OPINION, P6 ECONOMY, P2 K SRINATH REDDY True prevalence most likely lower than sero-survey figure INTERNATIONAL, P8 EDITORIAL PSB PRIVATISATION DEBATE COVID IMPACT Covid could mean more than just one year lost for many students if digital divide is not bridged Banks need deeper reforms, recapitalisation no panacea: Singh Google to keep employees home until summer 2021 NEW DELHI, TUESDAY, JULY 28, 2020 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. XLVI NO. 127, 22 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: 37,934.73 ▼ 194.17 NIFTY: 11,131.80 ▼ 62.35 NIKKEI 225: 22,715.85 ▼ 35.76 HANG SENG: 24,603.26 ▼ 102.07 `/$: 74.84 ▼ 0.01 `/€: 87.63 ▼ 0.78 BRENT: $43.51 ▲ $0.17 GOLD: `52,116 ▲ `1,156 REPAYMENT ROAD Do not extend loan moratorium: Parekh HDFC chairman says even people with ability to pay taking advantage FE BUREAU Mumbai, July 27 HDFC CHAIRMAN DEEPAK Parekh on Monday urged ReserveBankofIndia(RBI)governor Shaktikanta Das to not extendthemoratoriumonloan repayments beyond August 2020, saying even borrowers who were able to service their loansweredeferringpayments. “Please do not extend the moratoriumbecauseweseethat even people who have the ability to pay — whether it is individuals orcorporates — are taking advantage under this moratoriumanddeferringpayment…There is some talk that There is some talk that there will be another extension of three months. It's going to hurt us, and hurt the smaller NBFCs particularly. — DEEPAK PAREKH HDFC CHAIRMAN When the stock market is its own best predictor RS Continued on Page 2 US 1,00,000 80,000 60,000 65,498 43,880 20,000 0 INDIA ON MONDAY inched closertoclocking50,000infections a day and is on course to beat Brazil at this metric; last week,Indiaadded3.1lakhcases while Brazil added 3.2 lakh.At this pace, India is also likely to surpass the US within two weeks by which time, it will be adding around 90,000 cases per day while the US will add around 85,000. For several weeks now, India has reported thefastestgrowthininfections in theworld. A month ago, India’s cases Technical analysis involves examination of past market data such as prices & trading volume leading to an estimate of future price trends and, thereby, an investment decision ■ Personal Finance, P9 18,653 33,846 July 1, 2020 *based on current growth rates were rising 22.9% per week compared to 15.8% for Brazil and 11.5% for the US. In the COVID-19 UPDATE 14,35,453 TOTAL CASES 32,771 DEATHS SO FAR 49,931 NEWCASES First net loss for JSW Steel after 17 quarters Subsidiaries performed better than expected; balance sheet continued to deteriorate; valuations are stretched; ‘Reduce’ rating maintained with target price of `150 ■ Investor, P9 QuickPicks SpiceJet to operate first long-haul flight from Amsterdam on Aug 1 SPICEJETWILL operate its first long-haul flight from Amsterdam on August 1 to repatriate Indians "waiting" to come from Europe, the airline said on Monday, reports PTI. Scheduled international passenger flights have been suspended in India since March 23 due to Covid. "SpiceJet will operate its first long-haul flight to bring back Indians waiting to come from Europe. 1st flight departs from Amsterdam on Aug 1. Limited seats available," the airline said on Twitter. PAGE 4 Kotak Mahindra Bank Q1 net falls 8.5% on higher provisions PRIVATE SECTOR lender Kotak Mahindra Bank (KMB) on Monday reported a net profit of `1,244.45 crore in the June quarter of FY21, down 8.5% year-on-year, owing to a 204% jump in provisions on a y-o-y basis to `962 crore, reports fe Bureau in Mumbai. The bank has made a fresh Covid-19related general provision of `616 crore in Q1FY21. Covidrelated provisions as at June 30, 2020, stood at `1,266 crore, or 0.62% of net advances.. PAGE 10 Export sops scheme: `9,000-cr limit announced for April-Dec THE REVENUE-STARVED finance ministry has asked the commerce ministry to limit benefits under the flagship Merchandise Exports from India Scheme (MEIS) at just `9,000 crore for April-December of FY21, prompting it to block the online MEIS module for exporters to apply for such incentives from July 23, reports fe Bureau in New Delhi. Commerce minister Piyush Goyal wrote a letter to finance minister Nirmala Sitharaman on July 21 to reconsider the revenue department’s decision. PAGE 2 THE MINISTRY OF electronics and information technology (MeitY)planstoshortlyformulate a set of intermediary guidelines to regulate Internet apps and social media platforms based on the country of origin. The issue has gained prominence in the light of the IN THE OFFING A different set of norms would govern apps from countries sharing land border with India Such app providers would need to store