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Extras put Karan Johar in a tax spot

February 24, 2020 - 9:20am
MUMBAI: The status of ‘extras’ — men and women who hang around film studios to eke out a living and fleetingly appear on screen as wedding guests, shoppers in a mall or in a crowded city street — is the bone of contention between the tax office and some of the Bollywood production houses.The Income Tax (I-T) department last week conducted a survey on seven production houses, including Karan Johar’s Dharma Productions and Ekta Kapur’s Balaji Telefilms, amid suspicion that these companies have not deducted enough tax while paying wages to extras. Other houses which came under glare are Excel Entertainment (the company formed by producer Ritesh Sidhwani and Farhan Akthar), Vashu Bhagnani’s Pooja Entertainment & Films, Maddock Films — a new-age production house set up by director-producer Dinesh Vijan, Luv Films (founded by Luv Ranjan and his friend Ankur Garg), and Ajay Rai-owned Jar Pictures.For decades, film producers have been deducting 2% tax — or, ‘tax deducted at source’ (TDS) — before paying extras. For the dream merchants of Mumbai, extras are unskilled hands, often described in Hollywood as ‘human props’, in movies or soap operas. However, to the taxman, extras, despite their brief appearances on screen, are ‘skilled’ people – for whom a higher TDS of 10% should be applicable.A senior tax official confirmed that verification raids were conducted on some production but did not share details. “No decision has been taken,” said the person. But among tax practitioners the surveys were a reflection of the government’s pressure on tax officers to meet stiff revenue targets. “Where is the need for a survey? The department can carry out open investigation by asking the respective parties to appear in the tax office. It boils down to harassment,” said a person familiar with the recent exercise. 74274103 Differences between the tax department and assessees have also cropped up on the appropriate TDS rate on rentals paid on equipment hired for shoots.Officials of Balaji Telefilms refused to comment on the matter while Bhagnani, whose latest release ‘Jawaani Jaaneman’ is running in theatres was unavailable till filing of this report. Officials of Dharma and Excel (maker of ‘Gully Boy’), as well as Luv Ranjan (best known for comedy films like ‘Sonu Ke Titu Ki Sweety’) and Dinesh Vijan (whose company produced the recently released ‘Love Aaj Kal 2’) did not respond to ET’s text and calls.Of these Bollywood houses, the largest is Dharma (turnover of just under Rs 500 crore in FY19), followed by Balaji (Rs 460 crore in FY19) and Pooja (Rs 35.57 crore). The financials of others were not available.“The TDS rates for extras have been 2% for almost 4 decades. These hands are come via labour contractors and can hardly be called skilled artistes. The TDS applicable for stars and other regular actors is 10% and there is not much of a dispute on that,” said another person.
Categories: Business News

Don't fall for this real estate trap

February 24, 2020 - 9:20am
By Dhirendra KumarFor many years now India’s real estate has been under what is called a ‘time correction’. It’s been something like a decade. Time correction is a slightly fancy (actually, misleading) way of saying that prices are stagnant. At some point, this stagnation will end and real estate prices will head upwards.There are many reasons behind these years of stagnation. Obviously, the major one is that prices rose too fast and too far on the strength of investors who had more money than sense. For some years, these investors kept selling apartments to each other at higher and higher prices and finally the prices got too high for real buyers, those who would buy to actually live in the houses. So this stagnation is just the phase when the buying capacity of real users is slowly catching up with prices. In many parts of the country, another factor has been the tremendous distrust that buyers now have for real estate developers for reasons that are known to everyone.As time goes by, a greater and greater proportion of potential buyers will turn into actual buyers. Unlike other investments, real estate is unique in that one house is a necessity for every family and it’s only with the second house onwards that the buyer becomes an investor with all the risks and the baggage that it brings.Unfortunately, a number of psychological and financial factors combine to make a house purchase a minefield for most of us. In our modern consumerist economy, sellers of every product try to make you buy the most expensive version of whatever they are selling. Real estate developers also try to sell everyone the dream house—grand and aspirational—the like of which the buyer has never lived in before.The problem is that buying a dream house is a very different activity from buying a dream watch or a dream vacation. Housing is qualitatively different because of the scale of the expense. If you splurge on other things you will climb out of the resulting financial hole in at most a few months. However, if you make an equivalent splash on a dream house then the financial damage could take years to repair, and during that time you and your family will have to face many hardships, some of them with permanent effect.There are many ifs and buts in buying a house and it’s a topic that I often come back to simply because it’s probably the most important financial decision in the lives of every one of my readers and so getting it right is absolutely critical. There are many mistakes that homebuyers can make but overstretching one’s finances seems to be the most common. When one goes to look for a house, somehow the temptation to like something aspirational rather than something practical is just too strong for most of us. Human beings are such territorial animals that this seems to have roots deep in our psyche. There’s a simple thumb rule, which is that the monthly repayment must not be more than a third of your stable family income. If, later in life, you become much richer than you are now, then you can always sell the current house and buy a flashier, more expensive one. However, at any point, the most damaging thing to do is to buy for your future, hoped-for, income rather than the current real one.Like in so many products, this phenomena is a byproduct of easy credit. In our parents’ generation, housing loans were difficult to come by so people did not have the choice to stretch themselves. They bought whatever they could afford to pay for at the moment. The EMI culture is great for the consumer economy, but not so great when it lures you into that dream house that will become a financial nightmare.(The author is CEO, Value Research)
Categories: Business News

