt of walled by GVK, ermath of the Franklin fiasco, assets tunity in the crisis. All these are ing and will forever alter the way units of the schemes under wind- the first three days of its 2019
pledged. The GVK Airport, according to peo- under management for these what Sebi, in its wisdom, considers mutual funds were conducting ing-up on stock exchange plat- Diwali sale, 75% of credit-seek-
Adani group will ple aware of the schemes fell by about half. imperative for growth of debt funds their business. For instance, the forms. It was followed by allowing ers on its platform were from
against which a
also buy the com- matter, as the “It’s an open secret that beyond and corporate bond market,” said changes on resource framework for debt schemes to invest an addi- tier-II cities. It expects a similar
bined 23.5% stake 50.5% stake in group viewed the the top-rated paper, the tional 15% in liquid assets to ratio of customers availing
held by Airport MIAL was pledged m o v e a s a n secondary market is fairly RIPPLE EFFECT meet the temporary credit for shopping this festive
Company of attempted hostile illiquid. As against banks, redemption stress. season as well.
South Africa takeover. mutual funds who sub- ON 24 April, Franklin THE move stranded IN the aftermath of SOME of the rule Sebi further raised trans- “We have ramped up cover-
(Acsa) and South Africa’s Bid- Subsequently, GVK agreed scribe to these bonds have closed six schemes
amid extreme
investors, triggered
big outflows from
the fiasco, assets
under management
changes will forever
alter the way mutual
parency for debt mutual age of our EMI-based credit
vest Group in MIAL, for which with several investors—Abu to disclose daily NAVs and redemptions and similar schemes of for these schemes funds conduct their funds by ensuring that they products to help customers
it has obtained the approval of Dhabi Investment Authority, provide liquidity even if the severe illiquidity other mutual funds fell by about half biz, say experts disclose their portfolio with affordability, keeping
the Competition Commission Canada’s Public Sector Pension underlying paper is illiquid. every fortnight. their monthly budget in con-
of India. This would give the Investment Board, and state- This is a structural and fun- The market regulator trol. Debit-card EMI will be a
group a 74% stake in Mumbai backed National Investment and damental issue; as long as new the chief investment officer of fixed trustees and the riskometer. The also gave unlisted non-convertible critical product for tier II and III
airport. The remaining 26% Infrastructure Fund—to sell a investors are added, these issues income at a large AMC. riskometer on portfolio level has debentures (NCDs), where mutual buyers this festive season. We
stake remains with state-run 79.1% stake in GVK Airport Hold- can be managed but in the face of “The markets are ever-changing, kick-started the risk discussion funds are investors, a one-time win- have also increased the down
Airports Authority of India. ings for ₹7,600 crore. However, heavy redemptions, this becomes a which requires regulations to be among stakeholders and inves- dow of three months to get listed. payment cycles from 6 months
The deal also gives Adani Air- the deal fell through last month, tough task to manage. Sebi is work- ever dynamic. Since October 2018, tors,” said Swarup Mohanty, CEO, The step was meant to ensure that to 9 months for credit card-
port a controlling stake in the and GVK agreed to hand over con- ing with the industry to solve this the industry has seen a number of Mirae Asset Mutual Fund. debt mutual fund schemes hold holders,” said Vikas Bansal,
Navi Mumbai International Air- trol of MIAL to the Adani group. conundrum,” the official cited ear- regulatory and operational gaps Since 1 May, the market regulator only 10% in unlisted debt. director-Amazon Pay.

Delivery biz Vedanta seeks extension of

sees up to buyback after delisting fails
250% spike PTI to the failure. delisting offer and the equity
in attrition feedback@livemint.com BSE on 9 October showed
137.74 crore shares, out of a
shares of the company will con-
tinue to remain listed on the

V
edanta Ltd’s delisting total 169.73 crore shares held stock exchanges,” it said.
FROM PAGE 1 went from almost-a- by the public, to have been All equity shares tendered in
success to failure on offered for sale to promoters, the delisting offer shall be
Agarwala added attrition rates account of a large quantity of larger than the threshold of returned, it added. Officials
are unlikely to move below 100%. unconfirmed orders, forcing 134.12 crore. Some bids, how- privy to the development said
Industry experts said many the company to look for ever, were pending confirma- Vedanta is now exploring with
employers are already offering options to extend the buyback tion from custodians. Reconcil- regulatory authorities if the
some form of social security to period by a day. iation of data led to the number reverse book building period
gig workers to retain their loy- In a filing, Vedanta said its of shares offered for sale being could be extended by one day.
alty and more such measures buyback offer is deemed to trimmed to 125.47 crore. For successful delisting of
are likely to be implemented. have failed as per the terms of This, Vedanta said, was “less the shares, 134.12 crore shares
Swiggy, for example, offers the delisting regulations after than the minimum number of needed to have been validly
accident insurance, medical promoter Vedanta Resources offshore shares required to be tendered for the promoter
insurance (including depend- did not receive the required accepted by the acquirers in shareholding to cross the 90%
ents), on-call doctors for its number of shares to delist the order for the delisting offer to shareholding threshold.
delivery staff and their family, firm. A large number of uncon- be successful”. “Accordingly, The reverse book building
educational scholarship pro- firmed bids and some technical the acquirers will not acquire process for shareholders to
grammes, tie-ups with banks glitches in the tender process any equity shares tendered by tender shares, began on 5 Octo-
to offer personal loans at a bet- are likely to have contributed the public shareholders in the ber and ended four days later.
ter rate, the company said.
Agarwala said what firms are
doing is trying to map out the
correct mix of incentives
across demographics and job
profiles that work best for their
requirements rather than con-
tractually obligate people to
stay. According to a Better-
place report on blue-collar
workforce management, the
gig economy will recover to
80% of pre-covid demand.
Currently, the demand is at
70% of the 2019 level. The
report says job opportunities
will see massive growth in
tier-II and III cities.
Swiggy will add 25-30% to
its fleet to strengthen growing
demand. “In some cities, it is
now close to twice the num-
bers six months ago. A large
number of delivery partners
who have migrated to their
hometowns are keen to work
in their current location or
have come back to their previ-
ous work location,” a Swiggy
spokesperson said in an
emailed response.
Zomato has been using both
agencies and walk-ins to onboard
delivery partners. It has also
deployed a remote onboarding
mechanism wherein those inter-
ested in joining can download
the app, share identification doc-
uments and undergo training.
04 MONDAY, 12 OCTOBER 2020
NEW DELHI

S&P BSE Sensex Nifty 50 Nifty 500 Nifty Next 50 Nifty 100 S&P BSE Mid-cap S&P BSE Small Cap
CLOSE 1-WEEK CHANGE (%) CLOSE 1-WEEK CHANGE (%) CLOSE 1-WEEK CHANGE (%) CLOSE 1-WEEK CHANGE (%) CLOSE 1-WEEK CHANGE (%) CLOSE 1-WEEK CHANGE (%) CLOSE 1-WEEK CHANGE (%)

40,509.49 4.68 11,914.20 4.36 9,750.15 3.05 27,410.30 0.58 11,990.7 3.85 14,765.55 -0.32 14,966.21 -0.03
1-MONTH CHANGE (%) 3-MONTH CHANGE (%) 1-MONTH CHANGE (%) 3-MONTH CHANGE (%) 1-MONTH CHANGE (%) 3-MONTH CHANGE (%) 1-MONTH CHANGE (%) 3-MONTH CHANGE (%) 1-MONTH CHANGE (%) 3-MONTH CHANGE (%) 1-MONTH CHANGE (%) 3-MONTH CHANGE (%) 1-MONTH CHANGE (%) 3-MONTH CHANGE (%)

6.06 10.27 5.64 10.18 4.95 10.15 2.32 4.35 5.20 9.38 2.24 9.43 4.64 16.48
6-MONTH CHANGE (%) 1-YEAR CHANGE (%) 6-MONTH CHANGE (%) 1-YEAR CHANGE (%) 6-MONTH CHANGE (%) 1-YEAR CHANGE (%) 6-MONTH CHANGE (%) 1-YEAR CHANGE (%) 6-MONTH CHANGE (%) 1-YEAR CHANGE (%) 6-MONTH CHANGE (%) 1-YEAR CHANGE (%) 6-MONTH CHANGE (%) 1-YEAR CHANGE (%)

30.01 6.11 30.75 5.31 31.02 6.23 19.7 2.81 29.17 4.96 29.81 6.46 45.39 16.96

m MINT SHORTS
Big new ETF players may
Central bank’s optimism is helpful
bring back price wars
Wall Street players that are offering exchange-
traded funds for the first time may force a new
wave of cost cutting in the industry. Existing issu-
but a lone dissent calls for caution
ers have been slashing expense ratios in recent
years, vying for assets among more than 2,200 Aparna Iyer growth should be appreciated. The
could elongate the time before they
products available. Yet this summer, signs aparna.i@livemint.com prognosis on inflation is still incon-
reappear, putting upward pressure
Too much Currency with public Money supply Y-o-y growth (in %)
25
emerged that the competition could only go so clusive, although RBI predicts retail
on prices in the interim,” a HSBC note to handle

T
far, with one zero-fee fund shuttering and another he Reserve Bank of India’s inflation to ease closer to 4% by
said. “High inflation expectations The sharp rise in
23.7
product that used to pay investors who held it (RBI) monetary policy March. For this to happen, supply-
could become entrenched over this the growth of
changing course to charge fees of 29 basis points, Five of 12 committee (MPC) with side bottlenecks in the wake of the
period,” it added. A RBI working money supply 20
PSU bank and currency with
or 0.29%. Now asset managers that had been long- three new external mem- pandemic should ease. With progres-
paper points out that food inflation
stocks trade the public could
time ETF holdouts—including Wells Fargo, Fed- near face bers gave on Friday a near sive unlocking, signs are visible of
has sticky components that could complicate
erated Investors and Dimensional Fund Advisors value commitment to keep policy rates low such easing. Even so, an unknownresult in broad-based entrenchment matters for RBI in 15
—are finally diving in. They may reignite the price bit.ly/3nDlPFF for as long as the start of fiscal year informal sector piece muddies the
of expectations. the medium term.
wars. BLOOMBERG 2021-22. The second risk that 11.7
In the age of mone- RBI’S RISKS the central bank needs
12.2
tary policy activism, to monitor is the flow of 10
Comeback of covid-19 is where every central FOR retail inflation AN unknown RBI needs to unprecedented surplus 10.1
bank is pushing the to move closer to 4% informal sector is a monitor the flow liquidity. The average
huge but less deadly so far by Mar, supply-side
limits, the MPC hardly bottlenecks due to
challenger to the of unprecedented
liquidity surplus in the
smoothening of surplus liquidity
The coronavirus isn’t sticking to its schedule. The sticks out in its com- covid should ease banking system is 5
supply side friction into real sector Source: CMIE 3 Jan 2020 25 Sep 2020
deadly pathogen was always expected to make a mitment. What per- around ₹4 trillion and
comeback this winter, but an autumn rebound in haps stuck out was the RBI has committed to SATISH KUMAR/MINT

infections across Europe and North America lone dissent by member J.R. Varma outlook here. add to this. Money supply growth has into the banking system given tepid unwind its policy measures at a later
could make the colder months even more daunt- who was against keeping policy Analysts at HSBC Securities and risen to 13% in September from about credit growth. Currency in circula- stage. “There are definitely risks
ing than public health officials had anticipated. accommodative into the next fiscal Capital Markets (India) Pvt. Ltd warn 10% before the pandemic while cur- tion isn’t feeding into inflation due to involved here. But they are for
The pandemic’s resurgence is less deadly so far year. Varma’s reasons behind this that disruption of small businesses is rency in circulation growth has accel- the low propensity of Indians to another day,” said an analyst request-
than during its bleak early months, when thou- would be clear once the minutes of putting upward pressure on prices. erated to 24%. Friday’s measures spend. But the surge in growth of ing anonymity.
sands were dying daily. The risk is that with offi- the meeting are made public. “True, such businesses have a high were entirely focussed on liquidity money supply and currency in circu- In this context, an unbridled com-
cial case numbers already jumping to records in Meanwhile, there are two major rate of opening and closing, but the and towards increasing its flow to the lation could complicate matters for mitment to keeping policy accommo-
many countries, caring for the sick will overbur- reasons for RBI to keep that thread of pandemic-led prolonged lockdowns real sector. RBI later on. Indeed, the challenge dative for long may prove to be a dou-
den hospitals. BLOOMBERG caution even as its stance to support and labour and financial constraints So far, this surplus has been locked for RBI is greater when it decides to ble-edged sword.

USO’s wild ride

Anyone who bought options to bet USO would
drop likely saw the value of their wagers plunge.

120
United States Oil Fund exchange-traded fund (in $)
As covid-19’s impact subsides, Revamped Thar’s launch may rev up
100

80 88.3
Trent could recover sooner M&M’s passenger vehicle division
60 Pallavi Pengonda Clifford Alvares “Thar has its an appeal as a week- “If we assume 2% of those owners
40 pallavi.p@livemint.com
Revenue blip clifford.a@livemint.com end adventure vehicle, which is upgrade to Thar each year, it gives
27.9
The covid-19 pandemic weighed on Trent’s revenue what urban consumers could use us potential monthly volumes of
20 performance in the past two quarters.

I T
ndian apparel retailers have he passenger vehicle segment for local commuting as well. It will 5,000 to 6,000. Conservatively, we
0 suffered a lot due to the pan- 30 33 32 has been moving slowly for also help the passenger vehicle seg- are building further monthly vol-
7 Oct 2019 5 Oct 2020
demic as the need to 26 26 Mahindra and Mahindra ment sales, which has been under umes of 3,500-4,000 vehicles. This
Source: Bloomberg 18 18
dress-up reduced drastically. 8 Q1 (M&M) compared to the farm pressure lately,” said Abhishek Jain, would result in 7%/10% and
FY21
SATISH KUMAR/MINT Plus, operations were shut for equipment division, but the auto analyst, Dolat Capital. 13%/16% increases in our revenue
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
a good part of the June quarter FY19 FY19 FY19 FY19 FY20 FY20 FY20 FY20 revamped Thar’s launch may rev up The street has and earnings per share
owing to the lockdown. its car segment just in time. already ratcheted up Much of the estimates for FY21/
VIX creator warns options Given this, FY21 will be mis- Stand-alone year-on-year New Thar bookings of more than its revenue estimates recent increase in FY22,” said analysts at
glitch is harming investors erable and Trent Ltd will not revenue growth (in %) 9,000 vehicles within a few days of because of the new car. M&M’s stock price PhillipCapital India in
Options on tech stocks may have dominated the be immune to that. “FY21 will launch show that the company is Mahindra and Mahin- is because of the a client note.
headlines, but one of the leading minds in finance be a washout year and we fore- gearing up well for the forthcoming dra sold 14,857 pas- Much of the recent
increased
reckons this year’s crazy markets have been stir- cast a more than 40% year-on- -87 festival season. The company’s senger vehicles in Sep- increase in Mahindra
ring up trouble elsewhere in the system. Robert year decline in (Trent’s) stan- stock also gained 4% in October. tember, which is, of demand for and Mahindra’s stock
Source: Company, IDBI Capital Markets & Securities Ltd
Whaley, the man who created the VIX Index, is dalone revenue,” said analysts The personal mobility theme is course, lower than its tractors price is, however,
investigating a major problem in the market for from Jefferies India Pvt. Ltd in SATISH KUMAR/MINT largely tilted toward entry-level and monthly run rate of at because of the
derivatives of exchange-traded products. It shows a report on 8 October. tive prices. 2) Significant Ebitda CAGR should be about mid-sized cars but Mahindra and least about 16,000 increased demand for
up when certain ETPs adjust their investment Nevertheless, as the impact growth opportunities in Zudio 20%.” Mahindra’s vehicles also have a cars. tractors. With the agri and rural sec-
strategies, a previously rare event that has hap- of covid-19 subsides and eco- format driven by aggressive Note that while Trent’s rev- demand in the rural segment. A section of the street also tor doing well, Mahindra and
pened multiple times in 2020’s extreme turbu- nomic activity gains pace, store additions beyond metros enues grew by around 30% However, this time, though, the expects adventure-bikers to Mahindra’s tractors sales increased
lence. Options holders have lost hundreds of mil- Trent should find itself better and rise in consumer prefer- year-on-year in the first three street reckons that sales of this car upgrade to Thar, which could add 70% year-on-year in August. The
lions of dollars as a result. “These things don’t placed compared to peers. Its ence towards value fashion quarters of FY20, results for in urban areas could shift into a 3,000-4,000 to its monthly sales segment will do well in the next year
occur that often, but at the same time they have flagship concept, Westside, owing to the pandemic-led the last two quarters have higher gear. figures. also, said analysts.
occurred with increasing frequency in past which contributes a big share financial constraints.” Zudio is understandably been marred The tractor division accounts for
months,” said Whaley in an interview. “I’m inter- to revenue, is Trent’s value fash- by the pandemic. Revenue Sales pickup about 40% of total sales, but it has
ested in issues of market integrity, and this is the expected to play Westside, which ion business. growth dropped to 8% in the about 60% share in the operating
antithesis to me.” BLOOMBERG a key role in driv- accounts for a big As such, Trent’s March quarter. The June M&M’s passenger vehicle sales have been steadily rising post the profit pie. So, even while passenger
lockdown but are still far from pre-covid highs.
ing earnings. share of its prospects appear quarter saw revenues decline vehicles have higher sales, operat-
According to revenue, is better from a by a whopping 87%. Hereon, a 19,797 Sale of passenger vehicles ing margins are lower here and
18,460 (in units)
Axis Securities earnings before interest and taxes
Bond volatility expected to play m e d i u m - t e r m delay in revival in discretion- 15,691 are in the range of 6%, said analysts.
Ltd, factors that perspective. “We ary spending by consumers is 14,637 14,857
The lift in the Move Index reflects expectations
may drive recov- a key role in bake in a strong a key concern. 13,651 Hence, the progress on the new
that higher spending under a Biden govt may driving earnings recovery, driving 11,025
boost inflation, raise debt issuance. ery post-FY21 Muted near-term earnings 10,948 Thar becomes important for mar-
include “1) West- a 18% stand-alone outlook may well keep mean- 8,075 gin improvement.
180
ICE BofA MOVE Index side’s success in revenue com- ingful upsides at bay in the The Mahindra and Mahindra
160
retail concept (only format to pound annual growth rate stock, which has recovered 3,384 3,867 stock has been coasting smoothly
140
consistently deliver healthy (CAGR) over FY20-23,” said smartly from the lows of 2020. 0
on the accelerated growth in trac-
120 same-store sales growth and Jefferies analysts. “FY21 would Even so, the shares are still Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
tors. It is already up 19% in 2020.
100 high store metrics among also be a significant loss in the nearly 15% away from their However, investors may now want
2019 2020
80 peers) driven by exclusive and stand-alone entity, a first in at pre-covid highs seen in Febru- Source: Company
the passenger vehicle sub-segment
57.5 trendy offerings at competi- least 15 years but three-year ary on the NSE. to add to those gains.
60 74.7
SATISH KUMAR/MINT
40
20
3 Aug 2015 9 Oct 2020
Source: Bloomberg

