OPINION, P2 MIND & GAMES Forget backpacks and binders. Here are the essentials teenagers will need for the strange school year ahead Page 10 A time for supreme reform FE LINES Grounding has several physiological benefits besides enhancing general well-being and health Page 6 THE 2020 BACK-TO-SCHOOL LIST FOR TEENS’ EMOTIONAL WELL-BEING ACROSS THE AISLE , P CHIDAMBARAM Down to earth SPOTLIGHT Follow us on Twitter & Facebook. App available on App Store & Play Store WWW.FINANCIALEXPRESS.COM VOL .XVIII NO. 96 HOWWFH IS BIG BUSINESS FINANCIAL EXPRESS ON SUNDAY NEW DELHI SUNDAY, AUGUST 30, 2020, 20 Pages, `10 (Patna `11, Raipur `10) 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 , WHAT'S INSIDE C H A N D I G A R H , The game planner Football players may walk away with the lion’s share of the applause, but it’s their managers who are responsible for a team’s fortunes. A tactician, psychologist and support system, a football manager has to don many hats in the quest for silverware ■ WORDS WORTH, P4 The insider’s take A book sets the stage for onstructive debate on fiscal stability ODD & EVEN ROHNIT PHORE PRIME MINISTER Narendra Modi on Saturday pitched for taking farm education to middle school level, saying necessary reforms have been made in this regard in the National Education Policy (NEP) 2020, reports PTI. “There is a need to take knowledge related to agriculture and its practical application to school level. Efforts are on to introduce the Agriculture subject at middle school level in villages,” Modi said. `10,000-cr water projects for Bundelkhand region: PM PRIME MINISTER Narendra Modi on Saturday said the government is committed to the development of drought-prone Bundelkhand region and around 500 projects worth over `10,000 crore have been sanctioned for improving water availability, reports PTI. K O C H I , K O L K A T A , L U C K N O W , WHAT'S OPEN Social/academic/ sports/entertainment/ cultural/ religious/ political events allowed with cap of 100 persons from Sept 21 Open air theatres to open from Sept 21 THE MINISTRY OF home affairs issuednewguidelinesSaturday for opening up of more activities in areas outside containment zones with effect from September1.Basedonfeedback fromstatesandUTs,ithasbeen decided to allow metro rail to operate with effect from September7 in a graded manner. Social,cultural,religiousand political functions will be permittedwithaceilingof100persons from September 21,with safety norms in place.Open-air theatreswillopenfromSeptember 21.Schools,colleges,educationalandcoachinginstitutions willremaincloseduptoSeptember30.Inareasoutsidecontainmentzones,upto50%ofteaching and non-teaching staff can be called to schools from September 21. Also, students of classes9to12canvisitschoolsto seekguidancefromteachers. Skill or entrepreneurship training will be permitted in Students of higher classes can visit schools outside containment zones for teachers’ guidance Higher education institutions to open for PhD, PG students needing lab works WHAT'S CLOSED Schools, colleges, educational, coaching institutions till Sept 30 Cinema halls, swimming pools, entertainment parks, theatres not to open International air travel not allowed, except as permitted national skill training institutes, ITIs, and other government establishments. Continued on Page 16 ● Reliance Retail acquires Future Retail for `24,713 crore Reliance Retail Ventures acquires Future Group’s retail, wholesale, logistics, warehousing businesses FE BUREAU New Delhi, August 29 LEVERAGED TO THE hilt and struggling to honour repayments to lenders, the poster boy of Indian retail, Kishore Biyani, on Saturday capitulated,selling his Future Group to Reliance Industries. In a slump sale transaction worth `24,713 crore,RILbought out the wholesale, retail logistics and warehousing businesses of the Future Group. The deal gives RILaccess to Future Retail’s expansive network of hypermarket and supermarket stores,including the company’s flagship Big Bazaaroutlets.The retail business also covers the firm’s chain of electronics stores besides its portfolio of lifestyle stores, Central and Brand Factory. Future Retail has a footprint spanning more than 1,500 stores in over 400 cities and towns P U N E the 10 Asean members and eight other nations, including India, the US and China, have highlighted the importance of strengthening regional supply chains to make them resilient in times of heightened challenges posed by the Covid-19 pandemic, and to spur economic growth. As per a joint statement after the 8th East Asia Summit (EconomicMinisters’Meeting) held on Friday, the ministers “reaffirmedtheircommitment to promote trade and investment,minimise disruptions to trade and global supply