Innholdsfortegnelse for 24-Feb-19 i Business Today

IS INDIAN GDP data going the Chinese way? A day before Interim Budget 2019/20, the Central Statistics Office released surprising GDP growth numbers - 8.2 per cent for 2016/17 and 7.2 per cent for 2017/18 – when the economy was hit by both demonetisation and GST. The earlier numbers were 7.1 per cent and 6.7 per cent, respectively. The revision is due to new agri and industrial production, government expenditure data. “We are slightly surprised by the extent of the revision in construction and real estate,” says Kotak’s research team. These sectors were hit by the note ban and GST. SBI’s research department said, “A surge in consumption expenditure in 2016/17 is possibly because of people unlocking cash and converting it to purchases.” The revised data scores a point that average…

IT CLEARED HER last March and then sacked Chanda Kochhar in end-January, even withdrawing future entitlements. But why did the ICICI Bank board wait 10 months to act against its erstwhile CEO? Earlier, expressing full faith in Kochhar, it said there was no question of any quid pro quo, nepotism, or conflict of interest. On the Videocon scandal, ICICI functionaries went on record that the loans were sanctioned by a committee that included, the then ICICI Bank chairman (not Kochhar). No individual employee irrespective of position has the ability to influence credit decisions at the bank, was another much repeated statement then. Kochhar reacted to the dismissal saying none of her "credit decisions” were unilateral. The question is was the ICICI Bank board under pressure to clear Kochhar then? And,…

TRADE & TIE-UPS WHAT: India-ASEAN Expo and Summit WHEN: Feb 21-23, Delhi WHAT TO LOOK FOR: Organised by FICCI and supported by the Indian government, the summit will bring together ministers, government officials and business delegations from 10 ASEAN countries in a bid to promote trade and business partnerships. HIGH FLIERS WHAT: Aero India Show WHEN: Feb 20-24, Bengaluru WHAT TO LOOK FOR: The event will showcase a major trade exhibition of aerospace and defence industries as well as public air shows, and attract global leaders, big investors and think tanks. Around 500 companies and 15 lakh visitors are expected to attend, giving a fillip to the Make-in-India initiative. GENETICS WHAT: India-EMBO Symposium WHEN: March 10-13, Chennai WHAT TO LOOK FOR: The platform will look at all aspects of genome-related…

WHEN RIDA JAVED, a student from Chandigarh, downloaded the Vigo Video app after watching it being promoted on a popular TV series, she had no idea that it would turn out to be a money-churner. After some thought, she started making short comic videos on the platform and they went viral. She has 1.8 million followers on the Chinese app, earned ₹6 lakh until now and plans to keep making the videos. Of late, several Chinese apps such as Kwai, Vigo Video, Bigo Live and TikTok have started operating in India and they are going all out to attract young people from Tier-II cities and beyond. Most of them make sure that video creators earn some money on their platforms although it is unclear how these companies earn revenues in…

When the government was drafting this year’s Budget, it seems the only thing it had in mind was elections later this year. No wonder then that when the interim Finance Minister, Piyush Goyal, unpacked his customary Budget suitcase, it had many goodies for the common man, farmers and workers in unorganised sectors. In what some of the critics called the cash-for-vote Budget, the government seems to have thrown fiscal prudence to the winds. In announcing a direct benefit transfer scheme for farmers — under which it plans to give ₹6,000 every year to 120 million farmers with landholding of less than 2 hectares — the government took an additional financial burden of ₹75,000 crore in the next financial year. Since the scheme has been made effective retrospectively, from January 1,…

This is, literally, an interim budget for half a billion people. At the core, it is socially sensible because it seeks to apply balm where the pain is. The steps taken to ensure social security through minimum income support for farmers, a rebate for salaried employees and a pension plan for informal workers are what people needed, and they have been a long time coming. Overall, the emerging perspective is a pleasant one. While generations of lower-to-middle income folks now get a decent handle on basic income and support for their sunset years, the Ayushman Bharat insurance scheme would take care of their healthcare worries as well. Additionally, affordable housing has got a mild tax boost. The Interim Budget thus ties up the final threads of a much-needed basic social…

