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Updated: 1 hour 34 min ago

Reserve bank could be holding too much reserves. Here's why

1 hour 34 min ago
On October 26, Reserve Bank of India (RBI) deputy governor Viral Acharya had made a passionate speech warning that governments that raid the reserves of their central bank, as Argentina’s once did, can come to a sticky end, with foreign investors fleeing at this sign of gross profligacy. Newspapers highlighted the spat between the finance ministry and RBI on this issue.New light has been shed by an article in the Economic & Political Weekly, ‘Paranoia or Prudence: How Much Capital is Enough for the RBI?’ (Dec 8, goo.gl/j9p8HK), by four economists — Abhishek Anand, Josh Felman, Navneeraj Sharma and Arvind Subramanian.They claim that RBI has excess reserves of at least Rs 5 lakh crore, and maybe Rs 7.9 lakh crore, which can be used for better purposes than sitting in RBI vaults.Money PlantThe finance ministry has long argued that RBI has accumulated enormous reserves from seigniorage (profits from printing money and minting coins), far in excess of legitimate needs. But RBI governor Urjit Patel backed Acharya’s stand that RBI needed its high reserves as a prudential measure. The RSS member on the RBI board, SGurumurthy, added fuel to the fire in a speech condemning ‘foreign-trained economists’ who slavishly followed conservative western norms, insensitive to the huge and much-merited needs of credit-starved micro, small and medium enterprises (MSMEs). Ultimately, Urjit Patel had to go.A large transfer of RBI reserves could help the government go on a spending spree in an election year, recapitalise moribund public sector banks (PSBs), and cut its fiscal deficit. Many analysts, including me, fear that the finance ministry’s motives are not just technical, and include the desire to grab RBI money to finance election freebies.However, RBI reserve adequacy is a highly arcane issue. Ideally, the government and RBI need to talk at a non-political expert level, and agree on norms that will be followed by both in future. A committee is being appointed to examine this issue.The independence of RBI has definitely been eroded. Yet, the issue is not a simple one of evil politicians against an upright RBI. The EPW article by the four economists — including a former chief economic adviser, Subramanian —strongly supports the finance ministry’s claim that RBI has enormous excess reserves that should be transferred to the government. However, they also warn that the transferred funds should not be misused in a pre-election spending spree.They start by saying that the question of central bank reserve adequacy has no clear answer in theory or practice. They then compare central bank capital as a proportion of total central bank assets globally. India’s ratio is 27.7%, three times as high as the median ratio of 8.4%. Only four of 54 countries have higher ratios than India’s, and two of these are oil exporters.The four economists then study the ratio of retained earnings and contingency reserves to assets. Here again, India’s ratio of 8.2% is many times higher than the median ratio of 2.0%.Only five countries have higher ratios than India’s. Perhaps India has special factors requiring higher reserves, say the economists. But even allowing for this, India appears to have excess reserves of over Rs 5 lakh crore.RBI needs reserves in times of international crisis. But being highly profitable, it has never made a cash loss even in the worst crisis years. Its core capital has never declined. Total capital has risen consistently, except in the four years when valuation losses exceeded realised profits.Reserves BankThe economists create a model for determining reserve adequacy, taking into account India’s circumstances. They conclude that RBI reserves exceed the minimum needed by at least Rs 5 lakh crore, and perhaps by as much as Rs 7.9 lakh crore. The 2018 Budget outlay for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme was Rs 55,000 crore. The transfer deemed appropriate by the four economists is more than 10 times higher.However, they warn that such a transfer must not be used for a spending spree. That would amount to printing money, stoking inflation. The transfer they recommend is only for ‘below the line’ operations. One such operation would be to buy back government bonds, reducing government debt. This would reduce the annual interest outgo of the government by a whopping Rs 33,000-45,000 crore.Another possible operation could be the recapitalisation of moribund PSBs, enabling these financial zombies to start lending again. Shorn of technicalities, this can be seen as little more than abook entry, shifting government money from one category of its assets (RBI reserves) to another (capital of PSBs). This is by no means the last word on the subject. Viral Acharya and Urjit Patel, who favour the current policy of high reserves, are economists as eminent as the four journal authors. They need to respond to the four authors and carry the debate further in deliberation of a new committee — likely to be headedby former RBI governor Bimal Jalan —that will go into this thorny issue.Hopefully, it will come out with guidelines that both sides stick to in future, so that the autonomy of RBI is not in doubt, and populism does not erode the fundamental prudence for which RBI is responsible.
Categories: Business News

Now, carry your car documents in your phone

1 hour 34 min ago
NEW DELHI: The Union transport ministry has asked states to facilitate acceptance of driving licence and other documents like vehicle registration certificates in electronic format by enforcement agencies.Vehicle owners can also show their documents like driving licence, RCs and insurance certificates through mobile apps like Digilocker and mParivahan app, the Road Transport and Highways Ministry said Tuesday while issuing a Standard Operating Procedure (SOP) to states.The enforcement agencies like traffic and transport departments can simultaneously access these details from eChallan app, which has data for online verification of vehicle and its licence status, it said.The move is aimed at doing away with the handling of documents physically by enforcement agencies. Citizens would also escape from harassment of the collection of documents after paying challans, according to the ministry.Vehicle owners be allowed to present their documents like certificate of registration, insurance, fitness and permit, driving licence, certificate for pollution under check and any other relevant documents, etc in electronic format, the ministry said in a statement."They may now not be required to carry these documents in hard formats. Electronic form with reference to information, means any information generated, sent, received or stored in media, magnetic, optical, computer memory, micro film ...," it said.The ministry urged the states that the SOP may be adopted for ensuring compliance with the provisions of rule 139 of the Central Motor Vehicles Rules, 1989.People can produce the documents or other information either through the Digilocker app or the mParivahan app.They can download the Driving Licence or the Registration Certificate through these apps and store on their mobile devices.The statement said they can also show particulars relating to the Driving Licence or the RC through the mParivahan app on mobile through internet connectivity.The enforcement agencies can simultaneously access these details from eChallan app, which has data for on-line verification of vehicle and its license status, it said."Off-line verification of mParivahan QR Code is also available on this platform. The enforcement agencies can use normal android mobile apps for this purpose. This is irrespective of whether the state has implemented Vahanl Sarathi or not, provided the data from these states are regularly updated in the National Register. The enforcement agencies can also carry out complete challaning operation including tagging of the Driving Licence or the Certificate of Registration for impounding or suspension," it said.This step is likely to benefit both the enforcement agencies as they need not physically handle any document, their office need not maintain any inventory or record, and the citizens as they will escape harassment to collect document after the payment of compounding fees as the challan when disposed would automatically update the record in the Database, it said."This fast, transparent and accountable system will also ensure real-time availability of offence status to the transport and traffic enforcement officers and the citizens," it added.The notification to amend the Central Motor Vehicles Rules, 1989 to this effect was issued last month.
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Hospitals may have to split medicines, services bill for tax

