OPINION, P6 ECONOMY, P3 DIGITAL DILEMMAS Digitalisation needs streamlining of existing frameworks to thrive BACK PAGE, P22 HARD TALK REVIEW MEET UNCERTAIN FUTURE The Federal Reserve is still struggling to get its story straight FM to meet PSB heads on June 20; may nudge them for loan growth Musk hints at layoffs in first meeting with Twitter employees NEW DELHI, SATURDAY, JUNE 18, 2022 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL XLVIII NO. 93, 28 PAGES, `10.00 (PATNA & RAIPUR `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 SENSEX: 51,360.42 ▼ 135.37 NIFTY: 15,293.50 ▼ 67.10 NIKKEI 225: 25,963 ▼ 468.20 HANG SENG: 21,075 ▼ 229.57 `/$: 78.05 ▲ 0.05 `/€: 82.11 ▼ 0.83 BRENT: $117.07 ▼ $2.74 GOLD: `50,989 ▲ `542 IN THE NEWS Q1 advance taxes up a third to `1 trillion AIDED BY REVIVAL of economic activities and better compliance, the Centre's advance direct tax collections from companies, LLPs and individuals rose by 33% on year to about `1.01 trillion in Q1FY23, reports fe Bureau in New Delhi. Till June 16 of the current financial year, net direct tax collections (post-refunds) stood at `3.39 trillion, up 45% on year. Bombay HC rules in favour of HUL in Sebamed ad case HINDUSTAN UNILEVER SAID on Friday that the Bombay high court has ruled Sebamed’s campaign based on the pH value of soap, comparing it to Dove, Pears and Lux, as disparaging, reports fe Bureau in Mumbai. 12,000 plus Covid cases for second consecutive day INDIA REPORTED 12,000 plus new Covid cases for the second consecutive day with 12,847 infections on Friday, reports fe Bureau in Pune. India's active cases was at 63,063, the highest in the last three months. PM calls states to help in `5-trillion economy dream EACH STATE MUST recognise its strength and define a target as this is crucial for India to become a $5-trillion economy, Prime Minister Narendra Modi said on Friday, reports PTI. The prime minister was chairing the first three-day national conference of chief secretaries, which concluded on Friday at Dharamshala. Special Feature Don’t have a Schengen visa? Check out India There are thousands of touristy places in India. Here are some drove to in the recent past. ■ Motobahn, P8 FINANCIAL EXPRESS MODERN BFSI SUMMIT RBI not in favour of banks Macro stability outweighs growth now, says CEA floating digital-only arms India now rightfully inflation-intolerant, medium-term prospects sanguine, clouds may dissipate in 6-12 months Governor says the model carries some risks SHRITAMA BOSE Mumbai, June 17 THE RESERVE BANK of India (RBI) is not in favour of existing banks launching digitalonlyarms as the model carries some risks, governor ShaktikantaDas saidon Friday.The centralbankhaschosentonot accept suggestions on such arrangements,he added. “We don’t have a separate regulatory framework for what is called a digital bank,” Das said, speaking at financialexpress.com’s Modern BFSISummit.“Ifeelthereisno need for any bank to set up a separatedigitalbank,tohavea sort of parallel entity in the same business.What they can achieve by having a parallel entity they can very well achieve as a part of their own organisation.Thereweresome suggestions which came, but we felt that it carries certain risks with it. So we have not acceptedthatatthemoment.” In November 2021, Niti Aayoghadfloatedadiscussion paper offering a roadmap for aregimeforlicensingandregulation of digital banks in India. The paper had prompted large banks to start devising plans to build digital banks of their own in readiness for a licensing regime. Continued on Page 2 Unregistered food brands to attract 5% GST: GoM A GROUP OF ministers (GoM) reviewing the goods and servicestax(GST)rateshasdecided to remove exemption for packaged food items, if sold under unregistered brands, reports Prasanta Sahu in New Delhi. Theseitemswillbetaxedat5%, the rate forbranded food. The move is in the wake of misuse of the exemption for unbranded food bya section of the food processing industry, including rice and wheat millers.According to a source, the decision was taken by the GoM, headed by Karnataka chief minister Basavaraj Bommai, which met on Friday.