OPINION, P6 MARKETS, P11 GAUTAM BHARDWAJ & SANJAY JAIN An NPS would have stopped migrant exodus ECONOMY, P3 EDITORIAL PIPPING HDFC BANK ‘STIMULUS INADEQUATE’ India must first attract and retain Apple investment, and then get its component base to relocate Kotak Mahindra Bank is now the most expensive bank stock in the world Rajan says foodgrains not enough for migrant workers NEW DELHI, FRIDAY, MAY 22, 2020 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. XLVI NO. 70, 14 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: 30,932.90 ▲ 114.29 NIFTY: 9,106.25 ▲ 39.70 NIKKEI 225: 20,552.31 ▼ 42.84 HANG SENG: 24,280.03 ▼ 119.92 `/$: 75.62 ▲ 0.18 `/€: 82.95 ▲ 0.01 BRENT: $36.58 ▲ $0.83 GOLD FUTURE: `46,817 ▼ `314 CUT IN OUTLAYS Spending curbs to continue in Q2 Centre gave twice the amount it collected as taxes to states in April-May, says expenditure secy PRASANTA SAHU New Delhi, May 21 WHILE KEEPING A tight leash on its own expenditures, the Centre has devolved to states over 190% of tax revenue collected by it till May end, expenditure secretary TV Somanathan told FE in an interview.HesaidtheCentre might continue to exercise control on expendituresinQ2FY21too by stipulating department-wise ceilings as it has done in the first quarter. This, he admitted, might result in ‘prioritisation’ of expenditures on Centrallysponsored schemes. On the views expressed by some states like West Bengal,TamilNaduandKerala that the conditions set forthestatestousetheadditionalborrowinglimitof2% ofGSDPinFY21areonerous and un-implementable, the officialsaidthat,onthecontrary, most of the states would be able to utilise the entire extra borrowing space,“as the reforms suggested are feasible”. Given the uncertainty over the duration and extent of Covid-19 pandemic, it would be premature to state at this juncture whethertheCentre’sexpenditure would turn out to be within the budget estimate of `30.42 lakh crore in the current fiscal,he said. Continued on Page 2 TV SOMANATHAN, EXPENDITURE SECRETARY ON TAX DEVOLUTION TO STATES ON OUTLAYS FOR CENTRAL SCHEMES “We will have to cut (the devolution) later, because we can't give (to states) more than 41% of the divisible pool. But by the time when the cuts might be needed, we hope the states would have resumed getting petrol/diesel revenues, excise revenues and state GST in larger amounts." “We will be trying to do a rationalisation of both the central-sector and centrally sponsored schemes, not necessarily with the view to cutting budgets, but to remove low value-added and ineffective schemes.” EXPRESS PHOTO BACK IN THE SKY Govt caps air fares, issues safety tips No flight ticket to be less than `2,000 and more than `18,600 FE BUREAU New Delhi, May 21 ABOUT A THIRD of domestic flight serviceswill restart from May25withasetofstrictstandard operating procedures (SoPs) for passengers and fare regulations forthe carriers,the civil aviation ministry said on Thursday.Thefareregulationis for a period of three months — till August 24 — to ensure that passengers are not overcharged.“We have decided on fares based on flight duration. We have divided fares under seven flight durations,” civil aviation minister Hardeep Singh Puri said. So, for a Delhi-Mumbai flight, the minimum price of a ticketwill be `3,500 and maximum can go up to `10,000. Accordingtothefareregulation guidelines issued on Thursday, airlines will have to sell 40% of theirtotalseatsforafare,which willbethemedianofthelowest and highest slabs,which in the Delhi-Mumbai case will be `6,750. However, airlines are free to sell the remaining 60% at lowerprice if theywant. Aditya Ghosh,formerpresident of IndiGo, told CNBC TV18 that the fare capwill neither help the airlines in recov- ■ Air fares have been set in seven Guidelines for passengers bands on the basis ofduration of flights ranging from 40 minutes to 210 minutes ■ 40% ofthe ■ No flight ticket ■ For Delhi- Only confirmedweb check-in allowed for entry to airports ■ Flight tickets have to be sold in the median band oflower & upper limit Mumbai one way: Upper Band: `10,000 Lower Band: `3,500 Health status check usingArogra Setu app/Self declaration form will be less than `2,000 and more than `18,600 as per this criteria Passengers to wear masks, gloves, etc capacity: 1/3rd of approved summer schedule Mid point: `6,700 Passengers to reach airport at least 2 hours in advance to complete boarding procedures No meals to be provided on flights. Passengers not allowed to eat on flights Amaximum ofone hand baggage and one checked-in baggage per passenger allowed Those residing in containment zones not allowed to fly. ering cost and whatever they have lost during the lockdown, northeconsumersbecausethe very low fares in the range of `1,500-2,000 kinds will disappear,which the carriers otherwise offered on the basis of demand-supply. He said that during normal circumstances, airlines used to sell the very highly priced tickets for a very small number of seats, which may not be the case now. Basically, limits on air fares havebeensetinsevenbandson the basis of duration of flights