SATISH KUMAR/MINT

Traders are bracing for a Corporate earnings to recover, but investors want more stimulus
possible Democratic win
Even with the White House pushing a new $1.8 Harsha Jethmalani toward economic recovery,” Jur- earnings per share. poor, analysts said. As such,
Fetish for fiscal push
trillion stimulus plan, it’s unclear if anything will harsha.j@livemint.com rien Timmer, director of global To fast-track economic revival impacted by the pandemic, governments
Interest rates across the world demand revival can be sustained
get done before the presidential election... macro, Fidelity Investments, said across the world have announced fiscal stimulus measures. are at historic lows, leaving little only if there is more support from

G
Despite the uncertain timing, investors are bet- lobal equity markets are
ting that more stimulus will come eventually. desperately eyeing
After all, keeping the economy growing is going another stimulus package
to be a priority for whoever wins the election... and a failure to reach a consensus
Moreover, with the Democrat Joe Biden widening on the next stimulus would make
his lead in polls over President Donald Trump, them nervous.
investors across asset classes are starting to pre- From the markets’ perspective,
pare for a potential Democratic sweep, which this is one key talking point when
could bring even bigger govt spending in early it comes to the outcome of the US
2021, a less contentious trade policy and a focus elections, with the two presiden-
on infrastructure and clean energy. BLOOMBERG tial candidates taking divergent
stands on the nature and scope of
For more reports and analysis another stimulus.
on the markets, follow our “For now, the market remains
Mark to Market podcast with laser-focused on whether there
Pallavi Pengonda and Aparna will be another tranche of fiscal
Iyer on htsmartcast.com relief. With the liquidity impulse
waning, this is a needed bridge
in a report on 7 October.
“Unless another phase of the
CARES Act comes soon, the mar-
ket’s former valuation tailwind
could turn into a headwind. This
is why the market is on pins and
needles waiting for the next phase
of fiscal relief,” Timmer said.
Little wonder equity investors
are so busy tracking stimulus
clues that they seem to have side-
lined corporate earnings.
“Factset data show that analysts
have increased their Q3 EPS esti-
mates by 4% over the past three
months, the first time since Q2
2018 that estimates have risen
ahead of the earnings season. This
Central bank potential liquidty injection New government fiscal stimulus (in $ trillion) room for global central banks to the governments, they said.
12 act further. So, fiscal policy has to Back home, Union finance
take the onus of economic revival. minister Nirmala Sitharaman
9
Recently Federal Reserve recently said that the government
6 chairman Jerome Powell said he is open to one more stimulus if
thinks certain areas of the US required. However, given the
3
economy will continue to struggle tight fiscal space, it is anybody’s
0 without more stimulus. guess what the quantum will be.
US Eurozone Japan UK China Others Total
Reiterating the same, the “The timing of the fiscal stimu-
Others include RoW, Asian Development Bank, International Monetary Fund, World Bank
Source: Cornerstone, JP Morgan Economic Research as on 6 May 2020
bank’s president Robert Kaplan lus is key for both the US and
said central banks cannot solve India. It is like the last push they
SATISH KUMAR/MINT
income problems, so it is up to can offer to boost demand. So, the
increased optimism for Q3 is well- of the debate over fiscal stimulus governments to compensate for longer they wait, the less effective
founded, but it does present a is likely to remain the key driver of loss of incomes through fiscal pol- the stimulus becomes. The delay
higher bar and suggests that the equities in the near-term,” Daniel icy. will weigh on investors senti-
earnings season is unlikely to pro- Grosvenor, director equity strat- Markets are bent on more stim- ment,” said an analyst with a
vide an upside catalyst for equi- egy, Oxford Economics, said in a ulus because income generation domestic brokerage firm request-
ties. In this context, the trajectory note on 8 October. EPS is short for opportunities are likely to remain ing anonymity.

Mark to Market writers do not have positions in the companies they have discussed here
06 MONDAY, 12 OCTOBER 2020
NEW DELHI PERSONAL FINANCE
TOP ST RIES
‘India’s policy response towards C A P I TA L
C A LC U LU S

covid-19 is a great success story’

A N I L PA D M A N A B H A N

Read Anil Padmanabhan’s earlier columns at

livemint.com/capitalcalculus

Neetu Chandra Sharma

neetu.s@livemint.com
NEW DELHI
campaign is to instill in them the feeling country when there is no vaccine increasing. Our forex reserve is at the
that we need to take precautions in the available?
future also. There is no large expenditure
highest and all other economic indicators
India’s response to covid-19 is a great show a definite revival.
RBI STEPS INTO THE
as we have essentially designed the cam- success story, which many other countries Do you think India has also been suf-
RING, UNDERWRITES
I
ndia’s coronavirus count has crossed paign and sent to all local bodies. Social are emulating. We implemented a strict fering because of the “infodemic”
7 million, claiming more than media platforms and national broadcast- lockdown thereby arresting its growth in during covid-19? What is India doing
100,000 lives across the country. ers are also being used to propagate the the initial phase itself. We were not pro- to combat this infodemic?
However, though the average number message.
of cases has been decreasing in past Air pollution is considered to
HT I will not use the word “info-
demic”. In such a situation, infor-
ECONOMIC REVIVAL
few weeks in the country, the upcoming be one of the risk factors for mation flows from all directions.
festival season and the onset of winter may covid-19. With winter setting The government’s job is to give
lead to covid-19 cases increasing again, in, stubble burning will start in correct information and we are
according to public health experts. Pra- areas adjacent to Delhi, such as doing it.
kash Javadekar, minister of environment, Punjab, which will lead to an The pandemic is stabilizing in
forest and climate change, minister of increase in air pollution. What India with the average number Delhi
exempts road
information and broadcasting, and minis- are your plans to mitigate the of cases declining each day. As tax on
ter of heavy industries and public enter- impact of air pollution on cov- the festive season is arriving battery-
prises spoke about the covid-19 situation id-19? Is the ministry of envi- and under unlock-5, the gov- operated
in India, the government’s role in creating ronment carrying out or plan- ernment has allowed gather- vehicles RBI has been playing a quiet, supportive role to North Block. MINT
under its EV
awareness about coronavirus through ning any research to study the ings and festive activities. Do policy

E
recently launched campaigns, the upcom- link between covid-19 and pol- you think this may impact the ven before the pandemic forced a meltdown of the Indian
ing festival season, winters and the envi- lution?
ronmental impact on the pandemic.
Edited excerpts of an interview:

‘
Air pollution in the national cap- We started with testing capacity
ital region is a serious issue. The of only 1,000 per day. Now, we
The government has launched a central government led by Prime
nationwide awareness campaign for Minister Narendra Modi started have ramped up our testing
‘ ebbing covid-19 in the country
and trigger a fresh wave of
infections?
As winter and festival season are
approaching, the government is
bit.ly/34PHUZ
b economy—remember the 24% contraction of the national
income in the fiscal first quarter—the Reserve Bank of India
(RBI) has been playing a quiet, but supportive role to North Block.
Last Friday, RBI pulled out all stops as it were committing to
boldly underwrite the economic recovery. Yes, it did not initiate
covid-19. Why was the air quality capacity to 1,300,000 per day. more cautious and that is why we another round of rate cuts, yet in both actions and words, the cen-
this campaign
planned after nine
mint index (AQI) in
2015.
have launched the second round of
public awareness campaign.
tral bank made clear that it would—like its counterparts in (most
central banks of) other countries—do whatever it takes to create
PRAKASH JAVADEKAR
months of the pan- CONVERSATION The accept- Minister of environment, forest and climate change, The ministry of environment an ecosystem to foster a revival.
demic? Do you think PRAKASH JAVADEKAR ance of a problem minister of information and broadcasting, and recently issued guidelines for For one, it has put out key guidance on the Indian economy by
India lacks covid-19 is the first step minister of heavy industries hospitals and quarantine cen- suggesting that the economic tide is turning. Assuming there is
appropriate behaviour? How much towards finding a solution. The tres to dispose the waste gener- no second wave of covid-19 in the offing, RBI believes the econ-
funds and manpower are required to central government has taken ated after admission of cov- omy will mend over the next two quarters, and actually return to
implement the campaign. How much many steps. It completed east-west ducing and were fully dependent on for- id-19 patients. Are the hospitals and black in the fourth quarter ending March 2021. Remarkably it has
money has the government spent so peripheral ways, thus ensuring that eign countries for masks, PPE suits, venti- quarantine centres following the projected economic growth in the first quarter of 2021-22 at an
far on spreading information about 60,000 heavy vehicles that were passing lators, test and swab sticks. We had a test- guidelines? What is the mechanism in astonishing 20.6% (this number exaggerates the recovery, given
covid-19? through Delhi every day and polluting it, ing capacity of only 1,000 per day. Now place to monitor these facilities? the base effect of the record contraction in the previous year).
During a pandemic such as covid-19, do not do so now. Migration to BS-VI is a the testing capacity has increased to Central Pollution Control Board has Delivering his policy address, RBI governor Shaktikanta Das
which is essentially a new phenomenon, major step towards the reduction of pollu- 1,300,000 per day. The opening of hun- already issued guidelines for disposal of summed it up saying: “By all indications, the deep contractions
every country needs to re-energize its ini- tion. Electric vehicles are being subsidized dreds of covid hospitals and testing labs plastic waste generated during covid-19 of Q1 are behind us,” and then added: “In this environment, the
tial campaigns launched in March. In the and we are seeing thousands of electrical along with production and self-sufficiency with a new protocol and new methods. focus must now shift from containment to revival.”
first phase of the pandemic, people were vehicles on the roads, as well as e-rick- in all the required raw material, overseas Such waste disposal is monitored closely. Second, it bets that the current wave of retail inflation is transi-
afraid, unaware and also cared to adhere to shaws and e-motorcycles. export of pharmaceuticals and medicines tory. It also believes the spurt was triggered by the supply chain
what was prescribed. The lockdown was The metro rail network has also are the shining examples of leading from disruptions in the aftermath of the nationwide lockdown. And
successful. Even during Unlock 1 and 2, expanded with great speed and quantum the front. once the lockdown is gradually wound down—especially at the
people observed discipline and imple- and now serves 5 million people every day, What is the government doing to local level, where it continues to be deployed as the primary
mented the required protocol to a great which takes away nearly 500,000 cars boost the economy? What is the weapon to contain the spread of the
extent. The new campaign is an attempt to from the roads. Thus, vehicular pollution impact of covid-19 on heavy RBI has gone pandemic—the supply bottlenecks
re-invigorate the spirit and make a fresh is checked to a great extent. industries and public enter- out on a limb would ease and so would inflation.
appeal to the people to follow simple disci- About 3,000 industries have been con- prises? What is the govern- Third, probably the most important
verted to piped natural gas ment’s plan for their to bat for of the announcements, RBI has guar-
MINT
(PNG) and 2,800 brick reboot? economic anteed the continuation of the present
kilns have been converted The government is tak- growth over abundance in liquidity. Effectively, the
to zig-zag technology. Pet- ing all the possible steps to inflation central bank has capped bond yields
coke is banned. Illegal improve the economy. The on government securities, suggesting
industries have been September figures show they (and related lending rates) will
closed. The Badarpur and near normalcy has taken only head south.
Sonepat thermal stations place in goods and services “Market participants should be assured that in keeping with
have been closed. Thus, tax collection, production, the monetary policy stance announced today, the RBI will main-
industrial pollution is auto sales, electric supply, tain comfortable liquidity conditions,” the governor said. “Yields
reduced. and petrol consumption. in the government securities market, both primary and second-
To reduce stubble burn- The Aatmanirbhar pack- ary segments, also need to evolve in alignment with the comforta-
ing, machines with subsidy age and the first package of ble liquidity conditions. This is important for those segments of
are given and various other Garib Kalyan has addressed the financial markets that rely on the g-sec yield curve as a bench-

‘
packages have addressed the
needs of the poorer sections,
‘ interventions are pro- the needs of poorer sections,
Aatmanirbhar, PM Garib Kalyan moted. Thus, reduction in middle-class, ministry of micro,
stubble burning has taken small and medium enterprises
place in Haryana by 20% (MSME) industries and all sectors.
and in Punjab by 15%. To That is why we have succeeded in
overcome the problem of revamping the economy. Our foreign
mark for pricing financial instruments so as to benefit from the
easy financing conditions engendered by the RBI’s policy meas-
ures and operations.”
The thing is that the RBI is not actually done yet. It has made
it abundantly clear in its “accommodative stance” that another
round of rate cuts early next year are very much on the table—
middle-class, MSME sector. dust pollution, hundreds of direct investment (FDI) is presuming that its benign forecast on inflation holds up.
dust suppressants and However, the big unknown in all this is the pandemic, which
plines. There are three broad messages. water sprinklers are being used. originated in Wuhan, China. Given the resilient nature of the
First, the pandemic is on the decline but At the same time, Construction and virus, covid fatigue among the populace and the fact that the uni-
not over. Second, there is no vaccine or an Demolition Waste Management Rules, versal availability of the vaccine is unlikely to happen quickly, any
assured “one-drug” for covid-19. There- 2016 were formed and now are imple- predictions about the virus is on a wing and a prayer.
fore, we should not be afraid but should mented reducing the dust pollution from Recent data suggests that the curve measuring the spread of
take precautions. The third message is such activities. the virus is flattening in India. Whether the trend will hold up is
that without spending much, anybody can The Central Pollution Control Board in the realm of the unknown. Yet, what this trend can do is to
protect himself/herself by observing three (CPCB) has set up 50 teams to inspect all instil confidence among the authorities to dial down the local
basic protocols. One, put on the mask. the hotspots and carry out remediation lockdowns. Because without puncturing the fear economy, the
Two, keep a safe distance of 6 feet. Three, immediately. Biomass burning in the contact economy, especially services such as aviation and hospi-
sanitize or wash hands after every task is city has been reduced to a great tality, will continue to suffer.
finished. extent. All state governments and While this may be the case, the fact is that RBI has gone out on
This campaign is planned essentially agencies have been asked to a limb here. Now all eyes will be on North Block. Will it roll out
through local bodies whom we have sup- comply according to their the long-promised second economic stimulus?
plied with designs of pamphlets, posters, action plan. Anil Padmanabhan is managing editor of Mint.
and stickers. They will print and paste it in Covid-19 is a new disease. Comments are welcome at anil.p@livemint.com
bus, railway and metro stations, all the How would you compare
markets as well as all public places to India’s policy and politi-
ensure that people will see it and they will cal response towards the For more on the intersection of politics and
be reminded of this protocol so that after disease with those of economics, listen to Mint’s Capital Calculus
six months through the pandemic, people other countries? What podcast with Anil Padmanabhan on
do not become careless or carefree. This is your message to the HTSmartcast.

