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APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL 33 NO. 158, 22 PAGES, `12.00 (NORTH EAST STATES & ANDAMAN `12.00) 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: 73,895.54 ▲ 17.39 NIFTY: 22,442.7 ▼ 33.15 NIKKEI 225: 38,236.07 ▼ 37.98 HANG SENG: 18,578.3 ▲ 102.38 `/$: 83.49 ▲ 0.068 `/€: 89.92 ▲ 0.297 BRENT: $83.48 ▲ $0.52 GOLD: `71,525 ▲ `584 IN THE NEWS INVESTMENTS VIA P-NOTES SURGE TO NEAR 6-YEAR HIGH INVESTMENTS VIA PARTICIPATORY notes in the capital markets reached `1.5 trillion at the end of February, making it the highest-level in nearly six years, reports PTI. ■ PAGE 10 PROJECT FINANCE NORMS TO RAISE PSBs’ CREDIT COST THE TIGHTENING OF project finance norms by the Reserve Bank of India (RBI) will increase the incremental credit cost for banks and hurt their Common Equity Tier 1 (CET1) ratios, reports Sachin Kumar. ■ PAGE 10 ADANI IN TALKS FOR $600-MILLION OFFSHORE LOAN ADANI GROUP IS seeking an offshore loan of about $600 million to refinance existing debt, reports Bloomberg. The loan will be raised by Dhamra LNG Terminal, a unit of Adani Total. ■ PAGE 4 APRIL SERVICES PMI EXPANDS, ALBEIT AT SLOWER PACE DRIVEN BY STRONG domestic demand conditions, services activity expanded further in April, although at a slower pace, with the services PMI coming in at 60.8, reports Priyansh Verma. ■ PAGE 2 BABA KALYANI'S KIN SEEK FREEZE ON FAMILYASSETS IN THE OPENING proceedings of a civil case on Monday, Bharat Forge chairman Baba Kalyani found himself at the centre of scrutiny, reports Geeta Nair. His nephew and niece have sought division of assets within the family. ■ PAGE 5 FMCG MARKET POISED FOR GROWTH: BERRY THE DOMESTIC FMCG market is poised to return to growth in FY25, Britannia's executive vicechairman and MD, Varun Berry said on Monday, reports Viveat Susan Pinto. ■ PAGE 5 FE S P E C I A L S Titan: Putting growth above profitability Company maintains aggressive growth despite uncertainties ■ INVESTOR, P9 Why Europe is fed up with tourists Striking a balance between a tourist spot’s carrying capacity and income generation is essential ■ EXPLAINER, P9 ACCESS TO CREDIT SURGES PLI for all could hurt competitive export sectors: Panagariya Liabilities grew 73%, gross savings just 14% 16th Finance Commission chairman makes a pitch for more free trade pacts Household savings fall to five-year low in FY23 CREDIT BOOST Net financial household savings ` trillion PRIYANSH VERMA New Delhi, May 6 FY19 NETFINANCIALSAVINGSofIndia’shouseholds plunged to a five-year low of `14.2 trillion in FY23, sharply down from `17.1 trillion in FY22,primarilyowing to a sharp rise in short-term credit, data released by the statistics ministryshowed on Monday. The fall could be attributed to “a lot more leveraged consumption and spending” due to greater and faster access to credit,economists said. As a percentage of GDP, however, the households’net financial savings in FY23 was at 5.3%, the lowest in around five decades.Between FY12 and FY22 (excluding Covid-19 year FY21),the net financial savings hovered between 7-8%. The gross financial savings of householdsstoodat`29.7trillioninFY23,while financial liabilities stood at `15.6 trillion. In FY22, the former was at `26.1 trillion, and the latter at `9 trillion. To be sure, household liabilities jumped 73% onyear 14.9 7.9 FY20 As % of GDP 7.7 15.5 FY22 5.3 23.3 7.3 FY23 ` trillion 5.8 17.1 4.8 6.1 7.7 2.4 3 3.3 4.4 FY19 FY20 FY21 FY22 FY23 in FY23,while savings rose only 14%. Within financial liabilities, “bank advances”, or short-term credit usually availed through credit cards,jumped 54% onyearinFY23,thefastestgrowthrecorded since at least FY12. Bank advances also accounted for76% of the overall liabilities of households during FY23. “Thedata(FY23)depictsthatthenature of financing consumption has changed,” UPWARD SWING CAUTION OVER THE ongoing Lok Sabha elections continued to unnerve investors, who rushed to hedge theirpositions,leading to the India VIX rising for the eighth consecutive session on Monday. The volatility indicator soared 13.6% to 16.6, its biggest single-day rise in more than a year.Thiswas also the highest level forthe index in over a year. Market experts said there is a feeling that the elections maynot be awalk in the park for the ruling party.This was not the case two-three weeks ago. While many still believe the BJP-led National Democratic Alliance will return to power, there are divergent opinions on the number of seats it can win. ExpertssaidgiventhatVIXwasatultralow levels a couple of weeks ago, even the slightest uncertainty is leading to a sharp surgenow.Ineightsessions,thefeargauge has risen more than 60%. ThecurrentlevelofIndiaVIXisstillsignificantly lower compared to what it was during the previous general elections.For example,the index had risen to around 30 during the 2019 polls and to 40 in 2014. UR Bhat, co-founder of Alphaniti Fintech,doesnotexpectIndiaVIXtorisetothe levels seen in previous elections.