OPINION, P8 ECONOMY, P2 A GULATI & C CAHILL Getting agri market right critical to help India’s farmers INTERNATIONAL, P4 SUNIL JAIN HUGE OIL IMPORT BILLS DENUCLEARISATION Only the police can stop lynching, so there is no point going after WhatsApp Gadkari bets big on alternative fuels to ease crude import strain Pompeo sees hard road ahead but pursues North Korean talks KOLKATA, MONDAY, JULY 9, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOLUME XXVII NO. 212, 14 PAGES, `6.00 (NORTH EAST STATES & ANDAMAN `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 DMIC ● AYUSHMAN BHARAT Projects in Rajasthan hit land hurdle in only 2017 (at Shendra-Bidkin in Maharashtra). In fact, after the idea of the corridor was first mooted in 2007,it took around fouryears for the Cabinet approval to Continued on Page 2 POWER STRUGGLE Tighter regulations, policies to dent discoms' finances ~`18,000 cr Possible annual burden on discoms due to imminent regulatory crackdown, policy-induced obligations ■ BRANDWAGON, P10 `16,000 cr Including A bowlful of health likely drop in tariff realisation in a year as AT&C losses above 15% won't be compensated With the rising fitness quotient, breakfast food brands are looking to provide likeable solutions to the Indian palate & Under-recovery from extra supplies under 100% electrification drive ■ eFE, P8 Virtual is the new real Rise of virtual technologies like digital modelling & simulation is expanding the boundaries of scientific understanding `1,800 cr These apart, discoms have dues of `32,000 cr to power producers; mandatory signing of new PPAs (which entails fixed charges of `600 crore/giga watt) to add to their woes ■ INVESTOR, P9 Company has turned the corner While incremental spread pressure remains for LIC Housing Finance, back book repricing will help margins ■ INFRASTRUCTURE, P11 Wind of change for coastal cargo Allowing foreign vessels to carry domestic containers to local ports will propel waterways transportation and lower costs ■ SCIENCE & TECH, P12 Welcome to the wingbot Tomorrow’s squadron leaders will be accompanied by drones, though a human being will always be needed QuickPicks Andhra solar park: Lowest bid comes in at `2.7 per unit THREE COMPANIES have bagged the tenders to build 750 MW of solar power projects in Kadapa, Andhra Pradesh, with the lowest bid under reverse auction coming in at `2.7/unit, reports fe Bureau in New Delhi. Last week, the reverse auction for 2,000 MW capacity had discovered a tariff of `2.44/unit, matching the lowest ever rate that was found in May 2017. PAGE 2 CBDT directs I-T dept to curb high-pitched assessments THE CENTRAL Board of Direct Taxes (CBDT) has issued a stern directive to income tax department offices in the country, asking them to curb “high-pitched” assessments against taxpayers, reports PTI. It also asked the taxman to ensure that assessing officers who issue such irrational orders are transferred and face disciplinary action. ANUPAM CHATTERJEE New Delhi, July 8 THE UDAY SCHEME has helped the state-owned electricity distribution companies (discoms) to halve their losses to `17,352 crore in FY18 but animminentregulatorycrackdownmaycausemanyofthem to relapse. FE has estimated that the cumulative impact of stepped up regulations and policy-induced obligations on the discoms would be around `18,000 crore peryear. The power ministry has made it clear that aggregate technical and commercial (AT&C) losses above 15% won’t be compensated in tariffs (the new regime is likely from FY20). This would hit most discoms as AT&C losses of 26 major states under UDAY were 19% at the end of FY18 — these losses are very high in Bihar (33.2%), MP (29.7%), UP (27.7%); a sudden 4 percentage points reduction will be a tall order for most of the discoms. Continued on Page 2 Deficient monsoon slows sowing of paddy, cotton Govt says shortfall in acreage will be made up in coming weeks,‘grain output to exceed last year’s’ Water reserves trail normal level (Reserves as % of capacity) 35 30 25 21 20 15 10 5 0 PRABHUDATTA MISHRA New Delhi, July 8 East West Central North *Normal level WITH THE PATCHY progress of southwest monsoon rains — 8% below‘normal’at the panIndia level by July 6—, sowing of kharif cropswas 14% below the lastyear’s level as of Friday. Rice and cotton have been the most affected crops. The rain deficiency in ricegrowing West Bengal, Odisha and Chhattisgarh has been quite high and has had an adverse impact on sowing area of paddy, the main kharif crop with a share of nearly 60% in the normal acreage. Water levels at key reservoirs too are below the bench- July 5, 2017 July 5, 2018 10-year average 31 Monsoon yet to pick up Source: IMD Sowing plunges Paddy Pulses Coarse Oilseeds cereals