chains andfacilitatesupplychainconnectivity, including for essential goods such as medical supplies, medicines, including vaccines, food, commodities and other essential supplies and services in the region”. Reiteratingtheirsupportfor the “necessary reform” of the World Trade Organization (WTO),theministerspledgedto continue to work together“to realise a free, fair, transparent, nondiscriminatory,predictable, across the country. Reliance Retail, which has a store count of 11,806 outlets across 7,000 towns in the country, had earlier said that store expansion remains a 'thrust' for the business. Besides strengthening the company’s footprint, the transaction is also expected to significantly add to JioMart’s offerings that plans to expand beyond grocery. As part of the deal, the Retail &Wholesale Undertaking is being transferred to Reliance Retail and Fashion “WiththeshifttoBS6emission norms, the price gap betweenpetrolanddieselvehicles,including small SUVs,has increased,and with the differenceinfuelpricesalsonarrowing, customers in this pricesensitivesegmentarerealising that petrol SUVs make better Lifestyle Limited (RRFLL), a wholly-owned subsidiary of Reliance Retail Ventures (RRVL).The Logistics & Warehousing Undertaking is being transferred to RRVL. RRFLL also proposes to invest `1,200 crore in the preferential issue of equity shares of FEL (Future Enterprises Ltd) to acquire 6.09 % of post-merger equity and `400 crore in a preferential issue of equity warrants which, upon conversion and payment of balance 75% of the issue price, will result in Bharat initiaive “does not mean a protectionist India” SUMIT JHA New Delhi, August 29 ■ Members to minimise THE CENTRE’S MESSAGE to disruptions to trade and facilitate supply chain ■ To ensure movement of medical supplies, medicines, including vaccines, food, commodities in the region ■ Members agreed to support the “necessary reform” of the WTO SPORTING PRIDE Women's hockey team captain Rani Rampal with her Khel Ratna award on Saturday. The annual national awards were presented through an online ceremony, amid the Covid-19 pandemic, during which athletes logged in from multiple cities to be honoured by President Ram Nath Kovind Continued on Page 16 ■ The shift to BS6 emission norms has increased the price gap between petrol and diesel vehicles economic sense,” said Rajeev Singh, partner & leader, automotive,Deloitte India. Som Kapoor, partner, automotive sector, EY India, said withfuelpricesalmostonapar, customers now understand thatthetotalcostofownership (TCO) of a petrol SUV is lower RRFLL acquiring further 7.05% of FEL. According to ratings agency ICRA, debt for listed companies of Future Group increased to `12,778 crore as on September 30, 2019, from `10,951 crore as on March 31, 2019. Future Retail’s net profits declined to `164.56 crore on a consolidated basis in Q3FY20 from `197.60 crore in the year-ago period. Revenue from operations decreased to `5,193.19 crore in Q3FY20 compared to `5,368.46 crore in Q3FY19. Centre’s formula signals states to take hit from Covid ■ India says its Atmanirbhar and stable trade environment, andaffirmedtheimportanceof agreed-uponrulesintheWTO”. “The ministers agreed that any trade restrictive emergency measures put in place to addresstheimpactofCovid-19 must be targeted, proportionate, transparent, temporary, consistentwithWTO rules and do not create unnecessarybarriers to trade or disruption of global and regional supply chains,” according to the joint statement released Saturday. Retail and wholesale entity to be housed in Reliance Retail and Fashion Lifestyle GST SHORTFALL KEY TAKEAWAYS ■ Share of diesel subcompact SUVs dropped sharply from 76% in April last year to 23% in July 2020 Transaction for a going concern on a slump sale basis for `24,713 crore RRVL reported consolidated turnover of `1,62,936 crore and net profit of `5,448 crore in 2019-2020 India,China,US to bolster supply chains ● BIG ON PETROL (highest selling SUV in segment) in February 2020 — in that month the diesel share in thesegmentdroppedto21%— analysts say this shift speaks of the larger customer mindset change post-BS6,even in a segmentwheredieselwaslongperceived as the fuel of choice. D E L H I , Logistics, warehousing to be housed in Reliance Retail Ventures Limited EAST ASIA SUMMIT WHILETHERE HAS beena‘grad- ual shift’to petrol in the overall passenger vehicle segment — thanks to diesel price decontrol — in subcompact sports utility vehicles(SUVsunder4metresin length) —that shift happened comparativelylate,andhasbeen rathersteep.InApril2019,diesel subcompact SUVs enjoyed a 76% share, which dropped sharply to 23% in July 2020, accordingtodatafromindustry bodySocietyof