“I don’t think VIX can go to those levels just based on uncertainty on election-related news. But if the West Asia crisis gets worse…or if the tensions in Taiwan, Ukraine mount, it can go further up,”he said. Market participants also highlighted that the possibility of interest rates staying higherforlongerthan anticipated earlierisalsoweighingoninvestorsentiment. Benchmark Sensex ended flat at 73,895.54 points on Monday after a slightlyvolatiletradewhereitmovedinthe As % of GDP 3.1 14.2 VIX soars to 52-week high on poll jitters VIVEK KUMAR M Mumbai, May 6 11.9 Bank advances FY21 11.7 13.56% INDIA VIX 16.60 Close, May 6 ■ Biggest ■ VIX India rose for 8th consecutive session on Monday single-day increase at 13.6%, highest level at 16.6 in over a year ■ Had hit 30 during 2019 general elections, 40 during 2014 polls 14.62 Close, May 3 range of around 570 points intraday.Nifty closed 0.2% lower at 22,442.70 points. “India VIX is indicating that market is preparing for an expansionary phase. On thedownside,Ithink22,000shouldbeprotected.But if it is broken,then we can see a fall even towards 21,000. But that seems unlikely.I’m betting on the upside towards 23,300-23,500points,once22,800levelis broken,” said Santosh Meena, head of research at Swastika Investmart. Continued on Page 17 said Sakshi Gupta, principal economist, HDFC Bank.“Since a lot of consumption/ spendingisleveraged,itshowsthatthereis anincreaseindemandincertainsections– forinstance,housing,”shesaid.InFY23,the housing credit to GDP ratio was at 7.1%, slightlyhigherthanthatofFY22.Intheprepandemicyear,FY19,the ratiowas 6.2%. Continued on Page 17 Working to make CBDC available offline: Das sectors you can’t expand by subsidising everybody. You have to ultimately rely on expansion of the industry into the global market place,” the noted trade economist told FE in an interview. The PLI policy was launched in 2021-22. There are as many as 14 schemes now, with the government seeking to offer `2 trillion PRASANTA SAHU & KG NARENDRANATH in incentives byFY30.However,the schemes’ New Delhi, May 6 progress so far is barely par for the course. TO THE EXTENT India’s production-linked There are big lags in investments in many sectors, including highincentives (PLIs) are tarefficiency solar PV geted at larger firms, ARVIND PANAGARIYA, modules, automobiles, ratherthan smaller,“inefCHAIRMAN, 16TH FINANCE ACC batteries and textiles, ficient” ones, these COMMISSION that were supposed to lead shouldn’t be equated the pack. with indiscriminate proFTAs ARE LIKELYTO BE Panagariya’s new book tection for domestic – India’s Trade Policy: The industry, Arvind PanaA BIG INCENTIVE FOR 1990s and Beyond — while gariya, chairman of the AN MNC THAT IS underscoring the benefi16th Finance CommisCURRENTLY IN CHINA cial effects of India’s trade sion, said on Monday. AND IS CONSIDERING liberalisation since 1991, He, however, caudenounces the intermittioned that if the incenTO MOVE TO INDIA tent reversals, including tives were made available since 2018-19, the year to “all sectors and everywhich sawmajorescalation body,” with focus on of import tariffs, with import-substitution over 42% of all tariff lines industries, it would going up.The book,divided amount to “punishing into 10 parts, chronicles competitive export the evolution of India’s industries”. trade and industrial poli“If we use PLIs seleccies,through topical newstively to promote two or paper essays written by three sectors, that’s one the author over thing. But, if (these are decades, and is due used as tool for) overall for release. industrialisation, I think that’s a hard thing to do. The capital is limited… Continued the whole industry or on Page 17 LOK SABHA ELECTIONS: PHASE 3 ANUP ROY May 6 THE RESERVE BANK ofIndia(RBI)isworking to make its digital currency available withoutbeingdependentoninternetaccess, according to governorShaktikanta Das. “One of the keyfeatures of cash is that it works offline,” Das said on Monday at an event hosted by Bank for International Settlements.