OPINION, P6 ECONOMY, P2 SHOBHANA SUBRAMANIAN Data show the US’s pent-up demand has run its course FM-SPEAK ROAD TO IPO Recovery a long way ahead; services likely to remain weak, within manufacturing, just bigger firms doing well STEPHEN S ROACH MARKETS, P10 Budget announcement on tax incentives to give traction to IFSC SBI to prepare mutual fund venture for market debut KOLKATA, SATURDAY, FEBRUARY 27, 2021 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM VOL. 30 NO. 101, 14 PAGES, `10.00 (NORTH EAST STATES & ANDAMAN `13.00) 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 READ TO LEAD SENSEX: 49,099.99 ▼ 1939.32 NIFTY: 14,529.15 ▼ 568.20 NIKKEI 225: 28,966.01 ▼ 1,202.26 HANG SENG: 28,980.21 ▼ 1,093.96 `/$: 73.47 ▼ 1.05 `/€: 89.10 ▼ 0.60 BRENT: $65.87 ▼ $1.01 GOLD: `46,425 ▲ `81 IN THE NEWS BEML stake sale: Bid deadline now March 22 THE GOVERNMENT ON Friday extended the deadline for submitting preliminary bids for buying its 26% stake in BEML till March 22, the Dipam said in a circular, reports PTI. In January, the government invited EoI and had set March 1 as deadline for putting in bids. Eight core infra sector output up 0.1% in January THE OUTPUT OF eight core infrastructure sectors grew marginally by 0.1% in January, mainly due to growth in the production of fertiliser, steel and electricity, reports PTI. The core sectors had expanded by 2.2% in January 2020, according to the provisional data released by the government. Vedanta raises $1.2 bn ahead of India arm offer VEDANTA RESOURCES HAS raised $1.2 billion in a bond offering that saw strong investor interest, reports PTI. It is looking to buy around 37.17 crore or 10% of its India unit at `160 a share. At that price, the total deal value would be about `5,948 crore. FREAKY FRIDAY Stocks crash on global bond market panic Sensex falls to its biggest single-day drop in nearly 10 months Sensex 50,600 Intra-day, Feb 26 50,256.71 50,250 49,900 49,550 PRESS TRUST OF INDIA Mumbai, February 26 49,200 49,099.99 THE BSE SENSEX crashed about 1,940 points to post its biggest single-dayfall in nearly 10 months and the NSE Nifty plunged over 568 points to crack below the psychological 15,000-mark on Friday, trackingglobalselloffstriggeredbya panicinbondmarketsoverseas. Investors also turned cautiousaheadofthethirdquarter GDPdatarelease,besideskeepinganeyeonsimmeringgeopolitical tensions between the US and Syria. The Sensex settled 1,939.32 points or 3.80% lower at 49,099.99 — its worst one-day fall since May 4 last year.The Niftyplunged 568.20 Continued on Page 2 Bank Nifty (Intra-day, Feb 26) 10-yr bond yield (%) 35,950 48,500 Open Close pointsor3.76%toclosethesessionat14,529.15—thebiggest single-daydropsinceMarch23 lastyear.OntheSensexchart,all 30 constituents ended in the red, with eight scrips logging over5% drop.Sectorally,banking index suffered the maximumlosswithover4.8%drop. Financial and telecom indices too fell sharply by 4.9% and 3.85%,respectively. 6.26 34,803.60 35,250 6.233 6.24 6.22 34,900 6.20 34,550 6.18 34,200 Previous close: 51,039.31 (Intra-day, Feb 26) 35,806.65 35,600 48,850 Previous close : 36,549 Open Close 6.16 6.205 Previous close : 6.184 Open Close POLICY TALK Q3FY21 GDP back in positive RBI seeks govt help to tackle liquidity, bats territory, grows 0.4% for 4% inflation band Aided by pent-up demand, govt, realty; no proof yet of sustained revival; 8% contraction in FY21 FE BUREAU New Delhi, February 26 INDIA’S ECONOMY REGAINED quite a lot of lost steam in theDecemberquarter,toregister a flat growth of 0.4% after two consecutive quarters of deepcontractioncausedbythe pandemic, but might slip a bit in the current quarter, according to the data released by the National Statistical Office (NSO) on Friday. In FY21, GDP would contract by 8%, the sharpest drop in recorded history,as per the second advance estimate; the contraction was previouslyseen at 7.7%. A pick-up in private consumption, largely driven by release of pent-up demand by affluent households and sections of the middle class, government investments, solid performancebytheagriculture sector and revival of manufacturing, construction, banking and real estate activities aided therecoveryfromtheabyss(see GDP 10 Best performers (% change, y-o-y) (% change in GVA, y-o-y, in Q3) 5.4 4.6 3.3 3.1 Financial services, etc -7.3 -20 Q1 Q2 Q3 FY21 -7.7 -5.9 (% change, y-o-y) Govt consumption 20 13.3 0 -10 -20 -30 -40 -50 1.8 7.6 Private consumption Trade, hotels, transport, etc Mining -1.5 2.6 10 6.2 Worst performers -24.4 Q1 Q2 Q3 Q4 FY20 6.6 Construction -10 -30 7.3 0.4 Electricity, etc 0 Public administration, etc GDP -2.4 -1.1 Fixed investment Q1 Q2 Q3 Q4 Q1 Q2 Q3 FY20 FY21 Source: MoSPI chart).Therecoveryis,however, still not broad-based. Also, its sustainability is not proven beyond doubt, although a very favourablebasewouldboostthe numbers in Q1 and Q2 of the next financialyear. Of course, NSO, which has facedgraverdatachallengesdue to the pandemic, resorted in a more than usual degree to extrapolations to compute the GDP,and admitted that the latest set of