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12 pages in 1 section

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MUMBAI ~8.00

VOLUME XI NUMBER 17

WORLD P9

BUFFETT ABOUT TO MAKE $12 BN ON HIS BANK OF AMERICA BET

PUBLISHED SIMULTANEOUSLY FROM BENGALURU, KOLKATA, MUMBAI AND NEW DELHI

TVS CAPITAL’S SUNDARAM APPOINTED INFOSYS INDEPENDENT DIRECTOR

Infosyshasappointed DSundaram(pictured)asan independentdirectoronthe boardofthecompany.Heis goingtobethefourth independentdirectortojoin India’ssecond-largestsoftwareexportersince ChiefExecutiveOfficerVishalSikkatookover threeyearsago.Sundaram’srolewouldbe effectivefromJuly14.Heiscurrently vice-chairmanandmanagingdirectorofTVS CapitalFunds.“Hebringsextensiveexperience inthefieldoffinanceandstrategyexecution. Iamsurethattheboardwillimmenselybenefit fromhisexpertise,”saidRSeshasayee, chairmanoftheInfosysboardinastatement. 2 >

GST Day 1: Small businesses struggle

Mostorganisedretailchainsmanagetoissueinvoicesinnewregime PHOTO: SANJAY K SHARMA

INDIVJAL DHASMANA New Delhi, 1 July

BS SPECIALS

Conversion to Buddhism has brought literacy and well-being to Dalits

Shoppers take advantage of GST clearance sales at Connaught Place in New Delhi on Saturday

The converts tend to have fewer children and make a higher contribution to the national economy than the Scheduled Castes 7>

COMPANIES P3

Small firms struggle to find talent in big IT job crunch

SmallITservicesfirms,facingashortageoftalent forbothentry-levelandmiddlemanagement jobs,arefindingalackofnewtechnologyskills amongapplicantsfromlargeITservicesfirms. Atleastthreecompanieshaveexperiencedthis whileinterviewingforpositionsatmiddle levels.ThousandsofemployeesatITservices companieswith7-15years’experiencestareat joblossesiftheyfailtoupskillthemselvesin AYAN PRAMANIK reports digitaltechnologies.A

ECONOMY P6

States catching up in transmission tenders

ARNAB DUTTA, VEENA MANI, SHUBHAM PARASHAR & ANEESH PHADNIS

PRICE RELIEF

T

| Maruti Suzuki | Apple slashes reduces iPhone prices of prices in the various country models by by up to up to

New Delhi/Mumbai, 1 July

he goods and services tax (GST) proved to be a nightmare for small traders and businessmen on its first day. Shops and pharma distributors in Mumbai, New Delhi, and other cities scrambled to issue invoices under the new system. Organised sector players such as Big Bazaar and DMart were ready to issue GST invoices from Friday midnight, the hour at which the new indirect tax was rolled out. But not everyone was. At the outlet of electronics retailer Croma at Prabhadevi in central Mumbai, customers were still being charged value-added tax (VAT) on Saturday afternoon. Officials said the store would switch to the GST-based billing by the evening, when customer footfall increases. The situation was not too dif-

3%

7.5%

ferent in local supermarts and shops in Santacruz and Bandra. Ram Dhir, an owner of a supermarket in Santacruz (East), said it would take at least four to five days for the GST software to be uploaded on his billing terminal. “We are in touch with our local trade body and they are helping us out with this. Till then, consumers can continue to buy products at MRP (maximum retail price) plus VAT,” he said. In the crowded Dadar area of

Mumbai, shops across the board, from stationery to sarees, cosmetics to paints, said they were yet to switch to the new tax regime. “The picture is still hazy and we are unclear how we get going with this (GST),” said Vinit R, a paints dealer in Dadar. His shop was also running low on stocks, as supplies had fallen. The picture was similar in south Delhi’s Lajpat Nagar central market and the electronics hub at Nehru Place. Both wore a deserted look on Saturday, which is rather unusual. Traders and retailers were unhappy. Worse, a fifth of the shops had downed shutters. Turn to Page 4 >

GST IMPACT: 5> Minimuminventorysees carsalesplummetinJune Revenuewon’tdipdueto GST,assuresTamilNaduFM Gold business to take time to adjust to GST

Prime Minister Narendra Modi on Saturday said days before the rollout of the goods and services tax (GST), the Registrar of Companies had deregistered about 100,000 firms for irregularities. He also said data mining of money deposited in banks following demonetisation had revealed irregularities in transactions of 300,000 entities. He was addressing chartered accountants after launching a course introduced by the Institute of Chartered Accountants of India (ICAI). Finance Minister Arun Jaitley, who also addressed the event, said, “Why are some traders protesting against the GST when customers, who have to pay the tax, are not?” The government had demonetised old ~500 and ~1,000 notes on November 8, 2016. The GST, which replaces a slew of state and central indirect taxes, was rolled out on Friday midnight. On Saturday, Modi said the government had zeroed in on 37,000 shell companies floated to hold black money. “We are taking strong measures against black money holders and corrupt persons. We will take stronger measures against these entities in coming days.” The PM requested CAs to not support corrupt practices and to spread awareness among the people about the GST. Citing Swiss National Bank’s (SNB) figures, Modi said money deposited by Indians in Swiss banks fell to a record low in 2016 — there was a 45 per cent decline, to 676 Swiss francs (about ~4,500 crore). Turn to Page 4 >

Protests across the nation

TE NARASIMHAN, VINAY UMARJI, SOHINI DAS & AVISHEK RAKSHIT

Chennai/Ahmedabad/Kolkata, 1 July

The goods and services tax (GST) ran up against strikes, protests, and apprehensions across the country on Saturday. This was reminiscent of the resistance the value-added tax had faced more than 10 years ago. Tamil Nadu: Fear of imports revives Several industries, mainly micro, small and medium enterprises (MSMEs) — from movie theatres, multiplexes, units making firecrackers and matchboxes, and weaving and knitting factories — downed shutters in Tamil Nadu to protest the GST. Movie theatres in Tamil Nadu will remain shut from Monday to protest the lack of clarity on the tax that would be levied even though the state

government has said it will discuss the issue of the local levy of 30 per cent over and above the 28 per cent GST. Multiplex theatres in Tamil Nadu have suspended online booking for the weekend. Units making matchboxes and firecrackers in Virudunagar, Kovilpati, Sivakasi, and surrounding areas have decided to remain closed indefinitely to protest against the GST rate of 28 per cent. Their apprehension is that while small and medium manufacturers in India will vanish, the import of Chinese crackers will increase. According to the Fireworks and Amorces Manufacturers Association (TANFAMA), there are 821 fireworks factories in Virudhunagar. Of those, 51 factories, which comprise 10 large groups, pay a central excise duty of 12.5 per cent and 14.5 per cent VAT. Turn to Page 4 >

Kashmiri traders and transporters stage a sit-in protest against the implementation of the GST in Srinagar on Saturday PHOTO:PTI

New formula to protect fuel retailers’ margins

Associationsclaimthey IN THE NET havelost~400crsince Total retail outlets June15whendailyprice 59,591 changeswereintroduced PSUs SHINE JACOB

New Delhi, 1 July

Powertransmission,dominatedbycentral utilities,iswitnessingachangewithstate utilitiesplacinglargerandmorefrequent orders.“Wehaveseenachangeinawarding activityfortransmissionandsub-station projects.Earlier,centralutilitiesdominatedthe space,nowstatesareplacingmoreordersand ofhighervalue,”saidVimalKejriwal,managing directorandchiefexecutiveofficer,KEC AMRITHA PILLAY reports International.A

MODI SEEKS CAs’ HELP TO SPREAD TAX KNOWLEDGE

Oil-marketing companies (OMCs) such as Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL), and Bharat Petroleum Corporation (BPCL) are considering a revision in the formula to decide margins of dealers, to insulate them from fluctuations because of daily changes in fuel prices. Daily pricing changes were introduced on June 15. Associations of fuel retailers claim about 53,000 outlets of the public sector OMCs have lost ~400

54,607 Essar

3,499 Reliance

1,400 Shell:

85

crore since then. Several of these associations are threatening to go on indefinite strike from August 1. “We have mooted a new formula through which inventory will be owned

by the company in petrol and diesel, similar to the case of compressed natural gas and liquefied petroleum gas. The new margin model will take into account our increased operating cost,

value of net fixed assets, including land, and evaporation loss,” Ajay Bansal, president, All India Petroleum Dealers’ Association, told Business Standard. An official in the know confirmed an idea to revise the formula was mooted and it was under the consideration of the petroleum ministry. “We will soon take a call on this,” he added, without divulging any details. Dealers claim that the purchase price and selling price for them are different because of the daily changes. They buy fuel in advance at a certain price, but have to sell it at another price that might be lower. “We have so far suffered a loss of ~400 crore on our margins because of daily pricing changes; hence, some insulation is required,” Bansal added. Of the 59,591 retail outlets in the country, 54,607 are under PSUs, while Essar (3,499), Reliance Industries (1,400), and Shell (85) run the remaining

outlets. While the three PSUs have some company-owned, company-operated outlets, the rest are dealer-run. According to dealers, despite intervention by Petroleum Minister Dharmendra Pradhan, OMCs were yet to take a call on the margins. “Several associations, including some in Punjab, Haryana, and Kerala, are going to stop purchasing fuel soon. We are left with no choice but to go on indefinite strike from August 1, if companies fail to take a call on this. Daily price change is wiping out our margins,” said B T Ram Kumar, joint secretary of the Consortium of India Petroleum Dealers. Bansal said dealers across the country were facing a daily loss of about ~25-30 crore. IOC is monitoring the daily price revision round-the-clock through 87 control rooms to offer quick answers to queries from the field.

Hacks raise fear over NSA’s hold on cyberweapons NICOLE PERLROTH & DAVID E SANGER 1 July

Twice in the past month, National Security Agency (NSA) cyberweapons stolen from its arsenal have been turned against two very different partners of the United States — Britain and Ukraine. The NSA has kept quiet, not acknowledging its role in developing the weapons. White House officials have deflected many questions, and responded to others by arguing that the focus should be on the attackers themselves, not the manufacturer of their weapons. But the silence is wearing thin for victims of the assaults, as a series of escalating attacks using NSA cyberweapons have hit hospitals, a nuclear site and American businesses. Now there is growing concern that United States intelligence agencies have rushed to create digital weapons that they cannot keep safe from adversaries or disable once they fall into the wrong hands. On Wednesday, the calls for the agency to address its role in the latest attacks grew

Beyond that, the government has louder, as victims and technology companies cried foul. Representative Ted Lieu, a blamed others. Two weeks ago, the United California Democrat and a former Air Force States — through the Department of officer who serves on the House Judiciary Homeland Security — said it had evidence North Korea was responsible and Foreign Affairs for a wave of attacks in May Committees, urged the NSA to using ransomware called help stop the attacks and to For the WannaCry that shut down hosstophoardingknowledgeofthe American spy pitals, rail traffic and produccomputer vulnerabilities upon agency, what tion lines. The attacks on which these weapons rely. is unfolding Tuesday against targets in In an email on Wednesday across the Ukraine, which spread worldevening, Michael Anton, a world amounts wide, appeared more likely to spokesman for the National to a digital be the work of Russian hackers, Security Council at the White nightmare though no culprit has been forHouse, noted that the governmally identified. ment “employs a disciplined, In both cases, the attackers used hackhigh-level interagency decision-making process for disclosure of known vulnera- ing tools that exploited vulnerabilities in bilities” in software, “unlike any other Microsoft software. The tools were stolen from the NSA, and a group called the country in the world.” Anton said the administration “is com- Shadow Brokers made them public in mitted to responsibly balancing national April. The group first started offering NSA security interests and public safety and weapons for sale in August, and recently security,” but declined to comment “on even offered to provide NSA exploits to the origin of any of the code making up paid monthly subscribers. Though the identities of the Shadow this malware.”

Brokers remain a mystery, former intelligence officials say there is no question from where the weapons came: A unit deep within the agency that was until recently

called “Tailored Access Operations.” While the government has remained quiet, private industry has not. Brad Smith, the president of Microsoft, said outright that

the NSA was the source of the “vulnerabilities” now wreaking havoc and called on the agency to “consider the damage to civilians that comes from hoarding these vulnerabilities and the use of these exploits.” For the American spy agency, which has invested billions of dollars developing an arsenal of weapons that have been used against the Iranian nuclear programme, North Korea’s missile launches, and Islamic State militants, what is unfolding across the world amounts to a digital nightmare. It was as if the Air Force lost some of its most sophisticated missiles and discovered an adversary was launching them against American allies — yet refused to respond, or even to acknowledge that the missiles were built for American use. Officials fret that the potential damage from the Shadow Brokers leaks could go much further, and the agency’s own weaponry could be used to destroy critical infrastructure in allied nations or in the US. © 2017 The New York Times News Service Turn to Page 4 >

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2 COMPANIES

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MUMBAI | 2 JULY 2017

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Essar Shipping bets big on captive cargo; fleet renewal

Infosys appoints TVS Capital’s Sundaram as independent director Bengaluru, 1 July

I

SOHINI DAS

actually widened from ~229 crore in FY14 to ~583 crore in FY17. Singh explained that this is due to its ssar Shipping Ltd (ESL), the logistics fully owned subsidiary Essar Oilfields arm of Essar Group, is eyeing a 10 per Services Ltd (EOSL), owns and operates 15 cent growth in cargo handling during land rigs and one offshore semi-sub2017-18 at a time when the capacity utilisation mersible rig, was out of business due to levels at shipping lines are low. ESL’s cargo fluctuations in crude prices. “One rig has handling had grown by 22 per cent in FY17, been put with ONGC in June; it was out of while the company’s 14-vessel fleet also grew business for two years,” Singh informed. its capacity utilisation to 94 per cent from 80 On a standalone basis, ESL has managed to per cent in the previous fiscal. reduce its losses from ~198 crore in FY16 to ~119 Ranjit Singh, executive director and CEO, crore in FY17. ESL said the company expects cargo Vikram Suryavanshi, vice presihandling to grow by 10 per cent year Currently, ESL dent, equity, PhillipCapital said that on year during 2017-18. He admitted is in the process ESL has the buffer of captive cargo, that shipping business was going of replacing primarily from Essar’s steel busithrough a volatile cycle and while its old fleet ness. “Around 70-75 per cent of ESL's new ships are being delivered, the with younger cargo is captive. This puts them in a scrap market is not very high. better position compared to other vessels ESL is in the process of replacing shipping lines who depend on spot its old fleet with younger vessels. It acquired cargo contracts,” he said. Singh, however, claimed that ESL is cona Panamax vessel of 74,005 deadweight tonnage (DWT) in May this year taking its total stantly on the lookout for outiside cargo as fleet size to fourteen. Moreover, with the well. “Around 20-25 per cent of our cargo is liftacquisition of the 2000-built Panamax bulk ed,” he said. carrier, the company’s average fleet age has The good news for ESL is that the Baltic fallen to 12 years from 13.5 years earlier. Dry Index, a key indicator of freight rates went Interestingly, ESL, a firm that was to be up by four times during FY17 from an all time delisted in 2014, (but eventually remained low of 290 in February 2016 to a high of 1,300 listed on the bourses), has managed to double in March 2017. its market capitalisation from ~313 crore as In FY17, ESL carried 11.5 million tonnes on April 1, 2014 to ~605 crore as on June 27, dry bulk cargo as against 9.4 million tonnes in 2017. In fact, the stock has performed better the previous financial year. More than 80 per than the Sensex. (See chart) This came in cent of its fleet carries dry bulk cargo, which while its losses (at a consolidated level) have includes products like iron ore, coal, bauxite. Ahmedabad, 1 July

E

EXPANSION PLANS FY14

FY16

Source:Capitaline

Compiled by BS Research Bureau

Essar Shipping Vs Sensex Date

Essar Shipping

31-03-2014 31-03-2015 31-03-2016 31-03-2017 28-06-2017

15.30 21.90 25.05 28.00 29.00

%Chg

Sensex

%Chg

43.1 14.4 11.8 3.6

22386 27957 25342 29621 30834

24.9 -9.4 16.9 4.1

Ahmedabad, 1 July

rage paid by shipping lines, thus making KPT more competitive vis-a-vis the nearby ports. KPT is also working on rationalisation of berths based on cranes etc to increase the efficiency parameters. A consultant has suggested rationalisation of pipeline structure for increasing efficiency," said Parmar, while adding that KPT has also signed an MoU with Essar Oil for a single berth mooring (SBM) of 25 million tonnes at Vadinar. The discharge rate has already been improved from 150 tonnes per hour (tph) to 450 tph at present. KPT aims to improve this to 800 tph by removing the redundant pipelines, laying new pipelines and increasing diameters of pipelines within one year. At a 450 tph discharge rate, KPT can handle 12 mt of cargo with a 99 per cent occupancy. The increase in discharge rate will also result in faster turnaround of cargo at the jetties. At 800 tph, it will only take six hours of turnaround time and raise capacity to 18 million tonnes. For dry cargo, KPT is rationalising allocation of berths wherein it is handling less dense commodities like timber on older berths and dense commodities like steel on newer berths. KPT is also planning two additional berths, that would add 9 mt additional capacity.

nfosys has appointed Sundaram as an independent director on the board of the company. He is the fourth independent director to join India’s second largest software exporter since chief executive Vishal Sikka took over three years ago. Sundaram’s role would be effective from July 14. He is currently vice-chairman and managing director of TVS Capital Funds Limited. Before this, he served in various leadership capacities in Unilever Group since 1975 including director of finance & IT, and vice-chairman of Hindustan Unilever Limited. Sundaram is a Fellow of the Institute of Cost and Management Accountants, India and a postgraduate in management studies. “He brings extensive experience in the field of finance and strategy execution. I am sure that the Board will immensely benefit from his expertise,” said R Seshasayee, chairman of the Infosys Board in a statement. Since, Sikka became the first non-founder chief executive, Infosys board has appointed Roopa Kudva, partner and managing director Omidyar India, Punita Kumar-Sinha, founder and managing partner of Pacific Paradigm Advisors, an inde-

| Sundaram is the fourth independent director to join Infosys since chief executive Vishal Sikka took over the IT firm three years ago | He is currently vice-chairman and managing director of TVS Capital Funds LTD | Corporate governance experts are surprised by Infosys decision to announce appointment of independent director a week after the company’s annual general meeting

pendent investment advisory and D N Prahlad, a former Infosys employee. The appointment of Sinha was contentious as she happened to be the wife of Union Minister Jayant Sinha. Similarly, Prahlad’s appointment was also contentious as he is a former Infosys employee and a relative of the company’s founder N R Narayana Murthy. Corporate governance experts are surprised by Infosys decision to announce appointment of independent director a week after the annual general meeting. “The timing seems to be strange to me. What is the

reason behind inducting a director one week after the AGM. They could have done it one month before and put it up as a proposal during the AGM,” said Shriram Subramanian, founder and managing director of advisory and corporate governance firm InGovern Research Services. Analysts say Sundaram’s stints in leadership roles spanning across three decades at Unilever is an advantage in terms of corporate governance at Infosys board. The IT services firm was questioned by its founders recently over alleged “lapse of governance”.