THERE MAY NOT BE A chocolate river or the eccentric chocolate-maker Willy Wonka (like in Roald Dahl’s Charlie and the Chocolate Factory) to greet you as you walk into Amul’s new 1.5 lakh sq.ft chocolate factory at Mogar in outskirts of its headquarters in Anand, but the place surely entices visitors to indulge in chocolates without guilt. One walks from entrance to the production facility looking at life-size posters about therapeutic qualities of chocolates – that a piece of dark chocolate can keep heart disease away, that chocolates produce endorphins which make one happier, and that a dark chocolate drink can also help in post-workout recovery. The trivia on the walls will surely bring a smile on the face of chocolate lovers, especially the weight watchers. For the ₹41,000-crore Amul,…

“India is going to experience a big explosion in terms of content and types of stories”Gaurav Gandhi, Director and Head, Business, Amazon Prime Video, India THE STAGE IS SET; THE WARRIORS HAVE WARMED UP and the battle for supremacy has started. Not all will emerge winners, but the blow must go on, as they say in Narcos, the popular drug drama on Netflix. Eerily enough, India’s over-the-top (OTT) entertainment market closely resembles a Netflix trailer, especially a sequel entering a new season. Gone are the Hum Log-style family TV sessions and early YouTube days enjoyed by a lucky few with the device and Internet access (YouTube was not a pure-play OTT platform at the time and hence, not discussed here). A new season is on, with global giants Netflix and…

Q: What has UPS learned from years of responding to disasters? A: We focus not just on disaster relief but also on preparedness, post-crisis recovery, and supply chain logistics. We need to play to our strengths to have a multiplier effect. This is not sudden-onset activity that starts when there’s a disaster. We devote funding, expertise, and engagement to it year-round. UPS is a logistics company, so it’s obvious how it can help. What about an accounting or a consulting firm? Every private-sector company can play a role. Humanitarian relief agencies need consultancy and technology support. And companies operating in at-risk areas need to become more resilient. A study in New York City after Hurricane Sandy found that 30 per cent to 40 per cent of the small and medium-size…

AMAZON IS FOCUSSING on entirely automated stores where customers can walk in, pick up items and walk out to pay later through their Amazon Pay accounts, but other retailers are yet to catch up. Of course, there are self-service checkout machines in many places, but you may still end up in a queue if it is a busy store with too few payment points. Another alternative is to make shopping carts smart enough to scan and check out items. But that Holy Grail of retail has not been achieved yet although the quest for such a product has been on for well over 15 years. It started in 2002 when the US-based supermarket chain Safeway demonstrated a computerised sales vehicle that tracked where a shopper was within the store and…

THE NEED FOR INNOVATION to ensure fast and efficient processes has led to the use of artificial intelligence (AI) to identify abnormalities in heart rhythm. Although it is being done abroad, in the US, for instance, the protocol is yet to take off in India. As AI ensures rapid patient screening, it is critical in the Indian context where there are too few specialists. Implantable loop recorders are also used abroad for long-term remote monitoring, but very few medical facilities use them here as each device costs around ₹80,000 for three years. Now research is on to use remote monitoring in a non-invasive manner so that no implants are required, says Dr Padmanabhan.…

Billion Dollar Whale By Tom Wright and Bradley Hope Publisher: Hachette Book Group Pages: 400 Price: ₹699 FORMER MALAYSIAN PM, Najib Razak, is in jail on corruption charges. At least some of those charges relate to what is known as the 1MDB scandal. Tim Leissner, a former Goldman Sachs star who led its investment banking business in Asia, is facing charges in Malaysia that could put him behind bars for up to 10 years. Meanwhile, the man at the centre of l’affaire 1MDB, Low Taek Jho (known as Low Jho), is a fugitive who releases statements through his lawyers from time to time on his website. The Malaysian government is hunting for him, and so is the US government, and currently, there are rumours that he is hiding somewhere in…

