OPINION, P8 ECONOMY, P2 RCEP OPPOSITION Subramanian got it right, work his plan into education policy AI will actually add to jobs provided skilling/ education equips workers adequately MISSING WRITER China trade pact stalls as US tariffs feed India backlash EDITORIAL INTERNATIONAL, P14 Severe consequences if Saudis murdered Khashoggi: Trump NEW DELHI, SATURDAY, OCTOBER 20, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM VOL.XLIV NO. 199, 20 PAGES, `10.00 (PATNA `9.00, RAIPUR `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 READ TO LEAD SENSEX: 34,315.63 ▼ 463.95 NIFTY: 10,303.55 ▼ 149.50 NIKKEI 225: 22,532.08 ▼ 126.08 HANG SENG: 25,561.40 ▲ 106.85 `/$: 73.33 ▲ 0.28 `/€: 84.11 ▲ 0.85 BRENT: $80.39 ▲ $1.10 GOLD: `31,706 ▼ `16 Sensex, Nifty drop over 1% S&P BSE Sensex 36,700 36,526.14 35,900 34,315.63 35,100 34,300 33,500 Oct 1, ‘18 Oct 19, ‘18 Nifty50 11,200 11,008.30 10,303.55 10,900 DISSENT NOTE RBI opposes separate watchdog for payments Tells govt panel payments system a sub-set of currency, which is regulated by central bank 10,600 FE BUREAU New Delhi, October 19 10,300 10,000 Oct 1, ‘18 Oct 19, ‘18 YOOSEF KP Mumbai, October 19 INVESTORS HAVE LOST close to `4 lakh crore in the last two tradingsessionsalone;thetotal wealtherodedsinceSeptember is now `22.3 lakh crore. On Friday, the Sensex shed 463.95 points,or1.3%,to close the session at 34,315.63 while the broader Nifty 50 pared 149.5 points,or1.4%,to end at 10,303.55.WithFriday’sfall,the Nifty50hascomeoffmorethan 12% from itsAugust highs. Continued on Page 2 ● ATAL PENSION YOJANA THE RESERVE BANK of India (RBI) has opposed the idea of settingupanindependentregulatoroutside the central bank to deal with issues relating to payments, making public its dissent note on Friday on certain recommendations of a government panel. An inter-ministerial panel under economic affairs secretary was set up to finalise amendments to the Payment and Settlement Systems (PSS) Act,2007. “There is no case of having a regulator for payment systems outside the RBI,”said the dissent note submitted by the RBIrepresentativeonthecom- Panel's proposal PRB to be an independent regulator RBI dissent No case for a payments regulator outside RBI Proposal RBI governor not to be PRB chairman Dissent Composition not in conformity with Finance Bill 2017 mittee.Itstressedthatthepayment systems are a sub-set of currency,which is regulated by the RBI. It also opposed the panel’s suggestiononthecomposition of the Payments Regulatory Board (PRB), saying it isn’t in sync with the announcement Proposal Formal mechanism for co-ordination between PRB and RBI Dissent Need for integrated operations and not co-ordination. This is also why RBI governor be PRB chairman made in the finance bill. The panel has recommended that the central bank governor be replaced as chairperson of the PRB with a person appointed by the government in consultation with RBI. “Changes should not result in existing foundations being PFRDA seeks nod to double amount to `10k/month shaken and the potential creation of disturbances in an otherwise well functioning and internationally acclaimed structure as far as India is concerned,”the RBI said. The central bank, however, observed that itwas not totally against a new PSS Bill. “The overarching impact of monetary policy on payment and settlement systems and viceversa provides support for regulationofpaymentsystems to be with the monetary authority,” the RBI said in the dissent note. Thereisanunderlyingbank account for payment systems which is under the purview of banking system regulation that is already vested with the central bank. Settlement systems are finallypostedinthebooksofthe accountofbankswiththeRBIto attain settlement finality. Regulating these entities goeshandinhandwiththesettlement function, the central bank argued. Continued on Page 2 New Santro: The ‘sunshine car’ rises again How this toad-shaped car — positioned as Sunshine Car to attract reluctant buyers — became one of India’s best-selling cars and then drove into sunset. It rises again ■ Motobahn, P13 Biocon stock is likely to rise over the next two months A host of upcoming catalysts are behind the good outlook for Biocon; recent correction makes short-term valuations more compelling; ‘Overweight’ retained ■ Investor, P13 QuickPicks ED files money-laundering cases into AI deals during UPA regime IN FRESH trouble for or embattled state-run carrier Air India, the Enforcement Directorate (ED) has registered multiple criminal cases to probe allegations of irregularities and money