THE ECONOMIC TIMES WWW.ECONOMICTIMES.COM

BENNETT, COLEMAN & CO. LTD.

s://telegram.me/TheHindu_Zone

https://telegram.me/PDF4EXAMS

JOURNEY BEGINS Initial reports say rollout of India’s boldest reform has been hassle-free. As govt keeps close tabs, businesses & buyers are gradually adjusting to the new regime

Inside story

Pranab: Didn’t Let Divergence of View Cloud Ties With PM

Out On The Road, GST Finds The Going Smooth Deepshikha.Sikarwar @timesgroup.com

First Round Govt says initial implementation reports positive CLOSE WATCH

President Pranab Mukherjee on Sunday said there had been divergence of views between him and PM Narendra Modi in the past three years, but that both kept such differences to themselves while finance minister Arun Jaitley was able to clear his doubts. The PM and President lavished praise on each other at a book launch ceremony in the President’s House, with Modi turning emotional while recalling how Mukherjee “acted like a father” to him, reports Aman Sharma.PAGE 2

India Shows Construction Permits to Seek Higher Ease of Doing Biz Rank India has told the World Bank that it has improved processes for granting construction permits sufficiently to pip the current topper, New Zealand, in the next edition of the Doing Business report. It now takes only 60 days following eight online procedures to get a permit in Delhi and Mumbai, compared with 93 days and 10 procedures in New Zealand. Economy: Macro, Micro & More13 llllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllll

Mittal Blames Market Disruption Post Jio Entry for Sector Woes Bharti Airtel chairman Sunil Mittal has blamed ‘unprecedented market disruption’ following the entry of Relance Jio Infocomm for the telecom industry’s financial woes, but said his company had countered the challenge well. Mittal received a hike of over 8% to take home a salary of `. 30.1crore for 2016-17. Companies: Pursuit of Profit15 llllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllll

Rahul Yadav Joins ANAROCK Property as Chief Product Officer Rahul Yadav, cofounder and former CEO of Housing.com, has joined Indian real estate industry stalwart Anuj Puri’s newly launched venture ANAROCK Property Consultants as chief product & technology officer. Companies: Pursuit of Profit15 llllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllll

As Monsoon Covers Most of North, Met Says Rains 6% Above Normal The monsoon advanced over the National Capital Region and most parts of J&K and other Himalayan states. It is expected to cover the rest of the country in next two weeks. According to IMD data, the country has recorded 6% abovenormal rainfall since June 1. Economy: Macro, Micro & More18

Can govt's one product, one MRP plan really fix price manipulation in India?

63%

28%

9%

YES

NO

CAN’T SAY

TODAY’S QUESTION

Will GST bring a demonetisation-like disruption for Indian businesses? www.economictimes.com

New Delhi: The rollout of the country’s most comprehensive indirect tax reform — the goods and services tax — has been positive and largely hassle-free, with no checks on state borders, smooth customs operations and no major problems reported, the government said. Government officials are keeping a close watch on implementation and not taking any chances. “Initial reports are positive… There have not been any hassles,” revenue secretary Hasmukh Adhia told ET. The government is now looking at a massive outreach to consumers as well as industry to clarify all issues and highlight the benefits of

Centre keeping tabs on implementation

GOOD START

Bigger review on Monday of more depts

Cabinet secretary takes stock

Customs Supplies of systems working essentials goods hitch-free uninterrupted

GST

The Road Ahead

Cargo Some confusion movement at but business as ports normal usual for trade

MISCONCEPTIONS CLEARED13 the tax regime, which came into effect on July 1. “Day two of goods and services tax has passed without major problems being reported,” the finance ministry said in a statement on Sunday. Govt Keeping Eye on Prices18

Set to Hardsell Tax BJP ministers and officebearers will launch an outreach to allay fears about GST and project it as “Indian economy’s tryst with destiny”, reports Rakesh Mohan Chaturvedi.2

May be Sluggish for Some Time As real estate developers fine-tune their systems, builders and brokers are expecting sales to remain sluggish for some time as consumers await clarity.6

Producers of Daily Use Items Amul cut prices of some dairy items and made others costlier as makers of pickles and jams complained of tax burden and sellers of branded rice and flour said their distributors were unhappy.6

Prepaid Biz of Telcos May Toyota, Hero MotoCorp cut prices; FMCG cos will slash rates or increase weight Suffer Jolt

It’s Advantage Buyers on Day 2 Sagar Malviya, Ratna Bhushan, Writankar Mukherjee & Sharmistha Mukherjee

Mumbai | Kolkata| New Delhi: Some car and two-wheeler prices fell on day two of the unified indirect tax regime on Sunday and consumer companies promised more cuts in the days and weeks to come as goods produced after July

1 hit the market. Japanese automotive giant Toyota slashed prices of its cars by up to 13%, while New Delhi-based Hero MotoCorp reduced prices of twowheelers by `. 400-4,000. Hyundai Motors, Tata Motors and Ford India are expected to unveil price cuts in the next few days taking the cue from market leader Maruti Suzuki. India entered a new era of single, unified tax regime called the Goods

and Services Tax (GST) on Saturday, an era which promises a nation-wide single market and fewer tax hassles in the form of a leaner, simpler tax structure. Four tax slabs — 5%, 12%, 18% and 28% — replaced an assortment of local, national and state-level taxes that has been blamed for inefficiency and corruption. Amul Revises Product Prices12

Sebi Show-Causes I-Banks in Yes Bank QIP Probe Explanation sought from Goldman Sachs, CLSA, Motilal Oswal for Sept 7 issue that was pulled out a day later Reena Zachariah & Sugata Ghosh

Mumbai: The regulatory probe around private lender Yes Bank’s aborted fundraising last September and the fiduciary lapses of leading investment banks is reaching its culmination. A fortnight ago, Securities & Exchange Board of India shot off show-cause letters to merchant banks that had advised Yes Bank on the equity offering to foreign and local institutional investors. Goldman Sachs (India) Securities, CLSA India and Motilal Oswal Investment Advisors were the three main book-running lead managers to the cancelled qualified institutional placement (QIP). Around 10 banks were involved in the billion-dollar QIP that had to be pulled out soon after its launch on September 7, 2016. On September 8, the stock slumped amid rumours that there were no takers for the offer. The statement from members of the Yes Bank management indicated that since the issue had to be kept open for three days, uncertainty and volatility crept in despite good initial response to the offer. According to a Sebi official, this was not an accurate interpretation of the law and it was the responsibility of lead managers to explain the regulations to their clients prior to the launch. “The

Stock Shock Yes Bank had launched QIP on Sept 7, 2016, and cancelled it the next day The stock fell

5.7% on September 8

Misinterpretation of Sebi rule fuelled the chaos

Now Sebi has pulled up I-banks for failing to guide Yes Bank

rules do not bar an issuer from making a soft closing the very next day. Only the pricing has to be disclosed after two working days,” a person familiar with the matter told ET. The stock fell 5.7% and more than 75 lakh shares changed hands on September 8. Ten minutes after the market closed, Yes Bank informed exchanges that the QIP price could be finalised before the September 12 meeting of the bank’s capital raising committee and the bank was required to keep the issue open till September 9 in line with Sebi rules. Listing Obligations18

Intuit is India’s Best Company to Work For Co pips giants like American Express, Google in study by ET and Great Place to Work Institute [email protected]

Mumbai: Sitting in the very first row at the India’s Best Companies to Work For Awards on Friday, Intuit India managing director Vijay Anand and his team were seen to be growing more and more excited as the evening wore on. Anand already knew his company was high up in the rankings since ET had done an interview with his team for an article on Intuit’s corporate culture (see today’s special supplement) but he didn’t know exactly where it was placed. By the time Google came in at third position, the Intuit team was holding its collective breath. When American Express was named second, they were in a state of jubilation. From its number 10 ranking in 2016, Intuit India had climbed nine paces, to emerge as India’s best workplace in 2017. Now in its tenth year, The Economic Times-Great Place to Work Institute study has seen a considerable amount of churn. Many veterans of the top ten have given way to newcomers like Adobe (which has climbed up to 6), NetApp (at

MONDAY, 3 JULY 2017

NEW DELHI / GURGAON | 42 + 4 PAGES OF ET PANACHE | .` 3.00 OR .` 7.00 ALONG WITH TOI

Top 10 Work Places 1 Intuit

6 Adobe Systems

2 American Express

7 NetApp

3 Google

8 Teleperformance

4 Lemon Tree Hotels

9 Pitney Bowes

5 SAP Labs

10 DHL Express

(7) and Pitney Bowes (at 9). IT and ITenabled companies continue to dominate the top 10, with Lemon Tree Hotels and DHL being the notable exceptions at number 4 and 10, respectively. But the CXOs gathered for the award ceremony didn’t seem too worried about their changing fortunes in the rankings – they were just glad to be participating and happy to cheer their peers. Addressing the audience, special guest and former member of the Planning Commission Arun Maira said the country needs a movement to make India the best place to work. “Human resources are our most abundant resource. And unlike buildings and machinery, it is a resource that constantly appreciates through learning,” he said. And what makes for a great place to work? “It’s not a number you can easily capture in an Excel sheet, but it’s still very palpable. Trust, pride and camaraderie are the signs of a great place to work and we feel these in our hearts and minds,” said Maira. Artificial Intelligence in Workplace18

Mobile operators are bracing for a possible disruption in prepaid services business as many distributors and retailers have been unable to complete registration formalities under GST.8 2, 6, 8, 13, 14, 15

Gadkari, Prabhu, Goyal & Raju to be Part of AI Panel Centre keen that divestment process gets underway soon MihirMishra @timesgroup.com

New Delhi: Senior Union ministers Nitin Gadkari, Suresh Prabhu, Piyush Goyal and Ashok Gajapathi Raju will be part of a five-member ministerial panel headed by finance minister Arun Jaitley tasked with deciding the process of privatising Air India, which may start by December. The committee’s brief is to finalise the structure and procedure of privatising the debt-laden national carrier. The government wants the process to be finalised speedily and bidding to start within six months, an official said. “The mood in the government is that the process should get underway quickly,” said the official. The Union cabinet cleared the divestment of loss-making Air India and five of its subsidiaries last Wednesday. It said the mini-

Flight Plan FM-led panel to decide on modalities of AI’s privatisation Besides Arun Jaitley, Nitin Gadkari, Suresh Prabhu, Piyush Goyal and Ashok Gajapathi Raju to be members of panel Govt wants bidding process to be underway within 6 months

Cabinet approved AI privatisation last week

IndiGo, Tata Group have shown interest in bidding for Air India

sterial panel will decide on how much stake will be divested and the universe of bidders — whether a foreign company can bid. The panel will also determine how the airline’s unsustainable debt will be treated, the spinning off of assets to a shell company, and demerger and strategic disinvestment of three profit-making subsidiaries. Niti Mooted Total Privatisation18

SHIPPING MINISTRY OPPOSES DIVESTMENT PLAN

Hurdles for Shipping Corp Stake Sale The shipping ministry has strongly opposed strategic sale in Shipping Corporation of India (SCI) and some ports, joining a number of other ministries that are not keen on selling PSUs under their watch, report Rajat Arora & Dheeraj Tiwari.13

https://telegram.me/TheHindu_Zone

https://telegram.me/PDF4EXAMS

2  Pure Politics THIRD

TRYST WITH DESTINY AGAIN All ministers and BJP office-bearers will be fanning out across the nation and taking forward PM’s messages that the ‘economic union’ is akin to political unification of various provinces by Sardar Patel in 1947 and that ‘the Centre and the states have pooled their sovereignty’ as all decisions were taken in unanimity

EYE

Nitish Model for Textiles

Ministers to Sell GST Focus on GST, 175 as Biggest Reform Ever New IAS Officers Told FM writes to all ministers thanking them for their “inspired cooperation”

The Union government is taking heart from Nitish Kumar’s experience when it comes to protests by traders over GST implementation. Officials say the biggest protest is from the textile sector which was outside tax preview earlier and would invite 5% GST now. They point out that Nitish Kumar had a year ago brought the textile sector in tax ambit in Bihar and traders protested for a month before resigning to their fate.

PM Modi will also give GST message to the 2015 batch officers when he addresses them today

RakeshMohan.Chaturvedi @timesgroup.com [email protected]

New Delhi: The launch of Goods and Services Tax at midnight, the reference to the measure being Indian economy’s “tryst with destiny” and PM Narendra Modi’s emphasis that this “economic union” is akin to the political unification of various provinces by Sardar Patel in 1947 will be taken forward by all ministers and BJP office bearers when they spread out to educate the masses about the issue. Prior to the GST launch on June 30, finance minister Arun Jaitley had written letters to all ministers thanking them for their “inspired cooperation” in this endeavour. Describing GST as a historic reform, Jaitley said, “It would be an understatement to say that we are on the brink of transforming the economic landscape. This journey has been eventful and remarkable and has brought out the spirit of cooperative federalism among all of us.” He goes on to enumerate the various aspects of GST that the ministers can highlight while reaching out to the people. The ministers will be holding forth at various fora on the benefits of GST in the first week of its launch. The government has plans for educating the masses about GST in the next three months. The Centre has begun

Lincoln Stamp On US Visit

an all-out effort to reach out to the people—especially the trading community, business class, the bodies representing the section engaged in commerce and industry—to allay their fears about the new tax system. The exercise will focus on two aspects. The first is to educate the people about the technical aspects like filing of returns, GST law and rules and so on. The government is giving equal emphasis to sell GST as “the biggest taxation reform” since Independence and drawing comparisons with the events of 1947. The ministers have been asked to underline in their public interaction that GST is “Indian economy’s tryst with destiny”. The phrase, clearly borrowed from Jawaharlal Nehru’s freedom at midnight speech, is aimed at telling the masses that after

Independence this is the biggest economic reform since 1947. The union ministers will also highlight that while political unification was done in 1947 by then home minister Sardar Patel, GST will now convert India into an economic union. The ministers have also been directed to educate the people about GST being an example of cooperative federalism where “the Centre and the The Road states have pooled their sovereignty” as all decisions were taken in unanimity. “We will also talk about how this is a fight against black money and will ensure better tax compliance,” a union minister said.

New Delhi: The government has asked 175 Indian Administrative Service officers of the 2015 batch beginning their three-month deputation to the Centre from Monday to focus their energy on learning about the Goods and Services Tax and helping in its smooth implementation. PM Narendra Modi is expected to give this message to these IAS officers when he meets and addresses them on Monday, officials said. The first three months of GST implementation are expected to be challenging and these IAS officers, designated as assistant secretaries, will witness this period of transition during their stint with various departments. They have been posted to 58 overnment departments from Monday. The GST lear ning could come in handy they join their reAhead when spective state cadres, a senior official said. “Assistant Secretaries during the deputation period will be given an intensive exposure on GST with particular reference to SAKSHAM/IT (CBEC system), constitutional

GST

amendments, rules and regulations, working of GST Council, GSTN and coordination between Centre and States,” the Department of Personnel and Training said in a June 29 order. The order further said that special sessions will be organised by the Department of Revenue in coordination with DoPT for this purpose. “Each ministry is already taking action for smooth implementation of GST in their area of work…the assistant secretaries must be fully involved in these activities of the department,” it said. Digital transactions Digital and moving transactowards tions and cashless cashless economy economy will be the will be the other areas other areas of of emphasis emphasis for the assistant for the assistant sec- secretaries. The Department of retaries F i n a n c i a l Services, IT ministry and the National Payments Corporation of India have been asked to hold special sessions for these IAS officers on United Payments Interface, Aadhaar Enabled Payment Systems and BHIM app. The DoPT order said that work should be allocated to the assistant secretaries in a manner so as to ensure “they are fully engaged throughout the deputation period and develop a work culture to complete assigned tasks in time”.

ARINDAM

AFTER MONTHS OF PLANNING The Centre has identified at least 9 big points of mispropaganda as it calls them and will counter them in proposed training sessions

The stamp on Lincoln presented by PM Narendra Modi to US President Trump is no ordinary stamp. It symbolised the closeness of the ideals for which Lincoln stood and those which drove Mahatma Gandhi. Both leaders believed in the goodness of the common man and in emancipation of the downtrodden. Trump, on his part, gave the PM a guided tour of President’s residence quarters in White House, including Lincoln’s bedroom and showed him a copy of Lincoln’s Gettysburg address and the desk on which he wrote it.

200 Finance Ministry Officials Pore Over Media Reports & Settle Doubts ALL PRAISE: Prez & PM at the release a photobook, President Pranab Mukherjee - A Statesman, at Rashtrapati Bhavan.—PTI

MUTUAL RESPECT

There Was Unity Even in Divergence, says Prez on Ties with PM FM Jaitley was able to clear all his doubts, says President ANIRBAN BORA

[email protected]

New Delhi: In the fag end of his Presidential term, Pranab Mukherjee on Sunday said there had been divergences of views between him and PM Narendra Modi but both of them kept such divergences to themselves and FM Arun Jaitley was able to clear his doubts. The PM and President lavished praise on each other at a book launch function at Rashtrapati Bhavan, with Modi turning emotional while recalling how Mukherjee “acted like a father” to him and advised him to take rest during his hectic work schedule. “We have acted in close cooperation. It is not that there cannot be any divergence of view. Surely, there have been divergences of views. But, we have been able to keep those divergences, if there be any, only to ourselves. They did not affect the relationship between the President and the PM, between the titular head and the actual head of the administration and council of ministers,” Mukherjee said, say-

ing he wished to express his “deep gratitude and appreciation” to PM. The President looked at Arun Jaitley seated in the front row to say how the Finance Minister had played the trouble-shooter at many times. “The Finance Minister is present here. I don’t know how many times I have given him trouble… of calling him and consulting – why this and why not this? But finally I must say he (Jaitley) convinced me like an able and effective advocate and I had to concede to his reasoning. Functioning of the President gover nment was Mukherjee never disturbed, “acted like never stopped and a father” never delayed – I can to me and claim with confiadvised dence,” Mukherjee me to take said. rest during Speaking before hectic work the President at the schedule, same function, Modi says PM said he was fortunate to have got a chance to work with Mukherjee and said the latter had helped him in settling in Delhi in his new role as PM. “PranabDa ki ungli pakadake Delhi ki zindagi mein apne aap ko set karne me bahut badi suvidha mili (I was fortunate to get Pranab Mukherjee’s guidance to be able to settle in Delhi),” Modi said.

New Delhi: The finance ministry apart from working on the smooth implementation of the GST is doing an important task — analysing what is written in national and international media on the GST and responding to them — especially to what they see as misinformation or mispropaganda. Over 200 top officials at the central level are looking at only tackling the communication and information dissemination part of GST. They have reviewed articles, opinion pieces, cartoon strips, popular social media forwards that have appeared over the last few months in the run up to the GST launch. “This is the first time, we are not only implementing the tax but also proactively monitoring the response every day. Top most officials, experts at finance are dealing with how people’s doubts should be addressed,” an official said, adding that the Centre has identified at least 9 big points of mispropaganda as it calls them which are being countered by the government in its training sessions. “The most common panic technique is that GST will increase the number of arrests which is a blatant lie as it will happen only to tax evaders after investigation. If the company’s turnover is more than `100 cr and if the

What’s Real, What’s Not Myth: GST will increase the number of arrests Official Take: Is a blatant lie as it will happen only to tax evaders after investigation. If the company’s turnover is more than `100 cr and if the owner has not paid the 5% duty Myth: Internet is needed all the time for GST to function Official Take: You need internet two times in a month for 10 minutes to submit the returns and for tax payment Myth: GST needs consultants and cannot be handled by traditional firms Official Take: Even small firms have consultants now. Individuals hire them for Income tax too

owner has not paid the 5% duty, anybody in the world will agree that he needs to penalised. Then there is this thing about the need for internet all the time for GST to function. You need internet facility two times in a month for 10 minutes to submit the returns and for tax payment,” an official said. The analysis has also picked up allegations of media which they see as churlish. “Some have said GST is such a sophisticated tax that it needs consultants and cannot be handled by traditional firms. We know for sure

that even small firms have consultants now. Individuals hire them for Income tax too.” All the 50,000 officials trained in nuances of GST have been asked to talk to people, clarify doubts. This time all ads given to newspapers, the videos made to educate people online and even the tweets posted - everything was done after studying feedback. Officials have been asked to reply to tweets as and when they are received to clarify the doubts of people and more so to counter misinformation.

ANIRBAN BORA

[email protected]

Lalu’s Dilemma: Tej or Tejashwi

If Bihar’s ruling grand alliance of RJD, JD(U) and Congress finally collapses, it might be a difficult task for RJD chief Lalu Prasad to ensure equal status for his sons — deputy CM Tejashwi Prasad Yadav and health minister Tej Pratap Yadav — within opposition block. Since RJD is single largest party, younger son Tejashwi might become leader of opposition in the assembly. But what role RJD chief selects for Tej Pratap in such situation is a million-dollar question.

THE ECONOMIC TIMES | NEW DELHI / GURGAON | MONDAY | 3 JULY 2017

The work done by these officials also concludes that the international media has been more supportive of the step and is curious as to how the country with federal structure is taking it forward. “The international media largely is watching keenly on how India will implement it. Our analysis of international media reports says the feeling is largely mixed. The reports from international investors has been largely positive. Some reports abroad have correctly said that the GST is a recipe made from 29 different recipes and it is bound to have the best of everything,” an official said adding that it took the Indian media a little while to get the nuances of the GST right. “There is still a lot more even journalists need to do with respect to GST. But as we go through the reports that have appeared over the years, we see that this is first time States have reposed so much faith in the centre.” Of the regional media, experts who have looked at the articles coming out, the analysis has said that reports in Maharashtra, Tamil Nadu, Kerala, Bengal were highly critical in the run up to the GST till March. “Now the criticism is more to do with the alleged unpreparedness of the government which will be proved wrong.” Guidance notes are being sent to specific sectors based on reports in media about how they are implementing GST.

IT’S A LIFT Catchline first used by tax expert Satya Poddar, says Jairam Ramesh

Good & Simple Tax Not Original: Cong [email protected]

New Delhi: Congress has accused the government of plagiarising the catchy “Good and Simple Tax” line. Rajya Sabha member Jairam Ramesh has said PM Narendra Modi has once again lifted the catchline. “Good and Simple Tax was first used by tax expert Satya Poddar. After him, I have used the phrase to describe how GST should be but isn’t in its final shape. Once again, Modi has shamelessly plagiarised somebody

else’s work,” said Ramesh who called PM ‘a serial plagiariser’. Over the last three years, Congress has accused the Modi government of lifting UPA schemes and renaming them. “The Modi government has always been very good at plagiarism,” said Ramesh, adding “they have lifted all our schemes — Aam Aadmi Beema Yojana (AABY), Rajiv Gandhi Shilpi Swasthya Beema Yojana (RGSSBY) and the Rashtriya Swasthya Beema Yojana (RSBY) — and simply renamed them. Even Swachh Bharat is Nirmal Bharat.”

ALL UPA SCHEMES

At least 20 schemes of the Congressled UPA that have been ‘plagiarised’ by the Modi government JAIRAM RAMESH Senior Congress Leader

Calling the PM an expert in ‘renaming and rebranding’, Ramesh said there were at least 20 schemes of UPA that have been ‘plagiarised’ by BJP government. The former Congress minister shared an article dated June 2, 2015 written by him and quoted from it. “I had written two years back ‘Of course, GST stands for goods and services tax, but it really should be seen, as noted tax expert Satya Poddar said recently, as a good and simple tax. As proposed, GST is certainly not such a good and simple tax’.

Congress Opposes Lower Exemption Threshold Level for NE Businesses

FM Jaitley to Address Delhi BJP Workshop on GST for Traders on July 6

Maharashtra Bureaucrats Fear GST Has Little to Offer to the State

GUWAHATI: Congress has opposed the GST provisions for the Northeast where exemption threshold for businesses is `10 lakh while the same is `20 lakh at other places. In the GST regime, the composite tax structure for the Northeast is `50 lakh annually while for others it is `75 lakh. Congress said that this will adversely impact small traders. Assam Pradesh Congress Committee media department chairman Pradyut Bordoloi said that since GST will make the check gates (toll gates) of the sales tax, transport, forest and other departments irrelevant, the State government should close down all these checkgates.—OPB

NEW DELHI: In a bid to address the difficulties and anxieties faced by the capital’s traders following the GST rollout, the Delhi unit of the BJP is organising a mega camp for traders on July 6. According to a party functionary, the camp is being organised to address the ‘misconceptions’ about the GST rollout and will be addressed by Finance Minister Arun Jaitley at Talkatora stadium. The camp will be followed by seminars and workshops exclusively for traders at the district level to help traders adopt to the new system, including the filings of forms and tax papers, the party functionary added.—OPB

MUMBAI: Early this year, the Maharashtra government approached the Centre to seek `6,500 cr compensation for the abolished Local Body Tax (LBT). The state government was under pressure from the traders who wanted it to fulfil pre-2014 election promise on abolishing the ‘draconian’ tax. However, in a year of abolishing it in 2015, the state realised that the annual expense of `6,500 cr was too much to bear, so it approached the centre for compensation under GST. However the centre refused to bear the cost saying it could not compensate for revenue already forfeited. The GST is forcing the the bureaucracy to burn the midnight oil to find GST impact now.

https://telegram.me/TheHindu_Zone

https://telegram.me/PDF4EXAMS

Pure Politics

WWW.ECONOMICTIMES.COM



3

CHINA’S DECISION TO DENY INDIA MEMBERSHIP OF NSG, BLOCK ACTION AGAINST MASOOD AZHAR IN UN SECURITY COUNCIL AND TURN A BLIND EYE TO ANTI-INDIA TERROR INFRA IN SOUTH ASIA ARE INTRACTABLY LINKED TO SINO-PAKISTAN TIES

Border Standoff May Hit India-China Efforts to Put Behind 1962 Memories Flexing Muscle GROWING STRENGTH

DipanjanRoy.Chaudhury @timesgroup.com

New Delhi: India’s stand-off with China at the India-Bhutan-Sikkim trijunction indicates a deterioration in ties between the two nations which have undertaken increasing efforts over the past two decades to overcome bitter memories of the 1962 war. A closer look reveals concerted efforts on the part of China to thwart India’s progress while assisting Pakistan to further its geopolitical ambitions. China’s decision to deny India membership of the Nuclear Suppliers Group, block action against Masood Azhar and other Pakistan-based terrorists in the UN Security Council, turn a blind eye to anti-India terror infrastructure in South Asia and pursue China Pakistan Economic Corridor (CPEC) as a flagship project under mega One Belt One Road Initiative are intractably linked to Sino-Pakistan ties. Although reminiscent of similar incidents during 2009-10, the Chinese army’s latest assertion along the Line of Actual Control has cast a shadow over the spirit of President Xi Jinping’s visit to Ahmedabad and Delhi in 2014, less than six months after Narendra Modi’s election as PM. While that visit was marked by Chinese transgressions across the Line of Actual Control into the Ladakh region, it held promise of a new era of ties built on strong personalities and overwhelming support for the Indian PM and the Chinese President. China appears to blame growing In-

Nationalist sentiment within China coupled with unbridled ambitions has put many world capitals into discomfort China under Xi applies the divide and rule policy through use of force and economic allurement

MATTER OF WORRY Groupings such as BRICS, RIC and SCO, where China has been less keen to support India’s counter-terror agenda may increasingly find lesser common ground

do-US ties for emerging challenges in Sino-Indian ties, but to close observers the reality is much more complex. Growing nationalist sentiment within China coupled with un-

DALAI LAMA VISIT

While India’s opposition to CPEC have gone unheard, China has been extra sensitive to the visit by Dalai Lama to Arunachal , a territory it claims

bridled Chinese ambitions and powerful presidency has put many world capitals into discomfort along China’s periphery as well as in other continents. China under Xi is more powerful than ever since 1949 as well as intolerant – applying the divide and rule policy through use of force and economic allurement to achieve its goal. In 2008 a phone call from then US President George Bush to his Chinese counterpart Hu Jintao encouraged China to lift its opposition against clean NSG waiver to India. Nine years later, as India aspires to enter NSG, requests made to China from not only the US but also Russia have fallen on deaf ears. China can now afford to ignore such requests riding on its geography, economic and military might. It is hoping to emerge as an Indian Ocean

DUAL STANDARDS

China’s dual standards have been exposed on matters pertaining to its own as well as India’s sovereignty Region power by changing geography based on historical notions in the South China Sea region. It was but obvious that India as the key country in the region would attempt to shape a policy that safeguards its interests in the region and rest of South Asia. Pushback from India in South Asia

was a natural corollary as Beijing’s expanding footprint pushes the region towards instability. China’s dual standards have been exposed on matters pertaining to its own as well as India’s sovereignty. While India’s opposition to CPEC have gone unheard, China has been extra sensitive to the visit by Dalai Lama to Arunachal Pradesh, a territory it claims. The stand-off in Nathula is a reflection of the bigger neighbour’s attempt to retaliate for allowing Dalai Lama to visit the border state. In the process the action violated the understanding reached between China and India and China and Bhutan in the past. Though the ongoing impasse is not related to India’s decision to skip mega OBOR Summit in Beijing in May it comes close on the heels of the event. While CPEC remains India’s core concern, India is not comfortable with unilateral and non-transparent fashion the connectivity initiative is being implemented, a fact that was not lost on other countries and later reflected in the joint communique at the OBOR Summit. The tensions in Sino-Indian partnership are likely to have geopolitical and geostrategic impact. Groupings such as BRICS, RIC and SCO, where China has been less keen to support India’s counter-terror agenda and has merely given lip service in fighting the menace, may increasingly find lesser common ground. This raises a pertinent question as to whether Russia, an old partner of India and an ally of China, can step in to keep these organisations effective. China, on its part, could look for a way out to reduce friction if it comes to accept India’s aspirations and sheds its emphasis on historical claims which often do not find resonance among its neighbours.

