OPINION, P8 M&M, P10 RENU KOHLI Food inflation low due to poor demand, not a glut in supply INTERNATIONAL, P14 SUNIL JAIN INTERIM CHIEF COUNTERBID Plan to fix sugar crisis doesn't address root cause, that of very high cane prices SBI MD B Sriram appointed IDBI Bank MD & CEO for 3 months Bob Iger-led Disney ups 21st Century Fox bid to over $70 bn MUMBAI, THURSDAY, JUNE 21, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. 58 NO. 146, 18 PAGES, `7.00 P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 35,547.33 ▲ 260.59 NIFTY: 10,772.05 ▲ 61.60 NIKKEI 225: 22,555.43 ▲ 276.95 HANG SENG: 29,696.17 ▲ 228.02 `/$: 68.08 ▲ 0.31 `/€: 78.73 ▲ 0.23 BRENT: $75.54 ▲ $0.46 GOLD: `30,589.00 ▼ `168.00 Governor's rule imposed in Jammu & Kashmir JAMMU AND Kashmir was brought under governor's rule on Wednesday and the state Assembly put under suspended animation, a day after the PDP-BJP government collapsed with the BJP ending the threeyear-old alliance with the regional party, reports PTI. As governor NN Vohra held multiple meetings in Srinagar during which security measures were discussed, army chief Bipin Rawat said the ongoing military operations in the Valley against terrorists would continue as earlier. Governor's rule in the state is unlikely to have any impact on ongoing military operations, he told reporters in New Delhi. Farmers narrate ‘success stories’ 17,00,000 16,00,000 FE BUREAU New Delhi, June 20 AMID WIDESPREAD FARMER protests against non-remunerative crop prices, groups of farmers from nine states,eight of them major agricultural producers,told Prime Minister Narendra Modi onWednesday that their incomes have risen meaningfully over the current government’s tenure. While reports suggested a decline in prices of most crops in the 2017-18 crop year, some of them said the promised doubling of income has already materialised in their cases — there were a few who even vouched for 5-10 times rise in theirincome overrecentyears. The revelations by the agriculturists during a video conference with Modi broadcast on the Doordarshan Kisan channel and via the NaMo App clearly sought to disprove the narrative of an acute agricultural distress prevailing in the country.Also, it has come at a time six state governments have already unveiled generous farm loan 15,00,000 5.6 13,00,000 17,74,573 6.3 0.6 FY12 FY13 FY14 FY15 FY16 FY17 FY18 When I talked of doubling farm income, there were many people who made fun of it and said this would not be possible... But I had full faith in farmers — NARENDRA MODI, PRIME MINISTER IRREGULAR PAYMENT will be paid the differential between the MSPand the market price if the procurement mechanism fails. The Cabinet is expected to approve MSPs for kharif 2018 crops shortly, entailing substantial rise from support prices prevailed in the previous kharif season. During the conference, Modi reiterated the government’s pledge to double farmers’income by 2022. Continued on Page 2 ● PNB REPORT Essar Steel dues to pipeline firm continue to pile up ‘Lapses at many levels led to fraud’ SHRITAMA BOSE Mumbai, June 20 REUTERS Mumbai/New Delhi, June 20 ODISHA SLURRY PIPELINE Infrastructure (OSPIL),which owns the pipeline carrying iron ore to Essar Steel,has not been receiving payments from the steelmaker, Sunil Kanoria, vice-chairman, Srei Infrastructure Finance, has confirmed. Essar Steel is currently in the midst of a corporate insolvency resolution process. Kanoria told FE that since the pipeline is a leased asset,payments should have been regular. “It’s an operating expense and the companyshould have paid the monthly rentals. The companyis using the asset,but not paying,” he said. OSPIL owns the pipeline that carries iron ore from Odisha to Paradip port, from where the ore is sent to Essar Steel’s plant in Hazira, Gujarat. The remaining STUCK DUES RP turns down the bulk of sister firms’ claims 30% is held by Essar Steel. India Growth Opportunities Fund, floated by Srei Infrastructure, holds a 70% stake in OSPIL. Essar Steel is being administered by interim resolution professional Satish Kumar Gupta with the consent of its committee of creditors. CLOSE TO 70% of the claims made by companies related to the Essar Group on Essar Steel have been rejected bythe resolution professional (RP).Documents updated till June 14 reveal thatwhile these companies, as operational creditors, had asked for a sum of `5,710 crore,thebulkofthisor`4,000 crore has been turned down. Thisincludedthebiggestclaim of `2,498 crore from Essar Steel Jharkhand. A $2-BILLION FRAUD at Punjab National Bank (PNB) may have been orchestrated by a few rogue employees, but it escapeddetectionduetowidespread risk-control and monitoring lapses in many areas of the bank,the bank’s own internal probe has found. The 162-page report lays bare lapses that go far beyond a few branch officers. The report, a copy of which was reviewed by Reuters, lays out how failings by 54 PNB officials allowed the fraud to be perpetrated. A PNB spokesman said the bank“cannot share details on a sub-judicecase”.Headded:“We must reiterate that we will not spare anybody who is found guilty irrespective of the level orpositioninthebank,”hesaid. Continued on Page 2 Continued on Page 2 Detailed report on Page 10 ■ Odisha Slurry Pipeline Infrastructure (OSPIL) owns the pipeline that carries iron ore from Odisha to Paradip port, from where the ore is sent to Essar Steel’s plant ■ OSPIL has not been receiving payments from the steelmaker QuickPicks Draft rules to help lenders access foreign assets THE GOVERNMENT on Wednesday put out a draft on cross-border insolvency to further strengthen the Insolvency and Bankruptcy