OPINION, P6 ECONOMY, P2 INTERNATIONAL, P8 EDITORIAL ‘DIRECTIONAL CHANGE’ PRESIDENT’S LESSONS Big-ticket spending in infra, health & agri planned: FM 'Do as Xi says’, China teaches schoolchildren Fisc does the heavylifting, up to RBI to ensure liquidity Govt upping the ante on Twitter over farm protest tweets by Rihanna & others a bad idea, likely to backfire NEW DELHI, FRIDAY, FEBRUARY 5, 2021 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. XLVI NO. 292, 24 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: 50,614.29 ▲ 358.54 NIFTY: 14,895.65 ▲ 105.70 NIKKEI 225: 28,341.95 ▼ 304.55 HANG SENG: 29,113.50 ▼ 193.96 `/$: 72.96 < > 0.00 `/€: 87.48 ▲ 0.24 BRENT: $58.85 ▲ $0.39 GOLD: `47,263 ▼ `505 — THE CENTRE’S decision to keep its fiscal deficit at an elevated level of 6.8% of GDP in FY22 is unlikely to stoke much inflationary pressure, as it will deploy much of the additional resources in creating productive assets, economic affairs secretary Tarun Bajaj said, reports Banikinkar Pattanayak in New Delhi. Revised norms for closure of sick CPSEs soon TO ENSURE timely closure of sick and loss-making CPSEs, the department of public enterprises is formulating revised guidelines for a simplified and flexible mechanism, reports fe Bureau in New Delhi. The process will be monitored by an empowered group of secretaries. Q3 EARNINGS ● FARMERS’ STIR SBI net falls, outlook good FE BUREAU Mumbai, February 4 STATE BANK OF India (SBI) on Thursday reported a standalone net profit of `5,196 crore for Q3FY21, down 7% year-on-year (y-o-y) partly due to the impact of a large one-time recovery from the sale of Essar Steel in the base quarter and an increase in provisions of 43% y-o-y. Nonetheless, the SBI stock rose nearly 6% as chairman Dinesh Khara indicated there was a chance the lenderwould report smaller than anticipated credit costs. “I will not denythat there isastrongpossibilityof us undershooting the Continued on Page 2 Q3FY20 Q3FY21 76,798 75,981 « 1.54 Provisions 42.6 Net profit 6.9 « 3.59 3.34 Net NPA (%) 217 bps 2.65 1.23 142 bps « 25 bps ● BAD BANK Special Feature ‘Cost of creating content rising 10-30% every year’ Sameer Nair, CEO, Applause Entertainment, talks about the growing demand for content in regional languages, regulation of OTT platforms, and more ■ BrandWagon, P9 QuickPicks Population-infected (in crore) 25 21.5 20 15 9.1 1 29.5 10 5 0 6.6 0.73 Jun 4 2020 Sept 22 Jan 8 2021 Data for sero survey 1 relates to population over the age of 18 survey, conducted for Delhi, indicated that over half the population had been infected. Continued on Page 2 Britain to test combining Astra, Pfizer vaccines BRITAIN ON Thursday launchedatrialtoassessthe immune responses generatedifdosesoftheCovid-19 vaccines from Pfizer and AstraZeneca are combined in a two-shot schedule, reportsReuters.TheBritish researchersbehindthetrial said data on vaccinating people with the two different types of coronavirus vaccines could help understanding of whether shots can be rolled out with greater flexibility around theworld. ■ Page 8 Wealth creator FE BUREAU BSE m-cap hits `200-lakh-crore mark The market capitalisation of BSE-listed companies hit a new high of `200 lakh crore on Thursday as stocks continued to gain value. India's equity markets have been on a roll powered by strong purchases by foreign investors. In 2020 investors added nearly `33 lakh crore to their wealth as the Sensex rose 15.7%. 210 190 BSE m-cap 156.6 200.5 150 130 110 February 4, 2020 Budget spend seen above recent trend PRASANTA SAHU New Delhi, February 4 WHILE A 26% jump in budgetarycapitalexpenditureenvisagedforFY22iswidelylauded,it has been pointed out that given the less than 1% increase in overall expenditure budgeted fortheyearevenwithanelevated fiscaldeficitof6.8%ofGDP,the economymaynotgettherequisite support from public spend in the next financial year.However, the growth in the budget sizenextyearwillbehigherthan severalrecentyears,ifthebaseis adjusted for the Covid-related one-timeexpendituresincurred inthecurrentyear. Sharp increases in outlays are seen for FY22, in many areas including grants in aid to states,‘water supply and sanitation’, ‘medical and public health’, and transfers to the north-easternstates(seechart). Continued on Page 13 February 4, 2021 MONETISATION OF the assets of the Dedicated