HT

Cost-savings set to wane for India Inc from Q2 Razorpay becomes fifth fintech unicorn
FROM PAGE 1
the sector’s advertisement
spends remained at pre-covid
levels, Ebitda would have
declined by 12%, instead of
recording modest growth, JM
Financial Institutional Securi-
ties Ltd said in a report on 28
September.
Ebitda—earnings before
interest, taxes, depreciation
and amortization—is a meas-
ure of profitability.
But companies are expected
to begin loosening their purse
strings. Fast-moving con-
sumer goods, retail and con-
sumer discretionary firms will
have to eventually shell out
money for promotions. “In the
quarters to come, ad spends
will make a sharp comeback.
This bodes well for media
firms but will erase savings for
consumer companies. Varia-
ble costs, which are mostly
linked to volumes, will also rise
going ahead. Net-net, margin
growth, which was prompted
largely by cost rationalization
in the June quarter, is unlikely
to sustain for many sectors,”
said Jitendra Gohil, head,
India equity research, Credit
Suisse Wealth Management.
Ad spends are also expected
to rise owing to the festive sea-
son and the ongoing Indian
Premier League tournament.
Cost savings on account of
work-from-home may con-
tinue. “For banks and IT com-
panies, a reduction in fixed
costs due to faster adoption of
work-from-home would con-
tinue. Our interactions with
the management of banks sug-
gest there is a disconnect
between market expectations
and on-the-ground business of
banks. We expect some private
banks to surprise positively,”
Gohil said. Sector-wise, IT and
banks may post decent earn-
ings. Both are seen as key ben-
eficiaries of adopting the
work-from-home model. Tata
Consultancy Services Ltd, the
first to announce September
quarter results, has already
reported margins at an eight-
quarter high.
Other areas of cost savings
have been on wages, travel and
rentals. Based on a study of
more than 160 listed compa-
nies, analysts at JM Financials
found that at least one-third of
these firms made salary cuts/
variable pay rationalization,
one-fifth undertook head-
count rationalization, and
one-fourth re-negotiated rent-
als. “While growth revival is
likely to reduce the focus on
costs (as seen in previous
cycles), nonetheless, (a) lower
rental expenses (ex. of institu-
tionally owned business
parks), (b) savings on advertis-
ing/marketing spends, and (c)
lower discretionary cost struc-
tures are likely to provide sus-
tainable margin benefits going
forward,” JM’s analysts said.
While holding on to some
necessary cost cuts may be
helpful, loosening the purse
strings would be essential at a
macro level for demand to
improve.
FROM PAGE 1
into the Indian market and
broaden our product portfolio to
grow our business and achieve
profitability,” said Harshil Mat-
hur, chief executive and
co-founder of Razorpay.
While the long-term aim for
Razorpay is to go public, it will
first focus on achieving overall
profitability in 2-3 years. The
startup will also focus on newer
acquisitions in the business-to-
business space and is in discus-
sions with around five startups.
“It is too early to speak on
which startups we are looking to
acquire since these are still in the
discussion phase. But we con-
tinue to look at inorganic avenues
of growth through opportunistic
acquisitions,” said Mathur.
The six-year-old startup pro- solutions relating to payrolls business lines will generate
vides payments and other finan- and has almost 10,000 busi- almost 35% of its revenue in the
cial infrastructure to help busi- nesses using the platform. It is next year. By the end of this fis-
nesses manage money flow. Its looking to add invoice and cal, Razorpay expects to have
core business continues to be its expense management solu- more than 10 million custom-
online payment gateway, which tions to its existing offerings. ers leveraging its payment
accounts for 80% Razorpay Capi- gateway offering. The com-
of its revenue, as it The six-year-old tal currently dis- pany launched its corporate
serves five million startup provides burses ₹250 crore credit card last year and plans
customers, includ- payments and in loans every to expand the offering to newer
ing Airtel, Book- other financial month, with the businesses and corporates.
MyShow, Face- average ticket size Mathur said the company is
infra to help biz
book India and ranging from ₹7 planning to expand into South-
Sony. manage their lakh to ₹10 lakh, Asian markets this year, but the
Its neo-banking money flow for a duration of plans are on hold due to covid.
and lending plat- 3-6 months. The India has more than 35
form RazorpayX startup acts as a startup unicorns, with several
and Razorpay Capital, respec- marketplace and works with existing ones raising funds this
tively, were launched in 2018. five non-banking financial year. Edtech startup Unacad-
Razorpay X allows users to companies (NBFCs) and two emy, developer collaboration
open current accounts through banking partners, who provide platform Postman and cosmet-
two banking partners and pro- loans to its customers. ics and fashion marketplace
vides employee management Razorpay says that these new Nykaa turned unicorns this year.
 BUSINESS OF LIFE MONDAY, 12 OCTOBER 2020
NEW DELHI 07
STARTUP INC.
with organizations like Haqdarshak
becoming last-mile delivery agents for
entitlements, is pivotal in terms of the scale
BRIDGING THE
of impact moving forward,” says Divecha.
CAPACITY GAP
PERFECT PARTNER Over the past few decades, Indians' aspiration
Tata Power, several of whose plants are in levels have gone up. However, the government is
remote areas, had a financial inclusivity faced with capacity limitations, making it difficult
programme called Adhikar which was sim- to achieve key development goals. The promise
ilar in principle. For example, volunteers of civic tech is that it can close some of that gap.
from its Maithon plant in Jharkhand were howindialives.com
going into the surrounding tribal areas to
hold camps for people who had even less
awareness of government schemes than A LONG WAY TO GO
others. “We still encourage this, but in 2018 India's composite score in UN sustainable
developement goals has improved from 57 in 2018 to 60
we realized we needed a partner to scale it in 2019. However, there is plenty of ground to cover.
up,” says Shalini Singh, who leads CSR and
sustainability initiatives at Tata Power. Sustainable Development Goal Progress
“What attracted us to Haqdarshak was also No poverty 50
their app-based technology which helps Zero hunger 35
them collect data and show outcomes.” Good health and well-being 61
The startup helped Tata Power scale the Quality education 58
programme to 16 locations covering
Gender equality 42
100,000 people last year. It’s a service that
provides whatever it takes to get the bene- Clean water and sanitation 88
fits. It requires an understanding of how Affordable and clean energy 70
government functions and mobilizing Decent work and economic growth 64
teams on the ground. There’s usually a Industry, innovation and infrastructure 65
political angle too, as some states push a
Reduced inequalities 64
scheme while others dawdle.
Haqdarshak has partnered around 50 Composite SDG 60
organizations, which includes philan- Source: SDG Index 2.0, 2019-20 by UN and Niti Aayog
For a small fee, people can hire a Haqdarshak to help find schemes they are eligible for, get basic documents and apply for what they are entitled to. thropic foundations. This has taken it to 60
districts where 5,000 women are active as
MORE SPENDING NEEDED

Helping people
₹100 crore channelized to 300,000 citi- Haqdarshaks. Nearly 90% of the startup’s
zens so far, its value proposition dovetailed revenue comes from its corporate partner- Among major economies, India has one of the lowest
with corporate CSR programmes. ships. “They have helped us stabilize the government expenditure as a percentage of GDP.
“We’ve always been mission-driven. But model, improve ground operations, and This has hampered welfare schemes.
in the last couple of years, it has been a bring down unit costs. A year-and-a-half Government expenditure as a % of GDP

claim benefits is
pleasant surprise to see the uptake from the back, we were processing 5,000 applica- 44.57
corporate sector, and realize that we can tions a month; last month we did 65,000, 38.49 38.27 37.07
unlock money from the government for but we have the capacity to handle 2 lakh 35.14 34.09 32.62
social impact at a huge scale,” says Doegar. applications a month,” says Doegar. 26.18
One of the first to engage Haqdarshak The scale and stability now let him

good business
was Godrej Properties to help construction explore sustainable B2C options where cit-
workers avail of their benefits under the izens pay directly for the services. The
Building and Other Construction Workers challenge is in setting the right expecta-
(BOCW) Act. Realty firms pay a BOCW cess tions because when a document or benefit Germany Brazil UK Japan US China Russia India
to states, but most workers don’t claim will arrive depends on a government Source: IMF

their entitlement. They have to get regis- department. “But we have seen that people
tered and show eligibility, which gets com- are willing to pay a small fee, as long as they TECH CAN AID ENGAGEMENT
plicated because they are know we will get the work
There is a growing realization that India can't
migrant workers moving
People often find it tough to access govt welfare schemes. from one project to another.
Haqdarshak, done, because otherwise they
may end up spending 10 times
achieve its development goals without the help of
technology, given the capacity constraints.
“They’re employed by our a five-year-old as much,” says Doegar.
Haqdarshak’s mission is to make sure they get the benefits contractors and sub-contrac-
startup, has onAAugust new initiative, launched
Impact of civic tech
(% who agreed)
tors, but as a developer, when 15, is to help small
we look at our responsibility channelized businesses unlock govern-
Sumit Chakraberty community through self-help groups that towards these workers, who
have come up in rural India as a model for are really vulnerable, we want
government ment benefits. “For example,
a kirana store has no clue 80% 50% 74%

I
got gas connections for 42 women in microfinance institutions, government to ensure they’re protected by benefits worth about government schemes
my village,” says 28-year-old Zeba agencies and NGOs to extend their reach. the schemes they’re entitled and their documentation. So,
Khan, who moved to a farm near Vidi- to,” says Gayatri Divecha, CSR
more than even if you’re charging an facilitate a direct strengthen citizen engagement and
communication trust in participation with
sha in Madhya Pradesh after her mar- SOCIAL IMPACT head of the Godrej Group. ₹100 crore upfront fee, they’re willing to with government government and government and
riage. “I’ve got many young girls regis- “In a way, the supply chain was already “Initially, it was difficult to authorities its services civic bodies
tered for the Sukanya savings scheme and there, so it makes business sense for us. But raise awareness among the
to 300,000 take that chance because the
value of unlocking benefits is Source: Omidyar Network India and Village Capital survey, 2018
helped the elderly get pensions, and one of training women to do this also makes a big- workers, but as they started citizens so far huge,” he says. The startup
them received free treatment after a heart ger social impact because the money they seeing outcomes, like insur- has started working with
attack with an Ayushman Bharat card.” earn goes towards education, health or ance cover, scholarship for their kids, and close to 2,000 MSMEs in Madhya Pradesh, FUNDING BOOST FOR CIVIC TECH
A year ago, she joined Haqdarshak, a nutrition instead of being squandered on so on, it picked up steam. Haqdarshak Maharashtra and Rajasthan, and hopes to Building a robust civic tech startup ecosystem will take
five-year-old startup that helps people dis- alcohol or other things,” says Aniket Doe- played a key role because they were tuned scale it up to 1 lakh in the next six months. a concerted effort. The good news is that civic tech
cover and access thousands of government gar, co-founder and CEO of Haqdarshak. into the needs of these workers,” she adds. “There are complex challenges, but I startups are getting attention from investors.
welfare schemes. For a small fee, they can When he embarked on this in 2015, he What started out in a small way now cov- also see huge opportunities for innova- Funding (in $ thousand)
book a Haqdarshak like Khan to help find visualized a social enterprise backed by ers over 10,000 workers at Godrej Proper- tion,” says Doegar. “We are talking about Nepra 13,500
schemes they are eligible for, get basic doc- philanthropists, which would provide ties. The importance of connecting them to close to 1 billion people requiring some- Transerve Technologies 1,600
uments like a PAN card or Aadhaar, and information on welfare schemes. But it entitlements got a new dimension during thing or the other, whether it’s a govern- Milaap 1,400
apply for what they are entitled to. soon became clear that people also covid lockdowns when huge numbers of ment document or registration for a Swajal 1,200
“I’ve got recognition in the village for the required help with the paperwork and pro- migrant workers returned to their villages. scheme. In India, common people find it
Saahas Zero Waste 869
work I do and also earn around ₹6,000 a cedures to get their benefits. This led to Haqdarshak has been helping them get scary to get into all this. I’ve seen even a ₹50
Haqdarshak 191
month from this,” says Khan, who is bring- deployment of Haqdarshaks and a business ration cards, access MGNREGA jobs, and crore turnover company struggling with
ing up two young sons. “Before this, I was model to reduce dependence on handouts. connect with government or private orga- documentation just like a kirana store. So, NextDrop 120
doing nothing outside my home even The minimal charges to provide the ser- nizations offering relief, including food. we haven’t even scratched the surface yet.” Drinkwell 100
though I have an MA in sociology.” vice to beneficiaries didn’t defray the cost “There’s nothing bigger than the gov- Sumit Chakraberty is a Consulting Editor Source: Crunchbase, Omidyar Network India
Almost all of Haqdarshak’s field agents in training and operations. But as Haqdar- ernment and its budget for social impact. with Mint. Write to him at chakrab-
PARAS JAIN/MINT
are women who have access to the local shak proved itself, with benefits worth over So, being able to tap that systematically, erty@gmail.com

For more stories on how startups

PROBLEM, There are a plethora of govt welfare
schemes, but people—especially in
CHALLENGE
rural India—need help with the paper-
& SOLUTION work and procedures to get benefits
The minimal fees charged by
Haqdarshak to provide the service
to beneficiaries didn’t defray the
cost in training and operations
As Haqdarshak’s value proposition are changing the way we work
dovetailed with corporate CSR and the way we live, follow our
weekly podcast Startup Inc
programmes, the startup tied up with
the companies to scale up projects
hosted by Shalini Umachandran
on htsmartcast.com

Civic tech startups in India are rising against heavy odds

Malavika Velayanikal meant for government depart- mentation or new innovation,”
ments to engage with citizens and says Yagnaraman.

Money is available
later, but not for early
experimentation.
Mahesh Yagnaraman
INDIA COUNTRY HEAD, ACUMEN
We want to ensure workers
are protected by schemes
that they are entitled to.
Gayatri Divecha
CSR HEAD, GODREJ GROUP
We realized we needed a
partner to scale up our finan-
cial inclusivity programme.
SHALINI SINGH
CSR HEAD, TATA POWER
T
he scope for civic tech is
massive in India, but so are
the challenges. The poten-
tial comes from the sheer number
of underserved people and the
country’s lowly status on the UN
Human Development Index—last
year, it rose one place to be 129th
among 189 countries monitored.
The challenges are complex, ran-
ging from lack of adequate finan-
cial support to opaqueness of gov-
ernment processes and data.
Nevertheless, a number of start-
ups have ventured into this space
in the past few years. Some help
the government improve its servi-
ces in a range of domains, from
health and education to social wel-
fare, mainly through digitization.
Others come at it from the other
end—helping citizens access ser-
vices and become aware of their
rights and entitlements.
While innovations in this space
are diverse, they are mostly
dependent on charity and lack the
support ecosystem to build sus-
tainable, scalable business mod-
els. Venture capital (VC) invest-
ment in civic tech is negligible in
India, amounting to less than $1
million a year from 2015, shows
data from Tracxn.
Among the better supported
startups is Delhi-based CivilCops,
providing AI-based chatbots
derive insights for better deci-
sions. Founded in 2017 by Ashish
Sharma and Kusha Kohli, it has
backing from global VC SOSV and
was part of its mobile-only accel-
erator MOX’s cohort in Taiwan
early this year.
FUNDING BOOST
Bengaluru- and Pune-based Haq-
darshak, founded in 2015 by Ani-
ket Doegar, Asha Krishnan and
P.R. Ganapathy, recently
announced a funding round led by
global impact investor Acumen
Fund. Doegar says it has received
half of its targeted $1 million.
The startup has a multilingual
mobile app with which field
agents help vulnerable people in
rural areas and migrant workers
access government schemes to
which they are entitled.
Another startup that recently
announced funding is Gurugram-
based Dror Labs, whose app con-
nects women, children and the
elderly with a safety network. Dror
Labs re-purposed the app after the
covid pandemic to also help peo-
ple maintain social distancing.
While the amount of its latest
round is undisclosed, Tracxn puts
its total funding at $500,000.
“The way in which people
access basic benefits is straightfor-
ward in countries where the digi-
Some startups help the government improve its services in a range of domains, including education, mainly
through digitization. Others use a direct approach, such as helping citizens access welfare schemes.
tal infrastructure and identifica-
tion are strong,” points out
Mahesh Yagnaraman, India coun-
try director at Acumen. “We see a
big need in India to help people
access benefits made available by
the government. Most workers
here don’t have a contract and are
hugely insecure, being one salary
away from having nothing. That’s
why a tech platform like Haqdar-
shak has a huge role to play.”
Rather than civic tech aiming
for e-governance projects, Acu-
men’s focus is on smallholder agri-
culture and informal, unsecured
workers, who comprise 80% of the
workforce in India. “These are the
two difficult areas where the
progress of India will be stalled if
we don’t get it right,” he says.
He sees two gaps in the funding
ecosystem for such innovations in
India. The first one is what he calls
the “pioneer gap”. This is where
entrepreneurs struggle to get sup-
port before they are commercially
ready to raise institutional money
MINT
that requires good returns.
With impact investing going
mainstream, where investors seek
higher returns while looking for
impact, fund sizes have grown to
raise average ticket sizes and meet
these commercial needs. Even
some of the social startup acceler-
ators are raising funds of their own
for larger initial rounds.
“Everybody is going up the lad-
der, which means that money is
available at a later, more de-risked
stage, but not earlier for experi-
MOULDING LEADERS
Acumen addresses this with a fel-
lowship programme for entrepre-
neurs to develop leadership abili-
ties. It lets the fund be a fly on the
wall as the startup builds its com-
mercial value proposition in tan-
dem with its social objectives.
Haqdarshak co-founder and CEO
Doegar, for example, was an Acu-
men fellow for a year in 2018,
before getting funded by it.
The second main funding issue
in this sector is that early investors
have to wait a very long time for
exits. “Most of the exits are in
microfinance or financial services.
The secondary market is ill-devel-
oped in India for other catego-
ries,” says Yagnaraman.
A way forward would be for
investors to find alternative mod-
els instead of the usual equity
investments designed for busi-
nesses that have a clear path to
scale and exit. As a report by
Omidyar Network India, Village
Capital and CIIE puts it, “Equity
can be a poor fit for startups that
do not fit the traditional mould of
a Silicon Valley startup. More
patient models, including revenue
share, could be a better fit.”
Malavika Velayanikal is a Con-
sulting Editor with Mint. She
tweets @vmalu
08 MONDAY, 12 OCTOBER 2020
NEW DELHI