laundering in at least four deals signed during the UPA rule, including the controversial merger of Air India and Indian Airlines, reports PTI. The agency has filed at least four Enforcement Case Information Reports (ECIRs), which is the ED equivalent of a police FIR, officials said. The ECIRs have been registered under the Prevention of Money Laundering Act. PAGE 2 Anti-dumping duty imposed on certain Chinese steel products INDIA HAS imposed anti-dumping duties of up to $185.51 per tonne for five years on certain varieties of Chinese steel to guard domestic players from cheap imports from the neighbouring country, reports PTI. The duty was imposed based on recommendations of the Directorate General of Trade Remedies. JSW Steel, Sunflag Iron & Steel, Usha Martin, among others, had jointly filed an application before DGTR for initiation of investigations and levying of antidumping duties on some steel products. PAGE 2 Train runs over Dussehra crowd near Amritsar, at least 52 dead AT LEAST 52 people were killed and 72 injured on Friday evening after a crowd of Dussehra revellers that had spilled onto railway tracks while watching burning of Ravana effigy was run over by a train near Amritsar, reports PTI. The train was coming from Jalandhar to Amritsar when the incident occurred at Joda Phatak where at least 300 people were watching 'Ravana dahan' at a ground near the tracks. Sub divisional magistrate Amritsar I Rajesh Sharma said 52 people have died and at least 72 injured have been admitted to Amritsar hospital. PAGE 18 THE RESERVE BANK of India (RBI) on Friday announced more measures to increase liquidityflowstothenon-banking financial companies (NBFCs). TheRBIpermittedbankstouse government securities equal to their incremental outstanding credit to NBFCs,overand above their outstanding credit to them as on October 19, to be usedtomeetliquiditycoverage ratio requirements. The move will help provide liquidity to HFCs and NBFCs Indiabulls Housing Finance 780 930 654.25 706.60 750 690 660 645 600 900 840 Prev. close: 788.85 Open Close which have come under pressure following series of default by IL&FS group companies. NBFC stocks continued to slump, dropping up to 18.5% on Friday.Stocks of PNB Hous- 570 Prev. close: 867.55 Open Close To lenders: `35,000 cr Infusion into the company: `8,000 cr VEDANTA'S OFFER To lenders: `35,000 cr upfront After three years: `1,000 cr Guaranteed minimum pension proposed by PFRDA, up from `5,000 now Infusion into the company: `5,000 cr 50 Proposed upper age limit for entering the scheme, up from 40 now Declared highest bidder by CoC to acquire the bankrupt firm, pips Anil Agarwal’s Vedanta 1.5 crore Number of subscribers projected by FY19-end, from 1.18 crore now FE BUREAU Mumbai, October 19 Continued on Page 2 Intra-day on BSE (`), Oct 19 735 `10,000 Continued on Page 2 PNB Housing Finance Intra-day on BSE (`), Oct 19 765.10 TO MAKE THE Atal Pension Yojana (APY) more attractive, the Pension Fund Regulatory and Development Authority (PFRDA) has sought the government’s nod to double the guaranteedminimumpension underthe scheme to `10,000/ month and increase the upper agelimitforenteringAPYto50 from 40 now. ing Finance (down 18.55%) and Indiabulls Housing Finance(17.06%)fellthemost on the BSE. RBI moves to raise credit flow PRESS TRUST OF INDIA Mumbai, October 19 ARCELORMITTAL'S OFFER PRASANTA SAHU New Delhi, October 19 Officials reckon that such a move would attract more unorganised sector workers into the retirement plan. The APY has enrolled 1.18 subscribers till now since it’s rollout in FY16. The PFRDA is hopeful that the scheme’s subscribers would touch 1.5 crore by the end of FY19. “These changes are required due to increase in longevity of life as well as cost of living,” PFRDA chairman Hemant G Contractor told FE. The proposed changes and the recent permission to subscribers to contribute till the age of 70 instead of 60, would have profound impact on the scheme in coming years,he added. NBFC LIQUIDITY CRUNCH Special Features ESSAR STEEL BID ArcelorMittal wins the race THE COMMITTEE OF creditors of Essar Steel on Friday declared ArcelorMittal as the highest bidder for the bankrupt Essar Steel, pipping Anil Agarwal’s Vedanta Group. Inthesecondroundofbids, ArcelorMittal had offered upfront `35,000 crore to the lenders and had committed to infuse another `8,000 crore into the company. Subsequently,the companyhad proposed to increase its upfront offer to `42,000 crore but the Supreme Court had said that once the company cured its ineligibility its bid