OPINION, P6 COMPANIES, P4 T NANDA KUMAR Farm Act fears are unfounded, but better signalling was needed INTERNATIONAL, P8 EDITORIAL HUNGER PANGS COVID CASE Govt needed to do more to stop permanent damage; sans big stimulus, many units will shut down Food delivery volumes at pre-Covid peaks, says Zomato CEO Twitter flags Trump’s tweet about now being immune to virus NEW DELHI, TUESDAY, OCTOBER 13, 2020 WWW.FINANCIALEXPRESS.COM FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE READ TO LEAD VOL. XLVI NO. 193, 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: 40,593.80 ▲ 84.31 NIFTY: 11,930.95 ▲ 16.75 NIKKEI 225: 23,558.69 ▼ 61.00 HANG SENG: 24,649.68 ▲ 530.55 `/$: 73.27 ▼ 0.14 `/€: 86.54 ▼ 0.25 BRENT: $42.27 ▼ $0.58 GOLD: `51,034 ▲ `339 REALTYWORLD-ADVANTAGEPUNE IN THE NEWS SC notice to Centre on pleas against farm Bills THE SUPREME Court on Monday sought response from the Centre on various petitions challenging the validity of various provisions of the controversial new farm laws passed by Parliament last month, reports fe Bureau in New Delhi. GST SHORTFALL DRIVING DEMAND Fiscally-wary govt plays it safe with small stimulus Measures to cost govt around 0.2% of GDP, unlikely to do much to stimulate demand ~`1 LAKH CR FE BUREAU New Delhi, October 12 THE PROLONGED closure of schools due to Covid-19 in India may cause a loss of over $400 billion in the country's future earnings, besides substantial learning losses, according to a World Bank report, reports PTI. South Asia region stands to lose $622 billion from school closures in the present scenario. FINANCE MINISTER Nirmala SitharamanonMondaysought to create additional demand of `1lakhcroreintheeconomyin the current financial year, through a clutch of steps that may involve less than `40,000 crore or a tenth of the amount to be saved via expenditure controlsalreadyannounced,as budgetarycost to the Centre. Acashboostertocentralgovernment/CPSE employees via two schemes — with expectations that at least the BJP-ruled stateswouldreplicatethese—is expectedtogenerateconsumer spending of `36,000 crore by March 2021. The Centre has also enhanced its budget capex for the current fiscal by `25,000 crore to `4.37 lakh crore and offered atotalof`12,000croretostates, under a 50-year interest-free loan facility (as good as grant), Special Feature Extra demand creation seen due to Monday’s steps in FY21 Govt/PSE staff can get cash equal to leave encashment plus three times the ticket fare under LTC scheme, to buy goods; private sector expected to emulate scheme No meeting ground: 21 states to borrow,others may move court Some states say allowing 21 states to borrow as per Option 1 is illegal; FM says stopping others will show dissenters in poor light However,the government’s expectations of extra demand creation may prove to be overestimates. While it expects a fourth of the government/PSU staff to make use of the LTC cash/interest-free advance (flat `10,000 per person) schemes, the actual number of users couldprovetobemuchless.The requirement of spending three timestheLTCamountbyMarch could be a dampener for many, given that the uncertainty created by the pandemic has buttressedatrendtosave,especially among private-sectorworkers. Also, the `12,000-crore grant to states maynot be fully spent in the current year itself — while `2,000 crore of this is to be released to the states only iftheyfulfilatleastthreeofthe four reforms attached to the extra borrowing window opened under the Aatmanirbharfiscal package,manystates may not have the spending efficiencytoreceivethesecond tranche of the `7,500 crore earmarked for non-hilly, nonNorth-East states.The government has said only 50% of the funds will be disbursed initially and the balance will be subject to full utilisation of the funds released. FE BUREAU New Delhi, October 12 ■Dissenting states evaluating options before them, including approaching the Supreme Court for a resolution ■While the Centre hasvirtually ruled out that it would borrow from the market, it has kept its doors open to the dissenting states for further discussions ■The Centre says it will ensure that so long as the states opt for borrowing under any of the two options it put forth, they don’t have to bear the interest or principal repayment costs IN THE DARK WB: Covid school closure may cost $400 bn to India Have you thought of investing in commodities? If your investment portfolio is focused only on shares and bonds, investing in