OPINION, P6 ECONOMY, P2 SUNIL JAIN Brand Modi must be about his work, not just Rahul-bashing COMPANIES, P5 BLOXHAM & BHANDARI RAFALE DEAL ADVISORY ROLE India’s role in global commodity markets is rising though China will still dominate FM Jaitley rules out setting up JPC, calls Congress ‘bad loser’ Goyal's 'turnaround' man Kardassis leaves Jet Airways, again PUNE, MONDAY, DECEMBER 17, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL.IX NO. 237, 14 PAGES, `6.00 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 NFSA PROCUREMENT Govt gets into debt trap for FCI IN THE NEWS Govt eyes `10k cr from Bharat-22 ETF in February THE GOVERNMENT IS planning to raise about `10,000 crore through a follow-on offer of Bharat-22 exchangetraded fund (ETF) in February, reports PTI. So far, `22,900 crore have been raised via Bharat-22 ETF; `14,500 crore was raised in November 2017 and another `8,400 crore in June 2018. Baghel is new Chhattisgarh CM CHHATTISGARH CONGRESS CHIEF Bhupesh Baghel was on Sunday appointed the new chief minister of state, reports PTI. This comes after days of intense talks with top party leadership headed by Rahul Gandhi. The announcement was made by the Congress on its official Twitter handle even when the meeting of the Legislature Party was on in Raipur. To raise another `27,000 crore from NSSF to service earlier loan; similar amount raised in 2017-18 too EVERGREENING FE SPECIALS taken huge loans from NSSF starting FY17, outstanding amount at end-FY18 was `1.21 lakh cr The Dark Chocolate Rises Confectionery brands are expanding their portfolio as premium chocolates find takers. But it’s a bittersweet growth curve ■ eFE, P8 Indian start-ups on Oracle tech Three Indian start-ups—RepUp, Disprz and Teknospire—are making waves globally by solving business problems ■ PERSONAL FINANCE, P9 Ways to shore up your net worth Rebalance your portfolio or diversify it by reallocating risky investments to low-risk or moderate options ■ INFRASTRUCTURE, P11 Rising costs could muddy waters Shortage of water, used to clean solar panels, is casting a shadow on the profitability of several solar projects QuickPicks Writ petitions against GST Act keep tax department busy THE INDIRECT tax department is currently grappling with notices from courts issued in response to writ petitions filed against several clauses of the GSTAct, reports Sumit Jha in New Delhi. Tax officials say unfavourable rulings in some of these cases could have adverse revenue implications for the government. In petitions admitted by the Delhi High Court, the petitioners have argued that assessees should be allowed to claim transitional credit on pre-GST goods purchased more than a year before the GST roll-out. PAGE 2 HC dismisses Vodafone plea on tax refund of `4,759 crore THE DELHI High Court has dismissed Vodafone's plea seeking directions to the I-T department to expeditiously process its claim for refund of `4,759 crore in respect of returns filed for the assessment years 2014-15 to 2017-18, reports PTI. The HC said there was merit in the tax department's argument that substantial outstanding demand was pending against the company and there was likelihood of more demands being made after the AYs in question were scrutinised. PAGE 2 Continued on Page 2 Detailed report on Page 4 ■ However, to bail out the cash- strapped procurement agency, the Centre is arranging fresh loans to repay the principal ■ While `25,000 cr was arranged in this way in FY18, the current plan is to raise another `27,000 cr from NSSF in FY19 ■ Possibility of dipping further into NSSF pool by March, if fiscal situation worsens Golden girl PV Sindhu holds the winner's trophy after beating Japan’s Nozomi Okuhara in the women's badminton singles final at the BWF World Tour Finals in Guangzhou, China, on Sunday. Sindhu becomes the first Indian to achieve the feat AP/PTI SPECTRUM RESERVE PRICE Trai refuses to share with DoT its calculation model Regulator may now be asked to come out with a longterm calculation methodology ■ `14,000 crore required to buy out government stake in REC ■ Borrowing requirement pegged at `7,000 crore ■ Deal crucial for meeting disinvestment target of `80,000 crore ■ Moody’s has placed both firms on review for downgrade filling the entire requirement, wewouldbeovershootingboth regulatory limits and our own internal limits,” said an senior executive with a large PSB. As per the Reserve Bank of India’s (RBI) July 2015 master ELECTION TRIGGER Key ministries told to speed up spending BANIKINKAR PATTANAYAK & PRASANTA SAHU New Delhi, December 16 WITH THE INTERIM Budget barelyone-and-a-half months away, an election-bound government has asked key departments overseeing labour-intensive and infrastructure sectors not to curb the pace of spending this fiscal, and to ensure that funds meant for productive expenditure are used up on time,an official told FE. The latest reverses for the BJP in assembly polls, purportedly due to farm distress, are expected to make the review of spending in these sectors by the government even stricter. “Unlike