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August 9 - August.15, 2019, SINGAPORE/KUALA LUMPUR ° WWW.MINTASIA.COM

INSIDE mintasia

SPECIAL STATUS FOR

KASHMIR SCRAPPED
On 5 August, India abruptly ended the special status enjoyed by the border state of Jammu and Kashmir and split it into two federally
administered territories, amid a military lockdown, house arrests and a communication blackout in the restive Kashmir valley. Revoking
Article 370, which accorded a certain amount of autonomy to India’s only Muslim-majority state for more than six decades, has been on
the ruling Bharatiya Janata Party’s agenda for long. The step, executed in less than a day with little debate, has drawn praise and
criticism from across the country in equal measure. MintAsia reviews the unprecedented move by the Indian government > Pages 20-22

VIEWS MARK TO MARKET

The Gadkari plan for behavioural
change on roads
The amendments to the existing law piloted
successfully through Parliament by the minister
will provide the ecosystem to effect the desired
change, writes Anil Padmanabhan > Page 23
The capital adequacy norms for
banks could do with revision
RBI could use the mechanism of countercyclical
capital buffers to ease credit conditions in India,
writes V. Anantha Nageswaran > Page 23
With no friend in sight, India stock
markets may face further derating
Ongoing tensions over the trade war between
the US and China weigh on market sentiment
> Page 30
Individual loans hold fort at HDFC > Page 31
Government action is key for any course
correction in the auto sector > Page 32

India’s competition policy must LEISURE

RBI cuts repo rate by 35 basis points
The Reserve Bank of India has announced an array of steps to boost slowing growth, including paring the benchmark
interest rate by an irregular 35 basis points, its fourth cut this year
Worst July for auto sector in 2 decades
Economic uncertainties, slowdown in fresh investments
and stress in the non-bank lending space crimps demand
in both rural and urban areas > Page 5
The real estate slump may not be over
just yet
A recovery in the real estate sector, where project stalling
rates have spiked, may be as prolonged as the slowdown
without a significant price correction > Page 7
Sushma Swaraj, India’s former external
affairs minister, dies
Swaraj, 67, died late Tuesday after suffering a cardiac
arrest > Page 9
Easy credit access for HFCs
The central government sets a `10,000-crore liquidity
window for housing finance companies in efforts taken
to stem slowdown > Page 10
Zee closes a stake sale deal
Essel agrees to sell a 11% stake in Zee Entertainment to
an Invesco fund for `4,224 crore before a September
deadline to pay off debts > Page 11
keep up with emerging threats
The Competition Act of 2002 is inadequate to
deal with abuses of monopoly power in a
changing business environment, writes
Narayan Ramachandran > Page 24
Lessons for J&K’s economic
> Page 4 integration
It will be a slow process and the Central govt may
have to take the lead by increasing infrastructure
Everstone Capital puts up to `700 cr investment to boost tourism, writes
Niranjan Rajadhyaksha > Page 25
Burger King India share sale on menu
PE firm Everstone plans to file the draft prospectus for
the Burger King India share sale in two months > Page 13
Will NMC bill bring transparency? MONEY
The National Medical Commission Bill seeks to set up a
regulatory body with a clean image in place of Medical
Council of India that is marred by corruption > Page 15
Fund of Funds can work better for
DIY investors
While the IT benefits proposed in the budget
Firms may get to raise prices after
make a case for fund of funds, investors must
transferring GST rate cut benefits assess costs and risks > Pages 26-27
Liberty to raise price as per the business cycle will come
as a relief for consumer goods makers > Page 17
When not paying your electricity
DoT plans to boost mobile connectivity bills is good
Reliance Jio, Vodafone Idea and Bharti Airtel have Solar panels can not only help the environment
teamed up with the telecom department to reach but will also let you enjoy free power after
43,000 villages without cellular services > Page 18 2-5 years, depending on your bills > Page 28
Expense Account | Data is already currency,
After a decade, swimming starts to now you may be able to use it > Page 29
make the turn
Aided by high-tech swimsuits, swimming saw a flood of Power Point | GST rate cut can breathe new life
records in 2008-09. And then a drought after their ban. into the real estate sector > Page 29
Normal service is set to resume > Page 19
Is Bengaluru heading towards
Day Zero?
Bengaluru is a city divided by access to water.
Expanding rapidly, with a projected population
of 20 million by 2030, its water story is only
going to get more complex > Pages 33-34
The Neymar enigma
The Brazilian superstar has become the epitome of
footballing superstar excess. But back home, the
fans love him with a passion > Page 38
Corrections & Clarifications
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COVER PHOTO BY TAUSEEF MUSTAFA/AFP
04 August 9 - August.15, 2019, SINGAPORE/KUALA LUMPUR
News
POLICY STANCE
RBI goes for unconventional 35-bps rate cut
The RBI as announced an array
of steps to boost slowing growth,
including paring the benchmark
rate by an irregular 35 basis points
B Y A S TA F F W R I T E R
feedback@livemint.com
·········································
MUMBAI
I ndia’s central bank announced an array of
measures to boost slowing economic
growth, including reducing the benchmark
interest rate by an irregular 35 basis points
(bps), its fourth rate cut this year.
The Reserve Bank of India’s six-member
rate-setting panel on Wednesday, 7 August, cut
the repurchase rate to 5.4%, the lowest in
almost a decade and more than the 25 bps cut
expected by most economists. It also decided
to retain the monetary policy’s current accom-
modative stance.
Central bank governor Shaktikanta Das told
reporters that the Monetary Policy Committee
was of the view that the “standard 25 basis
point (cut) might prove to be inadequate in
view of the evolving global and domestic mac-
roeconomic developments. On the other hand,
reducing the rate by say 50 basis points might
be excessive, especially after taking into
account the actions already undertaken”.
Reducing the rate by 35 bps was, therefore,
viewed as balanced, Das said. This is the sec-
ond biggest rate cut in recent times after RBI
reduced the repo rate by 50 bps twice: once in
April 2012 and next in September 2015.
With inflation expected to remain benign
amid slowing consumption and investment
growth, which threatens to further slow down
FRESH PAGE
NSE, SGX bury the hatchet, set to create new trading platform
B Y N A S R I N S U LTA N A & A N I R U D H L A S K A R
·······································
MUMBAI
P rotracted acrimony between the National
Stock Exchange of India Ltd (NSE) and
the Singapore Stock Exchange (SGX) over
trading of Nifty derivatives in Singapore came
to an end on Tuesday, 6 August, with the two
agreeing to create a new platform for trading
them at the Gujarat International Finance
Tec-City (GIFT) in Gandhinagar.
The new platform, called NSE International
Financial Service Centre (IFSC)-SGX Con-
nect, will allow trading in Nifty index deriva-
tives, as well as single-stock derivatives of
Nifty’s 50 constituents, officials from the two
exchanges said at a joint press conference in
Mumbai.
The seeds of the discord were sown in Jan-
uary 2018 when SGX decided to start trading
of single stock-based Nifty products in Singa-
pore. Concerned that this would lead to the
offshore migration of Indian derivatives
trades, NSE abruptly ended its licensing
agreement with SGX that enabled the latter to
launch Nifty products on its platform.
The new model, subject to certain approv-
als, is aimed at enabling members of SGX and
NSE IFSC to trade in Nifty products at GIFT,
while managing their exposures through their
respective clearing corporations, according to
a press statement by NSE.
“SGX and NSE will work with all key stake-
holders to make the NSE IFSC-SGX Connect
operational before the end of 2020... Both
exchanges are also working to discontinue
related arbitration proceedings,” read the
press statement.
NSE said Tuesday’s announcement follows
recent approvals on certain dispensations for
Balanced approach: Reserve Bank of India governor Shaktikanta Das (centre) during a press
conference at the RBI headquarters in Mumbai on Wednesday, 7 August.
economic growth, the MPC’s focus has fully
shifted from combating inflation to boosting
aggregate demand. RBI has traditionally bal-
anced its policy narrative between growth
imperatives and inflation management but the
policy focus now seems solely reassigned to
minimizing the negative output gap. The
unconventional rate cut and the unchanged
stance may also signal the central bank’s will-
ingness to make room for future rate cuts.
This comes on top of a system flush with
liquidity, driving even the weighted average call
money rate below the policy rate; ideally, both
should be broadly aligned. In these times of
uncertainty—especially in global trade, geopol-
itics and currency markets—RBI has provided
certitude on at least one count: rate hikes are
definitely off the table for now.
BLOOMBERG
Protracted acrimony: Loh Boon Chye (left), CEO of Singapore Stock Exchange, and Vikram Limaye,
MD and CEO of National Stock Exchange.
the proposed model from their respective
regulators.
“We are working on varied product offer-
ings to make GIFT City the hub of activity for
all-India access products across asset classes
for international investors and a gateway for
home investors to access international mar-
kets,” said Vikram Limaye, managing director
and CEO of NSE.
“Depending upon the implementation
details, it could be a win-win for SGX to retain
some access to Nifty, and for NSE to bring
SGX Nifty flow in GIFT City. SGX market par-
ticipants shall look forward to clarity around
if they need to register in GIFT City and,
hence, under Indian regulators too, or not,”
said Kunal Nandwani, founder and CEO of
uTrade Solutions Pvt. Ltd, a fintech company.
INDRANIL MUKHERJEE/AFP
The decision to cut rates by 35 bps found
support from four MPC members—Ravindra
Dholakia, Michael Debabrata Patra, B.P. Kan-
ungo and governor Shaktikanta Das—while
Pami Dua and Chetan Ghate voted for a 25-bps
reduction. All the members voted unanimously
to maintain the monetary policy’s accommo-
dative stance.
Concern now pivots to whether financial
agents will be amenable to reducing their lend-
ing rates. Transmission from the central bank’s
benchmark rates to commercial lending rates
has been slow and sticky, with banks reducing
their lending rates by only 29 bps during the
February-June period against RBI’s 75 bps cut
during the same period.
“Our interactions with various stakeholders,
including both public sector and private sector
PRADEEP GAUR/MINT
Mint had reported on 23 January 2018 that
NSE was in talks with the Securities and
Exchange Board of India and the government
to find ways to prevent offshore migration of
India’s equity derivatives business, essentially
Nifty products.
On 18 January 2018, when SGX decided to
launch single-stock Nifty derivatives, its Nif-
ty-50 futures contracts had recorded daily
turnover of at least $1 billion and open inter-
est of $9 billion. The exchange had planned
to launch these contracts from 5 February
2018, causing concerns at NSE that such a
move might shift India’s derivatives business
to Singapore.
NSE, which had announced plans to get
listed, had mentioned in its draft red herring
prospectus in December 2016 that it had an
www.mintasia.com
mintasia
banks, indicate that steps are being taken by
them on an ongoing basis to progressively
lower their interest rates so that the benefits of
the policy rate reductions are passed on to the
economy. Accordingly, we expect higher trans-
mission of monetary policy actions and stance
by the banks in the weeks and months ahead,”
Das said.
In response, the nation’s largest lender, State
Bank of India (SBI), cut its lending rate by 15
bps. The bank claimed in a release that it has
reduced working capital lending rates by 85 bps
in the current financial year through four cuts.
As part of the package to improve aggregate
demand, the central bank has ensured easy
credit flow to consumer credit and to non-
banking financial companies (NBFCs). In the
accompanying statement on development and
regulatory policies, RBI reduced the risk-weight
banks need to attach to consumer credit to
100% from 125%, in the hope that this will
diminish the banking sector’s aversion to con-
sumer lending and, by extension, boost con-
sumption of a variety of products and services:
from cars to white goods, from holidays to col-
lege education.
The statement adopts twin modes to open
the credit tap wider for NBFCs. The first is by
relaxing the prudential limits on a bank’s expo-
sure to a single NBFC from 15% of its tier-I cap-
ital to 20%. This is also the limit prescribed for
other counterparties. Second, banks can meet
their priority sector credit targets by lending to
NBFCs for on-lending to agriculture investment
(up to `10 lakh), micro and small entrepre-
neurs (`20 lakh) and affordable housing (`20
lakh per borrower). NBFCs are believed to have
better last-mile access to borrowers in these
target segments.
agreement with SGX that authorizes the latter
to allow trading in derivatives such as index
options and index futures benchmarked to
Nifty 50, Nifty Bank, Nifty IT, Nifty CPSE and
Nifty Midcap 50 indices.
NSE has similar agreements with the Chic-
ago Mercantile Exchange, the Osaka
Exchange and the Taiwan Futures Exchange
of Taiwan. Also in 2016, six exchange-traded
funds (ETFs) linked to Nifty indices were
launched in global markets, including Hong
Kong, Taiwan and South Korea. As of 30 Sep-
tember 2016, ETFs linked to Nifty indices
were listed on 17 exchanges in 15 countries.
According to the draft prospectus, in fiscal
2015-16, SGX contributed almost 99% of
NSE’s overseas index licensing fees. In the
document, NSE said it expected revenue from
index services to grow 15-20% over the next
five years through expansion of product offer-
ings beyond pure equities.
Dollar-denominated products on SGX and
Chicago Mercantile Exchange benefit inves-
tors in terms of cost of trading. Also, unlike
India, Singapore, Taiwan and other South-
East Asian markets have a friendlier tax
regime and easier margin requirements,
tempting foreign investors to trade in Nifty-50
through offshore markets.
In May 2018, the Bombay high court barred
SGX from launching new India derivative
products and referred the case to an arbitra-
tion panel, to which SGX had agreed. In June
2018, while arbitration proceedings were on,
NSE had said it was working on a “structure”
to address the issues.
The spat between two exchanges has
brought down the outstanding positions in
SGX’s Nifty futures contract.
nasrin.s@livemint.com
 mintasia
INDUSTRY SLOWDOWN
Worst July for auto
sector in two decades
Economic uncertainties, slowdown
in fresh investments and stress in
the non-bank lending space crimps
demand in both rural, urban areas
B Y A M I T P A N D AY
amit.p1@livemint.com
·······································
MUMBAI
I
ndia’s automobile industry sank deeper
into an abyss in July, with sales at some of
the top passenger vehicle makers plung-
ing to their worst in about two decades.
Rising economic uncertainties, slowdown
in fresh investments and stress in the non-
bank lending space damped demand from
both urban and rural consumers. Irregular
monsoon rain this year further hit rural senti-
ments in an economy starved of fresh private
investments. This, coupled with an increase
in vehicle insurance costs last year and a
credit squeeze, forced several consumers to
defer their automobile purchases.
Domestic passenger vehicle sales at Maruti
Suzuki India Ltd, the country’s largest car-
maker, fell nearly 37% from the year earlier in
July. Second-ranked Hyundai Motor India Ltd
recorded a 10% drop, while total sales fell 16%
at Mahindra and Mahindra Ltd (M&M). Sales
at the local units of Toyota Motor Corp. and
Honda Motor Co. fell 24% and 49%, respec-
tively in July.
Sales of the five firms, which together make
up about 85% of India’s passenger vehicle
market, have fallen nearly 31% last month
from a year earlier.
With the weak performance in July, passen-
ger vehicle sales in India have now declined
for the ninth month in a row.
“The industry is deeply concerned with the
increasing pressure of low customer senti-
ment faced by the sector,” N. Raja, deputy
managing director at Toyota Kirloskar Motor,
said in a statement. “The high insurance
costs, rise in taxes and liquidity crunch across
the non-banking finance segment, tightening
of lending norms have significantly affected
the domestic sales in the last few months.”
Raja said Toyota is “trying to lend maxi-
mum support to our dealers through the hard
REGULATORY ACTION
Govt set to frame rules for ride-hailing firms
B Y S H R E YA N A N D I
shreya.n@livemint.com
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NEW DELHI
U pcoming rules governing taxi aggregators
such as Uber and Ola will address the
types of permissible vehicles, surge pricing
and safety of women passengers, two people
aware of the matter said. The rules will also
clarify whether such vehicles will be owned by
the driver or the aggregator, and specify their
liabilities.
Aggregators in various states have
attempted to bring bikes, cars, auto-rickshaws
and buses on their platforms, sometimes run-
ning into regulatory hurdles. For example,
Karnataka does not allow bike taxis, while
Haryana does. Also, in the absence of specific
rules on cab aggregators, many states regulate
them as fleet cab operators.
The new Motor Vehicles (Amendment) Bill,
2019 creates a new category of cab aggrega-
tors, addressing some of these issues. It recog-
nizes and defines aggregators as digital inter-
mediaries or marketplaces, which can be used
by passengers to connect with a driver for
transportation.
LOSING THE WAY
Maruti Suzuki reported the biggest drop in sales
in almost seven years.
Year-on-year growth (in %)
-36.71 Maruti Suzuki
-10.28 Hyundai
-14.91 M&M
-23.79 Toyota Kirloskar
Honda Cars
-48.67
-30.62 Average
Source: Companies
times faced by the industry by maintaining
lean inventory”.
The weak demand scenario has forced
automakers and their parts suppliers to tem-
porarily suspend production in July. Crimped
demand has led nearly 300 dealers to shut
operations, according to the Federation of
Automobile Dealers Associations. Mean-
while, banks are keenly watching the sector,
tightening the formal processes for wholesale
financing, which, dealers say, are hurting
them in terms of financing new stock.
Maruti reported total domestic passenger
car sales of 96,478 units in July. Sales fell in all
segments except those of the midsize sedan
Ciaz. Hyundai reported sales of 39,010 units
in July. This, despite robust initial reception
for the compact SUV Venue that went on sale
on 21 May.
M&M reported a decline of 16% from a year
earlier in its total domestic sales to 37,434
units in July. Its passenger vehicle sales fell
15% to 16,831 units during the month, while
commercial vehicle sales declined 17% to
15,969 units.
Sales of Toyota vehicles fell to 10,423 units.
Honda performed even worse, with sales
plunging to 10,250 vehicles.
Veejay Ram Nakra, chief of sales and mar-
keting (automotive division) at M&M, hopes
the buying sentiment will improve in the
run-up to the festive season.
FOR A SMOOTHER RIDE
THE ROAD TILL NOW
The Motor Vehicles (Amendment) Bill
has defined aggregators.
Centre to frame broad rules, states to
follow suit.
THE ROAD AHEAD
Priority for women’s safety and
improving passenger experience.
Rules for ownership of vehicles that
are run by cab aggregators.
The central government will meet all stake-
holders in the industry in the next few months
and frame a broad set of rules, said the people
cited earlier.
“Even the Supreme Court (on 31 July) has
asked the central government to consider
bringing a law to regulate taxi aggregators to
ensure women’s safety. Now that the motor
vehicles law is (almost) in place, we need to
August 9 - August.15, 2019, SINGAPORE/KUALA LUMPUR ° WWW.MINTASIA.COM
Slowdown in auto sector turns up
the heat on component makers
B Y A M I T P A N D AY
amit.p1@livemint.com
····································
MUMBAI
A uto parts makers in India have been hit
hard by automobile companies cutting
production to trim inventory amid weak
demand.
The vendors are being forced to follow
the path of the original equipment manu-
facturers (OEMs) by either temporarily
shutting plants or adjusting output by
reducing the number of daily shifts in their
factories.
Automakers such as Maruti Suzuki Ltd,
Tata Motors Ltd, Mahindra & Mahindra Ltd
(M&M), Ashok Leyland Ltd and Honda
Motorcycle & Scooter India Ltd have tem-
porarily closed plants in the past few
months. Initial reports for July suggest that
the passenger car sales have slipped by over
29% making it the worst month in the past 2
decades.
Mint reached out to
more than a dozen auto
parts makers and learnt
that while production cuts
are resulting in mounting
temporarily shutting
fixed costs and loss of jobs
for contractual shop floor
workers, smaller busi-
nesses are beginning to
default on loans.
On 20 July, Bosch Ltd,
one of the largest auto
parts makers in India, said it has suspended
operations at its Gangaikondan plant in
Tamil Nadu for five days starting 23 July to
‘avoid unnecessary buildup of inventory’.
Later, it suspended operations at its Naga-
nathapura unit in Karnataka for two days
(27 and 29 July) followed by single-day
shutdowns at Jaipur (27 July) and Bidadi (29
July).
Bosch is not alone. Other key tier one
vendors such as Exide Industries, Conti-
nental Automotive Components (India), ZF,
Brose India Automotive Systems, Schaeffler
India, Brembo Brakes India, Kalyani Max-
ion Wheels, Varroc Group, Eaton, IAC India
have adjusted their respective production
schedules to align their inventory as per the
revised forecasts by the car companies.
A spokesperson at Exide said capacity is
The Centre’s move to frame regulations for ride aggregators is
expected to bring in legitimacy and responsibility for such
companies operating in India.
frame the rules soon,” said one of the two offi-
cials cited earlier, both of whom declined to
be identified.
Cab aggregators have witnessed significant
growth in the last few years in India, following
the entry of San Francisco-based ride hailing
giant Uber and the rise of home-grown Ola,
owned by ANI Technologies Pvt. Ltd.
The rules may cover surge pricing, which
NEWS 05
usually diverted to the aftermarket segment
during low demand from automakers. “So,
in the short run, this works to our advan-
tage because aftermarket offers us better
margin. However, if the demand slump
continues for a very long time, then there is
cause for concern,” he stated.
Kalyani Maxion Wheels shut its truck
wheel manufacturing plant for five days
while the car wheel facility was closed for
three days, one person at the company said.
Meanwhile, Brose, a German supplier of
window regulators and door modules for
cars, trimmed its daily production schedule
from three shifts to a single shift.
“Facilities are being shut on weekends;
few shifts are being suspended impacting a
large proportion of contractual workers,
which comprise about 50% of all manpower
employed by the auto industry. Few smaller
enterprises are even beginning to default on
loans raised from the financial institutions
due to this economic
slowdown,” said a senior
industry official, who
Vendors are either declined to be named.
Jignesh Raval, MD, Sin-
tercom India Ltd, maker
plants or adjusting of sintered parts for
engines and transmis-
output by reducing sions, said, “The offtake
continues to be low from
daily shifts our customers. This has
forced us to cut our pro-
duction to two shifts to
control our inventory. If we don’t see fur-
ther improvements, we will have to con-
sider a block closure for a week in August.”
The current 15-20% cut in vehicle pro-
duction has led to a crisis-like situation in
the auto ancillary industry and if the trend
continues, an estimated one million people
could be laid off, Ram Venkataramani, pres-
ident, Automotive Component Manufactur-
ers Association of India (ACMA) said
recently.
Prashanth Doreswamy, market head,
Continental India, a powertrain and chassis
parts supplier, said various factors have
contributed to the downturn. “We are
closely monitoring our production and
process costs. We are continuing to opti-
mize them. Hiring is being looked at care-
fully,” he said.
kicks in at times of high demand or low cab
availability. Aggregators may find it difficult to
raise prices exorbitantly through surcharges
during peak hours or in times of adversity
such as a transport strike or heavy rain.
Taxi-hailing companies claim fares surge
when a large number customers from the
same location try to book cabs, overshooting
the number of vehicles available. Cab aggre-
gators claim that surge pricing encourages
drivers to go where the demand is.
The rules will clarify whether the aggregator
or the driver will be held responsible in case
of an accident, crime or any other incident
during the ride.
“For instance, if a customer leaves behind
any belonging in the vehicle, it has to be clear
whether the onus is on the driver or the com-
pany that is providing the services. Such
issues also need to be discussed,” said the
government official cited earlier.
The motor vehicles law will empower the
central government to frame guidelines for
these companies.
Under the proposed law, taxi aggregators
can seek a licence from the state government,
as transportation is a state subject.
At present, several states lack norms to reg-
ulate cab aggregators. Taxi permits are issued
by state transport departments and, as a
result, every state has different guidelines,
which could include fare and the number of
passengers, among others.
06 NEWS
August 9 - August.15, 2019 , SINGAPORE/KUALA LUMPUR° WWW.MINTASIA.COM
mintasia

