OPINION, P8 SUNIL JAIN M&M, P10 Remember MTNL/ VSNL? Air India is just as dispensable INTERNATIONAL, P14 EDITORIAL BANKING SCAMS SETBACK Fixed 5-year term for govt is a bad idea, noconfidence motion is a vital part of democracy Parliamentary panel calls Urjit Patel to answer queries Elon Musk-led Tesla halts Model 3 production again NEW DELHI, WEDNESDAY, APRIL 18, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL.XLIV NO. 40, 50 PAGES, `6.00 (PATNA `6.00, RAIPUR `7.00) 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 SENSEX: 34,395.06 ▲ 89.63 NIFTY: 10,548.70 ▲ 20.35 NIKKEI 225: 21,847.59 ▲ 12.06 HANG SENG: 30,062.75 ▼ 252.84 `/$: 65.65 ▼ 0.15 `/€: 81.23 ▼ 0.25 BRENT: $70.97 ▼ $0.45 GOLD: `31,099.00 ▲ `50.00 CASH CRUNCH No pan-India deficit: Govt, RBI 17.5 Value (` crore) Currency in circulation (CIC) on Nov 8, 2016, the day demonetisation was announced Oct 2016 NEFT 9,50,450 18.43 14,84,390 IMPS CIC on April 6, 2018 34,357 22-23 88,270 What CIC would have been now, without note ban Value of `2,000 notes in the hands of the public now Mobile wallets (at end of quarter) (` cr) 3,385 13,104 FY18* *Based on advance estimate of GDP gests. The Reserve Bank of India said “logistical issues of replenishingATMsfrequently” and the ongoing recalibration of ATMs in certain parts may Q2FY18 79,62,465 Q3FY18 FY17 74,786 Non-food credit outstanding India's cash-to-GDP ratio (%) 12.08 10.92 8.75 FY16 51,121 81,48,174 UPI 48.6 86,08,725 Q4FY18 19,126.2 have also contributed to the current shortage. Sensing the gravity of situation in an environment of rising credit growth and slowing Zeta clocks more than 14 m monthly transactions Zeta’s digital dashboard has streamlined grant of reimbursement benefits while preventing clearance of fake bills, says co-founder Ramki Gaddipati ■ Start-ups, P13 QuickPicks Decision on Monsanto trait fee soon, says government THE AGRICULTURE ministry will decide next week whether there is a need to scrap the trait fee charged by American agricultural biotechnology giant Monsanto after going through last week's Delhi High Court order that invalidated the firm's relevant patents, a top official said, reports fe Bureau in New Delhi. “We are the regulatory authority on cotton seed prices and will go by law as far as judgement is concerned,” agriculture secretary SK Pattanayak told reporters. PAGE 12 TDSAT reserves interim order on Airtel, Idea pleas THE TELECOM Disputes Settlement and Appellate Tribunal (TDSAT) on Tuesday reserved its interim order on the petitions filed by Bharti Airtel and Idea Cellular, in which both the telecom operators had challenged Trai's regulation prohibiting them from offering segmented offers, reports fe Bureau in New Delhi. Trai's regulation had said that there can be no discrimination between different sets of consumers. PAGE 3 Deutsche Bank said to shelve sale of Indian units DEUTSCHE BANK called off talks to sell its retail and private wealth businesses in India to IndusInd Bank, people with knowledge of the matter said, reports Bloomberg. The sale was a project initiated under former chief executive officer John Cryan, and Deutsche Bank is reconsidering the deal following his departure earlier this month, the people said, asking not to be identified because the information is private. PAGE 10 GoM approves new single-page return Continued on Page 2 “WE ALSO MAKE steel” was the catch line of a Tata Steel commercial. But on Tuesday metals and oil Vedanta could rightly make the same claim. The Kolkata bench of the National Company Law Tribunal (NCLT) on Tuesday approved the sale of Electrosteel Steels to the Anil-Agarwal promoted Vedanta. The transaction marks the first resolution under the Insolvency and Bankruptcy Code, 2016 (IBC) of the top 12 distressed companies listed by Reserve Bank of India (RBI). Vedanta is acquiring the bankrupt steelmaker for `5,320 crore. Of this, `1,805 crore would be used to subscribe to the company’s equity while `3,515 crore would be provided by “way of debt”. The entire amount, the company said in a statement, would be used to pay financial creditors. This implies the lenders are taking a fairlylarge While returns from gold bought last year on Akshaya Tritiya was close to 8%, historical returns in the last 3-5 years do not look that encouraging with 5-year gains at 2.9%. Price rise in 2018 boosts sentiments 31,500 Returns from gold 31,049 bought on Gold price (MCX, spot, in `/10gm) Akshaya Tritiya CAGR % 28,887 30,000 5 years 5.2 3 years launch e-way bill mechanism on Friday for intrastate movement of goods 25,500 April 28, 2017 feasibility of bringing back reverse charge mechanism under GST in May BANIKINKAR PATTANAYAK New Delhi, April 17 one-page return to allow invoice-matching without much of a hassle to taxpayers Pradesh, Gujarat, Kerala, Telangana and Uttar Pradesh) and Karnataka which had it running even earlier,12 states will have the anti-evasion measure rolled out by April 20. The