Altico's 3 bidders revise their offers yet again

February 24, 2020 - 9:20am
MUMBAI: All three suitors for Altico Capital — SSG Capital, Cerberus Capital Management and the incumbent management team — have revised their offers further, as lenders to the cash-strapped home financier drive a hard bargain that may see them recover at least 67% of the total dues upfront, said people in the know.The three submitted their latest offers on Friday after lenders had met last Monday to consider the earlier proposals. A key issue is whether to wind down Altico or keep it as a ‘going concern’. Creditors and bidders are slated to meet Monday.The revised proposal by Hong Kong-based SSG offers two options. The first includes a complete cash and equity offer similar to that of Cerberus. The second is comparable to the previous offer by SSG that included Rs 2,150 crore of upfront payment plus Rs 1,500-1,750 crore of security receipts. SSG has also suggested that the bad loans of Altico be moved to an asset reconstruction company chosen by the lenders.All Eyes on ResolutionAltico, then, will continue as a much smaller organisation with a shrunken book. The employees are likely to be absorbed as the company will be repositioned as a lendercum-advisory firm. 74275422 Cerberus has raised its offer a third time, keeping the broad structure intact — the new offer includes around Rs 2,600 crore cash and Rs 450 crore of security receipts payable when possible, along with an equity infusion of Rs 1,000 crore to complete projects. The shareholder resolution offer is similar to the last one but some equity commitment has been added as a sweetener.The Clearwater-backed Altico management had suggested 100% repayment of the principal amount with outstanding interest being paid back at 10% over 5.75 years. But this hinged on Clearwater taking control of Altico as part of the resolution process. In this formula, the existing shareholders will agree to pay Rs 630 crore by March 2021, which will be counted as year one. In years two and five, the management will make fresh equity infusions to keep the business viable, said people briefed on the matter. Alternatively, the shareholders have suggested that some lenders could get repaid before 5.75 years but only if they agree to a 30% haircut. They will get 70 cents to the dollar at the same coupon.“The credit committee is meeting on Monday along with the bidders, who will again present a detailed resolution plan,” said an executive. “An informal show of hands is also expected after the meeting. By March 20, a final resolution is expected after a final vote.” That vote is expected to be held on March 12. SBI Capital and EY, advisers to the lenders, will analyse the bids.SSG, Cerberus and Altico declined to comment. SBI Caps didn’t respond to queries.Crisis & OpportunityThe creditor-run recast is being keenly tracked for an indication on how the country’s shadow banking crisis will be resolved and the opportunity this presents for hedge funds, structured debt and distressed asset investors. The real estate lender faced a liquidity crunch in September and defaulted on Rs 138 crore of debt repayments.Lenders are struggling to realise a higher value in other big cases, including Dewan Housing Finance Corporation Ltd and Infrastructure Leasing & Financial Services, as they have stopped their core business activities.“It is important to keep any entity as a ‘going concern’, which is why lenders are insisting on it for Altico,” said an executive involved in the process.
Categories: Business News

Daiichi-Ranbaxy arbitration case: Singh brothers hearing in Singapore Supreme Court starts today

February 24, 2020 - 9:20am
NEW DELHI: The Supreme Court of Singapore will, from Monday, hear a plea by former Ranbaxy promoters Malvinder and Shivinder Singh that challenges Japanese drug maker Daiichi Sankyo’s arbitration award.A Singapore tribunal in 2016 awarded Daiichi Rs 3,500 crore in damages. In May that year, the company moved Delhi High Court to enforce the award. The Singhs appealed against it in Singapore as well as India.“The final hearing will begin tomorrow in the Supreme Court of Singapore. Senior counsels of Malvinder and Shivinder Singh in Singapore will appear,” a person in the know told ET.Senior advocate Harish Salve in 2017 filed an application to represent the Singh brothers. He sought an exemption from a Singapore law that generally bars foreign lawyers from appearing in local courts.However, he was denied by the Singapore court.Among other things, the court said no questions of Indian law were involved at that stage. Even at an earlier stage, when issues related to Indian law had arisen, the sellers had employed senior counsel from Singapore, the court noted, and only filed evidence from Indian law experts to defend their cases.Delhi High Court in January 2018 ruled in favour of Daiichi.
Categories: Business News

Covid-19 outbreak: Non-ferrous metals slip on slow China demand

February 24, 2020 - 9:20am
MUMBAI: The outbreak of Covid-19, or novel Coronavirus, has put pressure on non-ferrous metals aluminium and copper, with analysts forecasting a weak last quarter for Indian producers.Aluminium and copper prices have dropped nearly 5% since the outbreak on January 21, to trade at Rs 138.10 per kg and Rs 430.30, respectively, on the MCX as of Friday. Similarly, LME prices of aluminium fell to $1,676 per tonne on Friday from $1,810 on January 21, while copper slipped to $5,701 from $6,158 a tonne in the same period.“China being the major consumer of metals, the outbreak has put a stop to major manufacturing and import, which is likely to have a major effect on the entire supply chain, reducing demand from January to March,” said Akshay Agarwal, managing director, Acumen Capital, adding that the brokerage maintains a bearish outlook on the metals market overall.Companies are likely to take a hit on exports and see profit margins shrink due to falling prices, analysts said. The impact is, however, largely expected to be confined to the current quarter, as prices recover in medium term, they said.“Non-ferrous companies will continue to slide in Q4, with China battling Covid-19. Average aluminum price is down by $10, alumina by $7 and zinc by $101 on a quarterly basis, reflecting the continued weakness in the sector,” said senior research analyst Vishal Chandak of Emkay Global in a recent report.Hindalco Industries, the largest producer of aluminium and copper, said the outbreak has not hit numbers but may get affected by its purchase of US-based aluminium rolled products maker Aleris. “We have downgraded Hindalco from ‘buy’ to ‘hold,’ reflecting muted to lower aluminium prices and increasing likelihood of Aleris acquisition without automotive body sheet plants, which will make the acquisition value-expensive in the short run,” said the report. A lower premium on physical aluminium may impact Novelis’ profitability.
Categories: Business News

Talking Stock: Hold Karur Vysya Bank, GE Shipping, IDFC First

February 24, 2020 - 9:20am
By G ChokkalingamFounder & CIO Equinomics Research & AdvisoryI am holding 400 Finotex Chemicals at Rs 86 since January 2018. Will I be able to recover my cost? -B ARORAThe entire textile sector and also businesses associated with this sector have seen severe contraction in the valuation multiples in the stock markets and it is very difficult to anticipate any significant recovery in the valuations in the short- to medium-terms considering the current stagnation in the textile business. The stock also trades at a fair valuation of around 10 PE on the current year’s expected earnings. Therefore, you may exit the stock if it moves close to even Rs 30 in the next six months or so.I am holding 16,000 shares of Karur Vysya Bank at Rs 80. Should I hold or not? -PRAKASH SHARMAPlease hold Karur Vysya Bank, which has survived successfully over 100 years and trades at a market cap of mere Rs 3,800 crore while its business size is more than Rs 1 lakh crore. After falling more than 60% from its two-year high, the stock trades at just around one time adjusted book value.I bought shares of GE Shipping at Rs 270 and IDFC Bank at Rs 40. Should I hold it or sell? -DEBASISH DASThough immediate prospects for the industry are quite bleak as Dry Baltic Index is at a record low level and corona virus has complicated further short-term prospects for the shipping industry, you may hold GE Shipping as it has got a strong balance sheet. It is the best shipping firm to survive in the domestic industry and also the stock trades just about 60% of its book value. Considering the losses posted by the bank in the latest quarter and lack of significant yoy growth in its loan book, you may hold IDFC First Bank with a target price of only around Rs 48 which is about 1.5 times its expected one-year forward adjusted book value. Renewed competition from both existing and new banking players, almost peak out of banking penetration in the urban centres and the huge equity capital base of the bank will act as a drag on the stock for any upside beyond Rs 50 in the shortto medium-terms.I am holding 300 shares of GSK (Pharma) at Rs 1,275. Should I buy more or hold or sell? -NAVEEN JAINI consider the recent 23% correction in the stock price is a good opportunity to add this technologically superior pharmaceutical MNC with a target price of over Rs 1,550 (which is around 44x FY21E earnings).I am having 4,000 shares of CG Power since July 19. What should I do now? -A K SHUKLALack of promoters holding (100% stake held by the public), operating losses in the latest quarter, reopening of its accounts for the past fiveyear period for scrutiny and poor responses for the company’s recovery notices for over Rs 1,300 crore do not give any comfort on the stock. If you are willing to take very high risk, hold it, otherwise it is better to offload even at the current price.Please send your queries on Stocks to et.stocks@timesgroup.com; Mutual Funds to et.mfs@timesgroup.com; Tax to et.tax@timesgroup.com; Insurance to et.insurance@timesgroup.com; Realty to et.realty@timesgroup.com.
Categories: Business News

