OPINION, P6 ECONOMY, P3 ASHOK GULATI India needs to learn from China and Israel on farm policies NATION, P5 SUNIL JAIN REVIVING INDIA ON THE ROAD Time the government ended the hypocrisy on retail and allowed FDI in multi-brand retail PM dedicates to nation BPCL's petrochem complex in Kerala FASTag must from midnight today; double the toll sans tag KOLKATA, MONDAY, FEBRUARY 15, 2021 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. 30 NO. 90, 18 PAGES, `6.00 (NORTH EAST STATES & ANDAMAN `10.00) 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 ONLY DEBTORS CAN trigger their own bankruptcy process under the special insolvency resolution framework for micro, small and medium enterprises(MSMEs),whichthe government and the regulator areworkingon,sourcestoldFE. However,to be able to do so, a stressed MSME will require theapprovalofunrelatedfinancialcreditorswhoaccountforat least 25% of outstanding claims. If creditors want to initiate bankruptcy proceedings against MSMEs, they would need to go through the usual Corporate Insolvency Resolution Process (CIRP) under the extant rules,the sources said. As part of its measures to soften the Covid-19 blow, the government had last year proposed to bring in a special framework for these small businesses. It will form a part of the Insolvency and Bankruptcy Code (IBC). Given that MSMEs have limited wherewithal to go through a long and rigourous If lenders want to drag MSMEs to NCLT, they can do so only via the usual CIRP route Bidders will get only 90 days to submit plans, NCLT another 30 days to clear them Promoters who are not wilful defaulters can continue to bid for their assets insolvency process, the time limit for the resolution will be drastically reduced. Market participantswill get 90 days to submit resolution plans and theNationalCompanyLawTribunal will have another 30 days to approve them. Continued on Page 2 80 96.5 100 94.4 ● NIBRI rises 82.4 Feb 7 Jan 24 Jan 10 40 Dec 27 60 Dec 13 ALMOST ALL INDICATORS now point to a quicker-thanexpected recovery with the economy tipped to grow at about 10.5-11% in 2021-22. Consumerconfidenceisrising, even as infections fall and the vaccination drive intensifies. The services sector — tourism, transport, travel hospitality and entertainment — have all been badly hit; and it’s critical forthesurvivalofthousandsof small enterprises. Unfortunately,though,this is a cyclical recovery and will not take us too far. A strong structural recovery is sometime away and will take root only once there is a big investment push. However, private sector investments are expected to remainweak forat least two more years with a deficit of demand and a surplus of capacity. While the government’s budgetedcapexforthenextfiscal is around 26% higher at `5.5 lakh crore,the increase in thetotaloutlay(includingPSUs fundedviaintraandextrabudgetary resources) is just 4.5%; seen over FY20 too,it is a modestincreaseof8.7%.Forthekey infrastructuresectors,thetotal public sector expenditure outlaywilldecline3% to`8.4lakh crore next year. The recovery continues… Nov 29 To start the process, MSMEs will need approval of unrelated financial creditors accounting for at least 25% of claims FE BUREAU New Delhi, February 14 Nov 1 BANIKINKAR PATTANAYAK New Delhi, February 14 SPECIAL FOCUS Only cyclical, structural recovery some time away Nov 15 They will need nod from unrelated financial creditors ● SYSTEM OUTAGES Oct 18 MSME debtors may get to start bankruptcy process GROWTH PANGS ● Corporate profits rebound PBT (% chg, y-o-y) 150 100 50 -76.95 -61.84 0 -50 -100 Q4 Q1 FY20 FY21 122 55.87 Continued on Page 2 Continued on Page 2 Q3 FY21 ● Consumption is picking up ● Rural demand is holding up 1,19,847 Tractor sales (retail), % chg, y-o-y 100 11.1 50 24.4 0 -50 Source: GST Council -100 Jan 2020 Jan 2021 March-April lockdown months; Source: FADA ...but for higher growth ● Services need to grow Index (Average) 120 100 80 60 40 20 Feb'20 SA = 100 0 Feb-20 ● Loan growth must pick up Non-food credit (% chg, y-o-y) Dec-20 Source: CEIC, HSBC ● Capex must rise 60 