Google India eyes SMBs for growth GIREESH BABU Chennai, 1 July

Google India has is expecting to cover more Small and Medium Businesses (SMBs), with its initiatives focused on education and new tools to help them create online presence. The company is GST ready in terms of its systems tuned in to serve its SMB customers, added Shalini Girish, director — marketing solutions, Google. “A little over 10 million SMBs have their presence either on Google Search or on Google Map. We are hoping with some of these initiatives and tools, we will grow faster,” she said. The company is engaged in creating awareness among the SMBs on the

VINAY UMARJI & SOHINI DAS

increased rental value, diverted some traffic to other ports. “Kandla port is emerging as a hub for storage vegetable oils and chemicals. We took a strategic decision of more auction of plots for purpose of tank storage. Our storage capacity was limited and import was higher. So there was no storage available. So whatever storage was available was given on a premium. Tank owners began charging higher rates making Kandla uncompetitive against other ports like Mundra and Hazira. ” The auctioning of plots will create additional capacity for 1.5 million tonnes, leading to 2.5 million tonnes of liquid storage capacity. In addition, rentals have also come down from ~500 kl per month to now ~130 kl per month, resulting in reversal of cargo diversion. As a result, in FY17, KPT handled 12 mt of liquid cargo, becoming a hub for vegetable oils and chemicals, which is up from 11.5 mt in FY16. For handling capacity constraints, KPT is investing further in oil jetties. Currently, all the six oil jetties are almost fully occupied. However, KPT has begun planning for four new oil jetties which were delayed due to environmental clearance issues for the past two years or so. "This year jetty number 8 and 9 are likely to come onstream, which will not only decongest but also reduce demur-

FY17

Essar Shipping - Consolidated figures in ~ Crore Sales 1859 1911 1720 2188 PBIDT 678 470 506 310.64 Adjusted PAT -229 -459 -453 -583 Market Capitalisation 314 449 518 580 Essar Shipping - Standalone figures in ~ Crore Sales 874 791 729 658 PBIDT 288 352 302 373 Interest 323 286 343 353 Adjusted PAT -215 -83 -198 -119 Market Capitalisation 314 449 518 580

Kandla Port Trust on expansion mode In a bid to consolidate its position as one of the largest ports in the country, Kandla Port Trust (KPT) is undertaking several measures including expansion of jetties, revision of rentals on storage and achieving higher discharge rates. The measures are collectively aimed at taking up KPT's total handling capacity from 120 million tonnes as on date to 180 million tonnes by 2020. For this, KPT is enhancing both liquid and dry cargo handling capacities at the major port. Among such measures include the recent revision of rental rates on storage which have been rationalized to ~130 per kiloliters per month, down from ~500 kl per month in recent past. According to Ravi Parmar, chairman of KPT, the revision of rates alone have led to its profits jump by 100 per cent in financial year 2016-17 to close at ~700 crore. Having seen diversion of traffic and becoming uncompetitive as against other competing major ports in liquid and dry cargo, KPT is undertaking measures to regain its share. To begin with, since February this year, KPT started handling container cargo as well. With coastal movement of cargo, growth in container cargo would come to KPT, felt Parmar. “Container is the future of port business. If we are not in this crucial segment, we will lose out,” Parmar told Business Standard. Already this year from Kandla to Chabahar port in Iran, a 300 containers vessel has gone with a consignment of basmati rice. The Chabahar port is being jointly developed by KPT (40 per cent equity) along with JNPT (60 per cent equity). However, in liquid cargo, lately Kandla port had begun witnessing storage capacity constraints that led to auctioning of plots for inviting more tank storage owners. As far as liquid cargo at KPT goes, there was a lack of storage facility and handling capacity. Lack of storage coupled with

FY15

THE APPOINTMENT

AYAN PRAMANIK

going digital and has launched a learning application, which has seen 1.5 million downloads so far.

“The traction that we have seen in the last few years and the one which we are going to see in the coming few years is going to be much greater than that,” she said. On June 13, it has launched a feature within Google My Business page, which can be used to create a website for the SMB for free under 10 minutes, in nine Indian languages. The pilot was launched earlier this year which ran till June 13, in which around 120,000 business created their website using the tool. Google is running three initiatives for SMBs, one to educate them on how easy to come online, second providing an access to much more simplified tools to start their business online and finally, to recognise SMBs

that has made this journey already. Quoting a study conducted by the company along with KPMG, she said that there are around 51 million SMBs in India, of which around 32 per cent are online, while the rest are offline. The reasons for the low level of online penetration, while the customers are already adapting online fast, is that the lack of understanding related to entering online and lack of technical skills. In terms of advantages, the digital presence offers them a 2x growth in terms of revenue and profit, as against the offline businesses. Digital businesses able to reach consumers well beyond their own cities and they are able to offer far greater employment opportunities, she added.

Spice Mobility forms Orient Green Power to JV with Chinese sell loss-making biz Transsion T E NARASIMHAN Chennai, 1 July

ROMITA MAJUMDAR

Research (Ind-Ra). Xiaomi, Vivo and Oppo Mobiles has helped Chinese firms to own over 51 per Spice Mobility will launch smart- cent of the market, while phones through a joint venture Samsung continues to be the sinwith Chinese handset maker gle largest dominant brand with Transsion Holdings, targeting 28 per cent share. customers at a price range of less Transsion says that it is lookthan ~10,000 that is currently ing to strengthen its brands dominated by local players such through aggressive marketing as Micromax and Lava. offline and online and building Spice is looking at selling products for India. these feature and smartphones, “Our engineers are keen on currently to be made in China, getting consumer feedback to through its stores Through the improve our offerings across India. The JV, the two and we will look at offeroffline strategy would firms aim to ing the best service in also help it penetrate target sub the industry,” Qin added. smaller town markets, ~10,000 He also added that they where consumers are smartphones are keen on ‘making for price sensitive. India’ and graduate to “Our new brand (Spice) is tar- ‘make in India’ after that. geted towards a young and stylish Transsion’s introductory consumer with a new tagline brand iTel, which offers a 100‘Make sharing better’ for Spice,” day replacement warranty to said Lin Qin, VP Transsion consumers, already occupies Holdings. While the five feature second spot in the Indian handphones in the new range will cost set market with 9 per cent marbetween ~850 to ~2,000 while the ket share. Spice mobiles takes it smart phones will cost up to one notch higher with a one ~9,500. The brand expects a pan- year replacement policy. The India presence within 18 months. other brands in Transsion’s India is witnessing a domi- portfolio are Tecno and Infinix nance of Chinese smartphone for phones, service based makers, who control over half of Carlcare, Oraimo for mobile the country's market, according accessories and Syinix for home to study by India Ratings and appliances. Mumbai, 1 July

Orient Green Power Company Limited (OGPL), a renewable energy-based power generation company that is part of the Shriram group, plans to sell the bulk of its biomass operations to its promoter company Shriram Ventures or its subsidiaries. The enterprise value of the business estimated at around ~275 crore. The development comes ahead of the company’s plan to merge its wind energy assets with IL&FS Wind Energy. The private equity-backed OGPL had 96 MW of biomass capacity, of which it has already sold 30 MW in Rajasthan and Maharashtra and is now planning to sell 68 MW to Shriram Ventures or its subsidiaries. T Shivaraman, vice-chairman of OGPL and son of Shriram group founder R Thyagarajan, said the decision was taken to enhance value to shareholders of OGPL. He said the biomass operations registered revenues of ~78 crore in 2016-17, 24 per cent lower than a year ago, due to the shutdown of some plants. OGPL’s biomass operations registered a loss before tax of ~81 crore in 2016-17. The operations have around ~193 crore in outstanding debt. Almost 50 per cent of the company’s loss was on account of the biomass business, added S Venkatachalam, managing director and chief executive officer of OGPL. The company’s loss was ~112.36 crore in 2016-17, against ~168.51 crore in 2015-16 and ~238.63 crore in 2014-15. The sale of the biomass operations will result in a reduction of outstanding debt by about ~250 crore and will support efforts of the OGPL management to deleverage its bal-

ance sheet. The reduced interest outgo will improve operating performance while enhancing positive cash flows of the wind operations. Further, the sale of the biomass operations will result in an increased net worth of over ~250 crore in the consolidated balance sheet. Venkatachalam added in view of the accumulated losses and the reduced size of operations, it was felt the demerger of the biomass operations into a listed entity with limited growth potential would not create optimum value for shareholders. Shivaraman said OGPL and IL&FS were in the final stage of finalising the merger of their wind energy assets. “We have exclusivity till July end, hopefully we should be able to do it before that,” he said. OGPL will merge its 425 MW wind energy assets with IL&FS Wind Energy Ltd, which has around 700 MW capacity. The merged entity, which will absorb all the wind energy assets of both the companies, will be listed.

Banks take to hackathons to compete in digital world ROMITA MAJUMDAR Mumbai, 1 July

Banks are opening up their platforms and data to people with ideas in order to improve their business in a digitally disruptive environment. State Bank of India, RBL and Axis Bank are organising hackathons to welcome youngsters to come up with innovative digital solutions. Axis Bank held an event last year for technical and business roles across its offices. SBI’s Code For Banks, which concluded last week, was a monthlong event with over 1,000 participating teams. Based on the success of this event, the bank is working towards conducting quarterly hackathons with specific themes to increase the speed

of innovation. “When we had conducted hackathons earlier for our own employees we would typically see 2530 teams. A public event like this increases the level of engagement with young talent and also brings a host of new ideas from developers and startups,” said Sudin Baraokar, head of innovation, SBI. Baraokar sees hackathons leading to more practical engagement with future recruitment candidates as they can be asked to work on code directly to judge their competence. However, banks still look at hackathons more as a brainstorming opportunity with hiring being a secondary outcome. Code For Banks will announce winners later this month.

HackerEarth, a start-up in Bengaluru that helps technology firms and banks conduct hackathons, said

the exercise was a low-cost, highimpact programme. “Typically, an organisation would spend millions to drive innovation internally and might even end up acquiring a few companies in the process. Instead, hackathons provide a bottoms up approach where developers compete to come up with such ideas,” said Sachin Gupta, co-founder of HackerEarth. “Banks have figured out that, if they want to remain relevant, they need to be part of the entire user experience rather than just providing banking facilities,” he added. While it is difficult for bank employees to think from a user experience point of view, it comes easily to a technically sound generation of developers.

Big data, artificial intelligence, machine learning and robotics are the hottest trends at hackathons, although the events themselves are technology agnostic. The focus is always on finding the best solutions. French multinational finance institution Societe Generale recently hired a number of candidates through a hackathon. The ICICI Bank hackathon earlier this year generated over 600 innovative ideas during one event. “Hackathons help position a brand like DBS as a highly digital platform to campus students. Our summer internships and Ideathon for B-school students are designed as hackathons with a focus on cloud and big data,” said Kishore Poduri, head of HR at DBS Bank India.

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COMPANIES 3

MUMBAI | 2 JULY 2017

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.

Small firms struggle to find talent in big IT job crunch AYAN PRAMANIK Bengaluru, 1 July

S

mall information technology (IT) services firms, facing a shortage of talent for both entry-level and middle management jobs, are finding a lack of new technology skills among applicants from large IT services firms. At least three companies have experienced this while interviewing for positions at middle levels. Thousands of employees at IT services companies with 7-15 experience stare at job losses if they fail to up-skill themselves in digital technologies. Bengaluru-based Kreatio Software looked at 200-odd resumes for positions such as quality analysts, project managers and functional analysts with 5-10 years of experience and found many of these people had stopped coding because they were busy attending meetings and managing team members. “We are a very small but profitable company. We are doubling our manpower. This includes building middle management and leadership capabilities. We do not have enough people, yet our experience during recruitment was such,” said Krishna Kumar, chief executive officer, Kreatio Software. He added many small IT companies echoed similar sentiments on social media. “Besides, there are people I know who have privately

TALENT WOES | Bengaluru-based Kreatio Software looked at 200odd resumes for positions such as quality analysts, project managers and functional and found many of these people had stopped coding | Deltaphi, a Mumbai-based software testing services firm, had a similar experience during recruitment

| The majority of the over 2,000 members of Nasscom are small and medium IT services firms | Industry analysts said there had been a surge in the number of resumes of IT professionals with seven-15 years of experience as many large firms were trimming their workforce

expressed similar views,” he added. Deltaphi, a Mumbai-based software testing services firm, had a similar experience during recruitment of testing hands. The majority of the over 2,000 members of Nasscom are small and medium IT services firms. Industry analysts said there had been a surge in the number

of resumes of IT professionals with 7-15 years of experience as many large firms were trimming their workforce that had for long been managing large and long-term projects. With a significant technology disruption and automation, projects for these services players are becoming smaller, reducing the need for people managers. A recent report by

Mitsubishi Electric India bets big on transportation systems biz VINAYUMARJI

McKinsey India said, “The bigger challenge will be to retrain 50-60 per cent of the workforce as there will be a significant shift in technologies.” It added that unless IT professionals re-trained themselves they could become irrelevant. Kris Lakshmikanth, chairman and managing director, The Head Hunters India, estimated if jobs of 10,000 people were automated in any of the large IT firms, at least 300 people would have been in managerial roles who were in need of re-skilling to be deployed on projects in digital technology. “On the one hand many mid-level professionals have suddenly become available in the market and on the other they are not the right fit for small software firms. Generally, these people are familiar with working in 5001,000 people teams and hence it is difficult for them to cope in smaller companies,” said Lakshmikanth. Kumar of Kreatio said the bloated middle management in large firms was playing roles of coordinators rather than value creators. Some firms have exposed employees across all levels to technology to help them stay relevant. “I can take anyone from my operations team and tell that person to work with the client. It gives people exposure on how the business is run,” said Sudhir Tiwari, managing director, ThoughtWorks, a technology consultancy firm.

Shell seeks gas converts among Indian textile, cement plants

Ahmedabad, 28 June

Mitsubishi Electric India is targeting an annual revenue of $170 million (approximately ~1,097 crore) from transportation systems in India by 2020. The firm’s plant at Bidadi, near Bengaluru, opened in November 2015, will assemble electrical propulsion equipment for rolling stock under a plan to expand Mitsubishi Electric India’s transportation-systems business. A technical centre, aimed at providing support for Mitsubishi Electric CNC’s business in India, was opened in Peenya, Bengaluru, in May last year. The facility will have assembly, repair, warehouse, training and back office functions under one roof. According to Rajeev Sharma, head-corporate services and strategic planning, Mitsubishi Electric India, the local assembly and repair centre will decrease downtime. The Indian arm of Japanese electrical and electronic equipment major is also aiming to increase its contribution to the parent firm’s global business in five years, as it expects to double its sales to about ~6,000 crore by financial year 2020. Apart from its facilities in Bidadi and Peenya, Mitsubishi Electric India runs a automation product manufacturing and assembly unit at Pune, which

Mitsubishi Electric India expects to double its sales to about ~6,000 crore by financial year 2020

develops graphic operation controllers in India. Mitsubishi’s HVAC (heating, ventilation and air conditioning) business in India has also seen expansion by using the Indian facilities of Italy-based company MELCO Hydronics & IT Cooling (previously DeLclima), acquired last year for ^508 million by Mitsubishi Electric Corporation. In addition, Mitsubishi Elevators, a group company of Mitsubishi Electric Corporation, too is commissioning a factory at Bengaluru. Mitsubishi Electric plans to focus on selling more heating, ventilation and air conditioning products as well as electrical equipment used in train cars. From a ~930 crore sales generat-

ed from its local unit in FY14, Mitsubishi Electric India plans to raise the same by about 140 per cent to ~2,200-2,300 crore by March 2021. “The rail-car electrical equipment and HVAC businesses, each generating about ~612 crore in sales a year, will drive the growth. We have, to date, received orders of rolling stock equipment for approximately 1,800 railcars from Delhi Metro. Our market share of rolling stock equipment in the metro market is roughly 65 per cent in India," Sharma toldBusiness Standard, while adding that, including orders received from Indian Railways, the total rolling stock equipment order book comes to roughly 2,000 railcars.

Royal Dutch Shell is turning to India’s textile, cement and steel factories as it seeks to expand demand for its natural gas. The Hague-based energy giant has set up a team of about six executives to identify small businesses that use dirtier fuels like coal and convince them to switch, according to Ajay Shah, vicepresident with the company’s Asia unit. Shell, which will import the fuel as liquefied natural gas, is betting these users will account for a significant part of India’s gas demand growth, which it estimates will expand fivefold in 15 years. “Historically, we have targeted big customers, wholesale style,” Shah said in an interview on June 21 in New Delhi. “Now is the time of having more relations with the end customer. There is a significant market opportunity.” The push deeper toward small, industrial users comes as Prime Minister Narendra Modi’s government promotes gas to curb dirtier alternatives such as pet coke and furnace oil and seeks to slash emissions by a third by 2030. BLOOMBERG

Tencent Technology refused patent related to online ads

Odisha turns to payments banks, SFBs to tap unbanked areas

GIREESH BABU

Fearing that commercial banks in Odisha with steep NPAs (non-performing assets) may face curbs from the Reserve Bank of India (RBI) to expand their network, the state government has turned to payments banks and small finance banks to set up branches in the unbanked areas. Commercial banks in Odisha, especially the public sector lenders are battling alarming NPAs. Average NPAs of the banks in the state stood at 11.5 per cent (as on March 31, 2017). A clutch of public sector banks — Andhra Bank, Bank of Baroda, Central Bank of India, Indian Overseas Bank, Oriental Bank of Commerce, Punjab National Bank, State Bank of India and UCO Bank— have gross NPAs exceeding nine per cent. Such banks are likely to face prompt corrective action (PCA) measures from the RBI, as they are classified as second category offenders, breaching

Chennai, 1 July

Chinese technology major Tencent Technology (Shenzhen) Company, one of the largest internet companies in the world which owns instant messenger platforms QQ and WeChat, has lost a patent approval for its application related to online advertisement resources searching in India. The patent application was filed in Chennai Patent Office in 2009, for a method and apparatus for searching for online advertisement resource. The claimed invention was to provide a method and apparatus for searching for an online advertisement resource, which increases success ratio for searching for the resource, said the company in a patent filing.

NIRMALYA BEHERA & JAYAJIT DASH Bhubaneswar, 1 July

Paytm, Airtel Payments Bank, Aditya Birla Nuvo, India Post and AU Small Finance Bank have evinced interest

the prescribed threshold of nine per cent. “Due to the mounting NPAs, many banks are coming under PCA and there are some restrictions for banks to open new branches. The gaps will be filled up by the payment and small finance banks”, said a source in RBI. The Odisha government and officials of RBI’s regional office in Bhubaneswar met recently which saw the par-

ticipation of six payments banks and five small finance banks. The small finance banks and payments banks from Rajasthan, Chennai, Bengaluru and Mumbai attended the meeting. Odisha is the first state to engage such banks in areas untouched by banking services. Tuhin K Pandey, principal secretary (finance) with Odisha government, said, “We had an initial meeting with the payments banks and small finance banks. They have shown interest to set up branches in the unbanked regions and have committed to submit detailed proposals within a month.” Paytm, Airtel Payments Bank, Aditya Birla Nuvo, India Post and AU Small Finance Bank have evinced interest and have committed to submitting detailed plans within a month. The state government has handed over the list of 677 unbanked panchayats to be covered in three years and invited them to set up branches here.

Fairfax calls off ~1,000-crore Catholic Syrian Bank deal T E NARASIMHAN Chennai, 1 July

KILLED DEAL | With the deal derailed, the bank might have to find another investor | Approval from the Reserve Bank of India (RBI) to buy up to 51 per cent in CSB, and it was planning to commit an investment of ~1,000 crore | Sources said Fairfax offered ~95 per share but the bank was seeking ~180-200 per share | It may be difficult for CSB to find another investor willing to invest such a large amount in one deal | Catholic Syrian Bank reported a net profit of ~1.55 cr in FY17 against a loss of ~149.72 cr a year ago

Capsula.Studio of Israel ties up with Pinnace Industries Capsula.Studio of Israel’s Tel Aviv University and India’s Pinnace Industries will jointly set up a start-up accelerator that would focus initially on smart mobility and expand to other areas such as agriculture, health care and education. The Pinnacle Capsula.Studio will be located at the BHAU Institute, which is a part of the College of Engineering, Pune, and home to an innovation incubator BS REPORTER

The Prem Watsa-promoted Fairfax Financial Holdings has withdrawn its proposal to invest ~1,000 crore to buy a 51 per cent stake in the Kerala-based Catholic Syrian Bank. With the deal derailed, the bank might have to find another investor, sources said. Catholic Syrian Bank would need to seek approval from regulators and finalise a valuation, which would take several months, they added. “We have not heard anything specifically from Fairfax. The valuation has been a concern between the parties, but work is in progress,” Catholic Syrian Bank Chairman T S Anantharaman said. Sources in the bank, however, confirmed that the deal had been called off. Fairfax last year received approval from the Reserve Bank of India (RBI) to buy up to 51 per cent in Catholic Syrian Bank, and it was plan-

ning to commit an investment of ~1,000 crore. The bank has submitted its valuation report to the RBI. Sources said Fairfax offered ~95 per share but the bank was seeking ~180-200 per share. Fairfax also would not be able sell the stake for five years, sources said, adding it would not have been a viable option at the price being sought. Sources said at least two Catholic Syrian Bank board members were keen on pushing the price to ~200 per share. It may be difficult for CSB to find another investor willing to invest such a large amount in one deal. Further, delays in regulatory clearances will cost the bank time. The new investor might also not agree to the price the Catholic Syrian Bank board expected, a person close to the development said. “Fairfax would have been a great addition to the shareholders’ list. Any new

investor will take at least three to six months to find, and the bank should protect itself during this period,” said S Santhanakrishnan, former chairman of Catholic Syrian Bank. Investment banker Vallabh Bhanshali, has bought a 4 per cent stake in the bank from the Thailandbased Chansri Chawla family at ~160 a share. Catholic Syrian Bank reported a net profit of ~1.55 crore in 2016-17 against a loss of ~149.72 crore a year ago. The bank has cleaned up its books through writeoffs, rationalising of branches and other initiatives. “We will be a high quality SME (small and medium enterprises) bank and will focus on five to six states even after having a panIndia presence,” Anantharaman had said in May. Catholic Syrian Bank’s gross non-performing assets in the fourth quarter of 201617 rose to 7.25 per cent of total advances from 5.62 per cent in the same period a year ago.