FreightCorridorscanbetaken up in stages starting with public listing of the entities and progressive disinvestment, minister for railways, commerce & industryPiyush McKinsey settles for $573 m over role MCKINSEY & CO has agreed to pay $573 million to settle claims by US states that the consulting company helpedfueltheopioidepidemicbyproviding marketing advice to drugmakers including Purdue Pharma LP and Johnson & Johnson, people familiar withthe accord said. New York-based McKinsey will pay about 80% of the money immediately to beef up treatment programmes and bolster police budgets strained by expanded abuse of the addictive painkillers, according to the people,who asked not to be iden- PAYING UP The New York-based company will pay about 80% of the money immediately, while the rest would be paid over four years More than 45 US states signed off on the settlement McKinsey won’t acknowledge any wrongdoing as part of the settlement Continued on Page 2 FY22 OPIOID CRISIS JEF FEELEY February 4 tariff hike by Bharti Airtel is also ruled out. “Bharti’s subscriber additions across postpaid and prepaid data segments indicate strong market share gains in Q3.Giventhestrongsubscriber traction,weraiseoursubscriber estimates 5-8%,”he said. Growth in Budget size (%, y-o-y) 20 16 16 12 10.6 10.3 8 4 6.7 tified because they weren’t authorisedtospeakpublicly.Therestwould be paid overfouryears.More than 45 states signed off on the settlement, which will be announced soon, the people said. The consulting firm suggested ways to “turbocharge” sales of Purdue’s OxyContin painkiller at a time whenthe legal market fortheopioidbased medicinewas shrinkingdue to a wave of negative publicity, according to the Massachusetts Attorney General. McKinsey won’t acknowledge any wrongdoing as part of the settlement,the people said. Continued on Page 13 New Delhi 14* 13.6* 8.4 7.6 8.1 *Excluding one-time expenditure in FY21 FY21RE (` crore) FY22BE Increase (%, y-o-y) Drinking water & sanitation 17,023 60,030 253 Roads and highways Telecom 41,109 58,737 46,791 54,581 33,896 67,468 1,01,823 1,18,101 17 Housing & urban affairs Medical & public health Goyal hints at listing of DFCCIL (` lakh crore) 170 90 —GOPAL VITTAL, MD & CEO (INDIA & SOUTH ASIA), BHARTI AIRTEL « Continued on Page 2 Sero-positivity (% of population) DESPITE ACCEPTING THE need for tariffs to increase so that the average revenue per user (Arpu) moves up in the range of `200-300, Bharti Airtel is not going to take the lead on this front at this point of time. Speaking to analysts in a post-earnings call on Thursday, MD and CEO (India & South Asia) Gopal Vittal said the company’stariffsarein the premium range and therefore a hike at this stage mayimpact its competitiveness. However, if competitors raise tariffs Bhartiwould also do the same. “Tariffs should go up. The Arpu needs to go up to `200 in near term and ultimately to `300.Buthavingsaidthat,pricing is a competitive issue and we are already on a premium. We will raise tariffs if the competition does so,”Vittal said. Analysts have also said since Reliance Jio’s subscriber additionremained mutedduring the quarter,it is unlikely to raise tariffs and therefore any « THE PROPOSED ASSET reconstruction company (ARC), or the so-called bad bank, will be different from the existing ones, as it will have greater financial muscle as well as professional capacity to work out large stressed assets, chief economic adviser (CEA) Krishnamurthy V Subramanian told FE. Krishnamurthy At preVSubramanian sent,barring three-four, most of the ARCs are not adequately capitalised, Subramanian said in an interview. But the proposed one is expected to be well-capitalised by banks — both staterun and private. Though the government won’t hold any equity in the bad bank, it has now backed the idea of setting up the entityafterinitial reservation. ALITTLE OVER afifthofIndia’s population is infected with Covid-19,thelatestserosurvey released by ICMR reveals.The number is as high as a third in the case of urban slums and about a fourth for medical personnel across the country. The last sero survey, conducted between August and September 2020, had put the ratio at 6.6%,and theveryfirst one, in June last year, had put the number at 0.7%. In terms of the number of people infected, while one crore persons were