OPINION, P6 NATION, P12 EDITORIAL Make basic income support part cash, part tied-spending voucher INSURANCE MEASURE IT’S A DEAL Covid vaccine talk needs cautious optimism, many uncertainties still need to be resolved RAJARSHI GHOSH INTERNATIONAL, P8 India in talks to store crude in US strategic petroleum reserves Apple to gain a new Chinese iPhone maker during a trade war KOLKATA, SATURDAY, JULY 18, 2020 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM VOL.29 NO. 221, 14 PAGES, `10.00 (NORTH EAST STATES & ANDAMAN `13.00) 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: 37,020.14 ▲ 548.46 NIFTY: 10,901.70 ▲ 161.75 NIKKEI 225: 22,696.42 ▼ 73.94 HANG SENG: 25,089.17 ▲ 118.48 `/$: 75.02 ▲ 0.17 `/€: 85.51 ▲ 0.26 BRENT: $43.04 ▼ $0.33 GOLD: `48,844 ▼ `233 IN THE NEWS Forex reserves hit record high INDIA'S FOREX RESERVES rose by $3.1 billion as on July 10 compared to the week before to hit a record high of $516.36 billion, according to the latest data put out by the RBI, reports fe Bureau in Mumbai. Foreign currency assets, a key component of reserves, rose by $2.372 billion to $475.635 billion. Fraudulent IGST claims of `1,875 cr AS MANY AS 1,377 exporters have fraudulently claimed IGST refund amounting to `1,875 crore, sources in the indirect tax department said, reports fe Bureau in New Delhi. They added that there are at least 10 ‘star exporters’ among these who have illegally availed of `28.9 crore in refunds. “These exporters have been found untraceable at their principle place of business,” a tax official said. Yes Bank FPO subscribed 95% YES BANK HAS managed to raise `14,267 crore through its follow-on public offer, implying 95% subscription of the issue size of `15,000 crore, reports fe Bureau in Mumbai. The issue has achieved its minimum required subscription of 90% of its total size to sail through, the lender said. LENDERS WORRIED Bounce rates on auto-debits shoot up to 45% in June SHRITAMA BOSE Mumbai, July 17 THE BOUNCE RATE on autodebit transactions on the National Automated Clearing House (NACH) platform shot up to 45% in June against the six-month range of 31-38%. The value of the transactions that ‘bounced’ was `26,850 crore or 38% of the total mandates, data released by the National Payments Corporation of India (NPCI) shows. Most of these transactions are EMI payments,insurance premium debits or SIP mandates. Industry players attribute the jump in the bounce rate to borrowers’ reduced ability to 2020 Value (` cr) Continued on Page 2 Returns Bounce rate Volume (m) Value (` cr) (In %) Presentation Volume (m) make repayments, elongated cash-flow cycles, an increased propensity to save and confusion regarding the availability oftheloanmoratorium.Bethat as it may, the surge in bounce rates is cause for concern as bounces are typically corelated to slippages or loans turning bad. Aseem Dhru, MD and CEO, SBFC Finance, told FE the bounce rates had been rising even before the emergence of Covid-19, but what the new datasuggests—thatnearlyone in two requests are being dishonouredforwantofsufficient funds — is cause forworry. Jan 77.73 73,316 24.13 18,212 31.0 Feb 78.93 73,277 24.83 18,264 31.5 Mar 79.13 75,952 26.75 20,929 33.8 66.71 55,805 25.34 20,454 38.0 64.00 50,767 23.29 15,367 36.4 26,850 45.4 Apr May Jun 78.89 70,492 35.79 Data for recurring debit transactions on NACH Source: NPCI REDX PLAN IN THE RED Andhra solar units face TDSAT sets aside Trai order on `5k-cr under-recovery MARCH 2016 Andhra power regulator fixes renewable energy tariff at `4.84/unit, PPAsigned SEPT2019 Amravati HC tells state to pay plants lower interim tariffof `2.43/unit NOV2019 State starts tightening renewable energy norms,withdraws earlier incentives Regulator free to conduct inquiry but can’t block tariff plan DEC 2017 Lowest renewable tariffof`2.43/unit discovered forwind project in Gujarat JULY2019 New state government underYSJaganmohan Reddy forms panel to reviewwind/solar PPAs ANUPAM CHATTERJEE New Delhi, July 17 SOLAR AND WIND power plants in Andhra Pradesh,with aggregate capacity of 8,000 mega watt (MW),have claimed that their under-recovery owing to inadequate tariff payments by the state discoms have reached a staggering `5,000 crore. Whathascausedthecrisisis thestategovernment’sdecision to retrospectively amend the power purchase pacts, citing malpractices. AsperAndhraPradeshHigh Court’s September2019 order, the state-owned powerdistribution companies (discoms) are paying these plants at a provisional rate of `2.43/unit, against the `4.84/unit tariff approved by the state power regulatorearlierunderthe previous state government, leading to the financial stress of the renewable power producers.To addtotheirwoes,thestategovernment is amending its solar Vodafone Idea Whose undoing? Higher open access charges to double solar/wind power cost to large consumers APR 2020 State holds renewable energy payments citing coronavirus force majeure and wind power policies,effectively withdrawing the incentives which were offered to these plants earlier to promote renewable energyin the state. Suspending older provisions,thestategovernmenthas