OPINION, P6 ECONOMY, P2 A GULATI & S HUSSAIN States hobbling PMFBY by delaying premium payments INTERNATIONAL, P4 SUNIL JAIN EXERCISE BEGINS EXIT PATH WTO getting nowhere, using 30-year-old data for food subsidies Commerce min starts work to revise WPI base year to 2017-18 PM May says ‘trust me to deliver' Brexit even as Cabinet split MUMBAI, MONDAY, MAY 14, 2018 WWW.FINANCIALEXPRESS.COM FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE READ TO LEAD VOLUME XXXXXV NO. 357, 14 PAGES, `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 FOUR YEARS OF NDA GST, IBC, JAM ... LABOURING ON SUCCESSES 85,931 83,716 88,929 88,047 85,174 1,03,458 FY14 67,432 FY16 1,21,000 FY18 (RE) Agriculture loan waivers of `1 lakh crore annouced in two years 1,31,000 Source: Budget documents Source: CSO FDI shoots up Tax-to-GDP rose (Centre) Stagnant exports (FDI in equity, $ bn) 11.2 11.6 12.1 10.1 10.6 40 43.5 6.3 3 -0.2 0.6 FY14 FY15 FY16 FY17 FY18 (AE) 93,795 FY17 Apr 93,590 93,029 95,132 GVA at constant prices; % chg, y-o-y 5.6 ($ billion) 47.8 FY14 24.3 318.6 FY15 310.4 FY16 FY14 FY16 FY17 FY18 FY19 (RE) (BE) FY14 FY16 FY17 FY18* (Recapitalisation of PSBs, ` crore) (` bn) Investments stuck As does digital pay 24,997 IMPS 90,000* FY14 FY16 FY17 FY18 FY16 FY17 FY18 (AE) 6 5.21 4.16 4 2 0.71 2 0 FY15 FY16* FY17 FY18** 13.41 2.96 3.12 5.33 17,055 9,829 FY17 FY18 28.5 (Jobs addition in 8 sectors, lakh) (Gross enrolment in crore) Mar-16 Mar-17 Mar-18 28.5 Too few Jobs And insurance Construction (km) 15,948 8,231 10,098 6,061 FY14 28.5 Source: CSO PMJJBY FY16 31.3 Source: RBI, NPCI Huge road capex FY14 Card at PoS Wallet NEFT grows from `43,785 bn to `1,72,228 bn *Including budgetary support and recap bonds Source: Rajya Sabha reply Awards GFCF at current prices; % of GDP 2013-14 96 2,494 81 2014-15 581 3,112 213 2015-16 1,622 3,995 487 2016-17 4,111 6,582 838 2017-18 8,924 9,189 1,416 12 cases involving loans of `2.5 lakh crore to NCLT 303.3 Source: Ministry of Commerce Fixing banks 25,000 275.9 FY18 * Data annualised from Apr-Dec Source: DIPP Source: Budget documents 14,000 262.3 FY17 Payroll study claims 45 lakh new jobs in FY17 55 lakh in FY18 PMSBY No. of farmers with crop insurance up to 5.7 cr in FY17 *Till Dec only **till Sept Source: QES, Labour Bureau Source: Ministry of Finance Q4FY18 EARNINGS QuickPicks Vijaya Bank tags Reliance Naval as NPA from March quarter STATE-RUN VIJAYA Bank has classified Reliance Naval & Engineering, whose auditors had recently expressed doubts about the company's ability to continue as a "going concern", as nonperforming asset from the March quarter, reports PTI. The company, which was earlier known as Pipavav Defence & Offshore Engineering, was bought by the Anil Ambani group in 2016 and renamed Reliance Defence & Engineering. It owes over `9,000 crore to over two dozen banks mostly state-run, led by troubled IDBI Bank. PAGE 5 Study: Funding of agri research, education heavily skewed THE GOVERNMENT'S expenditure on agricultural research and extension education services is not only very low but also heavily skewed in favour of crops, reports fe Bureau in New Delhi. This is even as the dairy sector has a rapidly increasing share in the gross value of output from agriculture & allied activities (GVOA), a new study has revealed. The study called for a major increase in the financial resources for horticulture crops and animal husbandry. PAGE 2 Apple Watch: Jio claims Bharti violating licence conditions RELIANCE JIO has complained to the department of telecommunications (DoT) claiming that Bharti Airtel has violated unified licence (UL) conditions as it has not set up the network-related infrastructure for pairing Apple Watch with iPhone inside the country, reports fe Bureau in New Delhi. Under UL conditions, all the equipment for providing