infected in June, this rose to 9 crore in September and to just under 30 crore today. Afewdaysago,anothersero A fifth of India infected FE BUREAU New Delhi, February 4 « RELIANCE INDUSTRIES’ wholly owned subsidiary Reliance Marcellus has agreed to sell its stake in US Marcellus shale fields to Northern Oil and Gas of Delaware Corporation for $250 million or `1,825 crore in cash and warrants, reports fe Bureau in Mumbai. The sale is part of the company’s strategy to exit the US shale business after the drop in crude prices hit the valuations of its shale assets. The warrants entitle the company to purchase 3.25 million common shares of Northern Oil Gas at an exercise price of $14 per share in next seven years. PAGE 14 BANIKINKAR PATTANAYAK New Delhi, February 4 ISHAAN GERA New Delhi, February 4 Tariffs should go up. The Arpu needs to go up to `200 in near term and ultimately to `300. But having said that, pricing is a competitive issue and we are already on a premium. We will raise tariffs if the competition does so. « RIL unit to sell US Marcellus shale assets for $250 million Proposed ARC to be adequately capitalised, says CEA A fifth of Indians infected, a third in urban slums Company to raise rates only if rivals do the same « THE PETROLEUM ministry has put on hold a plan to bifurcate state-owned gas utility GAIL (India) so as not to dilute the firm's ability to finance the massive infrastructure building plan, a top official said on Thursday, reports PTI. GAIL is India's biggest natural gas marketing and trading firm and owns 60% of the country's 26,284-km gas pipeline network, giving it a stranglehold on the market. The official said GAIL will monetise some of its pipelines by selling a minority stake through instruments like Infrastructure Investment Trust (InvIT). Continued on Page 2 Bharti will not be first to hike tariffs « GAIL split plan put on hold, to monetise pipelines via InvIT IAF’s Suryakiran aircraft perform aerobatic manoeuvres on Day 2 of Aero India 2021, in Bengaluru on Thursday THE US HAS criticised India’s moves to block internet access at protest sites around the capital and called on the government and farmers to resolve their differences through talks ahead of planned nationwide demonstrations against new agriculture laws on Saturday. “We recognise that peaceful protests are a hallmark of any thriving democracy, and note that the Indian Supreme Court has stated the same,” the US embassy said in a statement. “We encourage that any differences between the parties be resolved through dialog.” The statement comes a day after the Indian government criticised widely shared social media posts in support of the protests by pop singer Rihanna andenvironmentactivistGreta Thunberg as“vested interests” tryingto“mobiliseinternational supportagainst India”. SERO SURVEY Gross NPA (%) 6.94 4.77 « Source: BSE 9,106 9,246 7,253 10,342 5,583 5,196 27,779 28,820 « Other income « « « 3.75 HIGH-FLYERS Chg (%) « (` cr) 1.06 Net interest income Domestic net interest margin (%) ARCHANA CHAUDHARY February 4 guidance. Our credit cost as of December 2020 stands at 1.1% so we should do better than the guidance we had given of 2%,”Khara said. Moreover, the chairman said the guidance forslippages and restructured exposures would not be revised. “Together, the total slippages and restructuring up to December are about `41,000 crore and I’m quite confident we should be in a position to close it within `60,000 crore,”he said. Asset quality at the lender improved as the gross NPA ratio fell 51 basis points (bps) sequentially to 4.77% and the net NPA ratio slid 36 bps to 1.23%. Dinesh Khara, chairman, SBI IRFC raises $750 m Report card in first bond sale Total income after listing INDIAN RAILWAY Finance Corporation (IRFC), which had a bumper IPO last month, has raised $750 million in 10-year dollar money from international investors, two merchant banking sources said, reports PTI. US criticises internet curbs, urges fresh talks VITTALSPEAK FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 IN THE NEWS DEA secy: Deficit slippage won’t stoke inflation 43 17 99 Goyal said on Monday.“This (monetisation) can be done after corridors become fully operational, and DFCCIL starts registering healthy profit,” he said, addressing mediainavirtualconference. ■ Report on Page 2