ranging from 40 minutes to 210 minutes. The first band, which would have its specific lower and upper limits of air fare,will consist of flights that are of less than 40 minutes duration. Second, third, fourth and fifth bands of upper limit would be of flights with durations of 40-60 minutes,60-90 minutes, 90-120 minutes and 120-150 minutes. Continued on Page 2 HOME DELIVERY TRACKING COVID Over a month, virus hits more Swiggy, Zomato districts, most in Bihar and UP can lift your spirits KARISHMA MEHROTRA New Delhi, May 21 AS THE INFLUX of migrant workers to their native places gains momentum and the national lockdown eases, there is a telling change in the geographical spread of Covid-19 positive cases over the one month since April 22 when the HealthMinistrylastreleasedthe national district-wise case load. This has implications in Covid management across states and will also affect allocation of resources in fighting the pandemic. An analysis by The Indian Express of the key changes shows that of the roughly 300 districts with no cases on April 22, more than half (174) now have at least one case with an average of 23 cases in each dis- COVID-19 UPDATE 1,12,359 TOTAL CASES 3,435 DEATHS SO FAR 5,609 NEWCASES US commits $1.2 billion for potential AstraZeneca vaccine trict.This means onlyone in six districtsmaynowbeCovid-free. Also, of all green zone districtswith no cases onApril 22, districtsineasternIndia,which happen to be the key destinationsforasubstantialsectionof migrantworkers,nowmake up the largest chunk reporting at leastonecasesinceApril22.For example,23 zero-case districts in Bihar on April 22 have reported at least one case. THE US HAS secured almost a third of the first one billion dosesplannedforAstraZeneca’s experimentalvaccinebypledging up to $1.2 billion, as world powers scramble formedicines to get their economies back to work,reports Reuters. While not proven to be effective, vaccines are seen by world leaders as the only real way to restart their stalled economies, and even to get an edge overglobal competitors. Continued on Page 2 Details on Page 8 PPE coveralls: India 2nd largest maker ‘Death rate less than half of global avg’ Lufthansa nears $10-bn rescue deal INDIA HAS BECOME the world’ssecondlargestmanufacturer of personal protective equipment body coveralls in just two months, reports PTI. China is the world’s leading producer. THE GOVERNMENT ON ThursdaysaidIndia’smortality rate at 3.06% has remained lessthanhalfoftheglobalaverage of 6.65%, reports PTI. At least 15 other countries have recorded more deaths. LUFTHANSA IS IN advanced talks over a $9.9-billion state bailout that would see Germanytake a 20% stake in the nation’sflagshipairlinewhich has been battered by Covid, reports Reuters. ■ Page 8 QuickPicks Aditya Birla Sun MF halts fresh subscriptions in two debt funds ADITYA BIRLA Sun Life Mutual Fund has decided to temporarily suspend acceptance of fresh subscriptions in two of its debt schemes with effect from Friday, reports PTI. The two schemes are Aditya Birla Sun Life Medium Term Plan and Aditya Birla Sun Life Credit Risk Fund, the fund house said in a notice on Thursday. The move comes after Franklin Templeton MF last month closed six of its debt funds, citing redemption pressures and lack of liquidity in the bond markets. In order to protect the interest of investors, Aditya Birla Sun Life MF said it has decided to temporarily suspend the acceptance of fresh subscriptions or switch in applications in two schemes with effect from May 22, 2020 till further notice. ■ Page 10 Path of destruction A day after Cyclone Amphan swept through West Bengal, a part of Kolkata airport remained flooded on Thursday Reports on Page 3 SENATE NOD US passes Bill to delist Chinese companies from exchanges DANIEL FLATLEY & BEN BAIN Washington, May 21 THE SENATE OVERWHELMINGLY approved legislation on Wednesday that could lead to Chinese companies such as Alibaba Group Holding and Baidu being barred from listing on US stock exchanges amid increasingly tense relations between the world’s two largest economies. The Bill,introduced by senator John Kennedy, a Republican from Louisiana, and Chris Van Hollen, a Democrat from Maryland, was approved by unanimousconsentandwould require companies to certify thattheyarenotunderthecontrol of a foreign government. FE BUREAU New Delhi, May 21 THE LONG LOCKDOWN had threatened to put liquor makers’businessesontherocksbut more home deliveries could give their sober revenues a bit of a high. Both Swiggy and Zomato have kicked off home salesofliquorinRanchiandthe trend could catch on.