OPINION, P8 ECONOMY, P2 SURJIT BHALLA RBI autonomy is sacrosanct, but it must be accountable INTERNATIONAL, P16 EDITORIAL NEW POLICY ON THE ANVIL POLITICAL CRISIS Loopholes in the pension law could make EPFO implode — govt needs to intervene Biofuels a `1 lakh-crore business opportunity in India: Pradhan Germany’s SPD decides to accept negotiations with Merkel NEW DELHI, SATURDAY, NOVEMBER 25, 2017 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM VOLUME XLIII NO. 229, 22 PAGES, `8.00 (PATNA `9.00, RAIPUR `10.00) P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E READ TO LEAD SENSEX: 33,679.24 ▲ 91.16 NIFTY: 10,389.70 ▲ 40.95 NIKKEI 225: 22,550.85 ▲ 27.70 HANG SENG: 29,866.32 ▲ 158.38 `/$: 64.70 ▼ 0.13 `/€: 76.75 ▼ 0.27 BRENT: $63.70 ▲ $0.15 GOLD: `29,447.00 ▼ `52.00 IN THE NEWS Winter session to be held from Dec 15 to Jan 5 THE WINTER session of Parliament will commence from December 15, a day after the second phase of the Gujarat Assembly elections, and conclude on January 5, reports PTI. The Cabinet Committee on Parliamentary Affairs headed by home minister Rajnath Singh met on Friday to decide the dates of the session. Justifying the government’s decision to call the winter session after the assembly polls, parliamentary affairs minister Ananth Kumar said it was also done by governments in the past, including Congress dispensations. Fare hike costs Delhi Metro 3 lakh commuters a day THE DELHI Metro lost over 3 lakh commuters a day after a steep fare hike came into effect on October 10, an RTI query has revealed, reports PTI. The metro’s daily average ridership came down to 24.2 lakh in October from 27.4 lakh in September, translating to a fall of around 11%. FIR against PVR’s directors, promoters THE GURGAON Police has registered an FIR against PVR Cinemas, and its promoters and directors on charges of cheating and forgery on the directions of a Gurgaon civil court, reports PTI. Its promoters Ajay Bijli, Sanjeev Kumar Bijli, Niharika Bijli and eight others have been booked under relevant sections of the IPC for selling stocks at inflated value of `820 crore illegally and causing loss to Gurgaonbased real estate companies. INSOLVENCY ORDINANCE SOVEREIGN RATING S&P plays it safe, keeps status quo S&P’s INDIAVIEW Positives Negatives $2,000 Per capita2017, income in Expected 7.6% growth over 2017-20, fastest among all investment-grade sovereigns the lowest of all investmentgrade sovereigns 8.4% Share of external in the past five years 8% Net fiscal deficits over past 20 years and 7% Share of general 22% govt revenue in debt, net of liquid public and financial sector external assets, in current account receipts over 2017-2020 GDP, lower than many peers 3% Fiscal deficit to be added by states to general govt deficit 67% 1.8% Expected CAD over Net general govt debt, with servicing costs making up for a fifth of govt revenue 2017-20, down from 2.3% in 2011-16 India’s sovereign rating S&P BBB- (Since Jan, 2007) Fitch Moody’s BBB- Baa2 (Since Aug, 2006) (Since Nov 17, 2017) Note: BBB- denotes lowest investment grade while Baa2 is a notch above FE BUREAU New Delhi, November 24 GLOBAL RATING AGENCY Standard & Poor’s (S&P) on Friday retained its sovereign rating and outlook forIndia,refusing to join its peer Moody’s which raised the rating for the country by a notch in recognition of reforms undertaken in recent years.S&Phas kept India’s sovereign rating unchanged at the lowest investment grade“BBB-” ‘Bar on wilful defaulters to crowd in genuine players’ the ratings. These strengths are balanced against vulnerabilities stemming from the country’s low per capita income and relatively high general government debt stock, net of liquid assets,” S&P said in a statement. Economic affairs secretary Subhash Garg said S&P chose to remain cautious, given a little uncertaintyoverthe fiscal situation due to several ongoing structural reforms. But it won’t have any impact on the government’s borrowing costs, which are in any case much better than for many other countries with similar ratings. “S&P has spoken favourably of institutional reforms, growth figures and said 7.6% growth in times to come. They are almost in line with Moody’s but maybe they want some more time to upgrade,” Garg said. He also underplayed concern on rising fiscal deficit of states,as expressed by S&P, saying the states are “anyway constitutionally constrained not to exceed prescribed borrowing limits”. Former economic affairs secretary Shaktikanta Das said S&P is several curves behind in rating India, and the country should be compared with only comparable nations. NITI Aayog vice-chairman Rajiv Kumar said: “I am quite surprised (that India’s rating was not upgraded) because S&P itself says that it expects robust economic growth in the next few years. When the economy grows, the debt to GDP ratio will decrease. Also, household savings is increasing.” Kumar said demonetisation has brought so much liquidity to the banks that there are resources available for investments without having to take recourse to external debt. Retains India at lowest investment grade rating of BBB-; sees risks in low per capita GDP, high govt debt, sizeable fiscal deficit since January 2007, citing