NO RECOVERY IN SIGHT
FOR THE INDIAN ECONOMY Mint Macro Tracker for June shows no signs of improvement and indicates a domestic
slowdown even as the external sector appears less fragile than before
MACRO TRACKER SNAPSHOT
Parameter value Average five-year value 10% This month, six of the 16 indicators in the tracker are above the
▲ Performance better than five-year average five-year trend (highlighted in green) and eight are below (red) while
two maintained the trend (amber). This is better than the reading
▼ Performance worse than five-year average from six months ago but worse than what it was a year ago.
◀▶ Performance in line with five-year average
Now 6 months ago 1 year ago 2 years ago 3 years ago

CONSUMER ECONOMY INDUSTRIAL SECTOR

Passenger vehicle sales (% Y-o-Y) ▼ Tractor sales (% Y-o-Y) ▼ PMI manufacturing ◀▶ Core* growth (% Y-o-Y) ▼
30 50 56
8
20
10
30
10
54
52
52.1 6 Lorem ipsum
0 4
-10 50
-10 2
-20 -13.6
-23.6 -30
48 0 0.2
Jul 2014 Jun 2019 Jul 2014 Jun 2019 Jul 2014 Jun 2019 Jul 2014 *8 core infrastructure Jun 2019
industries

Two-wheeler sales (% Y-o-Y) ▼ 30

Domestic air passengers (% Y-o-Y) ▼ Banks’ non-food credit (% Y-o-Y) ▲ Rail freight traffic (% Y-o-Y) ▼
40 15 10
20
20 11.4 5
10 10
0 2.0
-11.7 0 2.8 0
5
-20 -10 -5
Jul 2014 Jun 2019 Jul 2014 May 2019 Jul 2014 May 2019 Jul 2014 Jun 2019

EXTERNAL SECTOR EASE OF LIVING

Import cover (FX reserves in months) ◀▶ Rupee vs dollar (% M-o-M) ▲ CPI (% Y-o-Y) ▲ Core CPI (% Y-o-Y) ▲
3 10
14 7
8 6
12 1
10 10.4 0.5 6
5
-1 4
8 3.2 4 4.1
-3 2
6 3

Jul 2014 Jun 2019 Jul 2014 Jun 2019 Jul 2014 Jun 2019 Jul 2014 Jun 2019

Current account balance (as % of GDP) ▲ Trade balance (as % of total trade) ▼ Rural wages (% Y-o-Y) ▼ Job outlook (% net response) ▲
0 -10 10
8 9.8
-1 -15 6 8
6
-2 -20
-23.4 4 4.2 4
-0.6 -25 2
-3 2

Jul 2014 Mar 2019 Jul 2014 Jun 2019 Jul 2014 May 2019 Jul 2014 Mar 2019

The average band is constructed as +/- 10% interval around the five-year mean. The upper and lower bounds are wider for series with more volatility. Source: CMIE, Bloomberg and Mint calculations

GRAPHIC BY SRIHARSHA DEVULAPALLI/MINT

B Y N I K I TA K WAT R A economy. Meanwhile, inflation continues to remain benign

nikita.k@livemint.com While lower crude oil prices explain part of the fall with core inflation at its lowest level in almost two
·············································· in the value of imports, the contraction in imports of years.
MUMBAI
items such as transport equipment, machinery and This again reflects weakness in consumption

I ndia’s economic slowdown shows no signs of

abating, with a sizeable number of indicators of
domestic demand still flashing red in June, the lat-
est edition of the Mint Macro Tracker shows.
The tracker, launched last October, provides a
fertilisers indicate that domestic demand remains
weak.This is corroborated by the slowdown in the
consumer economy and industrial sector indicators.
All four indicators of the consumer economy, includ-
ing passenger vehicle sales, tractor sales, two-wheeler
monthly state-of-the-economy report based on trends sales, and domestic air passenger growth, continue to
across 16 high-frequency economic indicators. be in the red for the fifth straight month, with the first
Of these 16 macroeconomic indicators, six were in three indicators showing a negative growth over the
the green (above the five-year average trend) in June year-ago period.
and eight were in the red (below the five-year average Three of the four industrial sector indicators are
trend), while the other two maintained the trend. either flashing amber or have turned red. The core
The latest reading is in line with the reading in May sector growth has turned red, drop-
(when eight indicators were in the red) but a signifi- ping to a 44-month low of 0.2%
cant deterioration compared to the readings in March
and April (when six indicators were in the red). The
growth in June, the latest data
shows. Rail freight traffic also has
All four indicators
overall reading in June remained unchanged despite turned red (below five-year average) of the consumer
some improvement on the external front. and the purchasing managers’ index
The improvement on the external front in June was (PMI) is flashing amber (in line with economy continue to
largely because of fresh incoming data on the current the five-year average). Only the non-
account balance as a share of the gross domestic food credit growth indicator is in the be in the red for the
product (GDP), which narrowed sharply in the quar- green. However, weak demand con-
ter ended March, the latest period for which the ratio ditions and the stress in non-bank-
fifth straight month
is available. India’s current account deficit (CAD) nar- ing financial company (NBFC) sec-
rowed sharply to 0.7% of GDP in the March quarter, tor may drag down credit offtake as well. Already,
from 2.6% in the third quarter ended December, pri- there are reports suggesting that lenders are turning
marily on account of a lower trade deficit, even as for- cautious with regard to the auto sector (bit.ly/31aa-
eign portfolio inflows remained robust. However, that dOx).
performance is not likely to be repeated, with the “The persistence of weak demand conditions
trade deficit in the red over the past quarter.The across multiple sectors might precipitate an adverse
improvement on the external front, also reflected in feedback loop between the real economy and the
the rising import cover, is also partly because of weak financial sector,” warned a 30 July ICICI Securities
imports, indicating weak underlying demand in the report.
demand. Rural India appears particularly badly hit,
with rural wage growth in the red for almost two years
now. The delayed and erratic monsoon this year may
have further dampened rural sentiment.
With global economic uncertainties rising
(bit.ly/2LSor2G) and fresh investments in the country
at a 15-year-low (bit.ly/2ZnM9Hh), the outlook for the
Indian economy does not appear bright. It comes as
no surprise that multilateral institutions such as the
International Monetary Fund and Asian Development
Bank, as well as the Reserve Bank of India have pared
down India’s growth forecasts over
the past few weeks, citing both rising
risks to global economic growth and
weakening domestic investment
activity for their subdued forecast.
Some economists believe that the
actual growth of the economy could
be far lower than what the official
projections and those of multilateral
institutions based on these projec-
tions suggest, because of the meth-
odological changes in the new GDP
series.
In a Harvard University working paper published
earlier this month (bit.ly/2yoraIr), India’s former chief
economic adviser Arvind Subramanian argued that
there is “high likelihood of there being large over-esti-
mation” in India’s new GDP series, reiterating his ear-
lier criticism of the official GDP estimates, and argued
that the actual growth rate could be in the range of
‘3.5% to 5.5%’.
mintasia NEWS 07
August 9 - August.15, 2019, SINGAPORE/KUALA LUMPUR ° WWW.MINTASIA.COM

THE REAL ESTATE SLUMP

MAY NOT BE OVER JUST YET A recovery in the real estate sector, where project stalling rates have spiked, may be as prolonged
as the slowdown without a significant price correction
Chart 1 Chart 2 Chart 3
New projects in the real estate sector have been declining Stalling rates have been soaring in commercial After a prolonged slowdown, bank lending to real
since 2007 real estate estate rose last year
Value of projects (in  trillion) Value of stalled projects as a proportion of total projects under Year-on-year growth (in %)
implementation (in %)
2.5 70
25
Commercial 60
Stalling rates in commercial
2.0 real estate surpassed that of
20 21.46 50
residential real estate in 2012
Commercial Residential and has been rising since 40
1.5 15 Commercial Residential
30
Residential 18.66
1.0 10 20

0.55 10
0.5 5 9.06
5.27 0

0 -10
0 0.22
Apr 2008 Jun 2019
Mar 2000 2012 Jun 2019
1995-96 2018-19

Chart 4 Chart 5
Land acquisition and lack of funds are the major reasons Since fiscal 2014, house prices have fallen in Delhi but have risen in
for stalling in real estate Mumbai and its suburbs
Proportion of stalled projects in the quarter to June 2019 Compound annual growth rate between fiscals 2014 and 2019 (in %)

47.9%
Land acquisition
Kalyan Dombivali 7.3
Mumbai 6.6
problem
Thane 6.1
Lack of clearances
(non-environmental) 25.6% Mira-Bhayandar
Navi Mumbai
5.3
4.2
14% Lack of
promoter
Others*
Noida 2.1
Lack of funds
interest Ghaziabad 0.2
4.5% *includes NA and Delhi -1.8
Note: There were no stalled
3.8% 2.3%
natural calamities
Gurugram -1.9
projects due to fuel, Lack of 1.9%
feedstock or raw material environmental clearance Data for fiscal 2019 includes only the first three
supply problems. Unfavourable market quarters
conditions Source: CMIE Capex, RBI, NHB Residex

AHMED RAZA KHAN/MINT

BY S NEHA A LEXANDER Unsurprisingly, project launches in the sector have residential real estate, but lending to commercial real
sneha.a@livemint.com been declining steadily since the peak of 2007, accord- estate is still showing tepid growth (see chart 3).
·············································· ing to data from the project-tracking database of the Unsurprisingly, the lack of funds continues to be
MUMBAI Centre for Monitoring Indian Economy, or CMIE)(see one of the major reasons behind stalled projects even