REPORTAGE | TALKING POINTS | IDEAS | INSIGHT | THE BOTTOMLINE

WHY GST SAGA IS A

TERRIBLE LOW POINT
The battle over compensation is a tipping point that could set back Union-state relations by years

The agreement to unify and harmonize domestic trade taxes was a great example of cooperative federalism and the entire edifice now threatens to collapse in just three years. PTI

M. Govinda Rao Centre. This certainly does not augur well continue the compensation payment necessary jurisdiction to extend the levy the original GST Act, the central govern-
mint
feedback@livemint.com for the future of Union-state financial rela- which brought in tremendous loss of trust SHORT of compensation cess to make up for a ment could appropriate 50% of the unutil-
BENGALURU tions. and confidence on the Centre. Concerned STORY shortfall. “It has done that. Now, the ball is ized amount in the compensation fund at
The 42nd meeting of the council, held with the CST compensation experience, in the court of individual states, not the the end of five years and the remaining

T
he 43rd GST Council meeting on 5 October, failed to resolve the issue of the states wanted all possible assurances GST Council,” one anonymous central 50% would be distributed to the states. It
that is set to take place on Mon- promised compensation for the loss of regarding compensation for any shortfall WHAT government official is quoted as saying. is not clear how the Centre could be a
day holds enormous signifi- revenue to the states. The Union govern- in revenue in the run up to 2017. Further, it was stated that borrowing is claimant for the compensation cess! This
cance. The outcome will not ment had estimated the compensation A close reading of the minutes of the 7th The controversy surrounding individual state and Centre’s decision was further liberalized to enable the Cen-
only decide whether states have amount and had placed two options and 8th GST Council meeting shows the GST compensation is not merely under Article 293 of the Constitution. tre to appropriate the balance in the fund
adequate resources to fight covid-19, but before the council in the 41st meeting on strong concern about the issue of com- about revenue loss. This is an “When something is not under the juris- to the consolidate fund “at any point of
will also determine the future course of 27 August. pensation in the event of revenue from the issue which could impact the diction of the GST Council, how can vot- time”.
the Union-state relationship. There is a The total loss of revenue to the states cess falling short of the required amount. confidence and trust that states ing or division be permitted on the sub- The eventual Act passed in Parliament
third element: whether the future was estimated at ₹3 trillion, of which Most of the states wanted the Centre to decide to place on the Centre ject? Voting can occur in the council only does not provide for the Centre retaining
response of the collective of states to any ₹65,000 crore was expected to accrue commit to paying compensation from the in those matters that are under express the consolidated cess amount in the con-
economic issue will be guided by the from the compensation cess this year. Of Consolidated Fund of India (CFI) at which jurisdiction of the council”. That’s the offi- solidated fund, but as pointed out by the
interest of the states or will become hos- the remaining ₹2.35 trillion, the loss due the Union finance minister Arun Jaitley WHY cial position. Comptroller and Auditor General in the
tage to political alignments. to the so-called “act of God” (the pan- stated, “…the demand for payment of Should the states know about this from financial audit report of 2018-19, it did not
It goes to the credit of both the Union demic) was estimated at ₹1.28 trillion. The compensation from the CFI essentially Building the necessary the press? Why were the two borrowing transfer the compensation cess revenue to
government and the states that they first option presented to the states was meant funding of compensation from consensus that culminated in the options presented to the states in the the GST compensation fund amounting to
agreed to sacrificing fiscal autonomy in allowing them to borrow ₹97,000 Crore, income tax or non-tax revenues of the creation of a GST Council in 2017 meeting of the council if the council did ₹47,000 crore in 2017-18 and 2018-19 and
the interest of unifying and harmonizing which was later revised to ₹1.1 trillion, central government, which would be a took a lot of work. Now, that not have any jurisdiction? This is com- utilized it as its own revenue, thereby,
domestic indirect taxes so that a destina- under the special window to be opened by challenge as the central government also framework of collective decision pletely contrary to the promise made by showing lower revenue and fiscal deficits.
tion-based Goods and Services Tax (GST) the Reserve Bank of India and both inter- had its own committed expenditures”. making is under serious threat the then finance minister in the 8th meet- Thus, for all practical purposes, it util-
system could evolve. That was a great est payments and repayments will be At the same time, he stated, “There was ing of the council cited above. The entire ized the amount as its own revenue when
example of cooperative federalism. In a made from the future collections of the a constitutional commitment by the Cen- episode smacks of gaming. there was surplus, but now, when the
system where there are not credible insti- cess. tral government to provide 100% com- AND The ‘source’ is reported to have said, states are faced with a dire need for
tutions for inter-governmental bargain- In the second option, the entire short- pensation and how it would be done was “Can Assam be prevented from borrowing resources, it is attempting to shift the
ing, coordination and conflict resolution, fall of ₹2.35 trillion could be borrowed for the council to decide” (para 21 of 7th The biggest loss due to this year’s if Kerala does not want to borrow?” The responsibility. The Union government
the creation of a GST Council provided a from the market and the states will have to council meeting minutes). revenue sharing battle is the issue is one of compensation to be paid to also wants to invoke terms like “act of
model and could be a harbinger for many bear the interest cost, but the repayment The matter was reiterated by the camaraderie in the GST Council. the states for which the solution has to be God” like an insurance company, as if the
future cooperative institutions. will be adjusted against future collections finance minister in the eighth council Until now, the proceedings in the found. As there is a central government problems caused by covid-19 on the finan-
The biggest loss due to this year’s reve- of the cess. While the states ruled by the meeting when he stated, “….Compensa- council have been conducted in commitment to find the mechanism for ces of the state governments could be
nue sharing battle is the camaraderie in BJP and its allies have opted to take the tion to the states shall be paid for 5 years in the spirit of mutual respect compensation in the GST Council, and as wished away.
the GST Council. Until now, the proceed- first option, the 10 states ruled mainly by full within the stipulated period of 5 years borrowing is one of the options, both The controversy surrounding the com-
ings in the council have been conducted the opposition parties have rejected both and, in case the amount in the GST com- Assam, Kerala, as well as other states, pensation for the loss of revenue to the
in the spirit of mutual respect, camarade- the options and have stated that the pensation fund falls short of the compen- then mandating the states to choose any along with the Centre, have to find the states due to the implementation of GST
rie and the spirit of give-and-take without responsibility for making compensation sation payable in any bi-monthly period, one within a week is not in the spirit in solution. is not merely about revenue loss. This is an
paying heed to any political leanings. The payment is the Centre’s and, therefore, it the GST Council shall decide the mode of which the compensation for the loss of Furthermore, if the commitment of the issue which could impact the confidence
discussions have been free, based on mer- is for the Centre to borrow and compen- raising additional resources including revenue to the states was promised. It was Centre is recognized as admitted by the and trust that states decide to place on the
its, and in the interests of each state and sate the states in full. borrowing from the market which could an important promise which made reform then finance minister in the 7th meeting Centre. The real issue at stake is whether
the Centre. A careful reading of the min- be repaid by collection of cess in the sixth possible. In fact, reneging on the agree- of the council, then, given the relative fis- commitments and agreements will be
utes of the GST Council THE GENESIS year or further subsequent years” (para 23 ment by not recognizing the Centre’s cal strength of the Cen- honoured or not.
meetings show that
there was no groupism A careful reading of the B uilding the neces-
sary consensus that
and positions were not minutes of earlier GST Council culminated in the crea-
iii. page 27 of the minutes).
Thus, there was a clear commitment
from the Centre on the issue of compensa-
commitment will make the states wary of
any future reform proposal involving the
Centre and the states.
tre and the states and as
the interest rate for the
Centre’s borrowing is
The Union government
By its very nature, in a
federation with high
wants to invoke terms like centripetal bias, the
taken on the basis of tion of a GST Council in tion and the method of recouping the loss, Second, giving selective press state- much lower than that of Union and the states
political allegiance. meetings show that there was 2017 took a lot of work. including borrowing by the Centre and/or ments from time to time through “offi- the states, the Centre ‘act of God’ like an insurance have unequal relation-
The saga of compen- no groupism and positions States were naturally the states, had to be decided by the coun- cials” and “sources” to pressurize the should take the respon- company, as if the problems ships. The agreement to
sation payments, which reluctant to sign up for cil. It wasn’t supposed to be presented as states to accept one or the other option, sibility to borrow and unify and harmonize
has played out in the 41st were not taken on the basis of reform as it involved sac- a fait accompli. instead of deliberating the matter inside pay compensation to the caused by covid-19 could be domestic trade taxes was
and 42nd council meet- rificing fiscal autonomy. the council, does not bring credit to the states. Both interest pay- a great example of coop-
ings, threatens to dis- political allegiance In fact, they were reluc- THE DEBACLE central government. There was a state- ments and repayment of wished away erative federalism and
rupt this and it is tant due to the bad expe-
entirely the responsibility of the Union rience they went through with the regard
government. All the states feel the crunch, to the Central Sales Tax (which was
B ut since there was no attempt at col-
lective decision making, this entire
episode has plunged the Union-state rela-
ment in the press a few days ago that 21
states have accepted option one and if the
rest of the states do not exercise an option
the principal liability can the entire edifice now
be met from future collections from the threatens to collapse in just three years. It
cess. At the same time, the council can also is for the government of India to save it
but the states ruled by the Bharatiya Jan- reduced from 4% to 3% in 2007 and fur- tionships to a new low. Besides the issue of within a week, they will have to wait until decide on the way to augment cess reve- from collapsing. The future of a harmoni-
ata Party (BJP) or its allies are more than ther to 2% in 2008). The finance minister compensation itself, the way the entire 2022. Surely, this could not have been the nue by including more items. ous fiscal federalism will depend crucially
willing to accept a solution presented by in the 2006-07 budget speech had stated episode has been managed smacks of decision taken by the GST Council. upon the way in which central govern-
the Centre even as they know that it will that the compensation for reduced CST gaming and strategizing in a period of cri- Third, there is an attempt to take away THE PATH AHEAD ments deal with the ripple effects of this
severely constrain their finances. There will be paid until 2010 when the GST will
are also fence-sitting states which are try- be implemented.
ing to reach a bargain, or those that want As the GST regime was not imple-
sis, which does not augur well for the
future of Union-state relationships.
First, the presentation of the two
the decision about the nature of borrow-
ing from the ambit of the council. Another
press report indicates that the govern-
T he argument for central responsibil- saga.
ity gets strengthened when it is con- The author was a member of the four-
sidered that it wanted to appropriate the teenth Finance Commission and a former
to align with the ruling coalition at the mented in 2010, the Centre wanted to dis- options without any actual discussion and ment’s position is the council only has the excess collections of cess into the CFI. In Director, NIPFP. Views are personal
 PERSONAL FINANCE MONDAY, 12 OCTOBER 2020
NEW DELHI 09
MINT M NEY
Loan sanction eases ahead of festivals
With the moratorium period getting over, lenders can once again rely on credit scores to evaluate borrowers and can, therefore, relax other criteria
ISTOCKPHOTO
Tinesh Bhasin quarter last year (read bit.ly/ last year, for example, RBL Bank’s said Dhar.
tinesh.b@livemint.com hdfcbiz). Demand has also picked card spends went up by around While lenders were working with
up in the two-wheeler segment. 28%. “While there will definitely be limited staff on field during the

E
xpecting a surge in the
demand for loans in the
upcoming festive season,
banks and non-banking
financial companies
(NBFCs) have started relaxing their
lending criteria, which they had
tightened during the lockdown,
according to experts speaking at
the Mint Money Conversation pre-
sented by Digibank by DBS that was
held on 8 October.
Lenders and credit card issuers
were cautious during the morato-
rium period as the Reserve Bank of
India (RBI) had said that borrowers
who took moratorium would not be
classified as delinquent. This made
it difficult for lenders to assess
applicants as well as the impact of
the covid-19 pandemic on their
portfolios. Now that the morato-
rium has ended and borrowers have
started repayment, credit bureaus
are able to provide the required
information. This has made it easier
for banks and NBFCs to evaluate
applicants.
“In the next 30-60 days, along
with the fact that the festive season
is around the corner, we will see a
surge in demand for loans as well as
lenders’ ability to underwrite and
deliver them,” said Anshul Swami,
head, retail inclusion and rural
products, RBL Bank.
According to bankers, though
the spike in demand may not be the
same as it was during the festive
season last year, it may come close
to the February level, before the
pandemic broke out.
FLIGHT TO SAFETY
Lenders rely heavily on credit
information bureaus to assess the
creditworthiness of borrowers. But,
credit bureaus were not taking into
account non-payment during the
moratorium period when calculat-
ing credit scores.
The extension of moratorium
from three to six months added to
the uncertainty. “None of us knew
the impact of a black swan event
like the covid-19 pandemic. When
there is uncertainty, flight to safety
is the typical response. With credit
bureaus unable to provide the req-
uisite data, lenders adopted a cau-
tious approach,” said Jasmeet
Wadhwa, executive director and
business head, consumer finance,
DBS Bank India. This uncertainty is
now coming to an end.
DEMAND PICK-UP
Demand for loans is picking up in
some segments. Recently, HDFC
Ltd informed the stock exchange
that loan disbursements during the
September quarter were at 95% of
the level in the corresponding
Credit card applications are also
on the rise. “We are seeing a rise in
demand for credit cards as festive
season is around, and there are a lot
of special offers on cards during this
time,” said Adhil Shetty, founder
and CEO, BankBazaar.com.
The demand for personal loans
may take some time to reach the
pre-covid-19 levels. “We saw the
personal loan growth in multiples
initially. When we started our busi-
ness after the lockdown, we strug-
gled to set the first 10% business.
But the next 20% and 30% after that
happened within 30 days,” said
Adheer Dhar, head, personal loans
and fintech, Clix Capital.
“My sense is that the demand
should go up to about 70-75% of the
pre-covid-19 levels during the fes-
tive season and then taper off. Only
possibly by next March will we see
a full recovery and reach the pre-
covid-19 levels,” he added.
According to bankers, the overall
retail loan demand is about 60-70%
of what they were before the pan-
demic hit. But the conversion rates
are lower.
Bankers do expect some surge in
demand over the next two months
but not as strong as compared to
last year. During the festival season
upward movement this time as lockdown, the staff situation has
well, given there’s always incre- not improved a lot as many field
mental demand during this period, executives are yet to return from
but in absolute terms, I don’t think their home towns and public trans-
the growth will be that large port is not fully functional.
because customers are being However, with RBI putting regu-
slightly careful and thinking lations in place for the use of tech-
through before n o l o g y ,
making discre- onboarding
tionary spends,” new customers
said Swami. will not be diffi-
cult despite the
NEW FOCUS lack of staff.
During the “Whether the
moratorium, POWERED BY customer is old
lenders were or new, repre-
focusing on sentatives of
existing cus- lenders no
tomers. They longer need to
were unable to thoroughly evaluate meet them for most of the paper-
applications of new borrowers due work. Technology has become a
to lack of credit information. For leveller. It’s the same risk analytics
existing borrowers, they could rely that would not go into evaluating
on their repayment track records. old or new customers and process-
Banks were also able to focus on ing their applications. Onboarding,
existing customers who had their for example, can be done using
savings, salary or current accounts video KYC (know your customer),”
with them could easily evaluate said Shetty.
their cash flows. If you are looking for a loan, espe-
Now the situation has changed, cially one like a home loan that
lenders have started looking at new helps you build an asset, you may
customers. “Most lenders are trying not have to worry about rejection
to get back to normalcy and have due to lender’s strict evaluation cri-
started looking at new customers,” teria anymore.