previous years, there won’t be a cut in budget allocations for railways capex this year,” another official said.In the first eight months of FY19, railways has spent 70% of `53,000 crore budgetary support planned for full year.There was a 27% cut in railways capex last year. “The finance ministry has Mar 2010 Nov 2012 STRICT REVIEW ■ Labour-intensive, infrastructure depts told not to curb pace of spending ■ Ministries told to ensure funds meant for productive expenditure are used up on time ■ Telecom, food processing and sports ministries are lagging behind in spending been very keen in its review of FY19 spending in sectors, including agriculture,textiles and garments and infrastructure. So expenditure under keyschemes in these sectors is being monitored more closely than earlier even by the departments concerned,”said the first source.The idea is not to advocate a fiscal profligacy but to spend wisely, and timely, on schemes meant for people’s welfare, he added. Continued on Page 2 Feb 2014 KIRAN RATHEE New Delhi, December 16 PFC may approach foreign banks to fund REC stake buy POWERFINANCECORPORATION (PFC) may have to approachforeignbankstoraise partofthe`7,000croreitneeds to buy out the central government’s stake in REC as public sector banks (PSBs) may hit the regulatory limits set on exposures to a single entity, senior bankers said.OnThursday,PFC had approached a number of state-owned lenders to raise funds for the `14,000-crore deal,which it plans to close out bythe end of January. “The system already has anywhere between `15,000 crore and `20,000 crore of exposure to each of the two companies.Ifweweretobeful- Govt has earned hefty amount through auctions since 2010 Mar 2013 BORROWING SHRITAMA BOSE Mumbai, December 16 ■ BRANDWAGON, P10 AGENCE FRANCE-PRESSE Katowice (Poland), December 16 uation deteriorates. The budgeted food subsidy through FCI for the current fiscal is `1.38 lakh crore (the total food subsidy is `1.7 lakh crore). The Centre’s net tax receipts (post refunds and devolution to states) grew just 4% y-o-y in April-October of FY19,indicating a shortfall in indirect tax collections.Ay-oygrowth of 19% is required to raise the budgeted amount of `14.8 lakh crore from taxes for the full year. is to be funded out of budget, FCI is supposed to repay the principal monies were provided from the budget,the fiscal slippage (as percentage of GDP) last year would have been higher than 33 basis points reported. The government is facing the spectre of a loan trap in order to undertake the food procurement, transportation and storage operations under the National Food SecurityAct uninterruptedly. With the latest loan, the outstanding debt of FCI (from NSSF) would remain at `1.21 lakh crore. The Centre might even take an additional NSSF loan by March if the fiscal sit- Nations agree milestone rule book for Paris treaty NATIONSONSUNDAYstrucka dealtobreathelifeintothelandmark 2015 Paris climate treaty after marathon UN talks that failedtomatchtheambitionthe world’s most vulnerable countries need to avert dangerous globalwarming. Delegates from nearly 200 states finalised a common rule book designed to deliver the Paris goals of limiting global temperature rises to well below two degrees Celsius. “Putting together the Paris agreement work programme is a big responsibility,” said COP24 president Michal Kurtyka.“It has been a long road. We did our best to leave no one behind.” But states already dealing with devastating floods, droughtsandextremeweather madeworse byclimate change said the package lacked the boldambitiontocutemissions the world needed. Egyptian ambassadorWael Aboulmagd, chairofthedevelopingnations G77 plus China negotiating bloc,said the rule book sawthe “urgent adaptation needs of developingcountriesrelegated to a second-class status”. ■ While the interest part of the loan PRASANTA SAHU New Delhi, December 16 TO EASE THE pressure on its finances, the Centre will arrangeafreshloanof`27,000 crore from the National Small Savings Fund (NSSF) for the FoodCorporationofIndia(FCI) to service the principal dues of an earlier loan taken by FCI to run the government’s food subsidyprogramme. This is the second instance of the FCI tapping into the NSSF to repay the principal component of an earlier loan. Theinterestpartsoftheseloans are funded out of the Budget. The FCI had taken fresh loans of `65,000 crore in FY18 from NSSF not only to meet its expenses but also to repay`25,000 crore as principal amount due to NSSF. The NSSF route was used by the Centre to reduce the direct fiscal burden — had these ■ Under Centre's patronage, FCI has ● CLIMATE PACT Mar 2015 THETELECOM REGULATORY Authority of India (Trai) has refused to provide the department of telecommunications (DoT) a detailed methodology adopted by it to calculate the reserve price for spectrum for fresh auctions.Sources told FE that now DoT is left with the onlyoption of asking the regulator to come out with a longterm calculation methodology forwhich the latterwill have to come out with a consultation paper