Government wants social media companies to axe ‘skull-breaker’ videos

February 24, 2020 - 9:20am
BENGALURU: The government has asked social media platforms TikTok, YouTube, Twitter, Facebook and ShareChat to take down videos of what is known as the ‘skull-breaker’ challenge, which has resulted in serious head injuries among students across the globe. The social media challenge, popularised first on short video app TikTok, starts with three people standing alongside each other, seemingly ready to jump into the air all at once. However, the two people on either side try to kick the legs out from under the one in the middle, making him or her fall.Doctors have warned that the free fall can result in head injuries, fractures to the joints, and even break the unsuspecting person’s skull.In an advisory last week, the Ministry of Electronics and Information Technology (MeitY) said it expects social media platforms to remove such videos and warn users to avoid such acts.“This being a dangerous game, severely impacting and harming minors and also being a public safety issue, it is expected that social media platforms expeditiously remove videos performing or attempting the skull-breaker challenge or influencing a child for skull breaker challenge or similar content as and when it comes to your notice,” MeitY said.It also asked social media platforms to publish an online awareness campaign to help users avoid such dangerous actions.ET has a copy of the advisory.The challenge originated on TikTok but quickly spread to other platforms, where users shared videos from the Chinese short video platform. The hashtag #skullbreakerchallenge received a staggering 4.8 million views on the popular platform.The advisory pointed at Intermediary Guidelines of the Information Technology Act, which requires platforms to observe due diligence and inform its users to not host, display and update information that is harmful and objectionable, and affects minors.TikTok told ET that it has taken down the videos as it has violated the company’s community guidelines. On Friday, it also put out a warning asking users not to participate in dangerous stunts. The warning pops up whenever a user searches for videos on the challenge.
Categories: Business News

Is the virus a black swan for global economy?

February 24, 2020 - 12:19am
RIYADH: The deadly coronavirus epidemic could put an already fragile global economy recovery at risk, the IMF warned Sunday, as G20 financial chiefs discussed ways to contain its economic ripple effects.Global growth was poised for a modest rebound to 3.3 percent this year, up from 2.9 percent last year, International Monetary Fund chief Kristalina Georgieva said after a two-day meeting of G20 finance ministers and central bank governors in Riyadh."The projected recovery... is fragile," Georgieva said."The COVID-19 virus -- a global health emergency -- has disrupted economic activity in China and could put the recovery at risk," she said in a statement.Alarm has been growing over the new virus as Chinese authorities lock down millions of people to prevent its spread, with major knock-on effects economically.The virus has now claimed 2,442 lives in China, cutting off transportation, disrupting trade and fanning investor alarm as businesses are forced to close their doors.Georgieva told the Riyadh gathering that the outbreak would shave about 0.1 percentage points from global growth and constrain China's growth to 5.6 percent this year."I reported to the G20 that even in the case of rapid containment of the virus, growth in China and the rest of the world would be impacted," she said.The IMF projects a "V-shaped, rapid recovery" for the global economy, but given the uncertainty around the spread of the virus, Georgieva urged the financial leaders to "prepare for more adverse scenarios".At the meeting in Saudi Arabia, the first Arab nation to hold the G20 presidency, financial leaders also discussed ways to achieve consensus on a global taxation system for the digital era by the end of 2020.But at the core of the discussions was an action plan to shield the world economy -- already facing a slowdown -- from the impact of the outbreak.The gathered financial leaders vowed to "enhance global risk monitoring" of the outbreak, according to the G20 final communique."We stand ready to take further action to address these risks," it said.Paris on Friday announced several measures to assist French companies affected by the fallout from the epidemic."We are ready to take any additional measures if necessary to cope with a possible worsening of the impact on the global economy," said French Finance Minister Bruno Le Maire, who attended the G20 talks."The risk is now confirmed, and so is the impact on the global economy, and it is a real concern for all G20 members."Georgieva warned the global economy faced other risks including rising debt levels in some countries as well as climate change, but in particular urged G20 nations to cooperate to contain the spread of the virus."COVID-19 is a stark reminder of our interconnections and the need to work together," Georgieva said. "In this regard, the G20 is an important forum to help put the global economy on a more sound footing."
Categories: Business News