50 40 30 20 10 0 Total new investments Dec 2000 10.0 8.5 7.0 5.5 4.0 8.8 6.35 Oct 25, 2019 Jan 15, 2021 Source: RBI ● More jobs are needed % of GDP (4q rolling sum) Dec 2020 Source: Nomura To be sure, the two initiatives — incentivising manufacturing via the PLI schemes and the DFI that aims to build a `5-lakh-crore portfolio in SHRITAMA BOSE Mumbai, February 14 three years — are excellent but their impact would be felt two or three years down the line. Q2 FY21 Nomura India Business Resumption Index GST collections, ` crore 1,60,000 1,10,828 1,20,000 80,000 40,000 0 High volumes, multiple hops push up failures in digital payment TRANSACTION FAILURES HAVE become far more frequent in India’s digital payments ecosystem over the last few months than they have been historically. While the sudden surge in digital usage during the Covid scare was an importantfactor,industryexecutives saidtheburgeoningnumberof entities in the market whose systems are not always speaking to each othermayalsohave played a part. As the volume of transactions through digital channels surged, system outages across banks became almost a monthly feature last year. According to data from Downdetector.in, the three largest banks in the digital payments system together saw 61 instances of outages between March 2020 and so far in February 2021. SBI saw the maximum number of outages – 43 – followed by ICICI Bank (12) and HDFC Bank (6). In an emailed response to FE’s queries, an ICICI Bank spokesperson said, “We have invested in robust infrastructure to execute the digital transactions of ourcustomers. Sample of 779 firms (excluding banks & financials); Source: Capitaline Jan’20 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan’21 INSOLVENCY Labour participation (in %) rate (Rhs) 30 25 20 15 Unemployment 10 rate(Lhs) 5 May 12, 2019 Jan 31, 2021 44 43 42 41 40 39 38 37 36 35 Source: Nomura SPECTRUM AUCTION Telcos may bid conservatively Government is likely to mop up `43k cr as upfront payments and meet budgetary target FE BUREAU New Delhi, February 14 GOING BYTHE earnest money depositedwith the department of telecommunications (DoT) lastweek,telcos are likelyto bid conservatively at the spectrum auctionsinMarch.Basedonthe deposits of Reliance Jio, Bharti Airtel and Vodafone Idea, the total amount bid would be around `86,290 crore, and going by the upfront payment that the operatorswould make, the government would be able torealisearound`43,145crore. Addtothis,around`20,000 crore earned annually from licencefeesandspectrumusage charges, and the government would be able to realise its budgetary target of `53,986.72 crore from telecom receipts. Still, the amount would be far shortof`3.92lakhcrore,which is the worth of total spectrum beingputupforauctions,based on the reserve price. While neither telcos nor the DoT have disclosed the EMD amount,sources indicated that Jio’s deposit of around `9,000 crore is the highest followed by Bharti Airtel’s `3,000-3,500 crore.Vodafone Idea has made the smallest deposit of around `500 crore.The deposits indicateJiowouldberenewingspectrumexpiringlaterthisyearand alsobuyingmoretofillthegaps andtoleverageitsexistingspectrumholdingtothemaximum. Continued on Page 4 Spectrum expiring in 2021 & likely ouflow based on bidding strategy Jio Total: 81.25 MHz in 800 Mhz band EMD payment: `9,000 cr Likely total outflow in auctions: `57,790 cr At 50% upfront payment: `28,895 cr Bharti Airtel Vodafone Idea 51.40 MHz 6.20 MHz in 900 in 1800 MHz band MHz band EMD payment: 51.05 MHz 6.20 MHz in 900 in 1800 Mhz band MHz band EMD payment: Likely total outflow in auctions: Likely total outflow in auctions: At 50% upfront payment: At 50% upfront payment: Total: 57.60 MHz Total: 57.25 MHz `3,000-3,500 cr `25,000 cr `12,500 cr `500 cr `3,500 cr `1,750 cr COVID-19 ● LOGJAM Privatisation of UT discoms India’s daily case count mired in power struggle down 40% in a month, testing down by a fourth Pan-India 26 UT discoms up for grabs Chandigarh 9 Dadra, Nagar 4.2 Haveli, Daman, Diu 15 Puducherry Andaman and 14 Nicobar Lakshadweep 