NRIs are not required to give foreign ‘Having a financial plan is more
income, overseas bank details in India critical for women than men’
ISTOCKPHOTO
Archit Gupta I recently returned from the UAE
after living there for 14 years. I Nilanjana Chakraborty
I was a non-resident Indian (NRI) have a flat in Mumbai on which I nilanjana.chakraborty@livemint.com
and had bought a policy from an have a loan from a nationalized Financial plan for

T women has to make

Indian insurer before the Double bank in India. Can my relative in he number of women
Taxation Avoidance Agreement India repay my loan? What will One job mutual fund investors in
(DTAA) was enforced in 2015. be the effect on tax benefits? women
India has seen a surge up for the gender pay
shouldn’t
After the implementation, the —Puneet Sharma delegate to lately, upsetting the tradi- gap, differentiated
insurer asked for a DTAA certifi- Yes, your relative may pay your men tional idea that men handle career peaks and life
cate from authorities in Saudi loan. However, if you were planning bit.ly/3luxogA big-picture tasks like investing
Arabia, where I lived. Can a rule to avail tax benefits on interest on a and women do daily budget- stages that slow
be applied like that? Also, do I home loan, those shall not be availa- ing. In an interview with Mint, down earnings
need give a tax residency certifi- ble to you after your relative has Priti Rathi Gupta, managing
cate (TRC) to avoid tax deducted repaid the loan. Neither will your rel- director and promoter at PRITI RATHI GUPTA
MD and promoter, Anand Rathi
at source (TDS) at 31.20%? ative be able to claim any tax relief on Anand Rathi Share and Stock Share and Stock Brokers, and
—Nicasius Fernandes repayment of such a home loan. Brokers, and founder of founder of LXME
Those who make payments to LXME, a financial platform
NRIs are required by law to deduct I started living in Australia last exclusively for women, talks
TDS at the time of making the pay- year. Do NRIs have to disclose about what’s driving this shift
ment. The deductor must know the ASK MINT their foreign income and foreign and what the future holds.
rate of TDS. The rate of TDS can vary m N R I TA X AT I O N bank accounts details when fil- Do Indian women lag
based on whether you are a resident ing income tax return in India? behind their male counter-
or an NRI for tax purposes. Before —Name withheld on request parts when it comes to
deciding the rate of TDS, it is impor- income is likely to be taxed in two NRIs are not required to disclose financial planning? Why is
tant for the deductor to consider the countries, the source country of the details of foreign income and foreign that? Why do you think there There has to be a larger push the kind of investment which
provisions under DTAA for the rele- income and the country of residence bank account details. However, in In a country where only 14% was a need for a financial towards making women finan- women usually focus on over
vant country. If you meet the condi- of the taxpayer. As per the Income- case an NRI is claiming a refund of of the population actively planning platform dedi- cially aware and helping them competitive investing.
tions, DTAA rates may apply for TDS. tax Act, TRC has to be obtained from taxes and does not have a bank invests their savings, the statis- cated to women? How does with their money journey,
Usually, these rates are lower than tax authorities of the resident coun- account in India, they must mention tics on women are even more it differentiate itself from given the changing lifestyle Should financial planning
normal rates of TDS. Therefore, it try to claim relief under DTAA. In information about the foreign bank dismal. Surveys suggest that other similar platforms? dynamics. Financial inde- look different for women
would be advisable to share the rele- case you require TRC for India, an account, so that refund can be cred- only 33% of women take inde- When we did primary pendence and freedom are the than it does for men?
vant details with your insurer to application may be made to the ited by the tax department. pendent investment decisions research on why women shied key enablers for all of these. Financial planning is even
make sure TDS is deducted keeping Indian tax authorities. Therefore, a Archit Gupta is founder and chief as compared to 64% of men. away from investing, we real- Women form 48% of our more necessary for women
in mind the double tax avoidance deductor may require a certificate executive officer, ClearTax. Send in Women are raised in an ized that one of the key rea- population and while the gov- than men. It has to meet and
between the two countries. from you to make sure that you are an your queries and views at mint- environment where they are sons was that the entire indus- ernment has made substantial make up for the gender pay
This certificate is required if one’s NRI and to identify the rate of TDS. money@livemint.com made to believe that invest- try was talking to men, their efforts via policies for financial gap, our differentiated career
ments and financial matters goals and in their language. inclusion of women, there is a peaks and life stages that slow
are complicated and a man’s Finance and investment as a gap when it comes to the down our earnings and last but
domain. Thus, we usually domain continues to be domi- knowledge, information and not the least women live
depend on our partners or nated by men. And this is literacy reaching them. If even longer than men, necessitat-
other male members of the where we want to make a dif- 10% of our women population ing robust retirement plan-

Check how your NPS family like our fathers or

brothers when it comes to tak-
ing financial decisions.
ference.
A woman’s perspective,
needs, goals
takes on the onus of managing
their money, we would see a
societal
ning. Hence, at every age, the
way we would invest would be
quite different from a man of

investments are faring It is only when faced with

unforeseen situations like sud-
den death of an earning mem-
and life states
hugely vary
from that of a
MONEYGURU change.

In your
the same age.

Is there a larger market for

here are very few retirement products that help you accumulate a retirement ber or divorce when women man. The tools on the platform experience, are women women-oriented invest-
nest egg and one such product is the National Pension System (NPS). It is a really understand the impor- need to cater to all of this and typically more conserva- ment products and advi-
market-linked, defined-contribution product that needs you to invest regularly tance of having a financial ensure that decision making is tive investors? sory that has remained
in the funds of your choice. The returns are based on the performance of the plan. But quite certainly, it is easier as well as informed. It Women have the right untapped by the main-
fund that you choose. There are eight pension fund managers to choose from too late then. addresses challenges that are attributes to make for a suc- stream industry?
and one of the ways to do that is by tracking the returns. Here is a breakdown specific to women. cessful investor. Goal oriented, There definitely is a market
of the performance of different funds—equity fund, government bond fund and What role do Indian We have built not just a disciplined and detail ori- for dedicated products, which
corporate bond fund—of the private sector NPS. women typically play when financial platform but an ented, we take calmer and less go beyond just pure marketing
it comes to household entire ecosystem for women to emotional decisions than our tools. However, the real focus
Returns (in %) Tier-1 account finances? build their financial acumen male counterparts. This may has to be on improving aware-
The household day-to-day and wealth. be by some standards called ness before the product is
1 year 3 years 5 years Equity fund Government bond fund Corporate debt fund budgeting is almost always a The fact that you can begin conservative, as our style is thrust upon the market. As of
woman’s responsibility, investing in diversified portfo- more passive investing and now, the biggest need is to
Birla Sun Life Pension Scheme 2.23 5.73 NA 11.66 9.60 NA 11.98 9.84 NA because of the traditional gen- lios in small amounts, makes it diversification in order to miti- adequately communicate
HDFC Pension Fund 1.25 5.53 8.84 12.60 10.00 10.07 11.98 9.30 9.74 der-specific roles. equally attractive to both gate risks. about the financial products to
Fund Manager

According to DSP Winves- working women as well as Even Warren Buffet’s women in a relatable manner.
ICICI Prudential Pension Fund 0.49 4.83 7.64 11.43 9.58 9.87 10.65 8.91 9.63 tor Pulse, 2019, men dominate home makers who would oth- investing style has been often If our busy and actively
Kotak Pension Fund 0.06 4.45 8.05 11.26 9.54 10.03 9.80 7.76 8.92 when it comes to investing or erwise keep small savings quoted as that of a woman. engaged community of
long term financial decisions aside or in bank savings There is a wider sense of women who talk money, is
LIC Pension Fund -1.07 2.87 6.27 11.67 10.72 10.91 12.19 8.95 9.45 like buying a car or house. accounts. investing back in the society anything to go by, then money
Women on the other hand, and their families for their bet- will no longer be only a man’s
SBI Pension Fund 0.22 4.57 7.79 11.57 9.67 10.00 11.36 9.02 9.55
have a larger role while buying Is there a need for financial ter future, which highlights forte.
UTI Retirement Solutions* -0.63 4.26 7.70 10.89 9.21 9.47 12.38 8.48 9.25 gold or jewellery, day-to-day inclusion and literacy
household purchases and efforts aimed at women?
AUM: assets under management; NAV: net asset
Nifty 50 Total Return CCIL All Sovereign Bond-TRI CCIL Bond Broad-TRI durables. Financial planning While financial inclusion For more stories about how to manage your
value; For the Equity Fund the benchmark is NIFTY
50 Total Return Index, Government Bond Fund the for the family is always been a and literacy rates in India are money life, listen to the podcast Why Not
benchmark is CCIL All Sovereign Bond - TRI, 1.54 6.54 8.85 11.52 9.20 9.44 12.19 9.51 9.47 role assigned to the man of the very low for both men and Mint Money with Mint’s Personal Finance
Corporate Debt Fund the benchmark is CCIL Bond
Broad - TRI; Returns as on 1 October 2020; Assets as house, oddly even in cases women, it’s the urban women team on htsmartcast.com. Invest smartly to
Benchmark index
on 31 August 2020; *Assets as on 31 Jul 2020;
where both spouses may be population that lags far behind make every penny count.
1-year returns are absolute returns; NA: not available PARAS JAIN/MINT Source: Value Research
earning members. the urban male population.
10 MONDAY, 12 OCTOBER 2020
NEW DELHI VIEWS
V EWS
OUR VIEW MY VIEW | PARALLAX VIEW
PTI

The best Hindi movie ever and

the inimitable Kishore Kumar
‘Chalti Ka Naam Gaadi’’s portrayal of liberated women was ahead of its times and still stands out

their car Champion, a 1928 model
jalopy. Soon, the magical Madhubala
appears, drenched in the rain. The fun is
non-stop, the songs classic, and every
sequence brims over with a striking
spontaneity. Imagine a film with eight
songs, of which at least six are unforget-
table, and all of them joyous. The only
glitch is one mujra song that could eas-
SANDIPAN DEB ily have been done away with. From
is a former editor of ‘Financial Express’, and Babu, samjho ishaare and Haal kaisa
founder-editor of ‘Open’ and ‘Swarajya’ hain janaab ka to Hum they vo thi and Ek
magazines ladki bheegi bhagi si, they are some of
S.D. Burman’s happiest creations.
The last scene in the film has the
three women in the front seat of Cham-
pion, with Madhubala driving, and the
three men in the back seat. This, when
even today, the staple wooing tech-
nique for men in many Indian films can
only be described as blatant eve-teasing
till the girl miraculously discovers a
heart of gold behind the sexist behav-
iour and relents.
Hardly anyone in the film takes them-
selves particularly seriously, except for
Ashok Kumar, his lost love and the vil-
llain. Kishore Kumar is ever ready to

Two big riddles that RBI

And there’s some interesting trivia break into an impromptu song and
too. My friend, president’s award-win- dance, using mechanical stuff in his

I
have taken a conscious decision in ning film historian Aniruddha Bhattar- garage as convenient musical instru-
these troubled times to not write charjee, tells me that the song Paanch ments. All three brothers are quite crazy
about covid, the economy, China and rupaiya baara anna refers to the five in their own ways. The standard Indian

may still need to crack the answer to the big question about the
meaning of life, the universe and every-
thing (which, to anyone who has read
Douglas Adams, is of course well-
rupees and twelve annas that Kishore
Kumar owed the canteen at Indore
Christian College when he left for Bom-
bay to seek his fortune as a singer-actor.
film trope of rich boy-poor girl or rich
girl-poor boy is not paid any attention.
Madhubala’s millionaire father has no
objection to her marrying a lowly
known—42). There are enough learned And that no one till now has a clear idea garage owner. There is no cloying senti-
people writing about these weighty about who spoke the words O Mannu, mentality and, amazingly, even the
The central bank’s GDP forecast seems realistic and its monetary policy sensible. But it may matters. So let me take off my mask and tera hua, ab mera kya hoga? mouthed by police arrive on time, something quite
make this big categorical statement— Anoop Kumar in the song Hum the voh unthinkable in most Indian movies. It’s
yet need to work out if its inflation target needs revision and bond market strategy a rejig that Chalti Ka Naam Gaadi is the best thi. There is also the rumour that Kis- all fun and games, no one is sad for
Hindi movie ever made. hore Kumar made the film, hoping that longer than about three minutes, and
Let me explain. Cinema is the most it would be a flop and he could show the world is a fine place.
expensive art form invented till date by losses to evade income tax officials Incidentally, Satyajit Ray held Kis-

O
ur central bank expects India’s
economy to get back into
expansion mode only in the
fourth quarter of 2020-21, a
year that is projected to see a
9.5% contraction in output
overall. This seems like a realistic expectation,
just as the call taken by its reconstituted mone-
tary policy committee (MPC) on Friday to leave
its main policy rate at 4% was sensible. With
retail inflation hovering above the Reserve
Bank of India’s (RBI’s) tolerance limit of 6%
and its real repo rate negative, further easing
was out of the question. Yet, its focus was
squarely on a growth recovery as we try to put
the ravages of covid behind us. This was evi-
dent in RBI’s plan for liquidity infusion of
another ₹1 trillion via “targeted long-term repo
operations” (TLTRO), which would let banks
cheaply borrow longer-term funds from it
against top-rated securities. In addition, it said
it would buy bonds issued by states and made
home loans even more affordable. With com-
mercial activity picking up and consumer con-
remains depressed, credit demand is low and mankind. So, if a film does not entertain hounding him. If this is true, then he hore Kumar in high regard and even
lenders are risk averse. Given all the corona and consequently give a return on failed miserably. wrote adulatory blurbs for a couple of
investment, it fails a fundamental test. What is not often mentioned about films that Kishore Kumar directed offi-
flux, extra money could yet stoke prices Stanley Kubrick once said: “The truth of Chalti Ka Naam Gaadi is its portrayal of cially. He waited three months for Kis-
instead of production, or even distort asset val- a film is the feel of it, not the think of it.” women. Madhubala’s character is that hore Kumar to be free to sing the only
ues. The TLTRO package aims to put money in That is what Kishore Kumar did in of a remarkably liberated woman, driv- song in Charulata—he could not think
the hands of lenders for lending to specific sec- Chalti Ka Naam Gaadi. Yes, the official ing her own car and determined to be in of anyone else who could carry off a
tors, but big sums being parked overnight with director of the film was Satyen Bose, but charge of her life in a male-dominated song that had no orchestral accompani-
if you look at his filmography, you world. Her father would not agree to a ment.
RBI by banks would suggest weak loan disbur- mostly encounter the maudlin—Jagriti, wedding proposal from a prince unless Yes, there may have been other sing-
sals. If the government steps in with a burst of Dosti and Aansoo Ban Gaye Phool. Chalti she gives her consent. Anoop Kumar’s ers whose art and craft were of a higher
spending to spur our economy, then the MPC Ka Naam Gaadi leaps out from the list of beloved runs a petrol pump. Ashok level than this man with zero formal
could struggle to keep inflation capped. While films he directed as a giant aberration, Kumar’s former girlfriend was forcibly musical training, but his voice, sheer
dumping our current framework would be bad and so one can safely assume that it was married off, but he does not think twice range and adaptability to the actor for
eccentric genius Kishore Kumar who about taking her back when they meet whom he was singing was surely unpar-
for the long term, perhaps an escape hatch controlled the creative process. 10 years later. I cannot think of another alleled. He died young, at the age of 58,
could be worked out for severe crises. Like the The zaniness starts right from the ani- Hindi film from the 1950s (or even but can anyone actually imagine an eld-
US Federal Reserve, RBI could adopt an aver- mated credit sequence—certainly 1960s or 1970s, in fact) that treats erly Kishore Kumar? I certainly can’t,
age target to fight economic contractions. ahead of its time in 1958. Then we move women so equally as men, and in which and Chalti Ka Naam Gaadi is a perma-
India’s bond market, where the risk of nega- on to three brothers who run a motor all the male protagonists are less chau- nent reminder of his incomparable
garage, jiving through South Bombay in vinistic. whimsy and joie de vivre.
tive returns on debt had frayed some nerves,
responded well to both RBI’s moves and Gover-
nor Shaktikanta Das’s effort to talk prices up.
On Friday, yields dropped across the yield
curve stretching from low-tenure to 10-year
debt, reducing the cost of capital a bit. RBI had
said it would double its open-market bond pur- www.livemint.com New Delhi, Mumbai, Bangalore, Kolkata, Chennai, Ahmedabad, Chandigarh*, Pune* Tuesday, October 12, 2010 Vol.4 No.243 `3.00 32 PAGES

SPORTS: Sushil Kumar and

fidence bouncing back from the depths it had chases. The central bank’s goal has been to con- his wrestling roots >13
CRICKET: Rajasthan Royals
may seek legal recourse >3

plumbed, RBI saw both supply and demand in tain yields at the long end, which had crept up
TELECOM: BlackBerry maker gets
breather till Jan on data access >6
EXCLUSIVE PARTNER
TRADE: India may move WTO as
it seeks to resolve EU dispute >5

better sync, which may be why it termed infla- on fears of future inflation. Using “twist” opera-
SENSEX 20,339.89 Æ 89.63 NIFTY 6,135.85 Æ 32.40 DOLLAR `44.40 æ `0.02 EURO `61.90 Æ `0.10 GOLD `19,540 Æ `90 OIL $83.41 æ$0.62

ASHESH SHAH/MINT

Karnataka INITIAL 5% CORPUS QUICK EDIT

plunges into Fresh move to invest Cottoning
political crisis on to a boom
tion transient. If prices are indeed in control by tions, RBI has been buying long-dated paper B Y V ENKATESHA B ABU
venkatesha.b@livemint.com
·························
BANGALORE

T he B.S. Yeddyurappa-led
EPF money in stocks
B Y P RASHANT K . N ANDA
A SIT R ANJAN M ISHRA
·························
NEW DELHI
& HIGHER RETURNS
THE NEWS
The labour ministry has conditionally
agreed to revisit the long-standing
C otton prices are
rising and rising fast.
The Cotlook A index,
which tracks prices of
raw cotton varieties in
Bharatiya Janata Party
T he labour ministry has the international market,

the fourth quarter, as it expects, then its MPC and selling short tenures. Critics of its interven-
proposal for investing some of
(BJP) government in Karnata- moved to give a condition- the EPF corpus in the stock markets. is at a 15-year high. This
ka on Monday survived a high- al nod to the long-pending has the makings of an
ly contentious trust vote and is proposal for a portion of the THE BACKGROUND opportunity for India’s
now preparing for a battle of Employees’ Provident Fund The finance ministry has been cotton farmers who are
high political stakes to stay in pushing for liberalization of

Who said I’m crazy.