IndianAutomobileManufacturers(Siam). While this drop can be attributed to Maruti Suzuki replacingthedieselenginewith a petrol one in Vitara Brezza N E W FOR THE TAKING Petrol SUVs signal shift from diesel here for long haul VIKRAM CHAUDHARY New Delhi, August 29 M U M B A I , Biyani sells out to Reliance NEW GUIDELINES FE BUREAU New Delhi, August 29 ECONOMIC MINISTERS FROM PM pitches for taking farm education to middle school level H Y D E R A B A D , Metro to resume Burdened with debt, Kishore in graded manner FE BUREAU New Delhi, August 29 QuickPicks READ TO LEAD DONE DEAL UNLOCK 4 ● From Sept 1, more phased re-opening; schools still shut ■ LEISURE, P7 C H E N N A I , The work-from-home culture has spawned a whole business around it Page 5 ■ With fuel prices almost on a par, the total cost of ownership of a petrol SUV is lower for, say, a five-year period or even a 10-yearperiod.“Policies such as in Delhi where one can runadieselcaronlyfor10years and a petrol carfor15years are accelerating this shift, even in SUVs that traditionally have been diesel,”he said. Maruti Suzuki,which does- n’t offer a diesel engine in any of its cars, has been running campaigns at its dealerships and on its website to make prospective customers more aware about the TCO of a car. ShashankSrivastava,executive director, marketing and sales, MarutiSuzukiIndia,saidthere is little economic logic to buya diesel car.“We have created a calculator based on the distance travelled, the place the person lives in, the diesel and petrol prices in that area, and the upfront cost of the car.SUV customers are getting convinced — even in rural areas — that petrol is often a more economical choice,”he said. states as it presented two options before them at the Thursday’s GSTCouncil meeting was very clear: the additional revenue slippage on account of Covid-19, an event thatwas not foreseen once the states were offered a guaranteed revenue level under GST, could be addressed onlywith a cost to them. The revenue shortfall caused merely by GST implementationwill onlybe bridged without a cost to the states. The first option, clearly the one which the Centre prefers, will mean that a near-no-cost special loan facility will be arranged by the Centre, using its persuasive powers with the RBI and state-owned banks,to fill the gap in the compensationfundinsofarasrequiredto plug the deficit caused byGST. The second option, which involves addressing the entire revenue shortfall in FY21,will mean the states will have to bear the interest cost. Not for nothing some states likeKeralaopposetheformula— the compensation funds, after all,were supposed to be part of theirincome,sansanycost. Itisanothermatterthatthe Centre was unduly liberal whenitassuredthestates14% annual GSTgrowthforthefirst five years. Accordingtoadetailednote sent to states by the Centre — FE has reviewed the note — in the `97,000 crore borrowing option, the first one mentioned above, the loan will not beconsideredasdebtonstates’ books and the entire borrowing cost — principal and interest repayment — will be borne by compensation cess fund (to be extended beyond June 2022).Whereas,stateswill pay interest on the higher `2.35 lakh crore loan option, and a large chunk of it would be treated as states’debt. Both the estimated amounts of shortfall are adjusted forthe estimated cess collection of about `68,000 crore in the current fiscal. Although states choosing option 1 would still have entitlement to claim shortfall given it would be equal to option 2 amount,the note said that to the extent the shortfall is not made good, the states would still be eligible to get it in arrears after the transition period through extension of the cess,“if so decided by the Council”. Of course, an element of uncertainty prevails. Further, if states choose option1,theycancarryforward to the next fiscal the unutilised borrowing space of 1% of GSDP,of what was provided earlier as part of Covid-19 stimulus package,unconditionally. Continued on Page 16 BORROWING OPTIONS BEFORE STATES Continued on Page 16 New Delhi Option 1 Option 2 Cost to states None. Interest and principal repaymentvia cess Pay interest; principal repayment via cess Debt on books Not considered as state debt Amount above option 1 treated as state debt Amount `97,000 cr Borrowing 0.5% of GSDP unconditional; to limit carry forward unutilised part of 2% extra room to next FY `2.35 lakh cr New formula to accommodate borrowing; no carryforward of unutilised room
The Financial Express (FE) is a business paper that’s closest to the people who are in the business of business. From business policies to market trends to new developments, The Financial Express comes packed with incisive news on every relevant issue.