OPINION, P6 ECONOMY, P2 ANIL JAUHRI India must create world-class labs to meet global export standards INTERNATIONAL SUNIL JAIN COVID-19 VACCINATION Bureaucrats can’t stymie what politicians want if sweeping reforms eliminate their discretionary powers Gatherings banned in Maha; Lockdown if situation worsens: CM All adults in UK to get first jab by July 31, says Johnson AHMEDABAD, MONDAY, FEBRUARY 22, 2021 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOLUME XV-222, 12 PAGES, `6.00 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 Continued on Page 2 Private sector key driver of growth: FM FINANCE MINISTER Nirmala Sitharaman on Sunday saidtheUnionBudget202122 is about the role of government as a facilitator and theprivatesectorasakeydriver of economic growth, without which the country would be losing a big opportunity,reports PTI. "The most important component or input required here is the participation of the private sector.Unless the private sector is energised enough, unless it is facilitated enough, India is just losing a very big opportunity,"Sitharaman said. ■ Page 4 FE SPECIALS Growing the biscuit pie Biscuit brands launch new variants and smaller packs as pandemic drives growth in consumption ■ eFE, P8 Devices for blended learning 5G will introduce immersive lessons with real-time feedback, says Lenovo’s Rahul Agarwal ■ PERSONAL FINANCE, P9 Rebalance your portfolio In the current scenario, multi-asset funds of mutual funds can be a good option for asset allocation mix ■ INFRASTRUCTURE, P11 Phase 1 of KFON comes on stream Over 8,000 offices and institutions are being provided high speed connectivity through the Kerala Fibre Optic Network Q4 Q1 FY20 Q3 FY21 Sample of 2,447 companies (excluding banks & financials ) 353.8 735.4 Q4 Q1 FY20 -364.0 -269.9 -823.0 Q2 Q3 FY21 (bps, chg y-o-y) 46.7 58.6 -39.4 Q3 FY21 Q2 RM to sales (% chg y-o-y) Q2 -330.2 Q3 FY21 Tax (% chg y-o-y) Q4 Q1 FY20 Q2 -40.9 PBT Q4 Q1 FY20 -14.2 -32.0 Q2 (bps, chg y-o-y) -538.2 -1.4 Q4 Q1 FY20 -3.8 0.3 Q3 FY21 -6.7 Q4 Q1 FY20 OPM Q2 Q3 FY21 Source: Capitaline Told to prioritise for India needs: SII CEO THE GOVERNMENT has directed vaccine maker, SerumInstituteofIndia(SII) to prioritise for meeting the Covid-19 vaccination needs of India, reports FE Bureau. Adar Poonawalla, CEO, SII tweeted on Sunday urging other countries and governthe demand for a host of consumer goods could peter out once the demand from the more affluent households has been satiated; analysts point mentsthatareawaitingCovishieldsuppliestobepatient. SII has been directed to prioritise to cater to the huge needsofIndiaandalongwith that balance the needs of the rest of theworld,Poonawalla tweeted. ■ Page 2 out the lockdowns necessitated purchases of homes and also a range of goods. Continued on Page 2 Cairn hopeful of 'swift solution' REUTERS & FE BUREAU February 21 CAIRN ENERGY SAID on Sunday that it had discussed multiple proposals with Indian government officials in recent days in an attempt to find a ‘swift solution’ to a long drawn-outtaxdisputewiththe South Asian nation, Reuters reported. InDecember,anarbitration body awarded the British firm damages of $1.2 billion plus interest and costs, after ruling India had breached its obligations to Cairn under the UKIndia Bilateral Investment Treaty. FE Bureau adds: As reported by FE earlier, the Indian government wants Cairn to settle the dispute using the Vivad se Vishwas scheme. Continued on Page 2 WIN-WIN SITUATION PLI: Govt revenue to get a boost Excess of extra GST revenue over telecom schemes' outlays at `65-k cr over 5 years RISHI RAJ New Delhi, February 21 THE PRODUCTION-LINKED INCENTIVE schemes (PLIs), while catalysing exports and domestic manufacturing, are also designed to enrich the gov- ernmentexchequer.ThetwoPLI schemes for mobiles and telecomequipmentalonewillresult in net gains of around `65,000 croretotheCentreoverthenext five years, just on account of incremental GST receipts more than offsetting the estimated Budgetoutlays.Ofcourse,asthe higher incremental production &salesduetotheschemescould potentially bolster the earnings of firms,the Centre's direct tax receiptswillgetaboostaswell. Continued on Page 2 PLI schemes For mobile phones For telecom equipment 5-year budget outlay Incremental production in 5 yrs Of which exports Domestic sales with 25% value addition Govt's revenue from domestic sales with GST @18% Net gains for govt `40,995 cr `10.5 lakh cr `6.5 lakh cr `12,195 cr `2.4 lakh cr `1.2 lakh cr `5 lakh cr `1.5 lakh cr `90,000 cr `27,000 cr `50,000 cr `15,000 cr Revised CPSE pay matrix seen to aid privatisation THE STAFF OF Central Public Sector Enterprises (CPSEs) will lose on their performance related pay(PRP),if the firms fail to meet new goals of market capitalisation,return on capital,asset-turnover ratio as well as production and capex targets, reports Prasanta Sahu. These parameters will be included in the PRP criteria under the customary Memorandums of Understanding (MoUs) being signed between administrative ministries and indi- vidualCPSEs,effective2021-22financialyear. The move, while seeking to improve the performance of CPSEs, will also help boost investors’ interest in these firms. Many of these firms are to be privatised overthe next few years under a new policy. Another new parameter being included is Ebitda which will replace 'operating profits' to capture a firm's operating profitability more accurately. ■ Page 2 PROCUREMENT SEASON Mandi arrivals rise after SC stay order