and seek inputs of the stakeholders. Sources told FE that the DoT, which is currently examining the reserve prices submitted by the Trai in August, wrote to the latter asking to share in detail the methodology used by it to calculate the prices. However, the Trai refused to share any such information by simply replyingthatithasgiveneverything circular on exposure norms, a bank’sexposuretoasingleborrowerwill be capped at 15% of capitalfunds.Theexposuretoa singleborrowermayexceedthe 15%normbyanadditional5% togoupto20%ofabank’scapital funds, provided the additional credit exposure is on accountofextensionofcreditto infrastructure projects. On December 6, the Union Cabinet had approved the strategic sale of the Centre’s 52.63% stake in REC to PFC. Thedeal,similartoONGC’spurchaseofthegovernment’sstake in HPCLlastyear,would be crucial for the Centre to meet this year’sambitiousdisinvestment target of `80,000 crore. Continued on Page 2 Oct 2016 1,06,200 9,407 3,693 62,162 1,10,000 65,789 in its recommendations and it is forthe DoTto do further calculations.“Wehavementioned in the recommendations about the percentages used to calculate reserve price of various bands. DoT can do the calculation if they want to, why are we supposed to give it?” said a source in Trai. DoT sources said that their idea in asking for the methodologywastoascertainifthere’s any error in reflecting the true market price of spectrum, but since Trai has refused to cooperate they will examine whether it can be asked to come out with a long-term methodology using the consultative process. 50% jump in I-T returns SUMIT JHA Bihar, UP and MP report 70%-plus growth WHILE E-RETURNS FOR income tax saw a big jump this year — in AprilNovember, 6.09 crore returns were filed, up 48% y-o-y, compared with a growth of 20% in the yearago period — the sharpest increases were in relatively less-industrialised states like Bihar, Uttar Pradesh and Madhya Pradesh. Of course, the low base also resulted in the steep rises in filings in Bihar and MP, but in UP, the increase was on a rather strong base. The government has been flagging the unprecedented rise in e- E-return filings Number of filers (in crore) 6.75 2.97 3.42 4.33 returns as proof of increased compliance and widening of the tax base brought in by postdemonetisation scrutiny, goods and services tax (GST) and seamless datasharing among various divisions of the tax department. Experts said that the trend indicated that GST along with a host of other measures, including digitisation, was driving formalisation of businesses. This is particularly apparent in states where formalisation has States with highest growth in e-return filings (April-November, 2018) Growth E-return filers (y-o-y, %) (in lakh) 5.29 Bihar 15 38.1 15.1 26.8 22.0 27.6 Growth (y-o-y, %) Growth, y-o-y, % April-Nov 19.8 48.3 FY18 FY19 MP W Bengal Income-wise e-return filers (April-November, 2018) Growth No. of e-returns (y-o-y, %) (in lakh) 38.6 Up to 5 lakh 74.2 5-10 lakh 71.1 24 10-20 lakh 62.4 20-50 lakh 11.7 445 102 29.8 51.9 77.7 48.2 63.8 60.6 59.8 Gujarat Rajasthan Continued on Page 2 79.6 55.1 UP FY14 FY15 FY16 FY17 FY18 traditionally been lower. A tax official said that land prices in some of the densely-populated states like UP and Bihar have risen sharply over the last four-five years, and transaction values are being captured in a more transparent way. This has brought many buyers and sellers into the tax net. Further, in terms of income category, the highest rise in returns files has come from those declaring income of `5-10 lakh (see chart). ` 37.8 (` cr) 50-100 lakh 2.4 50.0 59.3 Over 1 cr 1.7 46.9 It may be noted that last month senior executives of major telecom operators like BhartiAirtel,VodafoneIdeaand RelianceJiohadmetTraichairman RS Sharma and pressed their demand to initiate a consultation around valuation methodology for spectrum. So far, the model used by Trai takes the last bid price as the base for calculating the price for fresh auctions. For instance, in its August recommendations,wherever the last auction price was available, Trai has scaled it up with the inflation index for arriving at the new reserve price. Continued on Page 2 ● LPG SCHEME Now, all ration-card holders to benefit SAURABH KUMAR New Delhi, December 16 TO EXPAND THE scope of the flagship LPG-for-cooking scheme, the government has decided to extend it to all ration-card holding households.Anannouncementtothis effect is likelyearlythisweek. The new beneficiaries will be those among holders of both ration cards and Aadhaar whowillidentifythemselvesas poor through self declaration, according to sources. Since there are 9.27 crore rationcard-holding households in the country, the proposed broadening of the scheme could potentially benefit over a crore households. Launched in May2016,the Pradhan Mantri Ujjwala Yojana (PMUY) was initially aimedatprovidingcleancooking fuel to 5 crorewomen from households classified as eligible overa period of threeyears. Continued on Page 2
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