the country’s sizeable fiscal deficit, low per capita income and high general government debt levels. It also maintained the stable outlook for the country. “The ratings on India reflect the country’s strong GDP growth, sound external profile, and improving monetary credibility. India’s strong democratic institutions and its free press promote policy stability and compromise, and also underpin Continued on Page 2 Special Feature Renewables Growing tiny tumours in the lab could help treat cancer Cementing growth The “tumouroids” mimic real cancers much more closely than traditional cell cultures, and accurate replicas of real tumours should help the hunt for better cancer drugs ■ Science & Tech, P15 FE BUREAU A massive increase in auction of renewable power projects over the next two-three years will allow the sector to further grow its share in the country’s energy mix. 20 gigawatt (GW) renewable energy auctions lined up for next 4 months 6 GW Solar Wind 5 1.52 3 1.52 3 Nil Dec QuickPicks RIL sells stake in Marcellus Shale to BKV Chelsea for $126 m RELIANCE INDUSTRIES on Friday said it has completed sale of its interest in one of the three shale gas assets in the US to BKV Chelsea for $126 million, reports PTI. Reliance Marcellus II, a subsidiary of Reliance Holding USA and RIL, closed the sale of its stake in the Marcellus shale gas asset operated by Carrizo Oil and Gas, the company said in a statement. The transaction, which was announced on October 6, will be effective April 1, 2017. PAGE 2 Wheat sowing down by 12.41% so far AREA UNDER wheat reached 110.66 lakh hectares in the current rabi season so far, down by down 12.41% compared with the year-ago period, government data showed on Friday. Farmers have sown wheat in 110.66 lakh hectares so far in the current 2017-18 rabi season against 126.35 lakh hectares in the year-ago period, according to the agriculture ministry’s data. UP, MP, Punjab, Haryana and Rajasthan have sown less area under wheat so far. PAGE 14 Forex reserves rose to $399.533 bn as of Nov 17 INDIA’S FOREX exchange reserves rose by $240.40 million as on November 17 to $399.533 billion, $ data from the Reserve Bank of India show, reports fe Bureau in Mumbai. Foreign currency assets (FCAs), which form a key component of reserves, rose by $220.40 million from the previous week to $375.096 billion. FCAs are maintained in major currencies like US dollar, euro, pound sterling, Japanese yen, etc. PAGE 10 Jan Solar 10 FY18 March Current installed capacity Wind 10 FY19 32.7 14.8 30 30 20 by FY22 Feb Auction plan Plan to take capacity to 175 GW Nil 10 FY20 Solar Wind Rising share of renewables in power generation (%) 12.5 12.9 13.2 14.1 FY13 FY14 FY15 FY16 ● INSOLVENCY CASE 17.5 FY17 SBI plea in NCLT against Bhushan arm BANIKINKAR PATTANAYAK New Delhi, November 24 SURYA SARATHI RAY New Delhi, November 24 KEEPING THE ASSETS of stressed companies out of bounds for wilful defaulters won’t depress the valuation of the assets as it will help crowd in genuine players, MS Sahoo, chairman of the Insolvency and BankruptcyBoard of India (IBBI) said on Friday.“I stronglybelieve that a corporate debtorwould be handed over to the most deserving people that would also ensure a genuine and time-bound implementation of the resolution plan,which is in the interest of all stakeholders,”he told FE. Anordinancepromulgatedby the government on Thursday brought about sweeping changes totheInsolvencyandBankruptcy Code (IBC), 2016: Wilful defaulters,dubious promoters and other unscrupulouselementshavebeen barred from acquiring stressed companies,with a view to ensuringefficientandtimelyresolution of corporate insolvency. AccordingtoSahoo,“Goingforward,thebestuseoftheIBCwillbe not to use it at all.The inevitable consequence of a resolution process that a property and the managementofacorporatedebtor vests in a third party,who would bring in behavioural changes, is discouraging the debtors from maylose control of their companies forever once the insolvency resolution process is initiated. The official said the concerns that disqualifying certain unscrupulous elements from bidding for stressed companies will dampen the valuation of such enterprises are exaggerated and unsubstantiated. FOLLOWING THE ADMISSION of loss-making Bhushan Steel under the Insolvency and Bankruptcy Code (IBC) earlier this year,State Bank of India (SBI) has nowreferred the company’s subsidiary Bhushan Energy — an unlisted entity— to the National Company LawTribunal (NCLT). At the first hearing on Friday, the principal bench of the tribunal, headed by its president justice MM Kumar, sought a replyfrom the companyonwhyinsolvency petition against it should not be initiated.The matter has been listed for further hearing on December 7. Incorporated in 2005, Bhushan Energy is based in Dhenkanal, Odisha. The company reported a gross debt of `2,336 crore in FY16 and posted a net loss of `229 crore on revenues of `622 crore in the same period,Capitaline data showed. On July 27, the principal bench had admitted the insolvency petition filed by a consortium of lenders led by SBI against Bhushan Steel. Promoted by the Singal family, Bhushan Steel owes banks a whopping `44,447 