askedtheelectricityregulatorto levytransmissionanddistributionchargesforwheelingpower forwind and solarplantswhich sells electricity directly to industrial consumers through the open access mechanism. This can raise power costs byas much as `5/unit (`3/unit wheeling charges, `1.5/unit cross subsidy charges and FE BUREAU New Delhi, July 17 IN WHAT CAN be seen as an embarrassment for the Telecom Regulatory Authority of India (Trai), the Telecom DisputesSettlementandAppellate Tribunal (TDSAT) on Friday stayed the former’s directive to Vodafone Idea to withhold its RedX plan,which promises 4G networkonaprioritybasistoits certain premium customers. Although it is an interim stay order granted on the principle of natural justice andTrai hasbeenallowedtoconductits inquiry into the plan and pass itsfinalorder,Itisnevertheless a partial victory for Vodafone Idea as it can carry on with the plan and on-board subscribers till then.ForTrai,it is a setback since the tribunal has directed it to first giveVodafone Idea an opportunitytoexplainitsposition on the plan, and observed that the regulator had failed to establish why the tariff plan neededtobesuspendedtoconduct an inquiry. `0.5/unitdistributioncharges), rendering these sources unviableforopenaccessconsumers resulting in these projects losing customers. The state government, againstthe adviceof theUnion power ministry, had formed a committee to revise “abnormally priced wind and solar” power purchase agreements (PPAs),sayingtheremighthave been linked with “malafide intentions” and could have “resultedinunjustifiedburden on the consumers of the state”. Continued on Page 2 WhyTDSATstayed Trai's directive Trai could not establish why suspension of plan was required to conduct the examination of tariff Trai could not establish that Vodafone Idea had violated any of the existing tariff directives SinceVodafone Idea has changed the plan from higher speed to priority 4G network, the issue of speed is not there anymore Earlier this week,Vodafone Idea had moved the TDSAT challenging Trai’s directive asking the company to withhold the plan till the matter is examined. Continued on Page 2 CHANGE OF GUARD ● RESOLUTION ROAD PRESS TRUST OF INDIA New Delhi, July 17 change Cash-strapped states cut materials spend to boost relief to poor THE COUNTRY'S RICHEST woman Roshni Nadar Malhotra on Friday became the first woman to head a listed Indian IT company as she took over as the chairperson of $8.9-billion HCLTechnologies from her father and billionaire Shiv Nadar. Roshni,also a trained classical musician, came on the board of HCL Technologies in 2013 and was the vice chairperson. She will continue as CEO of HCL Corporation, the holding company for all the group entities. ShivNadar,however,would continue to be the managing ANKUR MISHRA Mumbai, July 17 SURYA SARATHI RAY New Delhi, July 17 ALTICO CAPITAL ON Friday filed an application with the Reserve Bank of India (RBI) to transfer the ownership to Hong Kong-based SSG Capital from existing investors — Clearwater Capital Partners, Varde Partners and Abu Dhabi Investment Council (ADIC). LenderstoAlticoCapitalhad earlier voted in the favour of a resolution plan submitted by special situations fund SSG Capital,which offered `2,754 crore for the NBFC, against the totaldebtof`4,300crore.Additionally, `354 crore has been promised in the form of security receipts, as per the resolutionplan.Thechangeinownership will pave the way for the first NBFC resolution under June 7,2019,circularof RBI. Although the deal was closed in March, employees of AlticoCapitalhadsubsequently raised issues about SSG Capital’s proposed takeover of the company to the regulator. FE has learned that employees of the company had raised concerns to RBI about winding up of Altico Capital by the new owner.According to sources,all the concerns of the employees have been addressed. AS THE CENTRE fast-tracked releaseoffundsundertherural jobs scheme to provide timely incomesupporttothepeoplein villages, including migrant workers who have returned from cities in large numbers, manycash-strappedstateshave used the funds to employ the beneficiariesinworksinvolving lesser use of materials, according to data gathered byFE. In normal times, of every `10 spent under MG-NREGS, `6-7 goes to the workers as wages and the balance `3-4 is used for purchase of building materials. However, the wagematerialsratiohasturnedoutto be skewed much more towards thewagessideinthecurrentfiscal; in a number of states, the ratio has become 8:2 or higher and some states likeAssam and Haryana have used 95% or more of the scheme’s funds for payment ofwages. An obvious fallout of the states’strategy is that the MGNREGSworkcarriedoutduring the Covid period may not have created much durable assets, butaccordingtoobservers,since the expediency demanded use ofthefundsforwagepayments, the states cannot be faulted for adopting the line. The higher shareofspendingonwagesalso RURAL JOB SCHEME Shiv Nadar steps down, Altico Cap files for Roshni new HCL chief ownership director of the company with designation as a chief