PRABHUDATTA MISHRA New Delhi, February 21 ■ BRANDWAGON, P10 (% chg y-o-y) -88.3 THE REASONABLY GOOD results forthe December2020 earnings season and the recovery in the coming quarters notwithstanding, profit estimates for FY22 remain below pre-Covid levels. Indeed, while the economy is recovering fast, large pockets remain fragile. While earnings for FY22 will benefit from the low base of FY21, just as the FY21 numbers have benefited from the lowbase of FY20,there are a couple of headwinds. The first is the rising prices of commodities—especially crude oil—and it is not certain all businesses will be able to pass on the higherinput costs. The muted sales of twowheelers are evidence they have become unaffordable for many after the price increases. The second concern is that Total expenditure 54.4 FE BUREAU New Delhi, February 21 Net sales (% chg y-o-y) 331.6 AFTERABITofadipinDecember 2020, the momentum in thejobmarketpickedupinJanuary with total opportunities surging nearly 50% over the December2020 count to reach 2,65,000. The good news is that full-time opportunities ILLUSTRATION: were as high as ROHNIT PHORE Earnings estimates for FY22 remain below pre-Covid levels as large pockets remain fragile -34.5 SHUBHRATANDON Mumbai, February 21 2,40,000, up sharply over December, according to data sourced from Xpheno, a Bengaluru-based specialist staffing firm. “With more mainstream business activities resuming and thevaccine campaigns on, the numbers for February and March 2021 are expected to remain healthy,if not rise further,” Kamal Karanth, cofounder,Xpheno said. Hiring for freshers is back with a bang. After registering drops of 7% and 39% in November and December respectively, entry level openings at 1,10,000 in January registered an 83% growth over December 2020. -89.8 Opportunities surge 50% on month, Feb-March seen healthy ● TAX TUSSLE Muted demand,high costs to weigh on profits -7.1 Jobs market gathers momentum in Jan CORPORATE INDIA -94.1 FRESHERS IN DEMAND SINCE THE SUPREME Court put implementation of the three contentious farm laws in abeyance on January 12, arrivals of several crops in the organised mandis have picked up,accordingtoofficialdataon the Union agriculture ministry'sAgmarknet portal. Of the ten major kharif crops, mandi arrivals have increased in the case of five – groundnut, bajra, soyabean, arhar and moong – in the rangeof3-105%betweenJanuary 13 and February 15 from the year-ago levels. Mandi arrivals of another three crops – urad,maize and jowar– continuedtofallevenaftertheSC's stay on the laws, but the declineswere lesssharperthan the period in the season before the court's order. Of course, two major crops – paddy and cotton – reported further fall in mandi arrivals post the court order, but according to sources in the trade, the procurement of the two crops by the designated Pan-India mandi arrivals of kharif crops (% change on year) -2.6 Groundnut Bajra -50.8 7.2 Soyabean -36.1 -18.1 Arhar -2.1 Moong Urad Maize Jowar 2.7 -38.6 -30 -34.9 -26.9 -26.1 -20.3 Oct-Dec, ‘20 40.3 46.8 104.6 Jan 13-Feb 15, ‘21 Supreme Court stayed implementation of farm laws on January 12 Source: Agmarknet portal governmentagencies–FCIand CCI respectively – had nearly completed before the court's intervention. Paddy procurement hit a record level in the summercropseason(up16%), mainlyduetohigherpurchases (up 31%) in Punjab.In the case ofcottontoo,governmentprocurement has been robust, including from centres other than theAPMC mandis. Continued on Page 2 MEDIUM-TERM FRAMEWORK Don’t dilute inflation target: Economists BANIKINKAR PATTANAYAK New Delhi, February 21 AS THE GOVERNMENT and the Reserve Bank of India (RBI) gear up for a review of a medium-terminflationtargetingframeworkinMarch,many economists have cautioned against a dilution of the extant target,especially given the elevated fiscal deficit projections until FY26.Some even pitched for having a closer look at core inflation while continuing to target the headline retail inflation in the 4 (+/-2)% band. Theinflationtargettypically influences rate-setting by the monetary policy committee (MPC). Pronab Sen, former chairman of the National StatisticalCommission,suggested that the target be retained, though he batted for two Headline inflation target should be retained but within it, a lower core inflation target should be set. MPC’s remit also needs to be widened — PRONAB SEN, FORMER CHAIRMAN, NSC As output gap narrows, surplus liquidity can pressure (inflation)…. But that doesn't mean the targeting framework should be meddled with — M GOVINDA RAO, CHIEF ECONOMIC ADVISOR, BRICKWORK RATINGS Even in the extant framework, there is scope for MPC to address growth concerns. If the target is raised…, it will signal an expansionary policy — SONAL VARMA, CHIEF ECONOMIST FOR INDIA AND ASIA (EX-JAPAN), NOMURA changes in the overall framework.Withinthebroadertarget, a separate, lower core inflation bandof4(+/-1)%shouldbeset, he said.“Moreover,the remit of the MPC should be widened to cover instruments beyond just thekeypolicyrates,”Senadded. Pertinently, a recent RBI paper made a case for maintaining the 4% target, saying “if it ain’t broke,don’t fix it”. Sonal Varma, chief economist for India and Asia (exJapan) at Nomura, told FE: “India certainly needs growth but at the same time it can't afford to let inflation spike. Evenwithinthecurrentframework, there is enough flexibility for the MPC to address growth concerns, as was witnessed last year.” Continued on Page 2 Ahmedabad