F ifty years after bank nationalization, India is

today witness to a unique form of nationaliza-
tion of real estate, thanks to the Supreme Court.
To provide relief to homebuyers, the apex court has
asked state-owned National Building Construction
chart 1).
As fund flows dried up, project stalling rates spiked.
The stalling rate for commercial estate projects accel-
erated since 2012 as the economy slowed and demand
for office spaces declined (see chart 2).
Corp. Ltd (NBCC) to take over the housing projects of Construction of commercial real estate, which is
two financially troubled real estate giants Amrapali mainly for leasing, is funded primarily through own
and Unitech. equity and external debt.
The licences of these two real estate groups have Unlike the residential sector, these
been revoked, with the court holding them responsi- projects do not have customer
ble for diversion of funds and for not delivering pro-
jects on time after receiving money from homebuyers.
advances as a source to fund and
complete the projects, said Shashank
The court’s orders may have come as a punishing Jain, partner, deals, at Pricewater-
blow for the developers but it is not clear whether houseCoopers.
homebuyers can cheer yet, given that NBCC’s ability Private equity firms, which were
to deliver such projects on time remain untested earlier betting on real estate develop-
(bit.ly/2YHy8r0). ers to take a lead in development,
The broader crisis in the real estate sector also does have also turned cautious, he said.
not appear to be over yet, suggests an analysis of the The shock of demonetization, fol-
available data on the sector. lowed by two new regulatory
The roots of the crisis can be traced to the real changes, the goods and services tax (GST) and the
estate bubble in the years leading up to the global Real Estate (Regulation and Development) Act, only
financial crash of 2008. The crash led to a global credit served to bring in more uncertainty and ensured that
freeze and real estate projects across the world were the slump in the sector continued.
gutted as lenders did their best to avoid this sector. As bank credit to the sector slowed and bank depos-
India was no exception to this trend though credit its soared post demonetization, banks outsourced
flow to the sector did not dry up as dramatically as in lending to non-banking financial companies (NBFCs),
the West. However, at least the speculative capital in which in turn stepped in to fund real estate developers
the sector was no longer forthcoming as expectations (bit.ly/31mBCMX). However, the NBFC crisis last year
of investors about the returns from the sector got squeezed that channel of finance as well.
revised. Bank lending has picked up since then, especially in
today. The two big reasons cited by investors for
stalled projects is the delay in land acquisition and
lack of funds (See chart 4).
The lack of funds has also forced developers to
enter barter deals with smaller contractors to take over
parts of their projects, in a desperate bid to exit those
projects (bit.ly/33bzauD).
“It’s a challenging situation,” said Jain. “Every stake-
holder should be prepared to take a
hit or make compromises.
PE firms, which Banks and financial institutions
have to take a haircut in the loans
were earlier betting given, developers and owners have to
forgo profit/ surplus cash flows, and
on developers to even homebuyers should be prepared
to pay more, if required, for the com-
take a lead, have pletion of projects.”
Ultimately, a lot rides on where
turned cautious house prices head. Despite the slump
in the sector, most localities haven’t
seen much of a correction in house prices (See chart
5).
In Delhi and Gurugram, there have been mild cor-
rections but not in Mumbai or any of its suburbs
between fiscal 2014 and fiscal 2019 (up to December
2018), according to data from the National Housing
Bank Residex.
A significant correction can pave the ground for a
V-shaped recovery in the sector. In the absence of that,
the recovery in real estate is likely to be as prolonged
as the slowdown.
08 NEWS
August 9 - August.15, 2019 , SINGAPORE/KUALA LUMPUR° WWW.MINTASIA.COM
ONGOING TURBULENCE
No truce at IndiGo yet, Gangwal
seeks more board-level changes
Co-founder opposes plan to expand
board to 10 members in departure
from earlier stand, saying loopholes
will tilt scales in favour of partner
BY R HIK KUNDU
rhik.k@livemint.com
······································
MUMBAI
T
he feud between the promoters of
InterGlobe Aviation Ltd intensified,
with co-founder Rakesh Gangwal
opposing a plan to expand the airline’s
board to 10 members, a departure from his
earlier stand, alleging loopholes that will
tilt the scales further in favour of his part-
ner, Rahul Bhatia.
In a 5 August letter, Gangwal suggested
directors of India’s largest airline, IndiGo,
consider increasing the board strength to
seven from the current six, weeks after the
board approved a proposal to raise the
number of directors to 10.
Gangwal said he will oppose the special
resolution at the annual general meeting
(AGM) on 27 August unless another resolu-
tion is passed by the board to prevent
co-founder Bhatia’s InterGlobe Enterprises
(IGE) Group from attaining more power
and until a new policy on related-party
transactions (RPT) is adopted by the com-
pany.
“The AGM notice, along with unnamed
sources having planted press reports that
the chairman has brokered peace and mat-
ters have been resolved, leaves a misleading
and false impression that issues on RPTs
and changes to the Articles have the sup-
port of both promoter groups,” Gangwal
said in his letter to IndiGo’s board. “This is
in stark contradiction to the numerous
NEW OFFERING
Flipkart to take on Amazon with free video streaming service
B Y D E E P T I C H AU D H A R Y
deepti.c@livemint.com
·······································
BENGALURU
W almart’s Flipkart unit is set to introduce
a free video streaming service to draw
new users from small towns and cities in
India and take on rival Amazon’s Prime Video
service.
Flipkart is eyeing the next 200 million con-
sumers who are coming online. The company
believes that most consumers are introduced
to the internet through online videos. Hence,
video content and entertainment could play a
big role in getting consumers to come and
buy online.
“We believe that great content, if made
available to a wider base of consumers, espe-
cially the ones who are new to e-commerce
but not internet, can bring them on board on
an everyday basis and help take away any
anxiety that they may have towards online
shopping,” Flipkart group chief executive Kal-
yan Krishnamurthy said in a statement on
Monday at the launch of Flipkart Videos, a
curated range of movies, shows and enter-
tainment series. Customers, he added, should
not pay extra for premium content.
The video content offering is focused on
three primary aspects: it’s free, curated and
personalized.
Experts say the content market is still
evolving, considering the number of custom-
ers paying partly or fully for subscriptions to
Netflix, Amazon Prime and Hotstar.
“It’s still a small number. The pricing is too
RIFT WIDE OPEN
IndiGo co-founder Rakesh Gangwal has in a letter to the company’s
directors stated that reports about matters being resolved at the
airline are misleading.
PROFIT in Q1FY20
1,203
REVENUE in Q1FY20
IGE Group is holding the process
hostage... (it) hasn’t offered to close the
large loophole (proposed board structure)
after transition period.
RAKESH GANGWAL, IndiGo co-founder
emails exchanged since July 20, and my July
27th email to board members.”
On 22 July, IndiGo said the number of
directors in the company would be raised to
10, subject to shareholders’ approval.
Under the 10-member set-up, Bhatia will
have five nominations to the board, one
from Gangwal and four from independent
directors.
In the letter, Gangwal said that though
he, along with others directors, had agreed
to the framework of a new board composi-
tion and adoption of a new RPT policy at
the 20 July board meeting, he later realized
that the proposed board structure created
large loopholes that favoured IGE Group.
Online content: Flipkart group chief executive Kalyan Krishnamurthy.
high for a customer base that is accustomed
to free or cheap content,” said Devangshu
Dutta, chief executive of retail consultancy
Third Eyesight. “Also, there is a lot of fluidity
in terms of the platforms used. In India, con-
tent and pricing will be critical.” He added
that both Netflix and Amazon Prime are
“Indianizing” their content in a big way. Pric-
ing dynamics are being worked out as well.
Amazon India started its Prime video ser-
vice in December 2016 and has since devel-
oped a strong fan base with hit shows such as
Made in Heaven and Mirzapur.
The big question is—will people watching
the particular content eventually buy the
Boardroom battle
CURRENT STATUS
(in ₹ crore) The board of IndiGo now
has 6 directors, including
2 independent directors
9,420 AGREED PACT
Board has proposed
10 directors, with four of
them independent
NEW DEMAND
Gangwal wants 7-member
board with 1 independent
woman director
Source: Company
SARVESH KUMAR SHARMA/MINT
“Subsequent to the board meeting and in
finalizing the language on the Articles, all of
us realized that the proposed board struc-
ture created a large loophole that gives the
IGE Group additional powers that they do
not have today. Essentially, when there are
less than four independent directors, it
would allow the IGE Group to pass any
company policy that they want,” said Gang-
wal.
“However, IGE Group has steadfastly
refused to close this large loophole after the
transition period. It is inevitable that in the
future, there will be periods of a few
months when we will have less than 4 inde-
pendent directors (retirements, resigna-
AFP
products on the platform? It needs a mental
switch—the mindset while shopping is very
different from what it is while watching a
movie or a series.
According to Krishnamurthy, the focus is
on attracting customers, particularly those in
the age group of 20-30 and those who con-
sume a lot of user-generated and profession-
ally created content. “We want to ensure that
a user keeps coming to the platform every
day. Over time, we will figure out how this ties
into the e-commerce ecosystem, but today
that’s not the objective. Its just to ensure that
the consumer is hooked to Flipkart,” Krishna-
murthy said in an interview.
mintasia
tions, etc.). And, for these situations we
have not resolved the governance loop-
hole,” added Gangwal.
The tussle between the two promoters
came out in the open on 8 July when Gang-
wal accused Bhatia of violating corporate
governance norms, among other things.
Bhatia denies the allegations.
In a letter addressed to Securities and
Exchange Board of India (Sebi) chairman
Ajay Tyagi, Gangwal alleged several trans-
gressions at IndiGo, including those per-
taining to related-party transactions; and
appointment of senior management per-
sonnel, directors and the chairman, who
has always been an independent director by
convention.
Gangwal and his associates hold nearly
37% in InterGlobe Aviation, while Bhatia’s
IGE Group holds around 38%.
In his latest letter, Gangwal suggested the
board induct an independent woman
director to increase its size to seven. “To
break this impasse, I suggest that the chair-
man have a board resolution passed (he is
the tie breaker in a vote) to raise our board
size to seven and allow for the addition of
an independent woman director and then
issue a resolution as a corrigendum to the
AGM with the seven director option to alter
the Articles. Due to how the math and Sebi
rules work, a seven-director board will
close the large loophole automatically,” said
Gangwal.
IndiGo’s non-executive chairman, N.
Damodaran, had on Monday evening told
directors and the chief executive of the air-
line that Bhatia and Gangwal have agreed
on all the contractual language for a new
policy on RPTs and the composition of the
size of the board, but are yet to agree on a
“closing the loophole after transition
period”.
“I am separately initiating a proposal for
scheduling meetings of the AC (audit com-
mittee), the NRC (nomination remunera-
tion and compensation committee), and
the Board, immediately after the AGM. At
that meeting of the AC, followed by a meet-
ing of the Board, the RPT policy will be
cleared. At the meeting of the NRC, the
selection of the woman Independent
Director will be addressed,” Damodaran
said in the letter.
Dutta, however, believes that there may be
another reason for Flipkart’s video streaming
service. “It may be less expensive or more
profitable to service existing customers by
expanding the share of wallet than to acquire
new customers. Hence, companies try to add
as many products or services to the customer
relationship as possible,” he said.
According to Dutta, the metrics and operat-
ing levers of merchandise and streaming con-
tent businesses are very different. “Done well,
content may add to a group’s revenues, but
operationally it has to be managed with a
very different business mindset,” said Dutta.
India’s video streaming industry is set to
grow at an annual average pace of 21.8% to
reach `11,977 crore by 2023, according to a
report by global accounting firm PwC.
Subscription-based video-on-demand plat-
forms are projected to grow at an average
yearly rate of 23.3% to reach `10,712 crore
between 2018 and 2023.
The 34 companies present in the cluttered
market comprise US platforms such as Netflix
and Amazon Prime Video, as well as Indian
services such as ZEE5, Voot, Eros Now and
ALTBalaji.
In the meantime, Flipkart is launching its
service in Hindi with a Hindi-language “audio
visual guided navigation” to enable easy
on-boarding for new consumers.
It is also redesigning its app, which will
allow users to access their preferred lan-
guage, curated entertainment content and
content feeds through the navigation bar at
the bottom of the home page.
 mintasia
IN MEMORIAM
India’s first full-time female external
affairs minister to Twitter’s favourite
Swaraj, 67, died late Tuesday
after suffering a cardiac arrest.
She was rushed to AIIMS, but
efforts to revive her failed
BY E LIZABETH R OCHE
elizabeth.r@livemint.com
·······································
NEW DELHI
F eisty, warm, and acceptable to all
across political spectrum are some of
the ways people say they would
remember former Indian external affairs min-
ister Sushma Swaraj as.
Swaraj, 67, passed away late Tuesday, 7
August, after suffering a cardiac arrest. She
was rushed to the All India Institute of Medi-
cal Sciences (AIIMS), but efforts to revive her
failed. Her career in politics spanned five dec-
ades.
Born on 14 February, 1952 at Ambala in
Haryana, she studied law at Panjab University
in Chandigarh. She was married to Swaraj
Kaushal, a senior advocate in the Supreme
Court who served as governor of Mizoram. A
seven-time member of Parliament, Swaraj
also served as MLA thrice in the Haryana
state assembly. She was the chief minister of
Delhi for a brief period in 1998. Earlier this
year, she opted out of the general elections
citing poor health.
Sushma Swaraj joined politics at a time
when few women were part of India’s political
scene, taking part in the anti-Emergency
movement launched by Jayaprakash Narayan
against the then prime minister Indira Gan-
dhi. She first contested elections in 1977 from
her home state, Haryana.
Among the several firsts to her credit are—
youngest cabinet minister to serve in the Har-
yana government at the age of 25 in 1977 and
first full-time woman foreign minister (Indira
Gandhi held additional charge of the ministry
when she was prime minister).
An acute diabetic, in November 2016, she
took to Twitter to announce she had to
undergo a kidney transplant. She used the
social media platform extensively to connect
with the public.
In her last Twitter post on Tuesday at 7.23
PM, said, Swaraj “Thank you Prime Minister.
RESOLUTION PLAN
No haircut on principal sum for lenders, says DHFL
B Y S H AYA N G H O S H
shayan.g@livemint.com
·······································
MUMBAI
D ewan Housing Finance Corp. Ltd
(DHFL) said a panel set up by the
stressed mortgage lender’s board has
approved a debt resolution plan that seeks a
moratorium on repayments but spares credit-
ors from having to take haircuts on principal
payments, sending its shares surging 32%.
As part of the resolution proposal, which
has to be now approved by its lenders, DHFL
will seek funds from the National Housing
Bank and other lenders to restart retail lend-
ing and take steps to address its asset-liability
mismatch, the home financier said on Tues-
day after the special panel reviewed the draft
resolution plan formulated by the company
in consultation with adviser EY.
Lenders may still have to take a haircut as the
DHFL statement is silent on interest payments,
said an analyst, who declined to be named.
“It can also be that they are asking for a
waiver on the coupons they are paying on
their liabilities. For instance, if today’s liabili-
Accessible minister: Sushma Swaraj.
OBITUARY
Thank you very much. I was waiting to see
this day in my lifetime.” She was referring to
Parliament passing the Jammu and Kashmir
Reorganisation Bill abrogating Article 370 of
the Constitution that gave special status to
Jammu and Kashmir.
It was through Twitter that she made the
Indian foreign ministry—otherwise seen as
elitist, bureaucratic, distant and indifferent —
people friendly, accessible and responsive to
the needs of the common people.
Quick to respond and intervene when
issues were brought to her notice, Swaraj was
approached for help not only by Indians
abroad but people of other nationalities as
well–most notably Pakistan. A quick read
through her Twitter timeline shows that she
had intervened on many occasions to grant
visas to Pakistan nationals wanting to visit
India for medical treatment earning her the
title of “Mother Teresa”.
“A glorious chapter in Indian politics
comes to an end. India grieves the demise of
a remarkable leader who devoted her life to
public service and bettering lives of the poor,”
Prime Minister Narendra Modi said in a Twit-
Rescheduling repayments: DHFL’s debt resolution plan seeks a moratorium on repayments.
ties are costing 9%, they may ask lenders to
reduce it to 8%. So, effectively it is a loss of
future income but a zero haircut on the prin-
cipal. The zero haircut on the principal could
be a caveat as it could entail a hit on the
future interest income of lenders,” added the
analyst.
On Tuesday, 6 August, shares of DHFL rose
August 9 - August.15, 2019, SINGAPORE/KUALA LUMPUR ° WWW.MINTASIA.COM
AFP
ter post late Tuesday. “Sushma Ji’s demise is a
personal loss. She will be remembered fondly
for everything that she’s done for India. My
thoughts are with her family, supporters and
admirers in this very unfortunate hour.
Sushma Swaraj Ji was one of her kind. She
was a source of inspiration for crores of peo-
ple,” Modi said in another post.
‘Didi’ (or elder sister) is how most leaders
of the ruling Bharatiya Janata Party (BJP)
would remember her. Swaraj’s stepped into
national politics in 1990 when she became a
Rajya Sabha member and later contested Lok
Sabha elections also. During the first tenure
of former prime minister Atal Bihari Vaj-
payee, Swaraj was a union minister but she
resigned from the top post and took oath as
the chief minister of Delhi. Although BJP lost
the assembly election in Delhi, Swaraj had
made her presence felt in national politics.
She became a protégé of senior BJP leader LK
Advani who groomed her in politics at the
national level.
The former external affairs minister was
instrumental in launching the BJP in south-
ern part of the country in 1999 Lok Sabha
polls when she took on former Congress pres-
ident Sonia Gandhi in Bellary, Karnataka.
Even though Swaraj lost the election, her
ANIRUDDHA CHOWDHURY/MINT
the most in 27 years to `55.40 on BSE. The
exchange’s benchmark Sensex gained 0.75%
to 36,976.85 points.
Mumbai-based DHFL, which has about 1
trillion of debt, will now send the proposal to
its lenders for approval.
Dewan Housing was the worst-hit by the
crisis faced by non-bank lenders after Infra-
NEWS 09
campaign style, her speech in local Kannada
language and her personality ensured that
BJP gains strong foothold in the southern
state. Nearly 8 years later, BJP formed govern-
ment in the state with its leader as the chief
minister for the first time.
In 2014, Swaraj was seen as an unlikely
pick for foreign minister when the Narendra
Modi-led National Democractic Alliance gov-
ernment took office–given her proximity to
former BJP president Lal Krishna Advani.
She was often mocked by the opposition
for having a minimal role in the foreign min-
istry despite being the boss, given the promi-
nent role played by the prime minister in for-
eign affairs.
There was speculation about her equation
with the prime minister, but Swaraj never
gave any hint of difference of opinion with
Modi on matters of national interest. She not
only defended her role in the government but
also defended Modi and his foreign policies
on many occasions in Parliament.
Soon after joining Modi’s cabinet, in 2015,
Swaraj faced accusations of having lobbied
on behalf of former Indian Premier League
chief Lalit Modi, who was then in London
and seen as a fugitive. She defended her deci-
sion “on humanitarian grounds” to recom-
mend to the British government to give Lalit
Modi travel documents to see his sick wife in
Portugal. She was defended by both the BJP
and the RSS.
However, there were seemingly few to
defend her when she was trolled on Twitter
for taking action against an officer in the
regional passport office in Lucknow for alleg-
edly humiliating an inter-faith couple when
they went to apply for a passport. But many
officials in the Indian foreign ministry sup-
ported her action. That she commanded their
respect was clear from the messages that
were posted on Twitter on Tuesday.
“Leaving behind indelible memories. We
@IndiaUNNewYorkwill always cherish mem-
ories of her @UN Farewell Madam @Sush-
maSwaraj #RIPSushmaSwaraj” said a post by
former Indian foreign ministry spokesman
and permanent representative to the UN,
Syed Akbaruddin.
“Smt Sushma Swaraj - an extraordinary life.
An extraordinary person. I am deeply privi-
leged to have served as Secretary under her
leadership in MEA. My heartfelt condolences
to her family,” said another Twitter post by
Secretary Economic relations in the Indian
foreign ministry T.S. Tirumurti.
“Deeply shocked to learn of the passing
away of Smt Sushma Swaraj. Difficult to
accept this news. The whole nation grieves,
the Foreign Ministry even more so,” said Swa-
raj’s successor S Jaishankar, who served as
foreign secretary for two years between 2015
and 2017.
structure Leasing and Financial Services Ltd
defaulted on payments last year. The defaults
increased the cost of funds and made it
tougher for the shadow lenders to borrow
from banks and the bond market.
Lenders to DHFL have signed an inter-
creditor agreement and will now consider the
financier’s proposal. They have also met insti-
tutional bondholders comprising mutual
funds, provident funds and pension funds to
explore options of working together under the
resolution proposal.
Mint reported on 26 July that DHFL’s reso-
lution plan is likely to promise repaying all
term and fixed deposit holders on maturity
without them having to take any haircut. The
report said DHFL may seek a moratorium on
its debt repayments with lenders, extending
the tenure of existing loan facilities by up to
10-20 years, depending on the size of the
facility and the maturity period.
State Bank of India has an exposure of
about 10,000 crore to DHFL, the bank’s
chairman Rajnish Kumar told shareholders at
its annual general meeting in June. Other len-
ders to DHFL include Bank of India, Central
Bank of India, Andhra Bank, Canara Bank,
Punjab National Bank and Corporation Bank.
As of December, DHFL had an outstanding
debt of `1 trillion, of which 38% was in the
form of bank loans, 47% from debt markets
and 10% through deposits.
10 NEWS
August 9 - August.15, 2019 , SINGAPORE/KUALA LUMPUR° WWW.MINTASIA.COM
LIQUIDITY INFUSION
Govt offers easy credit access to boost growth
Central govt sets `10,000-crore
liquidity window for housing
finance companies in efforts
taken to stem slowdown
B Y G IREESH C HANDRA P RASAD
gireesh.p@livemint.com
····································
NEW DELHI
U F
nder pressure to arrest a slowdown
in the economy, finance minister
Nirmala Sitharaman on Friday, 2
August, started the process of rolling out a
slew of measures to boost industry’s access
to credit, including opening a `10,000 crore
liquidity window for home financiers.
Indicating that the finance ministry is
determined to tackle the liquidity crunch
affecting the housing finance sector, the
statement said the National Housing Bank
was opening a fresh liquidity window for
HFCs. A liquidity infusion of `10,000 crore
for housing financiers is being made availa-
ble from 2 August for lending to individuals
looking to purchase affordable homes.
HFCs, a key market for non-bank lenders,
was one of the segments hit by the liquidity
crunch, which, in turn, was precipitated by
a series of defaults by Infrastructure Leasing
and Financial Services Ltd last year.
According to N.R. Bhanumurthy, profes-
sor at the National Institute of Public
Finance and Policy, a think tank, the policy
response to the liquidity crunch should
reflect the extent of the problem. “There
doesn’t seem to be much clarity on the
extent of the crisis in the banking and non-
banking sectors. Once we assess that accu-
rately, we could frame the right solutions,”
he said.
The ministry also said it has endorsed the
Reserve Bank of India’s suggestions on how
to implement Sitharaman’s budget proposal
for providing partial credit guarantee to
state-run banks buying pooled assets of
non-bank finance lenders. The idea is to
ensure that financially sound shadow bank-
ing entities should not struggle for funds.
Experts welcomed the decision to take
more measures to improve access to credit
INVESTMENT RETURNS
VC firms likely to garner over
$4 billion from exits this year
B Y D E E P T I C H AU D H A R Y
deepti.c@livemint.com
·······································
BENGALURU
F or a little over a decade, venture capital
(VC) investors, who back startups during
the toughest of times, infused nearly $48 bil-
lion in young Indian companies. But during
this period, exits, which helps venture capital-
ists (VCs) get decent returns on their invest-
ments, have been few and far between,
broadly for three reasons.
One, lack of mergers and acquisitions
(M&As). Two, fewer secondary sales. Three,
regulations do not permit listing of loss-mak-
ing companies.
This scenario is set to change. VC firms
made around $2.8 billion from their exits
across 56 deals in 2017, an increase of 56.2%
from the $1.8 billion in 2016, according to deal
tracker Venture Intelligence. This number is
predicted to rise further with VC exits
expected to breach the $4 billion mark in the
two consecutive years after 2017.
For instance, in 2014 when Gautam Mago,
the then managing director of Sequoia Capital,
wrote the first cheque to Oyo, it was a small
LIQUIDITY MEASURES
The government on Friday, 2 August, took steps to ease the liquidity crisis
faced by the housing sector amid a slowdown in the economy.
WHAT IS THE LIFT WHO BENEFITS
SCHEME? FROM THIS?
The liquidity HFCs registered with
Infusion Facility NHBs and with
(LIFT) scheme will minimum internal
infuse 10,000 rating of 'B' will be
crore into the eligible. The
housing finance maximum amount
sector. The scheme that can be drawn
will be valid up to under the scheme
30 June 2020 will be 500 crore
Finance minister Nirmala Sitharaman
for businesses. “This is one short-term
measure that is very much needed, which
will help the economy. Another short-term
measure that is needed is to get all govern-
ment departments on board in framing pol-
icy responses to economic issues that will
improve efficiency in the system and help
lower the cost of doing business,” said Rajat
Kathuria, director and chief executive,
Indian Council for Research on Interna-
tional Economic Relations.
The announcements imply that the
National Democratic Alliance administra-
tion is shifting gears to decisively address an
economic downturn that could come in the
way of Prime Minister Narendra Modi’s goal
of building a $5-trillion economy over the
next few years.
The sobering trend seen in India’s eco-
nomic indicators coincide with worries over
a global recession amid an escalating
US-China trade war that threatens business
confidence.
Official data earlier this week showed that
output of the eight infrastructure sectors in
India, which constitute over 40% of the
index of industrial production, remained
almost flat in June. The economy, which
expanded at 8% in the first quarter of FY19,
subsequently slowed down to a five-year
hotel aggregator offering 200 rooms. Today,
Oyo Hotels and Homes is the world’s third larg-
est chain of hotels, homes, managed living spa-
ces and workspaces. While Mago quit Sequoia
Capital in 2017 end, the firm infused about $27
million in Oyo across several rounds.
A few days ago, Sequoia Capital announced
plans to partially exit Oyo to rake in nearly $500
million in returns. Sequoia, which held a 10.24%
stake in Oyo before the proposed deal, will still
have over a 5.5% stake in the hospitality firm.
Oyo’s earliest VC investor Lightspeed Ven-
ture Partners, too, will make over 50-times
returns on its $20 million investment in Oyo,
taking home nearly $1 billion. While the
transaction, wherein Oyo founder Ritesh
Agarwal acquire stakes worth $2 billion,
including a buyback of shares from Sequoia
and Lightspeed, is still subject to regulatory
clearances, such exits are what the venture
capital industry had been waiting for. They
had been hard to come by till about 18
months ago.
“For me, it’s much, much better than what
it was five years ago. Many companies have
achieved scale; companies are getting to scale
at better economics than earlier. There are
WHAT’S IN IT FOR
INDIVIDUALS?
The individual loan
size will be 35 lakh
in metros and 28
lakh in other
areas. The
scheme is
with effect
from
Friday
low of 5.8% in the quarter ended March
2019— resulting in 6.8% growth for the full
financial year.
RBI, which has so far cut the benchmark
interest rate thrice in 2019 by 25 basis points
each, may go for another round of rate cut
when its monetary policy committee meets
on 7 August.
According to a monthly review shared
earlier this week by EY consultancy, India’s
$2.7 trillion economy needs a real growth
rate close to 9% in order to reach the $5 tril-
lion-mark by 2024-25, assuming an inflation
rate of 4%.
While improving access to finance for
businesses and non-bank lenders, the gov-
ernment is also making policy changes rap-
idly to tackle the toxic assets in the banking
sector that has affected banks’ ability to
finance new projects.
Parliament had recently cleared amend-
ments to the Insolvency and Bankrupcty
Code to enable quick decision-making
among creditors of bankrupt companies
and to reduce the time lost in litigation,
while rescuing or liquidating such compa-
nies. It has also announced steps to give
relief to farmers by way of income support,
and to traders, shop keepers and the self
employed in terms of pensions.
Closing the gap
The Indian investment industry is beginning to
mature as PE/VC exits are coming close to the value
of PE/ VC investments.
50
Investments
(in $ billion)
Exits Investments/Exits ratio
(Right-hand scale)
40
3.8
30
20
10
3.7
1
0 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: EY analysis of VCCEdge data
many reasons to be optimistic because busi-
nesses are bigger and better than before and
going global, too,” Mago, a general partner at
A91 Partners, said in an interview.
To be sure, it’s not just unicorns (or startups
with valuation of $1 billion-plus) that are pro-
viding profitable exits.
A few months ago, Sixth Sense Ventures
exited from Hindustan Foods Ltd with nine-
times return on its investment of about `8 crore.
mintasia
Sitharaman seeks to
allay bankers’ fears
B Y S H R E YA N A N D I
shreya.n@livemint.com
·································
NEW DELHI
inance minister Nirmala Sithara-
man said on Monday, 5 August,
that the government plans to take pol-
icy measures “fairly quickly” to address
the challenges plaguing the industry.
She said also that the government is
open to hearing out the grievances of
foreign portfolio investors (FPIs).
The minister was speaking to report-
ers after meeting chief executives of
private and state-run banks as she
kicked off a series of meetings planned
with various industry heads.
She met the heads of State Bank of
India (SBI), ICICI Bank, Axis Bank,
Punjab National Bank and Kotak
Mahindra Bank among others. The
meeting also discussed the credit
requirements of non-bank lenders,
automobile industry and micro, small
and medium enterprises (MSMEs), and
the transmission of interest rate cuts to
the economy.
“Behind the series of meetings is to
hear them out and fairly quickly after
that come out with something that will
help those sectors...We are getting
inputs from various sectors and trying
to respond so that the confidence of
those sectors is being restored,” Sithar-
aman said.
Over the next few days, the minister
will meet representatives from several
sectors—FPIs, automakers, industry
associations, financial markets,
MSMEs, industry associations and real
estate to listen to their challenges. This
is the first time the finance minister is
meeting top executives in the second
term of the NDA government.
5
4
35.8
3
26
2
1.4 1
AHMED RAZA KHAN/MINT
Blume Ventures, which had first invested in
online skills assessment startup Mettl in a
seed round, exited the company with seven-
times returns when it was acquired by Mercer,
a global human resources consultancy. Pri-
vate equity (PE) and VC investors typically
seek internal rate of returns, or IRR, of 20-30%,
that is, 3-5-times returns on the capital
invested, depending on the stage of invest-
ment.
 mintasia
DEBT PAYMENT
Entertainment firm Zee closes a
stake sale deal, but needs more
Essel agrees to sell a 11% stake in
Zee Entertainment to an Invesco
fund for `4,224 crore before a
Sep deadline to pay off debts
B Y T A N YA T H O M A S , N E I L B O R AT E
L ATA J H A
····································
MUMBAI/NEW DELHI
S ubhash Chandra’s Essel group has
agreed to sell an 11% stake in Zee
Entertainment Enterprises Ltd (ZEEL)
for `4,224 crore to Invesco Oppenheimer
Developing Markets Fund, as the control-
ling shareholders of the broadcaster
attempt to pay off debts before a Septem-
ber deadline.
Invesco has agreed to pay `400 per share
for Zee, representing a 10.7% premium to
ZEEL’s Wednesday, 31 July, closing price of
`361.45 on BSE, the company said in a
statement.
Media mogul Chandra may, however,
need to find a second investor willing to
bet on ZEEL with the debt deadline loom-
ing. Essel group needs to pay lenders a
total of `7,500 crore by 30 September.
The group is trying to close sales of non-
media assets but failing that, it will have to
bring another financial investor on board
to meet the debt payment deadline, Punit
Goenka, managing director and chief exec-
utive of ZEEL, said in an interview.
Despite Wednesday’s fundraising, there
is still a large gap to bridge.
“We are looking at sales of non-media
assets that will close in this timeline,”