1 hour 34 min ago
NEW DELHI: The Goods and Services Tax (GST) Council will soon consider a proposal that makes it mandatory for hospitals to bill medicines and hospitalisation charges separately, a move that could help plug any leakage in GST collection from healthcare providers. Such a measure is also seen benefiting consumers as it will make hospital bills more transparent.Hospital bills typically include charges for both medicines and hospital services. While medicines and consumables attract GST, with some under the maximum retail price (MRP) regime, hospitalisation services usually do not face tax. Tax authorities are worried that hospitals could be charging in-patients for GST on medicines, but the tax may not be reaching the exchequer due to bundling of bill of hospitalisation charges and medication.67152378 “There is a thinking that hospitals should have separate bills for medicine and hospital services… This will bring transparency for consumers as well,” an official privy to the proposal told ET. The proposal will be taken up for discussion by the council on Saturday, the official said.Healthcare services are essentially GSTexempt, barring cosmetic surgery and hair transplant. Tax is applicable on implants and artificial limbs.A decision on the move will be taken by the GST Council, the apex decisionmaking body for the new tax that was rolled out last year.According to the official, authorities suspect patients are sometimes charged full MRP for medicines even though the hospitals may have procured the drugs for less. Tax authorities had, in some cities including Mumbai, visited a few big hospitals and sought information on various practices followed by hospital chains.Unbundling hospital bills implies unregistered healthcare service providers would have to register with GST authorities, collect tax and deposit it.Some healthcare providers have been pitching for a 5% GST because in the absence of input tax credit, they now end up absorbing taxes paid on goods purchased from vendors. Input tax credit is not allowed as healthcare services are exempt from GST.Tax experts say supply of goods is incidental to service offered and it falls in the category of composite supply.“The concept of composite supplies needs to be reinforced in medical treatment and if required, a clarification issued that this concept would apply in case of exempted services as well,” said MS Mani, partner, Deloitte India.They too have pitched for 5% tax on healthcare services to tide over the issue. “Hospitals typically treat the transaction as a composite healthcare service (exempt from GST) in case medicines are used in course of a treatment (for outpatients, generally medicines are bought directly by customers on which GST is paid)... It might be the right time to consider a 5% rate on healthcare services and allow complete input credits,” said Pratik Jain, national leader, indirect taxes, PwC.Jain said if the government wants to unbundle the medicine component from other services, then GST law may need to be amended to carve out an exception from the concept of composite service, and added that this again underlines the point that exemption becomes complicated under GST.The GST Council is expected to consider a slew of measures to further simplify the tax regime.
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FAA keeps India’s aviation safety rating at category 1

1 hour 34 min ago
MUMBAI: The US Federal Aviation Administration (FAA) has retained India’s aviation safety rating at Category 1, a spokesman at India’s aviation regulator said on Tuesday.FAA had conducted an audit of the Directorate General of Civil Aviation (DGCA) in July — the third since 2013 — to confirm India’s adherence to standards laid down by the International Civil Aviation Organisation and oversight of Indian airlines. It had raised questions on guidance and training materials used. This was after the ICAO, a UN body, gave it a low safety score after an audit in November 2017, placing it below Nepal, Pakistan and other nations.“FAA has formally communicated that India is adhering to the safety standards of ICAO and has confirmed India’s International Aviation Safety Assessment rating remains Category 1,” the DGCA spokesman said.
Categories: Business News

Have a degree in liberal arts? Infosys may want to hire you

December 18, 2018 - 10:51pm
Software export major Infosys plans to hire a few thousand people with arts and other non-engineering degrees to work on new digital applications, which are more than just delivering technology services.Technology companies such as Infosys are witnessing an increasing number of digital contracts where the solutions are often created with clients, unlike the traditional deals where the specifications were drawn by the clients and outsourced. In these new deals, user experience is key to solving the business problems of clients and the skills needed for this are as much arts as they are science.“People with liberal arts, who are creative thinkers, tend to put themselves in the shoes of the consumers and tend to think out-of-the-box,” said a person at Infosys. “That is what the industry is looking for.”Infosys’ hiring plan highlights a change in the way Indian IT companies have built their business — recruiting thousands of engineers to write computer codes and maintaining infrastructure for their customers. With the shift towards digital, where the applications need to be built for smartphones and provide the same experience as any consumer app, such as Facebook, they require people with skills in areas such as design and data analytics.Infosys has already started hiring people with these skills. In the US, where it hired more than 7,000 people in the past year and a half, 20-30% had a liberal arts and non-engineering background, said the person. It will be taking more such staff in the US and India, too, the person said, without giving a time frame.Digital Tech Revenue at 31%In an interview, Satish HC, head of global services, data and analytics at Infosys, told ET that the company was “making investments” to bring more people with liberal arts, design and other nontech specialisations.“...to reimagine (solutions), you need design skills. We are making some of those investments as a company in our workforce. You also need people from different backgrounds with design skills, people with liberal arts and everybody cannot be with engineering or MBA background,” said Satish. “It is starting small but will grow over a period of time.”Infosys’ digital technology revenue is 31% and that is an indication of the number of such people it would need, said Satish, without giving a specific hiring numbers for people with such skills.In fact, the first acquisition made by Salil Parekh after he took over as chief executive at Infosys earlier this year, was WongDoody Holding Company, a US-based digital creative and consumer insights agency. The Los Angeles-based advertising solutions company has Amazon Studios, Tinder and ESPN among its clients. In September last year, Infosys acquired Brilliant Basics, a Londonbased digital innovation and customer experience studio.Analysts said Infosys’ approach was in line with the shifts in the industry.“When you are doing more business services, you have to cater to varied industries. That necessitates the need for diverse skill sets. It also shows the changing model of business,” said Sanchit Vir Gogia, chief executive of Greyhound Research.
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Hafiz Saeed is a 'contributing writer' in Pak

