OPINION, P8 COMPANIES, P6 EDITORIAL RBI sanguine on growth, hikes repo rates a bit too early INTERNATIONAL, P14 JAMAL MECKLAI LETTER TO CUSTOMERS DATA CONCERN Global borrowing costs are going up — RBI’s actions are likely just the beginning Progress in India biz energising, says Amazon's Bezos Shared information with Chinese device makers: Facebook NEW DELHI, THURSDAY, JUNE 7, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL.XLIV NO. 83, 18 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: 35,178.88 ▲ 275.67 NIFTY: 10,684.65 ▲ 91.50 NIKKEI 225: 22,625.73 ▲ 86.19 HANG SENG: 31,259.10 ▲ 165.65 `/$: 66.93 ▲ 0.22 `/€: 78.79 ▼ 0.35 BRENT: $74.97 ▼ $0.41 GOLD: `30,660.00 ▲ `37.00 7.5 7.15 Asus Zenfone Max Pro M1: Asus outclasses itself, almost With prices starting `10,999, the ZenFone Max Pro M1 stands out as far as specifications, price and battery life are concerned. Rivals need to watch out for this smartphone ■ Gadgets, P13 Local data centre players spy big opportunity in RBI order The RBI direction to banks to store all data domestically instead of outsourcing the job to a third-party data centre will lead to more delivery centres operating in India ■ eFE, P13 QuickPicks QatarAirways to apply for launch of Indian airline soon: Al Baker QATAR AIRWAYS will “soon” move an application to launch a full-service airline in India for domestic operations, according to its chief Akbar Al Baker, reports PTI. He said the proposed airline would be fully financed by Qatar's sovereign fund. It would have Indians heading the board and as most of its members. Al Baker has been Qatar Airways' group chief executive for over two decades. PAGE 6 RBI approves IDFC Bank, Capital First merger IDFC BANK and Capital First are looking to consummate their merger in another four to five months even as the RBI, through a letter dated June 4, has said it has no objections to the proposed amalgamation, reports fe Bureau in Mumbai. The scheme remains subject to approval from the respective shareholders and creditors of the amalgamated firms and the amalgamating companies, the NCLT and others, IDFC said. Electrosteel allots shares worth `7,400 crore to lenders ELECTROSTEEL STEELS, undergoing an insolvency resolution process, has allotted equity shares worth `7,400 crore to lenders as loan conversion, with SBI getting the largest chunk, about 37%, reports PTI. The company had on Tuesday spelt out steps to be taken for completion of its takeover by Vedanta Star, an arm of mining giant Vedanta, which won the bid to acquire the stressed firm. PAGE 7 both growth and inflation are likely to head higher in the coming months, paving the wayforanother25-basis-point rate hike in August.“However, the ongoing tightening of financial conditions,higher oil pricesandpoliticaluncertainty are likely to slow economic activityafterSeptember,inour view,”Varma noted. Thebondmarketswerealso disappointed the RBI hadn’t been more reassuring on liquidity. DK Joshi, chief economist at Crisil, said that with somewhat tighter liquidity conditions in the banking system,ratesoncommercialpaper borrowings have hardened nearly 90 basis points so far in 2018,and40basispointssince the last policy. “Meanwhile, banks also have started raising their deposit and loan rates afteranearlyfour-yearrateeasing cycle,”Joshi pointed out. THE NATIONAL ANTI-PROFITEERING Authority (NAA) continuedtoallaytheapprehension of harassment of businesses underthegoodsandservicestax (GST)regime,withitsthirdorder exonerating elevator manufacturer Schindler India from charges of profiteering alleged bya Delhi-based business. Although even before the NAAorder,thecomplainanthad requested for withdrawal of application citing inadequate understandingofGSTprovision at the time of filing the complaintinSeptemberlastyear,the authorityconsidered the investigativereportoftheDirectorate General