AS BUDGETS GO, this one has a perfect focus – alleviating rural distress. That is also one of the two biggest problems facing India’s population. (The other one is jobs – but as the government has found out, high GDP growth is no longer leading to higher job creation.) In the run-up to the general elections, having recently lost three state elections because of farmer disenchantment, the government decided to try the last weapon in its armoury to woo them. It opted for a massive income support scheme – which would see each farmer with a landholding of less than two hectares get ₹6,000 in his account in a year. This is expected to benefit 12 crore small-and medium-farmer families. In fact, the government decided to bite the bullet, miss…

THE INTERIM BUDGET announced single-window clearances for Indian filmmakers who shoot in India, a privilege extended to international studios since 2015. Foreign studios, however, don’t view India as a filmmakers’ haven since we lack the talent and infrastructure global entities seek for production, and post-production work. The single window clearance will indeed make life easier for domestic filmmakers who currently need as many as 50-60 clearances from various authorities before they begin shooting for a film. The problem is India still doesn’t offer tax incentives for shooting in India, unlike many European countries and Australia. No wonder the Indian film fraternity prefers to shoot abroad – getting not just a cost advantage, but also access to high quality infrastructure and production talent. The question therefore in this case is not…

IN HIS BUDGET speech, Piyush Goyal claimed India would lead the world in the transport revolution through electric vehicles. He could have hardly found a more inopportune time to say this. In the past, India had similar dreams of becoming the world’s small car hub. That is already dying a slow death. Passenger vehicle exports are set to register the second straight annual decline in fiscal 2019 and so far this year, — nine months to December — passenger vehicle exports from India have declined by nearly 8.5 percent. Barring fiscal 2017, exports grew only in single digits the past three years, a far cry from 2007 - 2013 when export growth was 19 per cent per annum. Clearly, the momentum is lost. Reasons range from specific companies like Hyundai…

HUAWEI IN DEEP TROUBLE In a major development, the U.S. Justice Department has come up with 13 criminal charges against Chinese telecom firm Huawei and its CFO Meng Wanzhou. Huawei is accused of stealing trade secrets and violating economic sanctions on Iran. One indictment details its attempt to steal trade secrets from T-Mobile and offer bonuses to staff who stole confidential information from other companies. The US will also seek to have Wanzhou deported from Canada, where she was detained late last year as requested by the US. The charges came at a time when high-level talks between the two countries took place in Washington D.C. to reach a deal that could diffuse the US-China trade war after the temporary truce ends on March 1. FB SOARS; APPLE, TESLA ON…

In the middle of his Budget speech, Piyush Goyal, the interim Finance Minister, stopped to talk about a vision of the future. What would the NDA government do if it were still around in 2030? I “We have resolved many problems which were coming in the way of realising our full potential as a society and an economy. We are poised to become a $5 trillion economy in the next five years and aspire to become a $10 trillion economy in the next eight years thereafter,” he said. He went on to present a “ten-dimensional vision” that would eventually “create an India where poverty, malnutrition, littering and illiteracy would be a matter of the past. India would be a modern, technology driven, high growth, equitable and transparent society”. Much of…

With the availability of FY2018/19 revised estimate (RE), we now have an account of fiscal reforms under the NDA government from 2014/15 to 2018/19. A comparison between the final year of the previous regime (UPA II) and the corresponding year of the current government underlines the broad direction of fiscal reforms undertaken by the latter. Quite clearly, the Modi government focussed on augmenting the tax-GDP ratio throughout this period. With an expansion in the income tax base and the fall in global crude prices, especially in 2015/16 and 2016/17, it became possible to increase both direct and indirect tax revenues relative to GDP. From 2013/14 to 2018/19 RE, direct and indirect tax revenues increased by 0.7 per cent points and 1.1 per cent points of the GDP, respectively. Put together,…