Goenka said. “If there is any shortfall, we
will be required to sell some more stake in
Zee.”
We have received non-binding offers on
some infrastructure assets and we are
negotiating them. Whatever is the shortfall,
if any, will be covered from another stake
sale in Zee. A strategic investor is not likely
at this point; so it will have to be a financial
investor.”
Before this transaction, Invesco Oppen-
heimer held 7.74% in ZEEL. After Wednes-
day’s transaction closes, their stake in ZEEL
will rise to 18.74%, while the promoter
group’s shareholding will fall proportion-
ally from the current 35.79%.
Nearly 64% of the promoter shares have
been pledged as collateral against debt
raised by Essel’s infrastructure operating
firms.
Mint has reported over the past six
months on Essel group’s attempts to sell
part of its infrastructure portfolio in roads
and solar energy projects.
The group has an agreement to sell part
of its solar portfolio to Adani Green Energy,
while it is in talks to sell three road projects
INDIRA GANDHI KRISHI VISHWAVIDYALAYA
DIRECTORATE OF RESEARCH SERVICES
Krishak Nagar, Raipur - 492 012 (C.G.)
Phone : (O) 91-771-2443035, 2442228, Fax : 91-771-2443035, E-mail :drs_igkvr@yahoo.com
No. DRS/ADR/2019/1661
Expression of Interest
Indira Gandhi Krishi Vishwavidyalaya, Raipur intends to give license
for commercialization and marketing of its varieties, hybrid paddy,
planting material, tissue culture plants, bio-fertilizer and bio pesticides.
Interested Companies/ Traders/ Agencies/ Cooperative Societies etc. are
invited to submit their proposals to avail the license.
Details are available on the IGKV website (www.igau.edu.in). Last
date of submission of proposal is 05.09.2019 by 5.00 pm.
S-22174/2
ENTERTAINMENT NETWORK
Zee Entertainment Enterprises (ZEEL) has grown at 12.4% annually over the past five years,
with its net worth rising 18% during that period.
&
ZEE
ENTERTAINMENT
ENTERPRISES
ZEE5
41 TV
channels across 10
languages
19.7%
12
Indian languages
in which content is
streamed
share of TV
network 61.5 million
monthly active
₹7,933.9 crore users in Q4
consolidated
of FY19
revenue
to a consortium led by the National Invest-
ment and Infrastructure Fund and Roadis,
after an earlier bid to sell to a Canadian
pension fund fell through.
Mutual funds that have bought papers of
Essel’s operating infrastructure companies
have taken the lead in pursuing a stake sale
in ZEEL to make sure their dues are paid.
Of the `7,500 crore debt that ZEEL pro-
moters owe lenders, mutual funds account
for roughly `5,500 crore.
In January, lenders to Essel promoters,
primarily mutual funds, agreed to refrain
from selling collateral till
30 September, to give the
promoter time to raise
money.
“With this deal, the pro-
moter will be able to pay
50% of the debt against Zee
shares due to lenders in the
standstill agreement
including mutual funds.
The promoter is confident
of raising the balance 50%
by 30th September and
paying off the roughly `7,500 crore debt
covered by the standstill agreement. It is
hugely positive for the mutual funds, which
have lent money to the Essel promoter,”
said A. Balasubramanian, chief executive of
Aditya Birla Sun Life Asset Management
Co.
A member of this consortium of lenders
to ZEEL said on condition of anonymity
that Essel group has not formally commu-
nicated the closure of the Invesco Oppen-
heimer deal to lenders and there is no clar-
ity on whether the payments will begin
immediately or at the end of September.
“There is some uncertainty on how the
pledged shares will be sold and what the
Raipur, Dated : 06/08/2019
Director of Research
NEWS 11
August 9 - August.15, 2019, SINGAPORE/KUALA LUMPUR ° WWW.MINTASIA.COM
Bharti Airtel
looks to phase
out 3G across
India by March
B Y N AVA D H A P A N D E Y
navadha.p@livemint.com
·····································
NEW DELHI
All revenue figures Shares of ZEEL closed 5.18% lower
B harti Airtel will shut down its 3G net-
work across India’s 22 telecom circles by
March 2020, and increase its focus on pro-
are for FY19 on Wednesday, 31 August
(in ₹) viding 4G services, a top company official
600
475.70 said.
The company started the process last
MOVIE
BUSINESS
400
200
31 Dec 2018
361.45
31 Jul 2019
Source: Bloomberg
month, when it wound down the 3G network
in the Kolkata circle.
It, however, continues to provide 2G servi-
ces for feature phone users.
“This has worked very well in Kolkata.
₹ 299.70 crore Now we will do this process across India. By
revenue We are looking at sales of September, we will shut down six to seven
non-media assets that will circles and by March, the entire 3G network
close in this timelime pan-India will shut down,” Bharti Airtel chief
executive Gopal Vittal said in the post-earn-
PUNIT GOENKA
MD and CEO, ZEEL ings call with analysts on Friday, 2 August.
This marks the first phase-out of the 3G
SARVESH KUMAR SHARMA/MINT
technology in India, which is now increas-
resulting tax implication will be and how ingly moving to 4G, triggered by the entry of
the pledges will be released. This is a step 4G-only Reliance Jio in September 2016.
in the right direction and gives the promot- Rival Vodafone Idea continues to provide
ers some breathing space.” 2G, 3G and 4G services.
Speaking of the investment, in a press In Kolkata, Airtel has reformed the
statement, Goenka said: “It gives me 900MHz spectrum band, used for 3G, to
immense pleasure to note their strong strengthen its 4G network.
belief and trust in the intrinsic value of our The telecom operator is deploying L900
precious asset. It is the valuable belief and technology in the 900MHz band to comple-
support of our esteemed financial investors ment its 4G services in the 2300MHz and
that enables us to consistently generate 1800MHz bands.
great value, year after year.” The move, Airtel expects, will improve 4G
Justin Leverenz, portfolio manager of the availability inside buildings and coverage
Invesco Fund, said: “The across homes in Kolkata.
fund in its usual business However, the company does not expect
practice has been investing much cost savings by shutting down 3G as it
The network owns 41 in the Indian markets for would continue to use the same equipment
many years and has been a to offer 4G services. “Our capex will continue
channels across 10 financial investor in ZEEL for deployment of new sites and some load-
for 17 years. This addi- ing on 2300MHz band,” Vittal said.
languages and has an tional financial investment On 1 August, Airtel Ltd posted its first
underscores our continued quarterly loss in 14 years amid a brutal price
all-India viewership confidence in manage- war unleashed by Reliance Jio.
share of 19.7% ment’s ability to deliver
long-term growth and
Airtel swung to a `2,866 crore loss in the
quarter ended 30 June from net profits of
financial returns. The `97 crore in the year earlier, as finance costs
sound fundamentals of Zee make this a rose and it incurred a one-time loss of
highly compelling transaction for investors `1,445 crore.
in the fund.” However, its consolidated revenue from
ZEEL reported revenue of `7,933.9 crore operations grew 4.7% to `20,738 crore in the
in FY19, growing at 12.4% annually over the June quarter from `19,799 crore a year ago.
past five years. Over the same period, Revenue from its Indian wireless business
ZEEL’s net worth rose 18%. grew 4.1% year-on-year to `10,724 crore. Air-
The network owns 41 channels across 10 tel’s consolidated net debt was `1.16 trillion
languages and commands an all-India TV as of June-end.
viewership share of 19.7%. ZEE5, the video- The silver lining for the firm is that its
on-demand streaming platform owned by average monthly revenue per user from
ZEEL, reported a monthly active user base Indian mobile services rose to `129 in the
of 61.5 million in the fourth quarter of quarter from `123 in the preceding three
FY19, while its movie business revenue months.
grew 81% to `2,99.7 crore. This is also due to the fact that its sub-
tanya.t@livemint.com scriber base has shrunk.
OFFICE OF THE RAIPUR SMART CITY LIMITED
e-Procurement Tender Notice
Main Portal : http://eproc.cgstate.gov.in
NIT NO :- 165/RSCL/2019, RAIPUR, DATED : 23/07/2019
Online bids are invited for the following of works up to 13.08.2019 at 17:00 hours.
Sr. System EMD
Name of work/Description of work Time Period
No. Tender No. Amount (Rs.)
SETTING-UP OF 100 TPD CAPACITY PROCESSING 18 Months
1 53550 AND RECYCLING FACILITY FOR CONSTRUCTION AND 10000/- (Including
DEMOLITION WASTE IN RAIPUR THROUGH PPP MODE rainy season)
The details can be viewed and downloaded online directly from the Government of Chhattisgarh
e-Procurement Portal https://eproc.cgstate.gov.in from 23/07/2019 17:30 Hours (IST) on wards.
For more details on the tender and bidding process you may please visit the above-mentioned portal.
NOTE :- 1. All eligible/interested contractors are mandated to get enrolled on e-Procurement portal.
2. Contractors can contact Help Desk for any clarification of their doubts regarding the process
of Electronic Procurement System. Help Desk at Toll Free No. 1800 419 9140 or through Email ID
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3. For More Details please download NIT details. AGM
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12 NEWS
August 9 - August.15, 2019 , SINGAPORE/KUALA LUMPUR° WWW.MINTASIA.COM
STOCK PERFORMANCE
Increasing debt, finance costs take
a toll on Reliance Industries shares
The index heavyweight also
has comes under heavy selling
pressure on lower refining and
petrochemical margins
B Y N A S R I N S U LTA N A & K A L PA N A P AT H A K
·······································
MUMBAI
S hares of Reliance Industries Ltd (RIL)
have fallen 20.31% since May, with the
index heavyweight coming under heavy
selling pressure. The stock fell 1.68% on
Wednesday to close at `1,109 on BSE.
In May, the RIL stock fell 4.46%, followed by
a 5.85% decline in June, and a 6.87% drop in
July. This, despite the stock featuring on the
radar of buyers from the start of this year.
Since January, RIL has risen 2% thanks to a
10.68% gain in March—its biggest monthly
increase this year.
In a report released on Monday, Credit
Suisse downgraded the stock to underperform
from neutral and slashed its target price. The
brokerage said given RIL has been free cash
flow (FCF) negative for six years and given
margin pressure in refining and petrochemi-
cal (high supply), FCF is likely to be negative
for FY20-21.
RIL’s total liabilities have already climbed to
$65 billion in FY19 from $19 billion in FY15,
comprising 40% of its enterprise value. Total
interest cost has risen to $4 billion in FY19
from $1.2 billion in FY15.
Credit Suisse analysts cut RIL’s FY21/22
earnings per share (EPS) target by 5% to factor
in lower refining and petrochemical margins.
“Our enterprise value of $141 billion values
refining at six times FY21 EV/EBITDA, petro-
chemical at seven times FY21, retail at 22
times FY21, Jio on eight times FY25,” Credit
Suisse analysts Anubhav Aggarwal and Sayan-
tan Maji said in the report.
RIL’s burgeoning debt is also an overhang.
In the last fiscal year, the company’s finance
cost more than doubled to `16,495 crore from
`8,052 crore in the previous year.
“The increase was primarily on account of
MANAGEMENT CHANGE
Mindtree appoints Cognizant’s Chatterjee as CEO
B Y A NIRUDH L ASKAR
anirudh.l@livemint.com
·······································
MUMBAI
H ome-grown IT company Mindtree Ltd
on Friday, 2 August, appointed Debashis
Chatterjee as its new chief executive officer
(CEO) and managing director (MD). Chatter-
jee, who stepped down as the president of
global delivery at New Jersey-headquartered
Cognizant on 31 July, has been appointed for
a period of five years.
This is the first top management change at
Mindtree since the company was taken over
by engineering behemoth Larsen and Toubro
Ltd (L&T).
In an exchange filing on 2 August, Mindtree
said it has also appointed S.N. Subrahmanyan
as its non-executive vice chairman. Subrah-
manyan currently serves as L&T group’s man-
aging director and CEO.
Chatterjee, who was also Cognizant’s
global leader for digital systems and technol-
ogy practice, will be the first person outside
Mindtree’s seven-member founding team to
be appointed as the chief executive officer. He
is the third person to take up the top job since
the company was launched 20 years ago, and
has been appointed till 1 August 2024.
DOWNWARD TREND
Shares of Reliance Industries have fallen 20.31% since May. On Wednesday, 7 August, the index
heavyweight closed at 1,109, down 1.68% from the previous close on BSE.
1,450
(in )
1,400
1,391.8
1,350
1,300
1,250
1,200
1,150
1,109
1,100
30 Apr 2019 7 Aug 2019
Source: Bloomberg
the commencement of digital services busi-
ness, petrochemical projects at Jamnagar and
higher loan balances,” RIL said in its annual
report. The company made a capital expendi-
ture of more than `1.32 trillion in the last fis-
cal year. It ended the year with a gross debt of
more than `2.87 trillion. In the June quarter,
RIL posted gross refining margins of $8.1 per
barrel while its petchem production declined
10% quarter-on-quarter.
“We have not seen this kind of weakness in
both refining and petrochemical margins
probably in the last three-four years. Also, the
first-quarter earnings were muted. The petro-
chemicals margins are under pressure even
though they remain flattish because of their
efficient cost. The fact is that from here on,
growth is very difficult in the near term,” said
an analyst from a domestic brokerage, who
declined to be named.
After RIL posted its June quarter results,
New role: Mindtree CEO and MD Debashis Chatterjee (left) and non-executive vice chairman
S.N. Subrahmanyan.
The development is in line with L&T group
chairman A.M. Naik’s letter to Mindtree’s
employees on 18 July, following his appoint-
ment as the chairman of Mindtree. “A new
CEO will join soon to lead the team into a
future that will benefit all stakeholders,” he
had said.
Rostow Ravanan, who was part of Mind-
tree’s founding team, had resigned on 5 July
RIL's debt-to-equity ratio for the past five fiscal years
FY15 0.74
FY16
FY17 0.75
FY18
FY19
0.72 0.73
0.74
0.74 0.75
0.75
0.76 0.77
RIL's net worth over the past five fiscals
(in  cr)
324,644
289,798
258,511
218,482 231,556
FY15 FY16 FY17 FY18
Source: RIL annual report 2018-19
analysts at Jefferies said that Q1FY20 was
noisy, as expected, while core performance
was soft, with lower refining margins,
petchem volumes, and telecom average reve-
nue per user (Arpu). In June quarter, Arpu for
its telecom business came in at `122. During
the quarter, RIL’s revenue rose 22.1% from
`1.41 trillion in the year-ago period to `1.72
trillion in the first quarter of fiscal 2019-20.
It had said that with FCF uncertain, EPS is
at risk, and valuations rich, it has underper-
form rating with lower liabilities post the
InvITs offset by lower EV in telecom and retail.
In July, Reliance closed a `25,215 crore deal
with Canada’s Brookfield Asset Management
to sell its 49% stake in telecom tower assets,
and for Brookfield to also take over the Tower
Infrastructure Trust.
Currently, RIL has 22 buy ratings, 9 hold
ratings and 5 sell ratings on Bloomberg.
nasrin.s@livemint.com
as Mindtree’s CEO after L&T successfully
completed its open offer to acquire the
former despite vehement resistance from the
founder-promoters.
A mechanical engineering graduate from
Jadavpur University, Kolkata, Chatterjee over-
saw all service lines in digital systems and
technology practice at Cognizant. After join-
ing Cognizant in 1996, he held several key
mintasia
Warburg Pincus
pledges stake in
IDFC First Bank
B Y S WA R A J S I N G H D H A N JA L
swaraj.d@livemint.com
········································
MUMBAI
G lobal private equity major Warburg Pin-
cus has pledged its entire 9.86% share-
holding in private lender IDFC First Bank Ltd
to raise funds, two people aware of the devel-
opment said, requesting anonymity.
Warburg holds 471.73 million shares in IDFC
First Bank through an entity called Cloverdell
0.78 Investment Ltd. Based on Monday’s closing
price of `41.1 per share, the Warburg stake is
0.78
worth around `1,940 crore.
Warburg pledged the shares with Citigroup,
Barclays and Standard Chartered to raise
funds, said the first person.
“The funds mobilized by Warburg through
the loans will be used to return capital to lim-
ited partners (LPs, investor in a private equity
fund) of the funds managed by Warburg. PE
firms generally do this to provide liquidity to
LPs in a fund which is nearing its life, as well
as for other reasons,” he added.
According to the second person, Warburg
has mobilized around $150 million by pledg-
ing the entire IDFC First stake.
FY19 Warburg Pincus, Barclays, Standard Char-
tered and Citi declined comment to Mint’s
queries.
PARAS JAIN/MINT
In 2012, Warbug had acquired a 42.73%
stake in Capital First (before the merger with
IDFC Bank), formerly Future Capital Holdings
Ltd, from Pantaloons Fashion and Retail Ltd.
Subsequently, in October that year, it had
bought an additional 24.43% stake through an
open offer.
In May 2017, Warburg sold a 25% stake in
Capital First through an open market transac-
tion to several global and domestic investors,
including Singapore’s sovereign wealth fund
GIC Pte. Ltd.
In December 2018, IDFC Bank and Capital
First merged to form a combined entity with
assets of `88,000 crore under management
and a distribution network of 194 branches.
As on 30 June, the bank had total assets of
`1.12 trillion under management with retail
loans comprising 40% of the asset base. The
bank’s gross non-performing assets (NPA)
stood at 2.66%, while capital adequacy ratio
was at 14%.
management positions, also serving as the
executive vice president and president, tech-
nology solutions at Cognizant.
Chatterjee, according to Cognizant, was
instrumental in growing the company’s bank-
ing and financial services practice, which is
one of the largest verticals for the New Jersey-
based company today.
In a letter dated 16 July Naik termed Mind-
tree as “unique”. “…Over the past decade we
have closely followed, with a lot of respect
and admiration the organization’s (Mind-
tree’s) rise from an innovative startup to a
digital powerhouse…I see this (the takeover
of Mindtree by L&T) as the coming together
of two great institutions with a shared passion
for delivering extraordinary value to clients,
employees, shareholders…All this spells
growth. It means you are now artists with a
much larger canvas before you, more avenues
leading up and more opportunities to do
what you do the best,” he added.
“…We believe people are the prime movers
and real assets of an organization….And look
where L&T’s people have taken the com-
pany—deep into the oceans, and up into
space,” said Naik.
Mint has reviewed a copy of the letter.
Naik replaced Krishnakumar Natarajan
who resigned as chairman and a board mem-
ber of Mindtree on 5 July.
On 16 July, L&T became the new promoter
of Mindtree after buying a 60.59% stake and
inducting three nominees from L&T as direct-
ors in Mindtree.
 mintasia
PUBLIC OFFERING
Everstone Capital puts up to `700 cr
Burger King India share sale on menu
Private equity firm Everstone
plans to file the draft prospectus
for the Burger King India share
sale in the next two months
B Y R IDHIMA S AXENA &
S WA R A J S I N G H D H A N J A L
·······································
MUMBAI
H omegrown private equity firm Ever-
stone Capital plans to launch a `500-
700 crore initial share sale of its quick
service restaurant (QSR) chain Burger King
India, said two people aware of the develop-
ment.
Everstone has recently started work on the
draft prospectus for the initial public offering
(IPO), which it aims to file with the markets
regulator Securities and Exchange Board of
India in the next two months, said one of the
two people cited above, requesting anonym-
ity as he is not authorized to talk to reporters.
“The IPO will include both primary and
secondary share sales. The company will
raise primary capital as it is a growing busi-
ness and they need to invest in expanding
their number of outlets,” the person said.
“Everstone, on the other hand, would like to
use the listing to take some money off the
table. The exact proportions of the primary
and secondary share sales are still being final-
ized.”
Everstone Capital owns a majority stake in
Burger King India. The QSR chain’s filings
with the Registrar of Companies (RoC) shows
that the private equity firm invested `100
CONSUMPTION TRENDS
For FMCG firms and consumers, `10 packs fit the bill
B Y S U N E E R A TA N D O N
suneera.t@livemint.com
·······································
NEW DELHI
I ndian consumers need little convincing to
embrace products at cheaper price points;
after all, good things come in small packages.
The nation’s largest household goods mak-
ers are introducing cheaper packs—`10 is the
popular choice—of products ranging from
soaps to chocolates to attract new consumers
as an economic slowdown in Asia’s third-
largest economy depresses demand.
Over the past few quarters, brands such as
Doritos, Dabur Amla hair oil and Babool
Ayurvedic toothpaste have all released prod-
ucts in `10 price packs. Lower prices are
expected to help companies reach newer
consumers, especially as they expand their
reach in rural markets. Moreover, with expo-
sure to the internet, even rural shoppers are
aspiring to buy premium products, albeit at
an affordable price, said top executives at
consumer product companies.
“The `10 price point is required because
we have to increase consumption. For doing
that, we have to increase penetration,” said
Mohit Malhotra, chief executive of Dabur
India Ltd. “So, if you look—whether they are
economy brands or premium brands, they
are all reaching out at that price point.”
In recent quarters, Dabur India has intro-
duced a Real Koolerz drink at `10, and even
rolled out its Amla hair oil priced at `10
(30ml). The company recently launched a
`10 Babool Ayurvedic toothpaste and is
pushing its oral care brands such as Red
toothpaste and Babool’s `10 packs as it
expands its rural reach.
To be sure, India is a large value market,
Expansion plans: Everstone plans to use the capital to expand the number of Burger King outlets.
crore in the company in fiscal 2019.
Investment banks Kotak Mahindra Capital
and JM Financial have been appointed to
advise the company on the IPO, said the sec-
ond person cited earlier, also requesting ano-
nymity.
An email sent on 1 August to Everstone
Capital did not elicit a response. JM Financial
and Kotak Mahindra Capital too did not reply
to emailed queries.
To be sure, with domestic stock markets
volatile and Burger King posting losses
according to its latest available financial
results, it remains to be seen whether inves-
Cheaper packs: Over the past few quarters, brands such as Doritos, Dabur Amla hair oil have all
released products in `10 price packs.
which means that biscuit packets priced as
low as `2 and one-time shampoo sachets
priced at `1, as well as chips and chocolates
at `5 and `10 draw big numbers for compa-
nies. This is especially true for categories
such as salty snacks, chocolates and biscuits.
However, companies said that over the last
two-three years, the `10 price point has been
growing at a faster clip. “Small packs and
sachets are an important part of our portfo-
lio,” said a spokesperson at Hindustan Uni-
lever Ltd that launched a `10 pack of Surf
Excel detergent a few years ago. “Such packs
allow us to reach first-time users more effec-
tively, introducing our offerings to them. They
are particularly useful to drive market devel-
opment of nascent categories. Apart from
this, small packs and sachets allow us to
August 9 - August.15, 2019, SINGAPORE/KUALA LUMPUR ° WWW.MINTASIA.COM
PRADEEP GAUR/MINT
tors are keen for an IPO of the company.
Burger King India’s loss widened to `62
crore in the fiscal ended 31 March 2018 from
`57 crore in the previous year, showed filings
with RoC. Sales, however, surged 64% to `389
crore in fiscal 2018 from `234 crore a year
earlier, underscoring India’s growing food
service industry.
While domestic consumption growth has
seen headwinds in recent months, as evi-
denced by the slowdown in the sales of big-
ticket items such as cars, restaurants and QSR
chains have seen decent growth in revenue.
For the quarter ended 30 June, Jubilant
REUTERS
make available quality and aspirational prod-
ucts at affordable prices to consumers.”
In the biscuits category, for instance, `5
and `10 price packs constitute over 60% of
the overall market.
Parle Products Pvt. Ltd has seen contribu-
tion of `10 packs to sales jump from less than
15% a few years ago to almost 25% now as it
introduces trial packs for some of its pre-
mium cookies across rural and urban mar-
kets. The `10 pack, said Mayank Shah, cate-
gory head at Parle Products, has been grow-
ing at a faster rate over the past two-three
years, though `5 packs lead sales for the com-
pany.
“Ideally, it makes sense to gradually move
the consumer to a price point, which would
be convenient for you to cater to as well as
NEWS 13
Foodworks Ltd, which runs the Domino’s
Pizza chain, reported a 9.9% growth in reve-
nue to `940.1 crore.
In the same quarter, Hardcastle Restau-
rants Pvt. Ltd, which runs McDonald’s in west
and south India, reported an 11.8% growth in
revenue to `381.8 crore.
CARE Ratings said in a May report that the
restaurant and food service industry is
expected to grow at a CAGR of 10.4% over five
years through 2022 to reach `5.5 trillion.
“The growth will be supported by long-
term healthy demand outlook backed by
higher disposable income, favourable demo-
graphics and rising aspirations of the bur-
geoning middle class, increasing internet
penetration, increasing number of women
joining the workforce, increasing focus on
health and wellness, technological advance-
ments, and growing urbanization,” it said.
“With the surge in investments in the online
food ordering business, the industry is
expected to witness substantial growth.”
Burger King had 129 outlets in India for the
year ended 31 March 2018 in more than 30
cities, including Delhi-NCR, Mumbai, Pune,
Chennai, Hyderabad, Bengaluru, Chandigarh,
Ludhiana, Amritsar and Kochi.
Everstone runs Burger King restaurants in
India and Indonesia as part of its F&B Asia
Ventures platform. The investment firm
opened its first Burger King outlet in India in
November 2014.
F&B Asia Ventures is an investment hold-
ing company, a pan-Asian food and beverage
platform with assets across multiple cuisines,
geographies and formats. It owns and oper-
ates several brands such as Burger King
(India and Indonesia), Domino’s (Indonesia),
Singapore-based bar and dining chain
Harry’s and London-based Duck and Rice.
Several firms of Everstone’s portfolio have
gone public in the last couple of years.
Last May, Everstone-backed non-banking
financial company IndoStar Capital Finance
Ltd raised `1,844 crore through an IPO. In
2017, the PE firm’s education sector-focused
publishing company S. Chand and Co. got
listed in a `728.5 crore IPO.
ridhima.s@livemint.com
affordable for consumers, and `10 fits in very
well there,” he said.
For Mondelez India, which sells the coun-
try’s largest chocolate brand Cadbury Dairy
Milk, the `10 price point for the brand has
been growing at a faster pace and has
trumped the `5 pack over the last few years.
Close to 80% of units sold under the choco-
lates and confectionery category in India fall
in the sub-`10 price point.
“For the longest time, the category was
heavily dependent on `5,” said Anil Viswa-
nathan, director of marketing (chocolates) at
Mondelez India. Today, the `10 Dairy Milk is
available in more stores than the `5 pack, he
added. However, for some of its other brands
such as Perk and Gems, the `5 pack contin-
ues to lead growth.
Earlier this year, PepsiCo launched its pre-
mium nachos brand Doritos at `10, apart
from its Lay’s Maxx, to make it more accessi-
ble to urban consumers. Recently, it even
launched a Lay’s south Indian chips at that
price.
“The `10 pack is growing quite fast for us,
in both urban and rural; of course led by
urban,” said Dilen Gandhi, senior director of
marketing (foods category) at PepsiCo India.
“It is a more sustainable price point from a
manufacturing standpoint, and overall con-
sumer affordability is increasing; it is also
partly driven by the fact that a lot of innova-
tions are coming at `10.”
For wholesale retailer Metro Cash and
Carry, the `10 price pack has seen a 150%
jump in sales on an annual basis in May.
“The `10 is a very attractive price point,
which allows for easy distribution and pene-
tration into the market,” said a company
spokesperson.
 mintasia
MEDICAL REFORMS
Will NMC bill bring transparency in
India’s medical education system?
The National Medical Commission
Bill seeks to set up a regulatory
body with a clean image in place
of the MCI marred by corruption
BY N EETU C HANDRA S HARMA
neetu.s@livemint .com
·······································
NEW DELHI
T he medical education system in India
is set to witness significant changes as
the National Medical Commission Bill,
2019 heads for implementation.
Last week, the Rajya Sabha passed the bill
with two amendments—increased represen-
tation from state medical council and vice-
chancellor of medical universities—and
referred it to the Lok Sabha, which too passed
the amendments on Monday, 5 August. The
bill will now go to the President for his assent.
Seeking sweeping reforms to medical edu-
cation, largely opposed by the medical frater-
nity, the bill attempts to set up a regulatory
body called the National Medical Commis-
sion in place of the tainted Medical Council
of India (MCI).
“Marred by corruption, the MCI underwent
major judicial interventions for last 20 years.
The government after major deliberations
realized that the idea of a self-regulatory body
wasn’t fruitful. The NMC will bring a very
transparent era in medical education with
eminent personalities running it for a single
term of four years,” Arun Singhal, additional
secretary, ministry of health and family wel-
fare told Mint.
According to the government, the NMC bill
will provide for a medical education system
that improves access to quality and affordable
medical education, and ensures availability of
adequate and high quality medical profes-
sionals in all parts of the country. The NMC
will bring in changes in the way medical col-
leges are assessed, MBBS entrance are con-
ducted and bring in new provisions such as
GROWTH BOOST
Shift in its pricing strategy helps
Apple post robust sales in India
B Y N AVA D H A P A N D E Y
navadha.p@livemint.com
·······································
NEW DELHI
F or premium phone maker Apple Inc.,
growth in price-sensitive India finally did
come, but at a price. Thanks to a strategic
shift in pricing strategy, India, once an insig-
nificant market for Apple, has bounced back
to growth in the fiscal third quarter at a time
when the Cupertino, California-based com-
pany sold fewer iPhones globally compared
with the previous year.
In an analysts’ call to discuss earnings for
the quarter ended 29 June, Apple chief execu-
tive Tim Cook expressed happiness on the
sales performance in India which “grew (in)
strong double digits”, and where it has ambi-
tions to step up manufacturing capacity.
“India bounced back during the quarter,
we returned to growth there. We’re very
happy with that,” Cook said last week.
The rebound was driven by a change in
Apple’s consumer plans for the world’s sec-
ond-largest mobile phone market, dominated
by Chinese budget brands such as Xiaomi,
Vivo and OPPO.
For the first time in its history, Apple went
against the grain and decided to opt for price
Next step: The National Medical Commission Bill 2019 will now go to the President for his assent.
exit exams and regulation of course fees in
private colleges. Section 15 (1) of the bill pro-
poses a common final-year MBBS exam, the
National Exit Test (NEXT), before an individ-
ual starts practising medicine and for seeking
admission to post-graduate medical courses
and for enrolment in the state register or the
national register. There will also be a screen-
ing test for foreign medical graduates.
“The NEXT for getting a licence to practise
and enrol into the medical register is being
opposed, but it is one of the major reforms in
medical education with NMC. There will be
single National Eligibility cum Entrance Test
(NEET) to admit students to all medical col-
leges including AIIMS and JIPMER along with
a common counselling. The final-year exam
of the MBBS course will now be called as
NEXT, it will also be treated as entrance exam
for PG courses,” said Singhal.
“We have included the skill-based training
during the internship period and MBBS
cuts and credit card cashbacks for its flagship
model iPhone XR.
In April, the phone maker brought down
the price of the 64 GB iPhone XR from
`76,900 to roughly `59,000. Similar discounts
were introduced for other variants of the
same model as well.
The price-sensitive Indian
consumer lapped up this
scheme, and, almost over-
night, the model became a
For the first time,
best-seller in the category. Apple opted for
An improvement in Apple’s
performance in India is key price cuts and credit
given its ambition to make
top-end models in the coun- card cashbacks for
try through its supplier Fox-
conn Technology. Local
iPhone XR
manufacturing will offer it
more room to cut prices.
“In the past, the company was gloriously
indifferent to India. The softening of global
demand seems to be driving their new
approach. Potentially, India is a large market
and Apple is a desirable brand but currently
too expensive for the market. Given that their
new product pipeline isn’t as exciting as it
once was, it makes sense for the company to
activate the Indian market through aggressive
August 9 - August.15, 2019, SINGAPORE/KUALA LUMPUR ° WWW.MINTASIA.COM
MINT
course has been made competency-based.
This is one of the ways to measure the out-
come of medical education which wasn’t
there earlier. Now, students can focus on
internship instead of preparing for PG
exams,” he said. The NMC will frame guide-
lines for determination of fees and all other
charges in respect of 50% of seats in private
medical institutions and deemed to be uni-
versities which are governed under the provi-
sions of this Act.
“Before this, we never had the power to
regulate course fee. With NMC, we will have
some control over fee in private colleges with
50% seats, that too will vary from state to
state. More so, the state governments will
have more power and freedom to take their
own decisions regarding fee,” said Singhal.
“The bill is an outline. The rules, details of
final framework, standard operating proce-
dures and modalities are yet to be developed
by the government.”
pricing and discounts while they still can,”
said Santosh Desai, CEO of brand manage-
ment consultancy Future Brands.
Apple’s sales volume in the premium
smartphone segment in India (`30,000 and
above) doubled annually in the June quarter
driven by the price correction for iPhone XR.
It, however, lags behind Chinese smartphone
maker OnePlus which captured its highest-
ever shipment share of 43% in the June quar-
ter and is the leader in the premium segment
followed by Samsung with 22% share, Coun-
terpoint Research said on Wednesday. Apple
has 20% share in the premium segment but a
minuscule share in the overall domestic
smartphone market.
Apple’s change in stance
towards India also comes at
a time when the growth in
premium smartphone cate-