of Safeguard (DGS) before dismissing the petition. Earlier, the NAA had found charges of anti-profiteering baseless against Delhi-based KRBL, which sells India Gate branded basmati rice, and a Honda car dealer in Uttar Pradesh. The complainant in the SchindlerIndiacasehadalleged thatSchindlerhadchargedGST oninstallationofanelevatorbut didn’tdeductthepre-GSTtaxes suchasexciseandservice,which amountedtoimpositionofdouble tax. Continued on Page 2 Continued on Page 2 7.0 6.25 6.5 6.45 6.0 May 15, 2015 basis points over Tuesday’s closing,athree-yearhigh.Itwas not clear why equity markets rallied since economists say more rate hikes are on the way June 6, 2018 5.5 Jan 28, 2014 and that can only harm corporate India already grappling with high raw material costs. Sonal Varma, chief economist at Nomura India,believes MORE ROOM FOR LOW-COST HOMES ■ RBI increases the housing loan limits for bank's PSL eligibility; to `35 lakh in cities with population >10 lakh and `25 lakh in other centres ■ Analysts say with the raised PSL limit, banks will tend to lend more for low-cost housing ■ In parallel, the CCEA allows use of land parcels with closing PSUs to build affordable houses ■ Under PMAY, people from weaker sections get loans up to `6 lakh for up to 20 years with subsidy capped at `2.67 lakh ■ Outlay for PMAY-Urban saw a 520% annual increase in FY19 to `31,500-cr (including `25,000-cr EBR); FY19 outlay for PMAY-Rural at `33,000-cr (including `12,000-cr EBR) Detailed report on Page 2 ● FLYING HIGH Special Feature FE BUREAU New Delhi, June 6 8 Udan may soon link tourism centres FE BUREAU New Delhi, June 6 AFTER ATTEMPTING TO provide remote and small places withairconnectivitythroughits regional connectivity scheme (RCS)calledUdan,thecivilaviation ministry now wants to extend it to major tourism centres like Khajuraho in Madhya Pradesh, Hampi in Karnataka and Agra in Uttar Pradesh, amongothers.Allinalltheministry is looking at connecting around 20 tourist destinations through the RCS. UnderRCSorUdan,faresare capped at `2,500 for an hourlong flight for 50% of the seats while the balance seats can be sold at market rates.Routes are bid out to private air operators andtheministryofcivilaviation provides a viable gap funding (VGF) for the 50% seats where fares are capped. Under the routes on the tourist network, the VGF will come from the tourism ministry and not the civil aviation. Other aspects of the Udan scheme will continue like the usual commercial airlines paying a small levy to sustainsuchbelowcostoperations. Continued on Page 2 June 6, 2018 PREZ NOD TO IBC ORDINANCE Home-buyers are now financial creditors, can initiate insolvency FE BUREAU New Delhi, June 6 KEY CHANGES ■ 90% of creditors' nod WITH PRESIDENT RAM Nath Kovind’s assent to an ordinance on Wednesday, homebuyers will now be recognised asfinancialcreditorsunderthe insolvency law and promoters of micro, small and medium enterprises (MSMEs) will be allowedtobidfortheirstressed firms if they are not wilful defaulters. The Insolvency and Bankruptcy Code (Amendment) needed to withdraw a case, 66% to approve a resolution plan ■ Carve-outs for pure- play financial entities ■ Non-entertainment of late bids ■ MSME promoters, if not wilful defaulters, can bid for own firms SUMIT JHA New Delhi, June 6 WITH THE GST Network, the IT backbone for the goods and services tax (GST), turning out tobearepositoryofcentralised data on taxpayercompliance,a facility that was not available inthepreviousregime,theperformance of tax authorities has come into sharper focus. AfterreviewingtheGSTNdata, Union finance secretary HasmukhAdhia has recentlywritten to the Central Board of Indirect Taxes and Customs (CBIC), lamenting that “the performance of central government officers in all states except Arunachal Pradesh is lower than the state government officers in return filing %age for the tax period April (up to 26th May 2018)”.Adhia asked the CBIC to review the performance of central government officers and to make sure that their performance is superior to those of state governments. The finance secretary’s directive is seen against the backdrop of lower-thanexpected buoyancyin GSTcollections. The number of filers improved from 63% of the taxpayer base in February to 69% in March and 72% in April, but the revenue is not growing fast enough to meet the the Centre’s budget targets andmoststatesstillneedcompensation.TheGSTrevenuefor April(collectedinMay)camein at `94,016 crore,4.5% higher than the monthly average achieved in the last fiscal year. The central GST (CGST) collected for April was `28,797 crore; assuming half the balance integrated GST collected for the month also goes to the Centre’s kitty,the CGSTcollection for the month may eventually go up to `40,800 crore. However, even this figure is a fifth short of the budget estimate forCGSTof `50,325 core per month. As for state GST, `34,020 crore was collected forApril. Continued on Page 2 Return-filing by GST taxpayers Ordinance, 2018, also allows for the withdrawal of a case after admission by the adjudicating authority,but notwithout the approval of 90% of creditors,the government said in a statement. To encourage resolution ratherthan liquidation, the voting threshold for approving a resolution plan has been trimmed to 66% from 75% earlier. For routine decisions,thevoting threshold is fixed at 51%. April (% of respective bases) 80 60 40 63.7 A clarification The map in the World Environment Day graphic carried in the edition dated June 5 incorrectly depicted India's international boundary. We regret the error. 7.85 8.0 57.5 BRITAIN'S MARKETS regulator has fined the UK division of Canara Bank £896,100 and blocked it from accepting new deposits for around five months for systemic anti-money laundering failures, reports Reuters. The Financial Conduct Authority said on Wednesday that the control failures at the UK division of the bank affected almost all levels of its business and governance structure. 8.5 ` 7.917 7.945 71.6 Canara Bank UK division fined WITH MOST BANKS having already upped their lending rates over the past week, the 25-basis-point increase in the key repo rate to 6.25% by the Reserve Bank of India (RBI) on Wednesday was merely more affirmation money is becoming costlier. Forconsumers — corporate and individual — loans are turningmoreexpensive,unfortunate given the economic recovery is a very shallow one. The 7.7% year-on-year GDP growth in Q4FY18 was driven almost entire by government spending with the private sector playing onlya small role. While the RBI may have articulated a ‘neutral’ stance which would leave it enough headroom to move either way depending on data,bond markets sold off after the announcement,anxiousabout the higher inflation forecasts. The yield on the benchmark closed the session 7.92%,up 9 8.55 Data from GSTN bring tax officials’ performance into sharper focus 68.2 5.75 Repo rate (%) 66.9 FE BUREAU Mumbai, June 6 10-year bond yield (%) 62.9 BOND YIELDS HIT A THREE-YEAR HIGH Why are central staff lagging states: Adhia 71.1 Policy rate raised 25 basis points; central bank signals ‘neutral’ stance; equities rally while bond yields jump on higher inflation expectations Third NAA order too favours industry GST RETURN FILING 66.8 THE SECURITIES and Exchange Board of India (Sebi) on Wednesday extended the date for submission of Aadhaar details by those investing in capital markets till a final judgment by the Supreme Court on the proposed mandatory linking of the 12digit unique ID for all financial dealings, reports PTI. For the securities market, the requirement of PAN would continue to be mandatory for completing the KYC process, Sebi said. Costlier loans on RBI hike ● ANTI-PROFITEERING 60.5 MONETARY POLICY 55.9 IN THE NEWS Sebi extends date for Aadhaar submission 20 0 Tamil Nadu Uttar Pradesh Under the Centre West Bengal Gujarat Maharashtra Under the state govt Continued on Page 2 MP ASSEMBLY POLL FOCUS CABINET DECISIONS PRESS TRUST OF INDIA Mandsaur (MP), June 6 FE BUREAU New Delhi, June 6 CONGRESS PRESIDENT RAHUL Gandhi on Wednesday said farmers’ loans would be waived within 10 days if his party comes to power in Madhya Pradesh laterthisyear. “Kamal Nath (state president) and Jyotiraditya Scindia (statepollcampaigncommittee chairman)arehere.Iassureyou thatwithin10daysofcomingto power in Madhya Pradesh, the THE CABINETCOMMITTEEon Economic Affairs (CCEA) on Wednesdayapprovedapackage for the sugar sector — comprising `4,440 crore in loans to millstoexpandethanolproduction capacity and `2,507 crore asaidintheformofinterestsubsidy on the loan and carrying costofcreatingabufferstock— to help the mills clear cane arrearsthathaverisentoastag- Farm loan waiver in 10 days Govt offers another sweetener to sugar if Cong in power: Gandhi industry, clears sick PSUs package Congress chief Rahul Gandhi in Mandsaur on Wednesday government will waive (farmers’) loans,” Rahul said. Continued on Page 2 BOOSTER DOSE ■ Latest sugar package to comprise `4,440-cr loans to mills for ethanol capacity and `2,507-cr aid as interest subsidy on the loan and carrying cost of buffer stock ■ New guidelines on time-bound CPSE closure and disposal of assets gering `22,000 crore. Including an output-linked subsidy of `5.50 per quintal to farmers for cane supplies (with potentialcostof`1,540croreto the exchequer) that was approved bythe CCEAin Mayand the current loan,the total financial considerations in all these decisions stand at `8,487 crore. FE had reported these proposals, alongwithfiscalimplicationfor the government,on May23. Continued on Page 2 FORBES’ RANKING Kohli sole Indian among world’s best-paid athletes; no women in top 100 AGENCIES June 6 INDIA CRICKET CAPTAIN ViratKohliisamongtheworld’s highest-paid athletes, according to a Forbes’ compilation topped by American boxing champion Floyd Mayweather. Kohli, the only sportsperson from India to be featured in the list, is ranked 83rd with earnings of $24 million. Kohli,29,is not just cricketcrazy India’s biggest name but is also one of the most popular Top 5 (Athlete/nationality/sport/estimated earnings) FLOYD MAYWEATHER UNITED STATES BOXING $285 m 1 LIONEL MESSI CRISTIANO RONALDO ARGENTINA SOCCER 2 $111 m athletesintheworld,“boasting more Twitter followers (25 million-plus) than all but three activesportsstars”,Forbessaid. Surprisingly, the ‘World’s Highest-Paid Athletes 2018’ compilation is an all-male PORTUGAL SOCCER 3 $108 m affairwithnowomeninthelist. Mayweather, who goes by the nickname ‘Money’, earned $275 million from last year’s fight against Irish Mixed Martial Arts champion McGregor, whosecutofthepurseelevated CONOR MCGREGOR IRELAND MMA $99 m 4 NEYMAR BRAZIL SOCCER 5 $90 m him to fourth spot on the US business magazine’s list. The fight pushed Mayweather’s career earnings to $1 billion, joining American basketballgreatMichaelJordanand golfer Tiger Woods as the only VIRAT KOHLI INDIA CRICKET 83 $24 m athletestohavereached10-figures in earnings,Forbes said. Portuguese footballer Cristiano Ronaldo,who topped the rankings forthe last twoyears, slipped to third behind his Argentine rival Lionel Messi. Brazil’s Neymar, who became the world’s most expensive soccer player after his $260 million move from Barcelona to Paris St Germain last August,was listed fifth. Swiss tennis great Roger Federer, basketball players LeBron James and Stephen Curry and National Football League quarterbacks Matt Ryan and Matthew Stafford rounded out the top 10 of the 100 wealthy athletes. Continued on Page 2
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