e-way bill system, which allows tracking of consignments with a value above `50,000 beyond 10 km, was rolled out for interstate transport on April 1. Continued on Page 2 PRODUCTION INTHE labourintensive garment sector contracted for a 10th straight monththroughFebruarywhile exports dropped for six months in a row and in eight outofthepast12months,official data showed. The contraction stokes fears of job losses and compounds problems of policymakers who arecontemplatinghowtocompensate the textile and garments sector adequately once subsidies to promote such exports are phased out (by as early as December 2018, according to some analysts) to Worn out (% rise, y-o-y, in garments) EXPORTS 40 20 0 -20 -40 -60 31.7 Apr 2017 -17.78 Mar 2018 OUTPUT 4 0 -4 -8 -12 -16 1.3 Apr 2017 -4.7 Feb 2018 Source: DGCIS; AEPC India* 2017 2018 2019 US China EU World GDP World trade^ Difference from January forecast (percentage point) 0 0 0 0 ■ Transaction yet to be vetted by the Competition Commission of India and the Securities and Exchange Board of India ANILAGARWAL, VEDANTA CHAIRMAN haircut of 60% given the company’s outstanding debt is `13,175.15 crore. Continued on Page 2 ● ‘HIGH TARIFFS’ Gujarat cancels 500-MW solar auction 7.7 ● REQUESTS FOR PROPOSALS Growth forecasts for India, world unchanged (% rise, y-o-y) the deal, Vedanta will hold approximately 90% of the paid-up share capital of Electrosteel Continued on Page 2 Return in 2018 Garments output, exports slide ■ New simplified, ■ After completion of Continued on Page 2 April 16, 2018 2.0 COMING UNRAVELLED ■ GoM to discuss ■ The RP of Electrosteel Steels has admitted claims of `13,175.15 from lenders avoid disputes at the World Trade Organisation (WTO). Apparel exports dropped almost 4% in 2017-18 when the country’s overall goods exports jumped close to 10%, while garment production declined almost 10% during theApril-Februaryperiodofthe last fiscal from ayearbefore. HKL Magu, chairman, Apparel Export Promotion Council(AEPC),said:“Duetothe slide,several garments clusters have been impacted. Though India is struggling in exports, countries like Bangladesh and Vietnamareshowingconsistent growth in the apparel exports.” 2 years Note: Akshaya Tritiya fell on April 28 last year; Source: Bloomberg `5,320 cr to existing financial creditors of Electrosteel THE GUJARAT GOVERNMENT has cancelled the 500MWsolarauctionheldrecently as it found the tariffs “discovered were on the higher side”. The lowest tariff discovered in the bidding that took place in March was `2.98 per unit, compared with the all-time low solar tariff of `2.44 per unit found in May last year for the Bhadla project in Rajasthan. The Gujarat Urja Vikas Nigam’s (GUVNL) decision comes a week after the ministry of new and renewable energy amended the bidding norms for solar projects, clarifying that all indirect taxes can be a pass-through, underthe“change in law”provision. GUVNL had informed the potential bidders in advance that additional costs (assorted duties and cesses) were not liable to be passed through — a reason, experts claim, why bidders were extra-cautious and refrained from the aggression observed in previous solar auctions. 27,000 ■ Six more states to STEEL DEAL ■ Vedanta to pay ANUPAM CHATTERJEE April 17, New Delhi 2.9 28,500 IMF ups 2018 global trade outlook 50 bps THE INTERNATIONALMONETARY Fund (IMF) on Tuesday retained its global growth prediction but surprisingly raised its forecasts of global trade by a decent 50 basis points (bps) for 2018 and 30 bps for the next year from the levels it expected in January, despite a loomingtradewarbetweenthe US and China. Although the IMF flagged risks from “inward-looking policies” of some countries to trade MITHUN DASGUPTA Kolkata, April 17 FE BUREAU FLAGS PROTECTIONISM FE BUREAU New Delhi, April 17 Marks the first resolution under the Insolvency and Bankruptcy Code Long-term returns on gold modest FE BUREAU New Delhi, April 17 AMINISTERIALPANELchaired by Bihar deputy chief minister Sushil Modi has worked out a new simplified model for goods and services tax (GST) returnfilingasperwhichinput tax credit could be given on a provisional basis once the supplier uploads the sales invoice. However, the current system of filing the interim return GSTR-3B while paying the tax might continue till a new single-page return is endorsed by the GST Council. The GSTR-3B was to replaced with more comprehensive returns with details of inward and outward supplies post-June. The idea was to have system of invoicematching without complexities. The group of ministers (GoM) on Tuesday met about 40 industry representatives and 15 tax tax experts to discuss simplification of the return filing process. Meanwhile,six more states — Bihar, Haryana, Jharkhand, Madhya Pradesh,Tripura and Uttarakhand — will launch the electronic way bill mechanism forintrastate movement of goods above a threshold value from April 20. This means that including the five states