China Issues Map to Claim Indian Troops' 'Incursion' in Doklam Beijing: China has released a map to back its claim that Indian troops “transgressed” into the Doklam area of the Sikkim sector, which it claims as part of its territory. In the map, released by the Chinese Foreign Ministry, a blue arrow with markings in Chinese points Indian troops alle-

TRIP BIG ON DEFENCE, AGRICULTURE & WATER TALKS

Trump & Pope-like Welcome Awaits PM Modi in Israel DipanjanRoy.Chaudhury @timesgroup.com

New Delhi: Narendra Modi is all set to get a red carpet welcome when he lands in Israel on July 4, which will be the first ever visit by an Indian prime minister to the West Asian country amid celebration of 25 years of creation of diplomatic ties. The significance that Israel is attaching to the visit can judged from the fact that Modi will be received by PM Benjamin Netanyahu at Ben-Gurion Airport on July 4. This is a gesture that Israel usually reserves for visits of US presidents and the Pope. In fact Netanyahu is expected to accompany Modi throughout most of his three-day visit which he has described as historic. Officials apart common Israelis have welcomed Modi’s visit through social media. Modi is expected to meet Moshe, the 11-year-old survivor of 2008 Mumbai terror attacks. One of the sites that came under attack was the Mumbai Chabad house. Six people died in the attack,

including Rabbi Gabriel and Rivka Hotlzberg. Their then-toddler Moshe, who was two years old at the time, was rescued by his Indian babysitter who risked her life to save him. He has since moved to Israel, where he lives with his maternal grandparents. "I think it will be a very emotional meeting with a very strong message," according to Israeli Ambassador to India Daniel Carmon. In the historic city of Jerusalem, special arrangeEight ments have been delegations made for the PM’s from India stay. He will be stayhave visited ing in the same luxIsrael in the ury suite at King last three David Hotel where months to US president Dooversee nald Trump had preparations stayed. The hotel is for PM’s visit also making significant adjustments to the menu for the luncheon meeting between Modi and Netanyahu. It has secured the services of Israeli-Indian restaurateur Reena Pushkarna and her team of chefs for vegetarian cu-

Constitutional Cases to Keep SC Busy Now Samanwaya.Rautray @timesgroup.com

New Delhi: July will be a busy month for the Supreme Court after it reconvenes on Monday after a long summer recess. Only two vacation benches sat during the break since May 17 to deal with urgent matters. Up for hearing are a few key Constitution bench matters such as the legality of WhatsApp’s privacy policy and a 1985 amendment to the Citizenship Act, 1955, setting different cut-off dates for settlers in Assam and the rest of India to be eligible for Indian citizenship. The latter is an emotive case as it allows deemed Indian citizenship to those who migrated into Assam from East Pakistan (Bangladesh) before January 1, 1966, provided they have been ordinarily resident in the state. The WhatsApp case involves a challenge to the company’s new privacy policy post its acquisition of Facebook as violative of a citizen’s right to privacy. Those opposed to the new policy have alleged that the company, which has 200 million users in India, shares its data with Facebook. WhatsApp has denied any such sharing policy and dared those who have such apprehensions to quit the popular social media app. A five-judge bench is expected to rule on this issue. The other important case to be listed for hearing for a regular bench for interim relief will be the contentious Aadhaar case. Though a Constitution bench is yet to be convened to examine the intricacies of involuntary nature of the government’s Aadhaar scheme, in the interim a smaller bench will grapple with demands of naysayers to keep the unique identification number voluntary till the larger

bench takes a call on its legality. In examining the case, the top court will have to venture into another legal minefield – whether citizens enjoy a fundamental right to privacy. Before this case, it was taken for granted that a citizen does have an absolute right to privacy although it wasn’t clearly spelt out. That included an absolute right of individuals over their bodies as enunciated by an earlier top court ruling. Five judges led by former Chief Justice of India KG Balakrishnan had earlier ruled that no entity can force a person to submit his blood samples, voice samples, etc. against his wishes, making obtaining of prior consent

UP FOR HEARING

Cases on Whats App’s privacy policy & setting different cut-off dates for Assam migrants in such cases mandatory. Doing otherwise would violate the right against self-incrimination guaranteed to citizens under the Constitution. But Attorney General Mukul Rohatgi’s stand that citizens do not have an absolute right over their bodies forced the court to refer the issue to a larger bench, possibly a seven-judge bench. That is yet to be constituted and the court has the task of making an interim arrangement that would not hinder Centre’s developmental goals while taking care of concerns raised by activists about the all-encompassing surveillance inherent in scheme.

Honoured by PM’s Invite, Says Moshe’s Nanny Jerusalem: Sandra Samuels, the brave Indian nanny who saved Israeli child Moshe Holtzberg during the 2008 Mumbai terror attack, feels PM Modi's decision to meet her along with the boy during his visit here indicates that the government cares for the victims. Sandra was awarded an honourary citizenship by the Government of Israel so that she could live in the country and be with Moshe, who is now 10-year-old. “It's a huge honour and comes as a pleasant surprise. I am deeply touched,” she said. —PTI

isine. The bar at the hotel has been converted to a temporary press lounge. At the hotel Modi will be greeted on arrival by Michael Federmann, the chairman of the Board of Directors of the group that owns and operates the hotel. Federmann's personal interest in Modi's visit to Israel is noteworthy, as he is also the chairman of Elbit Systems, a defence electronics company that has businesses in India. Eight delegations from India have visited Israel during the last three months to oversee preparations for the PM visit. As was the case with Trump, when Modi leaves Israel on the morning of July 6, everything at the hotel will remain in place for at least two hours till his plane is out of the Israeli air space in case there is a reason for the plane to turn back. Expanding defence ties will be on the agenda of dialogue. Besides the two sides are expected to conclude deals concerning water and agriculture following the dialogue.

When Two PMs Meet Modi will be received by PM Benjamin Netanyahu at BenGurion Airport on July 4 Netanyahu may accompany Modi through most of his three-day visit King David Hotel making significant adjustments to the menu for the PMs’ luncheon meeting Expanding defence ties will be on the agenda of dialogue TWO SIDES ARE EXPECTED TO CONCLUDE DEALS CONCERNING WATER AND AGRICULTURE

ged transgression into the area to prevent the PLA troops from building a strategic road. The map shows Doklam as part of Chinese territory. Bhutan has protested to China asserting that the area is part of its territory and Chinese action is vocative of 1988 and1998 agreements—PTI

US Approves Guardian Drone License for India

Washington: The US state department has issued the necessary license for the export of 22 predator Guardian drones to India, a government source here said, days after Prime Minister Narendra Modi and President Donald Trump had their first bilateral meeting at the White House. The state department has “issued the DSP-5 Guardian export license” for India, the source told PTI. A DSP-5 category license is issued for permanent export of military hardware as found in the US Munitions List which is defined by the International Traffic Arms Regulations.The Guardian drones will enhance India's maritime surveillance capabilities in the Indian Ocean region and their sale was announced by Trump on June 26 after he met Modi for their first face-to-face meeting.—PTI

https://telegram.me/TheHindu_Zone

https://telegram.me/PDF4EXAMS

4  Pure Politics Pakistan Seeks Four Months for Sending Samjhauta Blast Witnesses to India NEW DELHI Pakistan has sought four more months from India for a decision on producing 13 witnesses before a special Haryana court which is trying the 2007 Samjhauta Express blasts case in which 68 people were killed. Last month, summons issued by special NIA court at Panchkula were handed over to the Pakistani authorities, for sending witnesses to India for the trial. Pakistan conveyed that it needed four more months for taking a decision on this, official sources said.—PTI

THE ECONOMIC TIMES | NEW DELHI / GURGAON | MONDAY | 3 JULY 2017

TRACKING POLITICIANS & POLITICS THROUGH THE DAY

Puducherry CM V Narayanasam on Sunday receives opposition’s presidential nominee Meira Kumar who will meet the ruling Congress and DMK legislators to seek their support —PTI

Congress leader Randeep Surjewala meets familly members of Junaid Khan in Faridabad.—PTI

Madhya Pradesh CM Shivraj Singh Chouhan with his wife offers prayers at the origin site of Narmada before planting saplings under Narmada Sewa Mission on Sunday. —PTI

BJP Refused to Help Lalu in Benami Cases for Destabilising Nitish Govt

S

enior Bihar BJP leader Sushil Modi told ET’s Aman Sharma in an interview that colleagues of RJD chief Lalu Prasad twice met senior BJP leaders and sought their help in benami property cases against Prasad’s family. Modi, a former deputy chief minister, said the BJP refused the offer of the RJD leaders to destabilise the Nitish Kumar government if Prasad’s family is let off in the cases. Edited excerpts:

But both JD (U) and RJD say there is no threat to the government… Income tax authorities have provisionally attached four properties lately — three of them are linked to Lalu’s son Tejashwi. As far as I understand the I-T process, the way they gave notice to Misa Bharti to explain how she acquired properties, it is likely a notice will

SUSHIL KUMAR MODI BJP LEADER

AN UNEASY ALLIANCE

From the very first day, Nitish Kumar and Lalu Prasad’s was an uneasy alliance with no cohesion

ARINDAM

Seventeen months after the BJP’s defeat in Bihar, how do you view the mahagathbandhan? From the very first day, Nitish Kumar and Lalu Prasad’s was an uneasy alliance with no cohesion. Neither was there any chemistry or meeting of minds. In 17 months of the government, there have been so many hurdles. They have not been able to constitute any board or commission, only because of infighting between partners. All transfers and postings in Bihar are at a standstill for the last nine months because Lalu Prasad has a long wishlist of tainted officers. Knowing the temperament of Nitish and his working style, he can never be comfortable with Lalu. Nitish supported big moves of PM Narendra Modi like Pakistan trip, surgical strikes, demonetisation and now presidential nominee Ram Nath Kovind. He has given a message to the Congress – Don’t take me for granted.

be served to Tejashwi. Now, being a deputy CM, if he has to appear before I-T to explain his source of income, which will be impossible for him to do, he should resign. If he does not resign, Nitish will be compelled to expel him. So the way things are developing, especially regarding both of Lalu’s sons, I don’t see this government surviving for long. I know Nitish’s nature – after a point, it will be very difficult for him to continue with such tainted people in his cabinet.

You have been at the forefront of exposing business deals of Lalu Prasad’s family… Somebody helped us from inside the Nitish government. In 2008, Shivanand Tiwari and Lalan Singh of JD (U) had also raised these issues on instructions of Nitish. Today, I can’t say if it has been with the knowledge of Nitish or without his knowledge, but we got many of the documents from inside the government. It is possible that such documents may have been given with Nitish’s knowledge as such information

Lalu Will Never Seek BJP Help: Manoj Jha NEW DELHI: RJD national spokesperson Manoj Jha termed Sushil Modi’s statement of Lalu’s emissaries meeting the BJP as mischievous, unfounded and aimed at tarnishing Lalu’s politics and image. “Whatever legal case Lalu Prasad had to face, he is facing but he will never ever seek BJP’s help. Those who know his politics would never believe such mischievous plans by BJP which specialises in converting rumours into facts,” said Jha.—PTI

GRAFT CASES AGAINST LALU’S KIN UNDER CLOSE WATCH

Nitish Turns Focus on Social Issues amid Shaky Alliance Bihar CM is making efforts to ensure that cases against Lalu’s family don’t dent his image of Sushasan Babu [email protected]

New Delhi: While his own style of politics remains a major source of embarrassment for his allies — RJD and Congress — within Bihar’s ruling grand alliance, chief minister Nitish Kumar continues to present a cool and calm face now-a-days. Perhaps, he is in no hurry to walk out of the Grand Alliance. At a time when his supporters are trying hard to read his mood, he has started focussing on his future plan to launch a massive campaign against child marriage and dowry on the occasion of Mahatma Gandhi’s coming birth anniversary on October 2. He apparently is looking for a chance to avoid any damage to his popular image as “Sushasan Babu” in his new avatar as a “fighter” against such social evils. So far this year, he has fully engaged himself and his government in organising good shows on the occasion of 350th birth anniversary of Guru Gobind Singh (January) and the Champaran Centenary Celebration (April). He has already got declared Bihar as a “dry state” and subsequently, strengthened his women vote-bank particularly in rural areas. With GST coming into force, Bihar as a consumer state, is expected to compensate its loss which it suffered in the wake of total prohibition. So, CM has reasons to deliver more on development front. Although his ally Lalu Prasad-headed RJD has more seats (81) than his JD (U)’s 71 seats in the state assembly, he successfully continues to have an upper hand in Bihar politics. Initially, there was a fear in Nitish’s camp that RJD might assert its position within the government because of its good strength in

against Lalu’s family and promised that as a quid quo pro they will help the BJP in destabilising the Nitish government in Bihar. But the BJP leaders flatly refused saying they cannot help the RJD, as there cannot be any interference in the work of the agencies.

Q&A

the house. By taking a surprising decision to back NDA nominee for presidential polls, Nitish has already put the ball in the court of his allies — Congress and RJD. Now, all eyes are on RJD’s rally scheduled to be held in Patna on August 27. RJD wants to play its role in the formation of opposition parties’ unity and it has invited important regional and national political players from the opposition camp. RJD chief Lalu Prasad has so far maintained a good relation with West Bengal CM Mamata Banerjee. Nitish’s sudden

Nitish looks to project himself as a social reformer. He will launch a massive campaign against child marriage and dowry on October 2 decisions like his praise for demonetisation and support for NDA nominee for presidential polls Ram Nath Kovind has apparently helped the RJD chief to improve his relation with Congress . Lalu’s good relation with former UP CM and SP boss Akhilesh Yadav is an open secret. RJD has reportedly approached BSP chief Mayawati to attend its rally. So, Kumar’ presence at the RJD’ show will be interesting to see. Sources said all the three allies- RJD, Congress and JD (U) — have sorted out their differences currently. “JD (U) support for NDA’s nominee Kovind

is an isolated example. Our party will continue to play its role for opposition’ unity at national level,” a source in JD (U) said. What is considered to be source of trouble for the Nitish’ camp is constant attack against RJD chief Lalu and his family members on alleged corruption charges on part of the BJP’ Bihar unit. The Enforcement Directorate is allegedly tightening its noose around Lalu’s family. Those who personally know CM Nitish feel he (Nitish) is an imageconscious politician. “Nitish camp is closely watching the development on ED front in connection with alleged cases of money laundering against Lalu Prasad. Only time will tell how Nitish acts in this matter in future,” a source in Bihar said. So, it still remains a moot point to see CM Kumar’s future role to keep intact the Grand Alliance in case ED inches close to Lalu’ family. Another debatable point about Nitish in Bihar is his possible space in opposition camp in national politics. His new “avatar” as a “social reformer” suits his political interest in his style of politics. There are many takers of the theory that he can counter BJP through social issues.

HELP FROM INSIDE

It is possible that such documents may have been given with Nitish’s knowledge as such info is usually not given directly but through some emissaries is usually not given directly but through some emissaries. Also, Lalu’s senior colleagues have met some senior leaders of the BJP in the government – not once but twice – and asked for their help in these benami property cases

Is the BJP ready to support Nitish Kumar to run the government? LJP leader Ram Vilas Paswan has already given an open offer to Nitish to come and join NDA – Paswan is a major constituent and a senior leader of NDA. As far as the BJP is concerned, if a situation arises, our parliamentary board will take a call. Nitish is calculating. He has opened a window for the BJP the way, when he was with the BJP, he opened a window for Congress by supporting Pranab Mukherjee for President. What will Nitish Kumar gain by joining the NDA? Some say he may be projected as the PM face of the opposition in 2019. He does have an ambition to become a PM candidate in 2019 but he also knows his limitations. Being a regional leader, he will not be able to get more than 15-16 Lok Sabha seats to fight. Nitish had said in May that he is not in race to become the PM. JD (U) is also hurt by Congress not giving it a single seat in the UP election and not even speaking to Nitish about it – he had worked hard in UP for eight-nine months. Also, the kind of statement now issued by Ghulam Nabi Azad about Nitish Kumar – uske baad to kuchh bacha hi nahin hai (nothing is left after Azad’s statement). It was a deliberate statement to diminish status of Nitish who has to now decide ki apmaan ka ghoont pikar kab tak Lalu aur Congress ke kandhe pe chadhkar woh CM bane rahenge (till when will Nitish wish to suffer humiliation and stay as a CM with Lalu-Congress support).

WHO WILL PULL THE PLUG?

Trust Broken, Cong Feels Coalition in Bihar All But Over [email protected]

New Delhi:The Congress central leadership feels the trust quotient — political and personal — in Bihar’s JD(U)-RJD-Congress coalition is badly dented after chief minister Nitish Kumar’s “seemingly pre-determined” three actions — backing the Centre’s demonetisation, supporting BJP’s presidential candidate and attending the Central Hall function to mark the GST rollout — which, were not only in conflict with his two other allies but also amounted to handing out public snubbing to them. As the Congress leaders along with RJD camp conclude the honeymoon of the Bihar coalition is clearly over, the question they now face is how long this “loveless-marriage” can go on and, or more precisely, which side will make the first call to notify the divorce. For all the stage-managed efforts of the coalition partners to underplay the brewing crisis within, the Congress camp reads a pattern and also a repeat of history in Kumar’s actions. “Before Nitish Ku m a r e n d i n g JD(U)’s stint with BJP-led NDA, he had first backed UPA’s presidential candidate, then he projected a personal clash with Narendra Modi just — as he is letting some JD(U) leaders to lament about their recent discomfort w i t h

Home Ministry Starts Process to Recruit More Women in Paramilitary Forces

Congress and RJD in the coalition. So, the next logical step should be to script a justification for returning to BJP as JD (U) can’t thrive without a prop. So, should we wait for that in the name of coalition compulsions or, begin guarding against more humiliations”, said a senior AICC functionary in anonymity. The Congress now also wonders whether Kumar’s recent (unpublicised) break with AAP when JD(U) fielded candidates in MCD polls to the merry of BJP, as well Kumar venturing out to tie up with Hardik Patel for Gujarat polls, as part of the same pattern. The Congress says the most accurate public articulation of the in-

Bihar CM’s decision to hail note ban, surgical strikes and back BJP presidential nominee upsets allies ner feeling of leadership was reflected in what Ghulam Nabi Azad said a week ago —“People who believe in one principle make one decision, but those who believe in many principles make different decisions.” As Congress leadership has started buying time to look at the future options, Azad has started tactically underplaying the coalition crisis. But another senior party leader summed what the party thinks: “We are used to dealing with bickering within coalitions. But what Nitish doing, leading a coalition that came on anti-BJP plank and then collaborating with the Modi regime is an entirely different issue. This leaves us the dilemma of dealing with a situation that amounted to sleeping with the enemy”. Underplaying the crisis may be an immediate tactical ploy as Congress knows the countdown has started for the final showdown in Bihar coalition.

NEW DELHI: The MHA has started the process of recruiting more women to meet target of 33% in two paramilitary forces — the CRPF and the CISF — and 15% in BSF, the SSB and the ITBP. The 33% reservation in constable-level posts in Central Reserve Police Force and Central Industrial Security Force (and 14-15% posts in Border Security Force, Sashastra Seema Bal and Indo Tibetan Border Police will start immediately, a home ministry official said. —PTI

Guj BJP Banks on Modi’s Pull Among All Caste & Class His work for the state and country will be a factor for canvassing votes: Party leader Our Bureau

New Delhi: PM Narendra Modi’s brand “that works beyond caste and class” will be the BJP’s mantra for the upcoming Gujarat elections in December, senior leaders of the party told ET. To propel this, party president Amit Shah has already held two-page pramukh meetings in the state to mobilise organisational work for the electoral campaign. Starting July 9, he is expected to spend three more days in Ahmedabad to take a call on the best candidates and furthering the strategy to reach the ground. In the last page pramukh meeting of party, Shah asked workers of eight districts of central Gujarat to take the message of the party to each voter enlisted in the printed page of the electoral roll under their charge and get them to vote for the party. He reminded them that it was their solemn duty to repay Modi by gifting him 150 seats from the State. Preparations for the grand 150 plus victory in the state have already begun, said a senior BJP leader on condition of anonymity. “The elections will entirely be fought on Narendra Modi’s brand value. His work for the State and the country and the way he has uplifted the image of Gujarat and India abroad will be a huge factor for canvassing votes this time,” said a senior BJP leader. The upcoming elections in Gujarat will be the first to be fought in the last 15 years with Narendra Modi not at the helm. Congress leader Shaktisinh Gohil, however, said the performance of the Congress party in the zila parishad elections of 2015 wherein it managed to win 23 of 31 seats was a sign that people were taking the party seriously. “Also, promises made by the BJP government with respect to housing, recruitment etc are yet to be fulfilled. There is outsourcing in every section of the government now which has led to much dissatisfaction among government employees. People of the state will not vote for Rupani or Vaghani, they voted for Modi. They already showed they are ready to trust us and the people of Gujarat have in the past voted for the UPA at the centre and for the BJP at the state level, so the opposite is quite

NOT AT HELM

The polls in Gujarat will be first to be fought in the last 15 years with Modi not at the helm possible,” Gohil said. He added that over the last few months, BJP has also been trying to break Congress MLAs using all “possible means.” The BJP, however, feels the situation has improved for the party since the zila parishad elections, especially after consecutive victories in states such as UP. “Even then we retained our urban votes. No one can deny the Congress has traditional voter base in rural areas which they got. But elections are all about situations and mood of the people and that is proBJP and pro- Modi now,” a Delhibased leader of the party said. A state-level BJP leader said Gujarat was bracing to more visits by the PM and longer stays of party president Amit Shah. “The crowds at the PM’s roadshows have been spectacular. While in Surat people spilled over the streets, in Rajkot, several got emotional when the PM reminded them if the city had not first elected him to Gandhinagar, he wouldn’t have gone to Delhi. Narendrabhai has time and again shown his gratitude to the State and the people will pay him back with votes,” he added.

RESTRICTIONS IMPOSED TO CHECK PROTESTS

Bandh in Valley over Two Civilian Deaths [email protected]

Srinagar: Kashmir Valley observed a shutdown on Sunday against the killing of two civilians near the encounter site in Dialgam village of Anantnag district where two Lashkar-e-Taiba militants were killed. Security forces were deployed on all major roads across Srinagar and other sensitive towns in norther n and souther n Kashmir. Besides, restrictions were imposed and barricades erected around at least seven police stations of old city to scuttle any protest gathering. There was heavy deployment of forces in Anantnag district of southern Kashmir due to the ongoing Amar nath Yatra through Pahalgam, which falls in the sensitive district. In the past 18 months, according to official figures, at least 20 civilians have been killed near encounter sites during the protests staged to rescue militants from the security cordon. Separatist leaders Syed Ali Geelani, Mirwaiz Umar and Yasin Malik, who called for the strike, continued to remain under arrest or house detention. The government also detained most of the second-rung Hurriyat leaders who could mobilise people for protests. Meanwhile, on Sunday, thousands of people attended the funeral of Lashkar-e-Taiba “commander” Bashir Lashkari, who carried a reward of Rs 12 lakh and was involved in killing of at least

six policemen including an SHO last month in southern Kashmir. The government is apprehensive about the week-long protests from July 8 announced by the United Jehad Council from across the border, marking the first death anniversary of Hizb-ulmujahideen “commander” Burhan Wani. The protests, police officials said, Security forces were could snowball into another political deployed unrest. on all maAs a cautionary jor roads measure, the govacross Srier nment has annagar and in northern nounced a ten-day summer vacation & southern from July 6 in all edKashmir ucational institutions, which have been the flashpoint of protests this year. Kashmir University, where police was expecting a protest gathering on Wani’s death anniversary, has announced holidays from July 7.

https://telegram.me/TheHindu_Zone

6

https://telegram.me/PDF4EXAMS

issues but we are There may be teething long-term gains. confident there will be the rising enth wi We are encouraged tfall at our dealquiries and increased foo ent of continuing erships, and are confid h momentum with our positive growt

GST will be fruitful for growth of auto industry. It will break into double digit growth territory this year

, Mercedes-Benz ROLAND FOLGER MD

THE ECONOMIC TIMES | NEW DELHI / GURGAON | MONDAY | 3 JULY 2017

N RAJA Director, Toyota Kirloskar Motor

The Road Ahead

Maruti Suzuki & Hero MotoCorp first to drop prices post GST; Hyundai, Tata & Ford to follow suit

New Delhi: Car buyers would likely be the most enthusiastic backers of the GST, the new levy that has led Indian automakers to immediately slash prices substantially across consumer segments. Maruti Suzuki and Hero MotoCorp, leaders in the country’s fourwheeled and two-wheeled vehicle markets, were the first to drop prices after the July 1 midnight adoption of GST. Hyundai Motor India, Tata Motors, and Ford India – manufacturers that compete with Maruti locally – are likely to follow suit with cuts in the next few days. For the Maruti Suzuki’s range of vehicles, prices declined between `. 2,300 and `. 23,400 a unit. The range was wider at Toyota’s Indian unit, which slashed vehicle prices between `. 10,500 and `. 217,000 apiece. Hero MotoCorp’s prices declined between `. 400 and `. 4,000. “We are hopeful that the price decrease after GST will further boost customer demand in the coming months,” said N Raja, director and

`10,500 to `217,000 a unit

Price cuts at Maruti Suzuki

Price cuts at Toyota India

`400 to `4,000

New Delhi: The goods and services tax regime may have brought some cheer to economy class air travellers but it is unlikely to last long. Experts say that since there is no provision for input tax credit on economy class tickets under GST, the cost of operations for airlines will increase and lead to an increase in fares. While the GST rate on economy class air tickets, at 5%, is about 1 percentage point lower than earlier taxes, it is about 4 percentage points higher for business class tickets, at 12%. Airlines said that the reduced rates on economy class tickets and increased rates on business class tickets will automatically be passed on to consumers. Senior executives said that while airlines would need more time to assess the impact of GST, the industry’s concern cannot be seen as a showstopper for such a big reform. “We will be able to assess the impact on us over a couple of weeks and we expect it would take four to six months for things to sort out,” said SpiceJet chairman Ajay Singh. “The industry is concerned about double taxation on the import of aircraft, a tax on import of aircraft as well as lease rentals, which the government has promised us, will be sorted.” Abhishek Jain, tax partner at EY said, “There could be a possible dual levy of GST on the import of aircraft on lease basis, that is, a 5% IGST on the import of aircraft and another 5% IGST on payment of lease rentals.” The industry had represented to the government and was expecting an exemption to avoid the dual le-

Price cut at Hero MotoCorp

Toyota Camry & Toyota Prius – up by over `3.5 lakhs in Bangalore and going upto Rs 5.24 lakhs in Delhi as per the applicable tax under GST framework. FANCIER VARIANT, BIGGER CUTS

The ex-showroom prices of small car Alto in Bengaluru have declined by up to `. 5,400, WagonR by up to `. 8,300, Swift by up to `. 10,700, DZire by up to `. 15,100, Ertiga (petrol) by up to `. 21,800, Ciaz (petrol) by up to `. 23,400, Vitara Brezza by up to Rs14,700 and S Cross by up to Rs21,300. Bengaluru has been taken as a representative city as VAT of 14.5% here is matched with the rate in most places in the country. Due to the withdrawal of tax con-

cessions on mild hybrid vehicles, the prices of Smart Hybrid Ciaz Diesel and Smart Hybrid Ertiga Diesel have increased. Toyota has revised prices by up to 13%. The price decrease in Bengaluru for Innova Crysta will be up to `. 98,500, Fortuner up to `. 217,000, Corolla Altis upto `. 92,500, Etios Liva up to `. 10500. Hero MotoCorp also said the company is passing on the benefit of GST to its customers with a reduction in the prices of models.

Luxe Cars Get a Bit More Affordable Prices of Merc-Benz, BMW, Audi & JLR would decline up to 10%, or `. 10 lakh for fanciest of models Ketan Thakkar & Sharmishtha Mukherjee

Mumbai/Delhi: Luxury cars have become a bit more affordable overnight – and Indians have the GST to thank for this windfall. Prices of Mercedes-Benz, BMW, Audi, and JLR would decline up to 10% — or `. 10 lakh for the fanciest of models — after the historic July 1 midnight adoption of the GST. The luxury car market in 2016-17 saw sales of 35,000 vehicles. Market-leader Mercedes-Benz, BMW and Audi, after the announcement of GST rates in May, decided to pass on the benefits before July 1. On Saturday, Tata Motors-owned Jaguar Land Rover was the first off the block to announce reduced pri-

ces in an aggressive advertising run. The benefits are available on models locally assembled. Roland Folger, MD at MercedesBenz, said he looks forward to the simplified tax structure creating a single market across India and benefiting the buyer and the seller. “There may be teething issues but we are confident that there will be promising long-term gains. We are encouraged with the rising enquiries and increased footfall at our dealerships, and are confident of continuing with our positive growth momentum,” added Folger. The GST may drive double-digit growth in the luxury-car market, two executives associated with the global carmakers said. Interestingly, the market posted its first ever decline in 2016 because of the

ban on diesel vehicles in the National Capital Region, the introduction of infrastructure cess, and the demonetization in November. Rohit Suri, MD of Jaguar Land Rover brands in India, said the move expands the overall market. The company already lowered JLR prices after the pound declined in the aftermath of Brexit, and cars would become a further 5-7% cheaper after the introduction of the GST. “As prices become more attractive and more people seek to own brands like ours, the market will surely expand. Despite the tough market, we grew by 6%. This year, we expect a double-digit growth.” Apart from price reduction of 4-9% implemented on car prices, Audi India says there are some attractive offers already available

from dealer to dealer. Welcoming the new tax reforms, Rahil Ansari, head of Audi India says hopefully this will be a new and exciting phase for luxury car business in the country. “The new realigned prices offer great opportunity to expand the market and widen our customer base,’ adds Ansari. The luxury car segment still accounts for just 1-1.5% of the overall passenger vehicle market in India. The share is lower than that of even some of the emerging markets of South East Asia, and Brazil. Vikram Pawah, MD at BMW India, says share of luxury cars could rise to 5% of local market, and the automaker would seek to expand market through greater accessibility and better financing options.

Setting The Road on Fire Segment Small Cars (length < 4m) – Petrol Small Cars (length < 4m) – Diesel Mid Size (length > 4m with engine < 1,500cc) Bigger Cars (length > 4m with engine > 1,500 cc) Sports Utility Vehicles Hybrid Vehicles

Pre-GST Rate 31.40% 33.40% 46.60% 51.80% 55.30% 30.30%

Base rate 28.00% 28.00% 28.00% 28.00% 28.00% 28.00%

Producers of pickles, jam, tomato ketchup report of fall in sales post new tax regime

Post GST Rate Cess Cumulative Tax 1.00% 29.00% 3.00% 31.00% 15.00% 43.00% 15.00% 43.00% 15.00% 43.00% 15.00% 43.00%

[email protected]

New Delhi: Amul has reduced prices of cottage cheese, dairy whitener and baby food, increased the price of ghee and left cheese, butter and ice cream unchanged after the Goods and Services Tax regime kicked off on Saturday. Producers of pickles, jam, tomato ketchup, however, complained that GST had raised the taxation level and said sales had slumped after the onset of the new regime, while sellers of branded rice and wheat flour said their distributors had issues with the new system. RS Sodhi, managing director, Amul said implementation of GST had been normal. “We don’t expect any major change in revenue with implementation of GST. The consumer gets to gain. As there was substantial increase in tax for ghee we have increased prices by `. 25-30 a kg. Cheese, butter and ice cream prices have not been changed as increase was marginal. However, we reduced prices of milk products Sellers of which came under a lower slab branded rice, by 5% like dairy whitener, pawheat flour neer, baby food and cream.” said their Nitin Seth, MD at GD Foods, distributors the maker of Tops brand of fohad issues od products, said there was a with the new slump in demand on the first system day with modern retail stores Kendriya Bhandar, Easy Day and others not doing the billing as systems were being updated for GST, and they were only selling essential commodities with manual billing. "Everyone is trying to understand how things will work. We have not increased retail prices yet.” Rakesh Jain of Rajdhani Group said they have increased wheat flour (atta) prices by 5%. “Implementation is a challenge as 90% of bulk packing of 50 kg is being sold unbranded. No one (distributor or retailer) is buying as of now. The other challenge is that retailers have not registered for GST," he said. Priyanka Mittal, director at KRBL, which owns India Gate basmati said the company was GST ready. “The shocker is distributors have not placed orders as they expect GST on branded basmati to be reversed from 5% to zero.”

Hotels escalate the matter with the ministry but say are still waiting for replies

New Delhi: The lack of clarity around applicability of new GST rates caused confusion in the hotel and restaurants industry for some but most said it was business as usual. Hotels have been taxed under different slabs based on room tariffs but hoteliers said there was some confusion around whether this was applicable on the rack rates or the invoice value. Garish Oberoi, VP, Federation of Hotel and Restaurant Associations of India said that while GST brings in a much simpler system by reducing the multiplicity of taxes and that customers were happy with taxes coming down for most hotels and restaurants, hoteliers and restaurateurs had a lot of concerns and questions. “We have escalated those to the ministry but the replies have not come yet. There

LONG-TERM GAINS

There are going to be hiccups in the short term but it is a good thing for the industry VISHAL KAMAT,

Director, Kamat Group

are 60-70 queries on different scenarios which are yet to be answered. The query on whether the taxes are applicable on invoice value still stands. The notification mentioned declared tariff and we were told by some officials that it would be on invoice value but there is no formal announcement. We hope these queries would be addressed in a few days,” said Oberoi. But most hoteliers said the taxes were applicable on the invoice value. “Taxes

GST rate on economy class at 5% is about 1 percentage point lower than earlier taxes For business class tickets it is at 12%, about 4 percentage points higher

Airlines say will pass on benefit as well as load to consumers

CORE CONCERN There could be a possible dual levy of GST on the import of aircraft on lease basis, that is, a 5% IGST on the import of aircraft and another 5% IGST on payment of lease rentals

ABHISHEK JAIN Tax partner, EY vy, but this has not happened, Jain said. “Also for economy class travel, there is a restriction of eligibility of GST credit on the purchase of any goods, which the industry was hoping would be rectified but has not happened yet.” Singh said the absence of input tax credit on economy class tickets will surely impact the cost of operations of airlines. “Certainly, it will impact (the cost of operations), but these cannot be showstoppers for such a big reform and we are hopeful that it will be resolved by the government,” he said.