access services should be deployed within India. PAGE 5 PRESS TRUST OF INDIA New York, May 13 ANUPAM CHATTERJEE New Delhi, May 13 INDIA WAS THE largest remittance-receiving country, with migrant workers from the US sending home $69 billion in 2017, according to a report which said remittances to the Asia-Pacific region amounted to $256 billion lastyear. The report‘RemitSCOPE — Remittance markets and opportunities — Asia and the Pacific’said India ($69 billion), China ($64 billion) and the Philippines ($33 billion) are the three largest remittancereceiving countries in the world in 2017. Pakistan ($20 billion) and Vietnam ($14 billion) are also in the top 10. About 70% of remittances senttoAsiaandthePacificcome from outside the region and,in particular,from the Gulf states (32%), North America (26%) and Europe (12%). By 2030, around $6 trillion in remittancesareexpectedtobesentto developing countries by 2030: Over half of these flows will arriveintheAsiaPacificregions, very often in small towns and villages. Last year, migrant workers sent $256 billion to their families in Asia-Pacific, the report released by the InternationalFundforAgriculturalDevelopment(IFAD)said. EVENAS OVER 40,000 MWof private power plants are stressedforwantofpowerpurchase agreements (PPA),staterun NTPC is busy adding new capacities at high capital costs. This is thanks to a strong legacyof PPAs executed before 2011undertheerstwhilecostplus system. Since the capital costs of many of NTPC’s upcoming generation units are much higher than the industry average of `6.5 crore/MW — even `9 crore/MW in case of Bongaigaon unit in Assam —, consumers may need to brace for high tariffs. While PPAs for Q1 Q2 Q3 Q4 FY18 RM to sales Q1 Q2 Q3 Q4 FY18 7.12 12.46 126.80 315.84 (bps, chg y-o-y) 229.75 Net profit (% chg y-o-y) 155.53 OPM (bps, chg y-o-y) 3.86 INDIA INC WILL clearly take a little longer to stage a sustainable recovery since the core sectorremainsstressedbutthe consumer pack seems to be making faster progress. The results for Q4FY18 have been helped by a favourable base effect — Q4FY17 was the first full quarter post demonetisation — but management commentary from both consumer durables and staples firms has been encouraging. The one key headwind for India Inc is the increasing cost of inputswhich are eating into profit margins — raw materialstosalessawajumpofnearly 230 basis points year-on-year forasampleof348companies. While some companies have been able to take price increasestopassonthecosts— Eicher Motors, for instance, others such as CEAT have not been able to do so due to the keen competition. Given a big chunk of the sales of consumer-facing firms emanates from the rural markets,— 50% for motorcycles — it would suggest rural demand is on an uptick. The management at Hero MotoCorp believes the demand outlook is encouraging and that the twowheelerindustryshould report a volume increase of 9-10% in Net sales (% chg y-o-y) 1.61 Building a retirement corpus may seem a daunting task. But with the power of compounding, this goal can be achieved with modest, regular investments ■ Personal Finance, P9 FE BUREAU Mumbai, May 13 -26.43 Three small steps towards building a retirement corpus India largest recipient of remittances -2.71 Across geographies, Dell Technologies is helping firms modernise their infrastructure to simplify management and increase efficiency with the help of IoT systems and devices ■ EFE, P8 Consumer firms back on track, core sector stressed -16.08 Putting data to work, the Dell Technologies way ● $69 BN IN 2017 -142.08 Special Features ` % GDP Poor farm growth (` crore) Source: Minsitry of Road Transport and Highways Continued on Page 2 14.63 THE CENTRE WILL link additional 200 wholesale mandis to the online trading platform eNAM this fiscal and also encourage inter-mandi