ELSS Vs PPF Vs FD: See what works for you

February 24, 2020 - 12:19am
By Ashok Kumar ERWith HRs and accounts department sending the “submit your tax investment proofs” email, thousands of taxpayers are frantically searching for the best way to save some tax, whatever way they can.Inevitably, some less than great decisions will be taken. Thanks to investor education programs, most individuals are now aware that insurance should be bought for actual insurance needs rather than just as a way to save tax. Most individuals would end up with a list of options that includes Public Provident Fund (PPF) or a 5-year Fixed Deposit (FD) or Equity Linked Saving Scheme (ELSS) tax saving mutual funds.These are among the most popular options available and a PPF account or an FD can be started using your existing bank account. They have been the default option for decades. Though this is not necessarily smart.ELSS tax saving mutual funds have been getting some good traction in the past few years as individuals are becoming more aware. Considering the fact that ELSS funds invest in equity, they also promise the most in terms of growth. Equity, however, is a volatile asset class due to its market dependent nature, but this is exactly what makes it grow ahead of inflation unlike fixed income-based asset classes like FDs. This volatility might be a turn-off for most new investors as they don’t want to deal with uncertainty but they also miss out on the potential for growth.Here’s how your money will grow in ELSS (first row) tax saving mutual funds versus PPF (second row) or FD (third row) assuming a total investment of Rs 4.8 lakh in each of them: 74272610 As you can see the growth potential is the highest in tax saving mutual funds, despite the inherent volatility. This makes ELSS not only attractive as a way to save tax but also a great way to start with equity for most investors and grow their wealth over the years.But here are three benefits of ELSS funds you should consider.The obvious benefits - lowest lock-in, best potential returnsUnlike any other investment option, tax saving mutual funds allow for the shortest lock-in period of three years. Not just that, these special mutual funds offer the biggest bang for the buck because they invest in equity and thus have the highest potential for growth. Historically, equity has delivered 12-14% annualised returns as compared to 6.5% for fixed deposits. PPF has a lock-in period of about 15 years and currently returns slightly over 8% (pre-tax) annualised while tax-saving FDs have a lock-in of 5 years and return anywhere between 6%-7% pre-tax.The greater long-term benefit - Learning about equityWhat smart investors realise is that tax saving mutual funds are an easy yet intelligent way to get started with equity mutual funds. Since you anyway have to make tax-saving investments, why not start with something that will form the basis of your future wealth? You will experience the market volatility without being able to do anything about it given the lock in.You can make your investments in monthly instalments - like an EMIYou don’t have to shell out the entire investment amount in one shot. You can do it over a few months using a SIP. Best to start in April itself, but even if you get started in December, you can split it over 4 months - December to March.Getting started with tax saving mutual funds is quite easy with online services, many help also select the best tax saving funds for you. You also get a tax-saving investment proof which you can submit to your HR when the time comes.(Ashok Kumar ER is co-founder of Scripbox, a Bengaluru based startup)
Categories: Business News

Blackstone’s Punita Sinha to join InCred as CIO

February 24, 2020 - 12:19am
MUMBAI: InCred Capital, a unit of non-banking finance firm set up by former Deutsche Bank top officials including Bhupinder Singh and backed by Anshu Jain, has hired former Blackstone Group public equity business head Punita Kumar Sinha to spearhead its asset management business. Sinha, wife of former aviation minister Jayant Sinha, will be the chief investment officer of In-Cred, which is looking to expand to a full-service financial services company from retail and MSME focused NBFC, multiple sources with knowledge of the matter told ET.
Categories: Business News

Vijay Shekhar Sharma on Paytm's long walk to profitability

February 23, 2020 - 9:18pm
Digitial payment giant Paytm expects to turn profitable after two years as it is monetising the existing customer base and eyes financial services as its next major frontier for growth, its founder CEO Vijay Shekhar Sharma said. Noida-based firm, which had an astonishing rise after infamous demonetisation in 2016, is betting on financial services, commerce and payments as three key focus areas. In an interview with , Sharma said Paytm's growth is divided into three phases - first three years of finding the right product-market fit; the next was revenue and monetisation; and the last phase will be about profitability and free cash flows. "We are in the second phase of that journey," he said. In 2015, Paytm started deploying QR codes and by 2018-19 completed its product-market fit. From 2019-20 onwards, it is monetising. "I would say at least 2 years because we are also a large dominant market share company and we wouldn't want to lose market share while becoming profitable next quarter," Sharma said when asked about the timelines for hitting profits. In the last 12 months, Paytm has seen pre-tax losses cut - thanks to monetisation, and not reckless cost-cutting, he said, adding business like Paytm Payments Bank, commerce and cloud were already profitable, while Paytm FirstGames and Paytm Mall is "close to profitability". Paytm - which competes with Google Pay, Flipkart-owned PhonePe and others in the digital payments space - had late last year raised USD 1 billion (over Rs 7,000 crore) in funding from US-based asset management firm T Rowe Price and existing investors, including SoftBank and Alibaba, to fund expansion plans. Paytm had also said it plans to invest around Rs 10,000 crore (USD 1.4 billion) over the next three years to expand financial services. The last round of fund raising had valued the company at about USD 16 billion. Asked about the businesses under OCL that were draining profitability, Sharma said that investments were focused on expanding offline merchant base. "Overall, offline merchant expansion and technology is where the investment is happening," he said. Earlier this month, the company said it aims to add close to 10 million merchants to its platform over the next 12-18 months as it brings new features to its payments platform. The company, which has introduced a new all-in-one payment gateway and business solutions as well as an Android-based point of sale (POS) machine, currently has over 16 million merchants across unorganised and organised sectors.
Categories: Business News

On Trump's visit to India, all show and no business?