Corporate Travellers Must Give Employer Details for Tax Credit

Hoteliers Voice Concern Over Lack of Clarity on Tax on Invoice Value Anumeha.chaturvedi @timesgroup.com

Class Conscious

FOR A SMOOTH TAKEOFF

ANIRBAN BORA

Dairy Cos See No Revenue Change; say Consumer will be the King

RS SODHI MD, Amul

[email protected]

PRICES OF HYBRID VARIANTS HAS GONE UP

senior vice-president for marketing and sales at Toyota Kirloskar Motor. “The GST will be fruitful for the growth of the auto industry. The industry will break into double digit growth territory this year.” Maruti said prices have been revised such that the entire benefit of GST rates is passed on to customers. The company has reduced ex-showroom prices by up to 3%. The rate of reduction varies across locations, depending on the VAT rates applicable prior to GST.

AJAY SINGH CMD,SpiceJet

Absence of provision for input tax credit may up cost of ops for airlines & in turn the fares

Auto Check `2,300 to `23,400 a unit

We don’t expect any major change in revenue. The consumer gets to gain

Relief Over Lower Levy on Economy Air Ticket may End

Car & Two-Wheeler Cos Get Into Auto Mode to Cut Prices Sharmistha Mukherjee

There are two concerns — double taxation on import of aircraft as well as lease rentals

would be on the selling price. There are going to be hiccups in the short term but it is a good thing for the industry and I don’t think the consumers have taken it negatively. People are booking through the usual channels,” said Vishal Kamat, director of the Kamat Group. Kamat’s Orchid Hotel in Mumbai has rooms which are taxed at 18% and suites with tariffs of `. 7,500 and above which are taxed at 28%. Hotels and lodges will a tariff below Rs 1,000 a day have been exempted from GST, while those with a room rate of between Rs 1,000-Rs 2,500 will be taxed at 12% and those with tariff of Rs 2,500-7500 will attract 18% tax, and a 28% slab is applicable for hotels above Rs 7500. Oberoi said for restaurateurs there was confusion around how they would tax some items sold in their premises. GST Council had pegged GST rates for air-conditioned eateries and those with liquor licences at 18%, and non-air-conditioned restaurants at 12%.

GST invoices to be shared with cos every month, which can be used to claim benefits Anirban Chowdhury

Mumbai: Airlines have written to its corporate travellers to register their companies’ or employers’ GST number to claim a tax credit. Corporate travellers form a significant chunk of the air traffic in India. They comprise between 30% and 45% of passengers of a lowcost airline and up to 60% for a fullservice airline. GST of 5% has been levied on economy-class airline tickets and 12% is charged on business class. “It is mandatory for guests travelling for business to add their company’s GST details at the time of booking. To ensure a seamless experience, we request that you inform your guests travelling for business to register on our portal and claim up to 12% back on flights," Jet Airways said in the letter to its registered passengers. “After registering, simply add your guest’s GST number every time you make a booking, and all other GST related details will automatically be added to your reservation,” said the airline. Passengers who have not added their GST number at the time of booking may do so within 72 hours

of booking their ticket or before their flight departure, whichever is earlier, the airline said. GST invoices will be shared with the passengers’ companies monthly, which can then be used to claim GST benefits. IndiGo and Vistara sent similar emails to their passengers. The government since yesterday implemented a new tax structure which seeks to to replace at least seven indirect tax heads. “Earlier too the companies could claim a tax credit for employees’ corporate travel,” said M Shivkumar, controller at Jet Airways. “The airline then provided a certificate to the corporates with the service tax details against which credit was availed. Now, all the data led by the GST number will be Physical fed into the GST netdocument not adequate work along with tax unless the invoice details. Corsame is porate entities can uploaded in then track the transthe GST action in the system network and claim credit for system the same, which effectively means physical document per se is not adequate unless the same is uploaded in the GST network system,” he added. “Also in the case of airline travel, service tax was extremely difficult to claim and led to litigations sometimes. Now, it would be much easier,” said an independent chartered accountant on condition of anonymity.

GROUNDED Builders & brokers expect sales to remain sluggish for some time as consumers seek clarity on tax obligation on transactions

Buyers may Home In On Ready-to-move-in Properties Segment remains out of GST ambit but may cost a bit more as it won’t get benefit of input tax credit [email protected]

Mumbai: Even as real estate developers are busy preparing and fine-tuning their systems to align with the new tax regime, builders and brokers are expecting real estate sales to remain sluggish for some time as consumers are seeking more clarity on exact tax obligation on their transactions. Over the past few days, builders and brokers’ offices have been receiving queries from existing and prospective customers on how would resale of an

under-construction apartment by an investor be treated under GST. Also, consumers want to know if any reimbursement or future payment adjustments are possible from developers’ input tax credit. “Customers will be in a discovery mode for a while, trying to analyse and follow a secure investment pattern for themselves. And we are talking about an industry which is just about to recover from the side effects of demonetization,” said Prakkash G Rohiira, director, Karma Realtors. “Allowing homebuyers to be induced into a wait-andwatch mode would alter the performance of the industry.” Realtors reckon that ready-to-move in properties would be preferred by homebuyers now as that segment remains out of the GST ambit. However, such properties are likely to cost a bit more now as these properties won’t get any benefit of input tax credit.

“While developers might still get some benefits for projects that are in nascent stage, they will have to bear the tax burden for ready-to-move in projects since they are kept out of the GST ambit,” said Surendra Hiranandani, CMD, House of Hiranandani. According to Hiranandani, while the intent is to streamline the tax adminis-

tration and bring more businesses in the tax net, it is unlikely that GST will have any impact on property prices. He believes that the current rate of 12% on under-construction projects might marginally bring down prices in the affordable segment owing to the input tax credits, but it is unlikely that similar impact will be felt in mid-priced or pre-

mium developments. Last week, the government had notified the goods & services tax rate (GST) for construction of real estate at 18% as against the 12% announced earlier. However, with this rate, the government has also allowed deduction of land value equivalent to one-third of total amount charged by the developer, making effective tax rate same as 12%. According to experts, this revised rate is expected to be tax-neutral as the GST obligation for the property buyer would remain the same. More clarity is expected to emerge once the GST gets implemented and the government clears its stand on the abatement available for the land cost for calculating service tax on underconstruction projects. For premium projects where land cost forms around half the total expenditure in cities like Mumbai, apartment prices are likely to rise.

https://telegram.me/TheHindu_Zone

8

https://telegram.me/PDF4EXAMS

ion about There is a lot of confus ce, which will an pli invoicing and com to understand take time. Few are yet IGST. Many meanings of CGST and d businesses an websites were down were halted , Cleartax ARCHIT GUPTA Founder

PREPAID SERVICES BUSINESS COULD BE HIT AS TELECOM DISTRIBUTORS HAVE BEEN STRUGGLING TO REGISTER ON THE GST PORTAL. THIS COULD HAVE BEEN AVOIDED IF THE GOVT HAD GIVEN MORE TIME

THE ECONOMIC TIMES | NEW DELHI / GURGAON | MONDAY | 3 JULY 2017

All policy changes of this size are bound to face teething problems. As long as the government and industry work together for the greater good, we are certain that all issues will get resolved RAJAN S MATHEWS

SANJEEV BAHL

The Road Ahead

Director General, Cellular Operators Association of India

Director (sales and marketing), MTS India

Pause for Breath Most retailers say end consumer sales have been tepid over the first weekend post GST implementation as consumers seem to be in the wait and watch mode — more so after Apple lowered prices. Several other cos said they won’t be changing prices

THE GiST OF MATTER

Questions Arise, Handset Stocks Stay Low New Delhi: Mobile phone retail stores have kept their stock at a minimum as they await clarity on pricing of new stock that is expected in the coming week in the wake of new goods and services tax (GST) tax regime, which could affect sales for a week or so. Smaller retailers too are wary of issuing bills as many are yet to update systems, though larger ones such as Croma, Reliance Digital and The Mobile Store say the transition has been seamless. End consumer sales have been tepid over this weekend, according to most retailers. Consumers seem to be in wait and watch mode, more so after Apple lowered prices across all its models by up to 7.5% on July 1. Brands such

as Samsung, Xiaomi, Oppo,Gionee, Intex and Lava had previously said they won’t be changing prices even after GST sets in. “We usually don’t keep all models but over the last few days, we have lower than what we typically keep,” said a standalone retailer in south Delhi, while another in east said all models were not available but would be in a few days. A large distributor catering to the north India market, who did not want to be named, said the slow pace of sales at smaller shops will continue for a week or 10 days, as most have yet to do their GST registrations and align their invoicing with it. Since all processes now have to be done online, smaller stores would see an impact on their inventories and supply chain, he explained. Retail chains such as Croma,

SMALL BIZ, BIG PUZZLE

It’s Still Work in Progress at Tier II, III Cities

Sending In the G Forces Handset makers train sales teams/distributors for transition Samsung Intex HMD Global Micromax (Nokia) Crack team of execs from Working Partner business innovation, finance, production, others to help supply chain

Sanghamitra Kar & Aritra Sarkhel

Bengaluru: Prime Minister Narendra Modi hailed GST as a “good and simple tax” that will end harassment of small businesses. However, reality remains quite different. Experts and economists have said GST will be beneficial in the long run but small businessmen are unclear about nuts and bolts. Requesting anonymity, a central excise, and customs official said the main problem is that there is no concept of issuing a tax invoice in tier II cities which has now been mandated if the sale value is above `200. “This is bound to create an initial hiccup for small businesses.” He added that without strong IT infrastructure, these businessmen are now hapless, looking for IT skills. However, they will become more transparent later, he said. Archit Gupta, founder of Cleartax, says they see over 50% traffic from metro cities while tier II and III cities constitute around 46% who seek help for e-filing of tax. “Right now, individuals are not clear about the rates and are querying about IGST, CGST etc. There may Surprisingly many restaurants be added and others are charging GST difrunning ferently. There is a lot of confucosts for sion about the invoicing and smaller compliance which will take titraders as me. Few are yet to understand meanings of CGST and IGST. everything Many websites were down and goes businesses were halted so as to digital get clarity on the situation.” He adds that overall it should take around 100 days for businesses to completely embrace GST. “Tier II and III cities will take longer to implement because even though they are aware, implementation will be a major challenge.” Lucknow-basedMudit Kaushik, owner of three Sharma Departmental Stores, told ET, “There is a lot of confusion regarding the final tax rates of different products that we sell. Many companies sell multiple products to us which will invite different tax rates but I still have no clarity on the entire situation.”He adds, “Many businessmen here have not yet registered for GSTN till now.” Customers are even being given handwritten bills as shopkeepers are uncertain as what to charge the customers. A 59-year old manufacturer said sales had been halted due to invoicing and compliance ambiguity. ”Our traders who mostly deal in cash, are still hesitant to confirm any deals yet.”

training will be held in states for switchover from July 1

Sales team will train distributors in billing, stock keeping changes

Illustration: ANIRBAN

Reliance Digital, The Mobile Store, however, reported normal sales for this time of year or compared to a regular Saturday, with at

most a 5-6% drop in footfalls – mostly attributable to rains. “We had stocked up, so we did not face any issues, sales were also nor-

duction and consultants to help internally and external supply chain, said industry sources. It has trained all distributors and channel partners for transitioning into GST, inventory management, putting technology in for billing and other processes. Samsung did not officially comment. Karbonn Mobiles’ MD Pardeep Jain, though, said the entire trade channel would take time to acquaint with changes. “…as of now, we don’t see any specific challenge.” Intex Technologies chief financial officer Rajeev Jain said its accounts, SAP and EY team were working for the last few months to make the transition without hiccups. HMD Global, which sells the Nokia brand of phones, said it had trained its sales team to communicate with its 400 exclusive distributors.

On Sunday, a famous vegetarian restaurant in Ville Parle had to deal with a hard-nosed customer who screamed at the manager for having wrongly charged 18% GST when food prices in thge menu already included old taxes like VAT – leading to double taxation. The man at the billing counter should have lowered prices before charging 18%. The manager sheepishly apologised and even confessed that since morning he had issued at least 200 such ‘inflated’ bills. He promised to change the software – understandably, as under new rules, overcharging could technically lead to cancellation of licence.

Old Sins Catch Up By the way, GST in no way means forget and forgive the past. In fact, for many it’s catching up a lot faster than they feared. In the past one month excise authorities and indirect tax departments have been busy slapping notices on violations and disputes around taxes which are now history. Tax officials have a blunt explanation: we want to clear off our desks before GST kicks in. So chartered accountants and their harried clients are dividing time between dealing with the past and fixing the future.

Telcos’ Revenues Vulnerable to Disruption in Prepaid Services

OPERATORS EXPECT TROUBLE AS MANY DISTRIBUTORS, RETAILERS ARE YET TO REGISTER UNDER GST [email protected]

Small traders trip over lack of IT infrastructure, new invoicing

with SAP, EY team for last few months to make easy transition

mal,” said Krishna Kumar, CEO at India’s largest mobile handset retail chain The Mobile Store. Handset companies such as Karbonn, Intex, Panasonic, HMD, Micromax and others, though, say they experienced fewer problems than expected as most worked to ensure all internal processes and systems were updated to handle change seamlessly. Rajesh Agarwal, co-founder of Micromax, said internal trainings have ensured its teams are well equipped to handle change and even advice business partners. “Micromax is also helping by organising partner training at state levels to ensure free education for switching the partner businesses to GST from July 1.” Samsung has set up a crack team including executives from finance, business innovation, pro-

Kolkata: Mobile phone operators are bracing for a possible hit on revenue following disruption in prepaid services as many distributors and retailers have been unable to complete mandatory registration formalities under GST by July 1. More than 90% of mobile phone users in India subscribe to prepaid services, which contribute over 80% to telecom operators’ revenue, executives said. “So any form of business continuity disruption in the prepaid services platform, even short term, can cause a serious revenue hit for telcos in the coming weeks,” said a senior executive, who did not wish to be identified. Telcos are facing huge pressure amid intense competition and have sought government sops to tide over the financial stress. Without GST registration, distributors of prepaid mobile services will be unable to replenish or “refill” their talktime balances from the telcos with effect from July 1. As a result, distributors will not be able to offer talktime replenishment to more than a million industry retailers, who, in turn, will not be able to sell prepaid recharge vouchers or electronic top-ups to customers. A sizeable chunk of the prepaid user base avails itself of lower denomination prepaid vouchers, and recharges on a daily basis. Prepaid service distributors mostly reple-

Disruption Diaries Innumerable prepaid distributors, retailers have not completed registration for GST

They won’t be able to replenish and sell prepaid talktime balances

Prepaid business generates over 80% of a telcos’ revenues

Telcos say distributors struggling to register due to excessive load on portal

Over 90% of users in India subscribe to prepaid — many with daily recharges

nish their running talktime balances every week, while in some cases they do so even twice a week. Anticipating the problem, phone companies sold extra prepaid talktime balance to distributors last week to maintain supply levels, but conceded this was just a “temporary solution.” It could snowball into a bigger problem if distributors ran out of balance and were unable to wrap up GST registration in the next 72 hours. “Prepaid services business could be hit as telco distributors have been struggling to register on the GST portal. This could have been avoided if the government had given more time, considering the massive load on the GST registration platform lately,” said Sanjeev Bahl, director (sales and marketing) at MTS India.

Tax computation and collection under GST will be complex for prepaid services business where there are intermediaries such as distributors and retailers. Till last month, service tax on prepaid tariff vouchers was directly collected by telcos from customers and deposited to the government, but under GST, tax will have to be recovered separately by the carrier, distributor and retailer, and passed on to the government. “Every link in the distribution cycle needs to comply with GST. Some distributors are indeed facing registration challenges,” said another senior executive on condition of anonymity. “Besides, a significant volume of prepaid business comes from multi-brand retailers, who front-end customers. Not all of them

have been able to register either.” Bharti Airtel, Vodafone India, Idea Cellular, Reliance Communications, Reliance Jio and Aircel did not reply to ET’s queries till late evening on Sunday.Rajan Mathews, director general of Cellular Operators Association of India, did not comment on the looming crisis in the prepaid services business, but said the mobile industry association “had requested the government to exempt the distribution chain from GST like the previous service tax regime”. The COAI represents India’s biggest phone companies such as Bharti Airtel, Vodafone India, Idea Cellular and new entrant Jio Infocomm. This problem will not exist in the post-paid business, where there are no business intermediaries. So, a telco can continue to directly collect GST from post-paid customers and pass it on to the government. Separately, telcos have been working to rejig their back-end IT and billing systems. But some customer care executives of leading phone companies told ET on condition of anonymity that there could be some delays in new SIM activations, along with increased downtimes for customer service requests relating to tariff plan changes, amid the continuing reconfiguration and stabilisation of IT and billing systems at the telcos for GST compliance. Global network vendors such as Nokia and Ericsson, however, said their transition to GST had been smooth.

Mint St Maths The advent of GST would force RBI eggheads to do some fine maths. Some items (like cereals) with higher weights in the Consumer Price Index – a key tool that the central bank uses to decide on interest rates and money supply – will now have lower tax. So, even if there is a rise in general price level, the CPI number may continue to be low. As someone said, “As it is there is a question mark on RBI’s inflation model. Now comes GST. They will have to put their best minds to fine tune the model for forecasting inflation and cut rates.”

Ring-fencing Data It was rather reassuring when Prakash Kumar, chief executive of GST Network, the other day said it has taken all necessary precautions to prevent ransomware attacks and data thefts. In the cyber security industry, vendors are talking about GSTN putting out a request for proposal (RFP) to procure a string of security software and tools. Indeed, this should be a top priority because anyone hacking the data would get to customer details of business rivals.

No Hanky-Panky Traders often cut deals while commuting in train. For years, Maheshbhai, who has been dealing in handkerchiefs, escaped tax by scribbling `hand cloths’ in the invoice. That was because in the textile chain, while yarn and garments attracted indirect tax, the cloth was spared. Not anymore. The annoyed 60-year old trader asked a fellow-commuter, “Kya handkerchief likhna padega?” “Rahne dijiye, hanky chalega,” smiled the man next to him.

Prepaid Users Flounder in Tariff Fog Some stores anticipate confusion and stay closed while at other places, users avoid weekend recharge Devina Sengupta, Gulveen Aulakh & Kalyan Parbat

Mumbai|New Delhi|Kolkata: On Sunday, day II of the GST regime, Yash Communications, a small mobile phone recharge shop in SakiNaka, Mumbai, had to pacify around 10 customers who had braved the rains to recharge their phones. Their recharges ranged from `10 to `200, but things got muddled when one person got `7 worth of talktime for a recharge of `10, while another got `6 for the same recharge cost. “Even a rupee counts in India, and I couldn’t explain why the taxes were different for the same company’s recharge. I could not tell the customer because distributors had not told us what the changes will be,” said Rajesh Pratap, owner of Yash Communications. He expects better

clarity from Monday. Pratap also couldn’t recharge for Tata Docomo customers as lines were jammed. The story was pretty much the same across the country over the weekend. While post-paid users aren’t facing any problems since their bills will factor in 18% GST instead of the 15% service tax earlier, pre-paid users, especially those who use lower value, are a confused lot. Recharge shop owners said they haven't got sheets detailing all the plans, which show the amount people will get for a certain recharge value, but they're going ahead with rates that existed before GST. There were complaints of jammed servers because of which recharge coupons could not be uploaded. Emails to Airtel, Vodafone, Idea, Reliance Jio, Reliance Communications, Tata Teleservices and Aircel remained unanswered till the time

of going to press. “All policy changes of this size are bound to face teething problems. As long as the government and Industry work together for the greater good, we are certain that all issues will get resolved,” said Rajan S. Mathews, director geExec at a neral, Cellular Kolkata Operators Associstore says ation of India (COAI), which reprethere may sents the likes of be some Airtel, Vodafone, delays Idea and Jio. in SIM Many across citiactivations es did not get their next week phones recharged due to the tariff confusion, especially at the mom-and-pop outlets, but the larger operator-owned stores said it was business as usual.

Some of the stores in Delhi, anticipating this confusion, had shut shop over the weekend. In South Delhi, for instance, most of the recharge stores were closed over the weekend, and a few that stayed open, said they would not recharge till the second half of the day as their systems were getting updated. Mrinal Ghosh, who has been doing mobile recharges and electronic top-ups for over a decade in Kolkata, said electronic top-ups were not happening for most vendors on Sunday morning as telcos were still reconfiguring IT and billing systems. But it wasn’t all downhill though. A store in Mumbai, owned by a top telco, said they had been given the pricing charts and had no issues with customers. The store, located at a busy junction, said if there was any low turnout, it was because of the rains and not the new taxes.

Far From GST

ARINDAM

[email protected]

A Second Look at the Menu Card

Last week, all shops selling handsets and electronic items in a squalid four-storey structure in Mumbai’s Crawford market area, downed their shutters for almost two days. Passers-by felt the men in Mumbai were, as they say, lending solidarity to their friends in Surat to oppose GST. But a closer look at one of the closed shops said another story. A notice pasted on its door read, “Due to sad demise of Mustafa Ahmed Dosa, the market will remain closed on 28/6 & 29/6”. Indeed, a world far from GST.

Simple, Yet Complex Tax Regime seeks to Integrate Business Transactions As businesses are becoming complex and being disrupted by technologies, it is utopian to expect that the draftsman of a law will miraculously envisage and address all possibilities As we watched Prime Minister Modi inaugurate the ‘good and simple tax’ (as he coined it) at the midnight hour of June 30, there was clearly an unmistakable feeling of history being made amidst a new ‘awakening’ and dawn of what undoubtedly is India’s most transformative tax reform since Independence. Whilst in his characteristic style, the PM crisply explained, in simple terms, what GST was all about in his Parliament speech, he followed it up with an hour-long address to the chartered accountants fraternity on the profession’s Foundation Day on July 1, by referring to the overarching policy objective of GST. In his latter speech, he left no doubt in anyone’s mind that he considers GST — along with many other measures introduced by his government (including demonetisation) — to bring in the desired degree of transparency and impetus to enhancement of tax base and augment

much needed resources for investments in social and physical infrastructure. Yet, there are nagging concerns on myriad fronts as GST unfolds. First, there is the spectre of some boycotts by trading organisations protesting against GST. As the finance minister lucidly explained in an interview, it appears these protests are more about the ‘compulsion’ to formalise all business transactions on a digital platform and, thus, ensuring there is ‘no place to hide’ as far as both GST and direct tax compliance is concerned. Second, there is trepidation about ability and sustainability of the technology backbone created for administration of GST. However, the fact that compliance requirements have been staggered by a couple of months should provide enough breather and comfort to most taxpayers to believe that the system will stabilise in these initial few weeks. Third, there has been a critique of the

Sudhir Kapadia PARTNER & NATIONAL TAX LEADER EY INDIA

multiplicity of rates across various goods. The fact is that there is factually One Nation, One Tax for a particular good all across India for the very first time. However, there is obviously not just one tax rate for all goods. Again, the FM has repeatedly explained why it is impractical to expect a single rate of GST in our country. The sooner we accept this reality the better it is for all of us.

Fourth, in some sectors (especially in services), there are some really burning practical issues on overall GST impact, applicability of credit mechanisms, uncertainty on place of service rules etc. These aspects clearly need urgent attention and redressals to avoid extra costs being incurred in the system. Fifth, by excluding sectors like petroleum, liquor and real estate from GST, avoidable distortions have been built in resulting in cascading costs for consumers. Here again, the FM has clarified he expects a calibrated integration of these sectors into GST over a period of time. The government must follow this up with quick action to integrate these sectors too into GST. Lastly, India Inc is legitimately concerned about the ‘anti profiteering’ provision. While the government’s intention to use it only as a deterrent is comforting, decades of experience in the field has made businesses jittery about

overzealous action being initiated based on this provision. Government needs to do much more on this front to assuage these legitimate concerns. Coming back to the original question — is GST really a ‘simple’ tax? The CA community, if asked individually, will likely answer, “Not really.” Practitioners of tax laws in India have enough experience to know words in statute books acquire meanings and a ‘life’ of their own for as long as (and sometimes even more) than the biological life span of residents in the country, given our slow march of tax disputes through the judicial hierarchy. But this is, to some extent, unsurprising and inevitable. When businesses itself are becoming more complex and continuously disrupted by fast changing technologies, it is utopian to expect that the draftsman of the law will miraculously have a 2020 vision in hindsight to envisage all possibilities and address these in the law upfront.

Therefore, it has to be said, that GST per se is simple, yet complex. However, and more importantly, its concept and objective is really quite simple. GST seeks to bring the entire body of business transactions into a single integrated digital platform with full transparency. For some businesses, this will cause pain in as much as their tax outgoes will increase for the simple reason that they were able to successfully operate below the radar all these years. Like in the aftermath of demonetisation, there is little sympathy left for such businesses either in the government or in the public. For most businesses, however, GST will undoubtedly usher in a salutary and welcome change in the way business will be carried out in the country. For this reason alone, we have to salute the PM and FM for steadfastly and resolutely driving GST to its logical conclusion and much awaited implementation.

ETMarkets

https://telegram.me/TheHindu_Zone

Beating Volatility

https://telegram.me/PDF4EXAMS MONEY MATTERS

Indicators Suggest Govt is Committed to Growth Q&A with Mohamed El-Erian

WWW.ETMARKETS.COM NEW DELHI / GURGAON, MONDAY, 3 JULY 2017

INVESTORS FEAR cos may not be fully prepared for transition and could see impact on volumes & earnings

Earnings Worries Spread on D Street bring and there are concerns that companies are not fully prepared for the transition, which may imMumbai: A near-term disruption pact volumes and earnings. is likely in the ongoing bull run on “Considering that valuations are Dalal Street as investors live in the high and we will see a mild disrupdark about the impact of the Goods tion, we are seeing some pain in the and Services Tax (GST) on compa- market,” said Mahesh Patil, conies’ earnings. If market partici- chief investment officer at Birla pants judge that the new Sunlife Mutual Fund. “I tax system will have an think some disruption adverse effect on compawill be there due to GST, nies for a longer period, it but it will be a short-term could spook the market, phenomenon, just like already worried about eldemonetisation.” evated valuations. In June, benchmark inThe Road Ahead GST, the biggest tax redices Sensex and Nifty form since India’s indeposted their first monthly pendence, came into effect from loss since November. Cash market Saturday. The reform is expected volume fell 11.6% from the previto get rid of the bottlenecks associ- ous month to ` 27,291 crore. ated with the indirect taxation, Ramesh Damani, a stock market facilitate free movement of goods veteran, said, “The volatility is and services and ensure better tax keeping markets on the edge, but compliance. companies are confident that However, initial hiccups are like- things will get straighten out in a ly given the extent of change it will quarter.” [email protected]

Why Stocks of Organised Sector Cos Have an Edge Share of unorganised sector Sector

(%)

Cos in organised sector to gain

Consumer discretionary Footwear

60-70

Bata, Relaxo, Liberty

QSR

60-70

Jubilant Foodworks

Home Improvement Adhesive Ceramic/Tiles Paints Plywood

30-35

Pidilite, Astral

50

Kajaria, Somany, HR Johnson

35

Asian Paints, Berger Paints

60-70

Greenply, Century Ply

Sanitaryware

50

HSIL, Cera

Cable and wire

50

Finolex, KEI Industries

ANIRBAN BORA

GST

MARKET SENTIMENT

Volatility is keeping markets on the edge but companies are confident that things will get straighten out in a quarter — Ramesh Damani

What is adding to the nervousness is that the markets are already trading at expensive valuations. Moreover, fears are growing that the era of easy money policy is coming to an end after the recent comments by the heads of the Federal Reserve and the European Central Bank, which also triggered a selloff in global bond markets last week. These factors together may keep investors on edge in the coming weeks. The BSE Sensex closed at 30,921.61 and the NSE Nifty at 9,520.90 on Friday, and are now about 2% away from the lifetime high levels scaled in June. They are still up 16% for the year, and at 18.2-18.9 times forward earnings, one of the most expensive Asian markets which are at 10-17 times and MSCI’s Emerging Market index which is at 12.8 times, according to Bloomberg data. Continued on XX SMART INVESTING

gaining currency in rural India where smartphone-based payments cannot work

ON THE BOURSES

The Gainers & Losers Aadhaar Pays See Analysts expect the overall transition into the formal sector to take place at a slower pace due to tax neutrality and high compliance costs, it would be faster in categories where the GST rates are lower than the existing rates. Here are some of the stocks, according to analysts, that are going to be impacted with the coming of the new tax regime. — Rajesh Mascarenhas

6-fold Jump in Rural Areas in Oct-April [email protected]

Light electrical 30-40 Havells, Crompton Greaves Consumer Staples Biscuits

35-40

Positives

Britannia

Detergents

30

Jyothy labs, HUL

Edible oil

40

Marico

A market share shift to the organised players from the unorganised space under the GST regime could improve revenue visibility of several companies in sectors where unorganised players capture a fair share of the business. Improving volume visibility for companies at a time when the demand environment continues to be weak could help them to either maintain their premium valuations or potential of expanding their price-earnings multiples. Companies such as Havells, Crompton Greaves Consumer, Kajaria Ceramics, Cera Sanitaryware, HSIL, Finolex Cables, KEI Industries, Bata, Amara Raja, Greenply Industries, Asian Paints, Pidilite Industries may see better revenue growth thanks to the rising proportion of the organised player in the industry. Currently, unorganised players account for nearly 30-70% of the total industry size of the sectors such as consumer electrical, cables and wires, sanitaryware, footwear, paints, quick service restaurants, adhesives and plywood.

Why GST will help organised players? Firstly, the new tax regime will help maintain centralised data collection with transactions capturing the entire value chain right from the retailers to manufactures. Secondly, at every step there is a requirement to pay GST and claim input tax credit for taxes paid in the value chain. The availability of the input tax credit will reduce the tax burden for the manufacturers. This availability of input tax could be a major incentive for buyers in the B2B segment for the sourcing from organised players. For instance, a builder and contractor will be incentivised to use branded products as input tax credit will be available for GST on inputs such as tiles, paints, electrical fittings. Lastly, due to tax compliance, input cost will increase for the unorganised players and help narrow the price gap with the organised players. For a customer, it would make little sense to continue to buy an unbranded product at a higher cost if the cost differential with a branded (and organised sector) product narrows. — Ashutosh R Shyam/ETIG

Negatives

PIDILITE INDUSTRIES

VOLTAS

GST at 18% for adhesives as against the existing tax of 23% will certainly benefit the company most in terms of margins expansions as adhesives account for over 65% of its total revenue.

Based on the current GST rates (28% for room ACs), prices are likely to see an upward revision of 2-5%. Hence, volumes in 1H18 are likely to see downward pressure due to a) destocking by dealers followed by a lean sales period, which may restrict restocking and b) high growth base of 1H17, where UCP segment sales grew by 23% YoY.

ITC ITC will benefit significantly from GST as tax rate on cigarettes is lower than street expectations and GST will create efficiencies in the supply chain for cigarettes and ITC’s ‘FMCG others’ businesses.

COLGATE Lower tax rate on toothpaste (GST at 18%) augurs well for Colgate as its current indirect tax rates are over 600 bps higher than the GST rate.

CHAMBAL FERTILISERS GST is expected to negatively impact the fertiliser sector given higher tax rates, non-inclusion of subsidy, and disparity between input and output product tax rates in some instances.

INDIAN HOTELS

Road transportation accounts for over 60% of total freight mix. Benefits pertaining to improvement in lead time and reduction in distribution and inventory carry cost will improve its operating performance in the coming quarters.

Luxury hotel were subject to multiple tax rate like luxury tax (varies across states), VAT and service tax. Under the new regime, all these taxes will be subsumed into one tax (GST). The single tax rate will result in lower admin cost. However, the new GST rate recommended for luxury hotels (28%) is significantly higher than the prevailing rate (21-24%), which will negatively impact margins of hotel companies.