FE BUREAU One nation, many taxes Revenue from the goods and services tax is barely half of the states' own tax revenue. Projected OTR for FY19 (` lakh crore) 1.88 Maharashtra Haryana West Bengal Kerala 48 48.4 0.49 40.3 1.22 Uttar Pradesh Bihar Contribution from GST (%) 0.31 48 42 0.55 46.1 0.59 After GST, the other main sources of states' OTR are sales tax on petroleum, stamp duty/registration fee on real estate transactions and state excise on alcohol. For instance, in the case of Maharashtra, 19% from of the projected OTR for FY 19% is to come from sales tax, 13% from stamp duty/registration fee and 8% from state excise duties. Source: PRS Legislative Research All India Cane 8 -9 5 -8 (Area in lakh hectares) mark 10-year average touted to be normal, with the levels particularly low in north A job half done South Source: Ministry of water resources East/North-east -21 North-west Central India South peninsula All India (% change in rainfall from LPA, June 1-July 6) 20 20 *Including all phases Source: DMIC UNDISTRIBUTED RAINS 25 REASON No land acquisition by Rajasthan for both PTI 12 160 sq km* 71.82 54.6 Total area 26 22 Khushkhera-BhiwadiNeemrana investment region 49.64 50.44 155 sq km* 21 14 Total area A woman wades through water-logged streets after heavy rainfall, in Mumbai on Sunday. The rains continue to lash the city and adjoining regions 73.45 63.59 Jodhpur-Pali-Marwar industrial area In troubled waters 17 17 Projects to face delay 66.27 57.35 FE SPECIALS `15,000 crore Value of land contributed by states for the projects 30 CRISIS-HITJAIPRAKASH Associates has bagged a `2,850-crore contract from Chenab Valley Power Projects in Jammu and Kashmir, reports PTI. The contract to construct diversion tunnel and concrete face dam for a hydro-electric project takes its order book to about `14,000 crore. Funds approved by the Centre for all DMIC projects so far PRESS TRUST OF INDIA New Delhi, July 8 17 JAL gets `2,850-cr contract in J&K NEARLY SEVEN YEARS after the Cabinet cleared a proposal tobuildthe$100-billion DelhiMumbai Industrial Corridor (DMIC), the country’s biggest infrastructure project, land for at least two of the initially-conceived eight nodes —or centres ofindustrialproduction—that run though Rajasthan hasn’t yet been acquired by the state, casting a shadow over their development anytime soon. Sources told FE the Japan International Cooperation Agency(JICA),which had committed $4.5 billion for the DMIC, hasn’t yet invested in anyoftheprojectsdespitehaving shown “interest” in developing two metros-—one in Haryana and the other in Gujarat—for two years now. Thanks to slow progress in planningfortheprojectsininitialyears,DMICDC could lease out the first chunk of land developed by it to companies `15,000 crore come in 2011. The planning part for these nodes took another 3-4 years to be over andDMIChardlyhadanything substantial to showon ground until 2014-15,said analysts. In an interview to Governance Nowin 2013,DMICDC's formerchiefexecutiveAmitabh Kant had said the first phase of variousprojectswouldbeready by 2019. If that was the intended goal initially,the pace ofdevelopmentformostpartof the corridor’s history has been farfrom encouraging. Nevertheless, the initial phase ofwork in six of the eight nodes—at Dholera (Gujarat), Shendra-Bidkin (Maharashtra), VikramUdyogpuri (Madhya Pradesh), Nangal Choudhary (Haryana),Greater Noida (Uttar Pradesh) with deadlines between 2019 and 2022 —will be completed on time,asserted DMICDCchiefexecutiveAlkesh KumarSharma.The2019deadline for another project — settingupAsia’sbiggestexhibition and convention centre at Dwarka in Delhi—will also be met,SharmatoldFE.TheDwaka centre isn’t directlya part of the DMIC projects but DMICDC is its knowldedge partner and is overseeing its progress. 41.67 33.6 INDUSTRY BODIES COAI, ISPAI and Assocham have urged the Centre to review Trai’s recommendation allowing Public Data Office Aggregators and Public Data Offices to provide internet through Wi-Fi without a licence, reports fe Bureau in New Delhi. They claim the approval violates the Indian Telegraph Act and Trai Act. BANIKINKAR PATTANAYAK New Delhi, July 8 A status report 79.08 67.25 IN THE NEWS ‘Public Wi-Fi sans licence violates Acts’ JICA yet to invest in projects; DMICDC says work on 6 of 8 nodes on schedule Rajasthan, Maha 'reluctant' to implement PM’s ambitious health scheme Cotton TOTAL July 6, 2017 388.89 July 6, 2018 333.76 Source: Ministry of agriculture India (see chart). Continued on Page 2 INASETBACKtotheModigovernment’s ambitious Ayushman Bharat National Health ProtectionScheme(AB-NHPS), two of the BJP-ruled states — Rajasthan and Maharashtra — have expressed “reluctance” to implement the programme. According to a government official, the Rajasthan and Maharashtra governments are reluctant in implementing the scheme, as similar projects catering to a much largerpopulationarebeingruninthestates. The AB-NHPS aims at providing a coverage of `5 lakh per family annually and benefiting more than 10 crore poor families. The government official said that though the Rajasthan governmenthaswelcomedthe Centre’s scheme,“they are not sure how to implement it, as they already have the ongoing Bhamashah Swasthya Bima Yojana, under which cashless health care services are provided to around 4.5 crore people”.