Although the term Interim Budget suggests it, this clearly is not a Budget meant to have a short shelf life. It has managed to deliver pro-growth impetus and still maintained fiscal prudence by eschewing overt populism despite pressures to the contrary. The Budget has been able to provide a consumption stimulus for people who badly need it. Farmers will get it through a farm income package worth 0.26 per cent of the GDP stimulus and the middle class through income tax giveaways, accounting for 0.1 per cent of the GDP. But how good is the agri income transfer scheme? Each farmer is likely to get ₹6,250 in FY2019/20, which will be about 8 per cent of his income if we assume an annual income of ₹78,000 per farmer (as established…

“INDIA HAS SPACE FOR ANOTHER INSTITUTION ENTIRELY DEDICATED TO FINANCING SMALL ENTREPRENEURS AND CONSUMERS”V. Vaidyanathan MD & CEO, IDFC First Bank SANDY WEILL, THE FORMER Chairman of Citigroup, now in his mid-80s, had an exceptional five-decade-long career during which he rose from being a professional to an entrepreneur to head the largest bank in the world. Weill sold his securities business to American Express for a billion dollars in the 1980s and also became the president of the merged entity. After leaving American Express mid-way, he founded a small finance company, and went on to acquire some big Wall Street names like Primerica, Travelers and Salomon. But his biggest kill was merging his entire business with Citicorp. After close to a decade at Citigroup, Weill hung up his boots as…

The Hershey Company first entered India through a joint venture with the Godrej Group. How important was that partnership and what did you learn from it? Our vision is to make The Hershey Company an innovative snacking power house. We have been in the confectionery business for over 125 years as a leader in the US and globally, and we want to continue that growth as well as our portfolio. Our international strategy is important to our overall growth, and within that, India is critically important – it is one of our key focus markets. India is one of the fastest growing economies in the world right now. The chocolate category is $1.2 billion in revenue and is growing at 11 per cent (a year). We have been in India…

WITH TECHNOLOGY rapidly taking over our lives, you would expect to find a ‘tech copy’ or ‘tech-improved’ version of almost everything, right from chatbots to recreated artworks. But do we really need an artificial meteor shower, a breathtakingly beautiful celestial happening? Whether you like it or not, Japanese company Astro Live Experiences (ALE) has sent up a rocket to execute that feat for sheer entertainment. To many, Sky Canvas, as the rain of meteors is called, is a bizarre idea. ALE, however, describes it as the world’s first artificial shooting star project that aims to bring people together from all over the world to witness an unprecedented sight. “We aim to produce artificial shooting stars by projecting particles, made out of special materials, from orbiting micro-satellites,” the company’s website says.…

EXPENDITURE ON INDIA’S defence sector is expected to cross ₹3 lakh crore – for the first time ever – in 2019/20, interim finance minister Piyush Goyal announced in the last Budget speech of the current government. The minister also said that the government spent ₹35,000 crore on the One Rank One Pension scheme it introduced in 2015. But a closer look at defence expenditure numbers show that the government will end up spending more on pensions than bolstering India’s defence capabilities. For instance, the government is planning to spend ₹1.08 lakh crore on pensions as compared to ₹93,982 crore on capital outlay (capital spent on new equipment, aircraft et al). This has been the trend in previous financial years as well – 2017/18 and 2016/17. Although defence expenditure as a…

THE FACTS DON’T add up. While the government claims it’s creating more women entrepreneurs, data from the Centre for Monitoring Indian Economy (CMIE) suggests the opposite. The Interim Budget did its bit to encourage women entrepreneurs. Sourcing 3 per cent material from women owned SMEs is mandatory for the government now. Like last year, women comprise 70 per cent of MUDRA Yojana beneficiaries getting loans for new ventures. Data from the CMIE, however, says women’s participation in the labour workforce fell dramatically after 2016. In rural India it was 14.4 per cent in end 2016, 12 per cent in 2017, and 11 per cent in 2018. The drop-outs were mostly women from the lowest end of the spectrum - informal rural workers. There’s a clear contradiction in the numbers and…