JSW ENERGY

VIP INDUSTRIES

ULTRATECH CEMENT

Tax on coal under GST regime would be at 5% against the prevailing rate of 12%, which analyst believe will benefit to merchant players like JSW Energy. Merchant power sales account for over 60% of its total sales volume. A duty reduction of 7% will aid JSW to reduce its overall generation cost by 3%.

Since the proposed GST rate is higher than the existing tax rate (18-19%), analysts believe it may dent profitability of players like VIP Industries in the short-term. However, over the longer term, organised players may take a gradual price hike to partially negate the impact on margins. Stock

HERITAGE FOODS As milk is exempted from GST, Heritage Foods will be benefit most considering it derives over 95% of revenue from milk and milk products.

DISH TV There will be a positive impact on the company as the current tax outgo (service tax+entertainment tax) is 21-22% which would be reduced to 18%. Entertainment tax and CVD will get subsumed into GST.

CMP (%)

YTD Rtn (%)

PE

ROE (%)

27.6

POSITIVE Pidilite Industries

805.6

36.6

47.8

ITC

323.7

33.9

38.1

23.1

Colgate Palmolive

1110.9

22.8

52.3

50.4

Ultratech Cement

3959.1

21.8

40.0

11.7

JSW Energy

64.1

5.3

16.6

6.3

Heritage Foods

1105.8

24.9

38.4

19.2

Century PlyboardS

294.3

74.6

34.4

30.5

80.1

-5.4

77.8

25.1

Dish TV India

CENTURY PLYBOARD

NEGATIVE

The newly-announced GST rates for decorative laminates are much lower than the current incidence, which is positive for laminate players. The new GST rate for laminates is 18% compared to the current rate of 27-29%.

Voltas

457.3

39.3

29.6

17.9

Chambal Fertilisers

117.4

65.2

12.7

16.1

Indian Hotels

133.8

35.8

VIP Industries

182.1

55.3

--

-2.2

30.7

22.4

SOURCE: Bloomberg

SIGNIFICANT CHANGES to IT systems by banks for the nationwide rollout ensures no hiccup

For Banks, It Was a Smooth Ride to New Tax Era [email protected]

Mumbai: Business in banks may have been smooth since the Goods and Services Tax (GST) regime began two days back, but the banking and insurance activities of customers will begin to pinch as tax rates on these services have risen, said bankers. Most large sized banks had made significant changes to their IT systems in anticipation of the nationwide rollout of GST on July 1 and there has been no hiccup in the past two days, even though they were not normal banking days with July 1 seeing marginal activity since banks were busy closing books for the first quarter. But customers will have to pay more as banking services such as debit card, home loan processing fee, locker rentals, issuing of

cheque books, cash handling charges and SMS alerts would attract higher taxes. “We are one of the largest tax paying entities in the country, so we have made sure that we can do the filings in every single state. Go Live has happened, so we are live everywhere,” said Jairam Sridharan, CFO of Axis Bank. “The first tax payments will happen in the next one month, but all the billings have changed to the GST format and we haven’t had any problem.” State Bank of India and Axis are among the five banks that have been allowed to take GST payments across the country. SBI too announced its GST-readiness and said that GST payments could be made online through internet banking and SBI debit cards, or by using its 25,000-plus branches. “We are completely GST-ready,

AEPS TRANSACTIONS driven by micro ATMs

all systems have been integrated and tested and we haven’t come across any issues so far,” said Mrityunjay Mahapatra, DMD, SBI. “There are 40 internal applications which have been aligned with the GST guidelines. Transactions are happening successfully and we are seeing lot of them happening through internet banking. Several customers are

also doing small value transactions to find whether the system is working or not.” Some of the bigger private and multinational banks started modifying their front-end IT systems at the end of last year while several state-run banks and smaller private banks had floated tenders recently inviting IT companies to make them GST-ready. Recently, the Indian Banks Association had called for a meeting to check the preparedness for banks and found that they are more or less ready to face the new tax challenges. While most banks claim GST readiness, consumers will have to shell out more for banking services, insurance premium payments and credit card bills under the new regime. “Due to increased rate of tax on banking services from 15% to 18%, GST will result in in-

creased cost of services offered to customers,” said Ravindra Marathe, CEO, Bank of Maharashtra. “GST has a mechanism of reconciliation of output services and input services, and banks may get the credit of each eligible input service. Overall, the monetary impact may be negative initially, but complete transparency in transactions will show positive results for the banks and the economy in the long term.” Also, life and non-life premiums would involve an increase in taxes from 15% to 18%. “Though insurance customers will have to pay a higher rate of GST at 18% compared to 15% service tax earlier, the overall impact should be positive, given the convenience and simplicity associated with a single tax regime,” said Gopal Balachandran, chief financial officer, ICICI Lombard.

Mumbai: Aadhaar Enabled Payments Systems (AEPS), promoted by the government to drive digital payments in rural India, is showing definitive signs of adoption amongst its target audience with transactions rising more than six-fold within five months of the currency swap. “Banks have already deployed around 1.3 lakh micro ATMs in the country, of which more than 1 lakh terminals are interoperable,” said AP Hota, chief executive officer of National Payments Corporation of India (NPCI). “Aadhaar based payments is the right technology for rural India where literacy about security features for digital payments like OTP and password are lacking.” Mirroring the success of the Unified Payments Interface (UPI), AEPS transactions reached more than 6 million in April against less than a million in October, a month before demonetisation was announced, according to NPCI data. From about 2 million in December, the number of transactions has steadily increased to 6.1 million in April. AEPS transactions are driven by microATMs being deployed majorly by banks in rural India, where smartphone based payments cannot work. Interoperable microATMs allow customers to use any bank account to transact on any device, much like ATMs, where ATM cards of any bank can be used on any machine. Hota said that the success of the AEPS programme lies in the ability of the regional rural banks (RRBs) to deploy such solutions for their customers. “We already have 53 RRBs offering interoperable AEPS services out of the total 56, and our target is to make all of them interoperable as soon as possible,” said Hota. While offering options around digital

payments, microATMs also allow banks to take banking to rural India in a cost-effective manner, thereby driving financial inclusion. “The cost-to-serve through a MicroATM is lower than that of a traditional bank branch. Hence, this network can be quickly ramped up and can enable digital financial inclusion at scale,” said Rajiv Lall, founder chief executive officer of IDFC Bank. IDFC Bank, which has deployed around 4,139 microATMs in the country for AEPS transactions, plans to increase the number to 30,000 terminals and another 75,000 Aadhaar Pay merchants over the next two years. While AEPS picks up steam, around 70% of the transactions are still for only cash withdrawal or deposits and the rest for balance enquiry and fund transfer.

EUROPEAN & EMERGING MARKETS TO RISE FURTHER?

Equity Investors see EMs Outshining US Reuters

New York: Even though a steady stream of money has flowed out of US stocks into overseas markets, investors expect European and emerging market equities to rise further, supported by expectations for economic growth and accommodative central bank policies. US fund investors put the most money into overseas equities since the second quarter in 2015, with more than half of the $90 billion outflows for the first half coming in the second quarter, according to preliminary Lipper data. The MSCI Emerging market index . MSCIEF has risen 17% year-to-date compared with a 4.9% rise for Europe’s Stoxx 600 index and the S&P 500 index’s 8.0% gain. Since emerging market central banks have been lowering interest rates and their currencies have been falling in recent years this is now helping to boost economic g rowth, according to N o r t h we s t e r n M u t u a l ’s C h i e f Investment Strategist, Brent Schutte. But still the emerging market index is roughly 25 percent off its all-time high reached in 2007 while the Stoxx 600 is 8.0% off its record high. In comparison the S&P 500 is just 1.0% below its latest record, reached in June 2017. The overseas indexes could reach new record highs over the next two years, according to Jack Ablin, chief investment officer at BMO Private Bank in Chicago citing improving growth.

MSCI EM 1010.8

1050

781.6

Figures in $)

900

750

600

Sept 28, 2015

June 30, 2017

“Finally the recovery has really picked up in the rest of the world. It’s moving along faster than the US because it’s trailed. The US is further along because the central bank here really was aggressive in quantitative easing first,” said Ablin. For the second quarter, revenue for companies in European markets are expected to grow 5.8% compared with 4.6% for S&P 500 index companies and 11.5% for emerging markets in the Asia Pacific Region, according to Reuters data. Earnings estimates for European companies for the period stand out with a 13.5% jump seen compared with 8.0% growth expected for the S&P 500 and 6.4% for emerging markets. Northwestern Mutual’s Schutte said his company is betting that outperformance in emerging market and European stocks should continue and cited a one-two year timeframe for investment in eurozone stocks in particular.

https://telegram.me/TheHindu_Zone

https://telegram.me/PDF4EXAMS

10 Smart Investing

What Bajaj Corp

Going for investment is better avoided at this point, but short positions can be created in the index, in stocks and during pullback rallies. The Nifty is likely to face resistance at about 9,700, while 9,450 remains a key support level to watch out for.

380.1

400

360

320

July 4, 2016

Jun 30, 2017

„ Dolat Capital has a buy on Bajaj Corp with a target price of `458.The brokerage said the company reported a lacklustre performance in FY17 with sales dropping by 0.4% year-on-year to `792 crore. It said hair oils will attract 18% GST, lesser than current levels which will have a favourable impact on margins in the long-term. It said anticipated better monsoon is expected to increase discretionary consumer spending. The stock rose 1.89% to `380.05 on Friday.

NAGRAJ SHETTI TECHNICAL RESEARCH ANALYST, HDFC SECURITIES

What is in store? Nifty slipped into decline last week and closed the week lower by around 0.56%. After showing a sharp weakness during the early part of last week, Nifty was not able to sustain the upside bounce-backs and the area of 9560-70 has acted as a stiff resistance for the markets. Nifty, as per weekly timeframe, is in a down trend and broke below the immediate support of 9550 levels during last week. Now we are experiencing a sharp weakness in Nifty as per weekly timeframe,

upside bounce-back up to 9600 levels could be short-lived and hence could be a selling opportunity in the markets. This upside bounce-

RA

back could also be used for profit booking/exiting of existing long positions.

R ANI

BA

N

BO

SUDHAKAR PATTABIRAMAN Where are we? We continue to keep the status of the Indian market in a confirmed uptrend as Nifty holds its near-highs. Institutional selling has also been limited with just one pronounced selling day in the last two weeks. The market is waiting for fresh triggers before resuming its upward journey. What is in store? With the Nifty above its 50-DMA, we believe the bulls are firmly in control. This has been the story of 2017, as the market has not looked back ever since it crossed the 50-DMA at the beginning of the year, lapping up every positive news in earnest, while every dip was bought into. The Nifty is currently 2% off its all-time highs and is 0.4% above the 50-DMA. This week, we expect the market to cheer the rollout of India’s biggest tax reform till date. The Nifty is likely to face resistance at about 9,700, while 9,450 remains a key support level to watch out. Couple of down days on heavy volume over the next few weeks would put the market under pressure. What could investors do? The action from leading stocks continues to be encouraging, with equally good strength seen in the mid-caps and small caps.

Investors should actively look out for stocks with high-quality fundamentals that are breaking out of sound patterns. Stocks at near buy

„ Motilal Oswal has a buy on Persistent Systems with a target price of `740. The brokerage said the company is one of the few tier-II companies with the potential to grow revenues above the industry, given the focus on enterprise digital transformation. It said credible experience in agile product development and iterative approach to product engineering made it positive on the company. The stock rose 2.53% to `678.60 on Friday.

The study of price & time and the theory of Fibonacci retracement as per larger timeframe like monthly suggests a possibility of further downward correction in Nifty for the month of July and August. Later, the market could finally find a strong lower level support around 8870-8900 levels (with an intermediate stop at 9220-9270) and could finish its downward corrective leg. We are expecting a sharp bottom reversal around those supports in the month of August.

What could investors do?

HEAD-RESEARCH OPERATIONS, WILLIAM O’NEIL INDIA

„ Icicidirect.com has a buy on Bank of Baroda with a target price of `200. The brokerage cut earnings estimated by 21% in anticipation of muted corporate credit demand and higher provisions on accounts referred to NCLT. It said cleaning of books, focus on operational efficiency and increased credit traction remain positive and the resolution in a few accounts remains an upside risk. The stock rose 3.60% to `161.60 on Friday.

point include KEI Industries, Page Industries and Godrej Consumer Products. Monitor the portfolio stocks carefully and be quick to cut losses. We suggest investors pay heed to stocks that have given good returns and book profits or sell incremental positions upon seeing any technical weakness. This will help in capital preservation.

Going for investment buying should be avoided at this point while trading short positions can be created in Index and in stocks now and during pullback rallies. The bottom formation in the market as per price and time study could possibly give us an opportunity to bottom fish for investment over the next two months.

XX From ET Markets Page 1

India VIX — which measures market perception of near term volatility — has gained 33% from the low of 8.8 hit on June 23. Foreign investors have also pulled out funds to the tune of `1,176 crore since midJune. On Thursday, Hong Kong-headquartered brokerage CLSA’s chief equity strategist Christopher Wood said he is reducing weightage on India and Malaysia by one percentage point each in the firm’s Asia exJapan relative return portfolio in favour of South Korea and Taiwan. “With valuations at 18-19 times for-

Oriental Carbon 975.40 6.49 1067.35/545.50

14.9/10.1

Oriental Carbon & Chemicals (OCCL) is engaged in the production of insoluble sulphur for the tyre and rubber industry. Our recent discussions with the company’s management point out that the ramp-up of its new Insoluble sulphur (IS) line at Mundra has been faster than expected and OCCL’s penetration efforts into a difficult US market have remained effective. Work on the fourth line is already underway and early commissioning is a strong possibility. We expect volumes to rise strongly over FY18-19E and consolidated margins are expected to improve materially led by operating leverage, reduced power & fuel costs and turnaround of its downsised subsidiary Duncan Engineering. We expect OCCL to steadily increase its share in the global IS market in the next few years. We have a buy on the stock with a target price of `1,140. By Centrum Broking

Air India

Sectors like pharma and FMCG could show some resilience during market weakness.

Air Arabia

Emirates

3.3

AVP-TECHNICAL RESEARCH, SBI CAP SECURITIES

BUY

Formed hammer candle and price is at 78.6% retracement, coinciding with a rising trend line LAST CLOSE X `1,092

TARGET

1,160

`

STOP LOSS X `1,060

TVS MOTOR

BUY

Price moved higher from support zone with rising volumes, with good risk – reward ratio LAST CLOSE X ` 549

TARGET

575

`

STOP LOSS X ` 536

LARSEN & TOUBRO

SELL

Sustained Call writing, less long rolls and built up of short position suggests limited upside LAST CLOSE X `1,687

PIT BULL

|

TARGET

1,620

`

STOP LOSS X `1,720

ANIRBAN BORA

Air India Express

Etihad

4.7

5.3

Considering these facts, buying a stake in Air India and taking exposure to its domestic operations would not be a profitable for InterGlobe. In addition, the mixed fleet composition of Air India (Boeing and Airbus aircraft) would increase operating cost of IndiGo, a single-fleet (Airbus) operator. Another concern is, the combined entity —if the acquisition takes place — will have more than 50% market share in India. This may prompt Competition Commission of India to reduce excessive influence in ticket pricing by thwarting the deal. This may explain InterGlobe’s interest in international operations of Air India, which contribute two-thirds to the national carrier’s revenue. In FY16, Air India’s market share in international operations was 16.7% while it was 3.3% for IndiGo, show Directorate General of Civil Aviation (DGCA) data. According to some analysts, one way to deal with Air India’s debt is by creating a special purpose vehicle (SPV), which hosts its assets. The SPV will provide steady income to service debt. Apart from the assets such as slots, brand, experienced staff, and aircraft, Air India has three profitable subsidiaries: Air India Engineering Services, the maintenance, repair and overhaul (MRO) unit; Air India Transport Services, the ground handling subsidiary; and Air India Charters, which operates the low-cost Air India Express. The SPV structure may attract potential suitors. However, an outright sale of Air India, instead, may not serve the purpose for InterGlobe Aviation as it will stretch its balance sheet enormously. It had debt to equity ratio of 0.6 in FY17.

Nifty after making a high of 9708 has corrected to 9448 in almost 18 trading days ahead of result season. Market has to cross 9580 to resume an uptrend, and if it doesn’t break the trend until 9380,

a target of 10200-10500 before Diwali looks possible. For Nifty the

then it is up and

crucial important support level is 9225 and if that is breached then some meaningful correction may start. We maintain our Nifty target at 12000 by end of the financial year. Stocks like Manappuram, Persistent, Engineers India, BEL, ZEE, Trent, Thomas Cook, Cholamandalam Finance, Mahindra Finance, Finolex Industries look very good for 8-12% returns in 2-3months. GST rollout is the major event which is being watched, and which can have a major positive impact in the years to come.

have been a key driver of the market, pumping in `21,300 crore so far this year. Shah does not expect global liquidity to dry up soon. “Global central banks have announced cutting down balance sheet and hiking rates, but I believe they will be data dependent. US Fed may end the year with two hikes in total. Global growth is not so solid that all the liquidity can be taken out by central banks so fast,” said Shah. Iyer of JP Morgan said that India’s status as a one of the better investment destinations has not changed and that most emerging market funds remain overweight on Indian markets.

Head of Quantitative Research, MOSL

Pair Trading

Pair Trading

Derivatives & Technical Analyst

JSW STEEL: BULL CALL SPREAD

BUY 210 CE 1 lot; SELL 215 CE 1 lot Reward: `15,000 Risk : ` 5,000

RATIONALE 1. It has taken the support at 190 and managed to hold above 200 zone 2. Positive sector outlook with long rolls suggests extension of up move after a small consolidation 3. Fresh Put writing at 200 strike could provide the support 4. Call unwinding in 210 strike may give fresh momentum and fresh leg of rally towards 215-218 zone 5. Thus low risk strategy Bull Call Spread is recommended

KISHORE NARNE

Fx Technical

Head – Currency & Commodities

USD/INR STATUS: Downside is likely to continue in short-term as long as 65.10 is capped as resistance CMP ` 64.80

Target ` 64.30

Stop Loss ` 65.10

TRADE: Critical resistance for the pair remains at 65.10 and bias

looks negative as long as price holds below the same. Selling will be advised with short-term targets at 64.30–64.00 levels.

RESISTANCE SUPPORT

` 64.85

` 65.10

` 65.25

` 64.60

` 64.30

` 64.10

Target $1.125

Stop Loss $1.156

TRADE: The pair has stiff resistance around 1.148–1.156 and initial downside could be seen as long as price holds below resistance. Supports are at 1.135–1.125.

RESISTANCE SUPPORT

$1.146 $1.135

Commodity Calls COMMODITY

The pair is well co-integrated. The distribution is not normal and skewed to the left and has evidence of a reversion within its own distribution.

STRATEGY 2 Leg 1: Buy Ujjivan 1 Lot 27 JUL at `310.75 and 355 shares in cash Leg 2: Sell Equitas 1 Lot 27 JUL at `151 Tenure : 5 days Target Profit : 3.25% Stop Loss : 1.30%

CHANDAN TAPARIA,

F&O Strategy

CMP $1.1412

Statistical reversion is expected in the pair based on our mean-reversion model. The pair is co-integrated and passes the stationary test. The distribution is around normal.

STRATEGY 1 Leg 1: Buy OBC 1 Lot 27 JUL at `141 and 510 shares in cash Leg 2: Sell South Indian Bank 1 Lot 27 JUL at `27.60 Tenure : 5 days Target Profit : 3.5% Stop Loss : 1.5%

Bloomberg

EUR/USD STATUS: Profit booking of recent rally could be seen in short-term!

By Shubham Agarwal,

Writing with Hedging Leg 1: Sell Tata Steel 27 JUL 530 PE at `13.30 Leg 2: Sell Tata Steel 27JUL 520 PE at `9.55 Target Profit : `3.75 Stop Loss (Spread) : `5.40 Gross Monthly Yield : 0.90% ROI : 5.13% Margin : `1,46,000 Days to expiry : 24

BHARAT FORGE

Source: DGCA; data for FY16

AK PRABHAKAR

Writing with Hedging Leg 1: Sell Lupin 27 JUL 1100 CE at `19.3 Leg 2: Buy Lupin 27JUL 1120 CE at `14.1 Target Profit : `5.2 Stop Loss (Spread) : `7.8 Gross Monthly Yield : 0.60% ROI : 3.8.% Margin : `55,000 Days to expiry : 24

562

`

STOP LOSS X ` 506

10.8

36.0 4.0

STRATEGY 2 Writing against Futures Holding Sell Tata Steel 27 JUL 530 PE at `13.30 Target Profit : `13.3 Stop Loss : `17.5 Gross Monthly Yield : 3.05% ROI : 15.35% Margin : `1,73,000 Days to expiry : 24

LAST CLOSE X ` 524

TARGET

11.4

Qatar Airways

STRATEGY 1 Writing against Cash / Futures Holding Sell Lupin 1100 27JUL CE at `19.30 Target Profit : `19.30 Stop Loss : `27 Gross Monthly Yield : 2.28% ROI : 12.45% Margin : `61,000 Days to expiry : 24

BUY

It partially filled the gap of `494-505 and formed a Bullish Engulfing pattern with buy signal

14.2

IndGo

Option Writing

TITAN

Jet Airways

10.3

goods and energy sectors are expected to underperform during broader market weakness.

Quantitative Strategies

$1.15 $1.13

$1.156 $1.125

AMIT SAJEJA AVP – Commodities

EXCHANGE

STRATEGY

Gold (Aug)

MCX

Sell around `28,800 SL `29,450 Target `27,750

Crude Oil (Jul)

MCX

Sell around `3,050, SL `3,175, Target `2,850

Zinc (Jul)

MCX

Sell around `180, SL `186.70, Target `168

RM Seed (Jul)

NCDEX

Buy around `3,500, SL `3,350, Target `3,825

National Pension System (NPS) helps you to save tax in several ways. There are only seven NPS fund managers at present and the table below compares their performance. The data has been provided exclusively to ET.

NPS Scorecard TIER I: Equity Plans Fund

Others

Sectorally, banking, automobile, realty, capital

ward earnings and the earnings estimates still seeing cuts, foreign investors have tactically scaled down the extent of incremental investments for the near term,” said Bharat Iyer, head-India equity research at JP Morgan. Money managers insist that despite the near term worries, their medium to long-term view on the market remains intact. “With so much money waiting on the sidelines, market is unlikely to see deep corrections,” said Nilesh Shah, managing director at Kotak Mahindra Mutual Fund. Domestic institutional investors

CHANDAN TAPARIA, Derivatives& Technical Analyst

Share of Outbound Traffic from India

Earnings Worries Grip D-Street

Smallcap Mantra CMP (`) 1-M Return (%) 52-week H/L FY17E PE / 5Y AVG

ET Intelligence Group: The steep fall of nearly 6% in the stock of InterGlobe Aviation, the company that operates IndiGo airline, on Friday, shows investor concern over its interest in buying a stake in Air India. Key factors making investors wary include Air India’s large debt pile, relatively less profitable operations and lack of clarity on the possible deal structure. According to sector experts, there appears to be a difference between the government’s approach to Air India’s sale and the interest of corporates like InterGlobe Aviation. The government plans to sell Air India and subsidiaries as a consolidated package. Corporates, on the other hand, are more interested in cherry-picking the airline’s lucrative assets. For instance, InterGlobe has expressed interest in Air India’s overseas business without any reference to the latter’s debt pile. Air India has debt of over `52,000 crore. Of this, `22,000 crore is backed by assets while `30,000 crore is working capital debt. Some of its real estate properties in Delhi, Mumbai, Chennai and Hyderabad have been mortgaged with banks. Its market share fell in the past five years to 13% from close to 19% in 2012. In 2017 till date, the airline clocked load factor of over 81%, as against 85-92% for its competitors.

Motilal Oswal Securities

On the options front, seen Call and Put writing in most of the strike as OI concentration is scattered over different strikes at the beginning of new July F&O series and signifies a possible Nifty trading range of 9400-9700. It seems a general state of tension may continue for this week.

Tech Picks

[email protected]

which was absent over the period of time. Any

„ Ashika Stock Broking has a buy on Apollo Tyres with a target price of `278. The brokerage said strong demand for trucks owing to infrastructure and rural growth, new launches of passenger vehicle, huge opportunity in replacement business due to high possible chance of ban on Chinese tyre dumping are the key catalysts for the company going ahead. It said TBR tyre is the fastest growing segment in tyres and Apollo has strong foot hold in this segment. The stock fell 0.78% to `241 on Friday.

Day Trading Guide

IndiGo may End Up Biting Off More Than it Can Chew

For the Nifty, 9450 Remains a Key Support

Price on BSE (`)

399.1

PLAN TO BUY AIR INDIA

TECHNICAL VIEWS

to Buy, Sell and Hold 440

THE ECONOMIC TIMES | NEW DELHI / GURGAON | MONDAY | 3 JULY 2017

TIER I: Government Bond Plans NAV

Returns(%) 3-Month

6-Month

1-Year

Assets (` cr)

Fund

NAV

TIER I: Corporate Debt Plans Returns(%)

3-Month

6-Month

1-Year

Assets (` cr)

Fund

NAV

Returns(%) 3-Month

6-Month

1-Year

Assets (` cr)

Birla Sun Life Pension

10.07

—

—

—

—

Birla Sun Life Pension

10.46

—

—

—

—

Birla Sun Life Pension

10.24

—

—

—

—

HDFC Pension Fund

18.32

4.35

17.54

18.70

544.91

HDFC Pension Fund

15.46

4.23

3.38

12.97

433.57

HDFC Pension Fund

15.53

2.80

4.35

12.26

327.33

ICICI Prudential Pension

24.91

3.07

15.83

15.31

604.68

ICICI Prudential Pension

20.85

4.28

3.28

12.96

461.04

ICICI Prudential Pension

23.86

2.60

4.00

12.52

395.81

Kotak Pension Fund

23.24

3.98

18.82

17.59

104.60

Kotak Pension Fund

20.81

4.59

3.68

13.52

97.07

Kotak Pension Fund

23.85

2.98

4.11

12.83

73.77

LIC Pension Fund

16.44

2.42

13.95

14.34

240.99

LIC Pension Fund

16.29

4.83

5.53

15.67

196.27

LIC Pension Fund

15.58

2.89

3.89

11.96

148.82

Reliance Capital Pension

23.31

3.34

15.83

15.80

61.90

Reliance Capital Pension

20.31

4.53

3.72

13.48

59.98

Reliance Capital Pension

21.49

2.99

4.08

12.40

41.61

SBI Pension Fund

21.37

3.91

15.56

16.39 1124.89

SBI Pension Fund

22.45

4.18

3.33

13.11

1360.14

SBI Pension Fund

23.98

2.97

4.18

12.46

753.50

UTI Retirement Solutions

24.71

3.26

16.24

15.29

145.59

UTI Retirement Solutions

20.38

4.05

3.12

12.35

136.51

UTI Retirement Solutions

21.72

2.78

4.10

12.08

90.04

—

3.78

16.31

14.88

—

—

3.81

3.32

12.27

—

—

2.72

2.80

11.14

—

Nifty 50 Index

Nifty 50 Index ANIRBAN

Nifty 50 Index

Returns as on Jun 30, 2017. Assets as on May 31, 2017 Source: Value Research

https://telegram.me/TheHindu_Zone

https://telegram.me/PDF4EXAMS

Money Matters  11

WWW.ECONOMICTIMES.COM

Q&A

What is your view on Indian markets within the emerging market universe? One’s view on Indian markets is a function, to a large extent, of prospects for pro-growth policies. Encouraged by the measures taken so far, investors have priced in a sustained pick up in both economic growth and corporate earnings, the realisation of which would require sustained policy implementation at home and relative financial calm internationally. Some global fund managers have cited concern that the current Indian government may be turning populist in the final two years of its five-year term. Do you share the concern? Most indicators suggest that the government remains committed to continuing its policy approach aimed at unleashing India’s significant economic potential. This is important as, in this phase of the gradual middle income developmental transition the policy requirements get tougher and require sustained focus, implementation, sequencing and coordination. Despite the US Federal Reserve being on track to increase rates fur-

ther and clearly outlining plans to unwind the balance sheet, emerging markets have shown little reaction. Why is it so? In general, markets have responded in an orderly fashion to this year’s two rate hikes by the Federal Reserve and its indications that it intends to start reducing its $4.5 billion balance sheet. Reasons for this include the fact that the policy moves have been well telegraphed and, earlier, they were accompanied by signs of a global growth pickup and the possibility of pro-growth policies in the US. More recently, however, the calming influence on markets has come much more from the strong belief – a too optimistic and overly partial one, I feel – that central banks are still fully able and willing to maintain a policy of repressing financial volatility. While willingness may be the case for the ECB and the Bank of Japan, it is less so for the Fed. And when it comes to ability, there is more room to debate continued effectiveness given negative policy rates and mushrooming balance sheets in Europe and Japan.

There is a feeling that complacency has set in financial markets if you go by the CBOE volatility index which is at multi-year lows. What is your feeling? The complacency comes, I believe, in the form of excessive reliance on central banks in advanced countries,

INDIA’S POLICY PATH

Most indicators suggest that government remains committed to... policy approach aimed at unleashing India’s significant economic potential

and for understandable reasons. For several years now, markets have benefited enormously from central bank stimulus, be it ultra-low interest rates or the huge injections of liquidity under the various asset purchase programmes (also known as QE). These, together with aggressive forward guidance, have served not just to bolster asset prices but also to suppress volatility, making leverage-based trades even more profitable. Notwithstanding the fact that asset prices have become meaningfully decoupled from economic and corporate fundamentals, too many traders and investors are highly hesitant to change their portfolio positioning until they see unambiguous generalised evidence of a change in central banks’ policy reaction functions. With that, the buyon-dips mentality has become deeply entrenched in market psyche, and the liquidity trade is quite crowded. Oil prices are back in bear market territory. What does it mean for emerging markets such as India? It is good news for oil importers such as India as this reduces their import bills and, by enhancing the purchasing power of Indian households and companies, can boost investment and consumption activity. You recently said that the Trump rally has been replaced by the liquidity rally in US market. How long do you think the liquidity rally will sustain? It is hard to specify the exact timing. What is clear, however, is that the liquidity rally will be hard to sustain if fundamentals do not improve and validate what already are quite elevated valuations. For fundamentals to improve, the major advanced economies need a policy handoff — away from excessive reliance on central banks and in favour of a more comprehensive set of policies that includes pro-growth structural

US MARKET RALLY

The liquidity rally will be hard to sustain if fundamentals do not improve and validate what already are quite elevated valuations reform, greater fiscal responsiveness where there is room, targeted debt reduction operations, and better regional architecture in Europe, and improved global policy coordination. Note that this is less of a design and engineering problem, in the sense that the major elements of the solution are known, and much more a political implementation one. The current state of politics in too many advanced countries hinders sound economic governance. Do you think emerging markets will be able to sustain their outperformance this year or is it time to sell the rally? The answer to this question goes beyond emerging markets as it also depends on your policy and, therefore, political call for the US and Europe. Unless you believe in a timely policy handoff there, one approach to consider would be to reduce dollars at risk by lowering total exposure to risk assets, particularly stocks and high yield bonds, and to focus more of the remaining exposure to relatively underperforming segments, including emerging markets. Will the inclusion of China A shares in MSCI indices dent prospects for emerging markets? It may well result in some country re-allocations but, by itself, should not cause a major dent to the asset class as a whole.