commodities offers you the right option to hedge against portfolio risks ■ Personal Finance, P9 INCLUDING Govt staffcan also avail ofan interest-free advance of `10,000, to be recovered in 10 instalments `28,000 cr* `28,000 cr* Demand boost from special LTC scheme offered by the Centre, states and CPSEs If a section of Corporate India replicates the LTC scheme `37,000 cr^ `8,000 cr Additional budgetary capex by Centre, including `12,000 cr in 50year soft loans to states One-time festive advance scheme to employees, by Centre and states In both cases, employees have to spend by March 31, 2021 *Factoring in multiplier effect of 2.5 of LTC scheme on which Centre, states and CPSEs are estimated to together incur a cost of `11,200 crore, expected to be matched by pvt sector ^Multiplier effect to be higher but not captured for FY21, since much of it will be futuristic producing additional investmentdemandof`37,000crore. If, as the government expects, a section of Corporate India emulates the LTC (leave travel) cash voucher scheme, employeesintheorganisedprivatesectormayspend`28,000 crore by March end,raising the additional demand size to a round, headline-grabbing figure of `1 lakh crore. ANEXTENDEDSESSION ofthe 42ndmeetingoftheGoodsand Services Tax (GST) Council on Monday could not arrive at a consensus on thevexed issue of making good the states’ GST revenueshortfallinFY21.While as many as 21 states that have agreedtoborrowunderaspecial Option 1 window wanted to fast-track the process and meet their expenditure commitments, another 10 states stuck to their view that the full compensation amount will have to be paid in the currentyearitself withtheCentreitselfborrowing the shortfall amount. The dissenting states are evaluatingoptionsbeforethem, including approaching the SupremeCourt foraresolution. While the Centre has virtually ruled out that it would bor- Continued on Page 2 ■Repayments ofthe loanswould be fully adjusted against future collections ofthe cess Centre also assures states that all states will be facilitated to borrow roughly at the same cost, closer to G-sec rate rowfromthemarket,ithaskept its doors open to the dissenting states forfurtherdiscussions. The Centre, on its part, also reiterated that it is committed to ensure that so long as the states opt for borrowing under any of the two options it put forth,theydon’thavetobearthe interest orprincipal repayment costs, and that the repayments would be fully adjusted against future collections of the cess. Addressing the media, A RARE CITYWIDE power outage paralysed Mumbai on Monday, halting local train services, trapping people in lifts and disrupting work from home adopted by millions during the ongoing pandemic. Power restoration efforts began on “war footing” and pocket-wise resumption in supply was started around 12 noon onwards, nearly two hours after the outage. ■ Tata Power attributed outage to simultaneous tripping at state-run MSETCL's two substations ■ Power returned to BandraKurla Complex, many other pockets by evening ■ Train services were restored after nearly two-and-a-half hours Trains services took two and half hours to resume operations, beginning with CR’s Harbour Line. The trains are carryingonlyessentialservices workers at present, which helped minimise the passenger inconvenience. Both the Western Railway and Central Railway blamed the powercut fromTata Power (their power supplier) for the disruption in services. With work-from-home becoming the norm across the services sector, employee outputwasimpactedasthehomes do not have power back-ups like institutional bodies. Continued on Page 2 ● RETIREMENT PLAN QuickPicks Anil Ambani case: Notice to China banks THE DELHI High Court has reached out to a group of Chinese banks that are trying to recover money from Anil Ambani, in the latest twist in a personal bankruptcy case against the former billionaire, reports Bloomberg. The HC also ordered a moratorium on recoveries from any sale ofAmbani’s personal assets. State Bank of India, which had earlier this year filed a bankruptcy case against Ambani, had requested the moratorium. MSME NPA ratio rises to 12.8% in June THE NON-PERFORMING asset (NPA) ratio in the MSME segment rose to 12.8% in June 2020 from 11.4% in June 2019, TransUnion Cibil said in the October 2020 edition of its MSME Pulse report, reports fe Bureau in Mumbai. It also said disbursements to SMEs picked up pace after the government announced the emergency credit