(EPF) to be invested in the often at the receiving end
investment norms with a view to
power after the governor rec- stock market. enhancing returns. of poor climate, pests
ommended its dismissal. If accepted, it could see the in- and volatile crop prices.
The stage has been set with a jection of a substantial amount THE IMPLICATION Many of these farmers
legal challenge in the Karnata- of liquidity into equities. If the proposal is accepted, it will are located in very poor

could breathe easy. However, the outlook on tions, however, have pointed out glaring gaps in
ka high court, due to come up
for hearing on Tuesday, ques-
tioning the legality of the vote
even as the BJP said it would,
in a show of strength, “parade”
all its 105 members of the leg-
In a communication to the mean the finance ministry has to
guarantee a return even as the regions such as Vidarbha
Ending speculation: Cairn Energy chief executive Bill Gammell (left) ministry of finance, which has equity markets could see a fund in Maharashtra, in
and Vedanta chairman Anil Agarwal at a press conference in Mumbai. repeatedly sought the go-ahead inflow of up to R15,000 crore. Andhra Pradesh and
for earmarking up to 15% of the other regions. An
NON-COMPETE FEE corpus for stock market invest- earnings boost to them
ments, the labour ministry has can deliver a much

Vedanta
islative assembly before Presi- indicated its willingness, pro- “EPF is poor man’s money. stronger multiplier effect

The world is crazy; not me.

dent Pratibha Patil. vided there is a guaranteed EPFO is the custodian of it. than any number of
In the process, it has also “reasonable rate of return”, a Though stock market invest- government stimuli.

those variables seems hazier than we would the mid-range of our yield curve, even as inves-
posed a vexing challenge to the top government official close to ments can give a better return, If only the government
Congress party, which leads the development said on con- there is possibility of losing the would free cotton
the coalition at the Centre and dition of anonymity. money. That’s why CBT has exports. Since 2009, there

firmonCairn
has to decide on Karnataka The labour ministry propos- been opposing the finance have been export
governor H.R. Bhardwaj’s rec- al, according to the same per- ministry’s proposal,” the offi- restrictions on cotton.
ommendation. If the United son, has the approval of the cial said. India’s cotton output this
Progressive Alliance (UPA) Central Board of Trustees The labour ministry has con- kharif season is expected
does accept the recommenda- (CBT), the apex advisory body vinced CBT to start investing to be 33.5 million bales,
tions it will be vulnerable to of the Employees’ Provident 5% of the total corpus of `3

like, and so policymakers may have to confront tors show signs of resistance to yield repression.
while the demand is

charges of destabilizing demo-
cratically elected governments
in opposition-ruled states. On
the other hand, if it returns the
governor’s recommendations,
it will politically strengthen
Yeddyurappa’s hand.
Similarly, the BJP cannot
offer price
Fund Organisation (EPFO),
which had steadfastly opposed
any move to liberalize invest-
ment norms.
The move came in response
to a letter written by the fi-
nance ministry in August.
Chairman says company In a bid to generate a consen-
trillion, provided the finance
ministry guarantees a return. If
the proposal falls into place, it
will see an inflow of `15,000
crore into the equity market,
TURN TO PAGE 2®
around 20.5 million bales.
Allowing exports from
selected regions such as
Vidarbha can go a long
way in helping poor
farmers do better.

two riddles. One: Does our inflation-targeting Rather than persist with the same game and
move to defuse the crisis by ef-
fecting a leadership change as
won’t extend to retail sus for the transaction, Cairn In-
dia had announced the constitu-
shareholders the offer

some legislators have demand-
ed, since Yeddyurappa is still
popular and belongs to the
Lingayat community, around
19% of the state’s population.
The Union cabinet is due to
meet on Tuesday, immediately
K I SHOR E KU MA R
tion of a panel comprising two
made to promoters; independent directors on the
company’s board to figure out
price is ‘best and final’ the best way to proceed with the
deal, including the issue of non-
B Y A VEEK D ATTA compete premium. The commit-
aveek.d@livemint.com tee was to base its recommenda-

regime need greater flexibility? Two: Should exhort all players to play ball, RBI may need to
after the high court rules, to ························· tions on feedback received from
take up the governor’s recom- MUMBAI retail shareholders. Agarwal’s
mendation.

BJP
Meanwhile, in a day of acri-
monious developments, the
government scraped
through on a voice vote, even
as the opposition Congress and
Janata Dal (Secular) alleged that
V edanta Resources Plc will
not offer retail sharehold-
ers of Cairn India
Ltd—the Indian oil and gas
company it plans to ac-
statement put to rest any specu-
lation on the price that Vedanta
is willing to offer to non-promot-
er shareholders of Cairn India.
“We are very clear that this
quire—the non-compete fee be- (`355) is our best and final offer.
ing paid to its current promot- It is a very lucrative price for re-

RBI recalibrate its bond market dealings for re-adjust its bond buying and selling in a way
the speaker’s move to disqualify
16 legislators, including 11 rebel
BJP and five independents, be-
fore the floor test on Monday
TURN TO BACK PAGE ®
ALSO SEE
>OurView: The mess in Karnataka >P30
ers, Vedanta’s chairman Anil
Agarwal said. The open offer be-
ing made through group firm
Sesa Goa Ltd is yet to commence
in the absence of a nod from the
Indian government as well as
capital market regulator Securi-
ties and Exchange Board of In-
dia (Sebi).
tail shareholders,” said Agarwal.
“The non-compete fee being
paid to Cairn Energy is very im-
portant.”
Had the `50 premium been
extended to the retail sharehold-
ers, Vedanta would have had to
pay up to `3,570 crore more.
According to the deal, in ex-

better control of India’s yield curve? that balances market forces better with the
The price offered to retail
shareholders was the “best and
final,” Agarwal said at a joint
press conference with Cairn En-
ergy Plc chief executive Bill
Gammell in Mumbai on Mon-
day.
Vedanta Resources entered
into an arrangement with Cairn
change for the non-compete fee,
Cairn Energy will not enter into
any new business opportunities
in regions where Cairn India is
operational, including India and
some neighbouring countries,
for three years.
If Sebi accepts the recommen-
dations of the takeover regula-

Whether we need to relax our inflation tar- Centre’s expanded borrowing plan. It would be
Energy on 16 August to buy a
40-51% stake from it in Cairn In-
dia at a price of `405 per share,
including a non-compete fee of
`50. However, Vedanta has fixed
a price of `355 apiece for shares
to be acquired under the open
offer triggered by the deal be-
tween the two UK-based compa-
tions advisory committee while
redrafting the takeover code, the
payment of non-compete fees
to the promoter will not be al-
lowed. The panel has suggest-
ed that all shareholders of a
company should be paid the
TURN TO PAGE 2®

get might depend on the Centre’s stimulus 2.0, a big help, of course, if we had a clear picture of
nies. Many analysts said the deal
was not in the best interest of ALSO SEE
Mint is also available for R5.50 with Cairn India’s minority share- >CNBC-TV18: Interview with Cairn Energy
Hindustan Times under a combo offer holders. chief executive Bill Gammell >P15

if and when it materializes. Investment the government’s revised budget this year.

MY VIEW | MODERN TIMES

The enduring absurdity of following our role models

grander level, this is what “role models” do.
MANU JOSEPH Yet, those tipsy friends, like the rest of the
world, take role models seriously.
The origin of their peacock chapter itself
was in a recent tweet from one of India’s
most famous role models—Milind Soman,
is truly inspirational. Every extraordinary try in vain to achieve it, misunderstanding a billionaires, who even spoke like role models
person, or every person who can do one mere fog for a mountain that they must about how to be successful.
extraordinary thing, transmits two simulta- scale. Another group of highly influential but
neous messages, both erroneous. One A new documentary on “bad-boy” billion- useless role models are wealthy underdogs.
appears humble—“You too can do it”—and aires makes something about wealth clear to They hail from victimized segments of the
the other is vain: “Why can’t you be like me”. those who wish to see the truth—that, like in society, but are mostly also from extremely

O
ne night, in a villa in Gurgaon, the
drinking session of a circle of
friends entered the peacock phase,
a standard chapter in a house party when
one person begins to display a special talent
and others then show theirs. Someone sat on
the floor in a lotus position and rose without
using her arms or knees. A woman who was
who had posted a video clip of himself sitting
on the floor with his legs folded and rising
without any support but from the edges of
his feet. This manoeuvre had found fame a
few years ago after people with impressive
medical degrees claimed that the elderly
who can do it tend to live longer than those
who cannot. Many old people then tried to
This is at the heart of the advice industry’s the case of exceptional athletic fitness, the wealthy households. Like African-Ameri-
perpetuity. Successful peo- overarching reason why cans, Muslim migrants and others who are
ple offer advice without some people become celebrated for facing “great odds”. It is not
revealing or in ignorance of People confuse extremely wealthy cannot that the famous among them did not have to
the overarching reason be imitated. They are sim- fight any battles; just that their success can-
they are able to do that one the impressive ply scions of rich dads, or not be replicated by the other marginalized
thing. This overarching corrupt in ways that are not without an overarching factor—an excep-
reason could be a physical
with the possible for most people, or tional head start provided by a very wealthy

is a journalist, and a novelist,

surprised to find out she could not do that
displayed her own superpower, which was
most recently of ‘Miss Laila,
Armed And Dangerous’
to stay in plank position for several minutes.
Two people then started swinging on their
arms while seated. A man then showed he
could do several push-ups. Seeing this,
another guy started doing push-ups on the
back of his palm. An amateur runner who
could not do that without breaking his wrists
wondered if he should challenge everybody
to a long midnight run.
As you can see, everyone here displayed
something almost exceptional their body
could do because of long training or some
physical anomaly, and they demonstrated
their gifts as evidence of specialness. At a
do it, and injured themselves. What was
merely supposed to be evidence of fitness
among senior citizens soon became some-
thing that people worked on to achieve; a bit
like what we do with aptitude tests. Many
more will injure themselves after watching
Milind Soman’s clip. This though will not be
as destructive as the recent preening of a fit-
ness simpleton who had posted a video of
himself swinging an LPG gas cylinder
around claiming it was an exercise. It was in
reality the very opposite—an impressive way
to injure your back and shoulders.
The world is filled with bad role models. A
disenchantment of life emerges from this.
People confuse what is impressive with what
anomaly, mental anomaly,
or just genes. Millions who
inspirational just plain lucky. These are
not virtues that a role
home. The lucky are not duds as stars; they
are duds as role models.
do not possess this crucial
factor, without which the
and try in vain model imparts. As a result,
they impart only the vir-
So is there no such thing as a role model?
Are all imitations of extraordinary people
task is impossible, try to to achieve what tues that usually form the fated to fail? Can there be no inspiration at
imitate success and fail; second rung of reasons— all? That is not true. Who then is a good role
and then they seek more they can’t like persistence and tech- model?
guidance, and are given nical intelligence, which A meaningful role model is usually never
more wrong guidance. are useless without the a star. He or she instead is a regular person
The absurdity of role models for physical overarching factors. who not merely shares your broad identity,
health points to the kind of rubbish that goes This is why good-boy billionaires could be like gender or culture, but also is in your
on in the mental health and spiritual advice worse role models than bad-boy billionaires. exact hyper-local situation, an ordinary per-
industries. A person with a particular mental The unflattering paths to success of bad boys son with flaws who transcends his or her cir-
condition sits on a pedestal and asks others are exposed, but the paths of good billion- cumstances using ordinary and imitable
to be like him, or to do what he does, and aires are rarely known. Let us not forget qualities. A true role model thus is often
others who do not have his mental anomaly many bad-boy billionaires were once good someone who knows your name.
 VIEWS MONDAY, 12 OCTOBER 2020
NEW DELHI 11
V EWS
MY VIEW | THE INTERSECTION M I N T C U R AT O R

India’s local governments must

do far better in raising revenues
The tightening fiscal space means municipalities must get a fix on their revenue sources to be able to fund spending needs

ISTOCKPHOTO

Scientists had earlier discussed the idea because of the nutrients in it ISTOCKPHOTO

A fertilizer made of an abundant resource: pee

A French start-up is looking to convert urine into a product for use in farming.
The company’s idea is to collect and treat urine to develop a fertiliser out of
a plentiful natural human resource. Toopi organics—named after “to pee” in
English—is currently waiting to get the green light from authorities to sell their
NITIN PAI urine-based products. The concept came about after Michael Roes, who ran a com-
is co-founder and director of The Takshashila pany dealing with organic fertilisers, met someone who worked in the composting
Institution, an independent centre for research toilets business... Scientists have discussed using urine as an organic fertiliser for
and education in public policy years, given the nutrients contained in it. The start-up says their idea is not only
a good way to utilise a product considered waste, but it rich in chemicals that are
useful for farming.
The Independent