Investors Have Lost Sight of Purpose of Indexes Expert Take AARON BROWN The construction of financial market indexes has never been a very hot topic, but now: „MSCI adds some China A shares to its benchmark emerging-market index, though giving them a smaller weighting than would be justified by their sizes. Some investors are upset. „An institutional investor group asks S&P and MSCI to bar companies with unequal voting shares -such as Snap Inc., Facebook Inc., Ford Motor Co., Google parent Alphabet Inc. and News Corp. -from stock indexes. „Street protests erupt outside Goldman Sachs Group Inc.’s headquarters after it buys Venezuelan “hunger bonds.” The firm’s asset management unit bought them for its emerging-market funds that are benchmarked to indexes that include Venezuela. „This all seems absurd. Investors are free to hold whatever securities they please, and index providers are not in the business of arbitrating disputes about transparency in China, US corporate governance or Venezuelan politics. How did we get here? Six decades ago, researchers began asking how capital assets were priced. Something called the “effi-

cient market portfolio” kept popping up. The theory was, if you could find one efficient portfolio then you could use it to price all assets. This grew into the idea that the best thing for investors was to hold the market, rather than try to own a selection of carefully picked stocks that would beat the market. It wasn’t long until a related group of researchers began questioning the value of professional investment managers. That led John McQuown, working with those researchers, to design a fund without human judgment. He toiled for six years without success until he ran into Fischer Black. Black told McQuown that you don’t earn money buying stocks, you earn money holding stocks. The way to run a fund was to pick an inventory and hold it. That led to the first index fund at Wells Fargo. Later, John Bogle took the idea to the masses with Vanguard’s public mutual funds. Once investors had the alternative of low-cost index funds, the idea took hold that the job of an active manager was to outperform those funds after costs. The investor would allocate funds among different indexes, then pick either index funds or active managers benchmarked to indexes to manage each slice. Three distinct ideas had become entangled: 1) the index is efficient, 2) the index gets the average return of all active managers before costs,

BUSINESS OF INDEXING

Index providers are not in the business of arbitrating disputes about transparency in China, US corporate governance or Venezuelan politics and 3) the index is cheapest to hold. None of these is precisely true of any real index, and the ideas can conflict. Beginning with the last one, Lasse Pedersen, a principal at the firm where I work, has recently shown

MD, Equinomics Research & Advisory

I bought recently Maithan Alloys, Nitin Spinners, Haldyn Glass, & Beardsell. All are now in red. What are the prospects? —BKDALAL

FILE PHOTO

nvestors have priced in a pickup in India’s economic growth and corporate earnings, but there needs to be a sustained policy implementation and calm global financial markets for these to be realised, said Mohamed El-Erian, chief economic adviser, Allianz, which had €1,900 billion under management at the end of 2016. In an e-mail interview with Sanam Mirchandani, El-Erian, based in Newport beach, California, said most indicators point towards the Modi government’s continued commitment towards policies that can boost India’s economic potential. Edited excerpts:

G CHOKKALINGAM

Never Put All Your Money in Small-Cap Stocks

Indicators Suggest Govt is Committed to Growth

I 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% 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.

Stock Queries

Chief Economic Adviser, Allianz

“Encouraged by the (Indian government’s policy)measures taken so far, investors have priced in a sustained pickup in both economic growth and corporate earnings, the realisation of which would require sustained policy implementation at home and relative financial calm internationally

Bloomberg

New York: Warren Buffett’s bet on Bank of America Corp. 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 Inc. 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 Carolinabased bank increases its dividend, now planned for the beginning of the third quarter.

MOHAMED EL-ERIAN

how rapidly a fixed inventory of assets becomes undiversified due to things such as mergers, bond repayments, the reinvestment of cash flows and stock issuance. Any index fund requires trading even if there are no subscriptions and redemptions, often substantial trading. The first idea, that the market portfolio is efficient, has been debunked. One of the first to do so convincingly was Black, who long before he advised McQuown to buy a fixed inventory had shown that low-beta stocks have better risk-adjusted returns than high-beta stocks. And, since index fund trading is predictable, active managers as a group earn money trading against index funds, so the second idea is not exactly true. This leaves index providers with three conflicting goals: build an efficient index that benchmarks active managers fairly and is cheap to

run. Keeping Venezuela, Snap and China out of indexes works against the first goal by reducing diversification, however it could help if it excludes bad investments. Decisions made on case-by-case bases or frequently changed transform the index into active management. But all indexes have rules for construction, and adding rules for government quality, corporate governance or market transparency is not against the index spirit. Exclusion makes the index easier to beat by active managers, who are able to select from a broader universe of securities, securities that have higher expected returns due to being excluded from indexes. 5 On the other hand, at least in the cases of Venezuela and China, exclusion could lower costs as these securities are less liquid and more volatile than other index constituents. This suggests a natural division of labour. To the extent exclusions are meant to improve the index, either on financial or ethical grounds, the decision should be left to investors. Rating agencies have no expertise here. If investors disagree, split into two sub-indexes. To the extent exclusions are meant to benchmark active managers or to reduce index costs, index providers should dictate. Ceding control to investor polls makes indexes just a new form of active management by committee. — Bloomberg

Unless you have very good knowledge on your own in value investing or mid-cap space, never put all your investments in small-cap stocks — add stocks of timetested managements also in your portfolio. Surprisingly Maithan Alloys trades at less than seven times FY17 earnings — perhaps confidence in the management is very low as its dividend payout is less than 4% (`2.50 per share) of its net profits in FY17 despite robust EPS of `65 per share. Still you may hold it to recover your cost. Hold Nitin Spinners as it trades at just 10 PE on FY17 eranings and recent fall in oil prices and bumper cotton output expected are generally positive for the spinners. Both Haldyn Glass and Beardsell trade fairly around 17 PE on FY17 earnings and hence, sell them if they recover around 10% from the current levels.

of equity is possible in future. Hence, sell the stock if it recovers even 5% to 10% from the current levels. I was thinking of buying 3i Infotech which is currently at `4.70. How much it should be bought if you think it’s worth buying and what will be its future? —KAUSHAL BEHERE

It trades at an enterprise value to annual sales ratio of 1.3 times — most acquisitions in the mid-sized IT companies happened around 1.5 times. So if you want to go for a speculative bet on a possible acquisition, then you may buy with expected return of 25%. I have got HindZinc at `270, Vedanta at `228, Coal India at `275. What should I do? —TWAHA AHMED

ANIRBAN BORA

Buffett is About to Make $12 B on His Bank of America Bet

I hold 300 Sintex after demerger at `31. Please advise whether to hold or sell. —RAKESH JAIN

Net debt (debt of net of cash) after the restructuring stands at little more than 200% of its annual sales and a lot more conversion of foreign loans into equity is still pending, and therefore, substantial dilution

Sell Vedanta to diversify your portfolio. Hold Hindustan Zinc with a target price of more than `300/ as over 35% yoy rise in global zinc prices and over `24,000 crore of free cash are attractive points. Hold Coal India as the stock has been beaten down more than what it deserves and still sits on cash pile of around `50 per share. One more special dividend from both Hindustan Zinc and Coal India cannot be ruled out. Please send your queries on Stocks to [email protected]; Mutual Funds to [email protected] Tax to [email protected] Insurance to [email protected] Realty to [email protected]

Every week, an expert selected by ET answers queries from our readers on income tax and other levies

All Eyes on July for US Oil Demand to Drain the Glut

Reuters

London: US oil traders are hoping the sweltering days of July are also hot ones for demand, believing the new month is the last best opportunity this year to see the overhang of inventories finally subside. Export opportunities to Asia and big US summer driving demand expected to hit a record this weekend - are seen as the primary drivers for a drawdown in stocks that have remained stubbornly above seasonal averages. July is usually a big month for drawdowns: Over the last five years, inventories of crude oil have dropped by an average of 2.9 million barrels per week in July, according to the US Energ y Infor mation Administration. But analysts warn that if inventories do not draw down in earnest, it may dash the hopes of many in the industry of seeing higher prices by the end of this year. “Typically June/July represents the seasonal peak in refinery demand for crude,” said David Thompson, executive vice-president at Powerhouse, an energyspecialised commodities broker in Washington. “It gets tougher to use up all that crude as refinery utilization starts to ease off as we move past the peak of summer driving season.” A record number of motorists are expected to hit the road for the Fourth of July holiday. US gasoline demand was up 0.4% in April from the year-ago period, the first yearover-year increase since December, according to the latest US government data. In addition, a window has opened for US crude exports to Asia, after prices made it uneconomical to send US supplies offshore in re-

cent months. Robust appetite from Japanese and South Korean buyers could help soak up excess supplies. Investors came into this year optimistic, and indeed, US crude prices CLc1 topped out near $55 a barrel in February in the wake of the deal struck by the Organization of the Petroleum Exporting Countries with other key producers to reduce supply by 1.8 million barrels per day (bpd) that began in January. But OECD total oil inventories are still above 3 billion barrels due to an unexpected recovery in Libyan and Nigerian supplies and a rebound in US shale production.

ANALYSTS WARN

If inventories do not draw down in earnest, it may dash the hopes of many in the industry of seeing higher prices by the end of this year Several banks in the last week cut their oil price projections for the rest of the year, with analysts from Bank of America-Merrill Lynch on Friday saying the “the much trumpeted OPEC output deal has been a complete flop.” US crude futures have slumped about 15% so far this year to about $46 per barrel, and as of Friday, ended its worst half-year performance in 19 years. [O/R] “We expect to get real clues in the next 4-5 weeks about second half 2017 oil market sentiment,” Credit Suisse said in a note on Thursday. “If stocks do not fall much next month, at the very least we would worry that bearish sentiment again would come to the fore.”

https://telegram.me/TheHindu_Zone

https://telegram.me/PDF4EXAMS

12  Finance & Commodities

THE ECONOMIC TIMES | NEW DELHI / GURGAON | MONDAY | 3 JULY 2017

Quarts & Ounces

`12,000 CRORE FUNDRAISING VIA IPO IN H1 2017

Did You Know

Maintenance Bond Works as Insurance Maintenance Bond is a type of surety bond purchased by a contractor that protects the owner of a completed construction project for a specified time period against defects and faults in materials, workmanship and design that could arise later if the project was done incorrectly. A maintenance bond is not technically insurance but basically functions as an insurance policy on a construction project to make sure a contractor will either correct any defects that arise or that the owner is compensated for those defects. Pricing a maintenance bond is very different from pricing regular coupon paying bonds. A surety bond is a three-way contract where a third party called the surety guarantees the contractual obligations of one party (the principal) to another party (the obligee) by agreeing to pay a sum to the obligee as compensation if the principal does not fulfil its obligations. The surety assures the obligee that the principal will perform the required tasks. — Investopedia

BSE to Revise Transaction Charges on Equity MUMBAI Top stock exchange BSE has decided to revise the transaction charges for trading in equities, with lower volumes attracting higher fees, from August 1. The exchange has introduced a new slab-based structure for levy of transaction fees for securities traded under group A, B and other non-exclusive scrips. BSE would charge transaction fees of `. 1.5 per trade for trade volumes of up to one lakh. So far, volumes of up to 5 lakh attracted a fee of only `. 1 per trade. Under the new slab structure, the transaction charges range from `. 0.50 - 1.5 per trade. BSE was levying transaction fees from `. 1 per trade to as low as `. 0.30 for different slabs, since April 1, 2017.

FPI Inflows Hit 3-month High of `. 29k cr in June NEW DELHI Foreign investors pumped over `. 29,000 crore in the country’s capital market in June, making it the highest inflow in three months, enthused by the GST and forecast of a normal monsoon. This marks the fifth consecutive monthly inflow by investors. Most of the funds have been invested in the debt markets by the FPIs. FPIs invested a net `. 3,617 crore in equities last month, while they poured `. 25,685 crore in the debt markets during the period under review, translating into a net inflow of `. 29,302 crore ($4.55 billion).

“As an industry, we are planning to reach out to the government to bring ATMs on par with other payment terminals as otherwise there will be a general 7-8% increase on the cost of terminals,” said Ravi Goyal, managing dir e c t o r o f AG S T r a n s a c t Technologies, which deploys and manages ATMs in the country.

Customers wanting to exchange old gold for new to be hit by double tax

Confusion over Tax on Old Gold Exchange Ram.Sahgal @timesgroup.com

Mumbai: Huge confusion prevails on the interpretation of rules regarding exchange of old gold ornaments for new ones and on ornament making charges from customers’ own gold, which could end up in their having to bear a burden higher than the 3% GST rate fixed on gold and the 5% rate on making charges, the All India Gem & Jewellery Federation (GJF) has said. This confusion, however, does not affect those wanting to buy new jewellery from any jeweller, which attracts 3%. The leading jewellery body is hoping the government will “clear the air” on the interpretation in the shortest possible time, GJF chairman Nitin Khandelwal told ET. The GST Council created a separate 3% slab for gold after hectic parleys and industry representation. It also acceded to the industry demand that making charges on jewellery be cut to 5% from the 18% on job work for other sectors. The slabs of GST are zero, 3% (precious metals and diamond), 5%, 12%, 18% and 28%. While purchase of new ornaments will attract GST of 3%, when a customer opts to exchange old jewellery for new, the jeweller at time of purchase

Customer to bear brunt of 3% GST on sale of old gold to jeweller; when buying new gold ornaments again to bear 3% levy till government clears air on rule for gold trade

has to pay a reverse charge of 3% to the government, since the buyer is an unregistered dealer and GST is on supply. The jeweller will recover this from the customer. Say, if a customer wants to exchange an old, 10 gm necklace worth `30,000 for a new one, the jeweller will first deduct 3% on

that when purchasing it from the customer. This will have to be deposited with the government. Then, a new necklace is made and sold to the customer for say `33,000, the jeweller will once again apply a 3% (`990) GST to that. So, the customer will be burdened by double tax. The industry body hopes that Customers exchanging old gold be exempt from GST. In case a customer has gold bars and wants a necklace to be made from them, he will be charged only making charge. But GST rules say that job work undertaken by a registered dealer (jeweller) for a URD (customer) will attract 18% tax. Also, if a jeweller goes to a wholesale manufacturer for getting jewellery made, and the latter gets it done from a karigar, he pays 5% as labour charges to the karigar. But, the tax on making charges for the jeweller will attract an 18% levy. This also will be ultimately recovered from the customer. “Here the manufacturer is deemed to be agent and the jeweller principal and for this job work is taxed at 18%, instead of the 5% fixed on labour for jewellery. It needs to be clarified that there is no principalagent relationship here. Till then, the confusion persists and that 5% should apply to the customer,” added Khandelwal. Making charges on jewellery are on average 10% of the cost of gold, said Avinash Gupta, a jeweller.

Customers flocked to stores expecting gold prices to rise after GST rollout

Dhanteras in June for Gold Trade Sutanuka.Ghosal @timesgroup.com

Kolkata: For India’s gold trade, it was like having Dhanteras in June. The customary gold-buying rush associated with this festival, which falls on October 17, was witnessed in the last few days of June when customers flocked to jewellery stores in anticipation that the introduction of Goods and Services Tax (GST) will increase the price of the yellow metal. Sales in June spiked 60-100% year-on-year, according to leading jewellers although they doubt that this momentum will sustain in the next quarter on account of GST. Ahammed MP, chairman, Malabar Gold & Diamonds, told ET: “We have witnessed a 100% increase in sales in June, com-

Off Season Rush

60-100% RISE IN SALES IN JUNE Y-O-Y

$10

RISE IN PREMIUM ON GOLD LAST WEEK

103tonnes INDIA’S GOLD IMPORTS IN MAY

pared to the previous month and on a year-on-year basis, across showrooms in the country, both for gold and diamonds. Gold has fared especially bet-

ter among the two. The strong perception among consumers about a possible hike in the prices of gold, coupled with international factors like growing preference for hard currency and falling rates, triggered this rush.” “But a 3% GST rate, against the existing 1% tax and 1% excise duty, will not harm sales as there is only a 1% increase in effect which will be adjusted against sales promotion and our customers will not have to pay anything extra. It is unlikely that the current buoyancy in sales will continue, once GST is effective. But, we hope for a reasonable 30% growth in the next quarter,” Ahammed said.

MF Distributors, IFAs Need to Enrol for GST Size Matters `20L cr

`10L cr

AUM of MF industry at present

AUM of MF industry three years back

47,000 to 86,000 Rise in no of IFAs over the last four years Prashant.Mahesh @timesgroup.com

Mumbai: Mutual fund distributors and IFAs (independent financial advisors) will have to enrol for GST, even if the commission they earn is less than `. 20 lakh in a financial year. As per the communication from Association of Mutual Funds in India (AMFI), from July 1, fund houses will deduct GST from the commission paid to distributors who do not have a GST registration number and pass this tax to the government. They will not deduct it if a GSTN number is provided to them. For distributors with GST registration, asset management company (AMC) will continue to use the forward charge mechanism, that is AMCs will pay gross commission to them. However, such distributors will have to raise an invoice for the commission in a specified format. This is done by AMFI in consultation with chartered accountancy firm PWC. “It is in the best interest of everyone and it is advisable that all distributors register themselves under GST,” said the CEO of a large fund house. Distributors provide service to the asset management company which is considered as an inter-state supply. Hence, fund houses have to deduct GST unless they have a registration number. Typically, with most fund houses in Maharashtra, distributors outside Maharashtra will have to register for GST. “It makes sense for distributors to enrol for GST, irrespective of their earnings. Distributors with a GST number can save some costs through input credit,” says Manoj Nagpal, CEO, Outlook Asia Capital. The GST paid by the distributors would be eligible for input credit in case of other expenses made by the distributor, which will bring down their total tax liability. Assets under management of the industry have grown to `. 20 lakh crore from `. 10 lakh crore, three years back. IFAs are the link between fund houses and investors and help channelise retail savings to the capital markets. The number of IFAs has grown from 47,000 to 86,000 over the past four years. Industry estimates that barely a 1,000 odd IFAs would be earning commissions more than `. 20 lakh per annum. The rest would have to register under GST despite earning less than `. 20 lakh per annum. Most IFAs work single handedly and coping with GST, filing monthly returns could mean increasing their compliance work, which in turn will be an added cost to them and eat into their margins.

WPI (2014-100)

115

Agriwatch Index

110 105 100

2015

2016

Jul

May

Mar

Jan

Nov

Sep

May

Jul

95 90

Mar

GST

120

Jan

Prof Steve Hanke @steve_hanke The return for gov’t bonds over 353 year period is 2x higher than returns from art and obviously at much less risk.

Mumbai: Deploying automatic teller machines (ATMs) is set to get more expensive as ATMs have been put under the highest tax slab of 28% under the new Goods and Services Tax regime. With the machines becoming more expensive, smaller banks and newlylicensed small finance banks could slow down deployment of teller machines, causing further problems for the industry. Industry insiders say point-of-sale devices and other digital payments hardware were put under the 18% slab –– a slab in which ATMs should have been included. Confederation for ATM Industry (CATMI), the industry association of companies which deploy and manage ATMs, is planning to reach out to the GST Council, the revenue secretary and the finance ministry to take up the issue and request them to revise the tax rate on teller machines.

Nov

Tweet of the Day

contracts which will have to be borne by the banks eventually. “The biggest advantage for banks is that now they will be able to claim input tax credit on GST which will improve their cash flows and help in their business,” said Goyal. After demonetisation, ATM deployment has slowed down as banks were preoccupied with adopting the latest digital payment instruPrices of ments. Also, banks prefer machines asset light payment soluhave gone tions for financial inclusion, up like microATMs and Aadhaar Pay rather than deploying exService cost pensive ATMs. for ATMs will In an earlier interIMPACT go up to 18% action with ET, from 15% Not only have prices of Navroze Dastur, MD previously these machines gone up, for India and South This would be even service cost for Asia at NCR applicable for ATMs will go up as Corporation, said that they servicing charges, tax rates have been were replacing old maannual maintenance revised to 18% from chines for banks and not contracts which will 15% previously. This deploying new ones. “We have to be borne by would be applicable were growing at 15-16% bethe banks for servicing charges, fore demonetisation which eventually annual maintenance has come down to 8-10%.”

The Agriwatch Agri Commodities Index slipped 0.98% to 104.32 during the week ended July 1, 2017 from 105.35 during the previous week due to lower cereals and cotton prices. The base for the Index and all sub-Indices is 2014 (= 100). The Edible Oils and Pulses sub-Indices also declined while the Spices sub-Index gained led by a sharp recovery in red chilli prices from extremely oversold levels. The commodity group sub-Index values and their weekly changes are: Cereals Index: 106.47 (-1.83%), Pulses Index: 126.64 (-1.54%), Vegetables Index: 44.83 (+0.01%), Edible Oils Index: 98.62 (-1.60%), Oilseeds Index: 87.50 (+0.09%), Spices Index: 96.76 (+13.21%), Sweeteners Index: 123.14 (+0.11%), Fibres Index: 99.01 (-4.88%) and Other Non-Food Articles Index: 82.55 (-0.53%). Further details can be viewed on the ET website and on Agriwatch.com.

Sep

[email protected]

Prices of Cereals Ease

Jul

ATMs to Turn Costly Under GST, Small Banks to be Hit

AGRI COMMODITIES INDEX SLIPS 0.98%

INDEX

A HIGH TOLL Machines put under 28% of GST slab; industry to approach GST Council, govt

2017

Amul Revises Product Prices From Page 1

Key consumer goods companies on Sunday also promised price cuts in the weeks ahead on new stocks made after July 1, a day after the country’s biggest consumer goods firm Hindustan Unilever increased the weight and reduced prices of some products. Foods major Nestle will drop prices of its Maggi ketchup, Cerelac infant foods and select dairy products. “Categories where there are reductions in taxes, appropriate price reductions would be put into effect for stocks manufactured from July. There will be a transition time before new price stocks are available in the market,” Nestle managing director Suresh Narayanan said. Vivek Gambhir, managing director of Godrej Consumer Products,said it plans to cut prices or increase weight of its soaps soon. Pepsi, Marico, Parle and Bisleri also said that they will cut the prices of goods made after July 1. STABILITY FIRST

While the GST legislation includes an anti-profiteering clause requiring companies to pass on the benefits of lower taxes to consumers, companies say they have to gauge the impact once new goods are produced. “We are not taking any immediate price changes. What is more important is to offer some degree of comfort and stability to the consumer first, through the existing prices as far as possible. When you are at Rs 5, to raise it to Rs 5.30, 5.40 make no sense. We are holding on to prices. We will wait and watch till the GST issues settle down,” said PepsiCo chairman D Shivakumar. It was not a one-way street however. Prices of select consumer electronic items are expected to increase marginally after an increase in taxes under GST. Prices of television, refrigerator, air-conditioner and washing machine will go up by up to 2.5% — almost half of what was initially expected — with companies working out the final price structure under goods and services tax (GST) regime. A 42-inch LED television selling at around Rs 40,000 will now cost around Rs 40,900, while a 280 litre frost-free refrigerator selling at around Rs 26,000 will now be dearer by Rs 500. Prices of air-conditioner and washing machine will be up by Rs 400 to Rs 1,000 depending on capacity. On an average, the price increase for most of the products will be a meagre 1.5-2%. “The industry has been holding onto any massive price hike since last Diwali with one event after another such as demonetisation impacting sales. Hence, we do not expect the small price hike due to GST will impact sales for long and sales should be normal by Independence Day when there is a sales spike due to promotions,” said Videocon chief operating offi-

cer CM Singh. BUTTER, PANEER, GHEE

Amul reduced prices of cottage cheese, dairy whitener and baby food, and increased the price of ghee while leaving cheese, butter and ice cream prices unchanged. Producers of pickles, jams, tomato ketchup complained that GST had raised taxation and said sales had slumped after the onset of the new regime. Sellers of branded rice and wheat flour said their distributors had issues with the new system. Amul’s managing director RS Sodhi said that implementation of GST had been normal. “We don’t expect any major change in revenue with implementation of GST. The consumer gets to gain. As there was substantial increase in tax for ghee, we have increased prices by Rs 25-30 a kg. On cheese, butter and ice cream prices have not been changed as increase was marginal. However, we reduced prices of milk products that came under a lower slab of 5% such as dairy whitener, paneer, baby food and cream,” he said. ATTA, PICKLES

Nitin Seth, managing director of GD Foods, which makes products including pickles, jams, tomato ketchup, instant mixes under the Tops brand, said there was a slump in demand on the first day. These products now attract 12% tax, up from 5% earlier. He said that many retail stores such as Kendriya Bhandar stores, Easy Day and others were not doing the billing as systems were being updated for GST, and they were only selling essential commodities with manual billing. Rakesh Jain of Rajdhani Group said that his firm has increased atta (wheat flour) prices by 5% at Rs 1.20 per kg selling in retail at Rs 25.20 a kg. “Implementation is a challenge as 90% of bulk packing of 50 kg is being sold unbranded. No one (distributor or retailer) is buying as of now. The other challenge is that retailers have not registered for GST,” he said. Passengers flying business class may have to brace themselves for an increase as GST on the premium class has been fixed at 12% compared with 5% for the economy class. Airline companies say this will be passed onto customers though the absence of input tax credit on economy class fares may mean the price drop could be temporary. “We will be able to assess the impact on us over a couple of weeks and we expect it would take four to six months for things to sort out. There are two concerns that the industry has. One is double taxation on the import of aircraft — a tax on import of aircraft as well as lease rentals, which the government has promised us that it will be sorted out,” said SpiceJet chairman Ajay Singh. (With inputs from Mihir Mishra)

Sugar Trade Awaits Clarity on GST; Cotton Industry Welcomes Move Wholesale traders had reduced sugar purchases in June due to uncertainty about cess and claim there is a shortage in the supply chain Jayashree.Bhosale @timesgroup.com

Pune: Following the introduction of GST from July 1, the sugar trade is still awaiting clarity on the cess that mills pay, while the cotton industry has welcomed the new regime and the poultry sector is bracing for feed to become more expensive. Sugar, cotton and poultry sectors are the top employment generators both at the front and back ends. Sugar traders are not sure about cess after implementation of GST. “It is still not clear to us if we will get back the `. 124/quintal cess we had paid on the sugar that was bought till June 30,” said Ashok

Ranavat, president of the Bombay Sugar Merchants’ Association, which did not put out a rate for the commodity on July 1and declared there was no stock. Wholesale traders had reduced sugar purchases in June because of uncertainty about cess and claimed there is a shortage of the sweetener in the supply chain. The GST on sugar is 5%. In the previous tax regime, there was excise duty of `. 71/ quintal, which is about 2% of the sugar price, and a cess of `. 124/quintal. Cotton brokers are happy. They

expect demand for cotton to increase because GST on the commodity is less than that on manmade fibre. The GST on cotton is 5%, the lowest slab. “2017-18 will be a good year for the cotton textile industry with a sound tax ecosystem and real-time governance coupled with availability of surplus cotton,” said M Senthilkumar, chairman of the Southern India Mills Association (SIMA). SIMA, however, is disappointed that the 18% GST on manmade fibre (MMF) and spun yarn hasn’t been

reduced and would result in an inverted duty structure problem as fabric would attract only 5% GST. A reduction to 12% from 18% would have prevented the inverted duty problem. “The decision of considering any change in tax structure after three months would seriously affect the synthetic spinning and grey fabric manufacturing sectors,” said Senthilkumar. He said the inverted duty would increase fabric prices steeply and make Indian textile uncompetitive. In poultry segment, the price of soyameal will increase by `. 800/t to `. 850/t from the current price of `. 24,000/t to `. 24,500/t, an increase of about 3.3%, said DN Pathank, executive director of Soyabean Processors Association of India.

Govt Mulls 60% Duty Hike on Sugar NEW DELHI The government is considering raising import duty on sugar to 60% from the current 40% to restrict cheap shipments and maintain domestic prices. Any fall in local prices will affect millers’ capacity to pay cane dues to growers. In view of lower sugar output estimated during the current 2016-17 marketing year, the government had in April allowed import of 5 lakh tonnes of raw sugar at zero duty to boost domestic supply. “We are monitoring global price movement closely. Prices in the in-

ternational market are falling and some traders are keen to import even at high customs duty. So, we are considering raising import duty,” a food ministry official said. Higher duty will be imposed the moment there is further fall in global sugar prices to ensure cheap imports do not put pressure on domestic retail prices, which at present are ruling steady at `. 40-50 per kg across the country. Already, 5 lakh tonnes of sugar have been contracted at zero duty, the official said. — PTI

https://telegram.me/TheHindu_Zone

https://telegram.me/PDF4EXAMS

Economy: Macro, Micro & More  13

WWW.ECONOMICTIMES.COM

Monsoon Watch

Monsoon advanced into Delhi-NCR on Sunday 6% above normal rainfall recorded across the country since onset of monsoon

41% above normal rainfall recorded in the country on Sunday

East & Northeast India saw a 15% deficit in the normal rainfall since monsoon onset

NO SMOOTH SAILING

Shipping Ministry Opposes Stake Sale in SCI, Kamarajar Port Other administrative ministries also dissatisfied with NITI Aayog’s suggestions

Govt has raised about `6,800 cr from divestment in the current fiscal

Govt has set itself a disinvestment target of `72,500 crore for this fiscal, of which `15,000 crore is to come through strategic sales

Govt already has approval for strategic sale in Air India Rajat Arora & Dheeraj Tiwari

New Delhi: The shipping ministry has strongly opposed strategic sale in Shipping Corporation of India (SCI) and some ports under its watch, joining a number of other ministries that are not keen on selling state-run enterprises that they govern. This follows the government’s recent ‘in-principle’ approval for stake sale in Air India. The shipping ministry has raised objections to privatise Shipping Corporation and some government-owned ports, including Tamil Nadu-based Kamarajar Port. Some other ministries that had earlier opposed divestment plans include the health ministry and the heavy industries ministry but the government’s premier think tank, NITI Aayog, overlooked their opposition and recommended privatisation in some cases. The government has set itself a disinvestment target of `. 72,500 crore for this fiscal, of which `. 15,000 crore is to come through strategic sales. So far this fiscal, the government has raised around `. 6,800 crore, which includes selling its stake in L&T held through SUUTI. Two senior government officials confirmed the development and said the government may reconsider its decision on the proposed divestment. The government currently holds 63.75% stake in Shipping Corporation and 66.67% in Kamarajar Port. A senior Shipping ministry official told ET that shipping minister Nitin Gadakri has strongly opposed the divest-

CURRENT WEATHER & FORECAST

East Rajasthan, U.P & Uttarakhand to receive widespread rainfall during the next 2-3 days

temperatures in Delhi likely to remain between 36 & 40 degrees Celsius from Tuesday

India Hopes to Climb Up Ease of Doing Biz Ranking India improves processes for granting construction permits to topple New Zealand in the category

In Rough Waters Govt holds 63.75% stake in Shipping Corporation and 66.67% in Kamarajar Port

Monsoon to cover the entire country by July 15

Widespread rainfall in northern parts of the country likely today Maximum

ment of SCI on grounds it is not only profitable but the proceeds are also reinvested in capacity building in areas where the private sector shy away from investment. “The government wants to do Sagarmala project and inland waterways and there is hardly any budgetary allocation to these two areas. Our plan is to invest profit from ports in development of coastal areas and make inland rivers navigable,” said the above quoted official. Last fiscal, all 12 major ports owned by the government posted a profit of Shipping `. 5,000 crore. ministry is Shipping expected to Corporation take the has also beissues at the en in profit highest level, in the last including two years. the PMO The company reported an operating profit of `. 1,000 crore last fiscal. The shipping ministry is now expected to take these issues at the highest level, including the Prime Minister Office. The above quoted official said it was also clarified to the Niti Aayog that all terminals at ports have already been privatised and are maintained by global shipping giants. "The terminals on ports are already operational under the built-operate-transfer (BOT) mode. The government owns only the land and water breaks. What's the point of privatisation," he said, adding that the NITI Aayog should have given more thought before making such suggestions.