gory is outpacing that of the
overall smartphone cate-
gory. Middle class incomes
are rising and smartphones
are becoming lifestyle state-
ments than just devices.
Moreover, a new player such
as OnePlus has entered the
market, which was once dominated by only
Samsung and Apple. Budget brand Xiaomi is
also eyeing the premium phone segment.
“The Indian youth thinks of a smartphone
as a lifestyle statement and is convincing the
household decision-maker to opt for a
longer-lasting premium phone than having to
invest in multiple budget phones over time,”
said Tarun Pathak, associate director at Coun-
terpoint Research.
NEWS 15
The case against
reservations in
jobs for locals
FROM PAGE 14
social security benefits (more than cultural or
linguistic differences) as the key barrier for
interstate migration and advocated enabling
provisions to overcome this deficit. Instead of
nativism, states need to create a framework
where safe interstate migration for work is
facilitated and fiscal coordination is pursued
to enable the portability of social security
benefits. If this is done, interstate migration
would rise and provide more opportunities to
remedy regional disparities. Matching skills
seamlessly across geographies within India
would also facilitate the ease of doing busi-
ness, a much valued goal continually empha-
sized by the current central government.
Curious case of MP & AP
While interstate migration for work has
constitutional safeguards and is not a large
phenomenon, it is puzzling that states such
as Madhya Pradesh and Andhra Pradesh, in
particular, both states of net out-migration,
should consider legislating job protection for
locals.
Madhya Pradesh is not only relatively poor,
but it has a large share of migrant outflow in
bilateral flows with other states of India. The
share of interstate migrants for economic rea-
sons in its urban workforce averages less than
5% across districts and crosses 10% only in
Singrauli, Anuppur and Bhopal. Such low fig-
ures should not merit thoughts of job protec-
tion.
The Andhra Pradesh case is one of hypoc-
risy or selective amnesia since so many peo-
ple from its coastal region have had vibrant
links with Hyderabad (now in Telangana) and
the US and remittances continue to support
both investment and philanthropy. It should
know the uncertainty caused by Donald
Trump’s protectionist stance for many soft-
ware engineers and businesses from that
region.
If Telangana were to reciprocate with a
similar legislation, it would be Andhra Pra-
desh that would suffer more (because of
reduced access to the economic boomtown of
Hyderabad).
Census figures clearly show that economic
migrants in the urban areas of districts that
comprise the newly carved Andhra Pradesh
mostly came from within those same districts
(originating from a nearby town or village)
and a miniscule proportion of the urban
workforce came from outside.
In such a scenario, nativist legislation is
unlikely to be a binding constraint but it begs
the question of its necessity in the first place.
Andhra Pradesh has set a dangerous prece-
dent, which, if pursued by other states, will
lead to a collective race to the bottom. Nativ-
ism concerns have been directed in the past
against “dikkus, Bengalis, lungiwalas and
ghair-mulkis” and have also prompted wide-
ranging critiques including one sarcastic let-
ter to the editor of a newspaper in 1973: “Only
those born in the alluvial soil can work in the
alluvian region. They may call themselves
‘alluvians’… To solve the problem of babies
born in the air (planes), they should be
employed as pilots and air hostesses. Nobody
except the sons and daughters of the air
should get these air jobs. They should be
allowed to stay on earth in a non-classified
soil region when they are off-duty.”
Thus, calls for nativism and their critiques
are not new in India and they tend to occur
during periods of economic sluggishness. The
calls for nativism should also be seen against
the backdrop of the economic slowdown. The
best way to grow out of nativism is to ensure
that the economy is back on track at the earli-
est.
Chinmay Tumbe is an interstate migrant
who teaches economics at IIM Ahmedabad.
He is the author of India Moving: A History of
Migration.
16 NEWS
August 9 - August.15, 2019 , SINGAPORE/KUALA LUMPUR° WWW.MINTASIA.COM
RETHINKING MONEY:
IDEAS FOR CAPITALISM 2.0
Can the radical new ideas of digital money and social stock exchanges create a new form of capitalism?
B Y R AJNI B AKSHI
feedback@livemint.com
·······································
T wo recent, utterly unrelated, events
draw attention to one of the most com-
plex puzzles of our times—can money
work differently, both as a token of exchange
and a store of value?
One is Facebook Inc.’s—so far abortive—
plan to launch a digital currency called Libra.
The other is the Indian government’s plan to
launch a “social stock exchange”, announced
in the recent Union budget. Facebook’s Libra
is deeply embedded in the dominant para-
digm of our times—where convenience and
ease of participation at the front end are
accompanied by unprecedented concentra-
tion of power and control at the back end.
The social stock exchange idea acknowl-
edges that “normal” capital’s dharma of mul-
tiplying money/wealth is inadequate for the
society as a whole. Therefore, a parallel track
for “impact investment” is proposed to
deliver social and environmental good along
with profits—but money as we know it is left
unchanged.
So far, much of the commentary in
response to both these developments is about
the mechanics and how rapidly technology
threatens to alter the equation between pri-
vate enterprise and governments. What is
being overlooked is the gargantuan ques-
tion—can capitalism be transformed from
within in ways that dissolve gross concentra-
tion of power and actually keep this planet in
a liveable state for the estimated nine billion
people who will inhabit earth in 2050?
A meaningful exploration of this question
has some preconditions. One, that commerce
is not treated as synonymous with capitalism.
Two, there is a willingness to acknowledge
that community or Samaj is as important a
factor as state and markets.
To illustrate the importance of these two
points and how crucial they are to the
future—there is merit in first having a grasp
on the history of money, both as a token of
exchange and a store of value.
Birth of money
While the “market” as we know it today is
barely three centuries old, some form of
bazaar-based exchange has been around for
about 5,500 years. Metal coins emerged
around the sixth century BC and multiple
tokens of exchange, including silk and
tobacco, were operational at different levels
of economic activity across the world till
modern times.
The disruption that shaped our present was
not merely the adoption of paper money, but
the practice of banks creating money by lend-
ing it into existence. This practice, originating
in late-17th century Britain, along with the
proliferation of joint stock companies and
then stock exchanges was essential to the
unstoppable power of capitalism. The crea-
tion of a single national currency simultane-
ously consolidated the power of nation states
and the modern market.
Additionally, governments worked hard to
facilitate the “market” as a mechanism driven
almost exclusively by the money profit
motive. This was done by actively undermin-
ing existing community-based bazaar mecha-
nisms in which “value” was often defined in
non-monetary ways and generated through
relationships where reciprocity, cooperation,
and competition were intricately intermin-
gled.
By the early 20th century, there were chal-
lenges to the power of the state and banks to
create money as a token of exchange. For
instance, the economic philosopher Friedrich
Hayek, a passionate champion of free mar- actions in both goods and services. For exam-
kets, supported the idea of non-governmental ple, a bakery participating in a LETS may
complementary currencies as part of his price its bread partly in LETS points and
shrink-the-state agenda. partly in the national currency, to cover costs
Then, there were those who challenged the of raw materials. The emergence of digital
state’s monopoly over money as a token of technology has removed most of the logistical
exchange in order to energize local economy. difficulties that complementary currencies
This is why during the Great Depression of faced earlier.
the 1930s, community currencies sprang up An internet-based global trading network,
as a survival mechanism on both sides of the known as Community Exchange System
Atlantic. These town-level or regional curren- (CES), claims to enable participants in 99
cies were created either by a local governance countries to buy and sell goods and services
body or a private entity and managed to without using a national currency. This mobi-
infuse dynamism within the otherwise mori- lizes “the real wealth of a community, foster-
bund local economy. However, as soon as any ing self-reliance and self-esteem, fostering
community currency became notable in social justice and equality, keeping wealth
scale, spread, and efficiency, it was outlawed where it is created and fostering a sense of
because it was perceived as a challenge to community”.
both the state and banks. The development of blockchain technol-
After a lull of about four decades local cur- ogy, with its open ledger transparency, is
rencies resurfaced in the 1980s—primarily in potentially a boon that should support this
the US, Canada and to a smaller extent in core impulse behind community currencies.
Europe. Their objective was to foster a sense Instead it has, so far, largely been used for the
of community through a complementary spread of cryptocurrencies which are about
token of exchange that pure accumulation, not
helped those who were short building community and
of the official currency.
Among the most notable of
The core objective of local economy. Bitcoin, the
most famous of the crypto-
these complementary cur- ‘Time Banking’ is to currencies, pegs its value to
rencies are Time Dollars and the US dollar and its swings
Local Exchange Trading Sys- foster a community resemble the conventional
tems (LETS). market’s ups and downs.
Innovated by Edgar Cahn, in which everyone But the game is far from
an American lawyer, Time over. The communitarian
Dollars are a way of record-
feels like an asset impulse behind currencies
ing, storing, and rewarding like Time Dollars and LETS
transactions within a neighbourhood or is being expressed in new forms. For example,
group of people. As members in a Time Dol- Holochain is a rapidly growing non-profit that
lars community perform services for each is using blockchain to “liberate our online
other, they earn time credits which they can lives from corporate control over our choices
then use to buy other services within their and information”. According to its website,
group. Holochain aims to do this by building a
The core objective of “Time Banking” is to decentralized, peer-to-peer network which
foster a community in which everyone feels enables participants to build applications for
like an asset and where some kinds of work is a wide range of collaborative endeavours
deliberately not given a monetary “price” in including vendor relationship management,
order to encourage reciprocity and mutual cooperatives, sharing economy apps, com-
respect. According to one estimate, Time Dol- munity resource management.
lar groups are currently operating in 34 coun- Siddharth Sthalekar, the founder of a Singa-
tries including Argentina, Israel, Greece, pore based startup called Sacred Capital, is
Japan, South Korea, New Zealand, Taiwan, among those young people who believe that
Senegal, Spain, UK and the US. the digital age can give birth to a new econ-
LETS are also a mutual credit system that is omy whose primary currency will be reputa-
able to facilitate a much wider range of trans- tion. Take for example Holo Fuel, the crypto-
mintasia
JAYACHANDRAN/MINT
currency attached to Holochain. This works
as “a system of agreement between users not
associated with a monetary value, but rather
a proof of service value. It is a post-monetary
system of community engagement, not a sys-
tem of gambling or profit”.
Compared to this vision, Facebook’s prom-
ise that Libra would be more inclusive and
serve unbanked people is laughable since
“community”, in this case, is an illusory front
for enormous concentration of power at the
back end. Facebook’s reach includes seven
million advertisers, 90 million small busi-
nesses, and 2.38 billion active monthly
users—roughly a third of the world’s popula-
tion.
An inter-ministerial committee on virtual
currencies, headed by former finance secre-
tary Subhash Chandra Garg, has recom-
mended that all cryptocurrencies be made
illegal in India because they pose a threat to
the sovereign power of the state. But its sug-
gestion that the government issue a sovereign
cryptocurrency misses the point—namely,
that with appropriate regulation people-gen-
erated complementary currencies can poten-
tially promote more egalitarian participation
and thus revitalize village and regional econ-
omy.
However, this potential cannot be fully
explored in isolation without also asking if
money as a store-of-value can be reconfig-
ured. This is the context in which the promise
and peril of a social stock exchange needs to
be assessed.
Economy of permanence
The word “capital” has its origins in the
Latin word for head because, till modern
times, wealth was largely equated with the
head count of cattle and horses a person or
group could command.
French historian Fernand Braudel’s sweep-
ing three volume study titled Civilization and
Capitalism 15th to 18th Century records many
ways in which material value was earlier
defined and stored in organic things of actual
use to humans. In India, some of these sys-
tems survived till the late 20th century in the
form of community-protected forests as well
as collective forms of water and soil manage-
ment, which were ascribed greater value than
TURN TO PAGE 17
 mintasia
ANTI-PROFITEERING CLAUSE
Firms may get to raise prices after
transferring GST rate cut benefits
Liberty to raise price as per biz
cycle will come as a relief for
FMCG makers that have faced
‘profiteering’ charges under GST
BY G IREESH C HANDRA P RASAD
gireesh.p@livemint.com
·······································
NEW DELHI
C ompanies are free to raise prices of
products and services as per their
business cycle without fear of getting
caught in the anti-profiteering provision in
the Goods and Services Tax (GST) law once
they have passed on the benefit of tax rate
cuts to consumers, said a government official.
The clarification from the official, who has
knowledge of how the National Anti-profit-
eering Authority (NAA) and its investigative
arm work, comes at a time when ambiguity in
the law and the recent extension of the profit-
eering watchdog’s tenure as well as an
increase in penalty for violation have led to
concerns that the pricing liberty of businesses
stands curtailed.
Analysts said that due to lack of guidelines
on how to implement anti-profiteering provi-
sions in the Central GST Act, companies are
not sure how long they are expected to main-
tain a price after they reduce price to pass on
the benefit of a tax cut to consumers. This is
also worrisome for companies that have faced
charges of profiteering for specific periods in
the past. The law is silent on how long com-
panies have to maintain the reduced price
after a tax rate cut. This open ended provi-
sion, in effect, results in price administration,
they said. Under GST law, not passing on the
benefits of tax rate reduction or availability of
input tax credits to consumers by businesses
and merchants amounts to profiteering.
The liberty to increase price as per the
business cycle will come as a relief to compa-
nies, especially large fast-moving consumer
goods (FMCG) manufacturers that have faced
‘profiteering’ charges under GST law.
“Whenever there is a reduction in GST rate,
businesses have to pass on the benefit to con-
sumers immediately. Thereafter, companies
are free to follow their cycle of price adjust-
ments as they deem fit in line with market
forces. There is no lock-in period for main-
taining reduced prices,” said the first official
cited above, who spoke on condition of ano-
nymity. If a company has increased prices of
Rethinking money: Ideas for capitalism 2.0
FROM PAGE 16
either precious metals or paper wealth.
J. C. Kumarappa, best known as Mahatma
Gandhi’s economist, went far beyond these
existing traditions when he wrote Economy of
Permanence in 1945. This seminal text made
a strong case for anchoring material value not
merely in organic life but in those products
and processes which ensure a balance that
serves both humans and the rest of nature.
Though Kumarappa’s work inspired E. F.
Schumacher’s more famous text, Small Is
Beautiful: A Study of Economics as if People
Mattered, his core insight was entirely
ignored. Thus, the global economy shaped by
the Bretton Woods agreement after World
War II came to be ruled by a measure of suc-
cess, the gross domestic product, which
equates all value with monetary transactions
and makes no distinction between renewable
and non-renewable resources or processes.
Consequently, use of non-renewable natu-
ral-capital, such as fossil fuels and other
August 9 - August.15, 2019, SINGAPORE/KUALA LUMPUR ° WWW.MINTASIA.COM
AP
Policy clarification: Ambiguity in the law and the recent extension of the National Anti-profiteering
Authority’s tenure as well as an increase in penalty for violation have led to concerns that the
pricing liberty of businesses stands curtailed.
products in a particular month in the past, reduced price is to be continued,” said EY tax
that is a valid explanation for a price increase partner Abhishek Jain.
subsequent to reducing prices in line with a The other factor that has got businesses
tax rate cut. Businesses, however, should be worried is the perpetual nature of the anti-
in a position to defend themselves in case of a profiteering provision in the CGST Act
complaint, said the person. although the tenure of the NAA is defined.
Experts said it may not be a very easy task The provision which mandates immediate
for businesses to defend price increases con- price reduction of goods and services com-
sidering the complexities in the overall busi- mensurate with the tax cut, does not specify a
ness environment and pricing. They said past sunset clause. A second government official,
price trends may show movement both ways who also spoke on the condition of anonym-
and may not be sufficient to justify a price ity, said that the anti-profiteering provision
increase in case of a profiteering investiga- may be administered by any designated gov-
tion. ernment official or agency in a less elaborate
“Businesses may at times want to increase way after NAA’s term ends as the tax system
margins on a better selling product to offset would have stabilised by then. The GST
losses in other products. There is still an Council extended the term of NAA by two
ambiguity on whether that increase in margin years in June, which enables it to continue to
for some products would be acceptable by work till end of 2021. The Council had also in
the authorities as a justification for a price June decided to let NAA impose a penalty
increase. Separately, industry has also been equivalent to 10% of the profiteered amount
looking forward to detailed guidelines on cal- on those who pocket the tax benefit meant for
culating the amount of benefit to be passed consumers.
on and in specific, the duration for which the
mined minerals, is counted as value creation tionate to those actually generating the social
when it is actually depletion of assets. Over and ecological value.
the last two decades, both the corporate sec- In the ecological sphere, the situation is
tor and international agencies have created still more grim. In 2010, The Economics of
some metrics for mapping social and ecologi- Ecosystems and Bio-diversity (TEEB) study
cal value—but this has in no way reduced the done by the UN Environment Programme
primacy of monetary value. highlighted ways of measur-
In the social sphere, the ing the economic value of
saddest example of this is
microcredit which began as
Use of natural- ecosystems in the hope that
if the functions of a wetland
a self-help, local economy capital, such as fossil or a standing forest had a
and community empower- monetary value, the market
ing phenomenon based on fuels, is counted as would be incentivised to
the social glue of coopera- save them. This approach
tion. But injection of global value creation, when has yielded limited micro
capital caused all these successes.
qualities to evaporate and
it is depletion of assets But on the whole, it is still
value came to be defined the case if you cut down a
entirely in monetary terms. forest, sell the wood, and park the profits in a
Similarly, social venture capital does in bank, you will earn more annually as interest
some cases generate value in triple bottom than the monetary income that would have
line terms. But the scale of benefits and accrued from harvesting the standing forest.
nature of power accruing to those who wield This is because the standing forest, by itself, is
the venture capital remains vastly dispropor- still not considered “wealth”.
NEWS 17
IIT-Madras, DU,
BHU among 14
institutes to get
eminence tag
B Y P RASHANT K . NANDA
prashant.n@livemint.com
·····································
NEW DELHI
T he Union government on Friday granted
the institute of eminence (IoE) status
to 14 more higher educational institutions,
including Indian Institute of Technology,
Madras; Shiv Nadar University and O.P Jin-
dal Global University. The move allows
these institutions greater academic, admin-
istrative and financial autonomy.
The ministry of human resource develop-
ment (HRD) named seven private and an
equal number public institutions for the IoE
tag, following the approval of the University
Grants Commission (UGC).
The government’s first list of institutions
for the prestigious tag comprised six institu-
tions, including Reliance Foundation’s yet-
to-be-built Jio Institute, which had created a
wide debate in the country.
“Since the (IoE) scheme has only provided
for (10) public and (10) private institutions,
the UGC has examined the list of (15) public
and (15) private institutions using transpar-
ent and verifiable criteria,” the ministry said,
explaining the reason behind the selection
of only 20 institutes for the IoE status, while
an expert panel had recommended 30.
While private institutes will enjoy the
autonomy, public institutes in the list will
also get an assistance of 1,000 crore each
over a period of five years to improve their
growth in India and in global rankings.
“Since the thrust of the scheme is to pre-
pare institutions for the global rankings, no
existing institution which has not figured in
any of the global/national ranks shall be rec-
ommended for the institute of eminence sta-
tus. Only after exhausting the above crite-
rion, if any slot remains vacant, considera-
tion shall be given to ‘yet to be established
(greenfield)’ proposals,” the HRD ministry
said, while naming one more green field
institute proposed by the Satya Bharti Foun-
dation for IoE recognition.
The private institutes, which have got the
recognition are Shiv Nadar University (Uttar
Pradesh), O.P. Jindal Global University (Har-
yana), Amrita Vishwa Vidyapeetham (Tamil
Nadu), VIT Vellore (Tami Nadu), Jamia
Hamdard, New Delhi, Kalinga Institute of
Industrial Technology (Bhubaneswar), and
Bharti of the Satya Bharti Foundation in
Delhi.
Reimagining capitalism
If India’s proposed social stock exchange is
to be profoundly relevant, it must address
and attempt to solve this conundrum. Other-
wise, it is very likely that “impact investing”
funds will provide essential services to a few
million people not by truly empowering them
but instead delivering them much more
firmly into the grip of global capital.
For such an exchange to be a global path-
breaker, it must be based on stores of value
that are independent of or superior to mone-
tary value—and, therefore, defy the power-
concentrating tendency of 21st century capi-
tal. The “how to” does appear daunting. But
the real danger lies in failures of imagination
that threaten to keep policymakers and pri-
vate innovators locked in an outdated mind-
set, which equates value with money. The
future belongs to those who can convert the
digital age into an epochal shift that makes
social, cultural, and ecological capital more
powerful than the promise-to-pay on a cur-
rency note or bank draft.
Rajni Bakshi is author of the award winning
book Bazaars, Conversations and Freedom:
For a Market Culture Beyond Greed and Fear.
18 NEWS
August 9 - August.15, 2019 , SINGAPORE/KUALA LUMPUR° WWW.MINTASIA.COM
INCLUSIVE NETWORK
DoT plans sops to boost mobile
connectivity in all villages by 2020
Reliance Jio, Vodafone Idea and
Bharti Airtel have teamed up with
the telecom dept to reach 43,000
villages without cellular services
B Y N AVA D H A P A N D AY
navadha.p@livemint.com
·······································
NEW DELHI
E very Indian village without mobile con-
nectivity is likely to get connections in
a year from now, if a new incentive
model devised by the department of telecom-
munications (DoT) works out.
Reliance Jio, Bharti Airtel and Vodafone
Idea have teamed up with DoT to reach the
last 43,000 villages without cellular services,
Cellular Operators Association of India
director general Rajan Mathews said. Incentive model: DoT will subsidize (network) operating costs for five years after which the
Prime Minister Narendra Modi wants these infrastructure will be handed over to the telecom operator.
villages connected within a year, Mathews
said, along the lines of the last-mile connec- added.
tivity achieved for cooking gas and electricity “The (DoT’s) intention is to also subsidize
supply. (network) operating costs for five years,” he
“Telcos didn’t go there earlier because the said. After this period, the infrastructure will
commercials don’t work. DoT is now coming be handed over to the operator.
up with a model where they will give 100% Under the model, the government will
subsidy (for capital expenditure). Basically, divide these 43,000 villages into three catego-
the government will pay for it and telcos will ries—easy-to-cover, medium difficulty, and
set up the network and operate it,” Mathews hard-to-cover. After this, it will form pools
DIPANKAR DE SARKAR
OUTSIDE IN
Respond to this column at dipankar.s@livemint.com
Can Nitin Gadkari break the deadly
‘chakra-view’ of Indian roads?
T he gigantic ‘battle of cousins’ in the Indian epic Maha-
bharata, set in Kurukshtra in modern-day Haryana,
entered a crucial phase on day 13. That was the day Arjuna
and Subhadra’s warrior-son Abhimanyu heroically entered a
circular military formation called the Chakravyuh, set up by
the evil Kauravas, which was decimating the good Pandava
army. Unfortunately, this brave young man had no idea how
to get out of the maze, and was killed in action.
Thousands of years on, every roundabout in Delhi feels a
bit like the Chakravyuh—but even harder to negotiate. Abhi-
manyu, after all, was easily able to enter the formation even
if the exit route was unknown to him. With roundabouts in
Delhi, it’s hard even to enter and pretty much impossible to
exit. Unless, that is, you have a big bullying car and can bra-
zen it out.
This is fundamentally because of the lack of four elements
that make for safe roads: training, knowledge, application
and enforcement. Unlike Abhimanyu, no one appears to
know the rules here, or if they do, they are not trained for it.
If they are trained, they don’t care to follow them. And if
they don’t follow the rules, there’s no one around to pull
them over. No one tells you to stick to your lane or indicate.
Around the world, including in some of the poorest and
least developed cities, every roundabout follows one rule
and one rule only: the vehicle to your right has right of way.
No matter what. You break that rule at the risk of suffering
damage to your car—but that’s the least of it.
In Delhi, vehicles enter and exit the roundabout as they
please. This means that if you are already on the round-
about, you may be hit on the passenger side by a vehicle
rushing into the roundabout without so much as a glance to
their right. Equally, if you are that vehicle that is entering
the roundabout without a care, you may be hit on the driver
comprising villages from each of these three
categories. Telcos will then bid for these pools
and will not be allowed to disaggregate the
villages from the pools.
Whichever telco bids the lowest amount to
provide connectivity to these pools will win
the bid. The government is working on other
modalities, including the total size of the
project.
side by the vehicle already on the roundabout.
Which madman or woman would want to risk such a
frightful outcome? Every driver on the capital’s roads, it
seems. One reason is the complete absence of training. Even
the best training schools in the capital do not tell you when
to stop. There are no mock T-junctions (locally known as
T-points) in the capital’s finest training school. The entire
system is designed to make you pass the driving test easily,
rather than test your knowledge and application of rules.
There are no oncoming vehicles or pedestrians to encoun-
ter in driving tests. You don’t stop for anyone or anything
because the entire test is held in a mock driving park with
delightfully empty roads. There is but a single roundabout
and all you’re told to do is queue up with your car and
ensure one thing—that you enter it from the left. There are
no T-junctions in the park, and that means that most often
on Delhi’s roads, you will find a vehicle entering a larger road
(say a highway, yes, a highway) from a smaller road without a
care for the speeding vehicles already on that larger road.
Unlike, say, a driving test in England, you are not tested in
Delhi for your live skills on the road—neither for your skills,
nor for your knowledge of rules. The result: millions of driv-
ers, driving dangerously. In 2011-12 alone, 400,000 driving
licences were issued in Delhi, 1.4 million in Uttar Pradesh,
over 1 million each in Tamil Nadu and Karnataka, 1.8 mil-
lion in Maharashtra, and nearly 1.4 million in Gujarat,
according to the ministry of road transport and highways.
There were 2.6 million cars on the roads of London in
2018. By comparison, there were 3.1 million registered cars
on the streets of Delhi in 2017, a majority of whom—I can
say from experience—are driven by lawbreakers. There’s
only one rule everyone follows at all times: it’s the Rule of
Convenience. Ever driven in Delhi after 10pm? Count the
mintasia
An email query to DoT did not elicit any
response till press time.
So far, the government was dependent on
state-run operator BSNL to reach these
unconnected villages.
According to data from DoT, Odisha had
9,940 villages without mobile services, Maha-
rashtra 6,117 and Madhya Pradesh 5,558.
Other villages lacking mobile services are
located in border areas, islands and the
north-eastern states.
MINT The fresh focus on connecting the villages
comes after telecom minister Ravi Shankar
Prasad met top officials of telcos last month
and assured them of the government’s full
support on outstanding issues, such as cut in
levies and refunds, apart from asking the
industry to reach all villages within a year.
According to the Telecom Regulatory
Authority of India, as of May end, rural tele-
density was 56.42. Teledensity is the number
of telephone connections for every hundred
individuals living in an area.
There were 505.59 million wireless sub-
scribers in the country as of May end. The
share of rural wireless subscribers in the over-
all wireless user base is 43.52%.
Interestingly, the national digital commu-
nications policy, approved by the Cabinet in
September 2018, had set a goal to provide
universal broadband coverage, deploy five
million public Wi-Fi hot spots by 2020, and 10
million by 2022 through a National Broad-
band Mission, apart from implementing a
“Fibre First Initiative” to take fibre to the
home. In February, DoT announced plans to
monetize fibre assets built by the government
under its flagship mission BharatNet by leas-
ing the assets for a 20-year period after a bid-
ding process. This comes against the back-
drop of concerns over poor utilization of digi-
tal infrastructure that has been created across
more than 100,000 gram panchayats in the
country.
number of cars that actually stop at a red light over a 10-km
drive and you are likely not to cross the single-digit mark by
the time you reach your destination.
There were 7,375 road accidents in Delhi in 2016. T-junc-
tions were the most dangerous spots, accounting for 1,008 of
these accidents, followed by Y-junctions (837), arm junc-
tions (742) and roundabouts (270), according to Delhi
Transport Department figures quoted by The Hindu news-
paper.
It is in the middle of this Chakravyuh that roads minister
Nitin Gadkari—a man routinely tipped to be prime minister
of India—has intervened with the most ambitious piece of
legislation yet to reform and modernize the entire road
transport and safety ecosystem in India. It is a challenging
task, and one that cannot be achieved without a complete
overhaul of enforcement. The Motor Vehicles (Amendment)
Bill wants to take on that challenge, to reverse India’s status
as the world’s single largest contributor to road deaths
(146,133 in 2015, an increase of 4.6% from 2014).
Gadkari’s raft of proposals include steep increases in pun-
ishment for violators of traffic rules, penalties for builders of
unsafe roads, an automated system of licencing to do away
with human examiners (and presumably the chances of cor-
ruption), cashless treatment of accident victims and hikes in
compensation.
Gadkari’s Bharatiya Janata Party excels at building roads.
But what’s the point of building roads if they kill?
Gadkari must to do more—much more. The common
worry after the bill was passed by Lok Sabha (it’s yet to be
notified) is that hikes in fines will simply mean hikes in the
bribes demanded by Delhi’s traffic police. This, apparently,
is already happening, according to auto and cab drivers who
say they are having to pay bribes of `500 for offences that
attracted `200 bribes until recently. Drunk driving bribes
are reportedly in their thousands.
Who will stop this mounting road corruption and how?
Where are those speed cameras that really need to be ubiq-
uitous to be effective? Why are driving tests held in sanitized
parks more suited to children pedalling toy cars? Who will
police the streets for traffic violations at night?
Others are more positive. An IT professional in south
Delhi said: “Look at seat belts. People were so reluctant ear-
lier and would pay fines and small bribes, and even pretend
to wrap the belt around. But now everyone wears a seat
belt.”
This, of course, is a good example of a legislation leading
to behaviour change. Now, much of India is hoping that,
somehow, Gadkari’s new bill will do just that—many times
over. But he needs to tell the nation how.
India’s 21st century Abhimanyu has his work cut out and
we can only hope that he will emerge unscathed.
Dipankar’s Twitter handle is @Ddesarkar1
mintasia NEWS 19
August 9 - August.15, 2019, SINGAPORE/KUALA LUMPUR ° WWW.MINTASIA.COM

