INTERNATIONAL | PAGE 7 COMPANIES | PAGE 4 NissanbetsonHonda toreviveIndiabusiness BACK PAGE | PAGE 24 Former US president Jimmy Carter no more LUCKNOW, TUESDAY, DECEMBER 31, 2024 Australia beat India at MCG to take a 2-l lead FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL 18 NO. 26, 34 PAGES, `12 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 guidelines 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 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 programmecould alter cost structures, force strategic realignments, and reshape the workforce dynamics of Indian IT services firms in the United Stars, reports Padmini Dhruvaraj. ■ PAGE 4 »EXPLAINER« WHY IS THE RUPEE WEAKENING? PAGE 9 FINANCIALSTABILITYREPORT RBI: Medium-term outlook uncertain ● Butinvestment scenariolookingup, 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 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 fac- »INSIDE« 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 ing a shortage of liquidity due to several factors including the central bank’s intervention in the currency markets. 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. India’s GDP growth fell to a seven-quarter low of 5.4% in Q2 FY25. However, the review also cited the possibility of struc- REPORTRED-FLAGSWORSENINGASSET QUALITY IN UNSECURED LOANS PAGE 2 In Q2 FY25, India’s GDP growth fell to a seven-quarter low ■ The governor also cited robust capital adequacy for the country’s banks and NBFCs tural factors having contributing to the slowdown in H1FY25 while welcoming the cut in the cash reserve ratio (CRR) from 4.5% to 4% that will free up liquidity for lenders. Malhotra committed to maintaining financial stability that would support a higher growth trajectory for the economy. The governor believes that the uncertainties in the global environment notwithstanding, the Indian economy would to do better from now on. Continued on Page 13 MICROFINANCE SECTOR FACES RISING DELINQUENCIES PAGE 2 ● SANJAY MALHOTRA, GOVERNOR, RBI Dove,hawkorowl? 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 »INSIDE« KEYTHEMES: BEARS GAIN GROUND, BULLS SOBER UP PAGE 24 NEWSMAKERS OF THE YEAR - VII ● Every RBI guv debuts with a unique set of challenges; Malhotra has his own – uncertain externalworld & a growth slowdown that co-existswith financialsector robustness 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 way of functioning that dovetails deep insights with pragmatism.“Malhotra is an upright officer,who always keeps a macro perspective,while getting the policies implemented efficiently at 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 unfailingly delivers,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 SHYAM KUMAR PRASAD Lucknow