numbers were thereforelikelytoundergosharprevisionsinduecourse(theNSOhas already revised GDP growth rates for Q1 and Q2, both released after the onset of the pandemic, to -24.4% and —7.3%, respectively,from—23.9%and -7.5% estimated earlier). Continued on Page 2 Highlights need to increase sterilisation capacity to help deal with surges in capital flows FE BUREAU Mumbai, February 26 THE RESERVE BANK of India (RBI) on Friday highlighted the need to increase sterilisation capacity to help tackle with surgesincapitalflows,withhelp from appropriate provisions in the Union Budget even as it endorsed the tolerance band of 4%(+/-2%)forinflation,saying it should be retained. The RBI’s report on currencyand finance for2020-21 proposed sterilised intervention as an effective solution to resolve the trilemma of a fixed foreign exchange rate, free capital movement and an independent monetarypolicy. “Enhancement of sterilisation capacity may be necessary to deal with possible surges in capital flows in future,”it said. While the activation of the standing deposit facility (SDF) can address the security availabilityconstraint of the RBI for undertakingsterilisationoper- ■ The estimated ■ Trend 3.9% 3.8 – 4.3% average trend inflationworks out to during FIT period inflation estimates stood in the range of for the FIT period ■ Failure redefined as inflation overshooting/undershooting the upper and lower tolerance bands around the target for four consecutive quarters. ■ As concept ofthreshold inflation applies to long run and growth is unambiguously impairedwhen inflation crosses 6%, it should be held as upper tolerance limit Alower bound ofabove 2%will lead to actual inflation frequently dipping below the tolerance band, while a lower bound below 2% will hamper output/growth ations,market-based sterilisation instruments are required to avoid misalignment of the operating target relative to the policy repo rate,it noted. Continued on Page 2 FIVE ASSEMBLY POLLS Special Features Our current focus is catering to demand that’s come back With A-Class Limousine and new GLA, this year Mercedes-Benz India will have more ‘volume products’ in its portfolio, in addition to India-made AMG cars: Santosh Iyer ■ Motobahn, P9 Ambuja Cements’ Q4CY20 results beat estimates LafargeHolcim group to continue investing in India; market share sustenance is key to stock’s re-rating; target price raised to `330 from `300; ‘Buy’ rating maintained ■ Investor, P9 QuickPicks India to export coronavirus vaccines to 40 more countries INDIAWILL export vaccines to 40 more countries, supplementing the list of more than 70 nations where it is exporting vaccines, external affairs minister S Jaishankar said on Friday, reports fe Bureau in New Delhi. “India has lived up to its talk on a collaborative future by exporting vaccines to more than 70 countries and will be adding 40 countries to this list soon, Jaishankar said addressing the Asia Economic Dialogue 2021, on the theme of ‘Post Covid-19 Global Trade and Finance Dynamics’. Jio launches ‘2.5x cheaper’ offers for JioPhone users JIO ON Friday unveiled offers for new and existing JioPhone users, which are 2.5x cheaper compared to what the feature phone users spend on other networks, reports fe Bureau in Mumbai. The first offer is of `1,999, which includes a JioPhone device and a 24month plan of unlimited service. It includes unlimited voice, 2 GB high speed unlimited data every month and won’t require recharge for two years. The other is of `1,499, which includes JioPhone device and a year of unlimited service. PAGE 4 IOC to invest `32,496 crore to expand Panipat refinery capacity STATE-OWNED INDIAN Oil Corporation (IOC) on Friday said it will invest `32,946 crore to expand its oil refinery at Panipat in Haryana to 25 million tonnes per annum capacity (mtpa) and set up chemical units, reports PTI. The expansion will be completed by September 2024, the firm said in a filing to the stock exchanges. Panipat refinery currently has a capacity to turn 15 million tonnes per annum of crude oil into valueadded fuels such as petrol, diesel and ATF. PAGE 4 ● CRITICAL SECTORS Voting to begin on Mar 27; maximum 8 phases in Bengal PM asks lenders to boost credit flow PRESS TRUST OF INDIA New Delhi, February 26 POLL POSITION VOTING FOR FIVE assembly elections will begin on March 27,with West Bengal conducting the maximum eight phases continuing till April 29, and votes for the polls in the four states and one union territory will be counted on May 2, the Election Commission said on Friday.As many as 18.68 crore voters will be eligible to cast their votes at 2.7 lakh polling stations for 824 assembly seats acrossAssam,WestBengal,Kerala,TamilNaduandPuducherry. The elections for the five assembliesareexpectedtowitness a determined attempt by the BJP to put a strong show, including in Assam where it is already in power, as well as in West Bengal, Kerala, Tamil Nadu and Puducherry where the saffron party has been pushing hard in recent years. Elections in Assam will be conducted in three phases on March 27, April 