AFTER A DECADE, SWIMMING

STARTS TO MAKE THE TURN Aided by high-tech swimsuits, swimming saw a flood of records in 2008-09. And then a drought
after their ban. Normal service is set to resume
Chart 2
Chart 1
Post-2009, men's freestyle events have seen the lowest world 2000 to 2009
2019 has seen the most men's world records since 2009
record returns 2010 to 2019
Number of world records Number of world records
Men Women
Men's Women's
Freestyle 35 2 35 17
2000 13 16 Butterfly 24 3 19 5
2001 15 1 Breaststroke 25 16 21 5
2002 5 6 Backstroke 21 2 28 6
2003 15 2 Medley 18 1 9 3
2004 8 4 Freestyle has 6 events; butterfly, breaststroke and backstroke have 3 events each, and medley has 2 events

2005 6 4
Chart 3
2006 6 9 Men led women in average gains in 2000s but trailed in
2007 7 9 the next decadal period 2.93 2.47
Average time gain across 17 individual disciplines (in %)
2008 23 27
2000 to 2009 2010 to 2019
2009 25 34
(2000s) (2010s) 0.55 0.86
2010
Men's Women's
2011 2
2012 4 5
Chart 4
2013 4 There's a healthy presence of post-2009 swimmers in the top 25 2000 to 2009
swimmers by time recorded 2010 to 2019
2014 1 6
Number of swimmers in all-time top 25 times
2015 3 6 Men's Women's

2016 3 6 100 metres freestyle 12 13 6 19

2017 3 4 100 metres butterfly 11 14 9 16
2018 3 3 100 metres backstroke 12 13 6 19
2019 5 2 100 metres breaststroke 6 19 12 13

Source: Wikipedia.com, Fédération Internationale de Natation

AHMED RAZA KHAN/MINT

B Y H OWINDIALIVES.COM bled to 59 world records: 25 men and 34 women (See both in the name of the institution called Phelps, were
feedback@livemint.com chart 1). Amid this age of athletic grandeur, amid this broken in men’s butterfly.
·············································· celebration of phenomenal swimmers such as Phelps, There was Dressel in the 100 metres butterfly. Two

M any congrats to @caelebdressel!! So sick to

watch your start, turns, under water, and of
course your stroke”. Thus said Michael
Phelps on Instagram after Caeleb Dressel broke the
former’s world record in the 100 metres butterfly
event. It was the passing of a baton: Dressel is shaping
to be the phenomenon that Phelps was. It was the
passing of a record that had stood for a decade. It
might even be the passing of an era in men’s swim-
ming.
At the recently-concluded swimming world cham-
pionships, in Gwangju, South Korea, the 17 individual
events on the men’s side saw five world records. In a
calendar year, that is the highest count since 2009,
when a rule change on equipment—a ban on full-
length bodysuits made of high-performance mate-
rial—brought a cycle of records in swimming to a
grinding halt. Gwangju might have turned that 2009
page.
In sports that involve a race against the clock, no
sport has seen as many advances in timing as swim-
ming. Swimmers try to find time in their stroke. Swim-
ming pools are designed to regulate the flow of water.
At the turn of the century, time also came from head-
to-toe bodysuits that reduced drag in the water.
They were initially made of textiles. Then, sporting-
goods companies took it further and found more time
by using materials like polyurethane and neoprene on
these full-body suits. In 2000, an Olympic year and
thus a bigger stage, in these 17 individual events, 29
world records were set: 13 on the men’s side and 16 on
the women’s. In 2009, a non-Olympic year, this dou-
swimming was in conflict with itself.
“Technological doping”, many called these full-body
swimsuits that crafted performance in laboratories.
The only difference, as compared to say the drugs-in-
fested sport of cycling, was that it was legally institu-
tionalized: all elite athletes were using these suits, in
full knowledge of the administrators.
Beginning in January 2010, the body governing
swimming banned non-textile and full-length swim-
suits. Result: not a single world record was broken that
year. Post-2009, women continued to
make more gains. On the men’s side,
a semblance of gains and moving on
from 2009 is beginning to gain pace
only now. However, it still has some
distance to travel. If one excludes the
team relays, there are 17 individual
disciplines in each gender across the
four strokes.
On the men’s side, only the breast-
stroke, which is more about a crawl
through water than slicing through it,
has seen an element of continuity. Elsewhere, the
2009 time in seven disciplines still holds as the best.
Among the four strokes, the freestyle is the laggard
(See chart 2).
The men’s best time of 2009 is yet to be breached
over the five distances of 50, 100, 200, 400 and 800
metres. The other two disciplines where the 2009 time
is still the marker is the 200 metres backstroke and the
400 metres medley. In the recently-concluded 2019
worlds, two records standing for more than 10 years,
days before Dressel, there was Kristof Milak of Hun-
gary in the 200 metres butterfly. Compared to women,
elite male swimmers were the bigger beneficiaries and
made more advances in the “plastic era”. Across the 17
individual events, men averaged a reduction of 2.93%
in the best time, compared to 2.47% for women. How-
ever, in the decade that followed, men have trailed,
averaging a time gain of 0.55%, against 0.86% for
women (See chart 3).
Women, in general, experienced a lower drop-off
than men. For example, against
seven records for men, the count of
In sports involving a women records still standing from
2009 stands at three: 200 metres free-
race against the clock, style, 200 metres medley, and 50
metres breaststroke. Despite the
no sport has seen as overhang of the 2008-09 period, there
is change in the air. In most disci-
many advances in plines, the balance of time is tilting
timing as swimming towards the generations that have
followed the 2008-09 one. In most
disciplines, there’s a healthy pres-
ence of this trailing decade among the top 25 swim-
mers by time recorded. And even men are catching up
(See chart 4). A new generation of swimmers is taking
over and breaking out. And they are doing so at a tan-
talizing time.
The Olympics is swimming’s big day, and Gwangju
was the big lead-up to the 2020 Tokyo Olympics. Dres-
sel is poised to mount a challenge on Phelps’ 2008
haul of eight gold medals in a single Olympics.
Records may well follow.
20 August 9 - August.15, 2019, SINGAPORE/KUALA LUMPUR
Cover Story
SPECIAL STATUS FOR KASHMIR SCRAPPED
On 5 August, India abruptly ended the special status enjoyed by the border state of Jammu and Kashmir and split it into two federally administered territories, amid a military lockdown, house arrests and a communication blackout in the restive
Kashmir valley. Revoking Article 370, which accorded a certain amount of autonomy to India’s only Muslim-majority state for more than six decades, has been on the ruling Bharatiya Janata Party’s agenda for long. The step, executed in less than
B Y G YA N V A R M A & S H A S WAT I D A S
········································
NEW DELHI
T
he Narendra Modi government has
revoked the special status granted to
Jammu and Kashmir, fulfilling a
promise made by his Bharatiya Jan-
ata Party (BJP) but drawing protests
from some opposition parties.
Both the Rajya Sabha and the Lok Sabha
approved the scrapping of Article 370, a status
the state had enjoyed for over 65 years.
The step, the first ever in India’s history that a
state has been reduced to a Union territory, is
likely to reframe the Kashmir debate, particu-
larly with respect to the dialogue with Pakistan
and also within the country.
The Parliament approved the resolution that
scrapped all the clauses of Article 370—which
provided special status to Jammu and Kash-
mir—and simultaneously approved a bill that
bifurcates the state, wherein Jammu and Kash-
mir will be converted into a Union territory
with a legislature, while the region of Ladakh
will be carved out as a separate Union territory
without a legislative assembly.
Effectively, the people of Jammu and Kash-
mir will be governed by a new administrative
set-up in which the power of law and order will
rest with the Lt Governor, who is appointed by
the Union government. The importance of the
passage of the Jammu and Kashmir Reorganisa-
tion Bill, 2019, can be understood from the fact
that Prime Minister Modi, who was present in
the House, rose to congratulate home minister
Amit Shah after the government successfully
piloted the bill through the upper House.
While the issue was being discussed in the
Rajya Sabha, India simultaneously launched a
diplomatic offensive, briefing key diplomats of
countries comprising the UN Security Council
to contain any adverse reactions.
The briefing comes against the backdrop of
Pakistan condemning India’s move to bifurcate
the state. Article 370, enacted in 1954, lays
down that except for matters related to defence,
foreign affairs, communications and finance,
and issues specified in the Instrument of Acces-
sion of Jammu and Kashmir, Parliament needs
the state government’s ratification for all other
laws.
The move, part of a long-standing poll prom-
ise of BJP, was passed after nearly eight hours of
debate, in which the opposition, particularly
the Congress, found itself in a corner—several
opposition parties including the Bahujan Samaj
Party and Aam Aadmi Party voted for the
amendments.
The move to change J&K’s status came
against the backdrop of a steady build-up. The
buzz had grown in recent weeks, especially
after 30,000 additional security personnel were
despatched to the state. The scheduling of a
Union cabinet meeting in the first half of Mon-
day reinforced the perception that the govern-
ment was poised to go ahead. The die was cast
ARTICLE OF FAITH
Scrapping Articles 370 and 35A was the BJP’s
poll plank. On Monday, Rajya Sabha cleared the
bill seeking abrogation of
Article 370 moved by
home minister Amit
Jammu and
Shah. The people of Kashmir
Jammu and Kashmir will
now be governed by the Ladakh
same laws that apply to
other Indians. Here’s a
brief history of Article 370
a day with little debate, has drawn praise and criticism from across the country in equal measure. MintAsia reviews the unprecedented move by the Indian government
after Parliament was informed that Shah would
be making a statement in the Rajya Sabha.
Interestingly, the step taken by the BJP lead-
ership comes just two months after it returned
to power with a majority, winning 303 seats on
its own and 353 as part of the National Demo-
cratic Alliance (NDA). A resurgent BJP-NDA has
since managed to push its legislative agenda.
The decision is significant because it is part
of the three core items on BJP’s agenda—revo-
cation of Article 370 is an electoral promise
since the formation of the Bhartiya Jana Sangh,
the earlier version of BJP. The two other prom-
ises are construction of Ram temple at the dis-
puted site in Ayodhya and implementation of
the uniform civil code.
Addressing members of the Rajya Sabha,
Shah said: “Repealing Article 370 is the only
way out to resolve the crisis and deadlock in
Kashmir. It will take some time, but this is the
only way.”
Shah said the changes were above legal scru-
tiny and were needed to eradicate terrorism
from the region. “Because of Article 370, democ-
racy has never percolated, corruption was at its
peak and poverty was entrenched in the area.
There are people of different religions in the val-
ley and we are not politicizing on the basis of
religion. The people of J&K want democracy
and if you see clearly, you will know how much
Article 370 has harmed J&K,” he added.
Although the ruling NDA does not have a
majority in the Upper House, the government
once again demonstrated its deft floor manage-
ment and political instincts. Among the parties
that played a crucial role in getting the bill
passed were the Biju Janata Dal (BJD), Bahujan
Samaj Party (BSP), Aam Aadmi Party and Tel-
ugu Desam Party (TDP).
“In a real sense today, Jammu and Kashmir
has become a part of India. My party supports
this resolution. We are a regional party but for
us nation is first,” said Prasanna Acharya, BJD’s
Rajya Sabha member.
YSR Congress Party (YSRCP) and All India
Anna Dravida Munnetra Kazhagam (AIADMK)
also supported the bill.
Speaking in the Rajya Sabha during the
debate, members of YSRCP termed the govern-
ment’s move as historic. “The government will
be remembered for this for all time to come and
Jammu and Kashmir will see a new change,”
said Vijay Sai Reddy of YSRCP.
However, NDA was divided on the issue as
Bihar chief minister Nitish Kumar’s Janata Dal
(United) opposed the move in the Upper House
and said that Article 370 should not be revoked.
“Our chief Nitish Kumar is carrying forward
the tradition of J.P. Narayan, Ram Manohar
Lohia and George Fernandes. So, our party is
not supporting the bill moved in the Rajya
Sabha today. We have a different thinking. We
want that Article 370 should not be revoked,”
said K. C. Tyagi, senior leader of JD(U).
PTI contributed to this story.
gyan.v@livemint.com
 OCT: Singh
1947 merges the state 1948
SEP: Pakistan- with India MAR: Singh
supported militia through an appoints an
invades Jammu Instrument interim
and Kashmir, of Accession government
ruled by with Sheikh
Maharaja Abdullah as the
Hari Singh prime minister
In check: Paramilitary troopers stand guard behind a barbed fence wire as they block a road during a curfew in Srinagar.
Repeal of Article 370 points to a political realignment
B Y A N U J A & G YA N V A R M A
·······································
NEW DELHI
T he Bharatiya Janata Party’s (BJP’s) success
in revoking Article 370, which granted
special status to Jammu and Kashmir, signals
a political realignment, as this is the latest in a
string of key bills for which the ruling BJP-led
National Democratic Alliance (NDA) has got
parliamentary sanction.
The BJP leadership has carried out its core
agenda by revoking Article 370 just two
months after returning to power with a huge
majority in the Lok Sabha, with the remaining
two controversial issues—of an uniform civil
code and the construction of a Ram temple at
the disputed site in Ayodhya—in the works.
The Union government on Monday pushed
through the revocation of the special status of
Jammu and Kashmir with support from alli-
ance partners and a divided Opposition. The
Nationalist Congress Party (NCP) and the Tri-
namool Congress (TMC) staged a walkout.
However, the Bahujan Samaj Party (BSP), the
Aam Aadmi Party (AAP), the YSR Congress
Party (YSRCP), the Telangana Rashtra Samithi
(TRS), and the Biju Janata Dal (BJD) sup-
ported the government on the issue.
1949
JAN: A
UN-brokered
effort leaves India
with Kashmir
valley, most of
Jammu province,
and Ladakh
www.mintasia.com
“I do not know whether the BJP is able to
set the narrative because of its own success or
the dismal failure of the opposition, which has
not been able to get its act together,” said San-
deep Shastri, national coordinator of Lokniti
Network, the research programme of the New
Delhi-based Centre for the Study of Develop-
ing Societies (CSDS), and pro vice-chancellor
of Jain University, Bengaluru.
All key alliance parties, including the All
India Anna Dravida Munnetra Kazhagam
(AIADMK), supported the legislation. The
only exception was the Janata Dal (United) led
by Bihar chief minister Nitish Kumar, whose
members walked out during voting in the
Rajya Sabha on Monday.
The NDA’s gradual consolidation in the
Rajya Sabha has happened at the cost of the
Congress party being increasingly isolated,
particularly in terms of gaining issue-based
support from other opposition parties.
The day spelt trouble for the Congress in
the Upper House, especially after its chief
whip, Bhubaneswar Kalita, resigned over the
party’s opposition to Article 370.
“Non-NDA parties supported perhaps
because, outside Jammu and Kashmir, there is
a larger sentiment that this issue needed to be
 JAN: Pakistan
gains control of the  JUL: Sheikh
western districts, Abdullah, three
including the other colleagues
present-day join the Indian
Pakistan-occupied Constituent
Kashmir Assembly and
negotiate
special status
for J&K
AFP
PTI
party will hold a meeting of its top decision
making body on 10 August.
Senior party leaders said the developments
in Parliament and the BJP’s growing political
dominance could trigger more internal strife
and desertion from the party. “In the last five
years, we have made all efforts to ensure peace
in Jammu and Kashmir through decisive
action and a firm policy. We are committed to
overcome all obstacles that come in the way of
development and provide adequate financial
resources to all the regions of the state. We reit-
erate our position since the time of the Jana
Sangh to the abrogation of Article 370,” its
Parliamentary sanction: Union home minister manifesto for the Lok Sabha elections read.
Amit Shah in Rajya Sabha. The development also comes just months
ahead of key state elections in Jharkhand,
resolved. Whether it will happen through this Maharashtra, and Haryana, slated to be held
route, or not, the BJP is seen doing something. later this year. The scrapping of Article 370 could
There is also this feeling among such parties be the BJP’s key campaign cry for state polls.
that they cannot oppose it, given the popular Polls in J&K were scheduled to be held later
sentiment for the issue in the rest of the coun- this year, but the Election Commission will
try,” Shastri said. take a call on the issue once the parliamentary
The isolation of the Congress in Parliament and administrative proceedings are over.
and the growing internal troubles follow a Related bills, such as the one on the reorgani-
leadership crisis after Rahul Gandhi resigned zation of Jammu and Kashmir, is likely be sent
as party president two months ago. The Con- to the Lok Sabha on Tuesday for approval.
gress is yet to find someone for the post. The anuja@livemint.com
 AUG: Sheikh
 OCT:
Constituent 1950 1953 Abdullah is
dismissed as PM of
assembly inserts
JAN: MAR: Jana Sangh the state; Bakshi
Article 306A in
Constitution of leader Syama Ghulam
the Constitution.
India is enforced Prasad Mookerjee, Mohammed
On 17 November
in Jammu and against autonomy, replaces him
1952, it comes to
Kashmir is arrested while
be known as
entering J&K
Article 370
August 9 - August.15, 2019, SINGAPORE/KUALA LUMPUR
Immediate impact: A file photo of PM Narendra Modi with trainee IAS officers at the Lal
Bahadur Shastri National Academy of Administration in Mussoorie. As J&K won’t be a state,
the J&K cadre for IAS and IPS will have to be scrapped.
Equations change for the
bureaucracy, books, flags
B Y P R AS HAN T K N ANDA
prashant.n@livemint.com
·········································
NEW DELHI
B eyond the changes to land and territorial
legalities, the abolition of Article 370 and
bifurcation of Jammu and Kashmir will have
an immediate impact on three things: bureau-
cratic cadres, books, and flags.
Since Jammu and Kashmir will not be a
state, the J&K cadre for the Indian Administra-
tive Service (IAS) and the Indian Police Service
(IPS) will have to be scrapped. Instead, this
civil services cadre will be part of the AGMUT
cadre—the acronym for Arunachal Pradesh,
Goa, Mizoram and Union territories (UTs).
“IAS, IPS and the Indian Forest Service cad-
res will change. All of us who represented J&K
cadre now will no more represent that region,
and instead will be open to postings across the
country,” said a J&K cadre bureaucrat cur-
rently posted at the union government,
requesting anonymity.
As the state is set to stand divided into two
UTs, history and geography books for schools
and colleges, as well as key official documents
need to be revised. Instead of 29 states and
seven Union territories, the books will now
show 28 states and nine UTs.
“As a government body, whatever the par-
liament decides, we have to incorporate in
books,” said Hrushikesh Senapaty, director of
the National Council of Educational Research
and Technology (NCERT). “The academic
1954 1964 1965
 MAY: Article 35A NOV: J&K AUG:
is brought in via a assembly changes Indo-Pakis
presidential order the posts of tan war
 J&K constituent 'Sadr-i-Riyasat' begins
assembly ratifies and PM to
accession of the governor and CM,
state to India respectively
21
mintasia
PTI
year 2019-20 has already begun, so it will be
tough to make changes in books now. The
revised books will, however, be ready before
next year,” Senapati said.
Not just NCERT, over two dozen state
school boards and universities will also have
to make the changes in their books.
In the Rajya Sabha, Congress leader Ghulam
Nabi Azad said the Union government decision
will wipe out “one state” from the map of India.
He was speaking during a debate on the Jammu
and Kashmir Reorganisation Bill that seeks to
scrap Article 370, Article 35A and bifurcate the
state into two UTs.
Besides, the National Atlas and Thematic
Mapping Organization (Natmo), a national
body in the field of thematic maps and atlas
making under the ministry of science and
technology, will have to show the delimitation
of the region into two Union territories.
Since Jammu and Kashmir will no longer
enjoy autonomy, and its special status will be
scrapped, its official flag will also be taken
down. The state so far has had the freedom to
fly two flags—its own state flag and the Indian
national flag. The red-coloured flag with three
stripes reflects the three regions of the state—
Kashmir valley, Jammu and Ladakh. The
plough in the flag represents farmers. Having
been made the official flag of the state by the
state constituent assembly in 1952, the flag has
been representing the special identity of the
state.
Shaswati Das contributed to this story.
2019
AUG: Articles
370 & 35A are
scrapped; J&K is
bifurcated into
two separate
Union territories
22 COVER STORY
August 9 - August.15, 2019 , SINGAPORE/KUALA LUMPUR° WWW.MINTASIA.COM
mintasia
INTERNATIONAL DISCOURSE 2016, Pakistan had despatched envoys to
prominent world capitals in its bid to high-