“We are working on making the CBDCtransferableintheofflinemodealso.” India is one of the few economies to experiment with a digital currency backed byacentralbank,evenasdevelopednations tread cautiously.The countryexpanded the use of its digital currency on a pilot basis, with at least 1.3 million customers and 300,000merchantsusingit.CBDCusagein Indiahasreachedonemillionaday,butpeople still prefer using instant mobile payments mode,Das said. “Thekeyobjectiveofthepilotshasbeena change in consumer behaviour vis-a-vis bankdeposits—we needmanymoretransactions to understand its wider economic effects, especially on monetary policy and the bankingsystem,” Das said. However, by making CBDCs as “nonremunerative”and“non-interest bearing”, any potential risk of bank dis-intermediation has been mitigated, he said, speaking remotely with his counterparts from Germany and Italy — Joachim Nagel and Fabio Panetta — on a panel chaired byBIS head of research Hyun Song Shin. While CBDCs will help the central bank harness new technologies to make transactions and payments more efficient,risks of dataprivacyandcybersecurityremainaskey hurdles fora full launch. — BLOOMBERG POLL CALL SEATS Including Gujarat (25), MP (9), Karnataka (14), Maharashtra (11), UP (10) 93 AMIT SHAH (BJP), Gandhinagar, Gujarat DIGVIJAYA SINGH (INC), Rajgarh, MP SHIVRAJ SINGH CHOUHAN (BJP), Vidisha, MP JYOTIRADITYA SCINDIA (BJP), Guna, MP CANDIDATES 1,351 BJP’s Surat candidate Mukesh Dalal elected unopposed; Voting for Anantnag-Rajouri seat in Jammu and Kashmir deferred to May 25 244 (18%) CANDIDATES WITH CRIMINAL CASES 172 (13%) CANDIDATES WITH SERIOUS CRIMINAL CASES 392 (29%) CROREPATI CANDIDATES `5.66 crore AVERAGE ASSETS OF CANDIDATES Source: Association of Democratic Reforms SUPRIYA SULE (NCP– Sharadchandra Pawar), Baramati, Maharashtra DIMPLE YADAV (Samajwadi Party), Mainpuri, Uttar Pradesh OTHERS PRALHAD JOSHI (BJP), Dharwad, Karnataka GEETHA SHIVRAJKUMAR (Congress), Shimoga, Karnataka BADRUDDIN AJMAL (AIUDF), Dhubri, Assam DATA LAW TO CURB THIRD-PARTY SOURCING OF PHONE NUMBERS BY NEXT ELECTION 2024 polls set to ring the curtain down on ‘call’ for votes JATIN GROVER New Delhi, May 6 ANNOYED BY PESKY phone calls asking for your vote? Well, the ongoing general elections may be the last one when political parties can get your phone number from third-party agencies to make a pitch for their candidates. While the Digital Personal Data Protection (DPDP) Act is in place,it has not been implemented in the absence of supporting rules. Once the new government assumes office in June, the rules are expected to be finalised,which will put an end to such practices. At the most such calls will bug subscribers during the next few assembly elections, but not SILENT MODE ■ Political parties will then need to collect phone numbers with user consent, specify purpose, and delete them after intended use ■ Digital Personal Data Protection in place, but to be implemented once new government finalises supporting rules beyond that,officials said. Passed by Parliament in August 2023, the DPDP Act aims at data minimisation, purpose limitation and storage limitation. Data min- Violation of the guidelines may lead to a penalty as high as `250 crore ROHNIT PHORE imisation,means entities can only collect the absolute minimum required data. Purpose limitation restricts use of the data only to the purpose for which it was acquired, ■ Parties currently use services of cloud telephony and SMS companies for bulk IVR calls and messages while storage limitation requires the entities to delete the data after the services have been delivered. Political parties will thus need to collect phone numbers — with user consent — while specifying the purpose for which they are being collected and then also delete them. Any violation of the guidelines may lead to a penalty as high as `250 crore, and even the entities from whom the data has been sourced will be booked. According to legal experts,complaints of data breach can currently also be made under the Information Technology (Reasonable security practices and procedures and sensitive personal data orinformation) Rules,2011,and Section 72 of the Information Technology Act, 2000. However, the punishments and liabilitiesunder these are not that severe. Political parties currently use the services of cloud telephonyand SMS companies for bulk IVR calls and messages. According to independent political consultant, Sagar Vishnoi, “huge amount of data is being collected and assessed bypolitical parties and their agencies. Data is not just restricted to phone numbers and names,but details about caste, religion,income status,etc,are also being used fortargetingvoterswith campaigns”. However,compared to the 2019 Lok Sabha elections, where parties spent approximately`100 crore on IVRcalls,the expenditure this time is estimated to be less,especiallyby opposition parties,analysts said. Continued on Page 17 Kolkata