INTERNATIONAL | PAGE 7 COMPANIES | PAGE 4 NissanbetsonHonda toreviveIndiabusiness BACK PAGE | PAGE 24 Former US president Jimmy Carter no more NEW DELHI, TUESDAY, DECEMBER 31, 2024 Australia beat India at MCG to take a 2-1 lead FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. L NO. 259, 34 PAGES, `12 (PATNA & RAIPUR `12, SRINAGAR `15) 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: 78,248.13 ▼ 450.94 NIFTY: 23,644.90 ▼ 168.50 NIKKEI 225: 39,894.54 ▼ 386.62 HANG SENG: 20,041.42 ▼ 49.04 `/$: 85.54 < > 0.00 `/€: 89.26 ▼ 0.14 BRENT: $74.40 ▲ $0.23 GOLD: `75,935 ▼ `189 — IN THE NEWS New production norms for pharma firms from Jan 1 WITH THE REVISED norms for good manufacturing practices coming into force from January 2025, the pharma sector is staring at a crisis situation, reports Manu Kaushik. ■ PAGE 2 VRS scheme for Bata India’s staff at Hosur facility BATAINDIAON Monday said that it will introduce a VRS at its Hosur unit inTamil Nadu, reports RaghavAggarwal. ■ PAGE 4 H-1B visa changes may alter IT firms’ cost structures THE ONGOING DEBATE over proposed changes to the H1B visa programme could alter cost structures of Indian IT firms in the US, reports Padmini Dhruvaraj. ■ PAGE 4 »EXPLAINER« WHY IS THE RUPEE WEAKENING? FINANCIALSTABILITYREPORT RBI: Medium-term outlook uncertain ● Butinvestment scenariolooking up,saysgovernor SACHIN KUMAR Mumbai, December 30 INDIA’S MEDIUM-TERM ECONOMIC outlook remains challenging in the face of a possible rise in geopolitical tensions, sporadic financial market turmoil and rising indebtedness, Reserve Bank of India (RBI) governor Sanjay Malhotra, cautioned on Monday. What is also adding to the evolving uncertain outlook are stretched asset valuations, fragilities in the shadow banking sector and threats from new and emerging technologies, Malhotra wrote in the foreword to the Financial Stability Report (FSR). At the same time, prospects for the Indian economy are expected to improve on the back of high consumer and business confidence in »INSIDE« PAGE 9 STOCK TAKING ■ The stretched asset valuations, fragilities in the shadow banking sector and threats from new and emerging technologies are adding to the outlook, said the RBI governor ■ A finmin review cited the possibility of structural factors having contributing to the slowdown in H1FY25 5.4% ■ The Monetary Policy Committee is widely expected to cut the key repo rate by 25 bps at its next meeting 2025, the governor observed, adding the investment scenario was looking up. Importantly, Malhotra said financial conditions can be expected to “remain easy”.The banking system has been facing a shortage of liquidity due to several factors including the central bank’s intervention in the currency markets. REPORTRED-FLAGSWORSENINGASSET QUALITY IN UNSECURED LOANS PAGE 2 FINANCE MINISTER NIRMALA Sitharaman on Monday said that she wishes to ‘do more’ for the middle class, but highlighted that there are ‘limitations’ in providing relief through tax tweaks. The statement c o m e s »INSIDE« ahead of the U n i o n INDIA INC B u d g e t SEEKS TAX 2025-26, RELIEF & WELFARE w h i c h , OF POOR given the slowdown PAGE 2 in consumption demand, has raised expectations of significant tax concessions for the middle class, and support for the low-income population. While speaking to a TV channel, Sitharaman said: “I respect the issue of giving relief to the middle class. I wish to do more, but there are limitations in taxation. HOPES ALIVE income tax collections grew at 20.2% on year in the April-October period of the current financial year MICROFINANCE SECTOR FACES RISING DELINQUENCIES PAGE 2 AdaniGroup tosellstakein WilmarJV;to fetch$2bn BUDGET 2025-26 “To make a difference for salaried people, the standard deduction was increased from `50,000 to `75,000 (in the last K G NARENDRANATH New Delhi, December 30 W HEN SANJAY MALHOTRA, a quiet, unobtrusive IAS officer, was chosen as the 26th governor of the Reserve Bank of India (RBI) earlier this month for a three-year term,observers were surprised — briefly.Soon came the realisation that the government merelywanted a safe pair of hands at the helm of the principal financial-sector regulator. Seemingly,what it looks for is policy stability and soundness,without any serious unpredictability.Malhotra might be a perfect fit for the job,with all the necessary attributes: intellectual acumen,technological savviness,and a demeanour that combines sternness with almost self-effacing restraint. In his interaction with the media after assuming the coveted – but extremely demanding – office, Malhotra summarised his approach to the task at hand,by emphasising the need to ensure stability and continuity in policy.He stressed the importance of ‘trust’in effective regulatory governance,while expressing his disapproval of‘day-to-day kind of policy’. The 1990-batch Indian Administrative Service officer, however,also acknowledged the need for dynamism amidst the current set of challenges from the volatile external world and reiterated the central bank's commitment to financial inclusion and leveraging technology for NEWSMAKERS OF THE YEAR - VII ● Every RBI guv debuts with a unique set of challenges; Malhotra