consumer data within the country They would also need to store all consumer data for a minimum of three months These guidelines would not apply to US-based firms like Facebook, Google, etc recent banning of around 59 Chinese apps by the government onnational securityconcerns.Official sources said that though the current provisions in the Information Technology Act empowers the government to ban apps and block content which threaten national security, sovereignty, etc, a framework needs to be put in place regarding other operational details aswell. Meanwhile, the government on Monday is understood to have banned 47 more Chinese apps, taking the total numberofmobileapplications banned to 106. The 47 additional Chinese apps that have been banned are clones and variants of the apps which were blocked earlier. One of the provisions in the new set of guidelineswould be that companies which are based in countries that share land border with India, can only operate if they store consumerdatawithinthecountry, officials said. Such a provision would make functioning of Chinese apps difficult in the country and if they want to be present in the Indian market, theywould have to meet stringent government guidelines right from the beginning. Continued on Page 14 Projections* July 26 Aug 15, 2020 Source: Our World In Data last one week, while India’s growth rose to 23.9%, for Brazil, it fell to 14.1% and for theUSto10.7%.Asaresult,the number of infections in India will double in around 19 days while it will take 32 days in Brazil and 42 in the US. What is worrying is that as India’s testing levels have risen,so have positivity levels. Continued on Page 14 Karnataka and Andhra Pradesh record over 1 lakh infections ISHAAN GERA New Delhi, July 27 FIVE STATES IN the country todayhaveoveronelakhCovid infections. While a month back, the majority of infec- tions were in three major cities,the southern states are emergingasthenewhotspots. Karnataka and Andhra Pradeshhavebothcrossedone lakh infections each, and are adding about 5,000 cases a day. What’s worrying is that most of the infections in the twostateshavebeendetected in the last one month,85% of them since earlyJuly. Continued on Page 2 ● I-GST REFUND Exporters claiming `2,000 cr go missing Tough data storage guidelines likely to deter Chinese apps FE BUREAU New Delhi, July 27 78,770 48,661 51,147 40,000 ISHAAN GERA New Delhi, July 27 99,443 89,841 Brazil India ENTRY BARRIERS Special Features Volume Continued on Page 2 Rising daily infections FE BUREAU New Delhi, July 27 EN ROUTE The first batch of Rafale aircraft before taking off from Dassault’s aviation facility in Merignac, France, on Monday. Five aircraft are likely to arrive at the Ambala airbase tomorrow, IAF said. In slow gear FE BUREAU Pace of recovery nowhere near comfort level The pace of recovery remains stuck at around 30pp below normal, as worsening mobility and employment data offset higher power demand. Thus, while high frequency indicators for Q2 broadly suggest a normalisation, Nomura sees a rising risk that the sequential improvement in activity may fade after the initial post-lockdown normalisation. 100 Nomura India Business Resumption Index (NIBRI) 90 80 70.1 THE CENTRE SAID it hasn’t taken any decision to reintroduce the controversial Financial Resolution and Deposit Insurance Bill, scotching growing speculations, reports fe Bureau in New Delhi. It was withdrawn from the Lok Sabha in 2018. 70 Continued on Page 2 RESERVE BANK OF India (RBI)governorShaktikanta Das on Monday said nonperforming assets (NPAs) relating to infrastructure loansofbankshaveremained at elevated levels.“There is clearly a need for diversifying financing options,” Das observed, adding a big push for mega infrastructure projects can reignite the economy,as in the case ofthe golden quadrilateral. “This could begin in the form of a north-south and east-westexpresswaytogether with high speed rail corridors, both of which would generate large forward and backward linkages for several other sectors of the economy and regions around the rail/road networks,” Das said at the CII national council. INDIGO ON MONDAY said it is implementing “deeper” pay cuts of up to 35% forits senior employees in order to reduce its cash outflowamid the coronavirus pandemic. From Mayonwards,IndiGo had implemented pay cuts of up to 25% for its senior employees. The“deeper”pay cuts came after the airline's announcement on July 20 that it would lay off 10% of its workforce due to the economic crisis caused by the pandemic. In an e-mail on Monday, IndiGo CEO Ronojoy Dutta told employees,“Iwill increase my personal pay cut percentage to 35%. I am asking all senior