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4 YOUR MONEY

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MUMBAI | 2 JULY 2017

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TAX

BS TUTORIAL

File revised tax returns within stipulated timeline

Jayant Pai

Financial literacy 1. Who issued the world's first blockchain-based insurance policy? A. Prudential Financial B. AXA C. AIG

While tax authorities permit you to revise your tax return in case of an error, this task must be completed by a specific date and can’t be postponed indefinitely

D. Chubb 2. Which is the first messenger app in India to facilitate digital payments?

2016-17 2017-18 2018-19

Mar 31, 2018 No Mar 31, 2019 Yes Mar 31, 2019 Yes

Timelines are crucial The first point that the taxpayer must remember is that if he changes the income declared, the tax officer could levy additional tax and interest on it. Any additional tax liability on account of change in income reported or change in tax deducted at source (TDS) would attract penal interest on account of delay in payment of such additional taxes. A tax return can be revised any number of times, as long as there is no wilful concealment of income by the taxpayer and is filed within the prescribed time limit. The time frame available to an individual taxpayer for filing revised tax returns is crucial. The tax law has been changed in recent times regarding the timeline for filing revised returns for assessment year (AY) 2016-17, which is, financial year 2015-16 (FY) and onwards. For FY 2015-16 (AY 2016-17) and FY 2016-17 (AY 2017-18), revised return can be filed before the end of one year from the end of the rele-

IMAGE: ISTOCK

vant assessment year or before the completion of the assessment, whichever is earlier. In other words, for FY 2015-16, the deadline is March 31, 2018, and for FY 2016-17, it is March 31, 2019. The point of difference here lies in the revision of the return filed after the due date (belated return). For FY 2015-16, a belated return cannot be revised. But for FY 2016-17, a belated return can be revised at any time before March 31, 2019. For FY 2017-18 (AY 2018-19), revised return can be filed before

the end of the relevant assessment year or before the completion of assessment, whichever is earlier the last date to file the revised return will be March 31, 2019. A belated return for FY 2017-18 can be revised at any time before March 31, 2019 (see table for the summary of timelines for filing revised tax return for different years). As can be seen, for FY 2015-16, the taxpayer can file a revised return by March 31, 2018. For FY 2016-17 and FY 2017-18, he will have to file by March 31, 2019. Revision of belated

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return is not permissible for FY 201516, whereas the same can be done from FY 2016-17 onwards. To illustrate, ‘A’ filed his original tax return for the FY 2015–16 on July 20, 2016, ie, within the due date (July 31, 2016). Later on, while going through his banking records he realised that he had inadvertently missed reporting interest income from a fixed deposit. In this scenario, since his tax return was filed within the due date, ‘A’ has the option to rectify the aforesaid error by filing a revised tax return on or before March 31, 2018. If he hadn’t filed his original return within the due date, he would have lost the right to revise his return. For FY 2016-2017, if ‘A’ files his original tax return on August 10, 2017, which is after the due date (July 31, 2017), he will still be entitled to revise his tax return on or before March 31, 2019, since the law has been amended to allow revision of a belated return for that year. Therefore, from FY 2016–17 even if the tax return is filed after the designated due date, one has the option to revise his tax return as per the earlier mentioned timelines for the respective financial year. Challenges for expatriate employees With the change in the timeline for revision of tax returns, expatriate employees will face several challenges while claiming tax credit for taxes paid in overseas country. One, the reduction in time limit for revising the tax return may deny the ben-

FROM PAGE 1

The writer is partner, Deloitte Haskins and Sells. The company’s Manager Bhavin Rajput and Deputy Manager Monish Satra contributed to the article

B. Hike C. WeChat D. JioChat 3. In 2008, Warren Buffett said that this company was his worst investment decision. A. Mainesole B. Borsheims C. Net Jets D. Benjamin Moore 4. Donald Trump has co-invested in only one Trumpbranded property. This is based in __________. A. Mumbai B. Vancouver C. Las Vegas D. Dubai 5. Which iconic company opened its first store in 1971 at Pike Place Market in Seattle? A. Costco B. Wal-Mart C. Microsoft D. Starbucks

Solutions

2015-16 2016-17 2017-18

Revision of belated return is permitted

1. C. The policy, sold to Standard Chartered Bank, allows those involved to secure details of the policy terms, premium payments, claims, etc, in a far more efficient manner.

Due date for revision

2. B.The mobile wallet service of this app permits users to make both peer-to-peer and bank-to-bank payments on Unified Payments Interface.

Assessment year

3. A. The footwear maker was severely affected by Chinese imports, prompting Buffett to state that he overestimated the moat that Mainesole enjoyed.

T

Financial year

axpayers are typically cautious and exercise due care while filing income tax (I-T) returns. But very often, in the rush to meet deadlines, many of them end up making errors. Some of these include not claiming deductions, not reporting losses, incorrect or total lack of reporting of income. These mistakes could occur due to lack of knowledge of the provisions of tax laws or due to lack of accurate information at the time of filing the original return. Lawmakers are mindful of such situations and, hence, have made provisions for an opportunity to file a revised return, in case an omission or wrong statement is discovered after filing of the original tax return. However, this task must be completed within a specific time frame.

A. WhatsApp

4. C. The Trump International Hotel, Las Vegas, is a 50:50 joint venture with his long-time friend Phil Ruffin.

TIMELINES FOR FILING REVISED TAX RETURN

efit of such relief, especially where overseas tax returns are not filed or are not available by the end of the time lines as discussed in the above table. Two, filing of Form 67 will also be a challenge in the absence of documentation substantiating the claim of such relief. These challenges are elaborated with an example. ‘A’, an Indian citizen, goes on an assignment to the US on December 1, 2017 and his residential status for FY 2017–2018 in India is Resident and Ordinarily Resident. Hence his global income is chargeable to tax in India for the aforesaid financial year. He files his original return on the basis of his income information available before the due date, which is July 31, 2018. The return can be revised up to March 31, 2019. In order to offer his actual US income and claim the credit of the US taxes on the same in his India tax return, he requires his US return for the year 2017 and 2018. Since the US follows the calendar year and has a due date of April 15 for filing the return, which can also be extended, it is unlikely that his US return for the year 2018 would be available before March 31, 2019. Therefore, A will be unable to claim the accurate or complete credit of foreign taxes for the year 2018 by the due date of March 31, 2019. Given the above challenge, one will have to wait and watch if the government provides any relief for this class of individuals. While it is always better to be cautious and have all information available so that accurate details are reported while filing tax returns, one can still avail the opportunity provided by law to rectify mistakes in the tax return.

5. D. It currently has over 20,000 stores globally.

HOMI MISTRY

The quiz master is head - marketing, PPFAS Mutual Fund Send your queries and feedback at [email protected]

Protests across the nation

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Hybrid seed companies favour GST Day 1: Small licensing for plant breeders businesses struggle DILIP KUMAR JHA

Mumbai, 30 June

Hybrid seed manufacturers have opposed the decision of the Protection of Plant Varieties and Farmers’ Rights Authority (PPVFRA) to dispense with the requirement of the no-objection certificate (NoC) from the trait developer for breeding Bt cotton varieties with genetically modified (GM) traits. Companies such as Monsanto, Mahyco, and others engaged in agricultural research fear a major hurdle to fresh investment in agricultural research, especially in India, when the PPVFRA dispenses with the requirement of licences from the technology provider. This means companies engaged in primary research on patented seed varieties would no longer require to license to the secondary breeder for developing follow-on seed varieties. The PPVFRA is the regulatory body that supervises the rights of seed companies. “In the case of varieties incorporating genetically modified (GM) technology, a letter of confirmation or no-objection certificate (NoC) from the technology provider will ensure that proper and accurate information is submitted by the seed company to the regulatory authorities at the time of application. This also ensures a fair and transparent mechanism for farmers and regulators to define the critical credentials of the variety. We would like to clarify that the NoC requirement does not in any way undermine the rights of the plant breeder to seek variety registration – rather it ensures that a breeder did not violate third-party rights when seeking such variety registration,” said Shivendra Bajaj, executive director of the Association for the Biotech Led Enterprises – Agriculture Group (Able – Ag), the representative body of leading biotech companies in India. The NoC does not violate the PPVFRA Act, because GM crops do not come under its

Monsanto, Mahyco and others engaged in agri research fear a major hurdle to fresh investment when the PPVFRA dispenses with the requirement of licences from the technology provider

purview, said Bajaj, adding it was consistent with the Act because the PPVFRA required applicants to declare that the variety had been developed using lawfully acquired material. The Authority had obtained a legal opinion that indicated that the NoC stipulation was contravening the legal provisions, giving undue advantages to trait developers such as Mahyco Monsanto Biotech (MMBL). MMBL is a 51:49 per cent joint venture between American biotech company Monsanto Inc and Indian company Maharashtra Hybrid Company Ltd (Mahyco), which licenses the GM insect-resistance trait in cotton. A notification in this regard is expected shortly. Confirming the development, M Ramasami, chairman of Coimbatore-based Rasi Seed and founder president of the Federation of Seed Industry of India (FSII), said: “We have come to know about this decision through our industry colleagues, but have not seen a notification yet. While this is good for the domestic seed companies, fresh investment in trait development would get impacted.”

Sebi tightens rules for credit rating agencies PRESS TRUST OF INDIA New Delhi, 1 July

Tightening norms for credit rating agencies (CRAs), the Securities and Exchange Board of India (Sebi) has asked them to proactively monitor the financial health, including share price movement, of companies to provide timely and accurate ratings on their debts. The decision follows several instances of CRAs not taking cognisance of delays in servicing debt obligations by the

issuers they rate, even though the information has already been discounted by the market. Besides, Sebi has increased the disclosure requirements. “CRAs are required to track the servicing of debt obligations for each instrument rated by them, ISINwise, and look for potential deterioration in financial which might lead to defaults/delays, particularly before/around the due date(s) for servicing of debt obligations,” Sebi said in a circular.

They would have to monitor the exchange's website for disclosures made by the issuer. Sebi asked rating agencies to carry out a review of the ratings upon the “occurrence of or announcement/news of material events” including financial results, any significant decline in share/bond prices of the issuer or group companies if it is not in line with the overall market movement and any attachment or prohibitory orders against the company.

Some had limited inventory and the rest were grappling with price tags. “This is our tryst with destiny,” said Rakesh Bisht, an electronics retailer at Nehru Place. Faiz Ahmed, a footwear shop owner at Lajpat Nagar, said, “While we are almost ready and charging consumers the additional tax burden due to the GST — from about 10 per cent earlier to 18 per cent now — placing orders has become a headache. Manufacturers have told us that no new orders can be processed before 4 July. So we are sending customers away.” Some others were clueless about it. A garment trader at Lajpat Nagar, Raju Gupta, continued charging the same price as he did before the GST roll-out. So did Nilesh Pathak, the owner of a curtains shop in the same area. He said, “I do not understand how the GST is going to help small businesses like us. It seems that this will stoke inflation.” Many, however, were taking action to make the best of the situation. Pharmaceutical distributors were working overtime through the weekend to update their systems. They will begin invoicing and selling stocks to retail partners from Monday. In the run-up to the GST roll-out, stockists cut down inventory and industrywide domestic sales in June dropped by 50 per cent, according to some estimates. Sales were expected to pick up over the next few days. “Stockists will begin selling to retail partners from Monday. We expect companies to take orders and begin supplies in next 2-3 days,” said Jagannath Shinde, president of All India Organisation of Chemists and Druggists. Abbott and Cipla had already switched over to the new system. According to S V Veeramani, former president of Indian Drug Manufacturers Association, around 80 per cent of stockists in India were already a part the GST Network. National Pharmaceutical Pricing Authority (NPPA) Chairman Bhupendra Singh met distributors in Bengaluru on Saturday to get feedback on GST implementation. According to the NPPA, prices of approximately 78 per cent of all actively used and traded drugs in the country will remain unaffected.

Smaller industries paid the 14.5 per cent VAT and were exempt from all taxes. Weaving and knitting factories in Karur also downed shutters, protesting the move to levy the GST on multiple production processes of the industry. S Surendhar, secretary, Karur Weaving and Knitting Factory Owners’ Association, said the GST proposals would badly hit textile units and other micro, medium and small enterprises. While cotton yarn would attract 5 per cent GST, 18 per cent would be levied on synthetic yarn. Besides, the GST has been proposed on various processes of production including dyeing, bleaching, colouring, and packing. Gujarat: Diamond traders to meet deputy CM In Gujarat, small-scale ceramic tiles manufacturers of Thangadh, near the Morbi cluster, went on strike from Saturday, protesting against the 28 per cent GST rate, which, they say, might spell the death-knell for the units. According to Suresh Songadh, president, Thangadh Ceramic Association, as against an exempted excise duty for the ceramic units with an annual

turnover of less than ~1.5 crore, a duty of 28 per cent will impact manufacturers severely. In Thangadh, there are roughly 200 units manufacturing ceramics worth ~300 crore. In addition, the units may also not be able to avail themselves of 15 per cent input tax credit on the natural gas supplied by Gujarat Gas Ltd because the fuel was removed from GST purview. On the other hand, diamond traders of Gujarat plan to meet Deputy Chief Minister Nitin Patel on Monday to discuss the issue of customs duty on imports of rough diamonds. Dinesh Navadia, president of the Surat Diamond Association, told Business Standard according to the new customs duty structure, the duty on unassorted rough diamonds is 3 per cent while that on assorted rough diamonds is 0.25 per cent. India imports mainly unassorted rough diamonds. Traders, thus, plan to open a dialogue with the government on the matter. Kashmir: Opposition parties support traders Most of the shops and other business establishments were shut in Kashmir.

Traders and opposition parties said that the GST would erode the special status granted under Article 370. The strike call was given by the Kashmir Traders and Manufacturers Federation (KTMF). Madhya Pradesh: Confusion reigns In Madhya Pradesh, wholesale markets wore a deserted look. “Wholesale traders and customers in Madhya Pradesh are confused over the GST and don't have any knowledge of the levies on different goods," Ahilya Chamber of Commerce and Industry President Ramesh Khandelwal told PTI. As a result, he said, wholesale markets were empty. West Bengal: Traders apprehensive Traders in West Bengal were back in business after a one-day strike on Saturday, but with a lot of apprehension. "According to rules, we do not come under the GST, but inspectors might harass us and ask for bills and invoices,” said Montu Naskar, a trader in Kolkata, with an annual income of less than ~20 lakh. The Federation of West Bengal Trade Association (FWBTA) shares this apprehension. At least 25 per cent of the 300,000-odd traders in the state fall under this category. (with inputs from agencies)

Hacks raise fear over NSA’s... Modi seeks CAs’ “Whether it’s North Korea, Russia, China, Iran or ISIS, almost all of the flash points out there now involve a cyber element,” Leon E Panetta, the former defense secretary and Central Intelligence Agency chief said in a recent interview, before the weapons were turned against American interests. “I’m not sure we understand the full capability of what can happen, that these sophisticated viruses can suddenly mutate into other areas you didn’t intend, more and more,” Panetta said. “That’s the threat we’re going to face in the near future.” Using the remnants of American weapons is not entirely new. Elements of Stuxnet, the computer worm that disabled the centrifuges used in Iran’s nuclear weapons programme seven years ago, have been incorporated in some attacks. In the past two months, attackers have retrofitted the agency’s more recent weapons to steal credentials from American companies. Cybercriminals have used them to pilfer digital currency. North Korean hackers are believed to have used them to obtain badly needed currency from easy hacking targets like hospitals in England and manufacturing plants in Japan. And on Tuesday, on the eve of Ukraine’s Constitution Day which commemorates the country’s first constitution after breaking away from the Soviet Union - attackers used NSA-developed techniques to freeze

computers in Ukrainian hospitals, supermarkets, and even the systems for radiation monitoring at the old Chernobyl nuclear plant. The so-called ransomware that gained the most attention in the Ukraine attack is believed to have been a smoke screen for a deeper assault aimed at destroying victims’ computers entirely. And while WannaCry had a kill switch that was used to contain it, the attackers hitting Ukraine made sure there was no such mechanism. They also ensured that their code could infect computers that had received software patches intended to protect them. “You’re seeing a refinement of these capabilities, and it only heads in one direction,” said Robert Silvers, the former assistant secretary of cyber policy at the Department of Homeland Security, now a partner at the law firm Paul Hastings. Though the original targets of Tuesday’s attacks appear to have been government agencies and businesses in Ukraine, the attacks inflicted enormous collateral damage, taking down some 2,000 global targets in more than 65 countries, including Merck, the American drug giant, Maersk, the Danish shipping company, and Rosneft, the Russian state owned energy giant. The attack so crippled operations at a subsidiary of Federal Express that trading had to be briefly halted for FedEx stock.

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“I have launched the Swachh Bharat Abhiyan to clean up the country. I am also carrying out operations to clean the economy,” the prime minister said. He also tugged at the conscience of CAs and appealed to them to not support generation of black money. “Only 3.2 million people in the country revealed that their income is more than ~10 lakh while 20.18 million people travelled abroad last year. Millions of vehicles are purchased in the country, but they don’t contribute to the exchequer. This is a matter of concern,” the prime minister said. He said the Institute of Chartered Accountants of India conducts enquiries to find who were helping tax evaders. “But action was taken against only 25 CAs. Is it possible that only such a small number have been involved in wrong doings?” Finance Minister Jaitley said a very small percentage of traders were objecting to the GST and claiming their information technology knowhow was not good enough. “It can’t be a logical argument that since I have not paid taxes in the past regime, so I will not pay now as well. If India is to become a developed nation, the mindset should also be of the developed nation,” he said.

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GST IMPACT 5

MUMBAI | 2 JULY 2017

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GST steers car prices downhill as makers look to pass on benefits

Minimum inventory sees car sales plummet in June

AJAY MODI

A reduction in dispatches by carmakers to ensure minimum inventory at dealerships in the run-up to Goods and Services Tax (GST) resulted in a doubledigit decline in wholesale of passenger vehicles (cars, vans and utility vehicles) in June. The industry volume is estimated to have declined by about 10 per cent. Most companies, including Hyundai, M&M and Tata Motors, have seen a decline. Based on data from nine companies, the industry is estimated to have sold about 190,000 vehicles last month, a decline of over 10 per cent from the same time last year. Maruti Suzuki reported a growth of one per cent in June domestic sales. The company sold 93,057 units against 92,133 units in June last year. The flat performance after months of strong growth is on account of a week-long maintenance shutdown at its two plants last month and also due to reduction in dealer inventory. Under GST rules, dealers cannot claim 100 per cent input tax credit on the taxes paid on the vehicles that came in their inventory till June 30. Hyundai reported domestic sales of 37,562 units in June, down 5.6 per cent over the corresponding month last year. Rakesh Srivastava, director (sales and marketing), said that the month of June was challenging due to “speculations” around the GST tax. “We

New Delhi, 1 July

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ars have turned slightly affordable, thanks to the roll-out of Goods and Services Tax (GST) from Saturday. The country’s biggest carmaker, Maruti Suzuki, has cut prices of various models by up to three per cent. Toyota has reduced prices by up to 13 per cent. Prices of luxury cars are down by nine per cent. The cut is expected to be a trigger for expansion of sales in the world’s fifth-largest car market. Hybrid cars, however, have become expensive by over 10 per cent. Maruti Suzuki, which sells every second car in the country, has passed on the entire benefit of GST rates on vehicles to its customers, the company said in a statement. “The rate of reduction varies across locations depending on the value added tax (VAT) rates applicable prior to GST,” it said. In states where the VAT was 14.5 per cent (most states had this rate), price of Maruti’s bestseller, Baleno, will come down by ~6,600-13,100 while its SUV, Brezza, will be cheaper by ~10,400 to ~14,700. The minimum price cut would be on the entry-level Alto (~2,3005,400) and the maximum decrease is on the S Cross (~17,700-21,300). Owing to the withdrawal of tax concessions on mild hybrid vehicles, the price of the smart hybrid Ciaz (diesel) and smart hybrid Ertiga (diesel) has increased by over 10 per cent — about ~1,00,000. “While GST will directly improve efficiencies and ease of business, its significance goes much beyond that. It is a powerful example of India’s commitment to reform,” Kenichi Ayukawa, managing director

IN REVERSE GEAR | Maruti Suzuki’s bestseller, the Baleno (above), will be cheaper by ~6,600-13,100 | Similarly, the Maruti Suzuki Brezza will be cheaper by ~10,400-~14,700 | The minimum price cut will be on the entry-level Alto (~2,300-5,400), and the maximum decrease is on the S Cross (~17,700-21,300) | Prices of the Ciaz and the Ertiga, both smart hybrids, will go up and chief executive officer at Maruti Suzuki, said.

Eyeing expansion, Apple cuts iPhone prices by 4-7.5% RAGHU KRISHNAN Bengaluru,1 July

by ~1,00,000 | Toyota’s entry-level car, the Liva, will be cheaper by ~10,500, the Fortuner by ~2,17,000, and the Innova by ~98,500 | Toyota Camry hybrid to become dearer by ~3,50,000 | Tata Motors-owned luxury carmaker JLR has also cut prices of its cars by a minimum five per cent and a maximum 8.6 per cent Japanese automaker Toyota has cut prices of its vehicles by up to ~2,17,000.