December 18, 2018 - 10:51pm
LAHORE: Mumbai attacks mastermind Hafiz Saeed has donned the hat of a column writer for a leading Urdu newspaper, stirring a debate among journalists as to how the media house allowed the head of a banned terror group to write on the Kashmir issue and the creation of Bangladesh in 1971.Saeed was declared a global terrorist by the US and the UN after the 2008 Mumbai attack and was put under house arrest in November 2008 but freed by a court some months later.He carries a USD 10 million American bounty on his head for his role in terror activities.'Illegal aggression of India on East Pakistan... Why Pakistan is avoiding advocating for Kashmiri people' written by "Professor Hafiz Mohammad Saeed" appeared in Daily Dunya (an Urdu publication of Dunya media group of Mian Amer Mahmood) on Sunday.The article carries a picture of former prime minister Indira Gandhi and some young men holding guns in Dhaka.Allowing the head of a banned terror group to contribute for a known media house has stirred a debate with journalists questioning whether the company in question allowed Saeed to write due to some "direct links" with the owner or under "someone's pressure".A court has ordered the Pakistan Electronic Media Regulatory Authority to ensure that the Pakistani media does not display Saeed's pictures.In his article, "Saeed said Indira hatched a conspiracy to dismember Pakistan", lamenting the then Pakistani rulers for their failure.Saeed has extensively explained the role of India in the creation of Bangladesh and expressed his opinion as to why Kashmir is important for Pakistan.He said Pakistan should support the Kashmiri people.India has been demanding Pakistan not only to arrest the Lashkar-e-Taiba (LeT) founder and try him in the Mumbai attack case but also punish all those involved in this carnage.Saeed launched the Milli Muslim League (MML) party in August 2017 with a so-called mission to implement the ideology of Pakistan in accordance with the 1973 Constitution.In April this year, the US placed the MML on its list of foreign terror organisations for its links with the LeT.The government has said that the MML is an off-shoot of Saeed's Jamat-ud Dawah (JuD), which has been declared as a foreign terrorist organisation by the US in June 2014.The JuD is believed to be the front organisation for the LeT which is responsible for carrying out the 2008 Mumbai attack that killed 166 people, including some Americans.
Categories: Business News

'Changes in policy in next 3 months to up biz ranking'

December 18, 2018 - 10:51pm
BENGALURU: The next three months would see the Centre put in place changes in policy and procedures to ensure India further improves its position in the 'Ease of Doing Business Report-2019', chairman designate of Central Board of Indirect Taxes and Customs P K Das said Tuesday.The process to assess the 'Ease of Doing Business-2019' for 2018 will start from February 2019 and go on till August-September. The result will be out in October.India has jumped 23 places to 77th rank in the global Ease of Doing Business rankings."Our efforts are that in the next three months we should ensure that all our processes are put in place in this financial year itself and deliver the desired changes, both in policy or if it is required to be made,any procedural changes.That is why any changes in the system upgradation, any capacity building, all these we are focusing now and see that we are all in the right track," Das told reporters.He was briefing reporters about the two-day 'All India conference of chief commissioners of customs/customs and central taxes and director generals on customs tariff and allied matters' that began here Tuesday.To curb smuggling and illicit trade,the customs department was also working on having new technological tools like Artificial Intelligence, block chain technologies and deep diving technologies, which are used in many sectors dealing with operations and applications, he said."We are engaging with technology experts. We are engaging with IBM and other system providers, but they have to build technology as per our requirement.We have to indicate (tothem) what the processes and what the minimum requirementsare.Our engagements are on,"Das said.He said the officers discussed numerous initiatives in connection with Indo-Bangladesh, Indo-Bhutan and Indo-Nepal cross-border trade, electronic cargo tracking system, off border clearance and various steps taken on TIR convention (International Road Transports convention).Smuggling was also an issue deliberated during the meeting, as also the steps taken to check it, Das said.The issue of upgrading the 12 laboratories of customs all over the country and getting them accredited was also discussed, he said.Das said efforts were on to give the lab facilities to the neighbouring countries so that consignments they exported for the benefit of the food safety authorities, drugcontrol authorities, wildlife authorities, animal quarantineand plant quarantine can be tested by theselaboratories.Strategic thinking was also discussed, he said, adding that the officers deliberated on the deployment of 109 Customs vessels helping agencies guarding the nation's borders like the Army and the Navy."We conduct a lot of exercises where we have something called Sagar Kavach. We conduct various joint exercises with the border guarding forces.All kinds of different parameters like whether their equipment is properly maintained or not, whether proper maintenance in terms of the comprehensive maintenance agreement is being carried out or not and whether the officers are deployed properly were examined," he said.We have issued several directions in this regard," Das added.
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IDFC, Capital First completes merger process to form IDFC First Bank