Strategy officer, the company said in a statement. HCL Technologies CEO C Vijayakumar said this was part of the company’s succession planning exercise. Continued on Page 2 Special Feature And the car world is finally going electric… This week three of the world’s most prominent carmakers unveiled their electric/electrified cars, including Volkswagen ID.3, Nissan Ariya electric, and Maserati Ghibli hybrid ■ Motobahn, P13 QuickPicks Reply to USTR: India defends ‘Google tax’, rollback unlikely INDIA HAS opposed a US probe into its digital services tax, firmly asserting that its equalisation levy, or the so-called 'Google tax', is "nondiscriminatory", reports fe Bureau in New Delhi. In its reply to the office of the US Trade Representative, New Delhi added that it has only prospective application and doesn't specifically target American companies. PAGE 2 I-T refunds of `71,229 crore issued to 21.24 lakh taxpayers THE CENTRAL Board of Direct Taxes has issued refunds worth `71,229 crore in more than 21.24 lakh cases during April 8-July 11, reports fe Bureau in New Delhi. “Income-tax refunds amounting to `24,603 crore have been issued in 19.79 lakh cases to taxpayers and corporate tax refunds amounting to `46,626 crore in 1.45 lakh cases during Covid,” the government said. Continued on Page 2 ALL GUNS BLAZING Defence minister Rajnath Singh poses for a photo with troops who took part in para dropping and other military exercises, in Leh, Ladakh, on Friday COVID VACCINE Cadila aims to complete trial by March SUMIT KHANNA Ahmedabad, July 17 ZYDUSCADILAPLANStocomplete late-stage trials for its novel coronavirus vaccine candidate by February or March and could produce up to 100 milliondosesayearinitiallyifit is successful, the company chairman said on Friday. Cadila’s vaccine candidate, known as ZyCov-D, is one of dozens being developed around the world to fight the coronavirus pandemic. “We are looking at about seven or a little more than Fury of pandemic provides context for rebirth and reform of the UN: Modi THE FURY OF the Covid-19 pandemic provides the context for the “rebirth and reform” of the United Nations, Prime Minister Narendra Modi said on Friday,reports PTI. Addressing the highseven months for the vaccine, provided the data is encouragingandthevaccineisprovento be effective during the trials,” level segment of the UN Economic and Social Councilsession via a video link, Modisaidthe75thAnniversary of the founding of the UN is an opportunity to assess its role and relevance in today’s world. PAGE 2 chairman Pankaj Patel told Reuters in an interview. Continued on Page 2 ■ So far this fiscal, states have released `39,230 cr under MG-NREGS; this is roughly 60% of amount spent in the whole of FY20 ■ The Centre’s budget for rural jobs scheme this year is `1,01,500 cr, up 50% over FY20 outlay Assam Haryana 96 3.7 3.2 Odisha 13.5 88.6 10.3 Maharashtra 94.8 Chhattisgarh 17.8 Gujarat 20 Punjab 24.8 83.3 79.5 77 73.7 MG-NREGS expenses till July 17 this year (% total) Wages Materials (Balance amounts spent for administrative/logistical expenses) Source: Rural development ministry shows the poor health of the state finances; under the rules, they have to bear a third of the expenditure on material and skilled labour,while the Centre bearstheentirecostofwagesfor the unskilled labour. Continued on Page 2 MONEY ORDER NRI asked to pay tax on Swiss bank account she denies owning SUMIT JHA New Delhi, July 17 NON-RESIDENT INDIAN CITIZENS are liable to pay tax in India only on India income, but they may still not be completely impervious to being asked to pay tax in the country on their global income, if they had, at some point,filed tax return in India as a resident. This is an intriguing prospect for a countrywith an exceptionally diverse diaspora, including a galaxy of billionaire corporate honchos. The Income Tax Appellate Tribunal (ITAT) in Mumbai has recently affirmed an order issued by the relevant commissioner-appeal,asking an 81-year old woman,claiming to be a US resident postFY06, to pay tax in India on `196.5 crore purportedly held by her in the financial year 2005-06 in a now-disbanded Swiss bank account ILLUSTRATION: ROHNIT PHORE Shiv Nadar and Roshni Nadar Malhotra Material benefit (HSBC Private Bank (Suisse) SA, Geneva), which she refuses to own. The individual — one Renu T Tharani — had filed income-tax return in India in 2006 for the relevant assessment year as ‘resident’, reporting an income of `1.7 lakh,which was below the tax liability threshold. The income tax department opened a reassessment proceeding in 2014 after it stumbled upon the Swiss bank account. The taxpayer in her defence argued against the validity of the reassessment process and whether the assessee was indeed the bene- ficiary of the Swiss bank account in the name of a family Trust. The tribunal held that the assesse’s conduct was akin to ‘running with the hare and hunting with the hounds’ as she had declined to sign a ‘consent waiver’ so as to enable the income tax department to obtain all the necessary details from the Swiss bank. Continued on Page 2 Kolkata