Revenue won’t dip due to GST, assures Tamil Nadu FM GIREESH BABU

Global smartphone maker Apple has reduced retail prices of its iPhone models, passing on the benefits of lower taxes from the goods and services tax regime to consumers. The move comes as the company looks to become more aggressive on capturing a bigger slice of India’s smartphone market. Apple has reduced retail prices of its iPhone models between 4 and 7.5 per cent, which would translate to lowering costs of its high-end iPhone 7 Plus (256 GB) by as much as ~6,600. The company, which contributes to less than 3 per cent of the total smartphone sales in India, generates higher percentage of the profits. India transitioned to the goods and services tax regime on Saturday, which is aimed at having uniform taxation across the country. Electronic goods and smartphones have benefited from the new change. The government plans to impose a 10 per cent counterveiling duty on imported smartphones that is aimed to bring in local manufacturing of these goods.The push towards local electronics manufacturing has forced over 38 global companies to produce goods locally in India. Apple has also reduced the price of iPhone SE, the entry-

Chennai, 1 July

The iPhone 7 Plus (256 GB) will now cost ~6,600 less

level phone made by Wistron Corp in Bengaluru. These phones have been priced between ~26,000 for a 32 GB model to ~35,000 for 128 GB version, lower by 4-6 per cent than previous prices. Experts say that manufacturers choosing to assemble devices locally in India benefit from around 12 per cent in savings. However, Apple has been known to maintain a price parity among devices it sells globally. Indian consumers, for majority of whom a smartphone is their first computing device, have a preference for larger screens with nearly 85 per cent of smartphones sold in the country having screens larger than 5 inches. More on business-standard.com

Gold business to take time to adjust to GST RAJESH BHAYANI Mumbai, 1 July

Banks importing bullion, gold refineries and jewellers may have to adjust their business models in the new tax regime. An official notification last night imposed a 9.35 per cent basic customs duty on dore importers, replacing the earlier countervailing duty. Imports will be 0.65 per cent cheaper, but gold refiners fear competition from those operating in excise-free zones. Gold imports have come to a standstill and the market is quoting a premium of $4 per oz. “Restructured import duties and the IGST rates have placed gold refineries and bullion-importing banks at a disadvantage vis-à-vis refineries in excise-free zones like Uttarakhand and Himachal Pradesh,” said James Jose, secretary of the Association of Gold Refineries and Mints. For dore importers, the total tax outgo will be 12.35 per cent

while refined gold importers will pay 13 per cent. Jose said this margin was enough to cover refiners’ operational expenses. However, gold refineries in excise-free zones are entitled to an IGST refund of 3 per cent. “This disparity will affect the industry and the livelihoods of hundreds of thousands of people,” Jose said. However, a dore gold refiner in an excise-free zone said, “Units in excise-free zones will receive a refund of the Centre’s share of the GST, but the rate will be considered as 3 per cent of the value addition and the refund amount will be insignificant.” Banks importing bullion also expect margin pressure after paying 10 per cent import duty and 3 per cent IGST. They can recover the IGST from buyers, but this will block funds for a couple of weeks. They are likely to focus on doing business on a consignment basis and on gold loans. More on business-standard.com

The state of Tamil Nadu said on Saturday that its revenue post the implementation of GST will either be neutral or may increase, but won’t see a dip. The state had earlier objected to GST saying that it may lead to a fall in revenue. Tamil Nadu Finance Minister D Jayakumar told reporters that manufacturing will increase and inflation will be controlled due to GST. He added that the middle-class and people living below the poverty line will be safeguarded and it will also help small and medium enterprises. “There is absolutely no need to be afraid. Prices will come down, manufacturing will increase,” he said. Initially, the state had apprehensions about the manufacturing state losing revenue due to the implementation of GST, which was likely to favour the consumption states. “This is consumptionbased tax. If we are a manufacturing state, we will lose. But we are also a consumption state. If you look at both, there are only chances to get an increased tax revenue as against chances of losing. We will get around 50 per cent of the service tax, central excise, etc,” said Jayakumar. “Many items that earlier had exemptions are now under the tax bracket. Since there is tax in a complete value chain, we are expected to gain more, rather than losing. There will be some adjustment problems in the initial period, but once it is stabilised, GDP itself is going to grow around 1-2 per cent. Over 45 per cent revenue is from petroleum products and alcohol. It has not been subsumed under GST.” “We have calculated that the state will not face any loss of revenue,”said C Chandramouli, Additional Chief Secretary, who has full additional charge of Commercial Taxes and Registration Department. Besides, there is a compensation fund to compensate states if there are any losses. Jayakumar said that if goods worth ~1 lakh ex-factory price is transported and sold in Chennai, under the GST, there would be a savings of ~19,927 at the end price, since the tax duplication is avoided.

More on business-standard.com

Its entry-level model, Liva, gets cheaper by ~10,500 while the Fortuner SUV is cheaper by ~2,17,000. Innova, its bestseller, is down by up to ~98,500. The Camry hybrid, however, will be expensive by ~3,50,000. Meanwhile, Hyundai, India’s second-largest carmaker, is working on the post-GST pricing and an announcement is expected in next couple of days. Every player will revise price in line with the new tax to avoid attracting the anti-profiteering clause. GST, which subsumes all central and state level taxes, has removed the inter-state variation in taxes. All cars now have a GST of 28 per cent. Besides this, a cess of 1 per cent on small (less than 1,200cc) petrol cars and three per cent cess on small (less than 1,500cc) diesel cars is getting levied. There is a 15 per cent cess on larger SUVs and luxury vehicles. This cess is also applicable to hybrid vehicles. Electric vehicles have the lowest GST of 12 per cent. Tata Motors-owned luxury carmaker JLR has cut prices of its cars by a minimum five per cent and a maximum 8.6 per cent. The price of Discovery Sport (diesel), for instance is down by ~3,76,446, to ~40,00,000. German luxury carmaker MercedesBenz has cut prices of its vehicles by a minimum two per cent and a maximum nine per cent. “We are looking forward to this simplified tax structure that will create a single market across India and benefit both the buyer and the seller. There may be initial teething issues but we are confident that there will be promising long term gains,” said Roland Folger, managing director and chief executive officer at Mercedes-Benz India. .

AJAY MODI New Delhi, 1 July

LEAN SPELL Auto sales Company

June ’16

June ’17

Honda 11,407 12,804 Maruti Suzuki 92,133 93,057 M&M 17,070 16,170 Hyundai 39,807 37,562 Tata Motors 12,509 11,176 Nissan 5,212 4,590 Ford 9,469 6,149 Renault 11,837 6,840 Toyota 13,567 1,973 Total 213,011 190,321 expect a positive demand pull post the successful implementation of GST in the coming months,” he added. SUV maker M&M reported a five per cent decline in June sales to 16,170 vehicles. “Our focus has been to minimise channel stocks to reduce the transition losses, on account of GST implementation. We strongly believe that once we tide over the initial uncertainties, GST is set to usher in a new era for the economy in general and the automotive industry in particular,” said Rajan Wadhera, president (Automotive Sector) at M&M.

% change

12.25 1.00 -5.27 -5.64 -10.66 -11.93 -35.06 -42.22 -85.46 -10.65

Companies such as Tata Motors, Renault, Nissan and Ford did not announce their numbers on Saturday. But all of them are learnt of have posted a double-digit decline in sales as well. Toyota dispatched only 1,973 vehicles to dealers against 13,567 units in June last year. N Raja, director and senior vicepresident (sales & marketing) at Toyota, said a conscious decision was taken to lower the volumes sold to dealers last month to ensure minimum burden on them while allowing them to focus on clearing the stocks. More on business-standard.com

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6 ECONOMY

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MUMBAI | 2 JULY 2017

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States catching up with Centre for transmission tenders POWERING UP 10,732 (17) 13,668 (58)

Sector-wise transmission line additions (in km)

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ower transmission, dominated by central utilities, is witnessing a change with state utilities placing larger and more frequent orders. “We have seen a change in awarding activity for transmission and sub-station projects. Earlier, central utilities dominated the space, now states are placing more orders and of higher value,” said Vimal Kejriwal, managing director and chief executive officer, KEC International. He added that transmission orders from states, which were earlier in the range of ~300-~500 crore, were turning into larger orders worth ~700

4,326 (96)

2,262 (-70)

17,260

16,904 (-2)

22,171 (31)

27,653 (25)

29,138 (5)

FY13

FY14

FY15

FY16

FY17

(P): FY’18 is as projected by CEA

“In recent times, we have seen Tamil Nadu issue a ~3,000 crore transmission tender. Our portfolio was earlier 90 per cent Power Grid, now it is 50 per cent and the rest is a mix of states, private orders and exports,” said Sharan Bansal, director of Skipper, which supplies transmission and distribution equipment to the power EPC companies. Kejriwal attributed the rise

9,279 (-20) 11,545 (16)

6,944 (-2) 7,755 (4)

New Delhi, 1 July

3,252 (-25)

crore or more. There has also been an improvement in transmission line additions at the state level. “The state sector witnessed a decline in transmission line additions in 2016-17 after strong growth in the preceding year, and is expected to post healthy growth in 2017-2018 (planned addition of 11,545 circuit kilometre) led by capacity augmentation plans to reduce network congestion and accommodate rising renewable energy,” said Rahul Prithiani, director, CRISIL Research. Industry executives said Rajasthan, Karnataka, Tamil Nadu, West Bengal and Uttar Pradesh were the states where heightened ordering activity had been noticed.

2,205 (-20)

Mumbai, 1 July

2,765

7,053 7,442 AMRITHA PILLAY

9,179 (32) 8,666 (12)

(% change over previous year in brackets)

23,086 (-21) FY18 (P) Source: CRISIL

in awarding activity by states to growing awareness of power supply to all. “States are required to improve operations, there is public pressure for better and reliable supply,” he said. Bansal added with the transmission subsidiaries of state electricity boards improving their financial performance, they were better placed to award larger and more frequent orders.

Niti Aayog keen to develop Paradip-Dhamra as CEZs JAYAJIT DASH Bhubaneswar, 1 July

The government plan panel Niti Aayog has shown interest to develop the Paradip-Dhamra cluster as one of the Coastal Economic Zones (CEZs). Amitabh Kant, CEO of Niti Aayog and other officials of the government think tank

held discussions with the Odisha government on the potential for developing a CEZ in the state. “Both Paradip and Dhamra are very good ports. Paradip is one of the fast growing ports while Dhamra is performing very well. We have proposed to develop a maximum of three CEZs across the country and

Odisha has very bright possibilities. An industrial zone that connects Paradip with Dhamra can help build exports apart from boosting local manufacturing”, said Kant, adding “we will have talks with chief minister after studying the site” The master planning for Paradip port is being done by Feedback Infra and by

There are legal problems and national implications in meeting the Delhi government’s demand of majority reservation for local students SAHIL MAKKAR

11,545 (8) 9,992 (-27) 7,601 (134)

| Central Sector | State Sector | JV/Private Sector; z Total

AAP government bats for admission quota in Delhi University

PricewaterhouseCoopers (PwC) for Dhamra The Ministry of Shipping has identified 14 CEZs along the coastline of the country under National Perspective Plan (NPP) of the Sagarmala Programme. The CEZs are spatial economic regions spread over multiple coastal districts with strong port linkage.

The Arvind Kejriwal-led Aam Aadmi Party (AAP) government in this city has revived an age-old demand, asking for reserving 85 per cent of seats for local students in Delhi University by passing a resolution in the legislative assembly. The city government believes students from the national capital should be given reservation in at least the 28 colleges, which are either fully or partially funded by it. Around 250,000 students from Delhi compete for around 57,000 undergraduate seats in the 110 Delhi University-affiliated colleges every year. However, the competition is so tough that Delhi students are only able to qualify for half the seats. The rest is filled by students from different states. This has led to both the AAP and the Delhi unit of the Bharatiya Janata Party (BJP) asking for reservation for students graduating from schools in the capital. but experts and officials in the Union ministry of human resource development (MHRD) say this is easier said than done. “As far as I know, it is not possible until the central government passes an amendment to the Delhi University Act of 1922 and to the statutes that emanate from the Act,” said Dinesh Singh, former vice-chancellor of Delhi University. Though the AAP government has passed another resolution exhorting the BJP-led central government to do this, the MHRD is unlikely to bring any Bill in this regard.

Around 250,000 students from Delhi compete for around 57,000 undergraduate seats in the 110 Delhi Universityaffiliated colleges every year

For various reasons. One would be that the BJP government at the Centre would not want its bête noire, AAP, to derive political mileage from the reservation issue and at the same time upset youth from different states seeking admission in Delhi University a year before the 2019 Lok Sabha elections. The admission process for the current academic year, 2017-18, is underway and no change can be introduced before 2018. The amendment is also not going to cut much ice with the various regional parties, as students from various states flock to Delhi University for quality education, recognition of their degree and better job prospects. “Introducing the quota in Delhi University is likely to increase regionalism.

Imagine a situation where other states start raising similar demands for other central universities housed in their respective states,” says a senior MHRD official. “It would be better if the matter is resolved between the Delhi government and the executive council of Delhi University.” Some say there could be a middle ground. MHRD, for instance, could introduce a common entrance examination for admission in all the 47 central universities, provided states don’t ask for a regional quota. “This would also take care of the inflation of marks issue in various school boards. Only those students who qualify the entrance exam would be admitted into central universities,” says another official in MHRD.

The marks moderation policy has already run into trouble, with parents petitioning the Delhi High Court to get the Central Board of Secondary Education (CBSE) scrap its policy in this regard from the next academic year. The officials predict the same problem is likely to arise in the future, as many states are reluctant to abolish their marks moderation policy. However, conducting a common entrance exam for all central universities would be difficult, as many affiliated colleges have their own admission policies and procedures. “In such a scenario, it would be best if the central government amends the Delhi University Act to a limited extent, allowing universities in Delhi to give affiliation to colleges, as was done in the case of the Guru Gobind Singh Indraprastha University in 1998,” the official said. Sub-section 2 of Section 5 of the Delhi University Act prohibits any university, except Delhi University and Guru Gobind Singh Indraprastha University, to have affiliated colleges. If such an amendment is passed, institutions such as Ambedkar University in Delhi could give affiliation to more colleges and meet the growing demand for quality education from students. Many say some of the three-year degree courses in Ambedkar University, which is under the Delhi government, are better than those offered by Delhi University. With the assembly resolution, the AAP-led Delhi government has now left the ball in the court of the central government.

HEALTH

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When anxiety or depression Trapped in smoke masks a medical problem FIT & PROPER

Your weekly health guide

JANE E BRODY

ISTOCK

Stomach bug? Don’t just blame the last thing you ate

ISTOCK

July 1, 2017

LUKE COUTINHO MD, Alternative Medicine and Founder of Purenutrition.me

“I smoke because it calms me down and helps me deal with the erratic work schedules” is a common revert you get from a smoker. An important project has held you back at work or you are just getting accustomed to the 24/7 work culture, these episodes come with excessive stress. If you have not yet realised, this becomes your first reason to light a cigarette, and then another. If this sounds like you, your journey towards being a corporate stress smoker has just begun. Smoking has become a common ritual in the corporate world. To help pull yourself out of this destructive vicious circle, you should understand the functioning of the body after it has come in contact with the risky contents of a cigarette. Nicotine found in cigarettes is the most dangerous part of smoking. It is what reaches the lungs and causes addiction. Cigarettes also contain tar, a dark gooey substance, which is very toxic and performs the function of carrying nicotine to your lungs. Cadmium is a metal that causes toxicity in the human body and cigarettes contain a lot of of it. So the faster we remove tyhe heavy metal toxicity like cadmium from the body, the better one can deal with the side effects. Smoking too many cigarettes, increases the iron content, which therefore creates more free radicals. Even a single puff contains up to a million different free radicals that contribute to

numorous diseases. Smoking cigarettes also depletes certain vitamins and minerals from your body, which are very essential for a strong immunity. Most of the diseases are born due to deficiency of vital vitamins. While there’s no way to reverse the damage that smoking can cause to your lungs, let’s look at a quick way to fix some of the illeffects of smoking. For people who smoke less frequently, a rich plant-based diet should do, but people who have been smoking everyday might need to add supplements to their diet. So after you have decided to kick the butt for good, there are ways you can curb the triggers. For starters, get on a diet rich in vital vitamins, minerals and antioxidants. Add a good quality emulsified vitamin E or getting it out of natural foods like seeds, pumpkin seeds, nuts, almonds or walnuts is good start. Smoking also damages and scars your arterial walls that can cause heart issues. A vitamin E supplement helps repair those scars that therefore keeps the arterial health in order. The rich antioxidants in them help to neutralise free radicals in the body. Taking a supplement high in B5, along with eating foods that are plentiful in B5 is also necessary, since it prevents aging of skin, wrinkles, and heart issues. Vitamin C is vital for people who have been smoking consistently. Smoking is an untrue security blanket for your body that provides temporary escape from reality. The more conscious you are of your smoke triggers, the less you’ll smoke and the less hurdles you’ll face when quitting. Embrace these healthy supplements and drift towards a healthier and happier life. Next week: Corporate binging affects dental care

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t’s perfectly normal for someone to feel anxious or depressed after receiving a diagnosis of a serious illness. But what if the reverse occurs and symptoms of anxiety or depression masquerade as an as-yet undiagnosed physical disorder? Or what if someone’s physical symptoms stem from a psychological problem? How long might it take before the true cause of the symptoms is uncovered and proper treatment begun? Psychiatric Times, a medical publication seen by some 50,000 psychiatrists each month, recently published a “partial listing” of 47 medical illnesses, ranging from cardiac arrhythmias to pancreatic cancer, that may first present as anxiety. Added to that was another “partial listing” of 30 categories of medications that may cause anxiety, including Persistent anxiety can cause symptoms like dizziness, nausea and diarrhoea antidepressants like selective serotonin or dizziness really has a physical ailment. people with an anxiety disorder are nevreuptake inhibitors, or S.S.R.I.s. Indeed, doctors at the Montreal Heart er treated for it. These lists were included in an article The problem affects children as well. called “Managing Anxiety in the Institute reported in 1996 that about a Medically Ill,” meant to alert mental quarter of 441 patients who came to the Anxiety disorders in children may be emergency room because expressed as recurrent stomachache or health practitioners to the of chest pain were in fact sleep disorders, including frequent nightpossibility that some suffering from panic disor- mares and teeth grinding. patients seeking treatment When people have a When people have a chronic physical der, not a heart ailment. On for anxiety or depression chronic physical the other hand, a woman I illness, untreated anxiety can make the may have an underlying illness, untreated know who was being treat- symptoms worse and the disorder more medical condition that must anxiety can make the ed for panic attacks turned difficult to treat. Among patients with be addressed before any symptoms worse and out to have a cardiac abnor- chronic obstructive pulmonary disease, emotional symptoms are the disorder more mality, and once that was for example, untreated anxiety can result in likely to resolve. difficult to treat. corrected, her panic attacks more frequent hospitalizations and more Doctors who treat ailsevere breathing difficulties. And those ments like cardiac, endocrine or intes- disappeared. Furthermore, anxiety is often over- with physical ailments and untreated anxtinal disorders would do well to read this article as well lest they do patients a seri- looked as the source of disorders like sub- iety are also more likely to die sooner. Anyone with a chronic ailment who ous disservice by not recognising an emo- stance abuse or addiction, or as a contional cause of physical symptoms or tributing factor to symptoms in experiences symptoms common to anxiaddressing the emotional components conditions like migraine headache or irri- ety might consider being checked out for this emotional component and getting table bowel syndrome. of a physical disease. The Mayo Clinic lists several factors treatment, if needed. There are several For example, Dr. Yu Dong, a psychiatrist at Inova Fairfax Hospital in Virginia, that suggest the possibility that anxiety effective therapeutic approaches for anxand colleagues pointed out last month may result from an underlying medical iety, including cognitive-behavioural therapy and medication, that can result in a that patients with respiratory conditions disorder: like asthma, sleep apnea or pulmonary ■ None of your blood relatives has an anx- much improved quality of life. Depression, too, can be an early sign of embolism could present with symptoms iety disorder. of anxiety, or those with cardiac symp- ■ You didn’t have an anxiety disorder as a an underlying medical condition not yet recognised. Among conditions in which toms like chest pain or rapid heartbeat child. ■ You developed anxiety seemingly out of this has occurred are thyroid disease, heart could have an anxiety disorder. attack, cancers of the lung and pancreas, The problem of missing the proper the blue. diagnosis grows out of a long-ago sepa- ■ You don’t avoid certain things or situa- and the adrenal disorder Cushing’s disease. In a report in the journal ration of powers within the medical pro- tions because of anxiety. Persistent anxiety can cause symp- Psychotherapy and Psychodynamics, fession that often limits the ability of practitioners to see the forest for the toms like dizziness, nausea, diarrhoea researchers from Italy and Buffalo, trees, as it were. Medical doctors like car- and frequent urination. People suffering pointed out that a neurological disorder diologists or gastro-enterologists are from anxiety disorders can develop an like multiple sclerosis or Parkinson’s disoften ill-equipped to recognise and treat array of additional physical symptoms as ease may first show up as a psychiatric emotional symptoms related to a physi- well, like muscle pain, fatigue, headaches problem years before neurological cal ailment, and psychiatrists may not and shortness of breath, which can lead to symptoms become apparent that result consider the possibility that a patient all manner of costly tests in a futile search in a correct diagnosis. with symptoms like palpitations, fatigue for a physical cause. Yet nearly a third of © 2017 The New York Times News Service

Most food-borne illnesses are caused by viruses or bacteria.