“No tax waiver will be allowed for food items where brands are usedbutpurportedlynotbeing claimed,”the source said. Full report on Page 2 K G NARENDRANATH Mumbai, June 17 NOTWITHSTANDING THE FRESH global headwinds caused by aggressive monetarytightening bythe US Fed, India will likely fare better than peers and other large economies in terms of medium-term growth and inflation prospects, chief economic advisor Anantha Nageswaran said on Friday. RELATED STORIES RBI governor Shaktikanta Das speaks at financialexpress.com’s Modern BFSI Summit in Mumbai on Friday Faster tightening would have been disastrous for economy, says Das IN A SPIRITED rebuttal of the charge that the Reserve Bank of India (RBI)was too slow to act against inflation, governor Shaktikanta Das on Friday said that any move to prematurelytighten monetarypolicywould have been disastrous for economic growth. “During the time of Covid, the monetary policy committee consciously decided to tolerate an inflation that was higher than 4%, up to 6% because the situation required that. If we had been very firm in maintaining 4% and kept the rates unduly high, I’m sorry, the consequences of that approach would have been disastrous for the economy,” Das said at financialexpress.com’s Modern BFSI Summit. The governor pointed out that the inflation target range of 2-6% has been given to the MPC to deal with extraordinary situations like the one brought on by Covid. The MPC,therefore,decided to use the band and the flexibility available to it around the 4% level to support growth and the panel has been quite open about it. Continued on Page 2 AI, ML to play a major role in fraud detection PAGE 7 Bankers call for tech upskilling to keep pace PAGE 7 quacy ratio) of Indian banks is on par with peers in many developed and developing countries.Whencurrentuncertainties dissipate,this is going to stand us in good stead to expand balance sheets once again,” he said. Full report on page 7 He, however, underlined the supportive role a “well-capitalised” banking sector will have to play for “sustainable and lasting”economic recovery. Ensuring finance and working capital to the MSMEs “at reasonable prices”is crucial. Delivering the keynote address at the FE Modern BFSI Summit here,he said it is “very important to focus on ensuring macro stability, ratherthan pursue growth”at this juncture. This is because “as shocks come and impact, we need to keep calibrating the order of priorities with respect to the economy.” Nageswaran, however, said since half or even two- thirds of the world economy may slip into a recession in the second half of the current year or even into 2023, there would be consequent nearterm challenges for India, including a dented export growth after a "stellar" show in 2021-22. THE NUMBER OF digital payment transactions should treble by 2025 and the Unified Payments Interface (UPI) should register an average annualised growth of 50% by then,according to the Reserve Bank of India (RBI). The central bank expects the Immediate Payment Service (IMPS) and National Electronic Funds Transfer (NEFT) togrowat an annual average of 20%.These are among 10 specific outcomes to be achieved by India’s payments industry over the next three years as part of its Payments Vision Continued on Page 2 India’s fishery rights protected in WTO Study sees 30% deal, patent waiver only for vaccines EVs by 2030; PVs FE BUREAU New Delhi, June 16 AFTER DAYS OFhard bargaining in Geneva, trade ministers of key members of the World Trade Organisation (WTO) hammered out a deal to scrap subsidies forillegal fishingand agreed togrant a patentwaiver for manufacturing Covid-19 vaccines for a period of five years to better fight the pandemic. The fishery subsidy, the continuation of which India has been keen on, has been retained. The WTO also decided to continue the 24-year-old moratorium on slapping customs duties on electronic transmission (e-commerce trade) by the next ministerial conference of the WTO but not later than March 2024. IT’S A DEAL ■ Patent waiver for Covid-19 vaccines for 5 years; a decision to include diagnostics/ therapeutics in 6 months (Proposal of IndiaS Africa partly endorsed) ■ Curb on illegal unreported and unregulated fishing, strict controls on overfished areas; no subsidies for fishing outside EEZ or RFMOs (Interests of Indian fishermen protected) Some of the world’s big technologyfirmswere apprehending that if the 1998 accord lapsed this week, it could result in cross-border tariffs on purchases from Amazon.com, Netflix movies, ■ Moratorium on customs duties on ecommerce trade to continue till next ministerial but not later than March 2024 (India softened its opposition to pave way for deal) Apple music and Sony PlayStation games, etc. Commerce and industry minister Piyush Goyal asserted: “All in all, it is a good package…There is a good outcome on the issues which are long pending.” India managed to protect the interest of its small and marginal fishermen, as the agreement on curbing harmful fisherysubsidies forillegal, unreported and unregulated (IUU)fishingisunlikelytodent New Delhi’s interests. The minister is learnt to have frequently taken directions from Prime Minister Narendra Modi during the course of negotiations, as India, which was frequently seen as a deal breaker by the West, emerged as a deal maker. The 12th ministerial conference,which was scheduled to be held between June 12 and 15, was formally