D
riving into Bengaluru’s city centre a
couple of weeks ago after several
months of working from home, I was
pleasantly surprised to see well-de-
marcated parking spaces, electronic
signs and payment kiosks along MG
Road. Brihat Bengaluru Mahanagara Palike
(BBMP), our municipal corporation, had finally
implemented a modern paid parking system, albeit
only along a few major roads in the central busi-
ness district. This being Bengaluru (the original
home of the “we have an app for that” meme), the
system allows you to discover available parking
lots on your smartphone and pay the fees online.
The BBMP expects this system, implemented as
a public-private partnership, to earn an annual
income of ₹31.56 crore for the next ten years.
That’s not a lot, but not bad either, considering that
it was earning nothing from the public asset in the
past. A few years ago, my colleagues at Takshashila
estimated that the city could earn over ₹500 crore
a year, or around 5% of BBMP’s approximate
annual budget, if it were to implement paid park-
ing on just one side of a mere 3% of Bengaluru’s
roads. Clearly, parking fees alone have the poten-
tial to be a significant part of the corporation’s bud-
get. Indeed, there is a moral case for the govern-
ment to implement paid parking—free parking is
effectively an unthinking transfer of public wealth
to an undeserving rich person. A car owner gets
₹30 per hour in implicit subsidy for every hour he
parks on the public road, for no good reason. That’s
not counting the economic costs of congestion and
pollution arising from the overuse of an under-
priced good. Contrary to popular belief, India’s
municipal corporations are doing a public disser-
vice by permitting free parking.
In fact, it is time for municipalities, gram pan-
chayats and state governments to start thinking
about generating revenues from unused or under-
used public assets. The ongoing proceedings at the
Goods and Services Tax (GST) Council with regard
to the compensation cess are an indicator of the
times to come, as expenditure commitments, slow-
ing growth and shrinking fiscal space put pressure
on state government budgets, and in turn, on the
budgets of municipal corporations and pancha-
yats. A combination of geopolitical uncertainties
and post-pandemic economic revival imperatives
will require the Union government to spend more
on defence, health, education and social welfare.
With the economy expected to shrink almost 10%
in real terms this fiscal year, and stage a slow recov-
ery thereafter, tax revenues will take years to
recover. State governments, for their part, will
have to spend more on health and social welfare.
With falling revenues from GST, excise, stamp
duties, registration fees, motor vehicle and fuel
taxes, they too will be hard pressed to transfer
funds to the third tier of government. Given that
three-fourths of the revenues of municipalities in
most states are transfers, this portends an overall
degradation in the most basic services that citizens
receive.
While state governments and municipal corpo-
rations must fight for every rupee they are consti-
tutionally entitled to, they are also obliged to raise
revenues from the tax base and public assets that
they already have. The truth is that the public
finances of states and local governments show a
shocking level of inefficiency and wastefulness in
terms of meeting their revenue potential.
My colleagues Sarthak Pradhan and Pranay
Kotasthane have found that “while Maharashtra
raises 70% of its revenue requirement from taxes,
five states in India are not able to raise even 30%”
and that even “high-income states such as Hary-
ana, Punjab, Maharashtra and Karnataka have a lot
of scope for improvement” in terms of own reve-
nues as a percentage of gross state domestic prod-
uct. Municipal revenues in India have stagnated at
a meagre 1% of gross domestic product, less than
half of which are raised by municipalities.
Bengaluru, for instance, collects only 20% of its
property tax potential. So, as much as state and
local governments rightly complain about the
need for greater devolution, it is also true that they
are inefficient and often unwilling to collect the
P olice in southern Germany say a woman got a shock while airing out her home
P owerful US and European fashion companies have refused to pay overseas sup-
taxes that they ought to.
Furthermore, governments must pay more
attention to non-tax revenues by making better
use of public assets. Land is perhaps the most ubiq-
uitous asset in the hands of any government. It is,
as exemplified by the case of parking, also the most
inefficiently utilised. Over a decade ago, the public
transport company in Bengaluru built multi-storey
office buildings over its bus stands in prime com-
mercial locations in the city. After some hiccups, it
has been earning a steady rental income from
them. It is this kind of thinking that municipalities
must adopt: public assets must not be allowed to
idle.
In fact, when the government fails to extract eco-
nomic value, other actors step in. For instance, it is
not uncommon for self-appointed parking opera-
tors to ”charge” you for parking in a public space.
The proceeds then feed into a shadow economy
and strengthen a nexus between local political
operators, corrupt officials and criminal elements.
Political economy is one of the chief reasons why
state and local governments are unable to put pub-
lic assets to better use. Lack of expertise and politi-
cal direction are some others. The current fiscal
crisis presents an opportunity for states, munici-
palities and panchayats to shake up the status quo
and get their public finances in better shape. It will
require chief ministers to initiate the process.
German woman’s home gets a crawling visitor
when a 25-centimeter (10-inch) Chinese mitten crab scurried in from the ter-
race through the open door. Freiburg police said Thursday that they received a call
reporting the unwanted home invader in the nearby town of Unterlauchringen,
near the Swiss border, the previous morning. Before they arrived, police say, the
woman captured the crustacean by putting an upside-down garbage can on top of
it. Officers were able to put the crab into a container and then take it to a local veteri-
nary clinic. The invasive species, native to Asia, is now found in many rivers in Ger-
many, and the woman’s residence was not far from the Rhine, though the Chinese
mitten crab has never been reported in the area before.
AP
A ruinous turn for garment workers amid covid
pliers for more than $16bn (£12.3bn) of goods since the outbreak of covid-19,
with devastating implications for garment workers across the world, according to
analysis of newly released import data. Two US-based groups, the Center for Global
Workers’ Rights (CGWR) and the Worker Rights Consortium (WRC), used previ-
ously unpublished import databases to calculate that garment factories and suppli-
ers from across the world lost at least $16.2bn in revenue between April and June
this year as brands cancelled orders or refused to pay for clothing orders. This has
left suppliers in countries such as Bangladesh, Cambodia and Myanmar with little
choice but to slim down their operations or close altogether.
The Guardian
Combat dogs to get augmented reality goggles
T he US Army has shown off augmented reality goggles for combat dogs,
designed to let them receive orders at a distance. The technology, made by a
firm called Command Sight, is managed by the US Army Research Laboratory. Mili-
tary dogs can scout ahead for explosives and other hazards, but need instructions.
The goggles are designed to let their handlers direct them, safely out of harm’s way.
In current combat deployments, soldiers usually direct their animals with hand
signals or laser pointers - both of which require the handler to be close by. But that
need not be the case if the prototype AR goggles are widely adopted, the army said.
Inside the goggles, the dogs can see a visual indicator that they can be trained to
follow, directing them to a specific spot.
BBC
Forced labour whips up a hair extension storm
T he business of hair extensions is booming, according to Tiffany Gill, associate
professor of history at Rutgers University and author of the book Beauty Shop
Politics. The African American hair care market in the United States was estimated
to be worth more than $2.5 billion in 2018 by research company Mintel... Now,
some of the Chinese factories supplying hair to the American market are under
scrutiny by the United States government, which is alleging the use of forced labour
in the country’s far western region of Xinjiang—where rights groups say up to 2
million Uyghurs and other ethnic minorities have been detained... Beijing has
called the camps “vocational training centers” and says the expansion of factory jobs
campaigners have linked to the camps is part of a “poverty alleviation” program.
CNN

MY VIEW | GENERAL DISEQUILIBRIUM

The country’s federal structure has three gaping holes

That promise now stands broken. Three
RAJRISHI SINGHAL developments over the past six months
clearly point to the BJP’s shifting focus on
federalism.
The first sign of a ruptured compact is the
breaching of foundational promises made to
gross domestic product growth rate of 10%,
over the previous year. In reality, both have
shrunk, and much more than most other
comparable emerging economies.
Also, given the Centre’s obstinacy in pur-
suing a suboptimal stimulus programme,
since agriculture is a state subject and labour
is on the concurrent list? Both should have
merited a discussion with the states before
being unilaterally pushed through. Ironi-
cally, the bills were rammed through in the
Rajya Sabha, which literally means “council
ing the extraordinary pandemic situation.
He is right and he certainly deserves the
benefit of doubt, but one key question lin-
gers: Did the minister or his colleagues con-
sult experts before taking this extraordinary
step? Or, on what basis were these subjects—

I
ndia’s federal structure is under stress as
myriad changes threaten to upend the sta-
tus quo. Change is not bad, per se, but the
manner of the transformation militates
against the constitutional and federal prom-
ise of providing states an equal say in the
process. The changes, on slow-burn so far,
have now been accelerated thanks to the
states during the creation of the GST Coun-
cil in 2016-17. States were promised the sta-
tus of adult consensual partners around the
table, with the Centre no longer hectoring
and unilaterally shoving down its decree.
But, come trouble, the Centre has walked
away by refusing to compensate states for
shortfalls in their projected revenues and
which has further stunted the economy and
impacted the revenue gen-
erating capacity of states
for the next 12 months, it is The Centre’s
incumbent on the Centre
to make money available to failure to meet
them, especially since they
bear the brunt of this
its obligations
for states”, in total disregard for opposition
voices or demands.
The bills on agriculture
also highlight another
skew: they will end states’
access to taxes from grain
markets at a time when
other revenue sources are
such as federalism—picked over others for
dropping? As has become common with this
government, no details are available on
stakeholder consultations or the rationale of
those decisions.
The renewed friction in Centre-state ties,
as well as the developing fault lines, stipulate
that the 15th Finance Commission play a

is a policy consultant, journalist

space afforded by the pandemic-induced
economic shock.
and author. His Twitter handle
is @rajrishisinghal
The ruling Bharatiya Janata Party (BJP)
promised “cooperative federalism” when it
came to power in 2014; its manifesto for 2019
elections made the same promise: “We have
set up an example of inclusive federal gov-
ernance through steps such as the creation
of Niti Aayog, establishment of Goods and
Services Tax (GST) Council and restructur-
ing of central schemes in line with our
pledge of cooperative federalism. We will
continue to pursue this course by ensuring
greater involvement of the states in all
aspects of policy making and governance
thereby strengthening federalism.”
instead asking them to borrow to meet those
gaps, in complete disregard of its fiduciary
responsibilities.
The economic shock from the pandemic
has affected tax revenues, especially GST
collection, after the lockdown froze income,
demand and consumption. In the absence of
a fiscal stimulus commensurate with the
magnitude of the economic shock, poor GST
collections have shrunk the government’s
divisible revenue pool. The gross tax reve-
nue collections, before states get their share,
till August 2020 was ₹5.042 trillion, com-
pared with ₹6.607 trillion the previous year.
Gross tax revenue was projected to grow by
12% during 2020-21, assuming a nominal
healthcare emergency.
The second sign is the
towards states
undemocratic manner in
which the agriculture and
has ruptured
labour bills were forced the Centre-state
through Parliament. With-
out going into the merits or compact
demerits of the legislative
changes, the two bill clus-
ters should have ideally been referred to
select parliamentary committees, as is the
norm, for further discussion and consensus
building. Given the BJP’s avowed prefer-
ence for “cooperative federalism”, shouldn’t
the Centre have consulted and engaged with
states before finalizing the bills, especially
shrinking and the Centre is
refusing to provide a back-
stop.
The third sign is the
strange syllabus changes
for students under the Cen-
tral Board of Secondary
Education. The ministry of
education decided to drop
a bunch of subjects from Class 9-12 curricula;
apart from subjects like “democracy in
diversity”, “gender, religion and caste” or
“challenges to democracy”, topics like feder-
alism, secularism, citizenship were also
axed. Education minister Ramesh Pokhriyal
had rationalized the cuts at that time, blam-
larger role. First, it must suitably amend the
original terms of reference, within constitu-
tional limits, by adding the financing and
expansion of healthcare infrastructure to the
ad hoc provision for defence funding. Both
have become critical for national security.
Two, states should not only get a higher
share of the divisible tax pool than the cur-
rent 42%, but must also get a share from the
sale of national commons (such as telecom
spectrum or future disinvestment proceeds).
Finally, the commission needs to redraw
India’s red lines on fiscal deficit and debt,
given the changed circumstances and their
irrelevance as economic anchors for the
foreseeable future.
12 MONDAY, 12 OCTOBER 2020
NEW DELHI CORPORATE
TOP ST RIES
Startups plan
to approach Plans afoot to bring more Covid-19 worsens
India Inc’s capital
competition
panel against foreign students to India expenditure plan
Google FROM PAGE 1 KERALA DEATH
The govt’s aim is to boost the number to 200,000 from the current 48,000 students services tax (GST) was intro-
TOLL CROSSES 1,000
FROM PAGE 1 duced. Companies, especially
those in smaller segments, took
INDIA
gavel Janakiraman, founder of Prashant K. Nanda some time adjusting to the new
Matrimony.com, said the com- prashant.n@livemint.com taxation regime before making 7,070,347 108,500
panies are looking at “all possi- NEW DELHI any major investment decision. Total cases Deaths
bilities”, including approach- Overall earnings were
6,093,755 868,092

T
ing the CCI and the govern-
ment.
He could not be reached for
comment after the Saturday
meeting.
An email sent to Google did
not elicit a response.
If the startups file a case
against Google with the CCI, it
will be the fifth such case Goo-
gle faces in India.
Two independent lawyers
filed an antitrust case against
Google last week for abusing
its dominance in AndroidTV,
while the regulator is also
looking into two other anti-
trust suits against the com-
pany.
In 2018, it had fined Google
₹136 crore for abusing its dom-
inance in search.
Google has faced a strong
backlash from Indian startups
over the past two weeks after it
issued a clarification for the
already existing Play Billing
policy in India.
While the company hasn’t
rolled back the 30% commis-
sion it charges for sales
through the Play Store, it has
given Indian startups six more
months than global to comply
with this policy.
Additionally, Google has
also been arranging meet-
ings with developers and
startup founders to listen to
their concerns and has said
that it will do policy work-
shops with companies as
well.
tarush.b@livemint.com
he Union education min- impacted with business and Recovered Active cases
istry, along with IITs and PepsiCo hikes consumer demand declining
investment in
top academicians, are UP plant to
post-GST in the past few years,” GLOBAL
exploring ways to attract ₹814 crore to said Dhiraj Sachdev, managing
foreign students to insti- meet partner and chief investment 37,278,481
tutions of higher education in increasing officer, Roha Asset Managers. Total cases
demand
India. These include asking foreign bit.ly/2SKhEtp
“Liquidity with large corpo-
faculties to develop short-duration
courses; devising ways to showcase
rations and in the banking sys-
tem for lending to good pro-
1,073,955
Deaths
the return on investments; coordi- jects for capex is not an issue. It
nating with Indian embassies; and is the pandemic-led uncer- 25,933,129 10,271,397
Recovered Active cases
joint branding and marketing of tainty, low utilization of capac-
Source: Union health ministry, states
India’s higher education sector. ity and shortage of manpower
During an internal deliberation due to the lockdown that has
at IIT Kharagpur, higher education led to the curtailment of “India’s capex/revenue has
secretary Amit Khare called for capex,” Sachdev said, adding been structurally declining
increasing the reach to foreign stu- private sector capex is expected over the decades (from 45% in
dents through online education to stay muted in the medium- the 1980s, 35% in the 1990s,
and also suggested that foreign fac- term but recover gradually. 25% over 2000-10 and 22% in
ulties’ expertise can be used to cre- The slump in consumer 2010-20). In fact, every crisis
ate short-term courses of one to demand had sent the govern- has structurally lowered the
two semesters. The government believes that reforms suggested in the NEP will push more foreign students to study in India. HT ment scrambling to boost capex further as a share of gov-
For that, India can leverage for- investment and consumption ernment revenues,” Amar
eign faculties’ network under the IIT Kharagpur that led the multi- long articulated aspiration of the ernment believes that a concerted through a raft of measures, Kedia and Chirag Dave, ana-
education ministry’s Global Initia- stakeholder talks on the issue. Union government but remains far effort and reforms suggested in the including a tax cut for corpo- lysts at Emkay Global Financial
tive of Academic Network (GIAN) Top officials of the education behind in achieving results. NEP will help change the situation. rates in September last year. Services, said in a report.
and Scheme for Promotion of Aca- ministry, university vice chancel- India is currently home to nearly Institutions like IIT Kharagpur, “Private sector balance sheet According to Kedia and
demic and Research Collaboration lors, directors at IITs and academi- 48,000 international students, BITS Pilani and IIT Gandhinagar participation in infrastructure Dave’s estimates, India does
(SPARC) initiative. Under GIAN, cians of global repute deliberated which it aims to grow to 200,000 pointed to the need to market and and real estate development is not have the fiscal space for
the ministry allows top var- promote India’s positives, largely missing except for a few counter-cyclical infrastruc-
sities to invite renowned HIGHER LEARNING including funding for for- names which is a key impedi- ture-driven stimulus of 5-15%
foreign academicians to eign students. While IIT ment for a large scale pickup in of GDP as the debt overhang is
come and teach at Indian EXPERTS pointed to FOREIGN faculties’ SEMESTER away, NEPAL, Afghanistan Kharagpur director V.K. the private capex cycle,” said not transient and may haunt till
institutions for short dura- the need to market
India’s positives,
expertise can be credit transfer is
used to create short- another plan that
and Bangladesh
contribute the most
Tewari said NEP 2020 has Vinod Karki, equity-strategist FY25.
tions, while SPARC pro- including funding term courses in could boost the number of foreign brought the opportunity to at ICICI Securities. Alternative funding options
motes joint research. for foreign students Indian institutions intake of students students to India “promote internationaliza- Private firms tightened the such as specialized domestic
Khare’s idea was sup- tion both inbound and out- purse strings in FY20 with financial institutions to lever-
ported by IIM Bangalore bound, through semester capex spending by 131 private age funds and multilateral
director Rishikesh T. Krishnan, on India’s way forward on foreign over a period of time. Nepal con- away, credit transfer”, Sudhir Jain, companies (in BSE 200) down funding are still small. They
who observed that foreign students students and how to sync this with tributed the most foreign students director of IIT Gandhinagar called by 9.77% to ₹2.77 trillion. expect infrastructure spend-
often opt for short-term courses the new education policy (NEP), to at 26.9%, followed by Afghanistan for publicizing funding schemes Among BSE 200, 19 state-run ing to stagnate without even
instead of long commitments due be rolled out next year. There are a (9.8%), Bangladesh (4.4%), Sudan available in the country and the firms reported a capex of ₹1.39 considering execution chal-
to the uncertain factor of the cost of series of suggestions to attract for- (4.0%), Bhutan (3.8%,), Nigeria need for promotional activities by trillion in FY20, a 6.11% lenges.
education, according to a note from eign students, which has been a (3.4%) and the US (3.2%). The gov- Indian foreign offices. increase from a year ago. nasrin.s@livemint.com

Stage set for Centre-states showdown China grants

$90 mn aid
Bankers wary as retail loan
FROM PAGE 1

refuses to set up a dispute reso-

ter Nirmala Sitharaman has
sought to buy peace with the
dissenting states by assuring
lution mechanism, the Kerala them that full compensation
government will move the will be paid to states of their
Supreme Court. shortfall in tax receipts due to
Abhishek Jain, a partner at either the implementation of
to Sri Lanka defaults continue into Sep
AP FROM PAGE 1 Analysts said the data point risk.
feedback@livemint.com on auto-debit is significant “We believe elevated zero-
COLOMBO To be sure, lenders are because it indicates a possible day delinquencies would not
divided on the repayment delay in recovery on the only keep asset quality under