February 23, 2020 - 9:18pm
By Ram SinghBefore embarking on his two-day visit to India, US President Donald Trump has dashed hopes of a meaningful trade deal between the two countries. American and Indian negotiators have blamed the other side for a lackadaisical response and for shifting the goalposts respectively.High tariffs and trade deficit with India are a constant refrain of Trump’s bashing of India as ‘tariffs king’. He has accused the country of denying American products an ‘equitable and reasonable access’ to its markets. The visiting president has assured his voters that he will ‘talk business’ with Prime Minister Narendra Modi.Modi should use the occasion to talk business with his guest by conveying some relevant facts. India does not figure even among the top 10 countries, which includes Ireland and Malaysia, with which the US runs trade deficits. For 2019, the US trade deficit with India at $23.3 billion dwarfs the corresponding figure for China -- $346 billion.The Trump government’s aggressive stance seems to be guided by a belief that trade is more consequential for India than the US. The latter is the second largest trading partner of the former, but India comes a distant eighth among the US’s largest trading partners. This is a rather short-sighted view. India is already the third largest market and its economic heft is, despite a slowdown, growing by the year.India is generating Big Data – the proverbial ‘new oil’ -- in super abundance. The country is witnessing unparalleled growth in mobile data fueled by low-cost connectivity enjoyed by 800 million users. Several US tech giants, like Facebook and Google, are already earning substantial profits using Indian data. In the coming years, a much larger number of US firms will need access to Indian data to create jobs and wealth in their country in activities such as artificial intelligence (AI), robotics, Internet of Things (IoT), cloud computing, data analytics, and nanotechnology. Potential gains from cooperation are many.But there are serious differences. The Trump government demands easy access for its dairy and agriculture products to 1.3 billion Indian consumers. It is opposed to the Indian measures to make healthcare affordable -- price caps on drugs and medical devices like cardiac stents and knee implants. Differences also abound over rules for data localisation and ecommerce.These issues have resulted in trade skirmishes. It started with the US raising the import duty on Indian steel and aluminium products -- as ‘national security measures’ against a country that’s supposed to be its ‘strategic partner’! India retaliated by dragging the US to the dispute settlement mechanism of the World Trade Organisation (WTO) and increased duties on import of 29 products from the US, including almonds, walnuts, and pulses.To ratchet up the pressure, from June 2019, the US suspended India's special status under the Generalised System of Preferences (GSP) that provided duty-free access to $5.6 billion worth of Indian exports. Admittedly, the concession was revoked in response to the ‘failure of the Indian government to provide equitable and reasonable access to its markets in numerous sectors’. In keeping with his reputation as transactional leader, just before embarking on his India sojourn, Trump has classified India as a ‘developed nation’ to eliminate the concessional treatment to India in countervailing duty investigations against its exports.Trump and Modi should use the visit to work out a framework for addressing the differences in the spirit of give and take. Their decisions will have real impact on people’s lives and long-term economic consequences in areas ranging from agriculture to health to manufacturing, digital trade, ecommerce and big data.For a start, the two countries should restore the status quo ante by reversing increases in duties imposed on each other, and withdrawing complaints at WTO. The US should restore GSP status for India. The gains from it can be used by India to buy US goods, including oil and gas.The Indian side should also realise that a flexible policy can work better for the country. For instance, not all drugs and medical devices like stents and implants are the same. It is not necessary to have price cap on all. There are standard-use products and devices, and their more advanced versions, which must be differentiated by price to incentivise drug and device companies to bring their latest products to the Indian market. Otherwise, India will lose out on the latest drugs and techniques in healthcare.One possibility is to go for an across-the-board trade margin rationalisation in view of the costs and expenses incurred by producers. The import duties on high-end Harley-Davidson motorcycles can also be slashed without adversely affecting the domestic motorbike industry.The agriculture and dairy sectors are complex. India needs to protect the livelihoods of some 500 million dependent on these sectors who are no match for their US counterparts. Besides, there are cultural sensitivities. India demands certification that dairy imports are not sourced from the milk of animals raised on bovine extracts-based feed. This is unacceptable to the US. One possibility is quota-restricted imports with clear package labelling regarding cattle feed. India should be open to import of more fruits such as blueberries and cherries.Finally, in its own interest, India should further liberalise foreign direct investment (FDI) norms and facilitate investment by US companies in infrastructure, storage capacity, manufacturing plants and insurance sectors. Addressing these and other issues such as intellectual property rights (IPR) will require the two sides to work in the spirit of cooperation befitting the world's two largest democracies.The writer is professor, Delhi School of Economics
Categories: Business News

Pine Labs plans to deploy 1.5 lakh Android POS devices by next fiscal

February 23, 2020 - 9:18pm
NEW DELHI: Fintech platform Pine Labs is confident of expanding the base of its Android POS machines to 1.5 lakh by the next fiscal, as it deploys these new machines across industries like hospitality, retail, healthcare and automobile.The company, which had launched Plutus Smart (its Android-based point of sale machines) about nine months ago, has already deployed over 50,000 of these POS terminals."Merchants across large, medium and small enterprises have chosen Plutus Smart as their preferred mode of payment acceptance. Apart from just accepting multiple modes of payment, it allows merchants access to a plethora of features like bill generation, inventory management etc," Pine Labs Chief Business Officer Kush Mehra told PTI.The company plans to considerably scale up its Android POS network in 2020-21 to 1.5 lakh machines and diversify into newer industries. POS machines are used by merchants to accept payments through cards among other features, he added.Some of its customers of Android POS include merchants across industries like hospitality, apparel and lifestyle, entertainment and healthcare. Organisations like Cinepolis India, Flipkart, Vijay Sales, Lenskart, Air Asia India and Miniso are among its customers."Additionally, multiple State Traffic Police departments have signed up to empower their personnel with the latest Android-based Plutus Smart terminals. We are working on onboarding customers from newer verticals like automobile dealers and educational institutions as well," he said.Plutus Smart can accept payments across multiple payment modes including debit/credit cards, UPI, mobile wallets, QR codes, loyalty cards, amongst others. It also has an in-built barcode scanner and helps customers to compare EMI offers across banks on the POS."We have built an extensive network of banks and brands to offer EMI-led purchase option on its POS terminals. It also helps merchants gain intelligent and real-time business insights and capture customer feedback," Mehra said.Pine Labs has built a portfolio of over 25 third-party billing apps developed using its open APIs since July 2019.These apps help merchants with inventory management, easy option for splitting payment across multiple payment modes, returns management, online ordering feature, and creating GST bills in the recommended GST format, among other features.
Categories: Business News

Senior govt officials meet to discuss relief measures for AGR-hit telecom industry

February 23, 2020 - 9:18pm
NEW DELHI: Senior officials of the telecom department and other key ministries met on Sunday to discuss urgent relief measures that can be extended to the telecom industry, which is battling an unprecedented crisis on account of massive statutory dues it owes the government.The meeting, held at the Department of Telecom, lasted for over an hour and is said to have deliberated on options before the government to provide much-needed lifeline to the AGR-hit industry.Telecom czar and Chairman of Bharti Airtel Sunil Mittal had last week made an appeal to the government for cut in levies and taxes to pull the sector out of what he had described as an "unprecedented crisis".Telecom department officials remained tightlipped after high-level government meeting on Sunday, where officials from NITI Aayog and Finance Ministry are said to have been present.DoT Secretary Anshu Prakash remained unavailable for comments.The crucial meeting comes at a time when the telecom companies are staring at Rs 1.47 lakh crore in unpaid dues -- Rs 92,642 crore in unpaid licence fee and another Rs 55,054 crore in outstanding spectrum usage charges.Of the estimated dues that include interest and penalty for late payments, Airtel and Vodafone Idea owe about 60 per cent.While Airtel has raised USD 3 billion in last few months and is expected to have sufficient funds to tide over the AGR crisis, Vodafone Idea - that has only paid just seven per cent of its total Rs 53,000 crore statutory dues - remains deeply vulnerable.The government, meanwhile, is looking to strike a balance between complying with the Supreme Court order on AGR dues, ensuring health of the sector and safeguarding consumer interest.Both Mittal and VIL Chairman Kumar Mangalam Birla continued to meet top government functionaries throughout last week to seek prompt measures that would offer a breather to the sector.A top government official had said recently that attempts are being made to balance the need for health of the sector, consumer interest while complying with the Supreme Court order on statutory dues.Although the official had not elaborated, sector watchers had said the statement alludes to the government keen on ensuring adequate competition by retaining the present three-plus-one model of competition (three private players and one public sector company).The statutory dues arose after the Supreme Court, in October last year, upheld the government's position on including revenue from non-core businesses in calculating the annual Adjusted Gross Revenue (AGR) of telecom companies, a share of which is paid as licence and spectrum fee to the exchequer.The Supreme Court earlier this month rejected a plea by mobile carriers such as Bharti Airtel and Vodafone Idea Ltd for extension in the payment schedule and asked all of them to deposit an estimated Rs 1.47 lakh crore in past dues for spectrum and licences.It threatened to initiate contempt proceedings against top executives of these firms for non-payment.Some telecom firms are already struggling with mounting losses and debt and the additional liability has raised concerns of them defaulting on existing loans.Vodafone Idea has so far paid only Rs 3,500 crore in two tranches. Airtel has paid Rs 10,000 crore out of its estimated liability of over Rs 35,000 crore. Tata Teleservices has paid Rs 2,197 crore, the entire outstanding it believes to have arisen after the October ruling of the apex court for calculating dues.
Categories: Business News