New Delhi covers diplomatic light alleged human rights violations by India
in Kashmir. Prime Minister Narendra Modi is
to travel to the US for the UN General Assem-
bly session and is expected to address the

bases, briefs UNSC members

gathering on 28 September.
Officials and analysts in New Delhi were
confident that the move would not in any way
negate India’s claims on regions of the state
that are under Pakistani control.
REUTERS “This is an internal matter of India. India
Foreign secretary Vijay Gokhale has complete sovereignty over the state of
and other senior external affairs Jammu and Kashmir and therefore, this is per-
fectly legal within the framework of our Con-
ministry officials have briefed all stitution,” said former foreign secretary Lalit
15 members of the security council Mansingh. Given that India says the entire
state of Jammu and Kashmir is part of the
BY E LIZABETH R OCHE country, revoking Article 370 in no way inter-
elizabeth.r@livemint.com feres with India’s stance that Pakistan is in ille-
······································· gal occupation of a part of Kashmir, he said.
NEW DELHI
Referring to India’s claim over Pakistan-oc-

I ndia on Monday, 5 August, launched a

diplomatic offensive briefing key diplo-
mats from countries currently in the UN
Security Council (UNSC) to counter any
adverse reactions to its decision to revoke the
special status granted to Jammu and Kashmir
under Article 370 of the Indian Constitution.
The announcement of the revocation of the
special status to Kashmir was made by home
minister Amit Shah in both Houses of Parlia-
ment. Article 370, enacted in 1954, lays down
that except for matters related to defence, for-
eign affairs, communications and issues spec-
ified in the Instrument of Accession of Jammu
and Kashmir, Parliament needs the state gov-
ernment’s ratification for all other laws. So far,
residents of the state lived under a separate
set of laws, including those related to citizen-
ship, ownership of property and fundamental
rights.
New Delhi’s move refashions the contours
of the discourse on Kashmir—nationally as
well as internationally. As a Union territory of
India and not a “dispute” with Pakistan, it
changes the dynamics of India-Pakistan
engagement over Kashmir.
The briefing to diplomats comes as Paki-
stan condemned home minister Amit Shah’s
move to bifurcate the region—Jammu and
Kashmir which will have a legislature and
Ladakh region without a legislature. Accord-
ing to a person familiar with the development,
foreign secretary Vijay Gokhale and other sen-
ior officials of the Indian foreign ministry
briefed all 15 members of the UN Security
Council.
Rallying support: India will have to look at Pakistan raising the Kashmir issue at all possible fora,
including at the forthcoming session of the UN General Assembly in September, said analysts.
“In the light of interest expressed by mem-
bers of the diplomatic community in New
Delhi, senior MEA officials are briefing the
envoys of several countries, including P5 (US,
Russia, Britain, France and China) on propos-
als related to Article 370 of the Indian Consti-
tution and administrative reorganization of
Jammu and Kashmir that were introduced in
Parliament,” the person cited above said. “It
was highlighted that the proposals which are
currently under consideration of the Parlia-
ment of India are internal to India. These are
aimed at providing good governance, promot-
ing social justice and ensuring economic
development in Jammu and Kashmir,” the
person added.
In the coming days, India could brief
envoys of some other countries too, a second
person said.
Reacting to the Indian move, Pakistan on
Monday said it “strongly condemns and
rejects the announcements made today by the
Indian government.” The part of the state in
Indian control “is an internationally recog-
nized disputed territory,” it said.
“No unilateral step by the government of
India can change this disputed status, as
enshrined in the UNSC resolutions. Nor will
this ever be acceptable to the people of
Jammu and Kashmir and Pakistan,” the state-
ment said.
“As a party to this international dispute,
Pakistan will exercise all possible options to
counter the illegal steps.”
“Pakistan reaffirms its abiding commitment
to the Kashmir cause and its political, diplo-
matic and moral support to the people of
Occupied Jammu and Kashmir for the realiza-
tion of their inalienable right to self-determi-
nation,” it added.
Analysts have said India will have to look at
Pakistan raising the Kashmir issue at all possi-
ble fora, including at the forthcoming session
of the UN General Assembly in September. In
cupied Kashmir, Gilgit and Baltistan, Mans-
ingh said this would not be diluted by the cen-
tral government’s move. “We claim the whole
of Kashmir as part of our territory and that
includes Pakistan-occupied Kashmir and Gil-
git-Baltistan,” he said. Moreover, India’s claims
over Kashmir date back to 1947 and Article
370 came into existence in 1954, he said.
“Pakistan will make a noise and ask the UN
and others to intervene. But the Simla Accord
of 1972 takes precedence over all previous
positions on the matter. Under the Simla pact,
we said India and Pakistan would sort out this
problem bilaterally. So, the UN is a closed
matter,” Mansingh said.
Recalling that Pakistan had made moves to
extend its sovereignty over Gilgit-Baltistan
some months ago, Mansingh said that this
was an illegal move given that all of Jammu
and Kashmir had acceded to India under in
1947. “So Pakistan crying foul over the revoca-
tion of Article 370 is a bit like pot calling kettle
black,” Mansingh said.
Former army chief Ved Prakash Malik wel-
comed the move by the Indian government
saying that the revocation of Article 370 was in
the long-term interest of the country. “Within
Jammu and Kashmir I have felt that there is a
distance between the people of Jammu, Kash-
mir and Ladakh.”
When asked about apprehensions that the
government move could fan separatist senti-
ments and boost the position of Pakistan-
backed terrorists in Kashmir, Malik was of the
view that “in the short term, we may see some
law and order problem.”

alizing of India’s decision.

Imran Khan has, according to the Pakistan government,
already “invited attention of world leaders and international
bodies towards irresponsible, unilateral and irrational behav-
PREM KHATRI iour of the Indian leadership”. Pakistan has warned that it will
exercise all possible options against India’s “illegal” steps.
EXPERT VIEW Pakistan has propagandist options, but no substantial
ones. It can try to foment resistance within the valley to
We welcome your comments at mintmoney@livemint.com India’s decision and step up terrorism in J&K. This will be
risky as support to jihadi activities in J&K will allow India to
increase pressure on Pakistan in the Financial Action Task

Decision changes the dynamics of the Force (FATF), besides the danger of retaliation from India,
which Pakistan can ill afford in view of its distressed eco-
nomic situation. Pakistan will, of course, raise the matter

India-Pakistan dialogue on Kashmir

with the United Nations (UN) Secretary General, who might
be persuaded to issue some statement advocating reduction
of tensions and peaceful settlement of differences, etc., but a
change in India’s domestic law on J&K’s status within the

A bold and historic decision has been taken by the gov-

ernment to scrap Article 370/Article 35A, separating
Ladakh from Jammu and Kashmir, to make both Union terri-
tories. No one really expected this decision so rapidly after
the Bharatiya Janata Party’s (BJP’s) electoral victory, and
especially such a far-reaching one. The government has obvi-
ously calculated all the consequences of this epochal deci-
sion, both internal and external. Even if there are difficulties
down the road, essentially internal, these will be overcome in
due course and a historical mistake in keeping Kashmir sep-
arate and entrenching separatism in the polity at the nation’s
cost will have been corrected.
Pakistan must be stunned by the Narendra Modi govern-
ment’s decision. It changes completely the dynamics of the
India-Pakistan dialogue on Kashmir. For too long India has
adopted a defensive approach on Kashmir, accepting talks
on the “outstanding issue” of Jammu and Kashmir, tolerating
terrorism in order to keep the bilateral dialogue alive. Now
that Kashmir’s internal status in India has been radically
changed and it has become a Union territory, and Ladakh
has been separated from it, the basis of a bilateral dialogue
with Pakistan on the issue has disappeared. For India, there
is now no “outstanding” issue of Kashmir except India’s
claim on Pakistan-occupied Kashmir (PoK), which includes
Gilgit-Baltistan. The need for a back-channel to find a solu-
tion to the Kashmir issue has disappeared. The so-called four
point formula, which has supporters in Indian circles, has
lost all meaning. All talk of a resumed dialogue with Pakistan
with a structured agenda, which has Kashmir on it, has
become pointless. The Modi government’s decision will also
have effect on the Indus Waters Treaty and Pakistan’s strat-
egy of creating obstacles for Indian power projects in Jammu
and Kashmir permitted by the treaty.
All in all, the prospects of any early “normalization” of ties
with Pakistan have receded. The ball will lie in Pakistan’s
court as it has been principally responsible over the years for
the state of our bilateral relations. It is unlikely that after hav-
ing been outflanked by the Modi government on Kashmir it
will change its policies towards India. Its political frustration
and domestic pressures will compel it to seek an internation-
Indian Union is not an international matter as it does not
endanger international peace and security. More impor-
tantly, Article 370 does not figure in any UN resolution on
Kashmir. It was inserted in the Indian Constitution in 1954
unilaterally by India, many years after the UN resolutions on
J&K and, so, it can be unilaterally removed.
The UN Security Council will not take cognizance of any
Pakistani complaint. All major powers have adopted the
position that the Kashmir issue should be settled bilaterally
between India and Pakistan. The Simla Agreement supports
that position. No major country would want to risk its ties
with a rising India for Pakistan’s sake. They are habituated to
India-Pakistan differences on Kashmir and would avoid get-
ting involved. Pakistan will argue that the tensions India is
creating in Kashmir will distract Pakistan from its support to
the US on Afghanistan. The US and the UK in particular may
raise the subject in private, more to understand the likely
scenario in the future, than injecting themselves into the sit-
uation.
Kanwal Sibal is a former foreign secretary.
 August 9- August.15, 2019, SINGAPORE/KUALA LUMPUR

asia www.money.mintasia.com

MUTUAL FUNDS
Under DTAA rules,
Fund of Funds can work employer must not
deduct tax from salary
better for DIY investors IS TOCKPHOTO
IS TOCKPHOTO

I have been offered a job by an Aus-

tralia-based company but I will be
working in India. As it doesn’t have
any office in India, my contract will
be from Australia. If the company
provides me a salary slip, will it be
valid for filing taxes in India? If yes,
what should be the structure of the
salary?
ASK MINT —Kunal Chandra
Salary for services rendered in India
MONEY is taxable in India, irrespective of the
place of receipt. As you would be ren-
SONU IYER dering services in India, salary earned
While the IT benefits proposed in budget at 10%. Other FoFs, which invest in units of mutual fund Tax partner and people from an Australian company will be
advisory services leader, taxable in India, irrespective of where
make a case for FoFs, investors must assess schemes—whether equity or debt, or gold ETFs—will be taxed
in line with the provisions for debt funds.
EY India
you receive it. Under the income tax
costs and risks before opting for them The special status to FoFs that invest in units of equity ETFs law, the employer is required to with-
seem to be a way to give a leg-up to ETFs that have been used hold applicable tax on the salary income. However, in your
S U N I TA A B R A H A M by the government as a vehicle to further its disinvestment case, if no India income tax is withheld by your Australia-
sunita.s@htlive.com targets. The primary disadvantage of the ETF structure, based employer, you may calculate your taxable salary
····················································· despite it being a lower cost option as compared to a mutual income and deposit it under the advance tax schedule—15%

T he budget had nothing much for mutual funds to talk

about. But there is one provision that is likely to bring
some cheer to a certain category of mutual funds—the
fund of funds (FoF). FoFs are mutual fund schemes that invest
in other mutual fund schemes. In other words, the scheme
does not hold shares or bonds of companies but instead holds
units of other mutual fund schemes or exchange traded funds
(ETF). The tax benefit proposed in the budget is for one small
segment of the FoF universe. It has provided for FoFs that
invest 95% of its assets in equity ETFs to be treated as equity
funds for the purpose of calculation of short-term capital
gains (STCG) tax. In February 2018, the tax treatment of long-
term capital gains (LTCG) from FoFs that invested in equity
ETFs was brought on par with equity funds. With the pro-
posed change, these FoFs will now get the benefit of STCG
being taxed at 15% and LTCG in excess of `1 lakh being taxed
fund, is that it requires a demat account into which the ETF
units are credited at the time of investment. Selling the units,
too, have to be done through a stock exchange, which again
requires a broking account. These operational issues have
affected the popularity of the ETFs, and the FoF is the mutual
fund industry’s way of making things easier for the investor.
The investor buys units of the FoF just like any other mutual
fund scheme and the FoF in turn will invest in the units of the
ETF. “The FoF helps take the scheme to retail investors of
‘Bharat’ without the need for a demat account.” said Chintan
Haria, head-product development and strategy at ICICI Pru-
dential Mutual Fund, referring to the ICICI Prudential Bharat
22 FoF that invests in the Bharat 22 ETF.
In the Indian context, FoFs are primarily being used to facil-
TURN TO PAGE 27
of total tax by 15 June, 45% of total tax by 15 September, 75%
of total tax by 15 December, 100% of total tax by 15 March.
You may also make the deposit under self-assessment tax
before filing the India income tax return. However, in this
case, interest for delay in deposit or non-deposit of advance
tax will be applicable.
Note that there are exemptions available (subject to condi-
tions) under the India income tax law on certain salary com-
ponents, such as house rent allowance, leave travel conces-
sion and so on. Eligibility of such tax benefits on the salary
expected to be received from the Australian employer may be
analyzed separately. Ideally, the Australian employer should
not withhold tax before paying salary into your India bank
account in view of the relief available under India-Australia
Double Tax Avoidance Agreement.
Queries at mintmoney@livemint.com

WEEKLY SENSEX CHART NON-RESIDENT EXTERNAL TERM DEPOSITS ( Deposits up to R1 crore; all figures in %)
37200
Bank 1 year 1 to <2 years 2 to <3 years 3 to <4 years 4 to <5 years 5 years >5-10 years
37100 SBI 6.8 6.8 6.7 6.6 6.6 6.5 6.5
37000 HDFC 7 7-7.1 7.1-7.3 7.25-7.3 7.25 7.25 7
37,018.32
36900 ICICI 6.9 6.9-7 7-7.3 7.25-7.3 7.25 7.25 7
36800 Bank of Baroda 6.45 6.45- 6.6 6.45 6.45 6.45 6.45 6.45
36700 PNB 6.75 6.75 6.75 6.5-6.75 6.5 6.5 6.5
36,690.5
36600
1 Aug 2019 7 Aug 2019
Source: Capitaline and BSE
FOREIGN CURRENCY NON-RESIDENT DEPOSITS (all figures in %)
NON-RESIDENT ORDINARY DEPOSITS (all figures in %) Bank 1 to <2 years 2 to < 3 years 3 to < 4 years 4 to < 5 years 5 years
Bank 1 to <2 years 2 to <3 years 3 to <4 years 4 to <5 years 5 year >5 to 10 years US $ Euro US $ Euro US $ Euro US $ Euro US $ Euro
SBI 6.8 6.7 6.6 6.6 6.5 6.5 SBI* 2.84-2.94 0.01 2.73-2.83 0.01 2.72-2.82 0.01 2.72-2.82 0.1 2.76-2.86 0.15
HDFC 7- 7.1 7.1-7.3 7.25-7.3 7.25 7.25 7 HDFC 2.75 0.01 2.76 0.01 2.74 0.01 2.74 0.01 2.61 0.01
ICICI 6.9-7 7-7.3 7.25-7.3 7.25 7.25-7.5 7 ICICI 2.79 0.01 2.61 0.01 2.3 0.01 2.27 0.01 2.28 0.01
Bank of Baroda 6.45-6.6 6.45-6.55 6.45 6.45 6.45 6.45 Bank of Baroda 2.89 0 2.71 0 2.6 0 2.57 0 2.58 0
PNB 6.75 6.75 6.5-6.75 6.5 6.5 6.5 PNB 3.04 0 2.86 0 2.8 0 2.77 0.01 2.78 0.08
Top three public banks and top two private banks by number of branches Note: Data taken from respective bank’s website Rates as on 5 Aug 2019; *wef- 10th June 2019 Source: BankBazaar.com
GRAPHIC BY NAVEEN KUMAR SAINI/MINT