KATE MURPHYJUNE July 1, 2017

It happens like a bolt out of the blue. One minute you’re fine, and the next you begin to sweat as crippling cramps move wavelike through your belly. You vomit or have diarrhea, or both, fearing you won’t live to see another day. And then it goes away. You’re back to your old self, maybe after a day or two of binge-watching Netflix and chasing dry crackers with ginger ale. The Centers for Disease Control and Prevention estimates this scenario, known as an “acute gastrointestinal event,” happens to all of us at least once a year. The bouts, while extremely unpleasant, usually don’t occasion a trip to the doctor or require any medication. But such events tend to make us spin our gears trying to pinpoint what made us so miserably sick. While it’s hard to know for sure, there are clues that might help you determine the source and reduce your risk in the future. “People tend to blame the last thing they ate, but it’s probably the thing before the last thing they ate,” said Dr. Deborah Fisher, a gastroenterologist and associate professor at Duke University School of Medicine. It takes the stomach around four to six hours to empty a full meal, and then the small intestine takes about six to eight hours to squeeze out all the nutrients and empty into the colon. The remains linger there for another one to three days, fer-

menting and being formed into what ultimately is flushed down the toilet. Socalled bowel transit time varies significantly from person to person, but gastroenterologists said you can easily find out what’s normal for you by eating corn and watching for when the indigestible kernels appear in your stool. Gross, perhaps, but with that baseline, the next time you get sick, you’ll be better able to estimate when you might have eaten the offending meal. For example, if you throw up something and don’t have diarrhea or roiling further down, it could be that what made you ill was something you ate within the last four to six hours. If you wake up in the middle of the night with cramps and diarrhea, it’s more likely something you consumed a good 18 to 48 hours earlier, depending on the results of your corn test. Most food-borne illnesses are caused by viruses or bacteria, such as norovirus, Staphylococcus aureus, campylobacter, salmonella, E. coli and Bacillus cereus. So in addition to figuring out the correct time frame of consumption, also consider what foods are more likely to be contaminated. Items cited by the C.D.C. and frequently on the Food and Drug Administration’s food recall list include leafy greens, culinary herbs, melons with textured surfaces like cantaloupe and fresh tomatoes. Finally, what goes on your mind has an enormous impact on your gut and vice versa. © 2017 The New York Times News Service

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IN DEPTH 7

MUMBAI | 2 JULY 2017

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Conversion to Buddhism has brought literacy and well-being to Dalits The converts tend to have fewer children and a higher contribution to the national economy than the Scheduled Castes

slightly better than for other groups.

FEMALE LITERACY AMONG BUDDHISTS IN INDIA IS CONSIDERABLY HIGHER (74.04%) THAN THE TOTAL POPULATION AVERAGE (64.63%) MANU MOUDGIL (INDIASPEND.ORG)

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here are more than 8.4 million Buddhists in India and 87 per cent of them are converts from other religions, mostly Dalits who changed religion to escape Hindu caste oppression. The remaining 13 per cent of Buddhists belong to traditional communities of the north-east and northern Himalayan regions. Today, these converts to Buddhism — also called neo-Buddhists — enjoy better literacy rates, greater work participation and sex ratio than Scheduled Caste Hindus, the group from which most converts emerge, according to an IndiaSpend analysis of 2011 Census data. Given that converts make for 87 per cent of the Buddhist population in India and most of them are Dalits, our analysis goes with the assumption that the benefits of growth in the community accrue mostly to the Dalits. Buddhists have a literacy rate of 81.29 per cent, higher than the national average of 72.98 per cent, according to Census data. The literacy rate among Hindus is 73.27 per cent while Scheduled Castes have a literacy rate of 66.07 per cent.

“Most Dalits at the senior levels of administration are Buddhists,” said Satpal Tanwar, a leader of Bhim Army, the activist organisation accused of the Saharanpur violence of May 5, 2017, and now mulling mass conversion of Dalits to Buddhism. “This is because Buddhism lends them self-confidence as compared to the caste system which tends to rationalise their low social status through vague concepts like bad karma.”

has the highest proportion (5.81 per cent) of Buddhists in its population than other Indian states — more than 6.5 million. It was the home state of BR Ambedkar where he, along with 600,000 followers, switched to Buddhism in 1956. This form of protest against casteism continues to this day though, as IndiaSpend reported on June 17, 2017, the growth rate of such conversions is declining. In Uttar Pradesh, 68.59 per cent Buddhists are literate, higher than total population average (67.68 per cent) and nearly eight AN percentage points higher than the indiaspend.org figure for other Scheduled Castes STORY (60.88 per cent).

Northeast falling behind It is only in the traditional communities of the northeast, especially in Mizoram (48.11 per cent) and Arunachal Pradesh (57.89 per cent), that Buddhists have a lower literacy rate than the population average. On the other hand, Chhattisgarh (87.34 per cent), Maharashtra (83.17 per cent) and Jharkhand (80.41 per cent) have the most number of literate Buddhists. The conversion movement has been the strongest in Maharashtra, followed by Madhya Pradesh, Karnataka, and Uttar Pradesh. Maharashtra’s story is unique because it

Better gender parameters Female literacy among Buddhists in India is also considerably higher (74.04 per cent) than the total population average (64.63 per cent), data show. Among neo-Buddhist states, only Uttar Pradesh (57.07 per cent) and Karnataka (64.21 per cent) show female literacy rates lower than total population averages, but these are still considerably higher than

Scheduled Castes in these two states. In 2011, the sex ratio among Buddhists is 965 females per 1,000 males as compared to 945 for total Scheduled Castes. The national average sex ratio was 943. Buddhists also tend to have fewer children. The Census 2011 data shows that there are 11.62 per cent children in 0-6 year age group among Buddhists compared to 13.59 per cent national average. This means, for every hundred population, Buddhists have two children less than the average. But can it be said that neo-Buddhists are more inclined towards education than Dalits? Or is there a greater possibility that Dalits turn to Buddhism after attaining education? Around 43 per cent of Buddhists stay in urban areas as compared to total population average of 31 per cent, which also increases their chances of being educated. But the reality is not simple. Around 80 per cent Buddhists are from Maharashtra, which has better literacy and urban ratio than the national average. Within Maharashtra, the literacy rate, urbanisation levels and child ratio among Buddhists is

The Maharashtra story: How the Mahars found a better life The development among Maharashtrian Buddhists can be attributed to Ambedkar’s call for education and certain social conditions. Ambedkar was from the Mahar community which had little agricultural land and no fixed traditional occupation in a village society. They often stayed on the periphery of their villages and acted as watchmen, messengers, wall menders, adjudicators of boundary disputes, street sweepers and so on. This flexibility of profession ensured that Mahars were more mobile than others. Many of them, including Ambedkar’s father, joined the British Army. Even before Ambedkar embraced Buddhism, he asked the Dalits to take to education. “Lack of farm land or traditional occupation made it easy for Mahars to take to education as the means for gainful employment,” said Nitin Tagade, assistant professor, Savitribai Phule Pune University, who has studied the economic condition of Maharashtra’s neo-Buddhists. “So, they had a head start as compared to other communities in attaining education and moving to cities.” Around 47.76 per cent Buddhists stay in cities compared to the Maharashtra state average of 45.22 per cent, according to Census 2011. Among those in rural Maharashtra, most working Buddhists continue to be agricultural labourers (67 per cent), which is much higher than the rural population average of 41.50 per cent. Their improved social status through education has helped neo-Buddhists contribute more to the national economy than Scheduled Castes. Their work participation ratio (43.15 per cent) is higher than of total Scheduled Castes (40.87 per cent) and higher also than the national average (39.79%). Reprinted with permission from IndiaSpend.org, a data-driven, public-interest journalism non-profit organisation

‘Ransom-payers are also the cause of ransomware proliferation’

IMO

Operations at a terminal of the country’s largest container port, Jawaharlal Nehru Port Trust in Mumbai, came to a standstill earlier this week. The process of loading and unloading containers was halted as the port’s computers shut down after a major cyber attack that swept across the globe. The aggressiveness of the malware showed that such attacks were capable of bringing both corporate and government networks to a sudden halt. The ransom to retrieve files was reportedly $300, to be paid in virtual currency bitcoins. Cyber law expert PRASHANT MALI, also an advocate at the Bombay High Court, tells Nikita Puri how to prevent mass-scale civil disruptions that future cyber attacks can result in. Edited excerpts: Government is moving towards selling the national airline, which has floundered amid stiff competition from newer players

AIR INDIA TO BE PRIVATISED Aditya Gadre@angry_bard 3 years into this govt, finally some hope for change — Air India to be privatised Manish Tewari@ManishTewari Buzz -Air India deal allegedly sealed.To be sold to private Indian Aviation player@20,000 crores when AI value is more than 5 lakh crores??? HindolSengupta@HindolSengupta For better competition in the market, Air India should not be sold to Indigo but to a competing airline. Ind + AI would be a monopoly

warfare, Inhuman acts where cow is superior than man Sadanand Dhume@dhume Normal: Mourn lynching of 16-year-old boy and deplore his killers. Deranged: Fight about whether he was killed over beef and attack media Mohsen Rashid@mmr_51 @narendramodi Thanks for speaking on killing of people in the name of cow protection.Your warning is going to be very useful in saving lives

Sorabh Pant@hankypanty IndiGo offers to buy Air India? Should work. The price of a Chicken Junglee Sandwich on IndiGo is more than the entire worth of Air India.

Sudipto Halder@Off_Sudipto_H Killing people in the name of Cow protection is not acceptable and also organising beef parties, fests to hurt Hindus is also not acceptable

Sasidharan Pazhoor@inquestioner Since the time they uttered "Air India", Indigo has been having problems. Tyre burst y'day, near-miss today...

Ashutosh Mishra@ashu3page Finally it comes from PM, hope this will put to an end of the terrorism and killing in the name of Cow protection.

Yatin Mota@YatinMota Indigo offer for Air India is like a 19 year old girl planning to marry a 80 year old and everyone in the family (Indigo staff) is worried Vasu@vasudevan_k If Tata wants to buy. And indigo also wants to buy. Why sell air india?

ATTACKS BY COW VIGILANTES Suhail Majeed@suhail_dainposh Gawraksha extremism, killing Muslim in the name of cow protection is a psychological

GST ROLL-OUT Ashish@AshishBhojania Only @narendramodi could have rolled out GST. Only he has the tenacity & gumption to manage the scale & complexity of GST. Kirti Sinha@Kirti_Sinha Congress boycotted #GSTrolledOut because by 10pm it's kids bed time. Sukanya Chatterjee@schat95_sukanya A very proud moment for all Indians. Finally GST has rolled out. One nation One tax.

First we had individual companies and high-networth individuals who were targets of ransomware, then WannaCry hit servers across the globe. Now another malware, which some are identifying as Petya, has sent corporations into a tizzy. Do you foresee more such threats?

To date, financial cyber crime has only grown and it is yet to peak, so I would say it’s written on the wall that many more such attacks are expected in the near future. Such threats loom large as the ransom is paid in bitcoins, so the criminals aren’t caught. One thing the police and the government can do is to ensure that citizens make compulsory declarations of purchase of bitcoins and other cryptocurrencies (like ethereum) when they file their income tax returns. This can help the government see who pays and how much because, I feel, ransom-payers are also the cause of ransomware proliferation. Security experts confirm that the malware isn't really a ransomware, but a wiper designed to destroy data. Reportedly, because of “ its aggressive features,” the malware makes it impossible to retrieve certain files leading many to believe that this attack may not have been for money. Can this be seen as an attempt to test how far companies will go to protect data?

establishing a cyber security culture in the company, and a country can be cyber resilient by cultivating a culture of cyber security in society. Government should quadruple its budget for digital literacy programmes. For the government to be ahead of hackers, we need cyber spies: our law and enforcement agencies should implant cyber spies among cyber criminals. The chatter within their group helps the state to be ready for what is coming: we need cyber intelligence.

Even if cyber attacks don’t cause financial damage, they definitely throw open defences. Identifying fortresses that have holes in their system can be of interest to the state and nonstate actors. This data of the number of loopholes is in demand and is sold at a premium price. There are different types of people involved in the dark world: many a time those who look for such holes, those who attack, and those who intend to get ransoms are all different.

Do you think companies should have ethical hackers on their pay rolls?

fear they put in Indians, the more they sell security products. The Insurance Regulatory and Development Authority of India and insurance companies should make it compulsory for clients to file a First Information Report (FIR) before claiming cyber insurance. Once reporting to some government Head agency becomes mandatory to to claim insurance, Head companies would be motivated.

Companies are often wary of making such attacks public. Security firm Symantec has said that India is the worst hit in Asia, but we have confirmation only from Mumbai’s Jawaharlal Nehru Port Trust. Do For the government you think information to be ahead of sharing could actually hackers, we need help build a better cyber spies: our law defence against such and enforcement attacks? agencies should

What are the security measures that one must take to avoid such attacks?

No one can be immune in By not reporting such cyber space and that's the implant cyber attacks, companies are spies among cyber reality. Only cyber depriving the nation of a criminals awareness in knowledge database organisations can bring in that can help other companies cyber resilience. I would advise develop better defences. Symantec organisations to have multi-prong and other (security) vendors also policies to establish a cyber security cannot be fully relied upon because culture. I feel the highest level of fear is what they harp on. The more cyber safety can be achieved by

I have an issue with the term “ethical hackers” because legally this isn’t right: those are two contradictory terms put together. People who use these terms are either doing it for branding purpose or are students. Companies should opt for services by cyber security researchers. Are India’s cyber laws equipped to handle such large-scale attacks?

No. Laws can be invoked when prima facie evidence is found against criminals and investigation can be completed if attribution to a criminal is possible. The legal framework to help enforcement agencies in India has serious flaws. Large-scale cyber attacks need multiple law and enforcement agencies to work together along with CERT-In (Indian Computer Emergency Response Team), but the protocol for this is yet to be developed. In the future, cyber attacks are going to affect government facilities meant for citizens: like centres for health, water etcetera. Even municipalities should coordinate with the aforementioned agencies to avoid mass scale civil disruption from cyber attacks.

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Xi says Hong Kong should profit from China, not defy it

N THINGS OF THE INTERNET N

Ukraine blames Russia for recent cyber attack PAVEL POLITYUK

Germany gears up to defend against possible G20 cyber attacks

TING SHI, DAVID TWEED & WAI YI SHAWNA KWAN

Kiev, 1 July

1 July

Ukraine said on Saturday that Russian security services were Germany is girding itself for involved in a recent cyber attack on the country, with the possible cyber attacks on next aim of destroying important week’s G20 summit in data and spreading panic. Hamburg, by hacker groups or The SBU, Ukraine’s state cells linked to foreign security service, said the attack, governments, its top cyber which started in Ukraine and official told Reuters. spread around the world on Arne Schoenbohm, presiTuesday, was by the same dent of Germany’s Federal hackers who attacked the Office for Information Security Ukrainian power grid in (BSI), said authorities had set December 2016. Ukrainian up a 24/7 special command politicians were quick to blame centre to defend against such Russia for Tuesday’s attack, but attacks, just as it was a Kremlin spokesman dismissed “unfounded blanket attack in May. But Ukrainian accusations”. Cyber security firms are try- officials and some security ing to piece together who was experts say the ransomware feabehind the computer worm, ture was likely a smokescreen. Relations between Ukraine dubbed NotPetya by some and Russia went experts, which into freefall after conked out com- Relations puters, hit banks, between Ukraine Moscow’s annexation of Crimea in disrupted shipping and Russia went and shut down a into freefall after 2014 and the subsequent outbreak chocolate factory in Moscow’s of a KremlinAustralia. annexation of backed separatist The attack also Crimea in 2014 insurgency in easthit major Russian firms, leading some cyber secu- ern Ukraine that has killed rity researchers to suggest that more than 10,000 people. Hacking Ukrainian state Moscow was not behind it. The malicious code in the institutions is part of what virus encrypted data on com- Ukraine says is a “hybrid war” puters, and demanded victims by Russia on Kiev. Russia denies pay a $300 ransom, similar to sending troops or military the extortion tactic used in a equipment to eastern Ukraine. “The available data, includglobal WannaCry ransomware

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resident Xi Jinping warned a divided Hong Kong that challenges to China’s rule wouldn’t be tolerated and said the city’s leaders must find new ways to profit from Chinese economic clout. Xi’s stern speech Saturday — at a ceremony in which he swore in Carrie Lam, 60, as Hong Kong’s first female chief executive — capped a three-day trip to mark the 20th anniversary of the former British colony’s return to China. The president said the city’s leaders must build political consensus, devise new economic drivers and address soaring home prices. “It is imperative to always focus on development as the top priority,” Xi told the gathering of the city’s political and business leaders, saying that growth held “the golden key to resolving various issues in Hong Kong.” Any attempts to challenge the Chinese government “or use Hong Kong to carry out infiltration and sabotage activities against the main- Pro-democracy protesters carry a banner that reads ‘One Country, Two Systems, a cheating for twenty years. Recapture land is an act that crosses the red line, Hong Kong with democracy and self-determination’, during a demonstration on the 20th anniversary of the territory’s REUTERS and is absolutely impermissible,” he said. handover from Britain to Chinese rule, in Hong Kong on Saturday Since the last Chinese president visited five years ago, Hong Kong has been Joshua Wong, 20, a leader of the mass racked by doubts about the city’s growth Occupy protests in 2014 who now runs model, protests for greater democracy his own political party, said he was and the emergence of a small inde- detained by police and released. After Xi’s departure Saturday, thoupendence movement. The trip demonVENUS WU strated Xi’s intolerance for challenges sands joined an annual pro-democracy with Lam say she’s intelligent, hardHong Kong, 1 July to Chinese sovereignty while showcas- march through the streets. Attendees working and able to push ing the confidence he has displayed carried banners calling for the downfall controversial government policies, Carrie Lam, who was sworn in as Hong earning her the trust of Beijing abroad as growing clout gives his coun- of the Communist Party and the arrest of try less reason to hide its strength and city’s former chief executive Leung Kong’s first female leader on Saturday, factions who strongly lobbied for votes Chun-ying. abide international pressure. is a former student activist who on her behalf when she was chosen in Many were unconvinced by Xi’s “Xi sent a clear sovereign message: climbed the rungs of the civil service March. ‘You belong to us, and your future is promise of prosperity, which they said over 36 years, and a tough, capable But her hardline and pro-Beijing with us,’” said David Zweig, a political would probably benefit the wealthy and possibly divisive Beijing-backed tendencies, say critics and opposition science professor at the Hong Kong most. The city, long lauded by econoleader. democrats, risk sowing further social University of Science and Technology. mists for its business freedom, has the Lam, most recently Hong Kong’s divisions in the former British colony “Maybe it will finally put to sleep the biggest wealth disparity in Asia. number two official, has to unify the that returned to China 20 years ago democrats’ unfailing belief that some- Apartments the size of parking spots Chinese-ruled city as public under a “one country, two systems” how Xi is going to offer a package that cost $500,000 and median wage earnresentment swells at Beijing’s growing formula that guarantees it widewill solve the political problems of Hong ers would have to save for 80 years to interference in its affairs despite being ranging freedoms. buy a home. Kong.” promised a high degree of autonomy. “Carrie Lam ... is a nightmare for “Xi always stresses that they bring Thousands of police officers were She also has to reinvigorate the Hong Kong,” said student activist deployed to keep protesters far away us economic opportunities,” said Ruth economy and address growing social Joshua Wong in March, one of the from Xi, and those lining nearby streets Wong, a 29-year-old social worker. “But inequalities and high property prices, leaders of the student-led “Umbrella during the ceremony appeared largely can you say it benefits most of the Hong issues Chinese President Xi Jinping Movement” protests in 2014 which supportive of Chinese rule, waving red Kong people? I think those who benefit highlighted at her swearing-in blocked the streets for 79 days national flags. Scuffles broke out when are those who have vested interests, like ceremony. demanding full democracy. REUTERS several pro-democracy demonstrators the property developers.” Several sources who have worked BLOOMBERG tried to carry a mock coffin to venue.