IT’S A CATCH-22 situation for both the government and the pharma sector. The former has to act in favour of the common man where drug pricing is concerned. But rising input costs and “the government’s arbitrary” ceiling on prices has meant some drugs are fast vanishing from drug stores. Many brands of widely used medicines such as Telmisartan, Rabeprazole, Vitamin C, Furosemide are just not available. Smaller firms have been worse hit. After China shut down bulk drug producing units citing environment concerns, the cost of Active Pharmaceutical Ingredients (APIs) – accounting for almost 60 per cent of a drug’s price – shot up by almost 200 per cent. As a result, production is no longer viable for many smaller players though no exact figures are available on brands or…

FAILURE TO secure approval from 40 lenders, legal challenges posed by the department of telecom (DoT), and continuous litigation by other parties have sent debt-crippled RCom to the National Company Law Tribunal (NCLT) for bankruptcy proceedings. “Despite the passage of over 18 months, lenders have received zero proceeds from the proposed asset monetisation plans, and the overall debt resolution process is yet to make any headway,” RCom’s statement said. The company had been trying to conclude its ₹25,000 crore 2017 deal with Reliance Jio (owned by Mukesh Ambani). So far, RCom has completed ₹5,000-crore worth of transactions for its nodes and fibre assets. The proceeds from the Jio deal and from its plans to sell prime real estate in Mumbai and Delhi would have contributed to paring down debt of…

The reserve bank of India frequently cites a survey of household inflation expectations in its monetary policy statements to support its inflation projections. The underlying assumption is that the survey is a useful indicator of future inflation. But that is not the case. Our analysis shows that the household survey on inflation is backward-looking. The central bank’s reliance on these backward-looking inflation surveys is one of the key reasons why the RBI has been consistently failing to forecast the inflation downtrend over the past few years. The target share of respondent groups in the RBI’s inflation survey is heavily biased towards housewives. It is fairly reasonable to assume that housewives and even other respondent groups form their inflation expectations based on their experience. In our view, these inflation expectations are…

₹1 SHORTFALL LAKH CRORE LIKELY GST COLLECTION ₹1.3 LAKH CRORE BUDGET 2019 ALLOCATION FOR DEPT. OF AGRICULTURE Budget speeches in India, since the 90s, have rarely been about a simple laying out of revenue and expenditure statements of the government for the coming year. They have been used to announce major policy shifts, signal the government’s priorities for the coming year, and sometimes, to boast about the government’s achievements and pitch for re-election. Interim Finance Minister Piyush Goyal’s maiden Budget speech was an unabashed pitch for bringing the Modi government to power, not just for one additional term of five years, but till 2030. It was the longest interim Budget speech on record because a good part of it went into boasting about the government’s achievements and also about laying…

This was supposed to be an Interim Budget, but the announcements made here seem more significant than those we come across in many regular budgets. The government seems to be banking on giving more money to farmers and middle-income groups to spur consumption. But will it bring enough feel-good factor to the average citizen? Will it spur growth by increasing consumption? More importantly, will the income support scheme – the Pradhan Mantri Kisan Samman Nidhi – work as planned or will it soon put pressure on the government to increase the coverage to those who do not own land? Finally, has the government given up on the original fiscal deficit targets it has set for itself? Our experts examine the fine print and give their analyses. ASHU SUYASH CEO AND…

The government has finally decided to swim with the tide and accepted that the best way to help the agriculture sector is to reach farmers directly. Ever since Telangana announced its Rythu Bandhu (RB) scheme, the debate has centred upon the most effective way to reach farmers. In fact, after the victory of Telangana Rashtriya Samithi (TRS) in assembly polls held in December 2018, the media has led politicians to believe that nothing short of direct support to farmers can win elections. In this Budget, the Finance Minister has provided ₹21,100 crore from Pradhan Mantri Kisan Samman Nidhi for direct payment to small and marginal farmers at the rate of ₹6,000 per annum. Unlike most other schemes, including the flagship programmes of the government, the states do not have to…