December 18, 2018 - 10:51pm
MUMBAI: IDFC Bank and Capital First today announced the completion of merger following all approvals to form a combined entity with Rs 1.02 lakh crore loan book. The merged entity will serve 7.2 million customers through its 203 bank branches, 129 ATMs, 454 rural business correspondent centres across the country’s urban and rural geographies. IDFC First Bank will now offer retail and wholesale banking products to a greater number of customer segments. V. Vaidyanathan, Founder and Chairman of Capital First will head the bank as managing director and chief executive officer. Rajiv Lall, Founder MD & CEO of IDFC Bank has been appointed as part-time non-executive chairman of IDFC First Bank. The merger was announced on January 13, 2018, and as per the terms of the merger agreement shareholders will receive 139 shares of IDFC Bank for each 10 shares held of Capital First. IDFC, which started banking operation on October 1, 2015, had been focussing on increasing the retail portfolio.Shares of IDFC Bank rose 4.71% to Rs 41 while Capital First rose 5.13% on the Bombay Stock Exchange.On a combined basis, IDFC First Bank has on-book loan assets of Rs. 1,02,683 crore, as per the last reported financial results for the quarter ended September 30, 2018. The retail loan book will now contribute 32.46% to the overall loan book.“The merger presents an incredible opportunity to strengthen our banking capabilities, operate as a larger universal bank and bring immense benefits to our customers,” said V. Vaidyanathan, MD & CEO of IDFC First Bank. ”We believe our complementary portfolio gives the combined entity access to high-growth customer segments. It enables us to enhance the lending platform and fast-track the building of the liability franchise, by offering customers a broader set of solutions. We look forward to enriching banking experience for the masses, by delivering technology-led quality banking services.”
Categories: Business News

GESIA IT Association appoints new Chairman

December 18, 2018 - 10:51pm
AHMEDABAD: GESIA IT Association, the leading body representing the ICT industry of Gujarat, appointed its new office bearers for 2018-2019. Maulik Bhansali, CEO of NetWeb Software has taken over as the Chairman &Director of the association while Tejinder Oberoi of Cygnet Infotech Pvt. Ltd. is the new Vice Chairman & Director.Pranav Pandya, Co-founder, and Chairman of Dev IT Ltd. is the new Secretary and Director, and Umesh Rateja of Sums Corp Solutions is the Joint Secretary & Director. Nilay Patel from Easy Pay Pvt. Ltd has been appointed the Treasurer and Director.Vivek Ogra has contributed immensely and will continue to share his invaluable inputs as Immediate Past Chairman and Industry Thought Leader.Maulik Bhansali, Chairman GESIA, categorically conveyed in opening remarks that “Gujarat is leading in several core sectors like Manufacturing, Pharma, Petrochemicals, automobiles, gems and jewelry and Engineering services. Many of these industries are either already going through or will go through Digital Transformation within the next couple of years. This will create a huge need for innovative and cutting-edge technology solutions, products and services around these core sectors".According to Tejinder Oberoi, Vice Chairman, “With these opportunities available within the state in addition to markets overseas, our IT, ITeS and Electronics Industries of Gujarat have the unique position of the advantage of creating for domestic and global markets, both."According to the association, it has decided to give thrust to member companies to develop innovative products, solutions, and IP to be able to deliver to these sector needs and grow."The association will set up free help desks with the assistance of Industry professionals to guide member in these key areas. The drive to co-create innovative solutions by ICT Industry SMEs with Start-ups will be one of the major focus areas and will be fostered to create these innovative solutions and products” said Bhansali adding that the upcoming industry and new entrepreneurs need guidance in areas such as legal, Intellectual property, Human resource management, trade fairs participations, IT policy, MSME policy, Start-Up policy.Association also realizes the need for skilled manpower to achieve this and will work on skilling and re-skilling initiatives on future technologies with esteem academic institutes, colleges, and universities across the state of Gujarat.Currently, there is 3.5 lakh IT professional working in small and medium IT companies in Gujarat. As per the Association’s estimate, by 2020 the IT workforce in Gujarat would cross above four lakh.
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Now, Modi govt wants to give I-T department a smart makeover

December 18, 2018 - 7:51pm
NEW DELHI: A fresh cadre review and restructuring of the Income Tax Department has been ordered by the government with an aim to create a "caring but strict" direct taxes regime in the country.The Central Board of Direct Taxes (CBDT), that frames policy for the I-T Department, on Monday ordered creation of a 12-member committee of senior officials to accomplish the task within the next three months.The development assumes significance as another committee or task force to draft a new direct tax law to replace the existing Income Tax Act is already a work in progress and it has been asked by the government to submit its report by February 28.The new committee to undertake cadre review and restructuring of the department has been given a specific four-point charter to follow.A copy of the terms of reference of the committee has been accessed by PTI and it said the panel will suggest ways to "organise the I-T Department in a manner which will further promote compliance with direct tax laws through caring tax payer service and strict enforcement."It will also "accordingly make advance projections of man power requirement and propose appropriate modifications in the extant organisational structure within the frame work of the government guidelines so as to facilitate filling up all the posts in the department in a time bound manner."The committee, chaired by Delhi-based Principal Director General of Income Tax, S K Dash, will also suggest ways to "bring about rationalisation of the organisational structure for enhancing the effectiveness of the department through improved efficiency and morale of its workforce."The CBDT said the motive of the entire cadre review and restructuring exercise is to "enable and equip the department to meet challenges of today and tomorrow."
Categories: Business News

Ola enters bike rental biz with $100 mn deal

December 18, 2018 - 7:51pm
BENGALURU: India’s largest ride-hailing company Ola is betting big on the two-wheeler market, as it said it will invest $100 million to help expand the supply of vehicles for scooter sharing startup Vogo. The Softbank-backed company will also allow its 150 million users to start booking Vogo scooters from the Ola application. The capital, which is expected to be infused in tranches, will be used to increase the number of scooters owned by Vogo to 100,000 across the country. Ola and Vogo did not disclose the precise contours of the deal, but the overall $100 million investment is expected to be a mix of equity and debt financing. After the completion of the structured investment Ola will become the largest shareholder in Vogo, holding between 35-40% stake, according to two sources familiar with the development. The development comes five months after Vogo raised around $7 million from Ola besides venture capital firms Stellaris Venture Partners and Matrix Partners India. It also counts Hero MotoCorp Chairman Pawan Munjal’s family office and Taxifosure founder Aprameya Radhakrishna as investors. Founded in 2016 by Anand Ayyadurai, Padmanabhan Balakrishnan and Sanchit Mittal, Vogo offers a cost-effective quicker alternative to existing forms of transport. Vogo users can access scooters from designated pickup and drop points across Bangalore and Hyderabad and drop the scooter at any other point in the city. Vogo competes with Bounce, earlier known as Metrobikes, which has raised capital from Sequoia Capital and Accel Partners.“Vogo has seen rapid growth in the last 5 months, growing over 10x in scale. We are thrilled to have Ola join us on this journey and help turbocharge our growth by providing us access to strategic and capital efficient supply as well as access to millions of customers on its platform in the time to come,” said Ayyadurai. Vogo’s app enables users to locate, unlock and pick-up its scooters and bikes at one point, and drop it off at a different point, without the need for a docking station. Currently operational in pockets of Bangalore and Hyderabad, Vogo 200 pickup points across the two cities. It has had over 100,000+ users which have commuted for over 20 million kilometres on the platform.The investment is part of Ola’s bet to further diversify its offerings, as the growth in the core cab hailing in India slows down. It is already investing significant capital in food delivery unit Foodpanda and also plans to enter pharma delivery space through an acquisition, as ET reported earlier. “Ola is committed to building a robust mobility ecosystem in India, creating a deep impact on livelihoods and how citizens get around. Our investment in Vogo will help build a smart multi-modal network for first-last mile connectivity in the country,” said Bhavish Aggarwal, Co-founder & CEO, Ola.
Categories: Business News