Hong Kong’s first female leader a ‘tilted bridge’ over troubled waters

US beef debuts in China after 14 years

Dropbox seeks to hire IPO underwriters, sources say

BLOOMBERG

place in 2003 that was triggered by a case of mad cow disease in Washington state. China, the The US aims to export more world’s largest pork producer high-quality and safe farm and consumer, has seen beef products to China to help bal- demand climb as more people ance trade between the two adopt Western-style eating countries as it marks habits. China’s beef its first shipment of China banned imports hit $2.5 bilbeef in 14 years. US beef in 2003 lion last year, with “We can provide triggered by a total shipments at more safe, high- case of mad 579,836 tons, accordquality food prod- cow disease in ing to customs data. ucts for the con- Washington The US also hopes sumers here in that China can China, a key part of improving approve more traits of genetiour relationship and reducing cally modified corn and soyour trade deficit,” US beans and finalise an agreeAmbassador to China Terry ment on rice, Branstad told Branstad told reporters in China’s Agriculture Minister Beijing on Friday. Han Changfu during a meeting China has re-started impor- with visiting US Agriculture ts of US beef, lifting a ban put in Secretary Sonny Perdue. 1 July

LIANA B BAKER & LAUREN HIRSCH 1 July

Data-sharing business Dropbox is seeking to hire underwriters for an initial public offering that could come later this year, which would make it the biggest US technology company to go public since Snap, people familiar with the matter said on Friday. The IPO will be a key test of Dropbox’s worth after it was valued at almost $10 billion in a private fundraising round in 2014. Dropbox will begin interviewing investment banks in the coming weeks, the sources said, asking not to be named because the delibera-

Drew Houston, CEO and founder of Dropbox

REUTERS

tions are private. Dropbox declined to comment. Several big US technology companies such as Uber Technologies and Airbnb have resisted going public in recent months, concerned that stock market investors,

who focus more on profitability than do private investors, would assign lower valuations to them. Snap, owner of the popular messaging app Snapchat, was forced to lower its IPO valuation expectations earlier this year amid investor concern over its unproven business model. Its shares have since lingered just above the IPO price, with investors troubled by widening losses and missed analyst estimates. It has a market capitalisation of $21 billion. Still, for many private companies, there is increasing pressure to go pubic as investors look to cash out. REUTERS

preparing for any physical violence. “We’re preparing intensively for every form of protest,” Schoenbohm said in an interview. “As the national cyber security agency ... we’re concerned about everything from (persistent threats) to groups like Anonymous and Lulzsec that could be planning political protests using cyber attacks.” REUTERS

ing those obtained in cooperation with international antivirus companies, give us reason to believe that the same hacking groups are involved in the attacks, which in December 2016 attacked the financial system, transport and energy facilities of Ukraine using TeleBots and BlackEnergy,” the SBU said. “This testifies to the involvement of the special services of Russian Federation in this attack.” The SBU in an earlier statement on Friday said it had seized equipment it said belonged to Russian agents in May and June to launch cyber attacks against Ukraine and other countries. REUTERS

Facebook changes algorithm to curb ‘tiny group’ of spammers

US warns businesses of hacking campaign

DAVID INGRAM

JIM FINKLE

1 July

Toronto, 1 July

posts per day, effectively spamming people’s feeds,” said Adam Mosseri, Facebook’s vice Facebook said on Friday it was president for the News Feed, changing the computer algo- in a blog post. rithm behind its News Feed to Ahead of the November 8 limit the reach of people known US presidential election, to frequently blast out links to Facebook users saw false news clickbait stories, sensationalist reports saying Pope Francis websites and misinformation. endorsed Donald Trump and The move is another step that a federal agent who had by the world’s largest social been investigating Democratic network to weed out spam, a candidate Hillary Clinton was battle Facebook has fought for found dead. years but that gained urgency The algorithm behind the after hoax news stories spread News Feed determines which posts people see widely during last year’s US presiden- The move is from friends, adveranother step by tisers and other tial campaign. Facebook said the world’s sources, and the the change would largest social order in which they reduce the influ- network to appear depending ence of a “tiny weed out spam on how users responded to previgroup” of people it has identified who share vast ous posts. amounts of low-quality public Facebook, which has 2 bilposts daily. Only about 0.1 per lion monthly active users, frecent of people who share more quently tweaks the computer than 50 posts a day fall into that code behind the News Feed. category, the company said. The latest tweak will have a The change would affect negligible effect, said Jennifer only links shared by those peo- Grygiel, a Syracuse University ple, not their photos or other communications professor who monitors social media, in posts, the company said. “Our research shows that a telephone interview, adding there is a tiny group of people that Facebook needs to hire on Facebook who routinely more content moderators. share vast amounts of public REUTERS

The US government warned industrial firms this week about a hacking campaign targeting the nuclear and energy sectors, the latest event to highlight the power industry’s vulnerability to cyber attacks. Since at least May, hackers used tainted “phishing” emails to “harvest credentials” so they could gain access to networks of their targets, according to a joint report from the US Department of Homeland Security and Federal Bureau of Investigation. The report provided to the industrial firms was reviewed by Reuters on Friday. While disclosing attacks, and warning that in some cases hackers succeeded in compromising the networks of their targets, it did not identify any specific victims. “Historically, cyber actors have strategically targeted the energy sector with various goals ranging from cyber espionage to the ability to disrupt energy systems in the event of a hostile conflict,” the report said. REUTERS

Hong Kong or Singapore: Which city is better for expats to live in? ERIC LAM 1 July

In the race to lure talent for global firms’ regional headquarters, Hong Kong and Singapore have long been neck-and-neck. While many companies make their managers locate in one or the other city — often depending on whether their duties focus more on Southeast Asia, or on China — others give top talent a choice. Back before Hong Kong’s handover to Chinese rule in 1997, Hong Kong had an edge due to expectations of the opening of China’s economy, the city’s role as the entrepot on the border, and the banking industry poised to capitalise on it. Now, Singapore’s push into innovation and technology has the Lion City on an upswing. The salaries The top salaries in Hong Kong for jobs in the financial industry are about 25 per cent higher than in Singapore on average, according to data compiled by Bloomberg from the 2017 salary survey of recruitment firm Robert Walters Plc. That trend carries across most industries. Personal income taxes in the two cities are relatively low. The top rate in Singapore for income above the first $230,500 is 22 per cent; in Hong Kong, the top rate is 17 per cent.

The lifestyle Those extra dollars don’t necessarily get you as far in Hong Kong, however. The city has overtaken Tokyo as the most expensive in the region and second overall in the world for expatriates. Singapore, by contrast, is 24th on its list. The survey tracks the cost of goods ranging from groceries to beer and tobacco, while excluding spending such as rent and school tuition. Taxes on alcohol mean the price of imbibing is higher in Singapore. A pint of beer in a Singaporean pub goes for about $9, while the same will set you back $7.70 in Hong Kong, according to Deutsche Bank’s 2017 report on global consumer prices using data gathered from Expatistan.com, which compiles input from thousands of people reporting the prices they pay in various countries. Paying for housing For most people, the single biggest cost, though, is housing — unless companies still offer housing packages, which have been increasingly dwindling. Expat packages for both cities have been sliding for the past five years, down 2 per cent to $265,500 in Hong Kong and 6 per cent to $235,500 in Singapore, according to ECA’s MyExpatriate Market Pay survey. While salaries have risen in Singapore in the same period, the

as pay a slew of taxes and recurring fees that can more than double the cost of car ownership. An Audi A6 luxury sedan costs, all-in, about $70,400 in Hong Kong, based on manufacturers’ suggested pricing, which includes a First Registration Tax, annual fees and insurance. In Singapore, the car would cost about $168,100 based on quoted prices from authorised distributors, according to the government’s vehicle registration website.

Residential rents in Hong Kong are higher than Singapore’s by a large margin

decline in benefits has reduced the total package value, according to Lee Quane, ECA’s regional director for Asia. Monthly rent for a 900-squarefoot furnished residence in an expensive area costs about $2,600 in Singapore, while the equivalent in Hong Kong costs almost $4,900. Business and investment Those looking to park their cash in local investments have done better in Hong Kong over the years. Real estate investors have seen secondary home prices soar 400 per cent since the last property slump in

2003. Hong Kong’s stock market has beaten Singapore’s over the past five years, too. International companies based in Hong Kong rose 53 per cent since 1997, totaling almost 1,400 as of last year, according to government data. Singapore, which tracks total investment by foreign companies, recorded a 12 per cent decline in the 20112015 period, with U.S. companies the only ones to increase their presence. Yet Singapore beats Hong Kong as a more attractive destination price-wise for companies, according to a report last year from DTZ/Cushman & Wakefield. Hong

ISTOCK

Kong suffers from higher costs, while Singapore boasts cheaper office rent — about half the price on a per square meter basis, the report said. The price of driving Singapore is possibly the most expensive place in the world to drive, due to regulations and fees designed to keep traffic from turning into the chaos that befell Jakarta, Manila, Bangkok and other Southeast Asian cities as incomes rose and more residents could afford to get behind the wheel. Drivers must bid for a limited number of special permits, as well

The air you breathe Hong Kong became notorious for its high levels of air pollution, so the government began enacting curbs on emissions — from vehicles and heavy cargo ships using its port — as well as cooperating with officials in Guangdong province to try to reduce smog blowing across the border. These measures have shown results. Since 1999 Hong Kong has curbed roadside levels of nitrogen oxides by 56 per cent, and fine particulate matter, known as PM2.5, by 52 per cent, according to 2016 government data. Singapore, despite stringent vehicle emissions standards, is occasionally plagued by trouble from across its border as well: haze from Indonesian wildfires. The city suffered from another spike in 2016. Singapore reported good or moderate air quality for 87.5 per cent of the year in 2015. That’s lower than

the 97 per cent of the previous year, due to the wildfires. Hong Kong reported 67 per cent clean air days. If you have children The cost of private school rivals rent as the biggest cost in each city. Tuition for a new middle-school student at Singapore American School costs about $36,200 if the student comes from a non-American family. At the American School Hong Kong, a similar new student entering grades 7 or 8 will need to pay about $25,200, including the entry fee, plus either a recurring annual fee of $2,600 or a refundable debenture of $77,000. It’s also difficult to get a spot in a number of Hong Kong schools. Yet Singapore’s secondary schools beat Hong Kong’s in the global Program for International Student Assessment, or PISA, ratings. Singapore ranks at the top for math, reading and science. Hong Kong is No 2 in reading and math, but fell to No 9 in science in the latest test. Most young families will also hire a domestic worker to help out. Minimum wage for such workers in Hong Kong is currently about $550 a month, according to the government. In Singapore, wages for Filipino maids and nannies are mandated by the Philippine government. As of last year, they were the equivalent of $400 a month. BLOOMBERG

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IN BRIEF

HSBCbags firstforeign majority owned China securities JV

All well for world economy at mid-year? Up to a point Policymakers and economists seem to believe that the world is enjoying a broad expansion JEREMY GAUNT London, 1 July

S

HSBC Holdings became the first foreign bank to win permission for a majority-owned securities joint venture in China, a structure some of its competitors have unsuccessfully lobbied several years for. The London-based firm received approval to own 51 per cent of a venture with Qianhai Financial Holdings, the China Securities Regulatory Commission said in a statement. HSBC Qianhai Securities is expected to start operations that include trading locally listed securities and underwriting initial public offerings by the end of the year, HSBC said in a separate statement. "China's securities industry reform is taking a big step forward as it's further opening up the market to foreign firms," Richard Cao, a Shenzhen-based analyst at Guotai Junan Securities, said by phone. "The regulator's move is paving the way for more foreign banks to own a majority stake." The approval may ignite optimism among other foreign investment banks that have struggled for years to challenge local rivals. Regulations limiting them to minority stakes in their joint ventures have reduced their sway over key decisions and they've been largely excluded from lucrative businesses such as secondary-market trading in Chinese debt and equities, as well as from managing money for wealthy clients. BLOOMBERG <

EU antitrust fine to cut profit by $2.74 billion: Alphabet

Oil up for 7th day but first-half drop biggest since 1998

AlphabetsaidthattheEuropean Commission'srecentantitrustfine willreducesecond-quarterprofit byabout$2.74billion.The companyplanstoreportthefine inaseparateoperatingexpense lineonitsincomestatement.It's nottaxdeductible,sothecharge willreduceAlphabet'snetincome andearningspersharebythefull $2.74billionamount,itsaidina statement.Analystsexpect Alphabet,theownerofGoogle,to reportsecond-quarternet incomeof$5.78billion,according todatacompiledbyBloomberg. AnalystsdismissedtheEUfineasa threattoGoogle'sstockposition. Googlehas90daystodelivera solutionthatappeasesEU regulatorsorfacefurtherfines. BLOOMBERG <

OilclimbedonFridayforaseventh straightsessionasadecreasein theUSrigcountandstronger demanddatafromChinalifted depressedpricesthatstillfinished thefirsthalfwiththebiggest declineforthatperiodsince1998. USdrillersdecreasedtheirnumber ofrigsforthefirsttimesince January,accordingtoenergy servicescompanyBakerHughes. Therigcounthadrisenforthe previous23weeks.Earlier,Chinese datashowedfactoriesgrewatthe quickestpaceinthreemonths. RobHaworth,seniorinvestment strategistatUSBankWealth Management,saidtheChinese data"certainlygivesyouhopethat demandisgrowingglobally." REUTERS <

Cost of getting on UK property ladder surges to record First-timebuyersintheUK propertymarketarepayinga recordamounttopurchasea home,withLondonersshelling outalmostdoubletheaveragefor therestofthecountry.Nationally, theaveragehousepricepaidby newentrantsroseto£207,693 ($270,000)inthefirsthalf,with purchaserslayingdowna16per centdeposit,accordingtodata fromlenderHalifax.InLondon, gettingafootontheproperty laddercost£409,975,up66per centsince2012.Depositson propertyaveragedmorethan threetimesthenationallevel,at £106,577.That'supfourfoldinthe pastdecade. BLOOMBERG <

Fyre festival founder McFarland arrested on fraud charge FyreFestivalfounderBilly McFarland,organiserofa disastrousmusicfestivalinthe Bahamas,wasarrestedon federalchargesthathe defraudedinvestorswhobought astakeinthemediacompany. McFarland,25,isallegedtohave cheatedatleasttwoinvestorsout ofabout$1.2millionbylying abouttherevenueandincomeof FyreMedia,whichhefounded lastyear. Hegavethemphony documents. BLOOMBERG <

o strong is the belief in the growth momentum of the global economy as it enters the second half of 2017, the point has been reached in the economic cycle where data not meeting expectations is dismissed as an aberration. Flash purchasing managers’ indexes for services in Europe in June, for example, were weaker than anyone in a Reuters poll had predicted, but the market paid scant attention. “Way below expectations, but let’s not worry,” was the mantra. Such economic Panglossianism — all for the best in the best of all worlds — is based on what seems to be a majority view among policymakers and economists that the world is enjoying a A file photo of shipping containers at the Port Newark Container Terminal in REUTERS broad expansion. Newark, New Jersey “Faster growth this year reflects a but there are centres of trouble, such as synchronised improvement across both tary stimulus thrown at it. The Citi Economic Surprise Index, in Italy, the bloc’s third largest economy. advanced and emerging market economies,” Brian Coulton, Fitch which moves in tandem with data beat- And while deflation may have gone, Ratings’ chief economist, wrote in an ing or underclubbing expectations, has inflation is still below target. The jobless rate is lower, but still outlook projecting 2017 would have the plunged for the main industrial nations fastest world growth — 2.9 per cent — this year and is at negative levels not above 9 per cent (twice that for the young), consumer spending has been seen since 2011. since 2010. Real US gross domestic product has easing and wage growth is stubbornBacking up this view, central banks in the United States, euro zone and been increasing, but the pace has been ly slow. China, meanwhile, has avoided the Britain are leaning toward tightening, slower in each of the past two quarters albeit with a cacophony of mixed sig- up to the fairly slow annualised 1.4 per slowdown some feared. Indeed, factories grew at their quickest pace in three cent in January-March. nals about when. A report by the Atlanta Fed suggests month in June. Financial markets are now pricing in But an official crackdown on excesa 90 per cent chance of a euro zone rate second quarter growth will bounce back hike by July next year, for example, to — but as a result of stronger home sales, sive debt and shadow banking has go with the Federal Reserve’s ongoing a reflection of cheap money, offsetting been enough of a risk to economic stasluggish equipment and inventory bility to make the central bank cauupward tweaks. tious about taking further action, parThere are, however, some incon- investment. Durable goods orders declined ticularly ahead of this year’s venient trends out there that will need sharply and jobs growth slowed at their Communist Party Congress. consideration in the second half. In Japan, the government has raised First, there have been some signs of last readings. In the euro zone, the overall picture its overall view of the economy because a dip in economic activity, while inflation remains, in most places, stubborn- is relatively positive with a current 1.9 of growth in private consumption. But ly nonchalant toward the huge mone- per cent year-on-year growth rate — the latest data showed retail sales rising

Obama takes swipe at Trump Trump demands ‘fair shake’ for US carmakers on Paris climate accord in South Korea SHANNON PETTYPIECE, JUSTIN SINK & KANGA KONG

‘Brexit chief is hamstrung by May's tough stance’ UKPrimeMinisterTheresaMay's inflexiblepositioninnegotiations toleavetheEuropeanUnionhas madethetaskmoredifficultfor BrexitSecretaryDavidDavis,a formeraidesaidinaBBC interview.JamesChapman,who wasDavis'schiefofstaffuntillast month,saidMay's"absolutist" stanceonendingthejurisdiction oftheEuropeanCourtofJustice overtheUKisamongissuesthat has"hamstrung"DavisasBrexit talksbegin,accordingtotheBBC report."Ifshedoesn't,inmypoint ofview,showmoreflexibility, showmorepragmatismthanshe diddemonstrateintheHome Office,shewon'tgetthisstuff throughParliament,"hesaidon theBBC'sTheWeekinWestminster. BLOOMBERG <

Tanker and cargo ship collide in Channel Anoiltankerandacargoship collidedintheChanneleastofthe BritishportofDoverearlyon Saturday,butnoinjuriesor pollutionwerereported,regional Frenchmaritimeauthoritiessaid. TheSeafrontiertankerhad27crew membersand40,000tonnesof hydrocarbonsonboardatthe timeoftheaccidentat0100GMTin Britishwaters.TheHuayan Endeavourwasnotloadedbut wascarryingacrewof22. REUTERS <

less than expected with slowing sales of durable goods and clothes. Britain, facing the huge unknown of leaving the European Union, is a case unto itself, with plummeting consumer confidence. None of this is to say that the world economy is not in good shape, with (non-British) consumer and business confidence generally rising. There are “mixed signals,” David Folkerts-Landau, group chief economist at Deutsche Bank, wrote to clients, but these reflect “momentum softening in the margin, but still robust”. But enough uncertainties exist for the Bank of International Settlements — the central bankers’ banker — to warn of risks ahead from a turning financial cycle, unmanageable household debt, and weak productivity growth among others. These are hard to track, but there will be a number of data spot-checks in the coming week. Full purchasing manager indexes and equivalents such as Japan’s Tankan will show whether manufacturing and services growth is keeping up with expectations or succumbing to a mild slowdown. Germany, France and Britain will also release their latest industrial output numbers. Finally, the end of the week brings the US non-farm payrolls data for June. The number of new jobs is expected to rise from May’s release, but still reflect a much lower pace of job creation than at the beginning of the year. In addition to the numbers, there will be talk. The Group of 20 nations meets in Berlin at the end of the week — seeking some kind of unity with US President Donald Trump to keep things going through the second half and beyond. REUTERS

1 July

Barack Obama talks with Indonesian President Joko Widodo and his wife Iriana Joko Widodo at Bogor Presidential Palace in Bogor, West Java of Indonesia

KARLIS SALNA 1 July

Former US President Barack Obama has pointed to the importance of the Paris climate accord while criticising Donald Trump for pulling the world’s biggest economy out of the pact. Trump said last month he would withdraw from the pact and seek to negotiate a better deal, in a move that attracted widespread criticism from counterparts in Europe and elsewhere. “In Paris, we came togeth-

er around the most ambitious agreement in history to fight climate change,” Obama said Saturday in a speech at the opening of the Fourth Congress of the Indonesian Diaspora in Jakarta. He said it was “an agreement that even with the temporary absence of American leadership will still give our children a fighting chance.” “The challenges of our times, whether it’s economic inequality, changing climate, terrorism, mass migration; these are really challenges and we’re going to have to confront

them together,” he said. Obama, who has been holidaying in Indonesia and on Friday met with President Joko Widodo, also warned in remarks Saturday against rising sectarian politics around the world, as well as growing discrimination based on race and ethnicity. He said in Jakarta there had been “enormous progress” which had occurred “in part because of the stability that the United States helped support here in the Asia Pacific.” BLOOMBERG