“Moreover, the contract with the insurance company goes up till the next year. So they are thinking of finding a way of how to converge the two schemes so that the ongoing scheme is not disturbed,”the official said. Dr Indu Bhushan, CEO, Ayushman Bharat, discussed the issue with Rajasthan CM Vasundhara Raje on Friday. The Maharashtra government has cited lack of funds as the reason fornot implementing the scheme.The state runs Mahatma Jyotiba Phule Jan Arogya Yojana, a flagship health insurance scheme, under which 2.2 crore people are provided an insurance cover up to `2 lakh. Odisha has already refused to implement the Centre’s flagship health programme, saying it already has a scheme called Biju Swasthya Kalyan Yojanawithmorebeneficiaries compared to the AB-NHPS. ● GST GoMs ‘Scrap reverse charge, defer sops for digital payments’ SUMIT JHA New Delhi, July 8 AGROUP OF ministers (GoM) led by Bihar deputy chief minister Sushil Modi on Sunday decided to recommend to the GST council that a section in the GST Act concerning the reverse charge mechanism (RCM) be scrapped as “it discriminates against unregistered dealers while not adding much to the revenue”. Underthe RCM rule,one of the anti-evasion tools envisaged by policymakers, regis- tered dealers are required to make tax payments in case they procure goods from unregistered ones. This has been resisted by the registered small businesses as they find it cumbersome to comply when goods are purchased from dealers outside the goods and services tax (GST) ambit. Since the GST’s roll-out in July last year, RCM has remained suspended and has recently been further deferred till September 30. Continued on Page 2 LATE ENTRANT Armed with IGTV, Instagram set to disrupt long-format video space ANKITA RAI New Delhi, July 8 INSTAGRAM MAY BE late to the long format video party, but it is poised to make up lost ground rather quickly. With the long format content (of over 20 minutes) making up more than 50% of time watched on smartphones, and completion rates on mobile almost similar to tablets,at 56.6% (as per Ooyala Global Video Index), investing in the digital video business is lucrative. Experts say Instagram’s long format video offering IGTV is set to disrupt the ecosystem further. Currently, the plans include uploading and viewing of user-generated content only. However, according to a Wavemaker report, “Eventually, the company aims to bring terrestrial TV content, such as reruns of popular shows or even freshly commissioned shows to its platform in due course.” This move could put IGTV in competition with subscription video on demand (SVOD) content services such as Netflix, Hotstar and Amazon Prime Video, in addition to its biggest rival YouTube. “We should expect native Instagram influencers to quicklyadapt,butexpectingthe mainstreamcontentecosystem in India to start moving to the vertical format is a long shot when all OTT and video platforms are stillworkingwith the horizontalformat,”saysShekhar Banerjee, managing partner, WavemakerIndia. “How long format videos perform on a social platform is up for discussion. Facebook Watch didn’t crack the code. Long format demands a more immersive experience,” says Monika Shergill, EVP and content head,Viacom18 Dig- Online video consumption in India 500 million people to view videos online in 2020 72% of total mobile traffic to come from consumption of video by 2020 The average length of video viewed is 20 minutes Source: Ficci-EY report 93% of time spent on digital videos is in regional languages India spends 200 minutes on mobile apps, 40% of which is spent on social media ital Ventures. However, the demography which social platforms like IGTVcatertoandthefunctionalityitbringstotablecannotbe ignored. IGTV can play a key role in two areas. The first would be interactive long format content which currently SVOD players are not into as they are focussed on premium content meant for passive viewing. The second is brand storytelling, as a social platform can allow for it.“If IGTV does this, it could be a new trend,”opines Shergill. Continued on Page 2
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