IT’S BECOME ALL TOO CLEAR in recent years: Catastrophic acts of nature – hurricanes, tsunamis, earthquakes, wildfires – are happening more frequently and causing more destruction. The annual inflation-adjusted global cost of natural disasters has increased sharply, with the average from 2011 to 2015, reaching four times the average from 1980 to 1985. The number of people affected is rising, too, often exceeding 300 million in recent years. But traditional sources of funding for disaster recovery, from governments, non-profits, and NGOs, have not kept pace. Corporations have stepped in to take up the slack. In 2000, fewer than one-third of the world’s 3,000 largest companies donated anything to disaster relief, but by 2015 the share had surpassed 90 per cent, with the average donation having increased tenfold. Among the 500…

Income tax payers who were feeling ignored for the last two budgets have got a substantial relief in Budget 2019/20. After the significant steps in Budget 2014 to enhance basic income tax exemption limit from ₹2 lakh to ₹2.5 lakh and Section 80C deduction limit from ₹1 lakh to ₹1.5 lakh, and an additional ₹50,000 deduction on NPS investment in Budget 2015, the last two budgets did not have any relief for individual income tax payers. However, tax breaks for small tax payers in this Budget have brought back smiles to the common man. Pay no tax on ₹5 lakh income: One of the biggest takeaways is that those earning up to ₹5 lakh will not have to pay any tax. “In the interim Budget, the finance minister has given…

IF YOU PREFER advantage of an assured buyback selling your old phone while buying a new one but do not want to get into a lengthy haggle over the best price for your old device, you should take programme offered by many sellers. Assured buyback by e-commerce players promises customers a buyback price right at the time of the purchase. In most cases, buyers are asked to subscribe to this option by paying a little extra at the time of the purchase. When you plan to avail it, inform the e-commerce company. It will collect the device from home, do quality checks right there and soon you will get the buyback money in your e-wallet which can be used while buying a new phone from the same seller. However, you…

On a bright Saturday afternoon, 85 golfers teed off at the Madras Gymkhana Golf Course for the Business Today-Tamil Nadu Global Investor Meet Golf Tournament. Played on Stableford format with Double Peoria handicap, the afternoon witnessed some outstanding golfing action with players competing for both individual as well as team prizes. The day’s action culminated with the prize distribution ceremony followed by dinner. The winning team, comprising of JayavelanT. (William Gregor), Commander K. Udaya Prakash (Sameera Estates), Varadhan S. (M/s Sankarraman & Dandapani Chartered Accountants) and Dr Rajan Krishnamoorthy (Metro Scans And Diagnostics, St Isabel’s Hospital), prevailed with a combined score of 95 points The Runners Up team, comprising of Venkataramana J., Venkatraman Krishnan, Niranjan Mardi (Addl. Secy, Govt of Tamil Nadu) and D.P. Yadav (Secretary, MSME), finished with 91 points.…

The 5 AM Club: Own Your Morning, Elevate Your Life By Robin Sharma Jaico Publishing House Price: ₹350 The Subtle Art of Not Giving a F*ck By Mark Manson Harper Collins Price: ₹499 Attitude Is Everything: Change Your Attitude… Change Your Life! By Jeff Keller Collins Price: ₹199 21 Lessons for the 21st Century By Yuval Noah Harari Jonathan Cape Price: ₹799 Get Better at Getting Better By Chandramouli Venkatesan Penguin Portfolio Price: ₹299 *Top books by sales for January 1-29, 2019; Includes only books released after Jan 1, 2015; Information provided by amazon.in…

Q. The biggest challenge you faced in your career A. Getting stuck in your comfort zone is the biggest obstacle. I relocated to the Middle East very early in my career but had limited knowledge of the market, people and the culture out there, and it made me challenge myself. Similarly, when I was setting up a shared service model for a global tech company, getting people on board and dealing with cultural differences gave me the biggest learning opportunity. I believe that the most challenging times bring us the most empowering lessons. Q. Your best teacher in business A. In a career spanning three decades, I learnt technical skills, business strategies and life lessons from exceptional leaders. But the best lessons came when I moved out of my comfort…