Almost 45% of seller base from tier-II, III cities: Flipkart

December 18, 2018 - 7:51pm
NEW DELHI: E-commerce major Flipkart Tuesday said it has witnessed strong growth in its seller base this year, driven by "steady increase" in merchants from tier-II and III cities that now account for almost 45 per cent of the total tally.The Walmart-backed company, which is locked in a battle for market leadership with Amazon, said it has also added sellers from small towns such as Baleshwar (Odisha), Gobindgarh (Punjab), Tirunelveli (Tamil Nadu), Siuri, and Lalgola (West Bengal)."Almost 45 per cent of our seller base is from tier-II/III cities like Ludhiana, Agra, Panipat, Surat, etc. We have been witnessing steady increase in interest and acquisition of sellers from smaller cities. The number of sellers from tier-II/III cities coming on board Flipkart in 2018 is 3x of 2017," Flipkart Senior Director (Marketplace) Nishant Gupta told PTI.The company is working with sellers from over 10,000 pincodes and the focus is on adding more tier-II/III cities, he added.Gupta, however, declined to comment on the number of sellers on Flipkart.Flipkart -- where investors sold 77 per cent stake to Walmart for USD 16 billion earlier this year -- has also tied up with government bodies from states such as Andhra Pradesh, Chhattisgarh, Bihar, Odisha, Maharashtra and Kerala to enable small-scale artisans and craftsmen to sell their products on its platform."We are in talks with other states as well. Products like Bell Metal Handicraft (Chhattisgarh), Sabai Grass from Mayur Shilpa (Odisha), and jute/paper jewellery (Bihar) have been witnessing good demand. Such initiatives help MSMEs benefit financially and grow their business while offering a larger selection to our consumers," he said.To ensure a smooth onboarding experience for sellers -- many of whom do not have an existing online presence -- the company has feet on the street teams."We have feet on the street teams that are based out of 21 cities. Apart from the metro cities, these teams are working from tier-II cities, including Ajmer, Cochin, Jaipur, and Bareilly," Gupta added.He said Flipkart shares insights about customer demand and seasonal trends with these sellers to help them decide on the selection stock and drive more business volume.
Categories: Business News

Ex Oberoi president Kapil Chopra launches new luxury brand The Postcard Hotel

December 18, 2018 - 7:51pm
NEW DELHI: Former president of the Oberoi Group, Kapil Chopra announced the launch of The Postcard Hotel, a new experiential luxury hospitality brand on Tuesday. The Postcard Hotel is starting with three operational hotels in Goa and has plans of building and operating 50 hotels in the next 5 years. In the next 12 to 18 months, The Postcard Hotel will be present in seven more destinations across the country including locations in Uttarakhand, Karnataka, Sikkim, Darjeeling, Sundarbans and Kanha Tiger Reserve. Chopra said the funding in the operating company was led by UAE based Small Ventures and a $ 100 million REIT is being set up for strategic acquisitions and buyouts. The hotels are aimed at the leisure seeking audience and will have customised check-in check out hours, no set breakfast hours, and no buffets. The Ambuja Neotia group and The Postcard Hotel will jointly deliver three hotels in Eastern and North Eastern India. ‘What I wanted to do with The Postcard Hotel, is make luxury hotels for the modern audience but bring back the romance and charm of sun kissed holidays. We wanted it to be rich in its experience but also wanted it to be simple. We believe guests want to stay in a place wherethe hotel does the thinking for them, where they get the simple things right, yet offer fantastic spaces for them to relax, meet like minded people and experience local culture," said Chopra. Chopra said he saw a big gap in the luxury hospitality space which led to the launch of the new hospitality brand. "This is an intimate experiential luxury hotel brand which could vary from 8-50 rooms and will focus a lot on experiences even outside the hotel. Tariffs will range from Rs 15,000-35000," he added. The Postcard Moira, located in one of the four heritage villages ofGoa, The Postcard Velha, surrounded by 300 acres of virgin coconut plantations in old Goa and The Postcard Cuelim, that houses a 350 year old chapel will be the first three properties of the company.
Categories: Business News

F&O: Low levels of VIX & surge in Put-Call ratio suggest bull’s grip

December 18, 2018 - 7:51pm
By Chandan TapariaThe Nifty index opened in the negative but witnessed buying interest at lower levels and extended gains towards the 10,900 mark. It partially filled its previous day’s gap and formed a bullish candle on the daily scale, which indicated that the decline got bought into. The index has been shifting its support to higher levels and seen the highest daily close in 52 sessions since October 1, 2018. Now, it has to hold above 10,800 to extend its move towards 11,000 and then 11,176 levels, while on the downside support exists at 10,777 and then 10,700 levels.On the options front, maximum Put open interest was at 10,000 followed by 10,800, while maximum Call OI was at 11,000 followed by 10,900. Fresh Put writing was seen at 10,900 followed by 10,800 levels while Call writing was intact at 10,900 followed by 11,100 levels. The Option band signified a trading range between 10,750 and 11,000 levels.India VIX remained flattish and closed with a marginal gain of 0.26 per cent at 14.57 level. The overall volatility fell sharply from higher levels in last six sessions with a surge in Put-Call Ratio, which suggests bull’s grip on the market.Bank Nifty respected its support at 26,850 level and witnessed buying in the latter part of the session to head towards 27,200 level. It formed a bullish candle on the daily scale by surpassing the immediate hurdle at 27,000, which suggests the momentum could extend to higher levels. Now, it has to hold above 26,850 to extend its gains towards 27,500 level, while on the downside, major support is seen at 26,666 level.Nifty futures closed positive with a gain of 0.23 per cent at 10,935 level. Long buildup was seen in UBL, Bank India, Hindustan Zinc and CEAT while shorts were seen in Zeel, MindTree, Torrent Pharma and MRPL.(Chandan Taparia is Technical & Derivative Analyst at Motilal Oswal Securities. Investors are advised to consult financial advisers before taking an investment calls based on these observations)
Categories: Business News