line guarantee scheme. PAGE 10 Thermax launches VRS for workers at Pune plant GEETA NAIR Pune, October 12 THERMAX HAS INITIATED a retirement programme for workersatits50-year-old Chinchwad plant which makes boilers and heaters.Employees who are more than 40 years old or have completed 10 years are eligible for the scheme. According to Sharad Gangal, head, people processes, around200ofthe285workers would be eligible. TheVRSpackagecomprises pension and commute apart from other retirals, Gangal said. He added that Thermax would continuetomanufacturein Chinchwad while also leveraging new facilities in Sri City (Andhra Pradesh), Savli (Gujarat) and Shirwal (Maharashtra) to support ramp up plans. Continued on Page 2 ECONOMICS US auction theory pioneers win Nobel DAVID KEYTON & FRANK JORDANS Stockholm, October 12 TWO AMERICAN ECONOMISTS won the Nobel Prize on Monday for improvingthetheoryofhowauctions work and inventing new and better auction formats that are now woven into manyparts of the economy. ThediscoveriesofPaulRMilgrom and Robert B Wilson“have benefited sellers, buyers and taxpayers around theworld,”theNobelCommitteesaid, noting that the auction formats developed by the winners have been used to sell radio frequencies,fishing quotas and airport landing slots. Both economists are based at StanfordUniversityinCalifornia,and The discoveries of Paul R Milgrom and Robert B Wilson have benefited sellers, buyers and taxpayers around the world, the Nobel panel said PAUL R MILGROM finance minister Nirmala Sitharaman stressed that borrowing by the Centre — which has already raised its gross borrowingceilingforFY21by54% to `12 lakh crore — could jack uptheG-secyieldsimmediately, causing an additional overall public debt burden and also constraints for the corporate sector, at a time they need to spend to revive businesses. Continued on Page 11 ● UNDER FIRE As US readies antitrust suit, Google faces backlash in more nations Trains stuck, WFH staff hit after rare power outage in Mumbai PRESS TRUST OF INDIA Mumbai, October 12 ■Borrowing by the Centre could jack up the G-sec yields immediately, causing an additional overall public debt burden and also constraints for the corporate sector, the Centre argues Auction formats developed by the winners have been used to sell radio frequencies, fishing quotas and airport landing slots Milgrom said he received news of their win “in a strange way.”“I got a knock at my door from Bob Wilson,” he told The Associated Press. “He was my Ph D adviser, and he lives right across the street from me.” Milgrom said students, friends and ROBERT B WILSON colleagues had long suggested he and Wilson might be due for the prize.“It’s really sweet actually,” he said.“It’s nice to have their respect but their affection as well.” Continued on Page 2 SARITHA RAI October 12 ON THE ROAD People queue up to take Maharashtra state transport buses in Dombivli after train services came to a halt due to a massive power outage in Mumbai on Monday EXPRESS PHOTO: DEEPAK JOSHI Double whammy FE BUREAU CPI inflation at 8-month peak, IIP recovery slows Retail inflation surged to an eight-month high of 7.34% in September, while industrial output contraction in August came in at 8%, indicating the slowness of recovery process. Food inflation spiked to 10.68% in September, against 9.05% in August. Capital goods output shrank for 20 months in a row, while consumer durables saw a 15th straight month of fall in August. 20 (% change, y-o-y) 10 3.21 CPI 7.2 7.34 0 -10 -1.4 -20 -8 IIP Aug ‘20 -30 -40 -50 -60 Aug 2019 -57.3 Apr ‘20 Sept 2020 GOOGLE IS CONFRONTING a growing backlash against its market powerin international markets, compounding the company’s regulatory challenges as it girds for a historic antitrust suit from the US Justice Department. In just a matter of weeks, the search giant’s business practices have drawn scrutiny in Australia, South Korea and India. The European Union’s antitrust chief has already threatened to break up Google if it won’t change its ways, while the company pulled out of China a decade ago because of government censorship. India is a prime example of how Google’s troubles could undercut future growth.More than 200 start-up founders have banded together and opened discussions with the government to stop the Alphabetunitfromimposinga 30% fee on smartphone app purchases, its standard levy around the world. Continued on Page 2
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