that had launched the system on Sunday (Andhra `25,000intocurrentaccounts. Separately,economicaffairs secretary Subhash Chandra Garg said the shortage is being fuelled by the hoarding of `2,000 notes and that the RBI will increase the printing of `500 notes fivefold to deal with the cash shortage. Analystshavealsoblameda rangeofotherfactors—including a lower cash-to-GDP ratio after the note ban, excessive cash use before elections in stateslikeKarnatakaandMadhya Pradesh, high demand for physical currency to paywages whenharvestingison—forthe latest crunch.Speculation that the government’s could move to gradually withdraw `2,000 notes and fill the gap with lower-denomination currency notes may have worsened the latest crisis. Whilethe`18.43lakhcrore of currency in circulation (CIC) as of April 6 was higher than `17.5lakhcrorewhendemonetisation was announced in November 2016, the cash-toGDP ratio has eased substantiallyto10.9%fromasmuchas 12.1% in 2015-16, said analysts.Also,hadthesamepaceof growth in the CIC maintained even afterdemonetisation,the centralbankwouldhavehadto pump in some `4 lakh crore more now,they added. Vedanta gets NCLT nod for Electrosteel Akshaya Tritiya 4.9 5.1 4.7 Insurance premium for a petrol car is cheaper than a diesel car or a CNG/LPG fitted car since diesel cars are expensive while CNG fitted vehicles need more maintenance ■ Personal Finance, P13 money supply, State Bank of India has scrapped the 75paise charge levied on every `1,000 of cash deposit beyond the daily permissible limit of 3.8 3.9 3.9 The fuel your car runs on also impacts its insurance premium Source: RBI, NPCI `6.7 lakh cr Card use at POS Rise in credit growth, after a long lull, boosted cash demand GST Special Feature Feb 2018 2.3 2.4 2.0 MAHINDRAAND Mahindra on Tuesday entered the coveted `1-trillion market capitalisation club after the stock settled with gains of over 1%, reports PTI. (` lakh crore) 2.3 2.9 2.7 M&M joins `1-trn market-cap club ASAPOLITICALslugfestovera cash crunch in certain states began to flare up, the government and the central bank on Tuesdayinsistedthereis“more thanadequate”currencyincirculation and the temporary shortage in certain parts of the country is being “tackled quickly”. Finance ministerArun Jaitley said the temporary shortage was caused by a “sudden and unusual increase” in demandinsomeareas.According to the finance ministry, currency supply rose by `45,000 crore in the first 13 days of April but an “unusual spurt in demand” was witnessed more in some parts of Andhra Pradesh, Telangana, Karnataka, Madhya Pradesh and Bihar.There is no dearth of money supply but a disparity in circulation in certain areas that have caused the current problem,the government sug- Digital payments had surged after the note ban, but the growth has slowed of late 6.9 6.6 6.4 BRITISH PE firm Actis is close to signing a deal to buy the solar power portfolio of conglomerate Shapoorji Pallonji, three people aware of the development said on Tuesday, reports Reuters. The acquisition will be done via a renewable platform owned by Actis at an equity valuation of around `1,100 crore, one of them said, asking not to be named as final negotiations are ongoing. FE BUREAUS New Delhi/Mumbai April 17 TAKING NOTE 6.7 7.4 7.8 IN THE NEWS Actis close to buying Shapoorji Pallonji assets Say it is restricted to some states, will be rectified soon; ‘more than adequate’ currency in circulation ATTAINING CLOSURE 0.2 0.2 0.2 0 *Data for fiscal years 2017-18, 2018-19 and 2019-20 ^Both goods and services Source: IMF 0 0 0.5 0.3 prospects,the higherforecasts on the basis of a rebound in investments suggest it still believes the trade war may not spiral out of control, plunging the world into a broader crisis. AsforIndia,theIMF’sreport, releasedinthewakeofa$2-billion fraud at Punjab National Bank,callsforabroaderpackage of financial reforms,alongwith recapitalisation,to improve the governance of public sector banks and strengthen banks’ debt recoverymechanisms. Continued on Page 2 Indian Navy looks to buy 57 fighters for `95,000 cr HUMA SIDDIQUI New Delhi, April 17 THE INDIAN NAVY will soon invite requests for proposals (RfPs) for a `95,000-crore tender to purchase 57 fighter aircraft. An official source said: “CompaniesincludingSwedenbased SAAB, Lockheed Martin, Boeing (both US-based firms), France’s Dassault Aviation and Russia’s MIG will be receiving the RfPs soon.” These firms had respondedtorequestsforinformation (RfIs) issued in 2017. Thenavy’smovecomesclose on the heels of the Indian Air Force (IAF) seeking RfIs for110 fighterjets,inwhatcouldpotentiallyleadtoadealworth$15billion,oneofthebiggestforIndia’s armed forces in recent years. According to industry sources, Boeing’s recently announced tie-up with the Mahindra Group and HindustanAeronautics(HAL)isprimarilyinviewof the the 57-aircraft requirement forthe navy. Continued on Page 2
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