[email protected]

New Delhi: India has told the World Bank that it has improved processes for granting construction permits sufficiently to pip the current topper, New Zealand, in the next edition of the Doing Business report. Now it takes only 60 days following eight online procedures to get a construction permit in Delhi and Mumbai, which are taken into account for India’s ranking in the annual ease of doing business report, government officials told a team of the World Bank last week. In New Zealand, it takes 93 days and 10 procedures to get a construction permit, officials said. India was ranked 185 among 190 nations surveyed on the parameter of getting a construction permit in the study conducted last year. Until last year it took 164 and 213 days in Mumbai and Delhi respectively to get a construction permit. The number of procedures required was as high as 42 and 29 in the two cities last year. The World Bank had then pointed out that India had not managed to shift online its construction

India was ranked 185 among 190 nations surveyed on the parameter of getting a construction permit in the study conducted last year

Reforms to Improve Ranking It takes only 60 days following 8 online procedures to get a construction permit in Delhi and Mumbai, which are taken into account for India’s ranking in the annual ease of doing business report

India has been ranked 130 in the 2017 Ease of Doing Business Index, an improvement of just one spot

In New Zealand, it takes 93 days and 10 procedures to get a construction permit Until last year it took 164 and 213 days in Mumbai and Delhi, respectively to get a construction permit Number of procedures required was as high as 42 and 29 in the two cities last year

permits system. “The World Bank officials will speak to the users in the course of this week to vet our claims. Radical improvement has been undertaken,” a senior official told ET, requesting not to be identified. The World Bank officials will visit Delhi and Mumbai during the week to gather industry and government feedback.

World Bank officials will visit Delhi and Mumbai during the week to gather industry & govt feedback

India has been ranked 130 in the 2017 Ease of Doing Business Index, an improvement of just one spot. Out of 10 parameters last year India’s rank improved in four and worsened in five. India is aiming for a quantum leap of 80 spots next year to rank among the world’s top 50 countries for ease of doing business. The government has written to the World Bank refuting several findings

India is aiming for a quantum leap of 80 spots next year to rank among the world’s top 50 countries for ease of doing business

of last year’s report in areas such as enforcing contracts. “A lot of the reforms that were undertaken were not taken into account by the study but hopefully we should be able to reap the benefit this year,” the senior official said. He said the government is confident that if the current provisions are recognised and stand the scrutiny of the World Bank, India’s rank would considerably improve.

NLC Biggest Winner in 1,500-MW TN Solar Auction Kaavya.Chandrasekaran @timesgroup.com

New Delhi: India’s latest solar auction, one of the biggest in the country, drew a surprisingly enthusiastic response with a big chunk of the 1,500 MW of projects on offer won by a state-owned mining company. The lowest bid in the auction in Tamil Nadu, where solar radiation is weaker than in Rajasthan, came from Bengaluru-based Raasi Green Earth Energy, which won 100 MW at `. 3.47 per unit, according to a list of official winners provided by one of the successful bidders.

Officials of the Tamil Nadu Generation and Distribution Corp., which invited the bids, could not immediately be reached for comment. Bids were invited in May and the results were declared on Friday. The corporation got a good response this time after two of its previous tenders were undersubscribed. “The interest in the 1,500 MW tender was largely due to pent up demand,” said Raj Prabhu, cofounder of Mercom Capital Group, which tracks the Indian solar segment. The tariff of `. 3.47 is well above the lowest solar bid in the country so far of `. 2.44 per unit, made at an auction at the

Bhadla Solar Park in Rajasthan in May, but it is a substantial drop from the winning bid of `. 4.40 per unit at Tamil Nadu’s auction in February. Apart from weaker radiation in Tamil Nadu, developers have to find land for their projects, unlike Rajasthan’s Bhadla, where companies had assured land. There were 18 winning bids among the 25 put in for the latest Tamil Nadu auction, at tariffs varying from `. 3.47 to 3.97 per unit. The tender states that all winners will have to agree to sell the power at the lowest tariff reached or opt out. The biggest winner was public sector mining giant NLC India (formerly Ney-

veli Lignite), which had bid for the entire 1500 MW, but was awarded 449 MW. The company mines lignite, which is also called brown coal, and generates power. Coal miners in India are concerned about the challenge from green energy and looking for ways to diversify. Coal India, also state-owned, is seeking services of a consultant to prepare for the future as it faces uncertainties due to its carbon footprint and the government’s commitment to the Paris accord on climate change. The response to the tender is encouraging because solar projects in Tamil Nadu have been plagued with problems.

Highest maximum temperature recorded at 40.4 degrees Celsius in Jaisalmer on Saturday

Misconceptions on GST Cleared Our Bureau

New Delhi: The government has clarified a number of misconceptions in circulation in the early hours of implementation of the GST, addressing apprehension of small traders and businesses. Revenue Secretary Hasmukh Adhia dismissed the concerns that all businesses need internet and computers in the GST regime. “Invoices can be generated manually also,” Adhia said, clearing “seven misconceptions” about the GST. “Internet would be needed only while filing monthly return of GST,” revenue secretary added in a statement issued in ‘myth vs reality’ format. Adhia said GST appeared higher than the valued added tax (VAT) in the retail receipts because excise duty and other taxes which were invisible earlier are now subsumed in GST and so visible now. This clears the misconception that GST rates are higher The Road Ahead than VAT levied by states earlier. Other clarifications dealt with largely the issues raised by small businesses and traders. Those with provisional IDs can start doing business. “Provisional ID will be your final GSTIN number,” the clarification said. Adhia also clarified the view that there were three returns to be filed per month. He said only one return needs to be filed but there are three parts to it — only one part needs to be filed by the dealer while the other two will automatically be populated by computer. He said small retailers will not need to file invoice-wise details. “Those in retail business (B2C) need to file only one summary of total sales.” Those businesses that have both B2B and B2C operations will need to file total turnover for B2C and invoice-wise details for B2B. Those dealing in goods that were exempt earlier can continue doing business but will need to get registered within 30 days, clarifying that such business need not stop for want of registration.

GST

https://telegram.me/TheHindu_Zone

https://telegram.me/PDF4EXAMS

14  Disruption: Startups & Tech a

Tweet OF THE DAY

THE ECONOMIC TIMES | NEW DELHI / GURGAON | MONDAY | 3 JULY 2017

GST may Derail Ola, Uber’s Cab-leasing Programmes

Asia is Surfing

Innovation Wave Salesforce, the global customer relationship management player, has reported findings from its latest study Innovation: All Eyes on Asia, a report on how businesses in Asia view innovation. The study gathered responses from key decision makers across 8 countries in Asia. Here are the findings of the report:

Drivers will see a hike in amount of tax paid on leasing from 14.5% to a range between 29% and 43%

If technology empowers machines instead of empowering people, then we’ve failed.

Tech Buzz

Facebook Can Find You Free WiFi

Facebook is pushing out a new feature inside its mobile apps to help you locate the nearest hotspots. It’s called Find WiFi and it’s been in limited testing since last year, though Facebook has now pushed the button to roll it out globally. As the name suggests, it shows you businesses near to your location offering free Wi-Fi that you can tap into. —Techradar

Times Internet Takes Top Share of Digital News Consumption in April: ComScore Our Bureau

Mumbai: India’s leading digital media company, Times Internet, dominated news consumption across devices by capturing 51% market share of all online news content usage in April, according to media measurement and analytics company, Comscore. The report makes Times Internet properties the widest reaching and most engaged news properties in the country by far. The widely-followed report indicated that Times of India sites alone reached over 69 million viewers (39% of all news viewers), who spent over 7 billion minutes (51% of top 14 sites' time spent) on Times Internet properties. Compared to the market leader, the next most engaged publisher, Dainik Bhaskar Group, totted up 1 billion minutes of total usage. The ComScore MMX Multi-Platform (R) reports are used heavily by media buyers to assess reach and usage of digital properties. Times Internet has followed a strategy of offering engaging and accurate news content, with a multimedia approach and user-friendly design. “This market leadership is a reflection of the relentless pursuit that our teams make every day to understand user behaviour and to provide users with timely and engaging news and content in areas that matter to them. We are excited about keeping this momentum going and continue to serve our consumers,” said Puneet Gupt, COO — News at Times Internet. The ComScore report indicated that while 84% of India's total digital population accessed news and information sites in April, 79% visitors accessed the content exclusively via mobile devices. Incidentally, news/information category reached 92% of all 25-34 year-olds and 89% of 15-24 year-olds, higher age-demographic penetration than other age groups. Speaking of the results, Times Internet CEO Gautam Sinha said: “We strive to deliver compelling experiences and engagement for our consumers with innovative products. We are energised and will continue to innovate and strive towards being India’s largest digital company.”

Bengaluru: Uber and Ola drivers associated with both companies cableasing programmes will see a hike in the amount of tax paid on leasing under the new GST regime. Tax rates are expected to go up from 14.5% to a range between 29% and 43%, according to company officials at Ola and Uber, besides analysts tracking the space. The drivers will have to pay an additional fee of approximately `. 1 lakh annually, with their monthly EMIs going up significantly. Employees associated with the driver experience teams indicate challenges dealing with a further backlash from the drivers in the coming month who have already been protesting against their falling incomes as these companies cut back incentives. “At Ola Fleet Technologies, we run a leasing programme for tens of thousands of driver-partners who may not be able to afford buying a car of their own. Presently, these driver-partners pay 14.5% VAT. In the proposed GST regime, they will have to bear GST rates of 29% to 43% on the cars already leased, as an outcome of double taxation on existing leases,” said Shalabh Seth, CEO of Ola Fleet Technologies, a wholly-owned subsidiary of Ola, in response to ET’s queries. “This will have an adverse impact on their livelihoods, setting them back by over `. 1,00,000 for the remaining period of the lease, making it unviable to sustain their business,” he added. Drivers associated with both the

ON THE EDGE

7k-8k

Drivers each associated with Ola and Uber’s cab-leasing programmes Pre-GST EMI `

25,000

Post-GST EMI `

35k-40k

MICHAEL SOWA, The Thinker

RONNIE SCREWVALA @RONNIESCREWVALA

Shashwati.Shankar @timesgroup.com

ract but nullifying the existing contract will be a problem or they will try to return the cars to the company and get back their security deposit of around `. 30,000,” said Jaspal Singh, partner at Valoriser Consultants. Analysts estimate that approximately 7,000 to 8,000 drivers each are associated with Ola and The Road Ahead Uber’s cab-leasing pro‘BURDEN TO FALL ON DRIVERS’ “This 29% to 43% GST rate grammes. Drivers paying range can be explained by understan- an EMI of `. 25,000 pre GST will end up ding that there is a service charge of paying an EMI of around `. 35,000 to around 18% plus over 20% vehicle sa- `. 40,000 post GST. le tax on the leased vehicles that coAccording to two Uber executives, mes under GST. The burden of paying the leasing service that the company this will ultimately come upon the offers is not a prominent part of the drivers. However, it’s likely the dri- business, however, they expect the vers will try to renegotiate the cont- drivers to revolt against the high rates cab-hailing applications leasing programmes pay approximately `. 825 a day as a part of the rental fee, this amounts to around `. 25,000 a month. The payment plan works over athree or four-year period. However, post GST, the drivers are likely to see a significant hike in monthly EMIs according to analysts.

GST

later this month. “Leasing is not a business we are looking to strengthen for sure, the overall sentiment in leasing will be all the more low now because of GST rates and the lack of provision for the hike in taxations. Besides this, the chances of default payments on the leasing drivers end is likely to go up or they will try to return the vehicles,” said an Uber executive, speaking to ET on the condition of anonymity. ET reached out to Praful Shinde, a member of the Action Committee of Maharashtra that spearheaded driver protests against Ola and Uber in Mumbai, Mukkawar Sunil, president of the Telangana Cab Association, Tanveer Pasha, president of the Ola, TaxiForSure and Uber Drivers’ Association in Bengaluru and Tamal Arasan, president of the Ola and Uber driver union in Chennai, all of whom claimed they had not heard of the impact of GST rates for drivers who were associated with both companies cab-leasing business or heard from company representatives on the matter. “There is a lack of transparency prevalent between the driver unions and the cab-hailing apps when it comes to discussing incentives, per km rates and payment hikes and in this case the GST rates. So it is to be seen how the drivers will react when they are made aware about it. We can expect payment defaults or drivers turning away from the leasing business, which will further cause problems for both companies who have taken loans for the vehicles,” said an analyst, speaking anonymously to ET.

Industry findings

%

Cos believe customer retention is their key priority for next 12 to 24 months

Bengaluru: Online marketplace Flipkart has launched ‘Metronaut’, a private label in men’s fashion and accessories, as part of its foray into private labels across categories. The marketplace plans on launching multiple private labels in furniture, fashion and decor ahead of the start of the festive sale season. “Men’s fashion is a top category for us contributing 60% by value of all fashion sales. Women’s fashion is catching up at 40%. There is a strong brand play in the sub-Rs 1,000 category,” said Rishi Vasudev, vicepresident, Flipkart Fashion. The label currently has a selection of denims, t-shirts, shirts and accessories such as belts, wallets and sunglasses. It will be extended to in-

wer returns as we have made sure that the sizing is standardised and better quality checks, and hence less discounting to clear stocks. Also the supply chain cost will go down. We will update styles every two months,” said Vasudev. This comes close to a year

Likely to adopt new innovation to achieve this goal

India 93%

Asia

77%

Philippines 88%

America

64%

Malaysia 82%

Strategic investment priorities for Asian businesses 82%

83%

Motivations for deployment of CRM

80%

68%

INDIAN MARKET SPECIFIC FINDINGS

72

% of Indian IT CXOs feel India leads and will continue to lead technological innovation across Asia. Correspondingly, 75% of respondents across Asia felt Japan leads Asia in technology

ë It will be extended to include other products like footwear and backpacks

59%

Increase in Cost business saving productivity

Enterprise Cloud Customer apps computing relationship management

57% Increase profitability

India ranks highest (90%) among Asian countries with likelihood to adopt CRM platform powered by artificial intelligence

Barriers for CRM deployment Cost concerns

55%

Complexity of technology

36%

Lack of relevant talent

32%

79

26

Targeting the Metro Man

ë Mens fashion contributes 60% by value to all Flipkart’s fashion sales

93%

Singapore 88%

% of Indian respondents felt spend on tech innovation needs to increase irrespective of market conditions or any economic downturn

%

ë The label currently has a selection of denims, t-shirts, shirts and accessories such as belts, wallets and sunglasses

53%

India

CRM Market Findings

after close competitor Amazon India launched Symbol, its private label of clothing for men. Online fashion retailer Myntra which is a part of the Flipkart group has also been focused on growing the private label business to achieve profitability by FY 2018.

ë Flipkart will launch multiple private labels in furniture, fashion and decor ahead of the start of the festive sale season

Full survey

CXOs that say cos are most likely to invest in tech to boost customer retention

Regions that will lead innovation globally in the next five years

Flipkart starts its very own private label to rules men’s fashion and accessories category clude other products like footwear and backpacks. For Flipkart, men’s footwear is among the top-selling categories. The platform launched a women’s private label in the ethnic wear category earlier this month. Metronaut as a brand will be retailed by a single seller, RetailNet which has outsourced the manufacturing. “We believe that the brand will have a higher sellthrough due to lo-

53%

70

Metronaut Takes First Step [email protected]

CXOs who felt tech could aid in customer retention

of Indian IT CXOs feel public-private collaborations drives innovation in India

Priorities for Indian IT leads Cloud computing

95%

Nextgen computing

88%

Big data

86%

CRM systems

85%

Driving innovation in India Private sector

32%

Public-private partnerships

26%

GRAPHIC: GEETANJALI

Exotel Partners with Zendesk Bengaluru: Exotel, the cloud telephony platform, has partnered with software company Zendesk to provide end-to-end multichannel support to Zendesk’s customers in India, reports J Vignesh . With this partnership, Zendesk will include Exotel’s voice platform as part of its customer support offerings in the region. “The combination of network security and cloud-based software has helped people log into their systems from anywhere. Instead of the call being in the call centre, it is actually going to where the software is,” said Shivakumar Ganesan, CEO, Exotel. Exotel provides the basic building block that helps a company customise customer communication over calls and SMS. The company powers voice communication for over a 1,000 businesses, including brands like Ola, Uber, Flipkart, Quikr and Practo. Exotel will be integrated through the Zendesk API to facilitate phone support from Zendesk products businesses used to manage all other channels. With full customer history, automatic ticket creation and call recording, this integration will help agents.

Droom Marketing Budget Zooms to `. 225 crore

Co looking to ride on its new ecosystem tools to drive growth Supraja.Srinivasan @timesgroup.com

Mumbai: Online marketplace for used cars Droom is betting big on its new ecosystem tools to drive growth as it looks to invest heavily to build complementary revenue streams through the allied services. Backed by Singapore-based Beenext and Japanese incubator and venture capital firm Digital Garage, Droom has earmarked `. 225 crore to be spent on marketing on its new tools alone over the next 12 months. The four new ecosystem tools include the pricing tool Orange Book Value, the inspection tool Droom Eco, vehicle history report Droom History and Droom Credit for loans and financing and the company’s marketing efforts will focus solely on these new services

this year. Droom’s spend towards marketing as a means to drive new business comes even as investors have been pushing startups to curb cash burn to drive unit economics and profitability. But Aggarwal believes the 2.25 times higher advertising spend in these verticals as compared to last year’s marketing budget of `. 100 crore,

would show definite results in the topline. “In terms of traffic, these four tools now account for 50% of our total traffic which means they are doing very well in terms of user adoption. They have become extremely important for us to win this whole automobile market for a long-term horizon,” he said. While there is scepticism over the prudence of this move, some analysts tracking the space, believe that the company’s increased marketing spends may not actually be an exaggerated strategy. “If a company has the resources, the best time to increase marketing spend is when others are tightening their belt. At such times marketing expenses are low, as is competition for the consumer’s mindshare,” said Devangshu Dutta, CEO of consultancy firm Third Eyesight.

OPENS TEA SALON IN MUMBAI

TGL Co Brews a Retail Cup Taslima.Khan @timesgroup.com

New Delhi:The Good Life Company (TGL Co), which has raised $ 1million from Bollywood actor and restaurateur Ayesha Takia Azmi and her husband Restaurateur Abu Farhan Azmi, has opened its first retail tea salon in Mumbai. TGL Co plans to raise another $3 million by July 2018 to launch new variants of essential teas and tisanes from around

the world. TGL Co is a venture by entrepreneurs Bhuman Dani and Shariq Ashraf. The Tea Salon is an experiential offering with evocative aromas of TGL teas and in-house patisseries for tea lovers where they can explore the colourful ingredients in each blend and sample the brewed tea. With 24 variants from the portfolio of 300 blends, the teas are bifurcated into three collections namely Dessert, Wanderlust and Connoisseur.

This 17-year-old has a Plan to Help Kids Code from Scratch Jay Jaganaath has helped 40 abandoned kids in SOS Children’s Village to learn programming with MIT Scratch over the past four months Aritra.Sarkhel @timesinternet.in

Bengaluru: About 40 abandoned kids in SOS Children’s Village, an NGO in Faridabad, spent four hours a day for the past four months to master a visual intensive programming language called MIT Scratch, to create desktop-based games and animated movies. The NGO did not have its own resources to teach programming to the kids. Had it not been for Jay Jaganaath, a 17-year-old, class 12 student of Vasant Valley School, New Delhi, those kids would never have learned to code.

Jaganaath, who loves to play violin and piano, rues the fact that he started programming later compared to other people of his age group. “My first exposure to computer science was in class 11 wherein I learned C++. I feel that coding should be introduced early in school curriculum in India so kids can get better at analytical thinking.”

He says that he wanted to create something through coding. But before he could take his dream forward, he visited Finland and Japan as part of a student exchange programme in 2016. He said that he was taken aback by the impact of technology in the education

sector overseas. “India’s school education system needs to be redesigned to help kids develop reasoning skills and not just run after grades.” But he knew, he alone could not change the education system. After coming back to India, he decided to teach the programming language to children. “Students in class 5 and 6 in my school were curious about coding but had no idea where to start. I searched for keywords like ‘coding for school’, ‘coding for children’ and came across MIT Scratch,” said Jaganaath. MIT Scratch’s visual storytelling approach appealed to him and he

JAY JAGANAATH Student

In the next few years, I want to create a proposal for NCERT and formulise my programme so it can reach a wider audience decided to take the platform to kids across Delhi. “Kids do not like to write a lot of lines of code or see a monochromatic layout on the screen. Scratch is a better option because it is colour coded and has a graphic interface in which you can

drag and drop blocks of code.” Having got a foundation from MIT, he approached many schools in and around Delhi but could not get a chance to teach. “Finally, after facing a lot of issues with institutions in Delhi, an NGO in Faridabad allowed me to teach boys who were less than 15 years of age.” He used an offline version as there was no internet available at the NGO. He created a lesson plan and then for the next four months, on a daily basis, he taught the kids. “In the next few years, I want to create a proposal for NCERT and formulise my programme so it can reach a wider audience, creating more coders for an information revolution in India.”

https://telegram.me/TheHindu_Zone

https://telegram.me/PDF4EXAMS

Companies: Pursuit of Profit

WWW.ECONOMICTIMES.COM

 15

NO TREATY BREACHED: Smartphones didn’t exist when we signed pact, ready to face any dispute at WTO, say ministry officials

Import Duty on Mobiles Justified: Govt Kirtika Suneja & Gulveen Aulakh

New Delhi: India has not breached any international covenant by imposing 10% import duty on smartphones and is ready for any dispute that may arise at the World Trade Organization (WTO), said government officials. The 10% basic customs duty (BCD) on smartphone imports came into effect from July 1, as the goods and services tax (GST) was rolled out, and is aimed at protecting local manufacturing. The move follows deliberations for over a month, and is backed by legal opinion from the attorney-general. “Smartphones didn’t exist when we signed the Information Technology Agreement (ITA-1). So, there’s no obligation and, hence, no violation if we impose any duty on these products,” said a commerce ministry official. The pre-GST tax structure made smartphone imports 11.5% costlier than India-made handsets, creating a duty differential that incentivised local manufacturing. But a 12% GST rate on mobile phones would have wiped away the advantage. By putting a 10% BCD, the government has ensured that incentives for local manufacturing will remain intact even under GST. But the move has been complicated by the fact that India is a signatory to ITA-1, a global agreement under which countries have committed to exempt certain electronic and telecom products from customs duty. Experts, who have held the agreement responsible for wiping India off the global manufacturing map, fear New Delhi’s move could be the basis of a long-drawn dispute at WTO and that the country will have to fight it carefully. “Most smartphone component manufacturers are in South East Asia and are also part of the value chain which gets completed in China, where smartphones are assembled. These countries, apart from the US, could challenge India at

WTO,” said a Delhi-based expert on WTO issues. Another expert cautioned that India will have to tread carefully lest it faces the same fate as in the solar panels dispute, where it lost to the US and the ‘Make in India’ initiative suffered a big setback. But the government is gearing up

INDIA FIRST

By putting a 10% duty, the government has ensured that incentives for local manufacturing will remain intact even under GST for a fight. “If there is a dispute, we will fight,” the commerce ministry official said. The government’s confidence is supported by legal opinion from the attorney-general. The A-G said the pact was signed in 1996, when smartphones did not exist, and hence these cannot be given zero-duty status. The move has already ruffled feathers. At a meeting in Geneva last week, countries including the US, European Union, Japan, Korea, Norway, Canada and Switzerland said the duty ‘on cer-

tain ICT products’ was a violation of ITA. Under the new tax structure, India has imposed the 10% levy on import of fully built mobile phones, rubber and metal items, including screw, used for manufacturing mobile phones. The government has, however, exempted other parts such as printed circuit board assembly, camera modules, connectors, display assembly, touch panel and ringer. Components used in 31 other parts and base stations, used by telecom network providers to transmit signals, will also be exempt from customs duty. “A dispute is possible, but by the time it gets resolved in WTO, India’s purpose would be served,” said an expert on trade matters. “Mobile cellular phones were never in ITA-1 and the duty rationalisation was a reaction to the huge grey market and undermined the legitimate industry,” said Pankaj Mohindroo, president of the Indian Cellular Association.

HANDSET MAKERS CHEER MOVE

10% BCD on Smartphones A Leg up for Make in India Investments Gulveen.Aulakh @timesgroup.com

New Delhi: Handset makers and contract manufacturers are set to fast track their investments into Make in India, after the government imposed a10% basic customs duty (BCD) on smartphones, ensuring continuation of incentives for local manufacturing that would boost investment into developing component manufacturing ecosystem in the country. The duty also comes as a relief for several local companies and foreign firms including Foxconn, Flex, Salcomp and iPhone-maker Wistron and even Samsung that have pumped in millions into setting up more than 70 phone and component manufacturing units over the past couple of years. Ad-

Ringing in Investments `1000 crore investments on hold for the past six months, to get a kick start

Finnish charger maker Salcomp to invest

Strong Local Link

Intex Technologies to invest

Move could make some countries drag India to dispute in WTO

`100 crore Greater Noida factory for expansion this FY

`4 crore

Contract manufacturer Dixon Technologies to add a PCB assembly line by September

Housing.com co-founder shifts to Anuj Puri’s newly launched real estate platform

ANAROCK to Now Nunzio Mirtillo to Head Ericsson India House Rahul Yadav Danish.Khan @timesinternet.in

Kailash.Babar @timesgroup.com

New Delhi: Swedish telecom gear maker Ericsson’s India head Paolo Colella is moving to a new role as head of digital services for Europe and Latin America, while Nunzio Mirtillo will lead the operations in India along with other countries under his charge. The change in leadership is in line with the recently announced organisational structure by the company at the global level to help drive execution of its strategy. The development follows a 10% year-on-year decline in Ericsson India’s revenues in the first quarter of 2017, impacted by consolidations and tariff competition between operators. Mirtillo, who had taken the new assignment as head of the Market Area South East Asia, Oceania and India in April, will now drive Ericsson’s business in India, Australia, New Zealand, Indonesia, Singapore, Malaysia, Thailand, Vietnam, Myanmar, Philippines and Bangladesh. Ericsson had earlier this year reorganised its business structure to five market areas from 10 regions and to three business areas from four business units with the objective of increasing efficiency, speeding up time to market as well as enhancing customer responsiveness. Mirtillo takes charge at a time when the telecom market is in the midst of a huge price competi-

Mumbai: Rahul Yadav, co-founder and former CEO of Housing.com, has now joined Indian real estate industry stalwart Anuj Puri’s newly launched venture ANAROCK Property Consultants as Chief Product & Technology Officer. ANAROCK Property Consultants, a real estate brokerage, investment and fund platform, is targeting a total portfolio value of $500 million for its fund business by 2020. Yadav will be responsible for the development of a technology-driven online brokerage platform for Puri’s venture that would eventually attract international investments. Yadav has been known for his entrepreneurial venture Housing.com that attracted significant investment from international investors including Softbank. However, he had to leave Housing.com under controversial circumstances. "This appointment is in line with ANAROCK's highly technology-driven orientation and business model for its residential advisory services. The online real estate business is still in its fledgling stage in India, and we are taking the lead in boosting it into maturity. So far, the real estate sector has not been able to emulate the success of ecommerce for consumer durables and services,” said Anuj Puri, Chairman -

Q&A

DENIS MANTUROV RUSSIAN INDUSTRY & TRADE MINISTER

10%

BCD aimed at protecting local manufacturing US, EU, JAPAN, KOREA has raised concerns on India’s plan to levy duty on ‘certain ICT products’

India’s stand that smartphones are out of ITA-1 ambit is backed by Attorney General

MEN ON THE MOVE Change in leadership at Ericsson in line with business rejig while

tion which has led to rapid consolidation, hurting revenue of equipment makers. Companies such as Ericsson are, however, hoping to gain as telcos expand their 4G network and deepen 3G coverage amid a huge data boom. Mirtillo, who Development is also a memfollows a 10% ber of Ericsyear-on-year son’s executive decline in team, has put in Ericsson place a new leaIndia’s dership team to revenues in drive business the first in the region quarter of under his char2017 ge. All the newly appointed executives will report directly to him. “I am confident that the new simplified organisational structure will enable the teams to leverage the synergies across the different countries in the market area and successfully execute on our business strategy,” Mirtillo told ET.

ditional investments worth `. 1,000 crore have been hanging in the balance, which will now be taken forward. “The investments in the industry were on hold for the past 6-8 months due to huge uncertainty, but now the momentum in the industry which was lost should come back and more and more people will invest in backward integration or components,” said Sunil Vachani, executive chairman of Dixon Technologies, which makes

ANAROCK Property Consultants. Puri intends to change that and hopes that Yadav's experience in harnessing the consumer housing market at Housing.com through technology will add the key element. Puri reckons that ANAROCK is loYadav will be oking to build a responsible cutting-edge, for creating a consumer-focutech-driven sed technology online platform and brokerage support infrastplatform ructure that would help it bring in a transformation of the residential property business. Indeed, real estate in India continues to see most of its success as an offline business, with very little technological innovation happening to speed up its adoption as a viable online business model. Real estate advisories, online property listing aggregators and even developers have made some headway, but this field nevertheless remains underserved.

phones for Intex, Panasonic and Gionee. Samsung has already announced its intentions to make India a manufacturing and export hub, with shipments to Europe, Middle East, Africa and elsewhere expected to kick off in 2020. Apple, through Wistron, has also begun to assemble some of its iPhone SE models in the country, with plans to expand it further, which could get a further legup with the BCD, said experts. “This is a big boost for local manufacturing, else it would have been impossible to manufacture in India,” said Rajeev Jain, chief financial officer at Intex Technologies, which would now look at investing `. 100 crore this fiscal to expand its Greater Noida plant. Before GST, the duty structure made imported phones costlier than locally made ones by 11.5%, but that duty difference was evened out after GST rate of 12% was set for all phones. The move has been lauded by Indian as well as foreign handset makers such as Lava, Micromax, Gionee and HMD Global which makes Nokia phones. "It's a step to ensure that CBU import becomes non-competitive," Gionee India MD Arvind Vohra said. "BCD also ensures that the Indian consumer is not taken for a ride by global companies which have in the past used India for dumping old and slow selling inventory and made their way back to their countries once the inventory got over," said Rajesh Agarwal, co-

founder of Micromax. The decision to impose BCD would also clear any roadblocks in the way of Phased Manufacturing Program (PMP), which lays down a roadmap that offers tax benefits to those making mobile phone components within the country. PMP would also increase local value addition to 35-40% from the current 6%. It would also lend a helping hand to India becoming an export hub for existing players such as Samsung, and for ecosystem players from China, Taiwan and other markets to come and invest in India. For investors such as the world’s largest mobile phone charger maker Salcomp, the long term assurance is good news. “The differential duty has come in the form of BCD, which is what we were expecting as we were sure the government would protect (investments like ours),” said the Finnish company’s MD Sasikumar Gendham. The company is adding capacity of 50 million chargers a year to take its total capacity to 200 million in Chennai, with an investment of `. 74 crore. “Now, the government is coming up with a long-term policy, so one can commit funds for expansion,” Intex’s Jain said. Noida-based contract manufacturer Dixon is pushing ahead its plan to set up a line to populate printed circuit board (PCB) with a capacity of 1 million units a month at its plant, at an initial investment of Rs 30 crore by September.

Airtel Blames Jio ‘Disruption’ for Industry’s Financial Woes

Mittal, who received a salary of `. 30.1 crore, says co has braved challenge Our Bureau

Mumbai: Bharti Airtel chairman Sunil Mittal has blamed 'unprecedented market disruption’ following the entry of Relance Jio for the industry’s financial woes, but said his company had countered the challenge well. In Bharti Airtel’s annual report for the financial year ended March 31, Mittal said the disruption caused by “the entry of an extremely well-capitalised and aggressive new operator” through “prolonged free trial offers created massive pressure on industry revenues and margins”. Mittal, who received a hike above 8% to get a salary of `. 30.1crore for 2016-17, however, said Airtel, India’s No. 1 telco, had met “this extraordinary challenge with a well thought out strategic action plan and of course, sheer resilience”. The firm’s net profit of Rs 373 crore for the three months ended March was its smallest in four ye-

ARINDAM

ars. The 72% on year fall in its net profit notwithstanding, analysts had after the results said that Bharti Airtel was countering Jio well through its own offers, which had prevented subscribers from changing loyalties. The firm, in its report, added that because of the intense competition, many small operators had

lost their bearings under the intense onslaught and consequently prepared to exit the market. “The shake-up also triggered an industry wide consolidation process, which we believe could prove beneficial for the market in the long run,” said the chairman in the report. The operator said that there was an increase of 2.67% in median remuneration of employees in 2016-17 as compared to 2015-16. MD and CEO-India and South Asia, Gopal Vittal, got an almost 50% hike to take a salary of `. 9.2 crore. There were 9,279 employees on the rolls of the company as on March 31, 2017. The firm said an approval of shareholders is being sought for modification of the Employee Stock Option Scheme 2005 with the objective to make the same more beneficial and employee friendly. It added that in the next three years, Airtel plans to reduce its carbon footprint by 70% and plans to move towards green mobile tower technologies that consume less power.