Formation of India's banking behemoths may be delayed

February 23, 2020 - 6:18pm
MUMBAI: With the deadline of April 1 fast approaching for the mega merger of ten public sector banks, there seems to be more odd in the way of meeting the target date as a series of regulatory approvals and clearances are still pending, bank officials said. Even after Cabinet approval to the proposed mega merger plan, officials said, fixation of share swap ratio, shareholders consent and other regulatory approvals are expected to take at least 30-45 days. It is believed that the Prime Minister's Office (PMO) has sought details from these lenders about their financial projections for the next three to five years. Details in respect of NPAs, capital requirement, credit growth and cost savings on account of the mergers have been asked for, officials said. So, chances of the merger becoming a reality beginning next fiscal year seems little unrealistic at the moment, a senior public sector bank official said. Besides, regulatory nods, the Scheme of Amalgamation has to be laid before Parliament for 30 days for the perusal of the members. The second-half of the Budget session is scheduled to start on March 2. Last year in August, the government announced the consolidation of ten public sector banks (PSBs) into four mega state-owned lenders. As per the plan, United Bank of India and Oriental Bank of Commerce would merge with Punjab National Bank, making the proposed entity the second largest public sector bank. It was decided to merge Syndicate Bank with Canara Bank, while Allahabad Bank with Indian Bank. Similarly, Andhra Bank and Corporation Bank are to be consolidated with Union Bank of India. According to a senior banker, information technology integration of Vijaya Bank and Dena Bank with Bank of Baroda is still in process even after 10 months of merger. In addition, the HR issues still continues to hamper business, causing inconvenience to customers. Moreover, the mega merger would create greater disturbance in the banking system and will affect the operation especially loan sanction as there will be chaos initially for few months, the official added. Bank unions are also opposing the move saying merger is not a solution to the banking sector problem and slowdown in economy. Rather than consolidation, there is a need for expansion, All India Bank Employees' Association (AIBEA) general secretary C H Venkatachalam said. The past merger carried out by banks are yet to show results and the proposed massive consolidation exercise will be catastrophic for the banking system at this point of time when the economy is in a downturn, he stated. Terming the government decision on consolidation as illegal, All India Bank Officers' Confederation general secretary Soumya Datta claimed that the decision was taken in the absence of full board. There was no representation from officers and staff in the board of any of these ten banks so decision is illegal, he further claimed. According to a senior official of Oriental Bank of Commerce, the grouping of banks in the consolidation plans does not appear to be logical as it would lead to large scale closure of branches than expansion of banking services. For example, the official said the merger of Syndicate Bank with Canara Bank would lead to large scale closure of branches as both are Karnataka-based and have strong presence in South India. The merger of Oriental Bank of Commerce with Punjab National Bank and Andhra Bank with Union Bank of India will have similar issues, the official said. As regards IT platform, the official said, although the software system is same, versions are different. So the technology upgradation will take a minimum of nine months to two years, depending on the size of the banks. However, Finance Minister Nirmala Sitharaman earlier this month said that she saw no reason to go back on the government's mega merger plan for banks. "I don't see any reason to go back or any reason (which is) particularly causing any delay in the notification. You will hear on it as and when a decision is made," she had said. In December last year, RBI had opined that the country could create some global banking majors if the ongoing mergers of state-owned banks achieve desired impacts of creating stronger and well-capitalised lenders of global scale. "The merger of PSBs is likely to transform the face of our banking sector with the emergence of stronger, well-capitalised banks aided by cutting-edge technology and state-of-the-art payment systems. Our banks have the potential to become global banking leaders," the Reserve Bank of India said in its annual report on 'trends & progress of banking 2018-19.'
Categories: Business News