crore. Continued on Page 2 Continued on Page 2 ● COST CONTROL NPPA caps prices of 51 essential formulations The inevitable consequence of a resolution process that a property and the management of a corporate debtor vests in a third party, who would bring in behavioural changes, is discouraging the debtors from committing defaults — MS SAHOO, CHAIRMAN, INSOLVENCY AND BANKRUPTCY BOARD OF INDIA committingdefaults.” Separately,allaying fears that any move to bar errant promoters or other dubious elements will expose the insolvency ecosystem to a litany of litigations, a senior government official said that disqualification will, in fact, enforce strict discipline in all promoters and discourage them from committing defaults in future for fear they PLUG-AND-RIDE Uber to partner with M&M to pilot electric vehicles PRESS TRUST OF INDIA New Delhi, November 24 THE NATIONAL PHARMACEUTICAL Pricing Authority (NPPA) onFridaysaidithascappedprices of 51 essential formulations, including those used for the treatmentofcancer,pain,heartconditions and skin problems. The prices have been slashed in the range of 6% to 53%. In separate notifications,the drug price regulator said it has notified ceiling prices of 13 formulations, while revising the same for 15 formulations. Moreover, retail prices of 23 essential formulations have also been notified, the NPPA said. Drugs whose ceiling prices have been capped includes colon or rectal cancertreatment drug oxaliplatin (injection 100 mg), Japanese encephalitis vaccine and measles rubella vaccine. Ceilingpricesofdrugsincluding anaesthetic sevoflurane,Phytomenadione (Vitamin K1) and tuberculosispreventionmedicine BCGvaccine have been revised. According to highly placed sources in NPPA, the reduction in prices following the latest exercise will be by 6-53%. NPPAfixes ceiling price of essential medicines of Schedule I under the Drugs (Prices Control) Order (DPCO) 2013. Continued on Page 2 Pawan Goenka, managing director ,M&M, and Madhu Kannan, chief business officer,Uber India, at a press conference announcing the tie-up in Mumbai EXPRESS PHOTO BY DILIP KAGDA REUTERS Mumbai, November 24 RIDE-HAILING FIRM UBER will partner with automaker MahindraandMahindratopilotelectric vehicles on its platform in India, thetwocompaniessaidonFriday, atatimewhenthegovernmentis pushing to have all new vehicles electrified by 2030. Uber will deploy hundreds of electric vehicles in Delhi and Hyderabad by March next year and will consider expanding the pilot to other cities, Madhu Kannan, the company’s chief business officer for India and emerging markets told reporters in Mumbai. “For how long this pilot will ROAD TRIP ■ Uber to add electric cars in Delhi, Hyderabad ■ India working on a new policy for electric vehicles ■ Electric car sales in India negligible due to high costs go on is difficult to predict... It will require adequate progress in engagementwith ourstakeholders before we plan to expand to other cities,” Kannan said, adding that Uber so far has no majorroll-out targets forelectric vehicles in India. Uber joins local rival Ola, backed by Japan’s SoftBank Group, which earlier this year launched a pilot for electric cars in Nagpur and is planning a large-scale roll-out by next year. Continued on Page 2 ■ Related report, Page 6 GREEN PUSH A power plant is burning H&M clothes instead of coal BLOOMBERG Stockholm, November 24 BURNING DISCARDED CLOTHING from retail chain Hennes & Mauritz is helping a Swedish powerplant replace coal forgood. The combined heat and power station in Vasteras, northwest of Stockholm,is converting from oil- and coal-fired generation to become a fossil fuel-free facility by 2020. That means burning recycled wood and trash, including clothes H&M can’t sell. “For us it’s a burnable material,”said Jens Neren, head of fuel supplies at Malarenergi,a utility which owns and operates the 54-year-old plant about 100 kilometres from Stockholm. “Our goal is to use only renewable and recycled fuels.” While Sweden prides itself on an almost entirely emission freepowersystem thanks to its hydro, nuclearandwindplants,somelocal municipalities still use coal and oil to heat homes and offices inwinter.Byconvertingoldplants to burn biofuels and garbage,the ILLUSTRATION: ROHNIT PHORE biggestNordiceconomyishoping toedgeoutthelastofitsfossilfuel units bythe end of this decade. Malarenergi has a deal with the neighbouring city of Eskilstuna to burn theirtrash,some of which comes from H&M’s central warehouse in the same city. The refuse wasn’t specified as clothing until it was highlighted in a Swedish national television programme on Tuesday. “H&M does not burn any clothes that are safe to use,” JohannaDahl,headofcommunications forH&M in Sweden,said by email. “However it is our legal obligation to make sure that clothes that contain mould or do notcomplywithourstrictrestriction on chemicals are destroyed.” The Vasteras plant burned about 15 tonnes of discarded clothesfromH&Msofarin2017, against about 400,000 tonnes of trash,Nerensaid.Malarenergihas dealswith several nearbycities to receiverubbishandevenimports waste from Britain to fuel its main boiler. Continued on Page 2
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