transactions, reports PTI. At present, 585 regulated mandis in 14 states are linked with the electronic National Agriculture Market, which was launched in 2016. initial disruption the new tax will help improve India’s tax compliance.Moreover,had the twin balance sheet problem not been tackled,the economy would have slowed sharply. However, the NDA hasn’t been able to help the corporate sector with amendments to either land or labour laws.And the tardy progress in agrireformshasleftthefarmsector in distress. Possibly fearful of 14.03 Govt to link 200 more mandis to eNAM this fiscal Four crore Ujjwala LPG for rural areas, 19 cr lowcost insurance for poor, DBT up to `1.91 lakh crore, 31.44 crore Jan Dhan beneficiaries ... social schemes impressive 11.22 GOA CM MANOHAR Parrikar, who is undergoing treatment in the US since March this year, has sent a video message stating he will return in few weeks, reports PTI. The message was played during BJP president Amit Shah's address to party workers near Panaji on Sunday. Aug 2017 Sept Oct Nov Dec Jan 2018 Feb Mar FOURYEARSIStooshortatime for even the most zealous reformer. This is particularly trueforIndiawhereresponsibilitiesaredistributedbetweenthe statesandtheCentreandwhere thefederalnatureofthedemocracy makes it harder to push throughlegislativechanges.Not surprisinglythenthosethathad believed the Modi Multiplier would catalyse the economy to new heights are disappointed. Indeed,thankstothedemonetisationexercisetheeconomyhas lost out on a few percentage pointsofgrowthsignificantata time when the GDP is barely clocking 6.5%. The NDA government may wanttopatitselfonthebackfor the recent rebound in industry and business but much of this comes off a low base; private sector investments remain sluggish,exportsremainadrag, private consumption is tapering off, there is distress in the farm sector and very few jobs havebeencreated.Indeed,there are many who believe the government failed to capitalise on the bonanza it reaped from falling oil prices of additional acquiring a ‘suit boot ki sarkar’ tag,the NDAhas succumbed to populism.Onlylabour-friendly reforms are being pushed through ahead of the elections (mandatory minimum wages, medical and pension benefits) but those would help industry are on the back burner; it has pulled back changes to the LabourCodeonIndustrialRelations—suchasallowingcompanieswith 300workers to layoff employeeswithoutpermission. That has left investments sluggishandthecapacityutilisation rateatarelativelylow—at75%. In the last year before the elections,there could be more populism in the form of higher MSPs or similar price support schemes forfarmers. While FDI flows have been robust and the government has done well to open up and ease norms for more sectors— defence, railways, insurance— thebulkoftheflowshavecome into the services space rather than manufacturing. The much hyped ‘Make in India’ is yet to take off at all and the share of manufacturing as a share of GDP remains more or less where it was in 2015. 10.25 IN THE NEWS Ailing Parrikar says he will return in few weeks revenue of close to `2.7 lakh crore. Industrial output in 2017-18 grewjust 4.3%. To be sure the NDA regime has done some really good work that will allow the economyto growfasterin the comingyears;themostnotableinitiatives are the rollout of the GST,the resolution of stressed assets under the IBC and the re-capitalisation of stateowned lenders. Despite the Railway capex up Tax collection; ` crore 3,620 4,260 SHOBHANA SUBRAMANIAN New Delhi, May 13 FAILURES GST introduced 8.85 9.94 With no easing in labour laws, both jobs and exports a casualty. Agri still in distress and, surprisingly for a pro-industry PM, investment remains sluggish with little for industry Q1 Q2 Q3 Q4 FY18 Q1 Q2 Q3 Q4 FY18 Sample of 348 companies (excluding