placed on April 2 (the second bid) is to be considered. Vedanta, which had placed its bid inApril,had committed around `35,000 crore upfront to the lenders and another `1,000 crore after three years. ● CHINA CATCHING UP India’s edge in software services trade erodes BANIKINKAR PATTANAYAK New Delhi, October 19 INDIA'S COMPARATIVE ADVANTAGE in the crucial telecommunications,computer and information services trade haserodedinrecentyears,while China’shasimproved.Although Indiastillretainsitsdominance Other biz services Transport Financial services Manufacturing services* 0.99 1.62 1.27 0.63 1.00 0.45 0.12 0.02 PRESS TRUST OF INDIA Mumbai, October 19 in this space, an analysis of the revealed comparative advantage (RCA) in a dozen services segments, ranging from software to transportation, by the commerceministryshowsIndia ismorecompetitivethanChina in onlythree of them. Continued on Page 2 2016 4.10 1.22 1.51 1.28 0.54 0.94 0.37 0.18 0.05 3.43 5.27 6.73 0.57 0.51 0.88 1.03 Increase in RCA implies improvement in competitiveness; *on physical inputs owned by others Source: Commerce ministry report, titled ‘Sino-Indian Trade—A Perspective’ Travel Continued on Page 2 Forex reserves tank $5.14 bn Revealed comparative advantage in services 2012 India China Computer, telecom etc It had offered to infuse `5,000 crore into the company. Friday’s development comes after the race to acquire the bankrupt firm finally zeroed down between ArcelorMittalandVedantaGroupwith theNumetalconsortiumwhich was earlier the chief rival of ArcelorMittal failing to paythe dues of the Ruia family promoted companies, which standsat`49,000crorewithin the stipulated two week deadline given by the Supreme CourtasperitsOctober4order. Accordingly by October 18 the concerned companies were supposed to clear their dues if theywere to bid for Essar Steel. The October 4 order of the SC had directed both ArcelorMittal and Numetal to clear the dues of their related companies by October 18 to be eligible to bid for Essar Steel. ● RUPEE SLIDE No entry Journalist Kavitha Jakkal being escorted by the police to Sabarimala temple, in Kerala on Friday. Kavitha had to return mid-way Report on Page 17 THE CONTINUING FALL of therupeehashaditsimpacton foreign exchange reserves, which plunged by $5.143 billion to $394.465 billion during the week to October 12 on account of decline in foreign currency assets, according to theRBIdatareleasedonFriday. This is one of the steepest falls that the forex kitty has seen in recent decades. In the previous week, the reserves had declined by $915.8 million to $399.609 billion. As the rupee has been plummeting, the RBI has sold over $40 billion of its reserves to prop it up since the beginning of the current fiscal. Detailed report on Page 10 COOLING ECONOMY China moves to lift confidence as growth hits weakest pace since 2009 REUTERS Beijing, October 19 CHINA'S ECONOMIC GROWTH cooled to its weakest quarterly pace since the globalfinancialcrisis,withregulatorsmovingquicklytocalm nervous investors as a yearslong campaign to tackle debt risksandthetradewarwiththe US began to bite. Chinese authorities are tryingtonavigatethroughnumerous challenges,as the tradewar fears have sparked a blistering selloff in domestic stock markets and a steep decline in the valueoftheyuanversusthedollar, heightening worries about the growth outlook. The economygrew6.5% in the third quarter from a year earlier, below an expected 6.6% rate,and slowerthan the 6.7% in the second quarter, the National Bureau of Statistics said on Friday. It marked the weakest year-on-year quarterly gross domestic product growth since the first quarter of 2009 ILLUSTRATION: SHYAM ● FREAKY FRIDAY at the height of the global financial crisis. “The trend of slowdown is strengtheningdespiteChinese authorities’ pledge to encourage domestic investment to support the economy.Domestic demand turned out weaker than unexpectedly solid exports,” said Kota Hirayama, senior emerging markets economist at SMBC Nikko Securities in Tokyo. Afteranotherbig decline in Chinese stocks on Thursday, policymakers launched a coor- dinated attempt to soothe markets, with central bank governorYiGangsayingequity valuations are not in line with economic fundamentals. Beijing has already been increasingpolicysupportinthe last few months to prop up growth. Yi and senior regulatorspledgedtargetedmeasures to help ease firms’ financing problems and encourage commercial banks to boost lending to private firms. Continued on Page 2
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