vice presidents and above to take a 30% paycut,all pilotswill see theirpaycut percentages increased to 28%,all vice-presidents will take a 25% pay cut and associate vice-presidents will take a 15% pay cut.” These increased pay cuts will come into effect from September 1,he added. For several weeks now, India has reported the fastest growth in infections in the world 70 60 ` ` 50 40 Jan 26, 2020 Mar 29 May 31 July 26, 2020 Source: Google, Apple, CMIE, Bloomberg and Nomura Global Economics AS MANY AS 1,474 exporters have gone untraceable after fraudulently claiming over `2,000croreofintegratedGST (I-GST) refunds,inwhat shows the extent of tax evasion attempts in the GST regime.These claims were rejected after verification at the actual places of business, official sources said, adding that the wrongdoers will be brought to book. The data analytics performed byDirectorate General of Risk Management (DGARM)which is followed by field-levelverificationbyCGST officers havefoundthese‘risky exporters’ included 7 ‘Star’ exporters. The analysis of frauds among exporters started in June last year. Star Export House exporters are certified by the government on the basis of exportperformance(`15crore to`5,000 crore FOB in the current and three preceding years). They are extended certain benefits, including customs clearance on self-certification basis and exemption from furnishing bank guarantee under certain schemes. Continued on Page 14 CLASH OF THE TITANS Global prospects bleak for Chinese technology champions REUTERS Shanghai/Beijing, July 27 HUAWEI TECHNOLOGIES’ FOUNDER Ren Zhengfei’s globalambitionsaremarkedin bricks and mortar at a new company campus in southern China,where the buildings are replicas from European cities. Zhang Yiming, founder of ByteDance, the operator of short video app TikTok, has plastered his Beijing headquarters with posters including a cover of former Google CEO Eric Schmidt’s book “How Google Works”, and has long said he will build a global firm that can compete with US tech giants. But the two companies which best exemplify China’s ambitions to challenge US tech dominance are now stymied bystrains in relations between China and countries including the US, India, Australia and Britain. Chinese companies with world-beating technology — including drone-maker DJI, ILLUSTRATION: ROHNIT PHORE No decision to reintroduce FRDI Bill: Govt FE BUREAU Mumbai, July 27 PRESS TRUST OF INDIA New Delhi, July 27 India to surpass Brazil this week, US in two weeks 57.5 THE CENTRE HAS released GST compensation of `13,806 crore to the states for March, which takes the total aid for FY20 to `1.65 lakh crore, reports fe Bureau in New Delhi. The collection under the compensation cess fund was only `95,444 crore, meaning the compensation payments were over 70% higher than the fund. Infra NPAs remain high, says Das FAST FORWARD 68.1 IN THE NEWS Govt releases GST aid of `13,806 cr to states for Mar there will be another extension of three months. It’s going to hurt us, and hurt the smaller NBFCsparticularly,”Parekhsaid in his remarks to the RBI governorat CII’s councilmeeting. Both Parekh and CII president Uday Kotak, however, urged the central bank to allow banksaone-timerestructuring of stressed assets. “There is a growing view across the membership of a need for one-time restructuring,” Kotak said. Industry has been asking that themoratoriumbeextendedby three months. Bharti Enterprises’VC and CII’s past president Rakesh Bharti Mittal said at the conference: “Given the stress in the economy and the huge pressure, I believe there willbemorecompaniesjoining the NPA list, and the moratorium extension should be seriouslylookedatandconsidered.” IndiGo says 'deeper' pay cuts of up to 35% for senior employees 95.2 MSMEs ● COME SEPTEMBER artificial intelligence firms Megvii,SenseTimeandiFlytek, surveillance camera vendor Hikvision and e-commerce conglomerate Alibaba Group — are also among those losing access to markets. Smaller companies are being forced to re-think too. “What we are experiencing now is unprecedented,” said a Chinese startup founder who has operations in the US and India but asked not to be identified as he is now considering walking away. “My entrepre- New Delhi neurial spirit has been dampened due to all this, let alone global ambitions.” It’s a big shift from even a year ago, when the US-led tradewarwith Chinaand security concerns about Huawei were having little impact on most Chinese tech champions. SenseTime and Megvii, backed by US investors, were eyeing big IPOs. ByteDance’s TikTok unit was enjoying unfettered global growth. Continued on Page 14
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