banks & financials) Source: Capitaline 2018-19. In Q4FY18, better operating leverage helped the company to offset a 100 basis points rise in input costs — the firm’s ebitda (earnings before interest, tax and depreciation) marginsexpanded220bps,driving up ebitda by43%y-o-y. Eicher Motors continues to post strong performances; ebitda margins in Q4FY18 expanded 90 bps with the ebitda increasing 38% y-o-y. Realisations in the quarter were up 5.4%y-o-ythanks to a price hike in February. Players in the core sectors of the economy remain somewhat stressed. Adani Power’s `650-crore loss was higher than estimates despite adjusting for a one-time income received due to a favourable regulatory order. The losses stemmed from commercial shutdowns at Mundra which is unviable at inflated imported coal prices and also low availability of coal at Tiroda and Kawai. JSWEnergy reported disappointing results for the quarter with net losses of `62 crore on the back of a 5% y-o-y fall in revenues; that was due to lower power generation and lower blended realisations, which fell 11% y-o-y. Continued on Page 2 Continued on Page 2 POWER STRUGGLE NTPC's legacy PPAs keep tariffs high about 73% of NTPC’s 13,100 MW coal-based under-construction capacity were signed before 2011, more than 8,000 MW of commissioned private power plants are currently stressed due to lack of assured markets via PPAs. NTPC acquired its privileged status by signing several PPAs on a ‘cost plus’ basis, before it became mandatory for power generators to discover electricity tariffs through competitive bidding. Just before the January 2011 deadline for shifting to competitive bidding regime, the companyhadtiedupPPAsfora huge 40,840 MW. Continued on Page 2 LEGACY GAINS 40,840 MW PPAs signed by NTPC in the three months to Jan 2011, when cost-plus regime ended ~40,000 MW Stressed power assets Tariffs (`/unit) NTPC Avg tariff approved for private players Bihar Chattisgarh Assam 2.99 4.96 (Barh plant) 3.97 (GMR) 5.94 (Mauda) 4.49 5.33 (Bongaigaon) MANDI RATES Traders don’t jack up crop prices, demand and global trends do PRABHUDATTA MISHRA New Delhi, May 13 MARKET DATA PROVIDE little evidence that mandi prices of crops skyrocket once the harvestingseasonends,disproving the notion that traders tend to artificially jack up prices once thearrivalsrecede.Evenincase ofcropslikepulsesandoilseeds where government intervention, through minimum supportprices,isnotveryeffective, prices barely showwild fluctuationsduringandafterthehar- Prices of kharif oilseeds & pulses in major states (`/qtl) 5500 4500 4,800 3,750 Moong Rajatshan (Nagaur) 4500 3500 4,250 3,500 3,370 Tur 3500 3,400 2,410 2500 2,700 1500 MP (Narsinghpur) Urad MP (Ashoknagar) Oct Nov Dec Jan Feb Mar Apr May Harvesting season 3,750 Groundnut Gujarat (Rajkot) 2500 2,700 1,145 1500 1,350 500 Soybean MP (Indore) Maize Karnataka (Davangere) Oct Nov Dec Jan Feb Mar Apr May Harvesting season vesting period. General economic conditions and global commodityprices(especiallyin the case of oilseeds, where importscatertobulkofdomestic consumption) impact mandi prices,much more than traders’cartels. An FE analysis of the price behaviour of six major kharif crops over the seven months to May 2018 shows that prices of pulses such as tur, moong and uradhaveremainedstableeven after their market arrivals dipped. But the domestic prices of soyabean,groundnutandmaize have moved up,in tandemwith the international prices that have firmed up (see graph). For instance, mandi prices of tur ruled between `3,4004,150/quintal at the start of market arrivals in mid-October in the country’s top-producing centres like Narsinghpur in Madhya Pradesh, Latur in Maharashtra and Gulbarga in Karnataka, according to Agmarknet. Continued on Page 2
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