Reliance Retail tops list of 50 fastest growing retailers

February 23, 2020 - 6:18pm
NEW DELHI: Billionaire Mukesh Ambani-led Reliance Retail has topped the list of '50 fastest-growing retailers globally between FY2013-2018' in the Deloitte's Global Powers of Retailing 2020 index.Deloitte ranked 250 firms globally in its annual report based on their revenues for FY2018. The Indian retail major secured the 56th spot this year against the 94th rank the previous year."India-based retailer Reliance Retail jumped from sixth in the list in FY2017 to first position in FY2018, recording a 55.8 per cent CAGR," Deloitte report said.According to the report, Reliance Retail is the only Indian company to be featured in it. More than half the retail companies were from Japan, and almost a quarter are in China and Hong Kong.Reliance Retail recorded retail revenue of USD 18.5 billion in FY2018, a massive increase of 88.4 per cent on its FY2017 performance. "The retailer also became the first Indian retailer to operate more than 10,000 stores in the country," it said."Factors that enabled the company to achieve top spot were a strong focus on boosting e-commerce growth through its website Ajio.com; a push for sales of smartphones and other consumer electronics online; an aggressive pricing strategy across its offline stores; the acquisition of Hamleys, UK-based toy retailer; and new store openings," the report said.Deloitte Global Powers of Retailing 2020 is topped by Wal-Mart Stores Inc, followed by Costco Wholesale Corp.Amazon jumped to third position with the highest retail revenue growth amongst the top 10 retailers. Kroger (US) is the only retailer in the top 10 with no foreign operations.Speaking on the launch of the report, Deloitte India spokesperson said, "Even as the economy is facing a prolonged slowdown, the resilience of the global retail sector is likely to be mirrored in India as well, especially given the tax sops announced for boosting investment in the recent Union Budget for 2020."Key initiatives taken by the government including liberalisation of FDI norms for select sectors; a rollback of the much-debated tax surcharge on foreign portfolio investors; incentives to support several industries; bank consolidation, the amendment of insolvency and bankruptcy code enabling the resolution of financial companies, and a significant cut in the corporate tax rate are sure to show some green-shoots in the Indian economy leading to the boost of customer confidence."Moreover, the young profile of the country and the increasing dependency on convenience through access to technology and digital platforms makes the country one of the growing retail destinations of the world, the spokesperson said.Key trends and highlights from the report state that retail growth in the Asia Pacific region continues to be driven by changing shopping preferences among growing middle-class consumers, particularly young millennials, and the increasing adoption of e-commerce and m-commerce by the physical retail players.In efforts to compete with Amazon, FMCG retailers have been employing strategies such as greater focus on e-commerce, buy-online-pickup instore, cashier-less stores, opening more convenience stores, voice-enabled shopping, and doorstep delivery, it said.According to the report, despite trade tensions and growing uncertainty around tariff policies, at the aggregate level the global retailers have exhibited remarkable stability. While the highest annual revenue growth in FY 2018 was reported to be in hardlines and leisure goods, apparel and accessories like every other year was found to be the most profitable product category.Talking about the macro level global perspective, Ira Kalish, Deloitte Global Chief Economist said, "The outlook for the global economy and the retail industry in 2020 is uncertain. Overall economic growth is likely to be subdued but positive, with lower growth in consumer spending and inflation in most countries remaining low". ANZ BALBAL
Categories: Business News

Adani's Rs 400 crore bid for posh Aditya Estates in Delhi gets NCLT approval

February 23, 2020 - 6:18pm
Business conglomerate Adani group has won a bid to acquire Aditya Estates Pvt Ltd, which holds a posh 3.4 acre residential property near Mandi House in the heart of the national capital, through an insolvency process for a total deal value of Rs 400 crore. The Delhi-based Principal bench of the National Company Law Tribunal (NCLT) has approved the resolution plan of Adani Properties to acquire Aditya Estates for Rs 265 crore. Another Rs 135 crore would go towards meeting the statutory charges, taking the total deal value to Rs 400 crore. The Committee of Creditors (CoC) of Aditya Estates led by ICICI Bank PLC had already approved by 93.01 per cent vote share, Adani's Rs 400 crore offer, which includes an upfront payment of Rs 265 crore. According to the list of resolution applicants submitted on June 27, 2019 nine resolution applicants had shown their interests for the property, which include - Narayana Murthy, Malvinder Singh, Anil Rai Gupta, Paras Pramod Agarwal besides others as Dalmia Cement (Bharat), Veena Investments, Welspun Logistics, Adani Properties and Panch Tatva Promoters. However, only two of them -- Adani Properties and Veena Investments -- had submitted their resolution plans. Later, the COC rejected Rs 225 crore offer from Veena Investments as it found it to be non-compliant and conditional. Besides, it did not take into account any liability that may arise from NDMC for house tax, sales tax and Income Tax in future. During the final hearing while granting approval to the sale, Spirit Infrapower, a dissenting financial creditor had raised objection before NCLT on the ground that the Adani group firm has reduced its offer from Rs 400 crore to Rs 265 crore, thereby the main object of the IBC Code to maximise the value of assets of the Corporate Debtor has been defeated. It has also contended that the liquidation value of the property was Rs 306 crore and the resolution plan was much lower sum of Rs 265 crore. However, the resolution professional and CoC submitted that the reduction/adjustment was done to meet the liabilities arising out of the transaction payable to NDMC for conversion of property to free hold, property tax, stamp duty and other related charges. As per the request for resolution plan (RFRP) was to provide a resolution plan to acquire on an "as is where is" basis, resolution applicants were asked to de-link the risks and to remove contingency and uncertainty. The rational for reduction of the financial proposal is as per the estimates. The cost of conversion and other associated payments were estimated at Rs 177 crore and can exceed beyond it, they submitted. "Accordingly, the financial proposal was reduced from conditional Rs 400 crore to fixed upfront payment of Rs 265 crore, which was accepted by CoC with overwhelming majority of 93.01 per cent votes," it said. Over the valuation, RP and CoC said that Aditya Estates Private is a the leasehold immovable property and the property is held on a leasehold basis from the Land and Development Office, Ministry of Urban Housing Affairs (L&DO). It further said that the liquidator had said that buyer would have to pay the conversion charges to L&DO and after considering this, the liquidation value of the property is reduced to half by Rs 153 crore. Allowing the deal and rejecting dissenting financial creditor's submission, NCLT in its order passed on February 14 said: "It is well settled proposition of law that commercial and business decisions of CoC are not open to judicial review. Adjudicating Authority (NCLT) cannot enquire into the commercial wisdom of CoC." NCLT has directed to appoint a "monitoring committee' comprised of five members constituting RP and two representatives of Adani Power and approving financial creditors. Earlier, NCLT had on February 26, 2019 had admitted the plea filed by ICICI Bank UK PLC to initiate insolvency proceedings against Aditya Estates. ICICI Bank UK PLC claimed to be a financial creditor of Aditya Estates on account of debt of USD 63 million granted to Assam Oil Company, an overseas company. It had contended that as per terms of debt asset swap agreement Aditya Estates defaulted to pay the debt. Later, NCLT order to initiate insolvency was challenged by Aditya Kumar Jajodia, a shareholder of Aditya Estates, before National Company Law Appellate Tribunal (NCLAT), which also rejected in September 5, last year.
Categories: Business News

Godrej Properties sells properties worth Rs 3,532 cr during April-December of FY20

February 23, 2020 - 6:18pm
NEW DELHI: Realty firm Godrej Properties sold properties worth Rs 3,532 crore during the April-December 2019 period, up 12 per cent as compared with a year-ago period. According to an investors' presentation, the company's sales bookings stood at Rs 3,155 crore during April-December 2018. In terms of volume, Mumbai-based Godrej Properties sold nearly 52 lakh sq ft area, an increase of 3 per cent from the corresponding period of the previous year. Out of the total sales bookings of Rs 3,532 crore achieved during the first nine months of this financial year, the housing segment contributed Rs 3,471 crore. Sales of commercial properties stood at Rs 61 crore. As per the presentation, the company's net debt stood at Rs 1,089 crore. Godrej Properties has posted a 9 per cent increase in its consolidated net profit at Rs 45.46 crore for the quarter ended December as against Rs 41.63 crore a year ago. Total income rose to Rs 517.47 crore in the third quarter of this financial year as compared to Rs 430.7 crore in the corresponding period of the previous year. Earlier this month, Godrej Properties announced an acquisition of nearly 27 acre land parcel at Ashok Vihar in the national capital for Rs 1,359 crore to develop a luxury housing project.
Categories: Business News