“We will goliveinRanchilatertodayand 7othercitiesinJharkhandover the next couple of days,” Zomato said on Thursday. Swiggy said it’s hoping to roll out the service in otherparts of the state within a week. 213 companies Belgium US watchdogs can't see Chinese companies' books Source: SEC citing PCAOB data/Bloomberg US lawmakers have raised red flags over the billions of dollars flowing into some of China’s largest corporations, much of it from pension funds and college endowments in search of fat investment returns. Alarm has grown in particular that American IN EARLY MARCH, before the coronavirus pandemic triggered a global economic lockdown,SoftBankGroupfounder Masayoshi Son paid tribute to RajeevMisra,themanwhoruns his $100-billion technology investment fund.The Japanese billionaire put his arm around Misra’sshouldersatatownhall Continued on Page 2 ● DUE IN JUNE If permissions come through, consumers in other parts of the country, where liquorstores aren’t open,won’t misstheireveningtipple.More state governments are expected to allow home deliveries since sales taxes from liquor account for a big chunk of their revenues.Potable alcohol and petroleum are still out of the purview of GST and for the majority of the states, excisedutyonalcoholaccounts foraround 10-15 % of own tax revenueswhileautofuelsbring in about 15-20%. THE FOOD CORPORATION of India’s indebtedness to the National Small Savings Fund (NSSF) is set to rise to an alarming level of `3.5 lakh crore in FY21 from `2.5 lakh crore at theendofFY20.Thiswillbethe steepest annual spike in these loans, which are increasingly being resorted to by the Centre to keep the food grain procurement operations going, and meet the enhanced obligations of highly subsidised PDS food supplies under the National Food SecurityAct (NFSA). NSSF loans are under sovereignrepaymentguarantee;and are an off-budget expenditure item with attached contingent liabilities for the Centre. The relentless rise in the NSSF loan, however, is a serious threat to the fiscal management efforts. Continued on Page 2 Continued on Page 2 ANURAG JOSHI Mumbai, May 21 GST Council eyes market borrowings thisweekreportedalossforthe latestfiscalyearof$17.7billion as it wrote down the value of portfolio companies,including WeWork and Uber. That triggered the biggest loss in SoftBank’s 39-year history. Its shares have been hammered as investors fret that theviruswill batter the company’s holdings even more,and Son has said he will sell $42 billion in assets. INDIA’S SHADOW BANKS need to repay a record amount of local bonds in June but elevated credit market stress during the coronavirus pandemic may make it a challenge for some to refinance their debt. Lockdown has left millions jobless and there are growing concerns that default rates across industries in the nation may jump after the world’s biggeststay-at-homemeasures. Shadowlendersfocusonriskier borrowers, and that exposes them typically to a greater chance than banks that their assetswill sourin a downturn. Shadow banks had been grapplingwithpersistentfunding difficulties even before the pandemic, and Franklin Templeton’s shock closure last month of local credit funds has addedtostressesforcompanies refinancing bonds.Weakening solvency in the shadow-lender sector risks having a knock-on effect for the nation’s financial system, because some banks have large direct exposures to non-bankfinancialinstitutions, according to a report this week byMoody’s Investors Service. Recent steps by the policy makerstoboostfundingforthe sectorhavefallenshortofexpectations, with RBI auctions to lend money to banks to buy bonds of financiers getting a tepidresponse.Thosestepshave been “ineffective because liquidity stress at NBFIs is a result of concerns about their credit risks,ratherthantheavailability of liquidity,” Moody’s analysts, including Srikanth Vadlamani, wrote in a May18 report. Continued on Page 2 Continued on Page 2 SUMIT JHA New Delhi, May 21 APART FROM THE Centre and states which have raised their market borrowing plan for the current fiscal year amid a big revenue shortfall, the Goods and Services Tax (GST) Council may also take an unprecedented stepbyresolvingtotapthe market to bridge the shortfall in compensation cess collection and ensure that states’ guaranteed revenue growth of 14% year-on-year is protected, government sources said. Details on Page 2 SoftBank’s Masa-Misra partnerhip strained by losses, infighting meeting in California. He said he would never forget the help Misra provided when he was at Deutsche Bank more than a decade earlier and spoke of the trust and respect they had developed since,according to a summary shared internally. “We are family,”Son said. But behind the smiles and talk of kinship,another story is unfolding, one about the perplexing relationship at the top of SoftBank. The Vision Fund moneyisbankrollingeffortsby the country’s technology giants to develop leading positions in everything from artificial intelligence and autonomous driving to internet data collection. Debt trap? FCI dues India NBFCs to NSSF may jump by brace for record debt steep 40% in FY21 HEART OF THE PROBLEM PAVELALPEYEV, GILES TURNER & PETER ELSTROM Tokyo/London, May 21 companies China/ Hong Kong About 95% of firms whose financials can't be reviewed use China auditors FREE RATION SCHEME PRABHUDATTA MISHRA New Delhi, May 21 ILLUSTRATION: ROHNIT PHORE 11 SoftBank chairman Masayoshi Son with Vision Fund chief Rajeev Misra and chief opearting officer Marcelo Claure
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