Xiaomi to invite more component suppliers to invest in India

December 18, 2018 - 7:51pm
KOCHI: Xiaomi India may invite more of its smartphone component suppliers to invest in India as part of the company’s efforts to pursue total localisation of the phone.Already, one of the component suppliers Holitech Technology has signed an MoU with Andhra Pradesh government for starting manufacturing facility. `` At present around 95% of the components are made in India,’’ said Anuj Sharma, chief marketing officer of Xiaomi India, adding that he can’t set a time period for the full localisation of the phones.He said Xiaomi, which has been maintaining its top position among the smartphones in the country for last one year, has component suppliers spread over different parts of the world . `` It is our aim to make the phones fully in India. We currently have six factories in the country.’’ Xiaomi has 27% market share in smartphones in the country.In the third quarter extending from July to September 2018, Xiomi sold over 10 million phones in India. `` During the Diwali month we sold 6 million phones. We hope to maintain our top position in the fourth quarter too,’’ Sharma said. Globally, the company has already exceeded its target of 100 million phones for the year by the end of October.Sharma was in Kochi to showcase latest product Redmi Note 6 Pro. Xiaomi has 21% market share in offline smartphone market in Kochi, where it has 99 preferred partner stores and 13 large format retail storesSharma said the company is also gradually bringing its other products to India. Already it has sold 1 million smart TVs in the third quarter. The company is setting up a TV manufacturing unit in Andhra Pradesh in partnership with Dixon Technologies. Apart from phone accessories, the company has also introduced air purifiers, luggages, security cameras and pens in the country.
Categories: Business News

Not so shiny? Indians are now buying gold for as little as Re 1

December 18, 2018 - 4:51pm
By Swansy AfonsoIndians are buying gold for as little as one rupee as retailers offer online sales in bite-sized portions to prop up shrinking demand in the world’s second-biggest consumer.Demand for gold is falling, partly as a result of government measures, higher local prices and the metal’s fading appeal among more youthful customers. That’s forcing jewelers to adapt online purchases to appeal to a more internet-savvy, younger population.“A lot of people have been buying at one rupee,” according to Gaurav Mathur, managing director of digital platform SafeGold, which has partnered with payments apps such as Flipkart Online Services Pvt.’s PhonePe to sell gold starting at that price. “It’s a low-risk way to try the product.”Buyers only get physical delivery of the metal once they have paid enough for one gram of gold, currently about 3,200 rupees. The low barrier of entry, compared with a minimum purchase of 1 gram in the traditional market, and faster transactions, which can be done on a phone in about 40 seconds, are the biggest lures for the product, Mathur said. 67139548 Since its launch last year, about 3 million people have already transacted on the platform and the company, which counts the World Gold Council as one its investors, is targeting to raise this to 15 million by next year, he said. The market is still small compared with the country’s overall consumption of gold, which stood at 524 tons in the nine months ended September.India’s consumption of gold, almost all of which is imported, has been declining because of the government’s efforts to curb its trade deficit and combat so-called black money by discouraging investors who used the metal to evade taxes. Demand for the yellow metal last year fell by about 23 percent from a peak of 1,002 tons in 2010. Meanwhile, benchmark gold futures in Mumbai are set to post a third year of annual gains in 2018 aided by a weaker rupee, which fell to a record low earlier this year.Changing PreferencesPlatforms offered by SafeGold, Augmont Enterprises and India’s most popular digital payments service Paytm, backed by China’s Alibaba as well as Warren Buffett’s Berkshire Hathaway, are trying to make inroads into a market dominated by traditional retail stores and chains such as Titan Co., the country’s top maker of branded jewelry, and Tribhovandas Bhimji Zaveri Ltd.Augmont sells gold and silver coins and bars with quantities as low as 100 milligrams to make bullion affordable for the public, according to its website. With gold available in lower quantities at a more reasonable price compared with the retail outlets, the preference of people has gradually shifted to the digital gold buying method, it said in an emailed statement. Young buyers now prefer shopping for gold on e-commerce sites and apps rather than going to the store, thus saving time, it said.Over half a billion Indians will come online in the next wave of internet users and shoppers, according to a report released jointly by Bain & Co., Google and Omidyar Network in August. Only over a third of India’s current 390 million users transact online, the report said, suggesting a massive untapped opportunity.“With the way the e-commerce market was shaping, we realized that digital technology will soon be the future of gold buying,” Sachin Kothari, director at Augmont, said in the statement
Categories: Business News