Q3 GDP data, Trump visit & F&O expiry among key market drivers

February 23, 2020 - 6:18pm
NEW DELHI: The domestic equity market will see a host of domestic and global developments in the week ahead, and they may influencing trading positions ahead of the expiry of February series F&O contracts on Thursday.Key triggers would include India’s December quarter GDP numbers scheduled to be released on Friday, any major outcome from US President Donald Trump’s India visit and this weekend’s G20 meeting and updates on the coronavirus crisis. The benchmark indices consolidated this past week, as investors moved on from the just-concluded earnings season carefully following commentaries from major Asian economies on the impact of the coronavirus crisis on their respective growth estimates.Sensex dropped 87 points, or 0.21 per cent, during the truncated week to close at 41,170 on Thursday. Nifty declined 32.60 points, or 0.27 per cent, for the week to end at 12,080. The market was closed on Friday on account of Mahashivratri.Here are the key events and developments lined up for the week ahead, which will influence specific stocks, sectoral fortunes and the broader market in the week ahead:-F&O expiryThe single largest factor that will have a bearing on domestic equities next week will be Thursday’s expiry of February series futures & options contracts. Options data suggests the maximum Put open interest (OI) stood at strike price 12,000, followed by 11,800, while maximum Call OI was at strike price 12,300, followed by 12,500.“There was meaningful Put writing at strike price 12,100, followed by 12,000 while Call unwinding was seen at all the immediate strike prices. Options data pegged the trading range between 11,900 and 12,250,” said Chandan Taparia of Motilal Oswal Securities.US President’s India visitAhead of his visit to India, US President Donald Trump said the two countries could make a ‘tremendous’ trade deal. This may build market expectations. Trump and First Lady Melania Trump will travel to Ahmedabad, Agra and New Delhi over February 24 and 25. There have been reports that India and the US may agree to a trade package as a precursor to a major trade deal. "We're going to India, and we may make a tremendous deal there," Trump said on Thursday.Outcome of G20 meetInvestors on Monday may react to the outcome of two-day G20 meet, which is under way in Riyadh over Saturday and Sunday. The China virus is a major focus of discussion among the finance leaders from the Group of 20 major economies, Bank of Japan Governor Haruhiko Kuroda said on Friday. Japan and Singapore are on the brink of recession and South Korea on Friday said its exports to China slumped during the first 20 days of February as the outbreak upended global supply chains.GDP data: Economy in a slow laneDecember quarter GDP numbers will be released on Friday.GDP growth is likely to show a marginal improvement to 4.6 per cent from 4.5 per cent in the previous quarter, said Nirmal Bang Institutional Equities. This brokerage expects GVA growth at 4.4 per cent, marginally above 4.3 per cent reported for the September quarter.“Agriculture, forestry and fishing is expected to see a rebound to 3.5 per cent growth, supported by a lower base, stable kharif production and a strong start to the Rabi season. Industry (excluding construction) is expected to witness a decline of 0.1 per cent YoY,” the brokerage said.Updates on coronavirus, possible stimulusWhat has eased concerns among global markets is the fact that the pace of new coronavirus cases has slowed, and the Chinese government has been quick to ease liquidity in the system to stem further slowdown in the economy. But China's central province of Hubei on Friday said it has revised the number of new confirmed cases of coronavirus infections on Thursday upward to 631 from 411 after including cases in the province's prison system. The province's health commission said in a statement it now had 62,662 cases as of Thursday, after including 220 cases in Hubei's prison system.US macro dataInvestors would pay heed to US economic releases such as Chicago Fed National Activity Index on February 24, followed by Redbook, Richmond Fed manufacturing index on February 25, API crude oil stock change and MBA mortgage applications on February 26.Besides, GDP growth rate, durable goods orders, jobless claims, pending home sales on February 27 and PCE price index, wholesale inventories and Baker Hughes total rig count on February 28 will be other US data investors would be watching keenly.
Categories: Business News

Should the onus of spiralling inflation be solely on the RBI?

February 23, 2020 - 3:16pm
NEW DELHI: Former RBI governor C Rangarajan has said the Reserve Bank alone can not contain inflation as supply side shocks are needed to be managed by the government. In a paper titled 'The New Monetary Policy Framework - What it Means', Rangarajan talked about the limitations of the RBI's monetary policy in containing inflation."The inflation mandate as already mentioned must provide for a range and a time frame for adjustment which should not be too short."Nevertheless, monetary policy must act irrespective of what triggered inflation. Obviously, supply-side management is needed in situations of supply shock and that should be the responsibility of the government," he said. Rangarajan said the adoption of inflation targeting by India has given rise to many doubts and concerns. The new monetary policy framework requires the Reserve Bank of India to maintain consumer price inflation at 4 per cent with a margin of + or - 2 per cent. "Thus in a sense, it is flexible targeting. The amendment to RBI Act also provides for the setting of a Monetary Policy Committee which will determine the policy interest rate in order to abide by the inflation mandates," he said.The focus on inflation targeting by monetary authorities hardly mean a neglect of other objectives such as growth and financial stability, he noted."Does the focus on inflation targeting by monetary authorities mean a neglect of other objectives such as growth and financial stability? Hardly so."What inflation targeting demands is that when inflation goes beyond the comfort zone, the exclusive concern of monetary policy must be to bring it back to the target level. When inflation is within the comfort zone, authorities can look to other objectives," the former RBI governor said. The monetary policy framework adopted by India and many other countries is correctly described as 'flexible inflation targeting'. "This flexibility is extremely important because it emphasizes the uncertainties against which central bank have to operate," Ranagarajan noted. The government had in 2016 constituted monetary policy committee (MPC) to set the benchmark interest rate. The MPC is headed by the RBI governor. Of the six members, three are nominated by the government, while the remaining three are from the RBI (including the Governor). The committee takes decisions based on majority vote. Each member has one vote but the RBI governor has a casting vote in case of a tie.
Categories: Business News

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