PNB to Block all Maestro Debit Cards from July 31 Press Trust of India

New Delhi: Punjab National Bank (PNB) Maestro debit cards holders will face a card blockage if they fail to replace it with a more secure EMV chip based card by the end of this month. The bank will not charge anything for the replacement and it will be provided free of cost.

“If you are having Maestro debit card, get it replaced free of cost with a new EMV chip based debit card from any PNB branch. All Maestro cards issued by PNB will be blocked or hotlisted on July 31, 2017 for security based reasons,” the bank said in a communication to its customers. The replacement is as per RBI advisory issued in 2015, asking all the banks to migrate to a much secured EMV chip ba-

sed cards, an official of the bank said. The bank has identified that there are about one lakh customers with old Maestro debit cards and has started sending them SMSes as well, an official of the bank said. At present, PNB's card base stands at around 5.65 crore. As per RBI advisory, existing magnetic stripe only cards need to be replaced with EMV chip and pin based cards by December 31, 2018.

India and Russia have identified 19 projects for joint cooperation in infra, pharma, aviation and automobile sectors

‘Supply of Russian Civil Aircraft, a Promising Venture’ The June 1St Petersburg Vision Statement after Narendra Modi-Vladimir Putin Summit laid down roadmap for lifting bilateral economic partnership across areas that were never considered in the past. However, the next challenge is to translate this ambitious vision into action to upgrade ties to the next level. Russian Industry and Trade Minister Denis Manturov, a key figure in giving shape to agenda told ET’s Dipanjan Roy Chaudhury that both sides have identified 19 projects for joint development and a new investment protection pact is in the works. How would you assess the milestones achieved in Russian-Indian relations following the St. Petersburg International Economic Forum (SPIEF)? This year, India became a

partner-country of the St. Petersburg International Economic Forum, Prime Minister Modi was invited as the honoured guest and delivered a speech at the plenary session. This fact alone already speaks volumes. But of course, the most important result of SPIEF for Russian-Indian relations was the St. Petersburg Declaration. As President Putin emphasised, the task is to expand cooperation in the political, economic and humanitarian spheres, to stimulate trade turnover, improve its structure, and expand production. The two sides have agreed on the list of 19 projects for cooperation in the field of transport infrastructure, new technologies in pharmaceuticals, aircraft and automobile construction, diamond extraction and agriculture. Let me remind you that India is currently involved in the assembly of military products with the participation of Russian specialists.

FRESH START

Russia and India are negotiating a new agreement on the promotion and mutual protection of investments BLOOMBERG

The joint development and production of modern weapons systems will be pursued. The St. Petersburg Declaration sets out the various areas in which India and Russia are planning to cooperate. Which Russian investments have better prospects in India?

I would especially highlight the aviation industry as well as the development of railway infrastructure besides IT. In terms of aircraft construction, the supply of Russian civil aircraft to India, including the Sukhoi Superjet-100 aircraft, is quite a promising venture. By 2029, India’s internal airlines will expand to 250 aircraft. This demand

will be shaped by an increase in passenger traffic travelling among the regional cities of India. We very much expect that India’s plans will allow to increase volumes of deliveries of the Russian planes. Our planes are capable of winning the competition vis-à-vis Embraer and Bombardier. In addition, given the high level of local content of the production of aircraft engines in India, Russia can offer another high-tech project: production of power plants based on aviation gas generators. This topic was recently discussed in Novosibirsk at the first meeting of the Russian-Indian High-Level Committee on Scientific and Technological Cooperation. We are interested in the participation of Russian companies in the modernisation of Indian railways. We know that in India today, railway transport is the most in demand. We

are also interested in the construction of dedicated cargo corridors, the modernisation of railway stations, as well as the reconstruction and construction of car repair depots. We are also ready to organise the training of Indian specialists. We have formed a Russian-Indian Working Group for the Development of Integrated Solutions in the development of railway networks and a subway in the State of Maharashtra. Russian private companies have faced hurdles in India in the past. What are the current impediments for Russian investment in India? Unforeseen changes in Indian legislation can be an obstacle to business cooperation. One discriminatory measure for Russian companies was the refusal to provide bank guarantees while concluding contracts under

government tenders. Nevertheless, Russia and India are negotiating a new agreement on the promotion and mutual protection of investments. The previously-signed Agreement on the Protection of Capital Investments ceased to exist in April 2017. Which areas have the greatest prospects for India’s investment in Russia? We are inviting Indian investors to participate in the “Aluminium Valley” project in Eastern Siberia. This will be a special economic zone in the Krasnoyarsk region. In mid-March, I was in Chennai, where during my talks with my Indian counterpart Nirmala Sitharaman, we reached an agreement on the establishment of a Subgroup on Cooperation in the Aluminium Industry As of today, we are waiting for India to respond to the proposals on the subject and composition of the subgroup.

https://telegram.me/TheHindu_Zone

The Edit Page

The tax will generate multiple audit trails We commend adoption of the goods and services tax, the biggest tax reform since Independence, to create a seamless common market. Prime Minister Narendra Modi, President Pranab Mukherjee and finance minister Arun Jaitley have done well to acknowledge that political collaboration and the spirit of cooperative federalism ensured the transition to the new tax paradigm. The GST Council, a collective body of the Centre and states, deserves to be lauded for its consensus-driven approach to transact the legal changes needed to adopt GST on July 1. Rightly, the PM billed this as a good and simple tax that would subsume and eliminate the previous cascade of 17 central and state taxes and 23 cesses, leading to efficiency gains and lowering retail prices. The audit trails the levy creates would curb evasion, widen the tax base and boost collections, both in indirect and direct taxes. The GST network that provides the IT infrastructure for taxpayers to pay tax, file returns and claim refunds, without having to interface with a tax official, except if taken up for audit and scrutiny, is a major innovation. Sensibly, businesses have been given more time to file returns in the first two months. This will make the transition smooth: companies need time to recast their accounting systems for full compliance. Compliance should be easy, and taxpayers must not be harassed having to deal with two sets of administrative bureaucracies for the tax. Industry’s fear that the anti-profiteering clause may be a perverse incentive to routinely suspect the pricing policy of producers is not misplaced. It must have a sunset clause. An institutional mechanism to assess the experience of GST as it rolls out to make swift course correction makes sense. Ideally, we should have started with low rates, achieved compliance and acquiescence, and pushed rates up gradually. Multiple rates are not inherently inimical to GST but make administration a little complicated. It is still possible to reduce the rates and the number of rates, as government gathers experience implementing the new tax.

Economic unification of states & GST Council make the tax rollout an epochal event, warts and all

On a Wing and a Prayer Mythili Bhusnurmath

T

he hype over the much-awaited launch of the goods and services tax (GST) at a special midnight session in the central hall of Parliament house last Saturday might seem a bit excessive. But not if you consider how long it has taken us to get there, and how tortuous the journey has been. It has finally made us one economic entity with a single national market. India, in the words of an imaginative campaign run by the government, has been transformed from being a political union to a political and economic union in the true sense. However, given the challenges that lie ahead, it would be naïve to imagine the ideal of a single national market will be realised overnight. There are glitches aplenty that will have to be ironed out. It will be a while before the jungle of indirect tax laws (with all its associated ills, including corruption) that impeded competition and ease of doing business is replaced by the seamless operation envisaged under GST. But we are on our way to getting there. Even better, we finally have on the ground the working semblance of a blueprint for true fiscal federalism. Something that was, perhaps, not envisaged even by the framers of the Constitution. The Indian Constitution has often been described as ‘federal in form, but unitary in spirit’.

Only weather experts care about whether it is pre-monsoon or the real thing

Monsoon Can Never be too Soon Once the skies become overcast and squally thundershowers throw normal life out of gear at this time of the year, most people can be forgiven for thinking the monsoon has arrived. Only the weather mavens know better, and call it “pre-monsoon”. Not that most know the difference, but the Met department and private weather forecasters do, and obstinately refuse to prematurely herald its arrival, no matter how much the downpour. Then one day, they finally declare that the monsoon is here. The key, as is helpfully revealed every year but apparently forgotten by most, lies in the shape and size of cloud formations and the timing of the showers, not the quantity of precipitation — always bafflingly recorded only in millimeters. Those towering vaporous grey behemoths seen in the afternoons and early evenings of hot and muggy days are pre-monsoon thunderheads that unleash torrents in a single shot and then whiz away. The real monsoon clouds are not as tall, spread much wider and cause prolonged and repeated spells of rain usually beginning late at night and continuing the next day, which also results in consistently lower temperatures. Such distinctions are just for the experts. Most others, already weary of the long scorching summer, would rather just echo Sadhguru Jaggi Vasudev’s succinct words, “Ah monsoon, never too soon.”

Freedom from Exile K S RAM

Powerful Council

The structure of the GST Council, the powerful decision-making body on all things related to GST, is such One satisfied consumer that neither the Union nor state governments will be able to do anything numerable — it is these two features, unilaterally. On the contrary. With the economic unification of states states collectively having two-thirds and the institution of the GST Counof the vote share and the Union, one- cil, more than any other, that make third, even as all decisions are to be the launch of GST a truly epochal taken by three-fourth majority, the event, warts and all. But does that mean GST is some earlier skew in taxation powers in fakind of a magic wand that will vour of the Union is now history. From a time when states were seen change India overnight? Not at all. as subservient to the Centre, states First, we will have to tone down our today sit at the same high table as the expectations. Accept that though theUnion government when it comes to re are many benefits, these will not be GST. Indeed, the word ‘Centre’, with realised immediately and, in fact, its subtle subtext of superiority vis- will be realised only after we have à-vis states, does not figure at all in overcome many challenges en route. the Constitution, which uses the more neutral ‘union’ to describe the na- Challenges The two biggest challenges (ignoring tional government. True, the council is only a recom- innumerable procedural hassles, ismendatory body. But for all practical sues relating to transitional rules, repurposes it will be the de facto agency fund procedure in case of inverted that decides all matters relating to in- duty structure, e-way bill mechadirect taxes: rates, slabs, classifica- nism, anti-profiteering clause and so tion of goods and services, admini- on) relate, first, to technology. The robustness of the IT backbone required stration and dispute settlement. For all the benefits that GST is ex- to process an estimated 3.5 billion inpected to deliver — and there are in- voices every month. And, more importantly, the readiness and preparedness of small businesses, retailers and traders. Cooperative federalism is the only way forward in a The success of GST depends on how quickly businesses adapt to the country as diverse as ours. GST’s structure is such it digital taxation. Under GST, compliance procedures like registration, paallows this diversity to get reflected on the ground.

Last Hurdle: Opaque Political Funding Speaking at the foundation day anniversary of the Institute of Chartered Accountants of India, Prime Minister Narendra Modi repeated his clarion call against black money and urged the assembled charted accountants to help their clients pay taxes rather than evade them. Those who try to take tax-evaded income outside the country will run up against the automatic exchange of information agreements that are shaping the global consensus to end base erosion and profit shifting. The goods and services tax will create multiple audit trails that will lead the taxman to undisclosed income. Tax rates have moderated and will moderate further. The government will take strong punitive measures against tax evaders. The PM ticked all the right boxes. Except one. The element of the black economy he failed to mention is not the largest but is of the most consequence. This is political funds. Spending on political activity has soared, rising faster than per capita income. However, the bulk of political expenditure remains off the books, and so, naturally, does most of the funding that finances the expenditure. Today, industry funds individual politicians, who amass war chests, out of which they dole out money to followers, supporters and activists, apart from to the party to which they hold allegiance. Much remains with the politicians, after meeting their political expenses. This builds personal fortunes of politicians. Unless this system is replaced with one of transparent accounting of political income and expenditure, corruption and black money cannot be eliminated. The politician will turn a blind eye to the black money generated to fund his coffers, and to the misuse of the state machinery/banking system to generate the unaccounted funds in question. This, too, must change.

Though it is based on a division of powers between the Union and the states, the division of powers, especially taxation powers, was weighted in favour of the Union government. This state of affairs might have been appropriate in a milieu where we had only national parties, but not in a scenario where regional parties and regional aspirations have become increasingly important. Cooperative federalism is the only way forward in a country as diverse as ours. The beauty of GST is that its structure allows this diversity to get reflected in policy on the ground. FILE PHOTO

GST: Biggest Move To End Black Money

THE ECONOMIC TIMES | NEW DELHI / GURGAON | MONDAY | 3 JULY 2017

yments, refunds and returns can only be done through online portals. This is going to be a huge challenge in a country where there is a large number of small and medium enterprises, accounting for a significant share of the GDP. The second big challenge is the short-term adverse fallout on economic activity as a result of teething troubles arising from the sheer complexity of the new regime and, more importantly, its impact on prices. If producers cut back on production for want of clarity on tax incidence or logistics problems, then we could see supply, and hence prices, being impacted. On paper, consumer price inflation should come down since food accounts for close to 50% share in the consumption basket and prices of most food items (except for more expensive branded items) should remain the same or fall. However, international experience suggests there could be a brief inflationary surge, in which case government could find itself on the back foot. None of this, however, can take away from the sheer economic logic and, indeed, necessity for GST. Remember, nothing venture, nothing win.

MEME’S THE WORD

Ending Child Marriage “Yesterday is history, tomorrow is a mystery, but today is a gift. That is why it is called the ‘present’.” Oogway Kung fu master

The welfare benefits from lower population growth by ending child marriage are estimated globally (for 106 countries) at $22 billion in 2015 and $566 billion in 2030, according to a World Bank report. The rapid increase in the benefits stems from the fact that the impact of ending child marriage and early childbirths on population growth is cumulative. That is, each year the gains become larger because the cumulative reduction in population growth keeps growing from one year to the next...

Welfare gains from ending child marriage & early childbirths due to lower population growth

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Cost of child marriage in billion $ (PPP)

Cost of early childbirth in billion $ (PPP)

22.1 44.8 68.6 93.8 120.8 149.5 179.9 211.9 245.8 281.7 319.6 360.4 405.1 454 507.6 566.3

27.8 56.3 86.2 117.9 151.8 187.8 225.9 266.1 308.5 353.4 400.9 451.9 507.7 568.5 634.9 707.5

Doing Business Will Get Easier

Citings

NEUTRON TO NYLON

Hard Rock from the Sky Debkumar Mitra The part of the universe that forms our neighbourhood mostly works like clockwork. This helps astronomers predict the visits of comets, movement of planets, eclipses and tides with an unerring degree of certainty. The same science helps researchers calculate dangers from the sky brought about by objects such as asteroids. One such large rock is widely believed to have pummeled into the Yucatan peninsula in Mexico and wiped away the dinosaurs millions of years ago. It is unimaginable what would happen if one such big rock collides with Earth today. The probability of an asteroid hitting Earth is 100%. We are, indeed, getting hit every day. Look up on a clear, dark night and you will find a shooting star. Most of these are too small and burn out upon entering Earth’s atmosphere. What matters is the size of the asteroid. The larger it is, the greater is the size of disaster it will cause on the planet. Astronomers have already catalogued many of these dangerously large objects lurking in Earth’s backyard. The bad news is that we are sitting ducks for asteroid target practice. We already know that very large asteroids, capable of triggering mass extinction of diameters of 1km or more, hit Earth only about every half-a-million years. However, there are many smaller asteroids, and these hit us more often. In 2013, one 18 meter in diameter asteroid broke up nearly 30 km above the city of Chelyabinsk in Russia and generated a shockwave that shattered glass and injured about

1,200 people. These rocks hit us every 20-30 years. And space rocks of the size that exploded in the sky over the remote forest of Podkamennaya Tunguska River in Siberia, flattening close to 80 million trees on June 30, 1908, pay us a visit once every few hundred years. According to Nasa astronomers, there are no near-Earth objects (NEO) on collision course with Earth right now. However, there is no assurance that the situation will not change dramatically. The uncertainty arises because NEO orbits are chaotic. Even in a clockwork universe, this makes the behaviour of these rocks uncertain. Suddenly a predicted innocuous asteroid flyby becomes a catastrophic event. Fortunately, constant refinement of tools and meticulous observation by a dedicated team of researchers from Nasa, the European Space Agency (ESA) and other nations have increased the event prediction time of both fortunate and difficult kinds involving asteroids and other NEOs. In 2004, asteroid Apophis raised anxiety levels when a group of scientists announced the likelihood of it hitting Earth to be quite high. As always, the media interpreted it as Apophis heading towards us. The NEO had a quiet flyby. Recently, the possibility of an impact during its close approach in 2029 was excluded by asteroid watchers. But what will happen in the

The last time there was serious panic

Destiny and the dynamics of living often remove us from the place we belong to, from what we refer to as our hometown. Living away, we tend to get “home sick”. We split ourselves and suffer a ‘body here, mind there’ syndrome. Interestingly, this can happen not just to an individual or a family, but even collectively to a whole people. Take the plight of America’s founding fathers. Mostly victims of religious persecution, they dared to cross the Atlantic to found a new settlement. They fled bodily, but mentally they remained in England. Many American cities reflect this nostalgia. England’s York became New York. The new Americans sought liberty, but could not free themselves of their emotional bondage to the “mother country’’. Many of us are employed and are living in places we are prejudiced to believe is not our home. We live in a state of exile, longing for the day when we shall get back to our ‘home place’. We poison our minds with thoughts of imagined alienation. Finally, maybe after retirement, if and when we do get back to the home place, we hardly feel at home, what with so much changed and the change often not to our liking. We feel even more miserable than before. If we view the people we are destined to live amidst as our people, we will learn to feel at home always. If we evince a little interest and involvement in our neighbourhood, we will discover an exciting world. Home is where the heart is.

Chat Room

(Order of Magnitudes at the Global Level for more than 100 Countries)

Source: World Bank

THE ECONOMIC TIMES

FILE PHOTO

16

https://telegram.me/PDF4EXAMS

more distant future is less known. This clear and present danger of a cataclysmic event often gets lost in the din of political and economic crises. The information vacuum gives rise to superstitions, grossly misinterpreted TV news and Hollywood-style exaggeration. The scientific community also needs a voice in the corridors of power to get more attention to this issue. The answer to the need came from astrophysicist Brian May, more famous as the guitarist of the rock band, Queen. In 2015, May — along with astronaut Rusty Schweickart, filmmaker Grigorij Richters and Danica Remy of the B612 Foundation, a non-profit organisation to protect Earth from asteroids through early detection — created Asteroid Day to educate and raise awareness about asteroids. They selected the date of the Tunguska disaster, June 30, as the Day of Space Rock. Last year, the UN decided to mark the day to spread the knowledge of asteroids. Every day scientists are adding to our knowledge about asteroids. But the fact remains that there is no plan, secret or otherwise, to stop an asteroid if it comes hurtling towards Earth. There are a few interesting proposals to prevent an impact — ranging from blasting an asteroid to deflect it using a ‘slingshot’ — on the table from Nasa, the European Space Agency and other independent teams. There have been dialogues in the recent past between the US and Europe to fund a couple of these proposals. But nothing has happened. And the clock keeps ticking. It is a natural disaster that we can predict. With a bit more understanding and experiments, we may even prevent one. But politicians are busy squabbling over other issues impacting funding. It is true that you cannot see a large asteroid falling from the sky. Sixtysix billion years ago, many of the dinosaurs did not see one coming. They just perished.

Investor Learning FRANK ZHOU

I look at how investor learning affects firms’ voluntary disclosure decisions. By voluntary disclosure decision, I mean management annual earnings forecast decisions. What are the forces that shape management earnings forecast decisions? Empirically, there is a very interesting phenomenon, which is that earnings forecast decisions tend to be “sticky” over time. I built a model trying to explain why the stickiness occurs and to empirically quantify this mechanism that I propose. The mechanism is investor learning about unknown firm profitability. We know that investors don’t know everything, so it is a reasonable assumption that investors don’t know firm profitability. Just by taking this simple premise, I show that investor learning leads to sticky disclosure incentives. Say that you invest in Apple; you think that Apple is a pretty good firm. Just observing that Apple’s performance drops a little bit at a certain time doesn’t mean that Apple is a bad firm for you. In other words, investors’ beliefs are sticky over time. I showed that investors’ beliefs, in turn, affect managers’ voluntary disclosure decisions. My structural estimation shows that investor learning leads to very sticky disclosure incentives so that there is a 10% increase in the likelihood of disclosure in one year caused by investor learning. That would, in turn, lead to about a 10% increase in the likelihood of disclosure in the next year. From: How Investor Learning Affects Firm Behaviour

Within a year, two back-toback historic economic measures – demonetisation and GST – have been enforced to weed out corruption and make India a right place to do business. GST, a destinationbased tax, cuts out a cascade of taxes and would fetch more revenue to the states where the goods are consumed. Though Centre has promised to compensate the producer states, it would to some extent discourage interstate movement of goods, so a lion’s share of IGST can be distributed to the producer states. S LAKSHMINARAYAN Vriddhachalam

AI Needs Full Autonomy Apropos the Cabinet’s inprinciple decision to divest stake in the loss-making national carrier Air India. A panel will decide the modalities. The ailing airline can be nurtured back to health with a professional management, sans any interference from politicians and complete autonomy in decision-making. BEHRAM AGA Via Email

Well Done, Mr PM! The Narendra Modi government's decision to keep tryst with GST despite all odds is commendable and ushers a new dawn in India’s taxation history. The reform has, in one stroke, eliminated the need for a host of central and state taxes that we had to put up with. Besides unifying India’s economy into a common market, GST will also bring in greater transparency, curb corruption, bring down prices and simplify the way we approach and pay our taxes. However, the government needs to address the concerns of small businesses and resolve glitches. The Opposition would do well to give up their protests, after having cooperated in enacting the law. NJ RAVI CHANDER Bengaluru Letters to the editor may be addressed to

[email protected]

https://telegram.me/TheHindu_Zone

https://telegram.me/PDF4EXAMS

CONTRAPUNTO The greatest discovery of all time is that a person can change his future by merely changing his attitude OPRAH WINFREY

WWW.ECONOMICTIMES.COM

US Warship Sails Close to South China Sea Island Occupied by Beijing Washington: An American warship on Sunday sailed close to a disputed island in the South China Sea occupied by Beijing, as part of an operation to demonstrate freedom of navigation in the waters, a US official said. The destroyer USS Stethem passed less than 12 nautical miles (22 km) from tiny Triton Is-land in the Paracel Islands archipelago, which is also claimed by Taiwan and Vietnam, the official told AFP. The operation, which is likely to provoke Beijing, is the second of its kind carried out by the Unit-ed States since President Donald Trump took office. The first was on May 25, when the USS Dewey, a guided-missile destroyer, sailed less than 12 nautical miles from Mischief Reef — part of the disputed Spratly Islands south of the Paracel Islands. China claims nearly all of the South China Sea, despite par-tial counter-claims from Taiwan and several southeast Asian nations including the Philippines, Brunei, Malaysia and Vietnam. AFP

Trump Calls for Unity After A Day of Twitter Outbursts

At Celebrate Freedom rally Trump attacks the free press as ‘fake’ for coverage critical of him Washington: President Donald Trump delivered a campaign-style speech heavy with patriotic themes and support for American troops on Saturday night, and didn’t spare the news media from another dose of the criticism dished out earlier in the day on social media. “The fake news media is trying to silence us, but we will not let them, because the people know the truth,” the president said in a speech to the “Celebrate Freedom” event at Washington’s Kennedy Center. “I’m president, and they’re not.” The programme, billed as a tribute to veterans, was staged by Christian broadcasting group Salem Media and the First Baptist Church of Dallas. Trump recycled many of his biggest campaign applause lines, including a vow to “build the wall” on the US border with Mexico, a re-

18 Killed as Car Bombers Strike Damascus Damascus: A suicide car bomber pursued by security forces blew himself up in eastern Damascus on Sunday, with a monitor reporting 18 killed in the deadliest attack to hit the Syrian capital in months. Syrian state media and the Syrian Observatory for Human Rights monitoring group said security forces intercepted three car bombers on their way into the city early on Sunday morning. State television said two of the vehicles were blown up on the outskirts of the city. A third managed to reach the eastern Tahrir Square district, where he was surrounded but able to detonate a bomb. The Observatory, a Britain-based monitor, said 18 people were killed in the bombing, including at least seven members of proregime security forces and two civilians. It had not identified the remaining victims. AFP

Dropbox Seeks to Hire IPO Underwriters: Sources New York: Data-sharing business Dropbox Inc is seeking to hire underwriters for an IPO that could come later this year, which would make it the biggest US technology company to go pub-lic since Snap Inc, 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 deliberations are private. Reuters

freedom of religion and speech, also covers freedom of the press — a protection Trump didn’t highlight. In a stab at inclusiveness late in the 34-minute remarks, Trump said, “We all share one home, and one glorious destiny. And whether we are black or brown or white — we all bleed the same red blood. We all salute the same great flag.” The speech, heavy on praise for the military and law enforcement, and for the role of religion in public life, came days ahead of the nation’s annual Independence Day celebration. Trump is also considering his administration’s approach toward fighting Islamic State. He said on Saturday that terrorism and extremism can’t be allowed to spread in the US, and was the “one of the most grave and dire threats to religious liberty”.

minder that he “inherited a mess” upon taking office, and a warning of the dangers of “radical Islamic terrorism”. Trump used the event, on the weekend before the Independence Day holiday, to attack the free press as “fake” for coverage critical of him. But the First Amendment, the tenet of US democracy that bolsters

Bloomberg

US Clears Laptops on Flights From Abu Dhabi: Etihad

Trump to Speak With Xi, Abe Over North Korea

Washington: The US Department of Homeland Security lifted its ban on electronic devices in the cabins of commercial jetliners flying to the US from Abu Dhabi after validating security measures at a facility inside Abu Dhabi International Airport, according to a statement from Etihad Aviation Group. “The removal of the restrictions allows passengers flying to the US to carry all laptops, tablets, and other electronic devices onto the aircraft, subject to enhanced security measures,” the airline said in a statement on Sunday. Bloomberg

Washington: US President Donald Trump will speak with Chinese President Xi Jinping and Japanese Prime Minister Shinzo Abe on Sunday, calls that come as frustration builds in the White House over North Korea’s nuclear programme and overcapacity in the steel market. The talks come ahead of meetings he will hold with both leaders on the sidelines of the G20 summit in Hamburg, Germany, on July 7-8 where trade practices are expected to be high on the agenda. The White House said the phone calls were scheduled starting at 8 p.m. EDT. Reuters

Japan’s Ruling Party Suffers Historic Defeat in Tokyo Poll

Israel’s Ex-PM Olmert Released From Prison

Tokyo: Prime Minister Shinzo Abe’s Liberal Democratic Party suffered an historic defeat in an election in the Japanese capital on Sunday, signalling trouble ahead for the premier, who has suffered from slumping support because of a favoritism scandal. O n t he su r f ac e, t he Tok yo Metropolitan assembly election was a referendum on Governor Yuriko Koike’s year in office, but the dismal showing for Abe’s party is also a stinging rebuke of his 4-1/2-year-old administration. Koike’s Tokyo Citizens First party and its allies were on track for between 73 to 85 seats in the 127seat assembly, according to exit polls by NHK public TV. Later vote counts showed the LDP was certain to post its worst-ever result, winning at most 37 seats compared with 57 before the election, NHK said, while Koike’s party and allies were assured a majority. “We must recognise this as an historic defeat,” former defense minister Shigeru Ishiba was quoted by NHK as saying. “Rather than a victory for Tokyo Citizens First, this is a defeat for the LDP,” said Ishiba, who is widely seen as an Abe rival within the ruling party. Past Tokyo elections have been bellwethers for national trends. A 2009 Tokyo poll in which the

Jerusalem: Former Israeli Prime Minister Ehud Ol mer t left prison early Su nd ay d ays after a parole Ehud Olmert board granted him early release from his 27-month corruption sentence. Prison Service spokesman Assaf Librati said Olmert, 71, was whisked away by security and driven home after serving 16 months. Olmert appeared gaunt and pale as he left the facility. Librati said t he ter ms of Olmert’s early release stipulate that for the next few months he must do volunteer work, appear before police twice a month and not give interviews to the media or leave the country. Olmert will reportedly volunteer at a food bank and for a group that provides medical aid to needy families. Olmert was convicted in 2014 in a wide-ranging case that accused him of accepting bribes to promote a real-estate project in Jerusalem and obstructing justice. The charges pertained to a period when he was mayor of Jerusalem and trade minister before he became premier in 2006. AP

TIPS, TRIVIA & TRENDS

Shinzo Abe

LDP won just 38 seats was followed by its defeat in a general election that year, although this time no lower house poll need be held until late 2018. Koike, a media-savvy ex-defence minister and former LDP member, took office a year ago as the first female governor in the capital, defying the local LDP chapter to run and promising to reform governance of a megacity with a population of 13.7 million and an economy bigger than Holland’s. Among her allies is the Komeito party, the LDP’s national coalition partner. “I am excited but at the same time, I am also keenly aware of the weight of my responsibility,” Koike told NHK, adding the results had exceeded her expectations. The strong showing by Koike’s party will fuel speculation that she will make a bid for the nation’s top job, though that may not be until after the 2020 Tokyo Olympics. Reuters

Trump Tweets Video of Him Knocking Down, Beating ‘CNN’ Washington: President Donald Trump launched a fresh attack on the news media on Sunday by tweeting a video — bizarre even by his standards — showing him knocking down and beating a professional wrestling “villain” whose face had been replaced by a CNN logo. The 10-year-old video, hailing back to Trump’s days as a guest celebrity at pro-wrestling events, came after a week in which his unrestrained Twitter attacks on two MSNBC talk show hosts drew widespread condemnation from members of both political parties. In the 28-second video, Trump, dressed in a suit, is seen knocking down another man in a suit who is standing next to a wrestling ring. Trump then pummels the man, whose face is covered by the CNN logo, repeatedly over the head. At the end of the video, a fake CNN logo appears in the lower right corner of the screen with the words “FNN: Fraud News Network.” Trump has recently picked up the pace of his attacks on the news media. AFP

The world’s oldest emergency helpline 999 on Sunday completed 80 years of its existence in the UK with Scotland Yard celebrating the “cornerstone” of the British policing by organising several events. In the early days of the 1930s, just 24 staff in the old Victoria Embankment headquarters of the Metropolitan Police dealt with a couple of hundred calls a day. It was launched after a major fire in London in 1935 resulted in five fatalities. Neighbours dialling 0 to alert the operator found it jammed – at that time the automatic exchanges had no way to distinguish between “life or death” calls and all the others coming into their switchboards – highlighting the need for urgent reform of the system. Now, there are three centralised communication complexes in Bow, Hendon and Lambeth, employing over 2,000 people dealing with 13,000 to 20,000 calls per day. As part of events to mark the anniversary of the 999 number, a special commemorative section has been set up on the Met’s Facebook page featuring video interviews with 999 operators, a wide range of photos, illustrations, and facts and figures relating to the history of the service. PTI

UK Launches New Fund to Counter Hate Crimes The British government on Friday announced a new £1-million fund to protect religious institutions and prevent hate crimes in the country following the terror attack on a mosque in north London last month. Eligible religious organisations can now apply for help to provide a range of security measures, such as CCTV cameras, and protective fencing to provide reassurance for their congregations. “There is no place for hate crime in this country and anyone who commits an attack motivated by race, religion or ideology will meet the full force of the law. “People must feel free to practice their faith without fear of violence or abuse, which is why I launched a £2.4-million fund last year to provide protective security to places of worship as part of my Hate Crime Action Plan,” said UK home secretary Amber Rudd in a statement released on Sunday. “Many groups have already benefited from funding. But following the tragic attack in Finsbury Park..., I am making another £1 million available to provide protection against hate crime to all those who need it,” she said. PTI