Deep discount days could be numbered

December 18, 2018 - 4:51pm
NEW DELHI: Commerce and industry minister Suresh Prabhu will this week review the proposed ecommerce policy that is being put together by the Department of Industrial Policy and Promotion (DIPP). The policy is likely to propose restrictions for differential and predatory pricing strategies such as deep discounts used by ecommerce firms — a measure that seeks to protect offline retailers.“The minister will internally review the ecommerce policy but this would not be a stakeholder meeting,” said an official in the know of the details. Prabhu told the Lok Sabha Monday that the conduct of certain ecommerce players who enjoy a position of market dominance may also be brought under the radar of Indian competition law under Section 4 of the Act, if they abuse their dominant position.“Similarly, the proposed merger or amalgamation of ecommerce firms whether in India or off-shore, which may have an impact on competition in India, remains liable for notification under Section 6 of the Act, if they fall within the thresholds prescribed under the Act,” he said.Domestic retailers have red flagged deep discounting and loss funding by online companies, saying it is against the extant foreign direct investment norms. The issue also came up at a recent meeting to improve India’s ease of doing business ranking. Another person aware of the development said the government and industry will define flash sales and their duration to enable provision of a sunset clause to restrict predatory pricing.DIPP is now the nodal agency for all matters related to ecommerce and has begun fresh discussions for a policy to regulate the ecommerce sector, after the Department of Commerce floated a draft policy in July.The draft fell through as stakeholders questioned the role of the commerce department and opposed key suggestions on data localisation, setting up of an ecommerce regulator, move to allow 49% foreign investment in inventory-based online retail and preference for RuPay.“A sunset clause, which defines the maximum duration of differential pricing strategies (such as deep discounts) that are implemented by ecommerce platforms to attract consumers, would be introduced,” the proposed policy document had said. DIPP has ruled out FDI in inventory-based ecommerce as was suggested in the earlier draft of the policy.
Categories: Business News

Fresh accretion of NPAs has come down: SBI

December 18, 2018 - 4:51pm
HYDERABAD: The State Bank of India (SBI) has been pursuing resolution of Non Performing Assets (NPA) and they should decline in the future, with fresh accretion coming down, a senior bank official said on Tuesday."As far as the NPAs are concerned, most of the large accounts which were not performing had already been regularised as NPA. So the bank has been acting on getting the resolutions done. So, lot of those large cases are already under NCLT," SBI Managing Director (Retail & Digital Banking), Parveen Kumar Gupta told reporters here.The resolutions have already been done in a few cases, while they were in an advanced stage in a few others, he said.He hoped that those resolutions would go through in the next couple of months."The fresh accretion to NPAs has already come down. So, we hope that going forward on the NPA front, we should see a decline in the numbers. We don't see NPA numbers actually going up in the future," he said.Gupta, who was speaking on the sidelines of celebration of 150th anniversary of SBI Hyderabad main branch, was asked about the steps the bank planned to take to ensure that it was able to tackle the issue of high NPAs.To another query, he said some increase in NPAs in the agriculture segment has been seen in a few states like Maharahstra and Karnataka."In a few states, we have seen increase in the NPAs in the agri segment. But, we have not seen this across the country. Only in a few states, we have seen some increase," he said.Asked about the exercise undertaken by the bank to replace old debit cards with more secure cards which has a deadline ending December 31, he said most of the active cards have already been replaced.The bank has approached the regulator, RBI, to give it little more time in view of the enormity of the task, he said."Yes, there was a large number of cards that had to be replaced. We have approached the regulators, that is RBI to give us a little more time, given the enormity of the task involved," he said."But, as of now, most of the customers whose cards are being regularly used have been replaced. We hope that most of the customers who are actually using the cards would have already requested and got the cards changed," he added.Replying to a query, he said the bank had sought six months time from the RBI.Asked about the rationalisation in the number of branches in foreign countries, Gupta said the bank is going ahead as per the original plan. "There is no fresh review of that."
Categories: Business News

Biggest bank fraud and RBI Governor's resignation mark a dismal banking year

December 18, 2018 - 4:51pm
NEW DELHI: The year leading up to the 2019 general elections was defined by a slowdown in investment, slackening growth, falling GST revenues, the biggest bank fraud and a credit crunch that provoked the most significant crisis in government-RBI relations.It was topped up by the abrupt resignation of Urjit Patel as the RBI Governor, a rare phenomenon in the banking world. He was immediately replaced by former Economic Affairs Secretary Shaktikanta Das the man who was the vocal face during demonetisation and seen as a 'yes' man of the government.India, meanwhile, continued to be the fastest growing big economy during 2018 with its gross domestic product (GDP) rising at above 7 per cent, after having slipped to 6.7 per cent in the previous financial year, mainly on account of the impact of demonetisation.Even as it is projected to overtake China by GDP in the coming year, India jumped 23 spots in the World Bank's Ease of Doing Business rankings to 77th place, continuing its impressive climb on this score for the third year running.The pace of the country's GDP growth slowed substantially during the second quarter of the current fiscal to 7.1 per cent, from 8.2 per cent in the previous quarter, mainly on the back of a drop in manufacturing, agriculture and mining. By criteria of gross value added (GVA), which includes taxes and excludes subsidies, growth fell to 6.9 per cent from 8 per cent during the April-June period.On the inflation front, lower food prices kept headline inflation down, which touched a 13-month low of 3.3 per cent in October, and fell further to 2.3 per cent last month. Core inflation, however, continued to remain elevated.Following the release of the GDP numbers, US agency Fitch Ratings lowered India's growth forecast for the fiscal to 7.2 per cent, from an earlier projection of 7.8 per cent rise, "on weaker-than-expected momentum in the data, higher financing costs and reduced credit availability."The year witnessed the biggest fraud in Indian banking history with the Rs 14,000 crore scam on state-run Punjab National Bank (PNB) committed over a number of years and reported in February. The fraud was committed from 2011 till 2017 by illegally issuing letters of undertaking and rolling over foreign letters of credit to diamantaire Nirav Modi and his uncle Mehul Choksi from PNB's Brady House branch in Mumbai.Both are currently absconding and Interpol has issued red corner notices against them.Twin storms hit the country in September -- rising fuel prices that climbed new highs daily and a falling rupee that spiralled down to new lows against the US dollar before recovering somewhat towards the end of the month.The year's global protectionist measures unfolding through the US-China trade war, along with high crude oil prices, put the rupee on a downward spiral, dragging it down to a record low of 72.98 against the US dollar on September 18.According to analysts, concerns over a rise in inflation rate, growing protectionism in global trade and an outflow of foreign funds from the country's equity markets have had an adverse impact on the Indian currency. It fell nearly 15 per cent since the start of the year to become Asia's worst-performing currency.On the other hand, transport fuel prices in the country began going up almost daily since August 1, incessantly recording new highs across the country, even as the UK Brent crude oil climbed to $86 per barrel. A weak rupee and high excise duty added to the heady mix that made for high petrol and diesel prices in the country before beginning to fall from late October in tandem with global crude prices."The widening of the current account deficit amidst tighter global financing conditions should put downward pressure on the currency, and we forecast the rupee to weaken to 75 against the dollar by end-2019," Fitch said.The defining moment, however, came in December with the resignation of the RBI Governor nine months prematurely and the first such instance since Independence, which prompted Patel's predecessor Raghuram Rajan to say that it should be a cause of concern for all Indians.The historic tensions in government-central bank relations were re-ignited in October when, in a public lecture, RBI Deputy Governor Viral Acharya talked about the independence of the Reserve Bank, arguing that any compromise could be "potentially catastrophic" for the economy.The government responded with the Finance Ministry seeking discussions with the central bank under the never-used-before Section 7 of the RBI Act which empowers the government to issue directions to the RBI Governor, who then summoned a meeting of the bank board.Central to the issue was the government's demand that the RBI hand over its surplus reserves by making changes to the "economic capital framework". Analysts noted that the government's demand came in the face of a huge fiscal deficit and the need to boost the economy in an election year.Prime Minister Narendra Modi met with Governor Patel before the board meeting and what emerged on November 19 was seen as settling the debate on the central bank's autonomy and clearly establishing the government as a stakeholder in policy making.The current liquidity crunch, particularly among non-banking finance companies, follows a series of defaults in late October by the privately-run IL&FS.In hindsight, the words of Sudipto Mundle on the Board of Governors of the National Institute of Public Finance and Policy, after the November board meeting proved prophetic."The RBI-government fight has been pushed down, abated for now and postponed, but the NPAs issue continues to remain," he said.
Categories: Business News