extended by a day to facilitate an outcome. Continued on Page 2 RBI sees digital payment transactions trebling by 2025 document for 2025, the central bank said on Friday. The vision document took noteof the proliferation of Buy Now,Pay Later (BNPL) services which, it said, has developed into a new payment mode alongside the existing payment modes like cards, UPI, and net banking. “This novelmethodshallbe examined, and issuance of appropriate guidelinesonpayments involving BNPL shall be explored,”RBI said. Among otheroutcomes are a reduction in the volume of cheque-basedpaymentstoless than 0.25% of the total retail payments.Theindustryshould target increasing its payment Banks stronger, keen to lend INDIA'S BANKING system is nowwell-capitalisedwith NPA ratios down,thanks to a series ofcapitalinfusions,assetsales, balancesheetprovisioningand normal nominal GDP growth, CEAAnanthaNageswaran said onFriday,reportsfe Bureauin Mumbai. “(The capital ade- VISION DOCUMENT SHRITAMA BOSE Mumbai, June 17 CEA Anantha Nageswaran at the summit on Friday IN TRANSITION ■ Debit card usage to surpass credit cards in terms of value ■ Increase in PPI transactions by 150% Volume of chequebased payments to be less than 0.25% of the total retail payments More than 3x increase in number of digital payment transactions UPI to register average annualised growth of 50% and IMPS/NEFT at 20% transaction turnover vis-à-vis gross domestic product (GDP) to eight and debit card transactions at point of sale (PoS) by 20%. Debit card usage is to ■ Increase of registered ■ Increase of payment transaction turnover visà-vis GDP to 8 ■ Increase in debit card transactions at PoS by 20% surpasscreditcardsintermsof value while transactions through prepaid payment instrument (PPI) should rise 150%,says the document. customer base for mobile based transactions by 50% CAGR ■ Reduction in Cash in Circulation (CIC) as a percentage of GDP It further says that card acceptance infrastructure is to increase to 25 million and the registered customer base for mobile-based transactions is to grow 50% on a compound annual growth rate (CAGR) while cash in circulation (CIC) as a percentage of GDP is to be reduced. The regulatoralso laid out a setofspecificinitiativesforthe industry. Considering emerging concerns with OTP-based authentication in terms of increasing cases of divulgence of customers’ confidential details, alternate risk-based authentication mechanisms leveraging behavioural biometrics, location, historical payments, digital tokens and in-app notifications shall be explored,the RBI said. Continued on Page 2 to account for 5% VIKRAM CHAUDHARY New Delhi, June 17 WHILE THE GOVERNMENT hopes to have electric vehicle (EV) sales accounting for 30% of private cars, 70% for commercial vehicles and 80% for two- and three-wheelers by 2030, just about 30% of overall vehicles are likely to be EVs by that time. Of this 30%, mostly will be two- and three-wheelers, as expensive electric cars would be outside the reach of many consumers in India, according toastudybymanagementconsultancyfirm,Arthur D Little. The study, ‘Unlocking India’sElectricMobilityPotential’, stated “the EV industry will cross sales of 10 million vehicles by2030,with an overall adoption rate of more than 30% across different vehicle categories. However, EV adoption for passenger vehicles (PVs) is likelyto be a mere 10% by the end of the period, amounting to a strikingly small 5% of total EV sales.” The study cited several factorsforthelowadoptionofpassenger EVs in India, including higherupfrontcostscompared to traditional vehicles, lack of enough models, dearth of charginginfrastructure(charging stations, battery swapping centres, chargers, and the entire supporting ecosystem), low consumer confidence in theproductdrivenprimarilyby range anxiety, exacerbated by product safetymishaps. The study added that the private sector and the government should work together to remove the barriers to electric mobility,and help India lift its EV game. New Delhi EV adoption rate % (EV sales as a % of total automobile sales) 37 Netherlands 16 Germany 13 Canada UK 10 France 10 Singapore China USA India Japan 5 4 4 2 1 Source: Arthur D Little “Ourstudyreflects the best estimate(30%)forEVpenetration to be achieved in India by 2030 given current visibility into plans and initiatives,” author Barnik Chitran Maitra, managing partner & CEO, India & South Asia, Arthur D Little,said. He, however, added that if India were to truly unlock its full potential,adoption rate of 50% could be achievable with the sale of more than 17 million EVs by 2030. “This reflects the ‘true potential’ of the Indian EV industry if all stakeholders come together and put a concerted effort in setting up a robust ecosystem in India.” Continued on Page 2