Code, seeking to help lenders access overseas assets of a stressed firm, reports fe Bureau in New Delhi. The draft aims to enable India to seek cooperation from foreign countries to bring defaulters’ assets there under consideration for insolvency proceedings. PAGE 2 Committed to strategic divestment of Air India: Govt THE GOVERNMENT said on Wednesday that while it is committed to the strategic divestment of state-owned Air India, market forces are currently not favourable for such a move, reports fe Bureau in New Delhi. Minister of state for civil aviation Jayant Sinha said that high fuel prices and a weak rupee were among the causes for lack of interest by bidders in Air India. PAGE 2 SHAYAN GHOSH Mumbai, June 20 ● STRESSED ASSETS Government to meet power firms today FE BUREAU New Delhi, June 20 THE GOVERNMENT WILL go into a huddlewith powercompanies on Thursday against the backdrop of the large stressed assets in the sector — 75,000 MW at last count — and a recent court directive temporarily stalling action against a clutch of firms under the Reserve Bank of India’s (RBI) toughened norms for banks regarding early detection and resolution of stressed assets. According to sources, the meetingwould be attended by the secretaries of the depart- GENERATING TROUBLE 75 GW: Total capacity 40.4 GW: No PPA 13 GW: Gas based 11.7 GW: Hurt by under-recovery 9.8 GW: Imported coal-based ment of financial services,and the power,coal,petroleum and natural gas ministries. Continued on Page 2 SHORTFALL ON THE DECLINE Shortfall (%)* When compared with relevant pre-GST revenue, few states witnessed a deficit ● EARLY EXIT Source: CSO waivers, amounting to `1.5 lakh crore, and there is nearunanimity across the political circles over the tenability of such largesse. In the latest Union Budget, the Modi government announced that minimum supportprices(MSPs)forcrops would be fixed at at least 1.5 times the production cost (A2+FL) — it is another matter MSPs for many crops used to be even more generous earlier — and promised that farmers SUMIT JHA New Delhi, June 20 -2 4 2 -0.2 States’‘shortfall’ not true picture 0 8 6 3.4 1.5 14,00,000 17,16,746 18,00,000 % chg, y-o-y, RHS 16,15,216 ` crore 16,05,715 (gross value added) JULY-MARCH GST REVENUES AT FIRST GLANCE, the goods andservicestax’s(GST)revenue buoyancy seems unproven yet, giventhat31of34states/UTsin the countryreported a‘revenue shortfall’during the July 2017March 2018 period — among the larger states, Bihar’s deficit was38%andMadhyaPradesh’s 26%—andreceivedcompensation. But the picture is actually notallthatgrimasmostofthese shortfalls are against the socalled‘protectedrevenue’;when comparedwith the relevant tax revenue growth rates of the states during the pre-GST period, the new tax, despite its Agriculture and allied activities 16,09,198 Modi talks of ‘balanced policy’ but fights shy of committing comprehensive agriculture reforms 15,24,288 THE SECURITIES and Exchange Board of India (Sebi) board is likely to discuss on Thursday the proposed overhaul of governance norms for market infrastructure institutions as well as amendments to buyback and takeover norms, a senior official said, reports PTI. Other proposals, including reducing the cooling-off period for former employees to one year and review of the watchdog's recruitment policy, are also on the agenda. The regulator’s board will be meeting in Mumbai. VIDEO MEET WITH PM 15,01,947 IN THE NEWS Sebi board to meet today on norms revision July 2017 28.3 July-Mar ('17-18) 16 *Against protected revenue (14% annual growth over FY16 base) Growth in Own Tax Revenue below 14% (OTR)^ (%, y-o-y) 14 12 10 8 6 4 2 0 TN FY15 FY16 Kerala UP Karnataka Maharashtra MP FY17 WB ^OTR includes taxes subsumed in GST (~60%) and other taxes such as excise on alcohol, stamp duty, VAT on auto fuels etc. teething troubles during the period, has already shown its potential to boost revenue. The five-year full-compen- sation mechanism under the GSTensuresthattheCentrewill make good any shortfall in the states’GSTrevenuefromwhata CEA to move back to US in Sept FE BUREAU New Delhi, June 20 CHIEF ECONOMIC ADVISER (CEA)ArvindSubramanianwill leave the finance ministry in September after serving for around four years and return to the US due to“pressing family commitments”. Last year, his tenure was extended up to May 2019. Announcing Subramanian’s decision to go back on Tuesday, Union minister Arun Outgoing chief economic adviser Arvind Subramanian Jaitley said in a Facebook post: “His reasonswere personal but extremely important for him. He left me with no option but to agree with him.”Separately, the CEA said he will “return to a life of researching, writing, teaching,and reflecting”. Subramanian was appointed as CEA to the finance ministry on October 16, 2014, for a period of three years,beforegettingtheextension. He is on leave from the US-based Peterson Institute for International Economics, where he’s a senior fellow. Continued on Page 2 ▪ Against the protected GST revenue, 31 states/UTs witnessed 'shortfall' and were given compensation in July 2017-Mar 2018 period. Among the larger states, the deficit was 38% for Bihar, 26% for MP, 22% for Karnataka and 31% for Chhattisgarh. ▪ But the revenue deficit is only notional for manufacturing states like Maharashtra, Gujarat and TN; even consumer states like Kerala would have seen lower receipts in the absence of GST that ensured 14% revenue growth 14% annual growth (overFY16 base)would haveyielded them. Continued on Page 2 eFE P13 Connectivity is changing within the wireless space: Sajan Paul
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