L ondon : Theresa May could storm out of Brexit negotiations to show voters at home she is willing to be tough with the EU over Britain’s divorce bill. The Prime Minister is preparing a dramatic walk-out in September over the bill, thought to be in the region of £87 billion, it has been claimed, as business leaders were told May was trying to “be as hard-nosed, as hard-headed and as cold-eyed about this as it is possible to be”. The claims, reported by The Sunday Telegraph, came from a senior former Downing Street figure, who added no final decision had been made on the plan. But another Number 10 source told the paper: “This suggestion has no part in our plans.” In May, Brexit Secretary David Davis said the UK should walk away unless the divorce bill demand was dropped, adding that even €1 billion (£867,000) was “a lot of money”. He said: “We don’t need to just look like we can walk away, we need to be able to walk away.” Downing Street declined to comment when contacted by The Independent. Labour has previously ruled out working with May’s Conservatives on Brexit unless the PM comes clean with the British public about the realities of what a “bad deal”, or no deal at all, would mean for the country. “There is not going to be a consensus, unless there is honesty,” shadow Inter-national Trade Secretary Barry Gardiner told The Independent. Independent

Theresa May

Brexit-bound UK Withdraws From Fishing Pact London: Britain said on Sunday it is to withdraw from a 50-year-old agreement allowing some foreign countries to fish close to the UK coastline, fulfilling a key Brexit pledge. The deal pre-dates Britain’s EU membership and would therefore still have applied after the UK completes its divorce with the bloc, expected in March 2019. UK will trigger on Monday a two-year withdrawal period from the agreement, the London Fisheries Convention. The convention allows vessels from five European countries to fish within an area that is six miles off the UK’s coastline. “Leaving the London Fisheries Convention is an important moment as we take back control of our fish-ing policy,” Environment Secretary Michael Gove said in a statement. AFP

Total to Sign $4.8-Billion Gas Deal with Iran

Qatar Defiant as Deadline Nears to Resolve Gulf Rift

Tehran: French energy giant Total will finally sign its multibillion-dollar agreement to develop an Iranian offshore gas field on Monday, the oil ministry said, in the biggest foreign deal since sanctions were eased last year. “The international agreement for the development of phase 11 of South Pars will be signed on Mon-day in the presence of the oil ministry and managers of Total, the Chinese c omp a ny C N P C Total will and Iranian comput in an pany Petropars,” initial a ministry spokes$1 billion for the first man told AFP. stage of the T o t a l s i g n e d a preliminary 20-year deal with Iran in project November, taking a 50.1% stake in the $4.8 billion (4.2 billion euro) project. China National Petroleum Corporation (CN P C ) wi l l ow n 3 0% a nd Petropars 19.9%. Total will put in an initial $1 billion for the first stage of the 20-year project. It was initially due to sign the contract in early 2017, but CEO Patrick Pouyanne said in February that it would wait to see whether the US administration of President Donald Trump reimposed sanctions on Iran. AFP

Doha: A deadline was approaching on Sunday for Qatar to accept a series of demands made by several Arab states to lift a de facto blockade, with no indications Doha was ready to comply. Qatar’s Foreign Minister Sheikh Mohammed bin Abdulrahman AlThani said on Saturday that the 13 demands from Saudi Arabia and several of its allies were designed to be spurned. “The list of demands is made to be rejected,” Sheikh Mohammed said. “ E ve r yo n e i s aware that these demands are meant to infringe the sovereignty of the state of Qatar,” he said at a news conference in Rome after meeting his Italian counterpart. “The state of Qatar... is rejecting it as a principle,” he said, adding: “We are willing to engage in providing the proper conditions for further dialogue.” Saudi Arabia, the United Arab Emirates, Bahrain and Egypt announced on June 5 they were severing ties with their Gulf neighbour, sparking the worst diplomatic crisis to hit the region in decades. They accused Doha of support-

Crossword

YOUR DAILY DIET OF FUN AND FACTS

UK’s 999: World’s Oldest Emergency Number Turns 80

Brexit: May ‘Could Walk Out of Negotiations’ Over EU’s Divorce Bill

ing extremism and of being too close to regional arch-rival Iran, which Qatar has strongly denied. The crisis has raised concerns of growing instability in the region, home to some of the world’s largest energy producers and several key Western allies hosting US military facilities. On June 22 the Arab states presented a list of demands and gave Doha 10 days to comply. The ultima-tum is expected to expire at the end o f t h e d ay o n Sunday, though the deadline has not been officially confirmed. Riyadh and its supporters have already severed air, sea and g round links with Qatar, cutting off vital routes for imports including food. Qatari citizens were ordered to leave the countries and various steps were taken against Qatari companies and financial institutions. It is unclear what further measures will be taken if Qatar fails to meet the demands, but the UAE am-bassador to Russia Omar Ghobash warned last week that further sanctions could be imposed. AFP

On June 22, Saudi Arabia, the UAE, Bahrain and Egypt presented a list of demands and gave Doha 10 days to comply with

6176

US States with the Fattest Cats & Dogs According to a new study, Minnesota is full of fat cats. The research was conducted by Banfield Pet Hospital and it found that over the past decade, the number of overweight cats and dogs in the US has ballooned 169% and 158%, respectively. Cats 46%

Dogs

Minnesota

Minnesota

Nebraska

Nebraska

40%

Iowa

Michigan

38%

40%

Idaho

Idaho

38%

43%

41% 39%

36%

39%

Delaware

Nevada

39%

Michigan

New Mexico

34%

38%

Nevada

Washington

34%

38%

Kansas

Utah

34%

37%

Utah

Indiana

34%

37%

New Mexico

Oregon

34%

Wonder Woman is DC’s Highest Grossing Movie Gal Gadot starrer Wonder Woman, which has broken the ground on the superhero market for females, has become DC’s most successful film ever. With box office collection $334.9 million, the Patty Jenkinsdirected movie earned the title of the highest grossing film within the DC Extended Universe, reported Entertainment Weekly. The DCEU includes films such as Man of Steel, Batman v Superman: Dawn of Justice and Suicide Squad. Wonder Woman now has the most box office dough of them all as far as domestic audiences go. Batman v Superman earned $330.36 million domestically throughout its theatrical run. But, the Ben Affleck-Henry Cavill starrer is still ahead in terms of its international box office collection. PTI

Source: Statista

QUICK HITS

Around the World  17

Pakistani Man Defrauds Bank of Millions A 39-year-old Pakistani salesman in Dubai has been accused of defrauding a bank of Rs 3.1 million in personal loan and credit card by using forged papers. The salesman was said to have approached the local bank’s Sudanese sales representative and provided him with several forged papers as he applied for a credit card with dirham 50,000 (over Rs 0.8 million ) limit in August 2016. The bank’s representative collected the papers and forwarded them to the department concerned, according to records, before the approval came and the man was handed the credit card, the Gulf News reported. Two months later, he paid the bank a second visit and applied for a dirham 130,000 (over Rs 2.2 million) personal loan, the approval of which was issued based on similar papers. Shortly after the money was deposited in the man’s bank account, the management discovered the forgery in the submitted papers and reported the matter to the police. The man had been apprehended earlier for a similar incident. PTI

Dilbert

by S Adams

https://telegram.me/TheHindu_Zone

https://telegram.me/PDF4EXAMS

18  Economy: Macro, Micro & More Niti Aayog Proposed Total Privatisation From Page 1

Air India’s three profit-making units are lowfare international carrier Air India Express, ground-handling unit AI Transport Services and AI-SATS, a 50:50 ground-handling JV with Singapore Airport Terminal Services. The government decided to sell Air India after hopes of the airline’s revival turned bleak, with losses of more than `. 50,000 crore and debt of about `. 55,000 crore continuing to accumulate. The carrier is afloat thanks to a `. 30,231-crore, nine-year bailout programme approved by the previous government in 2012. The Tata Group and low-fare carrier IndiGo have shown interest in acquiring Air India. While the Tata Group has not made its interest official, IndiGo has written to the aviation ministry saying it may bid for the airline. IndiGo president Aditya Ghosh said in a letter to employees that its “interest in Air India is primarily in its international operations.” IndiGo cofounder Rakesh Gangwal has significant experience with turnarounds as former CEO of US Airways. He has also dealt with airline unions, which might come in handy in any possible acquisition of Air India. The Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi approved the recommendations of Niti Aayog on strategic disinvestment of Air India and five of its subsidiaries based on the recommendations of the Core Group of Secretaries on Disinvestment. The government may look at exiting Air India completely. The Niti Aayog proposed total privatisation of the national carrier in a report to the Prime Minister’s Office.

THE ECONOMIC TIMES | NEW DELHI / GURGAON | MONDAY | 3 JULY 2017

Monsoon Showers 6% Above-Normal Rainfall Southwest monsoon advances over NCR and the Himalayan states; conditions remain favourable for its normal course: IMD [email protected]

New Delhi: The southwest monsoon advanced over the National Capital Region (NCR) and most parts of Jammu & Kashmir and other Himalayan states. It is expected to race ahead and cover the rest of the country, including western Rajasthan, in the next two weeks. Rainfall on Sunday was 50% above normal in most regions except the southern peninsula. The eastern states of Bihar and West Bengal, where the monsoon has been deficient so far, received heavy showers on Sunday. “The southwest monsoon has further advanced into some more parts of Rajasthan and Himachal Pradesh, remaining parts of Madhya Pradesh, Uttar Pradesh and Uttarakhand, entire

National Capital Region and some parts of Haryana,” the India Meteorological Department said on Sunday. The monsoon made a delayed entry into Delhi, where the normal date of its arrival is June 29. “It is because of Rainfall on Sunday was insufficient rainfall in Bihar and 50% above east Uttar Pradesh normal in most regions that the monsoon was delayed in Delexcept the southern hi,” said a senior peninsula IMD official. This lag, however, is unlikely to affect its performance over the country, another IMD official had told ET last week. The monsoon made an advanced entry in Kerala on May 30 and

has recorded 6% above-normal rainfall in the country since June 1, according to IMD data. “Due to insufficient rainfall over Delhi-NCR, we were hesitant to declare monsoon here. However, there has been enough rainfall in the region over the past two days,” the official added. Conditions remain favourable for the normal course of the southwest monsoon in the country, the IMD official said. The normal date for the monsoon to cover the entire country is July 15 and it is likely to be on schedule this year, according to IMD officials. The national weather office said the widespread rainfall in Delhi-NCR until Monday may decrease in intensity, while in east Rajasthan, Uttar Pradesh and Uttarakhand, it is likely to continue

Govt Keeping Eye on Prices From Page 1

“State and central government officers are providing the required information to trade and industry. We have got encouraging reports from roadside dhabas and big restaurants as well as from kirana shops to departmental stores that have started getting acclimatised to the new tax system,” the finance ministry statement said. The ministry said 2.23 lakh new dealers have entered the Goods and Services Tax Network system since June 25 by filing draft appli-

cations. Of these, 63,000 have also submitted full details and among them, 32,000 dealers have been granted fresh registrations. Adhia himself issued several crucial clarifications through the day on Sunday on certain misconceptions about various provisions of the new tax.

cerned are keeping a close tab on implementation. Cabinet secretary PK Sinha reviewed the situation on Sunday with revenue department officials. He has called a meeting with officials of other departments and ministries on Monday to take stock of sector-wise implementation of GST, said the official.

CLOSE MONITORING

The government plans to educate consumers about the comparative incidence on key commodities between GST and the previous tax regime, an official said, adding that it is also keeping an eye on prices. Officials in the ministries con-

ONE NATIONAL MARKET

Commercial tax check-posts at the borders in many states were dismantled, allowing for free movement of goods. “This commercial tax checkpost has been closed,” read a signboard at one such border

Rainfall Between June 1 and July 2 Region

Actual Rainfall (mm)

Normal Rainfall (mm)

% Departure from LPA

East & Northeast India

322.5

381.1

-15%

Northwest India

117.9

79.0

49%

Central India

199.6

183.1

9%

South Peninsula

182.3

173.1

5%

Country

190.7

180.7

6%

for another two to three days. Above-normal rainfall over most parts of northwest, central, east and northeast India and some parts of the west coast till the

middle of this week is likely to continue. Barring east and northeast India, the country has received abovenormal rainfall since June 1.

post. “The feedback is that queues have disappeared,” said a government official. In the previous tax regime, trucks had to queue up at borders for hours to pay octroi or some similar entry tax levied by states. All such levies have been subsumed in GST. GST combines 17 state and central taxes besides 23 cesses into one levy to create a seamless national market in the country. The customs department, which began collecting Integrated GST along with filing of bill of entry and shipping, has seen smooth operations, two senior officials said. Software issues cropping up due to the change in entries with GST were immediately addressed as offices remained open. There was only a one-

hour, late evening closure to update the software. “Cargo movement has been smooth,” one of the officials said. NO SHORTAGES

There are no reports of shortage of supplies of essential commodities and medicines from anywhere in the country, officials and experts said. The Confederation of All India Traders, a key association of traders across the country, said business activities remained normal and smooth with footfalls of customers in commercial markets and shopping complexes remaining normal. Tax experts agreed that the implementation of GST has been largely without hiccups. “The rollout has been broadly smooth… No shortage of supplies,” said Bipin Sapra, a partner at EY, while pitching for sectoral guidance to further help industry. “It’s good to see there have not been any major disruptions in business. The government’s massive outreach programme in the past few months seems to be paying off now,” said Pratik Jain, leader, indirect tax, at PwC, also adding that the government must quickly come out with sector-specific guidance for which groups were formed. The industry wants to see the first set of filings before giving the new tax a thumbs up. “The acid test of the systems would be from September 10 onwards when the filing starts and the Goods and Services Tax Network will provide us our purchase registers,” said CAIT national secretary-general Praveen Khandelwal. Khandelwal also sought expeditious resolution of GST in Jammu & Kashmir, the only state that has remained outside the ambit of the new regime. He said this was hurting not only the trade but also consumers in the state.

7th Pay Commission Allowances to Bump Up Inflation Temporarily: Report New Delhi: The Seventh Pay Commission and implementation of GST has put inflation in an uncertain zone, and prices are expected to rise temporarily, says an HSBC report. Both GST and HRA increase have kicked in from July 1 and though the pay commission allowances are likely to bump up inflation, the Reserve Bank is expected to cut repo rate by 25 bps in its August meeting. The HSBC report said as the centre implements HRA increase, headline inflation is likely to rise by about 65 bps for a year and if the states follow suit and implement the increase as one block, inflation would rise by another 65 bps. — PTI

Artificial Intelligence in Workplace From Page 1

In his address, chief guest and former Microsoft chairman Bhaskar Pramanik compared the present day corporate work culture to that of his early career with companies like DCM and Nelco. “These old companies were hierarchical, but there are some things they had in common with today’s best companies. The peer environment was excellent, the quality of people was the best and there were great opportunities for learning,” he said. On the subject of the increasing use of artificial intelligence in the workplace, Pramanik said that it is the middle level jobs that will be performed by robots. “We will always need people for work that requires lifting and moving, and also for higher level jobs that need creativity and intuition,” he said.

Listing Obligations From Page 1

An hour after this communiqué, Yes Bank told stock exchanges that the QIP was being deferred. Between March 25, 2016 and April 7 that year, the stock had surged 67%. On September 15, 2016, ET had reported that Sebi had called investment banks to point out their failure as issue managers. With the formal show-cause notices issued this month, the regulatory action is heading for a closure. “Fortunately for i-banks, the regulator has not yet questioned any possible irregularities related to market manipulation or insider trading. Broadly, they have been asked to explain their stand on two matters: First, on April 27 (2016), Yes Bank told exchanges that the board had approved in a meeting held on the same day that $1billion would be raised on one or more tranches. But I-banks should have pointed out that there was no pre-intimation, as is required by law, two days prior to April 27 that there would be a board meeting. Second, I-banks should have explained Yes Bank that Sebi rules do not necessarily require the issue to be kept opened for three days,” said another person. LODR MANDATE

Section 29 of the listing obligations and disclosure rules (LODR) mandate a company to inform stock exchanges at least two days in advance that it is holding a board meeting to consider fund-raising. It also has to give a two-day notice for a meeting that will decide the price of such fund-raising. “Merchant bankers are required to do certain due-diligence. They were in turn being advised by Shardul Amarchand Mangaldas, a top law firm. Sebi wants to know the kind of advice the Yes Bank management received from its bankers. Why didn't merchant bankers bring up the issues to Sebi? Why Sebi had to ask them based on media reports? I-banks often refrain from voicing their views clearly, fearing it could put off a good client,” said the person. The legal advice received by a merchant bank serves as the latter’s ‘due diligence’. A spokesperson for Motilal Oswal Investment Advisors said, “As this is a regulatory matter, we cannot comment on this.” The CLSA spokesperson declined to comment while there was no response from Goldman Sachs to ET’s email query.

https://telegram.me/TheHindu_Zone

https://telegram.me/PDF4EXAMS

Sports: The Great Games  19

WWW.ECONOMICTIMES.COM

MEN

UNPREDICTABLE AND OPEN-ENDED

India Rout Pakistan Bisht’s 5-for dismisses arch-rivals for a paltry 74 as Women in Blue win third consecutive match

WOMEN

No Favourite But Without Serena, Federer Best Bet Anyone Can Win

MAIDEN OVERS SNEHAL PRADHAN Former India Cricketer

M

Garbine Muguruza

Roger Federer

Nick Bollettieri Christopher Clarey As everybody back at the IMG Academy in Florida knows, I’m rarely short of an opinion. However, I have a Only two women playing in the Wimbledon singles tourterrible confession to make. Wimbledon is just two days nament this year have won the singles title. away and I have no idea who is going to win the men’s Neither is Serena Williams, which makes for quite a casingles title this year. reer opportunity. “When Serena is not around, the field is I can never remember going into a Wimbledon where definitely wide open,” said Martina Navratilova, the ninethere were so many question marks alongside so many time Wimbledon singles champion, who once was even players. To me there just isn’t a single stand-out favourite. more dominant than the seven-time champion Williams Andy Murray? He’s had an in-and-out year and now at the All England Club. there’s a doubt about his fitness. Novak Djokovic? He With Williams pregnant and out until at least next seahasn’t been at his best for quite a while either. Rafa son, the two former champions in the draw are Petra Nadal? Well, the king of clay just hasn’t done it on grass Kvitova and Williams’ older sister, Venus. in recent years and you never know how his creaky Venus Williams and Kvitova, for different reasons, will knees are going to be. be sentimental favorites. Both, for different reasons, are If I had to put my neck on the line I would’ve to go for dealing with more than forehands and backhands. Roger Federer, who has made such an astonishing Kvitova has made one of the great comebacks in a sport comeback this year. Boy, he gives encouragement to all that seems to have cornered the market in comebacks, but us veterans in our daily lives. it is unclear how much the effort has taken out of her I know how much Brits will be hoping that Murray can physically or emotionally. She withdrew from the grassget his mojo back and it seems strange to be talking court tournament in Eastbourne, England, last week, citnegatively about a guy who has won Wimbledon twice, ing an abdominal strain. is one of the great grass-court players of his time and is Williams, 37 and preparing to play in her 20th currently world No 1. Wimbledon, is having the finest season of her late-career But you have to say that Andy is not in the shape he was phase, but she was involved in a car crash going into this tournament 12 months ago. in Florida in early June that led to the To me the big differences in his game compared with last year are his movement, death of an elderly passenger in the other which isn’t what it was, and his court posivehicle, according to a police report released last week. Her lawyer issued a tioning. He’s standing too far behind the statement saying she had not been at baseline and just doesn’t look as confident fault, and as of Friday, Williams had not as he did when he played further forward, been cited or charged. The crash, howevtaking the ball early, sneaking into the net er, remains under investigation, accordand hitting great drop shots. ing to the police in Palm Beach Gardens. I can only speculate as to why Andy hasn’t In any event, Williams has arrived at been at his best for much of this year, but I Wimbledon along with all the younger suspect that it may well be due to the shingles he went down with after the Australian women who have a better-than-usual Open. I wonder if in some way he is still chance in Serena’s absence. paying a price for that, because it can be a There are new threats like Jelena big drain on your energy. Ostapenko, the surprise French Open For me the biggest question mark at this champion. There are established threats total prize purse Wimbledon hangs over Nadal. Holy like Garbiñe Muguruza and Angelique smoke, if he’s going to play on grass like Kerber, the struggling top-ranked player, he’s played on clay this year, they could who have both lost Wimbledon finals to just hand him the trophy now and we Serena Williams. could all head for the beach. There are dangerous and unpredictable for the singles Rafa has added two big things to his outsiders like the Americans CoCo champion game this year. His serve has improved Vandeweghe and Madison Keys, and the and he seems to have added even more rising Kristina Mladenovic of France. power to that incredible forehand. He There is the imposing Karolina Pliskova, loves grass — remember, he got to the fithe No. 3 seed whose flat-hitting game for first round losers nal at Wimbledon every year he played looks well suited to Wimbledon but between 2006 and 2011 — but unfortunatewhose results there have yet to reflect ly for him his knees don’t. He’s had some shocking dethat. feats on the green stuff in recent years. Kvitova, who won Wimbledon in 2011 and 2014, does have At this stage 12 months ago I thought Djokovic was just the advantage, like Navratilova, of being left-handed. about the most perfect player of all time in that he didn’t Above all, she can create acute angles and big openings have a weakness and did everything so well. Something with her flat, often overpowering groundstrokes. has gone seriously wrong since then, but if anybody can That Kvitova can do this only six months after being attacked and suffering career-threatening knife wounds to get him back to where he was it’s Andre Agassi. her left hand is remarkable. The thing about Andre is that he subsequently sank Kvitova, who was slashed by an assailant in her home in much further than Novak has, but then got back to No 1. He the Czech Republic last December, won the title at the knows what it takes to do that. Aegon Classic in Birmingham, England, last week in only Nobody outside the “Big Four” has won Wimbledon her second tournament since her return. since 2002 and if they are to maintain that stranglehold Kvitova is seeded 11th and has a promising draw. Her then it may well be down to Federer. Seeing him win the title in Halle last weekend, when he first-round opponent is Johanna Larsson, a Swedish veteran who is 0-6 in singles at Wimbledon. ran rings around a man 15 years his junior to beat Venus Williams, seeded 10th, is set to face Elise Mertens, Alexander Zverev, was like watching the clock turn back. a Wimbledon singles rookie, in the first round. Williams He has so much energy he’s like a little kid who jumps up has not played since the French Open, which is her cusand down and runs around the house the whole day long. I love the way Roger never shows his emotions and altomary preparation. She played no warm-up tournaways respects his opponents. He’s a champion off the ments on grass when she won Wimbledon in 2000, 2001, court too with the time he spends with his family and the 2005, 2007 and 2008, choosing to train in Florida on hard work he does for his foundation. Everyone in tennis should courts. She has had a fine season, beginning with a run to look at his example and learn from it. the final of the Australian Open, where she lost to Serena. Nick Bollettieri, 85, has coached But in this particularly wide-open Wimbledon, there are ten world No 1s over his career. also so many others who just might rise to this occasion.

PRIZE MONEY

£31.6m £2.2m £35k

The Independent

The New York Times

ost of the players in the Indian women’s cricket team grew up playing one or the other avatar of gully cricket. There is underarm cricket, one-side cricket and, most people’s favourite, one-tip-one-hand cricket. There is also tip-and-run — if the ball touches the bat, you have to run. It demands more than just good batting, it demands smart batting. The batter must maneuver the ball into gaps, play with soft hands, and not depend on boundaries. Now, they have left gully cricket far behind. They are playing a World Cup on the lush outfields of faraway England. They are on a winning streak. Against Pakistan on Sunday, they notched up their third win on the trot. Their total of 169 was well below par, but it proved enough for India’s spinners, who have done much damage in the tournament. At the County ground in Derby, they took seven of the 10 wickets, handing India a 95 run win. But the win was not without some anxious moments. At one stage, Pakistan’s tight bowling and brilliant fielding had restricted India to 111 for six in the 37th over. It was here that tip-and-run cricket would have served them well. After Smriti Mandhana fell early — beaten for pace by the impressive Diana Baig — Punam Raut and Deepti Sharma plodded along. In the first 10 overs, the batters played 52 dot balls to take the score to 17 for 1. If you don’t want to do the hard math, that’s just eight scoring shots in 60 balls. The run rate improved slightly for the next 20 overs, with Punam Raut lifting her strike rate from below 30 to above 60. But her wicket preceded a mini-collapse, with India four down at the 30th over for 99. Harmanpreet Kaur and Mona Meshram tried to rebuild, but they seemed to have only two modes: strong attack or strong defence. Meshram, in particular, could not pierce the infield and did not play with soft hands. After Harmanpreet drilled a pull to midwicket, Meshram succumbed to the pressure she created — out for 6 off 35 balls. Overs 31 to 40 saw another 48 dots.

VITALS Confed Cup: Portugal Beat Mexico to Third Place

An extra-time penalty from Adrien Silva gave Portugal a 2-1 win over Mexico and third place in the 2017 Confederations Cup on Sunday. Portugal, who missed a spot kick given thanks to the video assistant referees 16 minutes into the match, were awarded a second penalty after 104 minutes when Miguel Layun handled the ball. Adrien Silva converted the kick to give the European champions a hard-fought victory. The win came after Pepe saved his side with an equaliser in the 91st minute, hurling himself at a cross to knock the ball past Man of the Match Guillermo Ochoa with the sole of his boot.

Hat-trick for Teenage Debutant, SL Beat Zim Teenager Wanidu Hasaranga took a hat-trick on his international debut as Sri Lanka took revenge on Zimbabwe with a seven wicket drubbing in their second ODI on Sunday. Sri Lanka bowled out Zimbabwe for 155 — with Hasaranga one of the heroes alongside fellow-spinner Lakshan Sandakan and his four wickets. The home side then reached 158-3 in 30.1 overs with Upul Tharanga unbeaten on 75. Nineteen-year-old all-rounder Hasaranga, one of three changes made after Sri Lanka lost the first international by six wickets on Friday, bowled only 16 balls but tore through Zimbabwe’s tail. The third game in the series is on July 6. The two sides will also play a Test during Zimbabwe’s tour. PUBLISHED FOR THE PROPRIETORS, Bennett, Coleman & Co. Ltd. by Rajeev Yadav at Times House, 7, Bahadur Shah Zafar Marg, New Delhi-110 002, Phone: 011-23302000, Fax: 011-23323346 and printed by him at Times of India Press, 13 & 15/1, Site IV, Industrial Area, Sahibabad (UP). REGD. OFFICE: Dr Dadabhai Naoroji Road, Mumbai-400 001. EDITOR (DELHI MARKET): Javed Sayed (Responsible for selection of news under PRB Act). © Reproduction in whole or in part without written permission of the publisher is prohibited. All rights reserved. RNI NO. 26749/74 | MADE IN New Delhi | VOLUME 45 NO. 131 AIR CHARGE Raipur, Ahmedabad, Srinagar, Leh & via `. 2.00 | PRICE IN NEPAL: NEP `. 15.00 except Saturday & Sunday : NEP `. 25.00

Horn Stuns Pacquiao Nick Mulvenney Australia’s Jef f Hor n stunned Filipino Manny Pacquiao in a bloody Brisbane battle to claim a unanimous 12-round decision and win the WBO world welterweight title in front of 50,000 fans at Lang Park on Sunday. The unheralded 29-year-old former schoolteacher, who improved his record to 17-0-1, was awarded the win over the eight-division world champion by scores of 117-111, 115-113 and 115113. “I’m so happy, I can’t explain my feelings,” Horn said at ringside, before welcoming the prospect of a rematch. “I’ve just believed since I was very young that I could do this.” Pacquiao, one of the finest boxers of his generation, paid the price for a slow start and his inability to end the fight with a knockout. The 38-year-old was knocked off his

stride by the aggression of the taller and heavier Australian in the early rounds but looked to have weathered the storm as the fight wore on and Horn tired. With blood pouring from both sides of his forehead after accidental butts, the southpaw launched a fierce assault on Horn which nearly ended the contest in round nine. “Show me something in this round, or I’m going to stop the fight,” the referee warned the Australian. Horn, who was cut above his right eye in round two, said he had been exhausted and rattled by the Filipino’s punches. “It was hard, hard getting through that round, hard getting hit, getting caught with a shot and then continue on,” Horn said. “(But) I was like ‘settle down everyone, I’m fine’. I was recovering pretty quickly.” ‘PEOPLE’S CHAMP’

The Australian showed remarkable

AFP

Filipino loses WBO welterweight world title as he accepts controversial judges’ decision

Manny Pacquiao after losing the fight

powers of recuperation as he battled gamely on through the final three rounds with Pacquiao, who earned the last of his 38 knockouts in 2009, unable to capitalise on his dominance. The bout ended with the fighters in a clinch on the ropes and although Pacquiao gave a little shuffle and a grin to show he had plenty left in the tank, his fate was in the hands of the judges. “Very tough. I didn’t expect

that tough,” said Pacquiao, whose record now reads 59-7-2. “It’s okay, it’s part of the game. That’s the decision of the judges, I respect that.” Pacquiao, who had hoped for an impressive victory to fire talk of another fight against Floyd Mayweather Jr, said he would “absolutely” return for the contracted rematch against Horn. An emotional Horn brandished a walking stick as he also called out the undefeated Mayweather, who has come out of retirement at 40 years of age for a 12-round crossover boxing match against mixed martial arts champion Conor McGregor. “This is no joke, which one does he want? The walking stick or the gloves?” the Queenslander said. The loss stunned people in the Philippines, where Pacquiao, now a high-profile senator, has long been a national hero. Philippine President Rodrigo Duterte’s spokesman, Ernesto Abella, said the loss “would not diminish the honours he bestowed to the people and to the flag”. “Nothing will change: Senator Manny Pacquiao will remain our People’s Champ,” Abella said. Reuters

Pakistan’s Diana Baig was Ekta Bisht’s fifth victim — AP

Sushma Verma and Jhulan Goswami made something of a fight-back. Their 34-run partnership propped India up. Verma, who previously had only 14 ODI runs and a career high of 4 not out — showed that she can be trusted with the bat, and made a case for promotion up the order. She showed restraint coupled with intent, nudging the ball to the leg side at first, and later using the sweep to pick up singles. Her 33 off 35 balls, with one six over midwicket, was the second highest — but most important — score, after Raut’s 47. Goswami, batting for only the third time in her last 10 ODIs, showed the batters how to keep the scoreboard ticking. All of her 14 runs came in singles, dropped into the infield with soft hands or driven past the bowler. The final score of 169 was about a hundred runs less than what India would have wanted. The bowlers in turn, rose magnificently to the challenge. They did the simple things right, like targeting the off stump, and getting the batter forward. Given the new ball as she so often is, Ekta Bisht took three wickets in her first three overs, and all three seemed

to come out of a photocopy machine: batter playing for turn, ball sliding on to hit the pad. It was a back-breaking spell, especially against a Pakistan team who have lost their best batter to injury. They never recovered, sliding to 74 all out in the 39th over, with Bisht picking up five wickets to become India’s fifth highest wicket taker in ODIs. India emerged from the scrap with two points, their third consecutive win, and some questions. It could be that the pressure of occasion — with loud support for both teams coming from the 2600 strong crowd — held the batters back from expressing themselves. Whatever the reason, India have two days before their next game against Sri Lanka to sort it out. Perhaps a few games of tip-and-run are in order.

SCORECARD INDIA 169/9 (Punam Raut 47, Sushma Verma 33; Nashra Sandhu 4/26, Sadia Yousuf 2/30) PAKISTAN 74 all out in 38.1 overs (Sana Mir 29, Nahida Khan 23; Ekta Bisht 5/18, Mansi Joshi 2/9)