Lower commodity prices giving India an edge: Taher Badshah

December 18, 2018 - 4:51pm
Many macro parameters over the last 2-3 months are back in India’s favour, said Taher Badshah, CIO-Equities, Invesco Mutual Fund, during an ETNow interview. He cautions that it is not the environment where we can significantly buy things at a premium or overpay. Edited excerpts:So far, so good large cap stocks are holding on, but do you think it is a matter of time we will also get hit with what is happening in the global markets, whether it is oil or commodities -- everything is down?Well, we have been holding a slightly different view that some of the troubles that we are seeing in the overseas market are actually in a way positive for India and to that extent, I am not fully entirely surprised at the kind of decoupling we have seen of the Indian markets versus the overseas ones at least over the last one month or so. Obviously as we know, with oil and some other metal commodity prices also coming off, at one level this is kind of positive for India from a long-term perspective. Increasingly, there is a case where we need to see whether this tightening by the central bank is probably likely to continue. I do not really think so. That is going to probably be the case, going forward. Markets are probably looking forward to a turn from the point of view of interest rates as well in India. And therefore, and we are also coming from the situation where since the start of this calendar year, the US was the only market which was actually rising and it was positive for most part of the year. Most of the other emerging markets along with their currencies had actually come off and I think it is a reversal of that trade as of now. US markets did become a little expensive and were looking a little heavy and I think that is the reason why we have seen this correction. Meanwhile, many of the emerging markets had already corrected and so had their currencies. Maybe there is a possibility of DM to EM trade developing once again for the near future.This time we have managed to rough it out as opposed to what other US markets or other developed markets have done. But still, there lies that 2019 election just five to six months from now. What would you say would be the right investor approach, is it still prudent to keep maybe 20-30 per cent cash on the sidelines because the market is going to give you enough opportunities I guess in the next few months wherein you would get to deploy the cash? I am not sure if that works very well and it is very easy to do and those quantum of cash are a little difficult to deploy if the trend goes against you and we have seen that in the past. We saw that very recently even after the event of state elections and the markets saw a decent rally after that. I am not sure that is something which works, we are happy being more or less fully invested. We, of course, try to make sure that we defend ourselves in other ways by taking the right sector and stock exposures. Of course, we cannot shield everything but if we can shield a good part of it, we should be okay. But cash in and cash out is not a strategy from our perspective. Or we are not probably as well tuned in doing that so. We typically avoid those kinds of calls irrespective of what the nature of the event is.What sort of a balance would you keep in your portfolio currently, would you make it more defensive with some exposure to financials or would you start diversifying and increase some bit of allocation to investment led themes as well because in the run-up to the general elections with the interim budget coming up, there is much talk about how the investment cycle would get pushed.We try to buy into ideas where we feel that the valuations are reasonable and comfortable. It is not an environment immediately right now where we can significantly buy things at a premium or overpay. That is something which is a complete no-no. So we are trying to only find pockets which are reasonable from the point of view of at least the medium to long term perspective of those businesses without worrying very much about the short term. Of course, many of the macro parameters over the last 2-3 months have turned once again back in India’s favour. So that gives a little more leeway in order to be a little more aggressive, but by and large still we know that there are certain roadblocks, we know that there are certain things which have to clear out. It is still not time to be overly aggressive but yes, we are largely constructive on sectors where we believe that the risk reward is reasonable. And incrementally like for example, even in the mid and small cap space, we think now it is a better time compared to what it was one year ago or 18 months ago. Mid and small caps are starting to be a little more attractive, they are not cheap-cheap but they are still a lot more attractive than what they were one year ago. And I think they are best bought during times when they are down and they are kind of ignored by the market. If you have a 2-, 3-year horizon, they pay off pretty well. So we are kind of trying to find ideas in that direction or maybe in sectors where we believe that the valuations are reasonable.The consumption themes you are still happy to buy -- staples, durables. What are you ready to buy from the consumption basket?Well, it is again quite broad based, staples is still not very easy like as I mentioned from the perspective of valuations. It is not something where we can go aggressive. We have limited ourselves to a couple of names again where we believe growth versus valuation or the risk versus reward balances are reasonably okay. Otherwise, in consumer discretionary, there are certain pockets but this is a wide basket and includes everything from retailers to building materials to automobiles to various other things. To that extent, it is a very diverse basket. So, I cannot really pinpoint and therefore in the consumer discretionary space, it is more bottom ups which works well rather than a broad sector approach.
Categories: Business News

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