EY India, said the Constitution
does not specify what sort of
dispute resolution mechanism
should be put in place and
deciding the framework has
been left to the GST Council.
“The dispute settlement
mechanism can be an arbitra-
tion process, possibly under a
group of former Supreme
Court judges. It could also be a
group of ministers within the
GST Council which now the
opposition states have sug-
gested. The Centre and the
dissenting state governments
need to talk and find a mid-
way, possibly agreeing to
equally divide the borrowing
requirement between the
Centre and states,” he added.
The central government has
drawn a distinction between
what is payable to the states as
compensation due to the
implementation of the indi-
rect tax reform in 2017 and the
Around 10 non-NDA ruled states have rejected the Centre’s proposal
that states should borrow to meet the shortfall in GST revenue. PTI
revenue loss on account of the
pandemic.
In the 41st meeting of the
GST Council in August, the
central government gave two
borrowing options to states,
one in which they can borrow
₹97,000 crore from the
Reserve Bank of India (RBI)
through a special window,
which is attributable to GST
implementation, or the entire
amount of revenue shortfall of
₹2.35 trillion from the market.
The two options have subse-
quently been revised to ₹1.1
trillion and ₹1.8 trillion,
respectively, as the Centre sees
lesser shortfall in GST reve-
nues with the economy
already on the mend. GST
receipts rose 3.8% to ₹95,480
crore in September for the first
time this fiscal, signalling a
recovery after months of tur-
moil due to the pandemic and
offering a glint of hope to poli-
cymakers. The Reserve Bank
of India has projected the
economy to record positive
growth in the March quarter.
While Union finance minis-
GST or the pandemic, a final
call on the compensation
mechanism was deferred to
the next GST Council meeting.
“Nobody is going to be
denied compensation for
losses arising out of imple-
mentation of goods and servi-
ces tax or due to covid impact,”
said the minister.
“States’ Goods and Services
Tax revenue shortfall this year
either due to GST implemen-
tation or due to covid will be
met completely,” the minister
assured in the last meeting
earlier this month.
Rathin Roy, managing
director at Overseas Develop-
ment Institute, said he does
not foresee the issue to be
resolved in Monday’s meeting
unless the Centre offers to pick
up the interest liability.
“But if it does that, it might
as well borrow on its own
account,” he added.
C
hina announced on
Sunday that it was
providing a $90 mil-
lion grant to Sri Lanka, two
days after the island nation’s
president sought help from a
visiting Chinese delegation
in disproving a perception
that China-funded megapro-
jects are “debt traps”.
Calling the financial assist-
ance a “timely grant”, the
Chinese Embassy in
Colombo said that it would be
used for medical care, educa-
tion and water supplies in Sri
Lanka’s rural areas and that it
would “contribute to the
well-being of (Sri Lankans) in
a post-covid era.”
The announcement fol-
lows a visit to the Indian
Ocean island nation Friday
by a Chinese delegation led
by Yang Jiechi, a Communist
Party Politburo member and
a former foreign minister.
delinquency after the morato-
rium.
While some believe that
there is an uptick in defaults,
others said things are gradu-
ally going back to pre-covid
normalcy.
For instance, analysts at
Emkay wrote in a note on 7
October that the manage-
ments of non-bank lenders
have indicated a sharp revival
in collection efficiency by Sep-
tember; however, manage-
ment commentary on the sus-
tainability of the same is
awaited.
In fact, the central bank has
filed an affidavit in the
Supreme Court, requesting it
to lift the stay on bad loan clas-
sification as it “shall have huge
implications for the banking
system, apart from undermin-
ing the regulatory mandate of
the Reserve Bank of India
(RBI)”.
ground. pressure with a high cost of
The pandemic and the risk in the coming quarters
ensuing lockdown to contain it but also limit any sharp
has left millions jobless and revival in retail credit growth.
disrupted supply chains, Having said that, in our view,
shocks from which the econ- banks with a higher provision
omy is still recov- coverage ratio vs
ering. Many borrowers (compared to)
“While com- view SC’s orders the last down-
mentaries from for status quo in turn are rela-
lenders have downgrading tively well-posi-
pointed towards tioned to man-
loans as an
improving col- age non-
lection efficiency extension of the p e r f o r m i n g
sequentially, ele- loan moratorium loans (NPLs) in
vated bounce this cycle,” the
rates could entail Goldman Sachs
a higher cost of collections as report said.
well as delay any growth The current level of bad
recovery,” said analysts at loans in the country is quite
Goldman Sachs in a report on elevated, albeit slightly lower
7 October. than where it was a couple of
It said that the strong posi- years ago. Private sector and
tive correlations with credit state-run lenders had an
costs across the board suggests aggregate bad loan burden of
that bounce rates could be a ₹8.42 trillion as on 30 June,
leading indicator for cost of showed data from Capitaline.

Shriram Transport Finance expects

m MINT SHORTS According to the depositories data, overseas investors pumped
in a net ₹5,245 crore into equities and withdrew ₹4,159 crore from
the debt market during 1-9 October. This translated into a total
net inflow of ₹1,086 crore. In September, FPIs were net sellers at
RBI to move to next gen treasury
application to manage gold, FX
REUTERS
AUM to remain flat in current fiscal
New Delhi: Shriram Transport MINT

Coal blocks auction may generate
₹20,000 crore revenue per year
BLOOMBERG
New Delhi: Coal blocks auc-
tion for commercial mining
may lead to revenue of around
₹20,000 crore a year, a coal
ministry official said. The proc-
ess to auction 38 coal blocks is
on. “The total revenue for one
year is expected to be around
₹20,000 crore and capital
investment is around ₹33,000
crore,” the official said. PTI
₹3,419 crore. PTI Finance Company (STFC)
expects its assets under man-
agement (AUM) to remain flat in
Govt buys 3.8 million tonnes of the ongoing fiscal and post a
double-digit growth next fiscal,
kharif paddy at MSP in last 15 days a top company official said.
New Delhi: The Centre on Sunday said about 3.79 million ton- “Overall business has picked up
nes of kharif paddy worth ₹7,159.39 crore has been purchased at in semi-urban and rural mar-
the minimum support price (MSP) from 322,000 farmers in the kets, I should say it has come to
last 15 days. Paddy procurement commenced in Punjab and Har- normal,” STFC managing director and chief executive officer
yana from 26 September due to early arrival of the crop, while in Umesh Revankar said. PTI
other states from 1 October. More than 80% of the country’s
paddy crop is grown in the kharif season. The government
through Food Corporation of India (FCI) and state agencies New Delhi: In a bid to improve its functioning, the Branson’s Virgin Orbit seeks to
undertakes procurement of Reserve Bank has decided to move to the Next Generation
MINT

paddy at MSP. “FCI along with
FPIs pump in net ₹1,086 cr so far in other government agencies has,
up to October 10, procured over
Oct as economic activity improves 37.92 lakh tonnes of paddy with
New Delhi: Foreign portfolio investors (FPI) have invested a total MSP outflow of ₹ 7,159.39
₹1,086 crore on a net basis so far in October in Indian markets, crores to more than 3.22 lakh
tracking encouraging factors including improved GST collec- farmers,” Union food ministry
tion, acceleration in economic activity and positive global cues. said in a statement. PTI
Treasury Application (NGTA) for managing the country’s
foreign exchange and gold reserves. The NGTA, according
to the RBI, would be a web-based application providing
scalability, manoeuvrability and flexibility to introduce
new products and securities, besides supporting multi-cur-
rency transactions and settlements. The NGTA will sup-
port various transactions in asset classes . PTI
raise up to $200 million: report
Richard Branson’s satellite-launch business Virgin Orbit is look-
ing to raise up to $200 million in a funding round that could value
it at around $1 billion, The Wall Street Journal reported on Sun-
day, citing people familiar with the matter. Branson’s space ven-
tures compete with those of fellow billionaires Elon Musk and
Jeff Bezos in the commercially led space exploration industry.
BLOOMBERG
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‘INDIA’S POLICY RESPONSE TO WHY GST SAGA IS A TERRIBLE

MONDAY, OCTOBER 12, 2020
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DON’T MISS
Property ownership card is a step TWITTERVERSE

ahead for self-reliant India: Modi Hardeep S. Puri

@HardeepSPuri
Number of domestic
passengers touches
The SVAMITVA scheme will allow villagers to use property records to access loans from banks, said PM. 1,80,027 on 10 October,
we are on a steady
Lone dissent calls Gyan Varma & Anuja growth trajectory to
through an SMS link sent to their passed recently, The Farmers’ pre-COVID figures.
for caution NEW DELHI mobile phones. This is expected to Produce Trade and Commerce
Dissent by MPC member be followed up by physical distri- (Promotion and Facilitation) Bill,

J.R. Varma, over keeping
policy accommodative
into the next fiscal, calls
for caution. See Page 4
Sebi moves to stop
Franklin-like cases
Sebi is working on rules
to ensure debt funds
have sufficient liquidity
to meet redemption
stress. See Page 3
RBI underwrites
economic revival
RBI has gone out on a
limb to bat for growth
over inflation, writes Anil
Padmanabhan.
See Page 6
Plans on to attract
foreign students
The education ministry is
exploring ways to attract
foreign students to Indian
institutions of higher
learning. See Page 12
P
rime Minister Narendra
Modi on Sunday
Modi, Shah, launched a property
Rajnath
among star
card scheme called
BJP ‘SVAMITVA’ (owner-
campaigners ship) saying it will give people,
for 1st phase particularly those in villages, legal
of Bihar polls
documentation of their property.
bit.ly/36Qm6iF
He said the scheme will be a step
forward in “Aatmanirbhar Bharat”
or self-reliant India.
A record of ownership of prop-
erty will give citizens confidence,
allow avenues of new investments
to open up and facilitate easier
access to bank loans for employ-
ment, he said.
“I am confident that SVAMITVA
Yojana will become a big medium
of solving disputes in the villages.
The cause of worry is that only
one-third of people have a record
of their property. So in a country
like India, it becomes very impor-
tant that people have such docu-
ments,” he said.
Modi said the scheme would
also allow better implementation
of development programmes in
villages and help gram panchayats
in carry out the work.
“There are a lot of youngsters in
bution of the cards by the state 2020, The Farmers (Empower-
governments. ment and Protection) Agreement
The scheme was first of Price Assurance and Farm Ser-
announced on National Pancha- vices Bill, 2020, and The Essential
yati Raj Day on 24 April. Commodities (Amendment) Bill
“It is said that India’s soul 2020, are the Congress, the Trina- Thomas Isaac
resides in its villages but it is the mool Congress, the Left parties, @drthomasisaac
villages that have been left on their and the Shiromani Akali Dal.
Kerala has become first
own..those who have been in Farmers have protested against
state to achieve total
power for several years, they made the recently passed legislation in
digitalisation of school
grand speeches but left the villages Punjab, Haryana and parts of west-
education. 42000 class
and its people on their own,” Modi ern Uttar Pradesh.
rooms from 8th to 12th
said. “People have started to identify
have laptops, projec-
“Those who are troubled by the those who are working for the cor-
tors and screens.
reforms announced by the Union rupt, middlemen, and commission
PM Modi said a record of ownership will end many disputes in villages. government in the agricultural agents and people are also taking
sector are not worried for farmers steps to act against such people.
villages who want to do something a self-reliant country,” the prime or for the welfare of villages, they Those who have looted the coun-
on their own, want to be atmanir- minister said. are only worried for middlemen try for generations are opposed to
bhar . However, they did not have The scheme aims to get around and commission agents. It is for the work being done by the gov-
documents. Now the benefit of mid- ernment,” said the prime minister.
it will be much MAPPING RURAL INDIA dlemen and com- “Opposition did not increase
easier for them to mission agents the minimum support price of
Joe Biden
take loans from SVAMITVA scheme THE scheme aims to RECORD of property that these people agricultural produce to 1.5 times.
@JoBiden
banks. This card is will give citizens in
rural areas legal
cover 100,000
property holders
ownership will open
up new avenues of
are opposed to They are troubled by the direct
a legal document, documentation of agricultural transfer of money in the accounts One in five small busi-
from 763 villages investments in
which shows this their property across six states villages, said Modi reforms carried of farmers. They had even nesses have shut. Over
home is yours out by the Union opposed the neem coating of urea. 25 mn Americans are on
now and no one government,” he People have decided to become unemployment.But
Trump only cares about
can intervene in it anymore. This 100,000 property holders from said. self-reliant and make the country
his wealthy friends.
scheme will make a historic 763 villages across six states to Among the political parties that self-reliant,” Modi said.
change. This is one step ahead for download their property cards have opposed the three farm laws gyan.v@livemint.com

India, China to start talks amid uncertainty

PTI
Elizabeth Roche Singh of the 14 Corps based in approaching, there was a small
elizabeth.r@livemint.com Leh, and include Lt General window that China could
NEW DELHI P.G.K. Menon who is expected exploit to surprise New Delhi
to take over from Singh later and change the existing situa-

I
ndia and China are set to this month. Besides, senior tion to their advantage. This is
hold their seventh round of diplomat in charge of the something India will try to
military talks on Monday in China desk, Naveen Srivas- prevent, he added. “Both sides POWERED BY
yet another attempt to work tava, who was part of the dis- are preparing for the long
out steps to preserve an uneasy cussions with the haul,” he said
truce amid the unprecedented Chinese on 21 Expectations of a referring to large-
tensions along the border September in ‘breakthrough’ in scale prepara-
between the two countries. Moldo, will also the India-China tions by India and
Analysts said expectations be part of team. border standoff China to keep
of a “breakthrough” were low “I don’t expect
through the talks their militaries on

Your personal finance handbook

with question marks over what any break- the frontlines.
could constitute a “break- through in these are low, according The India-
through in the current cir- New Delhi aims to preserve an talks,” said Sri- to analysts China talks will
cumstances”, seen as a state of
unprecedented tensions in
decades. The thinking in some
uneasy truce in place since Sep

that a restoration of status quo

quarters was that a “break-
through” would mean a resto-
kanth Konda-
palli, a professor
coincide with a
three-day visit to
of Chinese Studies at Jawahar- New Delhi of US deputy secre-
for the new normal
would mean India move back lal Nehru University. He added tary of state Stephen Biegun
from some strategic positions that his expectations were starting Monday. Biegun’s visit

MUTUAL FUND
ration of status quo ante, that is it had taken in Ladakh on the “low” from this round of talks. follows close on the heels of a
China vacates the areas the banks of the Pangong Tso lake India’s objective will be to meeting of the “Quad” group
People’s Liberation Army surprising the Chinese. see that an “uneasy calm” that which includes the US, Austra-

INVESTING IN THE
intruded into in May. The The Indian delegation will is in place since early Septem- lia, India and Japan on 6 Octo-
other view in New Delhi was be led by Lt General Harinder ber, is preserved. With winter ber in Tokyo.

Plan to decongest Delhi in works: RLDA
Shreya Nandi
shreya.n@livemint.com
NEW DELHI
T
he Rail Land Develop-
ment Authority (RLDA)
is working on a ₹900-
crore investment plan to
revamp the road network in
and around New Delhi railway
station to help ease congestion.
The initiative is part of the New
Delhi station redevelopment
programme.
“We will develop an exclu-
sive road network for decon-
gesting the area around New
Delhi station so that people
don’t have to go around Con-
naught Place to reach the sta-
tion,” said RLDA vice chairman
Ved Parkash Dudeja in an inter-
view.
The Indian Railways is focus-
ing on modernizing and trans-
forming key railway stations
across the country and turn
them into commercial hubs,
under its ambitious asset mon-
RLDA is working on a ₹900-crore investment plan to revamp the
road network in and around New Delhi railway station.
etization programme.
The process of request for
qualification (RFQ), in which
bidders will be pre-qualified
and shortlisted, is expected to
roll out in November, Dudeja
said. The project will be imple-
mented in phases, including
station redevelopment, devel-
opment of associated infra-
structure, relocation of social
infrastructure, and refurbish-
MINT
ment of railway offices and
quarters.
“We are doing a master plan
for the entire area around New
Delhi station…we will come up
with an integrated township,
along with a world-class road
network. In phase-1, the station
will be redeveloped, and in the
second phase, colony redevel-
opment will start after bidding
out the station. The second
CURRENT SCENARIO
phase will only start in
JOIN THE WEBINAR
2021-22.” Dudeja said.
The entire project will be
developed on a public private
14 TH OCTOBER, 2020 | 5:45PM - 7:00PM
partnership model and will be
completed in four years, he
said. The estimated cost of the
project is ₹6,500 crore.
Last month, RLDA had said a
pre-bid meeting was held on
the redevelopment of the rail-
way station, which saw ‘enthu-
siastic participation’ from 20
companies, including France’s
Socié té Nationale des Chemins
de Fer, Arabian Construction Asheesh Jain Jinesh Gopani Rajeev Thakkar Mrinal Singh
Co., Anchorage Infrastructure, Senior VP & Head Head of Equity, CIO, PPFAS Deputy CIO - Equity,
the Adani Group, and GMR. Investments & Forex Axis Mutual Fund Mutual Fund ICICI Mutual Fund
RLDA is a statutory authority Business, DBS Bank
under the railway ministry and
develops vacant railway land
for commercial use.
“We are targeting to bid out
20 railways stations and 21 col- mint.live livemint
onies in this financial year, Register here : www.livemint.com
depending upon how the cov- live_mint livemint
id-19 situation pans out. We will
go out in a big way in these two
areas,” Dudeja said.
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PROPERTY CARD IS A STEP AHEAD INDIA, CHINA RESUME DIALOGUE

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