12.5 far — Chandigarh and Dadra andNagarHaveli&Damanand Diu (DNHDD). Continued on Page 2 FE SPECIALS ■ BRANDWAGON, P10 One-time watch The pay-per-view streaming biz in India gathers steam, as BookMyShow and Eros Now join the fray ■ eFE, P8 Building digital trust Security needs to be embedded in every stage of the business cycle, says Infosys’ Vishal Salvi ■ PERSONAL FINANCE, P9 Index-linked insurance plans index-linked insurance plans can be an alternative to or complement conventional guaranteed products and Ulips LAST FRIDAY, THE number of new Covid-19 infections dipped below 10,000 for the fourth time in the past month. While infections have been averaging 12,806 for over a month now, daily infections have been consistentlydeclining; they’ve fallen 37% since January 14. However, data from ICMR shows there has been a consistent decline in testing as well. While daily tests in the month to November 14 averaged 10,96,441, this dropped to 10,15,008 in the month to December 14 and further to 9,53,765 in the month to January14.InthemonthtoFebruary 14, the country tested an average of 7,11,106samples daily. Infections have been relativelyhigh in states like Maha- 60,000 50,000 40,000 30,000 20,000 10,000 0 (monthly average) Cases (LHS) Tests (lakh, RHS) 49,925 12,806 Jan 14Feb 14 69 * includes data for Ladakh Cases decline, so do tests Dec 14Jan 14 Jammu and Kashmir* ISHAAN GERA New Delhi, February 14 Nov 14Dec 14 PLANS TO PRIVATISE lossmaking state-run discoms are being hamstrung by political and legal hurdles, even as they continue to be a drain on the exchequerand a burden on the taxpayer.Although the Centre announced a plan to privatise discoms by putting on the block all the six discoms in union territories (UTs) in May last year as part of the Atmanirbharpackage,onlytwo of them have called for bids so AT&C losses, % (as on Sept, 2020) Oct 14Nov 14 ANUPAM CHATTERJEE New Delhi, February 14 12 10 8 6 4 2 0 Punjab and Bihar show worrying trend New death ratio per 1,000 infected people [daily infections (7-day ma)/ daily cases (15-day ma)] 45 30 15 0 40 30 13 Punjab India:7 3 Bihar Chandigarh Kerala rashtra and Kerala — which account for 72% of the country’s infections — and also in Punjab and Bihar. Continued on Page 2 Keeping close eye on cost structure: Maruti INCREASING COMMODITY PRICES, specially those of rhodium and palladium, which are used in catalysers to meet strict emission norms, are putting cost pressure on automobile makers, Maruti Suzuki India ED (marketing & sales) Shashank Srivastava told PTI. The company, which had hiked prices of its vehicles in January, however,is not planning to pass on the burden to consumers in the near future although it is keeping a close eye on its cost structure. ■ Page 5 TALL ASK E-tailers look to woo the next 200 million ASMITA DEY New Delhi, February 14 HAVING WON CLOSE to 300 millioncustomers,e-commerce players are now reaching out to the next 200 million potential e-shoppers.Experts say getting tothefirst300million,wholive inthecountry’stop30citiesand towns,hasn’t been easy. Asforthepotentialuniverse of the next 200 million,experts believe it’s somewhat different; the consumers are lesswell-off, less trusting of online transac- ■ Experts say getting to first 300 million, who live in the top 30 cities and towns, hasn’t been easy ■ But consumers now being eyed are less well-off and trusting of online transactions ■ They may know latest trends but are as aspiring as anyone else ■ E-tailers need to ■ Buyers would carefully curate the need more merchandise and hand-holding price products and interaction across multilevel touch points tions and not as familiar with latesttrends.Butthey’reasaspiring as anyone else.That means retailers will need to carefully curate the merchandise and priceproductstomatchthepurchasing power,saysAnkurPahwa, partner, EY. Buyers would need a lot more hand-holding andthiswould callforalotmore interaction across multi-level touchpoints,perhapsevenmicrositeswithasimpleuserinterfacewithin the main platform. Continued on Page 4 Kolkata