South Korea must give US automakers “a fair shake” to sell more cars there and stop exporting “dumped steel,” President Donald Trump told his counterpart Moon Jae-in during talks at the White House. After meeting with Moon, Trump emphasised he’ll press for changes to the current free-trade agreement to reduce the US trade deficit with South Korea. He told reporters he was encouraged by “Moon’s assurances that he will work to create a level playing field” for US exporters. Tensions with North Korea also figured prominently in the discussions as Trump signalled he would press for a tougher stance after the death of US student Otto Warmbier following his detention in North Korea. “The era of strategic patience with the North Korean regime has failed,” Trump said, “and frankly that patience is over.” The initial meeting would probably be seen as a success, said Duyeon Kim, a visiting senior fellow at the Korean Peninsula Future Forum in Seoul. “On the surface it appeared the two presidents had a fairly positive summit without major blunders, but the real work begins now with having to iron out their stark

differences and formulate a joint strategy on North Korea and alliance issues, particularly trade,” Kim said. Moon said he had a “a candid and lengthy conversation” in which Trump “came across as a man of determination.” He said threats from Pyongyang would be met with a “stern response” and North Korean leader Kim Jong Un “should by no means underestimate the firm commitment” of the military alliance between the US and South Korea. At the same time, he struck a somewhat softer tone in a speech later Friday in which he repeated his hope for talks with Pyongyang — a stance that potentially puts him at odds with Trump. “Engaging in dialogue with Chairman Kim Jong Un is also necessary, for he’s the only one who can decide to dismantle North Korea’s nuclear weapons,” Moon told the Centre for Strategic and International Studies in Washington. The South Korean leader didn’t directly address Trump’s complaints about trade in his remarks at the White House or in his speech. In a statement on the presidential office website, Moon’s presidential policy adviser Jang Ha-sung said the two countries did not agree to a renegotiation of the trade deal, known as KORUS. BLOOMBERG

Buffett about to make $12 bn on his Bank of America bet

NOAH BUHAYAR & KATHERINE CHIGLINSKY 1 July

Warren Buffett’s bet on Bank of America is about to pay off with a roughly $12 billion windfall. The billionaire plans to exercise warrants obtained six years ago in a vote of confidence in Bank of America while its shares were tumbling amid multibillion-dollar probes tied to the housing meltdown. The cash infusion helped the bank put to rest doubts about whether it had enough capital, and its shares have more than tripled since then. In the 2011 deal, Buffett’s Berkshire Hathaway invested $5 billion in Bank of America in exchange for preferred stock and the right to buy 700 million common shares — a stake now worth $17 billion. Berkshire said in a statement Friday that it would convert its preferred shares into common stock once the Charlotte, North Carolina-based bank increases its dividend, now planned for the beginning of the third quarter. Buffett laid out his thinking for the conversion, which will make him the company’s biggest shareholder, in a February letter to investors, saying that the decision would come down to simple math: the preferred investment pays $300 million a year in dividends, so it makes sense to convert that into common stock if those shares began earning more. After receiving Federal Reserve approval of its capital plan, Bank of America said on June 28 that it planned to boost its dividend 60 per cent to 12 cents a quarter. By converting the preferred stake into common shares, Berkshire’s payout will rise to $336 million a year. The $12 billion in gains come on top of more than $1.5 billion in dividends from the preferred stake over the past six years. Buffett shored up confidence in Bank of America and its chief executive officer, Brian Moynihan, at a critical juncture. With backing from Berkshire’s billionaire CEO, Bank of America soon rebounded. That generated a massive paper profit on the warrants. The warrants allow Buffett to buy the stock at a discounted rate of $7.14 a share, compared with the closing price of $24.32 on Thursday. The episode highlighted Buffett’s role as a financial firefighter and mirrored confidence-boosting investments he made in Goldman Sachs Group and General Electric during the 2008 crisis. In those cases, he was also able to extract generous terms in exchange for vouching for those companies’ long-term prospects. BLOOMBERG

Why not get a full workout while you wait and wait at the airport? JUSTIN BACHMAN 1 July

America’s airports are where long lines, crowds, and the Transportation Security Administration combine to make life miserable. But once the metal detectors, explosives-sniffers, and patdowns are behind you, suddenly all is transformed into boutiques, bars, and restaurants. Why not gyms, too? The airport terminal has long been lucrative commercial real estate, thanks to a captive audience. For those who have hours to wait, there’s not much else to do except shop, drink, and eat. So two graduate business students at the University of Oregon started wondering whether an airport gym could thrive in such a setting. After researching the airport and fitness industries, Cynthia Sandall and Ty Manegold concluded that the only obstacle is cost — not because air travellers consider it ridiculous. Thus, a business model was born. Its name is Roam Fitness, which opened its first airport location in January at Baltimore Washington International, with a goal of adding two airports this year. Now, to make a terminal

gym remotely feasible, most prospective customers need to be provided workout clothes and enough time not to stress over missing a flight, Roam’s founders said. A $25 day pass includes rental clothes and shoes, a shower, and if you bring your own workout gear, vacuum sealing so it doesn’t stink up the cabin. Even as massage, spa, and yoga spaces have become airport staples, the full-service gym has a very limited history. Five years ago, San

Francisco International Airport led the way with a yoga space, which proved popular, and airports including Chicago-O’Hare, Dallas-Fort Worth and Burlington, Vermont, followed. “It has been attempted in the past, but in our minds just not very well-executed,” Manegold, who serves as Roam’s president, said. “A lot of people did a copy-and-paste of a street version of a gym. And that really doesn’t translate that well because of the economics involved.” By economics, Manegold is referring to the unique costs associated with such an endeavour. There’s the steep outlay for equipment and facilities, including apparel, laundry, and shower accoutrements, plus the various higher expenses associated with operating in such a highly regulated environment, which Mangold said is roughly five times that of, say, a strip mall. “The cost of building in an airport is astronomical, compared to street level,” said Sandall, who is also chief marketing officer. The two partners of the Eugene, Oregon-based company nevertheless managed to raise about $1.5 million, mainly from friends and family, before the first location opened.

As a commercial enterprise, airport fitness has a few core requirements, according to Roam. First, an airport gym needs a sufficient number of business travellers at major hubs — gateways that serve at least 1 million passengers annually. The emphasis is on sky warriors rather than leisure travellers, since the latter tend to be more prone to indulgence than sets of squats. Second, the gym must be be situated beyond the Transportation Security Administration checkpoints, since clearing the screening is a traveller’s highest priority. The allure of products or services that lay past it is decidedly secondary. And third, the airport landlord must believe that the gym is part of a larger whole, helping to soothe harried travellers and boost spending elsewhere in the terminal. This is because, on a revenue-per-square-footage basis, an airport gym will never compete with a sit-down restaurant, Sandall said. And this may be the concept’s biggest problem. “Our airport has one of the smallest footprints in the country,” said Brian DeRoy, a spokesman for Seattle-Tacoma International Airport, which serves 46 million people annually. “Since space is at a premium in any

airport, the business side kicks in. ... How many people would utilise the gym for it to make money, compared with a restaurant or shop? That’s likely the biggest reason there aren’t more gyms at airports.” “That large restaurant will do more revenue than we can do,” said Manegold. But “the less stress that people have in a mall, an airport, any shopping environment, the more money they spend.” This fall, another start-up, FlyFit Global, plans to open what it says is the first airport yoga and wellness studio — with a shower included in the fee — at London’s Heathrow Airport, also an investor in the project. The yoga centre will be in Terminal 2, which houses most of the Star Alliance airlines. The space will offer travellers instructor-led classes, plus interactive strength, restorative and cardio classes. Currently, Roam sees about 20 customers per day, who exercise for about 30 minutes and then use the shower. A larger number of passengers drop in to ask questions about the gym, pledging to return for a workout next time. Roam believes its service will appeal more to millennial travellers and Gen-Xers, less to aging baby boomers. BLOOMBERG

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10 DEMOCRACY AT WORK

1

MUMBAI | 2 JULY 2017

CHATTERBOX

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You have promises to keep, Shivpal to Akhilesh The spat between Akhilesh Yadav and uncle Shivpal just doesn’t seem to end. At an Aam Daawat (Mango Party) in Kanpur. Shivpal reset the conditions on which he (according to him, the Samajwadi Party -SP) and Akhilesh could come together again. He said Akhilesh could claim till he was blue in the face that he had done a lot of development work in Uttar Pradesh. But he humiliated Netaji (Mulayam Singh Yadav). And you can do all the development you like, but if you humiliate people, you should not expect any respect. He reminded Akhilesh of his pre-election promise that if the party lost, he would give up control of the party and hand over things to ‘Netaji’. That still hasn’t happened. So that’s the bottom line. Akhilesh must hand over the reins of the party to Shivpal — and Mulayam — and then the disgruntled faction could consider tying up with him. The ball is now in Akhilesh’s court. Congress interrupts hand holding in Karnataka When Congress General Secretary K C Venugopal, who has charge of Karnataka (which will go the polls in the next round of assembly elections) took up his new job, everyone was enthused that a new hand was holding the reins of a state that is crucial for the Congress. Venugopal announced that he would held extensive consultations with the state party establishment in Karnataka’s various districts. But he arrived at the party headquarters late, called party representatives who had spent days getting feedback and collecting data, but spent just under 15 minutes with each of them. As Chief Minister Siddaramaiah was to come to Delhi on that day to be present at Meira Kumar’s nomination, he came away. Venugopal suspended consultations because the CM was not present.

DID THEY REALLY SAY THAT?

CHECKLIST

PRAISE FROM PRIME MINISTER NARENDRA MODI About Sushma Swaraj, Foreign Minister in 2017 in Washington: “The way Sushma Swaraj has worked and helped every Indian abroad is commendable. It is now well known in India that when anyone in trouble tweets to Sushmaji, she promptly replies and the government takes prompt action. Any Indian living abroad now has faith that their issues will be resolved.”

“Eternal vigilance is the price of liberty. We need to remember the things which harm democracy and move forward in a positive direction.” Prime Minister Narendra Modi in his Mann ki Baat programme, PTI 25 June, 2017 in New Delhi

years, but after Dharmendra took over, 11 lakh (1.1 million) new consumers were added in a year. This is how work is executed.” About Venkaiah Naidu, Urban Development and Parliamentary Affairs Minister in 2016: “On this occasion (passage of GST) I want to appreciate the efforts of M Venkaiah Naidu. He has never touched the feet of anyone in his life... He has pursued the matter rigorously for the last two years, his interaction with various political parties and various leaders was remarkable.”

About Arun Jaitley and his team in 2016: “Arun Jaitley and his team at the Finance Ministry did a lot of hard work resulting in the successful outcome of Income Disclosure Scheme (IDS) 2016. Revenue Secretary Hasmukh Adhia, CBDT Chairperson Rani Nair and their teams also put in tremendous effort on all aspects relating to IDS-2016. Congrats to them.”

About Suresh Prabhu, Railway Minister in 2016: “No one has given attention to the reforms being undertaken in railways till now. Those who talk of big reforms can see how much changes have come in the Railways”

About Dharmendra Pradhan, Petroleum Minister, in 2016 in Odisha: “A total of 26 lakh (2.6 million) people got LPG connections in Odisha in 60

About Smriti Irani, then HRD Minister in 2016: “Do hear this speech by Smriti Irani” (speech made by Minister in Parliament on the Rohit Vemula case).

OPINION LU KANG

China is resolute in combating human trafficking The US State Department will unveil later today the annual Trafficking in Persons Report, rating China among countries of the worst record when it comes to human trafficking. What is your response to this?

sitise local populations about it?

This is not a new question, and the Chinese government's position on that is clear to all, that is, we are resolute in combating human trafficking. The progress that we have made is also obvious. We are firmly opposed to the irresponsible remarks made by the US based on its domestic law about others' efforts against human trafficking. The Chinese side always believes that no country can stay aloof from the fight against human trafficking as it is a crime plaguing the whole world. The Chinese side will step up cooperation with other countries to crack down on human trafficking based on mutual respect. According to the Foreign Ministry’s statement yesterday, some Indian border guards crossed into the Chinese territory at the Sikkim section of the China-India boundary. Has the Indian side taken any steps to remove China’s concern? What is the latest on this issue?

Yesterday, spokespersons of both the Defence Ministry and the Foreign Ministry of China have made statement on Indian border troops’ trespass and provoking of troubles at the Sikkim section of the China-India boundary. It is the Indian border troops who crossed into the Chinese territory and obstructed the Chinese border troops’ normal activities in Doklam. We have taken proportionate measures in response. As for the question you asked, the Chinese side has lodged representations with the Indian side both in Beijing and Delhi, expressing our solemn position. I must say that China is sincere about developing friendly relations with India but is also resolute in safeguarding its own sovereignty and interests. We hope that the Indian side will work with us, take swift and correct measures to bring those who crossed into China back to the Indian side of the boundary. The Foreign Ministry statement said that the situation on the boundary was the reason why the arrangements for Indian pilgrims were being delayed. I just want to ask what about the remaining 300 pilgrims who are supposed to be undertaking this very important pilgrimage in the next few weeks, will China make arrangements for them or will they be denied?

I have stated China’s solemn position and requirement concerning the Indian border troops’ illegal entry into China. I will not repeat it. As for the trip by Indian officially-organised pilgrims to Xi Zang via the Nathu-la mountain pass in the Sikkim section of the China-India boundary, I believe that the Indian public are fully aware of the enormous efforts made and the convenience provided by the Chinese government against all odds in the interests of China-India friendly relations. Recently, the Indian border troops crossed into the Chinese territory at the Sikkim section of the China-India boundary, and in response to that, we have taken necessary and emergency measures. In the meantime, we have to put off arranging for Indian officially-organised pilgrims’ entry into Xi Zang via the Nathu-la pass out of security concerns. We have informed the Indian government through the diplomatic channel. As for what is coming next, it is a matter of course that the Indian side should take necessary measures to alleviate the tension caused by their border troops’ illegal entry, and create conditions for their pilgrims’ travel to Xi Zang via the Nathu-la pass. The next round of Syria talks will be held in Astana on July 4 to 5. I wonder if the Chinese special envoy on Syria or any official from the Foreign Ministry will attend the talks?

It is China’s long-standing position that the Syria issue can only be resolved through political and diplomatic means. We believe that both the Astana talks which focus on realising ceasefire and cessation of violence and the Geneva talks which aim at promoting political settlement are positive efforts for peaceful settlement. The situation in Syria is at a crucial juncture where all relevant parties should bear in mind the overall peace and stability of the region, work for the shared goal, and jointly play a constructive role for the political settlement of the Syria issue. As for the particular question you asked, the Chinese side always supports the process of political settlement. We hope positive outcomes can be achieved in the Astana talks on July 4. Information about China’s attendance will be released in due course. After the press conference, a journalist asked: Since China believes that the Sikkim section of the China-India boundary has been defined, can you tell us how it was defined, based on which treaty, when it was confirmed by the Indian government and how?

There is solid legal evidence to support the delimitation of the Sikkim section of the China-India boundary. It is stated in article one of the Convention Between Great Britain and China Relating to Sikkim and Tibet (1890) that “the boundary of Sikkim and Tibet shall be the crest of the mountain range separating the waters flowing into the Sikkim Teesta and its affluents from the waters flowing into the Tibetan Mochu and northwards into other rivers of Tibet. The line commences at Mount Gipmochi on the Bhutan frontier, and follows the above-mentioned water-parting to the point where it meets Nepal territory.” It is without any doubt that the spot where the Indian border troops trespassed is on the Chinese side of the boundary. Both China and the successive Indian governments recognise that the Sikkim section has been delimited. It has been confirmed by the Indian leader, the relevant Indian government document and the Indian delegation at the special representatives’ meeting with China on the boundary question that India and China share common view on the 1890 convention’s stipulation on the boundary alignment at the Sikkim section. To observe the relevant convention and document is the inescapable international obligation of the Indian side. Lu Kang is a Chinese foreign ministry spokesman

ILLUSTRATION: BINAY SINHA

BHASKAR VIRA teaches at the department of geography and is fellow of Fitzwilliam College,University of Cambridge. He is also director of the University of Cambridge Conservation Research Institute. He tells Aditi Phadnis about the need to incorporate ecological wisdom into our everyday decision making.

‘Nature sends us no bill, so we ignore it in our decisions’ Last week four Tibetan monks held prayers alongside the Naini lake, where mounds of dead fish were piled up because the water in the lake is drying up. But isn’t the matter beyond prayer? All over India, hills are facing an acute shortage of water. What is the solution?

I’m always a little wary of suggesting simple solutions to what are usually complex problems. But, we need to start with a change in our attitudes to what nature provides us. We have tended to take these ‘gifts’ for granted … clean air, water, forests, and the species that inhabit these spaces, all of which contribute to improving our lives. Nature does not send us a bill for these services, so we ignore them in decision

making, until we hit a moment of crisis, such as the current shortage of water. We need to incorporate ecological wisdom into our everyday decision making. We need to understand how water flows, how our decisions impact on these flows, and to learn to treat nature with the respect it deserves. We need to reinvest in nature rather than contributing to its destruction. India is not a dry country but almost all of the rain falls during the monsoon. How can we safely store and transport water so that it’s available 12 months a year, and distributed evenly throughout the country? How can we prevent encroachment in hill towns and sen-

regeneration in Sikkim. The problem in India is both to do with the timing of the rains, and where the rain falls — You study conservation. India talks a lot there is both temporal and spatial unevenness. about it, but as a field of research and study, it So, in any given year, we will get most of the has no following in India. Indian rivers rainfall in the three-four months of the mon- continue to be filthy, although leaders soon; and, in any given year, we will also see a smugly say purity of rivers is a creed with pattern of scarcity (too little rain in some India and Hinduism…. places) and plenty (too much rain in others). The modern lifestyle has definitely resulted in We can’t change this pattern — but we can people losing touch with the natural world. develop ways to cope with it. One key issue is Water comes from a tap now, and most people storage of water, both above ground (in ponds, have no idea about what the source of their lakes, tanks, and rivers) and below ground (in water is, and how threatened these critical terms of aquifer and groundwater recharge). water sources might be. They may be unable to For example, in Nainital, allowing Sukhatal to connect the loss of nature with the slow trickle serve as a buffer for the main lake, storing water of water in their municipal supplies, and there in the monsoon, and then slowly releasing it in is little appreciation of the interconnectedness subsequent months are a very sensible way to of our lives with the natural world. Religious practice and cultural manage the problem of too much traditions in India have a lot to conmonsoon rain. Up and down the country, we have traditional tanks and tribute, as they tend to reflect a storage systems that are being built respect for nature in some of their core principles. Unfortunately, and encroached upon, with developmany who practise or preach about ers unaware and unconcerned about the implications for the associated dis- BHASKAR VIRA religion lack an appreciation of this ancient wisdom, or indeed ecologruption to hydrological systems. Reader, University of ical wisdom of any kind, as far as The encroachment issue is relatCambridge our rivers and lakes are concerned. ed. Many of these water storage sysI am very interested in the implications of the tems are temporary or seasonal, critical for a few months, but then apparently falling into recent court rulings that have given rivers the disuse for the rest of the year. This temporary legal standing, as quasi-persons. What is signifavailability of space encourages encroachment icant about this is not just that rivers themselves and the occupation of land. These pressures have rights, but that these rights are associated can, and must, be resisted. We need to carefully with duties on the part of the government. If a demarcate these ‘critical water zones’, and river is polluted, or is dirty, its rights are being ensure that they are protected. With modern violated, and the new legal entitlement can be technology, and a vigilant civil society, moni- enforced in a court of law, holding the governtoring compliance should not be too difficult. ment to account. This could have major impliIt is important for local populations to realise cations up and down the country. that they can address these problems, and to pressure the authorities to ensure compliance There has been dire warning about water wars. Do you believe things will reach that with land use and zoning regulations. point in the South Asian subcontinent? There’s been a lot of talk about river interlinking. Is that the answer? In any case, apart from two rivers interlinked in Andhra Pradesh there has been precious little movement on this…

The river-linking project is high-risk, and unproven for Indian conditions — both in ecological and administrative terms. Ecologically, there are risks that such a project might disrupt existing bio-geophysical systems, and might not be resilient in the medium term due to changing patterns of precipitation due to climate change. I am also inherently cautious about such largescale engineering projects, which typically overrun and are often linked to high levels of corruption in execution and delivery. There are other, more local and small-scale options, and these should be examined. Investing in source protection and regeneration at a local level might be a more sustainable long-term alternative. This is beginning to happen, in parts of peninsular India, and the stunning work being done on springs and their

All scarce resources can be a potential flashpoint in times of political contestation. Water cannot be immune to this risk, although I suspect it is unlikely to be an immediate danger, at least in an international sense. Our relations with our neighbours are far too complex to allow the water question to emerge as the key determinant of conflict. However, as we have seen in the Cauvery dispute, at more local levels, water wars already begun. Instead of perceiving these as potential zones of conflict, it is far better to consider the shared waters of the sub-continent as drivers of peace and cooperation. Water flows, between places and does not respect political boundaries. When there is too much water, as in the Kashmir floods a few years ago, it does not matter which side of the border gets inundated (and, it is often likely to be both sides). Information sharing, data platforms, and joint emergency response services could be a very important bridge between communities at these critical moments.