1 and April 6, while polling in Kerala, Tamil Nadu and Puducherry will take placeinasinglephaseonApril6. Elections for the West Bengal assembly will be held in eight phases, up from seven last time, beginning with polling for 30 seats on March 27, chief election commis- 1st PHASE 2nd PHASE 3rd PHASE 4th PHASE 5th PHASE 6th PHASE 7th PHASE 8th PHASE "The government's responsibility is to stand with all such business decisions taken with good intent...You have to see how credit reaches new sectors, new entrepreneurs." West Bengal 30 30 Seats: 31 Seats: 44 Seats: 45 Seats: 43 Seats: 36 Seats: 35 March 27 April 1 April 6 April 10 April 17 April 22 April 26 April 29 1st PHASE Seats: 47 2nd PHASE Seats: 39 3rd PHASE Seats: 40 March 27 April 1 April 6 Seats: Seats: Assam —NARENDRA MODI, PRIME MINISTER FUELLING DISCONTENT Trucks are parked at a terminal during a nationwide strike to protest against rising fuel prices and goods and service tax rules, in Mumbai on Friday Kerala SINGLE Seats: 140 PHASE April 6 234 April 6 Puducherry SINGLE PHASE Seats: 30 KIRAN RATHEE New Delhi, February 26 April 6 Results for all 824 seats has communicated to the governmentthatifithastomeetall theconditionsstipulatedbythe committee then it would take another two years time for it to roll out the 4G network. The problemareasforBSNLarethat ithasbeenaskedthatthecoreof the 4G network should be built bylocalvendors underasystem integratormodelandnotglobal firms like EricssonorNokia. Continued on Page 2 Continued on Page 2 BSNL asks govt for concessions on domestic vendor clause SINGLE PHASE Seats: PRIME MINISTER NARENDRA Modi on Friday asked lenders to boost credit flow to critical as well as new sectors to satiate the growing appetite of a fast-recuperating economy, with an assurance that publicsector bankers won't be harassed for honest business mistakes. He also promised further reforms in the financial services space. The prime minister said the government recognises the cycle of ups and downs faced by businesses. So, it doesn’t harbour the thinking that all transactional decisions by bankers are done with mala-fide intent and amount to malfeasance. 4G DELAY Tamil Nadu May 2 sioner Sunil Arora said while announcing the poll schedule. The second phase ofWest Bengal’s assembly elections has been scheduled forApril 1 and will cover 30 constituencies. Continued on Page 2 IT'S GOING TO be a year since BSNL first floated its tender for 4G network, which was cancelledtogivepreferencetolocal vendors,buttheimpasserelated tothe finalisationof the second one continues with the company expressing its inability to meet the conditions recommended by a governmentappointedpanel.Exasperated,it ■ BSNL floats 4G tender on March 23, 2020 ■ The tender was cancelled on July 1, 2020 ■ An empowered panel recommended use of Indian core network ■ Niti Aayog proposed new tender should support local firms FE BUREAU New Delhi, February 26 ● NOT SO PRIVATE CONTENT MODERATION Judge disturbed Google Twitter pledges more transparency: Dorsey tracks even 'incognito' PRESS TRUST OF INDIA New Delhi, February 26 TWITTER HAS SAID that social media entities are facing a“significant trust deficit”and pledged to make its content moderation practices more transparent, giving people more control as it strives to be among the most open companies globally. Twitter CEO Jack Dorsey said the microblogging platform is making a lot of progress in its accountability RETWEET! Microblogging platform to give people more control to moderate their interactions To enable a marketplace approach to relevance algorithms, fund an open source social media standard Dorsey says focussing on metrics like transparency, accountability, reliability and choice will have a huge impact by “owning our mistakes and correcting, and reliability by following published principles and not wavering”. “We are lacking in transparency and giving people more choice and control,”he told analysts. Dorsey said Twitter intends tomakeitscontentmoderation practicesmoretransparent,give people more control to moderate their interactions, enable a marketplace approach to relevance algorithms, and fund an open source social media standard....We agree many people don’t trust us. Never has this beenmorepronouncedthanthe last few years... And we aren’t alone: everyinstitution is experiencing a significant trust deficit,” he said. Continued on Page 2 JOEL ROSENBLATT February 26 WHEN GOOGLE USERS browse in “Incognito” mode, just how hiddenistheiractivity? The Alphabet unit says activating the stealth modeinChrome,or“privatebrowsing” in other browsers, means the companywon’t“remember youractivity”.Butajudgewitha history of taking tech giants to task about their data collection raised doubts on Thursday about whether Google is being as forthright as it needs to be about the personal informationit’scollecting from users. At a hearing on Thursday in San Jose, California, US district judge Lucy Koh said she’s“disturbed” by Google’s data collection practices in a classaction lawsuit. Continued on Page 2 Kolkata