has his own – uncertain externalworld and a growth slowdown that co-existswith financialsector robustness »INSIDE« KEYTHEMES: BEARS GAIN GROUND, BULLS SOBER UP PAGE 24 Budget).” This adjustment (standard deduction), combined with revised tax rates, aims to benefit not just middleincome earners but also higher-income groups, offering incremental relief across various tax brackets, the FM said. Continued on Page 13 SHYAM KUMAR PRASAD Continued on Page 13 Fleet build-up outpaces operational efficiency Passengers left in the cold as flight delays surge 85 70 Average Indigo Air India Vistara Akasa Air 66.4 74.5 79.3 60.3 67.8 71.8 55 58.8 Apr May Jun Jul Aug Sep Airline on-time performance (2024) IndiGo, the country’s largest domestic airline, saw a sharp decline in its on-time performance (OTP), topping the punctuality rankings just once in 2024 compared to six times in 2023. Akasa Air, the country’s youngest airline, 68.1 61.5 61.6 Mar 58.0 Feb 69.9 Jan Source: DGCA 74.1 25 76.2 40 76.8 47.6 68.3 (in %) 100 67.0 AIR PASSENGERS FACED a turbulent year as flight delays soared, leaving them significantly worse off compared to the previous year. Despite an aggressive fleet expansion by airlines to meet burgeoning travel demand, operational inefficiencies marred the flyingexperienceforthemajority of the travellers. Between January-November, one in every three domestic flights (33%) was delayed, according to the Directorate General of Civil Aviation (DGCA). This marks a stark deterioration from 2023, when only 22% of flights by the country’s top six airlines faced delays during the same period. BEHIND SCHEDULE 57.5 SWARAJ BAGGONKAR Mumbai, December 30 Oct Nov seized the top spot six times, with an average OTP of 74%, outpacing IndiGo’s 71%. Vistara, which merged into Air India in November, held the second spot with a 73% OTP. Meanwhile, Air India and SpiceJet lagged behind, with growth while mitigating risks. Malhotra will be helped by his rich experience in finance and taxation, gathered over decades while handling various assignments in his parent (Rajasthan) cadre,and the Union government,including the relatively recent ones as secretary-financial services,and the Union revenue secretary.He has actuallywalked the talk on policy stability — as revenue secretary,he was often seen advising the field officers of the tax departments,to be mindful of not upsetting business growth and refrain from doggedly pursuing immediate revenue targets,at the expense of income generation.He used to invoke the‘golden goose’analogy. In the IAS fraternity,his seniors and other colleagues commend Malhotra's wayof functioning that dovetails deep insights with pragmatism.“Malhotra is an upright officer,who always keeps a macro perspective,while getting the policies implemented efficientlyat the micro level,”says SunilArora,former chief election commissioner,who also belonged to the Rajasthan cadre. Malhotra,according toArora,has always been quick in the uptake and keenly understands nuances of policy-making. Malhotra makes it a point to not to ‘over-project’himself,nevertheless he unfailinglydelivers,which is how a typical civil servant should be,adds Arora.Arvind Mayaram,former finance secretary,too describes Malhotra as a ‘quiet,methodical and thorough officer’. As governor,Malhotra is left with a legacy of a sound,de-leveraged and almost well-capitalised banking system. Continued on Page 13 ADANI ENTERPRISES (AEL) has decided to exit Adani Wilmar, the FMCG joint venture between its subsidiary Adani Commodities (ACL) and Wilmar International-owned Lence (Lence), to direct investments to its core infrastructure business, the firm said in an exchange filing on Monday. The divestment of its share in Adani Wilmar will fetch $2 billion for the Adani Group flagship, which it said will be used to ‘turbocharge its investments in the core infrastructure platforms in energy & utility, transport & logistics and other adjacencies’. “AEL will continue to invest in infrastructure sectors which will further strengthen AEL’s position as India’s largest listed incubator of platforms playing the key macro themes underpinning India’s growth story,” the statement said. I respect the issue of giving relief to the middle class RUN-UP TO THE Dove,hawk orowl? URVI MALVANIA Mumbai, December 30 FINANCE MINISTER ■ The Budget for FY25, presented in July, had introduced a slew of changes to the income-tax slabs under the new tax regime (NTR) also cited robust capital adequacy for the country’s banks and NBFCs Continued on Page 13 NIRMALA SITHARAMAN, ■ Gross personal ■ The governor Flagging the deceleration in the economy in H1 FY25, the finance ministry, in its monthly review for November, indicated that the central bank’s monetary and prudential policies may have contributed to the demand slowdown in the economy. FM says wishes to do more for middle class FE BUREAU New Delhi, December 30 In Q2 FY25, India’s GDP growth fell to a seven-quarter low ● SANJAY MALHOTRA, GOVERNOR, RBI OTPs of 63% and 50% respectively.These figures underline the growing challenges airlines face in ensuring punctualityamidrapidfleetand route expansions. Continued on Page 5 New Delhi