Nitish Kumar keeping the grand alliance on tenterhooks SATYAVRAT MISHRA On June 17, Rashtriya Janata Dal (RJD) supremo Lalu Prasad, along with his wife, Rabri Devi, and both his minister sons, Tejaswi Yadav and Tej Pratap Yadav, attended the Iftar party hosted by Bihar Chief Minister (CM) Nitish Kumar at the latter’s official residence in Patna. Prasad used the occasion to showcase the unity of the grand alliance and dismissed any rift between him and Kumar. They smiled and posed before the cameras and their bonhomie seemed genuine. Just a week later the bonhomie was nowhere to be seen. Kumar did turn up at an Iftar party hosted by Prasad, but the atmosphere was “tense”. The two stal- BIHAR warts did hug each other after repeated requests by shutterbugs, but the embrace looked forced. They sat near each other, but barely smiled or spoke. They were more interested in talking to others than to each other. In the past, at events hosted by the RJD's first family,

Prasad used to personally attend to Kumar and even served him. He didn’t bother that evening. “It’s all before you. What more is there to say?” asked a senior RJD minister. In less than two years of coming to power, the grand alliance in Bihar is facing its biggest crisis. The root cause is the JD(U)’s decision to break opposition ranks by backing National Democratic Alliance (NDA) candidate and former Bihar Governor Ramnath Kovind for the presidential election. An open war of words among the alliance partners — with the JD(U), on one side, and the RJD and the Congress, on the other — threatened the very existence of the alliance. Most importantly, the bickering didn’t stop at the level of lower-rung spokespersons. Top-level leaders of all the three parties got involved and took pot-shots at each other. Things deteriorated so much that the party leaderships had to issue gag orders to put an end to this. Until a couple of months ago,

STATE SCAN

Kumar was in favour of a united opposition. In April, he met Congress President Sonia Gandhi and expressed his desire to form a grand alliance at the national level to stop the BJP juggernaut. According to many in the party, sensing the Congress’s reluctance, Kumar started drifting. He skipped a meeting of opposition parties called by Gandhi on May 26, but agreed to have lunch with Prime Minister Narendra Modi the very next day. However, Kumar was still reluctant to be seen against opposition unity in the presidential election. This changed the minute the BJP announced Kovind would be its candidate. According to JD(U) insiders, the party believes that supporting the former Bihar governor, who belongs to one of the most depressed communities, would help in the upcoming elections. This, along with Kumar’s personal camaraderie with the ex-governor, played a pivotal role in his decision. Kovind was one of the very few governors with whom the chief minister enjoyed a cordial relationship. Despite serious reservations of local BJP leaders, Kovind supported the state government in its mission of prohibition. However, Kumar’s decision made JD(U) allies unhappy. Many RJD and

Congress leaders privately say they are bewildered by his stand. The Congress rushed Ghulam Nabi Azad to coax him to reverse his decision. If sources in the Congress are to be believed, Kumar ignored desperate pleas of its leaders to at least postpone his announcement till the time the opposition parties could announce their common candidate. “Kumar believes in many ideologies. We, on the other hand, will never join hands with the BJP,” told a visibly hurt Azad at Patna Airport on June 20. The next day, Prasad asked Kumar not to make “a historic blunder”. “I appeal to Nitish to avoid a historic blunder. We always fight for ideology,” said Prasad. More importantly, when asked if Kumar had betrayed the opposition, he said, “Dhokha hai yaa nahi, ye Nitish jane.”However, Kumar refused to budge. “I take pride in Meira Kumar being Bihar ki beti. But why is she being fielded to be defeated?” asked a defiant Kumar, coming out of Prasad’s Iftar party in Patna. “If I am making a historic mistake, so be it. The opposition should actually formulate a strategy to win the 2019 election and then make her (Meira Kumar) president in 2022.” His deputy in the state cabinet, Tejaswi Yadav, retorted: “Victory or defeat can only be decided in the election. How

can one predict defeat before an election? We have not fielded our candidate to lose.” And thus began the war of words between the alliance partners: Name calling, arm-twisting and verbal volleys. The grand alliance was in tatters. The JD(U) issued an ultimatum to the RJD to act against its leaders who constantly targeted the Bihar CM, saying it would shorten the life of the alliance. On Tuesday, JD(U) National Spokesperson K C Tyagi spelled out the biggest ever threat to the alliance by saying that the party had felt “more comfortable” with the BJP than with the Congress and the RJD. Finally, a truce was called on Wednesday, when all sides issued diktats to hold fire. Both Kumar and Prasad said that the alliance was “rock-solid” and talks of a break-up were a media creation. However, no one, not even their own leaders, believes this. “There is deep mistrust among the alliance partners. The Congress is not sure about Kumar’s intentions. The JD(U) wants to be seen as independent of the Congress and wants to keep the BJP eager. As far as the RJD is concerned, Prasad doesn’t want to destabilise the government as his sons' future is tied to it. This doesn’t mean that Prasad doesn’t understand Kumar’s plan,” said a senior politician.

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OPINION 11

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Volume XI Number 17

MUMBAI | 2 JULY 2017

A wake-up call India must build resilience against cyber attacks

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his week, yet again, the global economy was hit by cyber attacks that affected sectors as diverse as banking, the transportation industry, chocolate factories and oil refineries. Some attacks seemed designed to just cause disruption; others were backed by demands for ransom to be paid in bitcoin, a cryptocurrency. The digital infection is likely to have started in Ukraine, but it has spread like a plague across at least 60 countries. Some affected companies paid up while others managed to migrate to backups. But the attacks caused huge financial losses and physical damage. This is not the first instance

of such malware attacks, yet the worst aspect is that such invasions are likely to happen again, thanks to a proliferation of linked computer systems and the increasing dependence on computerised systems in almost all walks of life. There will also always be unscrupulous hackers exploiting computer systems to make a quick buck, or just to cause chaos for the “Lulz”, as hackers call them. It is apparent that some of the methods used were developed, with government approval, as tools for cyber warfare. Nationstates have used cyberwarfare extensively in the past decade. Stuxnet, a sophisticated and malicious computer worm, was report-

ed to have crippled Iran’s nuclear establishment by physically destroying centrifuges. The Stuxnet attack was believed to be a joint operation funded and run by the Israeli and American security establishments. When Russia and Georgia had a brief conflict in 2008 over the disputed region of South Ossetia, Georgia’s information technology infrastructure was targeted by hackers who knocked the country off the Internet. Since the start of its conflict with Russia, Ukraine has been hit by several waves of cyber attacks, targeting its physical infrastructure such as power grids. Any 21st-century war is likely to have a large cyber component since all modern military equipment and communication systems are enabled with information technology (IT). Cyber attacks are useful weapons, offering a big bang for the buck. They require relatively little investment to cause large-scale disrup-

tion. What is more, such attacks enjoy plausible deniability. But unlike other weapon systems, nation-states cannot control and sequester the tools of cyber warfare. Any smart hacker can design, modify and release malware into the wild and it is impossible to prevent the spread of such malware. Not surprisingly, the ability to cause actual physical damage and chaos has obviously multiplied as civilisation becomes more IT-driven. In this regard, India is at high risk. Quite apart from the defence establishment, Indian Space Research Organisation and big businesses, there is also the drive towards Smart Cities, Digital India, Aadhaar, and the newly unveiled goods and services tax (GST) regime, among other government programmes, where information technology and networking are integral to the structure. India is also enmeshed in multiple “dirty wars” and, therefore, an attractive target for

Negotiating the seas

Aadhaar and multiple identity disorder

With the United States having recognised India’s role in the Indo-Pacific region, the time is opportune for the two countries to step up maritime security cooperation

RAJENDRAN NARAYANAN

ers, perhaps paving the way for wages taken out in his name. While he was asked to sign gantuk (The Stranger) was Satyajit the consent form during enrolment, there Ray’s last film. The film revolves has been no education or training on the around the return of an old man, uses, abuses, and privacy of this biometric Manomohan Mitra, to India after 35 years. authenticated number. Not so long ago, Nandan Nilekani, the Manmohan had spent all his life with Adivasis from across the world and has a architect of the Aadhaar project, came up take on civilisation and progress that is at with a taxonomy of the people opposed to odds with the popular urban narrative of it. Aadhaar, two of the categories being “rightsHe claims to be the uncle of Anila and wants of-the-poor” advocates and “luddites” (those to spend a few days at her house in Kolkata. who are opposed to technological change). Anila’s husband Sudheendra is highly sus- Xavier doesn’t belong to either of the camps. picious of this stranger’s identity. He got an Aadhaar because he was told that Manomohan sees through Sudheendra’s once he gets his Aadhaar, all his problems suspicion and gives his passport to would be solved. However, all that has hapSudheendra to verify his “identity”. pened is Xavier resides in multiple databasSudheendra heaves a sigh of relief as he es with Aadhaar acting as the compass matches the name, the photograph, and the among his many so-called identities. Mr Nilekani’s taxonomy may appear distinguishing mark. Manomohan, on the contrary, debunks Sudheendra’s conviction clever but it indicates he is ill-informed about by saying “the passport proves nothing” ground realities, and points to his technoutopianism. What is primarily required is about “identity”. India is going through a curious phase political and administrative will for effective where these questions are being codified and delivery of services and not merely a ranmapped through a 12-digit numeric equiva- domly generated unique 12-digit number to lent called Aadhaar. Let us look at what these tag people. Enrolment in Aadhaar itself is a mean from the lens of an Adivasi man called shining example of the government’s reach when there is political willingness. The sheer Xavier Ahir Minj in his forties. Xavier is a resident of Mahuatoli village in numbers in the Aadhaar database is testiChampa panchayat of Mahudand block in mony to that. In Xavier’s context, it is more Latehar district of Jharkhand. That’s his res- important to have responsive and accountable field staff as opposed to idential identity. He cannot stWhat is primarily more camps to get people into a and straight and uses a sturdy required is database. Is it better to have a stick as support. He is visibly disfancy algorithm that solves a abled and has a certificate issued political and wrong problem or some subin 2009 with his passport photoadministrative optimal technology that graph stuck on it that “proves” will for effective that he is more than 50 per cent delivery of services attempts to solve more relevant problems? What is at stake is disabled. He is thus eligible to and not merely not efficiency but democracy get disability pension from the a randomly at large. state. Despite numerous visits to generated unique The proponents of the the block office, an 18-km walk, 12-digit number UIDAI project may dismiss he has still not started receiving to tag people Xavier’s situation as anecdotal. his disability pension. Identity as an NREGA worker: Xavier is They may desire an assessment of the scale listed as “Jebiyar” Ahir in the NREGA of such travesties. But how many anecdotes Management Information System (MIS). His are required to make the government pause job card, bank passbook, and his Aadhaar and reflect? The velocity of Aadhaar imposinumber have been taken away by a local con- tion has left no time for rigorous studies or tractor. According to the MIS, he and his wife debate in evaluating the costs and benefits of have collectively earned ~24,096 from the this coercive project. Aadhaar was supposed beginning of the last financial year. However, to be a panacea against corruption and leakthey don't even know their job card number age and a magic wand for financial incluand neither has worked a single day. They sion. But, Xavier stands tall, paradoxically were angry upon learning that so much mon- so, as a counter-example to the claims made ey has been siphoned off in their names. On by Aadhaar — he is yet to get his disability paper though, they are model NREGA work- pension, his PDS entitlements are in peril, ers because they’ve purportedly done close and cash is being withdrawn by somebody else in his name. Xavier exists as rows and to 100 days of work in a year. Identity in the Public Distribution columns in databases and is yet invisible to System: Xavier has also been struggling to the state. Much like Manomohan’s passport, get rations under the PDS because he does- Xavier’s Aadhaar seems to prove nothing. n’t have his “original” ration card and the How has Aadhaar helped Xavier? Manomohan Mitra in Agantuk astutely dealer refuses to acknowledge the photocopy. Xavier’s wife, Indo Devi, was shouted at remarks, “I understand your dilemma. I by the ration dealer for not producing the know you but you don’t know me.” In the original, and they have stopped getting same vein, Xavier remains an agantuk — a rations ever since — although the Jharkhand stranger to the state. He knows the state, but he has fallen through the cracks and PDS website indicates otherwise. An Aadhaar enrolment camp was con- continues to live in the blind spot of our ducted in his village a few years ago. Since democracy. then Xavier owns an Aadhaar card. Unaware of privacy concerns, he had given his The writer is on the faculty of Azim Premji Aadhaar number to a contractor, among oth- University

PTI

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PREMVIR DAS

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t must be truly rare in bilateral discussions between heads of state or government, and especially those in which the global superpower is a party, for a relatively inconsequential item like maritime security to even figure in the agenda, much less attract any serious attention. Yet, in the just concluded Modi-Trump interface, this theme was stressed thrice, not by our prime minister but by the US president. First, he spoke of the forthcoming Malabar exercises at sea which would, in his words, be the most elaborate and complex carried out until now. He then went on to stress the need to elevate the level of maritime security cooperation between the two countries. Finally, the joint statement acknowledged the need for both countries to play meaningful and legitimate roles in the Indo-Pacific and the common imperative for both in ensuring freedom of movement at sea consistent with international norms. There are other elements to this highest-level engagement too, but the purpose here is to focus on issues at sea highlighted at the meeting and how they impact our own interests and aspirations. Starting in the reverse order, some analysts have commented that by not referring to our role in the South China Sea (SCS), which had figured in the Modi-Obama statement of 2016, our position has been diminished. This is erroneous. The term “Indo-Pacific” was first coined by then Secretary of State Hillary Clinton in 2008. The Americans soon shied away from it and put out the more convoluted terminology of “IndoAsia-Pacific”. The term chosen by Ms Clinton is more embracing, covering as it does waters stretching from the Suez Canal to the waters of the western Pacific (which include the SCS). We should be more than satisfied that the Trump Administration has chosen to restore the original description and, even more important, that it recognises India’s legitimate role in this vast region. India is, in essence, an Indian Ocean Region (IOR) player, but given its size and interests, which includes growing maritime trade, its concerns extend beyond it. So, even though it is not a SCS littoral, it cannot remain excluded from developments that are taking place there. Its inclusion as party to the Indo-Pacific provides exactly that recognition. So, this is fully consistent with our long-term interests, and if some of our own foreign office mandarins have contributed to it, full marks to them. As for enhancement of maritime security cooperation, while this has increased substantially in the last 15

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cyber terrorism. India is also a soft target many so-called smart systems are designed to be accessed by over a billion people. Creating a cyber-security network to protect such assets is a multi-pronged task. It involves “hardening” key infrastructure elements such as the Aadhaar and GST databases so as to render them immune to attempts by hackers. It also involves educating private citizens and businesses to implement safe cyber practices. More importantly, it requires creation of backups to be seamlessly integrated, in case of a disaster. While this is imperative, yet it is unclear if the government has embarked on any such cyber-security initiatives. There have certainly been no attempts to educate private citizens in safe practices, for instance. India’s cyber establishment, thus, remains highly vulnerable to disruption. The latest attacks should be a wake-up call.

A productive visit: Prime Minister Narendra Modi with US President Donald Trump at the White House

The content of these annual exercises, years, we are still constrained by conducted alternately in the IOR and bureaucratic hurdles, the main ones the western Pacific, has been enhanced being our inability to conclude two over the last 15 years but there is a qualimportant bilateral agreements which itative difference this year. For one, would facilitate sharing of classified India will field its most capable platinformation. These have been discussed form, the aircraft carrier INS threadbare in earlier years but there is a Vikramaditya with its MIG 29K aircraft need, on both sides, to take a fresh look, and several frontline ships and subgiven the strategic convergence that has marines. The US participation will also been spoken of by both leaders. be substantial. Add to this the presCooperation at sea involves not just ence of the Japanese Navy and the ships going out together and carrying strategic convergence which guides out exercises over a couple of days, this exercise becomes readbut understanding the ily apparent. The Malabar whys and the wherefores. In the Indian series is clearly an IndoThis can come about only if Ocean Region Pacific event and lends there is some degree of synespecially, India credibility to India’s aspiraergy of doctrines, and for has to become a tions and potential. this to happen information net security To these three elements sharing is important. So, provider. This which figure prominently while one can be selective will require in the Trump-Modi diaand discriminate between joint operations logue, must be added the what can be shared and with the American clearance for the what has to be beyond the United States supply of nearly two dozen radar, some compromise Guardian drones for the Indian Navy. seems necessary. In the IOR especialWhile these will, no doubt, enhance ly, India has to become a net security the surveillance capabilities of our provider and that will often require forces at sea, the fallout will come in joint operations with the US. This realwhat may lie ahead. If these should isation will facilitate actions needed to materialise, as one hopes they will, it foster enhanced maritime security is almost certain that they will be folcooperation. lowed, sooner rather than later, by The third element is the reference weapon-fitted versions. The logic of to Malabar series of exercises at sea.

the strategic relationship, provided it is taken through, will dictate such a step for both parties. The Indian Navy also has an enquiry ongoing for nearly five dozen fighter aircraft to operate from aircraft carriers at sea and while the choice may, to some extent, be influenced by what the Indian Air Force selects for itself, the options should be wide open. Procurement of major military hardware must always be seen through the prism of geopolitical interests more than just financial cost. The dialogue just concluded gives India an opportunity to make the required course correction. In sum, we must treat the US focus on maritime security cooperation, which treats both parties on par, as more than just passing remarks. This is the most positive part of the articulation that has been made, quite different to the rhetoric about friendship and democracy. As the Bard wrote, “There is a tide in the affairs of men, Which taken at the flood, leads on to fortune...” That circumstance may be upon us. The writer is a former Commander in Chief of the Eastern Naval Command. He has also served as member of the National Security Advisory Board

OTHER VIEWS

Centre should sell entire stake in Air India, even if in stages Both domestic and foreign buyers must be allowed to bid freely for shares With the Union Cabinet’s “in-principle” approval for the sale of Air India and five of its subsidiaries, a long-standing demand on the reform checklist has been ticked. The rationale for the government to shovel in huge sums of money to keep the loss-making airline afloat was weakening by the year. Air India has been surviving on a ~30,000-crore bailout package put together by the United Progressive Alliance government in 2012 to help its turnaround, and the debt relief provided by public sector banks. The airline has a debt load of over ~50,000 crore on its books, and it is estimated that even a well-executed asset sale may not fully cover its present liabilities. It is not yet clear whether the airline will be fully privatised or how its eventual sale will be executed. A ministerial panel under Mr Jaitley is expected to begin working on the details soon. But having taken the politically courageous decision to privatise Air India, the government would do well to go for the sale of its entire stake, even if it is done in a gradual manner. Eventually, the aim of the sale should be to get the best price for the airline. One good way to achieve this would be to allow both domestic and foreign buyers to bid freely for stakes. For

this, the government will have to re-tune its FDI policy to allow foreign investors to buy a stake in Air India. The Hindu, June 30

The PM has at last spoken

Assault on the media

But, will he be heeded?

Breach of privilege charge misused

Whether emboldened by or compelled by the sense of harmony and coexistence suffused in the air of Sabarmati Ashram, Prime Minister Narendra Modi on Thursday was able to enunciate the long-awaited words: The killing of people in the name of cow protection is not acceptable. That done, he needs to now put his weight behind what he has said: Ensure mobs do not lynch anyone, in anyone’s name or for any cause. Irrespective of his politics, every person with a scrap of humanity in him has been dismayed by the rash of lynchings, public beatings and arson in the name of protecting the cow across the country, especially the BJPruled states, since 2014.

Trial by the legislature is an idea that goes against the principle of separation of powers which forms the backbone of a democratic structure. Yet, the Constitution of India grants this rare privilege to the country’s legislators. The idea is to ensure that no one has the audacity to assail the dignity of the House or impede its working. Unfortunately, as the long history of the working of state and Central legislatures in India shows, breach of privilege has become a weapon commonly used against media houses, media persons or individuals who get into the bad books of legislators. In the absence of a codified law that clearly defines what constitutes a breach of privilege, such cases of misuse of the special powers granted to the

It is a fact that Hindus and Muslims have lived for hundreds of years in a productive coexistence. It is also a fact that they have occasionally crossed swords with disastrous consequences. The clash today is between two “views” of these “facts”: One, the two communities are united citizens of this country, who occasionally get, or are incited to get, on the wrong side of each other. Two, Hindus and Muslims are fundamentally irreconcilable enemies, who now and then work together as a matter of convenience. Which view of the facts we choose defines what we are. Let us be careful in our choice. The Tribune, June 30

legislature have set precedents. The latest instance is served by the Karnataka legislature’s privileges committee, which has ordered a year’s jail sentence and fine for two journalists. The powers-that-be appear to be taking their right to be offended rather seriously. Throughout the country, this has built up a powerful onslaught against press freedom. Media persons who displease vested interest groups and influential politicians find themselves easy targets of official investigation or summary trials. If legislators come across offensive reportage, they should, by all means, counter it, but not by misusing their privilege. The Telegraph, June 30