Disclaimer: The articles and data in Mint Money aim to help readers with their money-related decisions. Each person will have a unique solution that would fit his personal situation and we advise you to consult a certified financial planner before buying a product.
 mintasia
REAL ESTATE
Amrapali buyers see light at end of tunnel
Supreme Court cancels Amrapali
Group’s registration, hands
over projects to NBCC, but
can it match up to the task?
A SHWINI KUMAR S HARMA
ashwini.s@livemint.com
·······································
M ore than 40,000 homebuyers stuck
in under-construction projects of
Amrapali Group, some for nearly a
decade, have finally found a light at the end
of the tunnel. In a landmark judgment last
week, the Supreme Court cancelled the regis-
tration of Amrapali Group of companies, a
Noida-based real estate developer, under the
Real Estate (Regulation and Development)
Act, 2016 (RERA), and appointed NBCC
(India) Ltd, formerly known as National
Buildings Construction Corp. Ltd, a govern-
ment of India Navratna enterprise, to com-
plete the various under-construction projects.
The apex court has asked the developer to
hand over the possession of apartments after
completing the project at a profit margin of
8% that it can charge from the homebuyers.
“Which is a great bargain on the side of the
buyers,” said Gulam Zia, executive director,
valuation and advisory, retail and hospitality,
Knight Frank India, real estate consultants.
“At least we now have the hope that we will
get our houses,” said Amit Gupta, 38, an HR
professional with an IT firm in Gurugram,
Haryana, who booked a two-bedroom apart-
ment in Centurian Park, one of Amrapali’s
project in Greater Noida, in 2011. The project
was to be delivered by 2013 and Gupta paid
about 90% of the value—approximately `25
lakh—by 2013.
Significantly, this also means that banks
and other lenders can’t touch homeowners
flats or the land on which they have been fully
or partially constructed to recover their
money, and homeowners have the first right
over the asset.
We tell you more about the verdict and
what it means for the homebuyers.
Rap to authorities...
In its order, SC made it clear that the devel-
oper is not the only culprit, and held govern-
ment authorities and banks equally responsi-
ble for the mess. It said that the Noida and
Greater Noida authorities were grossly negli-
gent in reviewing and monitoring the
progress of the projects, while banks failed to
ensure that the money was used properly.
“Noida and Greater Noida authorities shall
have no right to sell the flats of the homebuy-
Why Fund of Funds might be
a good pick for DIY investors
FROM PAGE 26
itate investments into ETFs, including those
that invest in gold and equity indices. They
also provide a way to participate in interna-
tional markets where the FoF hold units of
international funds, which in turn invest in
global companies. FoFs are also becoming a
popular way to provide investors with an easy
asset allocation product where the FoF
invests in units of equity, debt and gold
schemes in a defined proportion. Apart from
the tax benefit in the budget, the FoFs that are
still taxed as debt funds have been indirect
beneficiaries too with the imposition of the
10% tax on LTCG from equity mutual funds.
“The gap between the equity and debt long
term capital gains taxation has narrowed.
Hence, we may see more FoF offerings both
in the equity space as well as the asset alloca-
tion space,” said Haria. Reliance Mutual Fund
DELAYED PROJECTS
Here is a list of seven cities with maximum number of stalled projects across developers.
They have 220 stalled projects with 174,000 homes
Bengaluru 28,000 39,000
Chennai 6,500 10,000
Hyderabad 5,500 8,900
Kolkata
MMR
NCR
7,300 13,000
2,34,000
1,26,000 200,000
Pune 57,000 95,000
Total
PRADEEP GAUR/MINT
ers or the land leased out for the realization of
their dues. Their dues shall have to be recov-
ered from the sale of other properties which
have been attached. The direction holds good
for the recovery of the dues of the various
banks also.”
This means that the Noida and Greater
Noida authorities and banks will not be able
to make any claim on apartments sold by the
Amrapali Group. “SC has relied upon Public
Trust Doctrine and has deplored the no
affirmative action by government agencies
like Noida and Greater Noida and have held
them responsible together with banks,” said
Rajesh Narain Gupta, managing partner, SNG
& Partners, a law firm.
“SC has clarified that banks shall have no
has filed a draft offer document with Sebi for
an asset allocation fund that will invest in
equity, debt and gold. Multi-manager FoF
schemes, where the fund manager has the
flexibility to select schemes across mutual
fund houses, offer investors a well-diversified
product. “As a risk management strategy, we
allocate about one-seventh of the investable
corpus in each of the schemes, which are
spread across different market segments and
fund management styles in order to reduce
fund manager risk and capitalize on market-
cap cycles,” said Chirag Mehta, senior fund
manager at Quantum Mutual Fund that man-
ages Quantum Equity Fund of Fund, a multi-
manager equity scheme.
The FoF structure implies costs to the
investor at two levels—one charged by the
FoF and the other charged by the underlying
ETF or mutual fund scheme. This has been
perceived as a disadvantage to investors in
August 9 - August.15, 2019, SINGAPORE/KUALA LUMPUR ° WWW.MINTASIA.COM
Approx value (in ₹ cr) of projects
running behind schedule
Total delayed units
210,000
575,900
Projects launched before or during
4,64,300 2013 considered
Source: ANAROCK Property
GRAPHIC BY SANTOSH SHARMA/MINT
right to sell the flats or the land leased out for
realization of their dues. So the homebuyers
should not have any concerns with the out-
come of the insolvency proceedings filed
against Amrapali,” said Atul Pandey, partner,
Khaitan & Co., a law firm.
Based on the report submitted by the
forensic team, SC also warned and asked all
those who are involved in defrauding the
homebuyers of Amrapali Group to deposit
the money defrauded by them within one
month in the court’s bank account. If they fail
to do so, appropriate action will be taken
against them.
In its report, the forensic team disclosed
the wrongdoings of various executives of the
Amrapali group, chartered accountant
appointed for audit, other companies and
persons. SC directed the Enforcement Direct-
orate and concerned authorities to investigate
and fix liability of persons responsible and
submit the progress report to the court.
The governing body of chartered account-
ant, Institute of Chartered Accountants of
India, has been asked to take necessary
action against the chartered accountant
involved in the fraud.
In favour of buyers
The order give homebuyers the first claim
of rights over the apartments in Amrapali
Group projects. “Flat buyers get a clean
sweep and their rights are protected over and
above government, financial and operational
creditors. This case is being held as excep-
tional and peculiar,” said Gupta, who is a law-
yer.
The apex court has also set up a mecha-
nism to make funds available to NBCC in
order to execute the remaining construction
FoFs. Sebi has addressed this issue by cap-
ping the total expense ratio that an FoF can
charge, including the weighted average of the
total expense ratio levied by the underlying
scheme(s) at 2%. Most FoFs keep the expense
ratio at around 1.5% or lower.
The FoF as a product seems perfect for an
investor looking to separate the wheat from
the chaff, given the plethora of funds types to
choose from. But here a pro-
fessional fund manager does
the job of selection, moni-
toring and rebalancing in a
The FoF seems
more efficient way. While perfect for an
selecting schemes, the fund
manager is better able to investor looking to
track duplication of stocks
and sectors across schemes. separate the wheat
“Since capital gains would
be taxed on each switch
from the chaff
from one scheme to another,
you will have less capital being reinvested
and compounding every time you switch
schemes. The eventual impact of this on your
corpus would be quite large. However, when
the equity FoF exits an underperforming
scheme and buys into a better performing
one, mutual funds being pass through vehi-
cles, it isn’t liable to pay any tax on the gains,
MONEY 27
work.
Homebuyers have been directed to deposit
the outstanding amount that they are still to
pay within three months from the date of the
verdict in a court-administered bank account.
The amount deposited by the buyers will be
disbursed as per the SC order and in accord-
ance to phase-wise completion of the projects
or work by NBCC.
However, homebuyer Gupta is sceptical
about whether or not NBCC will be able to
manage the deficit of funds required to com-
plete the several projects.
Spreading the vibe
Besides homebuyers of Amrapali group,
the SC judgment also gave hope to buyers of
other stalled projects across India.
The court advised the concerned Union
ministry, state governments and the secretary
of housing and urban development to ensure
that appropriate action is taken against lease-
holders of similar projects in not only Noida
and Greater Noida, but also other cities in
various states where projects have not been
completed. They have been further directed
to ensure that projects are completed in a
time-bound manner as contemplated in
RERA and homebuyers are not defrauded.
According to a research report by ANA-
ROCK Property Consultants Pvt. Ltd, as many
as 220 projects with 174,000 homes, are com-
pletely stalled in the top seven cities alone.
Most of these projects were either launched
in 2013 or before. The overall value of all
stalled units is estimated to be more than
`1.77 trillion. Moreover, “almost 66% of these
stalled units (approximately 115,000 homes)
have already been sold to buyers who have
been left in the lurch—at the mercy of either
the concerned developers or the law of the
land. The net estimated value of these sold
units is approximately `1,111 billion,” stated
ANAROCK’s research. National Capital
Region (NCR) has the largest pile-up of
stalled units with 118,000 homes (68% of the
total stuck stock) spread over 67 projects, fol-
lowed by Mumbai Metropolitan Region
(MMR) with nearly 38,060 stalled units.
The SC judgment in the Amrapali case has
set a precedent and brought clarity on various
aspects, which will strengthen homebuyers
rights going forward. However, it may be diffi-
cult to come up with similar solutions for all
delayed projects. “The order can’t be taken as
a template for all such resolutions since each
case would have issues like cost, pending col-
lections from homebuyers, and government
charges,” said Zia. Time will tell whether
NBCC matches up to this challenging task.
thus keeping your capital intact for reinvest-
ment,” said Mehta, pointing out to the tax effi-
ciency built into the structure. But there are
caveats, too, that investors have to keep in
mind. All the schemes that are included in
the portfolio must match the risk and return
preference of the investor. A compromise on
any of the schemes may lead to a situation of
the fund being too risky or very low on
returns. The costs are
another aspect to be closely
watched; both the FoFs as
well as the underlying
schemes have to be dis-
closed under the regulations.
The Quantum Equity FoF, for
example, has an expense
ratio of 0.51% under its direct
plan and inclusive of the
underlying schemes, it
stands at 1.51%. Frequent
switching of underlying schemes and the
investor’s comfort with that strategy is
another fund behaviour that needs scrutiny.
Investors who work with advisors may not
find much use for this product. But for inves-
tors who are looking to build their own long-
term portfolio, there may be some merit in
considering these structures.
28 MONEY
August 9 - August.15, 2019 , SINGAPORE/KUALA LUMPUR° WWW.MINTASIA.COM
ENERGY SAVING
When not paying your electricity bills is good
Solar panels can not only help
the environment but will also
let you enjoy free power after
2-5 years, depending on your bills
N IL ANJANA C HAKRABORT Y
nilanjana.chakrabory@livemint.com
·······································
I t has been over a year since Surat-based
Dipak Patil, 39, last paid his electricity bill.
But Patil is not a defaulter, he is a benefi-
ciary of the solar campaign in his city, under
which more than 6,000 rooftop solar plants
were installed as of May 2019. The govern-
ment also offered subsidies to encourage
homeowners to install the systems. “I had a
2KW rooftop solar system installed, and since
then, I haven’t had to pay my electricity bill,”
said Patil, who is an electrical engineer.
Although Patil has always been conserva-
tive about how much energy he uses, the reg-
ular lighting load of the house, fans, two air
conditioners, a refrigerator and a pump are
well supplied by the rooftop panels. “After the
deduction of subsidies, I paid around `72,000
for the 2KW system I had installed,” said Patil,
whose electricity bill was an average of `2,500
every two months. He installed air condition-
ers after the rooftop solar system was put in
place, so his electricity bills did not factor in
the additional usage. But considering his ear-
lier annual electricity bill payments of around
`15,000, Patil will recover his costs in around
five years, and enjoy free energy afterwards.
Solar power is just one aspect of building
an environmentally sustainable or “green”
home. Green homes focus on the efficient use
of energy, water and building materials, and
maximize the available resources. Most of
these methods are not only good for the envi-
ronment, but can also help save money over
the long term.
Small changes
If you already own a home and want to
make small changes to make the structure
more energy efficient, you have several
options, including the one that Patil exer-
cised—of getting solar panels installed.
Simple changes like making the roof and
outer walls of a home reflective can keep the
interiors cooler and reduce the need for artifi-
cial cooling, according to Nilanjan Bhowal,
principal architect, Design Consortium, an
architectural firm. Bhowal was the architect
behind the construction of India’s first certi-
fied green home, Green One, in Delhi’s posh
Chittaranjan Park, owned by Prasanto K. Roy,
53, a public policy professional. “For an exist-
ing structure, using white tiles or even paint-
ing your rooftop white can boost insulation.
You can also insulate your roof by putting in a
layer of thermocol or a false ceiling,” he said.
Bhowal also recommends the use of energy-
efficient fixtures like LEDs, five-star rated
appliances and photo sensitive lights or
Cams imposes monthly withdrawal
limit of `10 lakh on online platform
N E I L B O R AT E
neil.b@livemint.com
·······································
T he Computer Age Management Services
(Cams), one of India’s largest registrar
and transfer agents, has imposed a limit of
`10 lakh per month on withdrawals from its
myCAMS online platform for mutual funds
(MFs). The limit applies even if multiple per-
manent account numbers (PANs) are linked
to a common email address.
Cams cited a “risk management frame-
work” as the reason for imposing the limit.
The limit only applies to withdrawals from
the MyCAMS portal and not through other
THE COST FACTOR
Solar power systems can shoulder the load of your home's electricity consumption
1KW off-grid solar power system
Cost ₹70,000
Recommended load Back-up time
4 LED lights + 4
4 4
fans + 1 TV
4 LED lights + 3
fans + 1 fridge
4 LED lights + 2
fans + 1 TV
4
6
Costs include installation charge, don't factor in government subsidies; running on the recommended load, the solar power system can sustain for the number of hours
mentioned.
Choose smarter lights: LEDs use 80% less energy compared to
traditional incandescent lights
Incandescent bulbs
Life (in hours) Less than 2,000
Anuual cost
saving per bulb (₹)
Nil
Source: Solarexpertsindia.com/Govt's DELP Ujala Scheme
RAMESH PATHANIA/MINT
motion sensors to switch lights on and off
automatically.
Maintenance is another factor to keep in
mind when putting in energy-efficient sys-
tems. “With the commercialization of sustain-
ability, everyone is pushing for systems, but
sustainability is about maintenance-free sys-
tems. The more actively your system needs to
be maintained, the higher the costs will be,”
said Akash Deep, senior programme man-
ager, GRIHA Council. GRIHA is the green
buildings rating and certification system for
green building adopted by the government
and has been developed by The Energy
Resources Institution (TERI).
Patil’s rooftop solar system is immune to
this problem and there are no extra costs
attached. “It barely needs any maintenance. It
needs to be cleaned periodically, but it’s a
basic task and I do it myself,” he said. Passive
systems like solar heating and solar power
systems can help boost energy efficiency
without the need for active maintenance.
Design is key
While there are ways to make an existing
modes. For example, withdrawal through
competing platforms like Mutual Fund Utili-
ties (MFU) or BSE Star MF Platform or
directly through mutual fund websites would
not be affected, even for funds where Cams is
the RTA.
“Almost 99% of the redemption transac-
tions on myCAMS will go through on the
basis of past trends and about 1% are likely to
have to utilize an additional mode,” the com-
pany stated in an email to Mint.
A senior executive at one of India’s largest
mutual fund platforms, who declined to be
named, said this move possibly indicates that
Cams is not confident of the robustness of its
2KW off-grid solar power system 5KW off-grid solar power system
Cost ₹1.4 lakh Cost ₹4 lakh
Recommended load Back-up time Recommended load
8 LED lights + 2 fans + 8 LED lights + 2 fans + 2
0.5 tonne inverter AC tonne AC + 1 fridge
8 LED lights + 2 fans + 1
cooler+ 1 fridge
8 LEDs + 4 fans +
1 TV
6
12
12 LED lights + 6 fans + 2
coolers + 1 fridge + 1 TV
12 LED lights + 6 fans + 1
fridge+ 1 TV+ 1 washing
machine + 1 cooler
Source: Bijlibachao.com
Green homes pay for themselves
10%
CFLs LEDs
The extra cost to
8,000 30,000 to contruct a
50,000 five-star-rated green
home compared to a
85.5 162 regular home
Source: Mint research
GRAPHIC BY SANTOSH SHARMA/MINT
home energy efficient, it’s usually easier to
build a green home from scratch. “In the case
of existing buildings, it mostly involves the
use of retrofit equipment that is more energy
efficient. It is not as comprehensive as that for
a new construction since factors like structure
and construction material can’t be altered,”
said Santhosh Ramkumar, senior project offi-
cer, GRIHA Council.
Bhowal agrees. “It’s much easier to incor-
porate energy efficiency features when con-
structing a new home. You can use construc-
tion materials like autoclaved aerated con-
crete (AAC) blocks, which are energy efficient
because they trap heat. Design features that
can boost your home’s energy efficiency
include avoiding south west facing windows
and openings, which can absorb too much
heat. Balconies should have deep overhangs
to stay shaded against the sun, and double
glazed panes can be used for windows,” he
said. All of this can keep the home naturally
cool, reducing your need for artificial cooling.
When constructing a home, people look for
value-for-money options. This often makes
them steer clear of making environmentally
conscious choices. But, according to Akash
Deep, “Design plays an important role in con-
structing a green home, and this is where the
costs can be managed.” “On an average, a
five-star rated green home costs around 10%
more to build than a regular building. It takes
only three to four years to recover the costs.
There was a time when these technologies
were very expensive, but with many players
entering the market, these costs have come
down,” said Bhowal.
GRIHA Council developed a simulation
named PRAROOP in 2017 to demonstrate
how much of a cost difference it would make
online systems.
Sandeep Parekh, partner at Finsec Law
Advisors, however, doesn’t see an issue.
“They are only limiting their liability. The
agreement between them and the users
would most likely give them the authority to
mintasia
to construct a green building as compared to
a conventional building. “We used a base
case of 30 years, and showed that the amount
invested can be recovered easily over the life-
time of the building,” said Ramkumar. This
simulation can help assess the cost and
Back-up time energy efficiency factors.
6
Dream green home
10
14
Roy, owner of Green One, was always inter-
ested in buying a green property. “But the
builders I met had little clue about what a
green building meant,” he said. So when he
inherited a property in Chittaranjan Park, he
decided to rebuild it as a green home.
Roy was inspired by the ITC green centre
built in 2001 close to his office in Gurgaon.
“The building was the world’s largest LEED
(Leadership in Energy and Environmental
3-4 years Design) platinum-rated green office building.
The period to I was keen to see whether it could be repli-
recover the
costs, with cated in a home,” said Roy. The construction
optimal use of Roy’s home, was completed in 2013.
“We used AAC blocks for all the outer walls
and low-impact materials, some of which
were reused. Low energy electronics were
used, as well as LED lights and motion sen-
sors,” he said. The home also has solar panels
on the rooftop, solar thermal heating, water
recycling and rainwater harvesting systems,
as well as ultra-low-flow water fixtures.
But Roy warns against expecting a green
home to automatically lower consumption
and expenses. “You can’t just move into a
green building and expect your costs to go
down. You also need to alter your lifestyle
accordingly. For instance, I am used to keep-
ing my air conditioners at 29 degrees, which
is perfectly comfortable when the tempera-
ture outside is over 30 degrees. This signifi-
cantly lowers power consumption compared
to keeping it at say 18 degrees,” said Roy.
Certified green
TERI GRIHA certification is granted after
several audits, which ensure building stan-
dards, especially when a green home is
bought from a builder. It also boosts the value
of residential properties.
Roy and his friend, actor Gul Panag,
approached GRIHA Council to find out more
about registration and certification for green
buildings. While GRIHA does not exclude res-
idential homes, it could cost as much as `5
lakh. After discussions with Roy and Panag,
TERI officials decided to put in place the
SVAGRIHA system, which is a simplified rat-
ing process for green homes.
If you are keen to help the environment,
you can make small alterations to the current
structure of your house as well as your lifes-
tyle. If you have the wherewithal of building a
green home, keep in mind that certification is
important. Also remember that though the
costs might be marginally higher at the out-
set, over time the returns are likely to more
than make up for your investment.
IS TOCKPHOTO
impose this limit,” he said.
The Cams move comes in the wake of a 60
lakh fraud on MFs held by the owner of Avon
Cycles. The fraudster opened a fake bank
account in the owner’s name and redeemed
MFs to that account. Open-ended MFs have
no lock-in and can be redeemed any time. It
is unclear if the redemptions in the case were
made through the MyCAMS platform.
MF investors should be careful about their
personal details as these can be misused.
They should immediately contact the RTA
concerned (typically Cams or Karvy) if they
receive any communication of change of
details in their mutual fund holdings such as
change in email address, bank account or
phone number.
Also, MF investors can withdraw their
money through alternative means such as
submitting paper-based withdrawal forms or
using platforms like MFU, BSE Star MF or
websites of mutual funds.
mintasia
MONIKA HALAN
EXPENSE ACCOUNT
We welcome your comments at mintmoney@livemint.com
Data is already currency, now
you may be able to use it
A lmost to the day, it was ten years ago that Nandan
Nilekani outlined how he would solve a problem in
the retail finance space. I was consulting with the
Ministry of Finance for a year and was assisting the Swarup
Committee. We were trying to solve the problem of mis-sell-
ing, consumer protection and financial literacy. On the
Committee’s invitation Nilekani had come across to the
PFRDA office in Vasant Kunj. He instantly picked a white
board marker and drew a screen on the board. This was the
one screen that would reflect a person’s entire financial life –
all the products, taxes, savings, loans – everything were tiny
boxes in that screen. A one screen image would give the
investor a much better handle of various products and what
they are doing for his financial life. The fragmented regula-
tory system, lack of adequate machine-readable disclosure
and the inability of entities like financial planners and
wealth managers to access this information, made that
screen look like science fiction. Ten years later, that idea is
almost ready to roll out. But the idea has got deeper and
wider, and is attempting to solve a much bigger problem.
The problem is of data ownership and its use. Nilekani
says that India is a poor country whose citizens are data rich
and therefore the western solutions of a data protection
framework are necessary, but insufficient. This data is better
used for individual empowerment, based on consent and
secure movement of data. India is the first country in the
world to attempt putting in place a system to make data
something that will empower individuals rather than just
stop at protection. Suppose I want my financial planning
firm to build me a plan today. I will have to email all my
bank statements, my insurance policy details, my mutual
funds, my real estate holdings, my small savings deposits, all
my loan details, my tax statements. Most of these are not in
a machine-readable format – these will be PDFs or excel
sheets with frozen cells making it useless for analytics. Not
only is the information clunky, it is also excessive and per-
RAJ KHOSLA
POWER POINT
We welcome your comments at mintmoney@livemint.com
GST rate cut can breathe new
life into the real estate sector
H omebuyers are inundated with good news. Earlier this
month, the budget proposed an additional deduction of
`1.5 lakh on interest paid on loans for affordable housing
priced up to `45 lakh. Last week, the State Bank of India
reduced its marginal cost of lending rate (MCLR) by 5 basis
points across all tenures. By themselves, both measures are
likely to have a limited impact. The additional deduction
may not get fully utilized and the rate cut by SBI is marginal
at best. However, if these benefits are combined with an ear-
lier change in GST rules, the pressure on the buyer’s pocket
could ease significantly.
In March, the GST Council reduced the GST rate for resi-
dential under-construction property from 12% to 5% and for
affordable housing from 8% to 1%. The real estate sector,
which was floundering under the triple impact of the Real
Estate Regulation Act, demonetisation in 2016 and introduc-
tion of GST in 2017, finally had something to cheer about.
However, the reduction in GST rates will not reduce home
prices for buyers to the same extent. Under the new rules,
August 9 - August.15, 2019, SINGAPORE/KUALA LUMPUR ° WWW.MINTASIA.COM
IS TOCKPHOTO
petual – I cannot scrub off the data once mailed to my plan-
ner if I fall out with him.
If this is an elite first world problem that needs solving,
imagine an auto driver who needs a home loan. If the credit
giving agency could have access to his bank statements, his
mobile phone payment history, his health record and his
skill details, the loan could become possible faster and at a
lower cost–saving on both time and money. Or small busi-
nessman needs working capital and wants to use his GST
receipts as evidence of his revenues, his bank statements to
show his capacity to pay. Again, a secure, low cost, quick
use of this data by the credit agency would make the loan
viable more efficiently. Nothing then stops a daily wager
from getting small drops of credit faster and cheaper using
the same data network.
The current market failure between data users and data
providers is sought to be solved through setting up of what
are called ‘data fiduciaries’. The manifest form of these fidu-
ciaries are entities called Account Aggregators. Think of
them as a switch that allow the data to flow between the
users of data (financial planner) and the providers of data
developers will not be able to claim input tax credit (ITC).
The new tax rules also say that 80% of inputs and input ser-
vices must be purchased from registered persons. Any short-
fall in purchases according to these norms will attract a tax
levy. For instance, tax on cement purchased from an unreg-
istered person shall attract a 28% duty. Under the previous
regime, the builders could claim ITC for the tax they paid
when procuring various products and building materials,
including steel, cement, paints and electrical items. This
used to be in the range of 2-3% of the base price. Also, keep
in mind that the introduction of GST has not subsumed the
stamp duty and registration fees that are still a state subject
and vary depending upon the location of the property.
If they can’t claim ITC, builders are likely to hike the base
price of the unit to account for the unclaimed amount. This,
in turn, will eat into the overall gain of the buyer from the
GST rate cut. The overall gain is reduced from 7% to merely
4.5% due to the elimination of ITC.
But even after taking into account the loss of ITC, the low-
MONEY 29
(banks, insurance firms, mutual funds), after getting consent
from the owner of data (you and me). To prevent the
Account Aggregators from scrubbing your data and selling
it, the data will be encrypted by the provider and will be
unencrypted at the user end, the Aggregator is just a switch.
It will earn by either charging you and me or the users. Most
likely the user will pay and embed this cost in its service
charge to you.
To ensure that the data is safe, a protection protocol aims
to tightly define consent. Today when we consent to data
sharing when we download an app or pay through a mobile
app, we hand over huge amounts of personal data, some-
times for ever. Nobody reads the 10 pages of the consent
form and if we want to use the app, we just say, yes. Consent
in this framework is going to tightly defined as to what is
going to be shared, with who, for how long. It will be porta-
ble and revocable.
In a rare event, four financial sector regulators have come
together to make the Account Aggregator idea possible. With
RBI as the lead regulator, SEBI, IRDAI and PFRDA are a part
of this plan to make a common platform possible. One of
the biggest problems in retail finance has been the different
standards between regulators and the inability to see
machine readable data in one place. Now seven NBFCs have
got an in-principle go ahead from the RBI and they await
their licences. Meanwhile, a not-for-profit entity called
Sahamati (http://sahamati.org.in), lead by tech entrepre-
neur B G Mahesh, is working with both the users and pro-
viders of data. Sahamati sees itself as an eventual SRO that
will self-regulate the Aggregators. Today Mahesh’s job is to
evangelise the idea and get people on board on both the
user and provider ends. It needs 80% of the data providers
in each industry to onboard the system for it to be viable. I
cannot but wonder if the life insurance industry will fully
onboard this given the current market share numbers. I do
wonder if IRDAI will have the needed influence to get the
market leader to share its information.
While the financial sector is the first space for the aggre-
gator idea to be tried out, other sectors such as telecom,
healthcare and skills are also in the pipeline. The same
aggregators will then become the switch between telecom,
healthcare, educational, professional institutions, workpla-
ces and the users of the data. For example, a life insurance
policy needs details of income tax returns, income state-
ments, health records and family details. In its mature form,
the Account Aggregator could provide the insurance com-
pany, after getting consent from the person seeking insur-
ance, in no time.
India is trying out something that no other country has
done. There will be mistakes made and lessons learnt. There
will be plenty of naysayers who will worry about getting it
just right. But perfect is always the enemy of good, and just
as the UPI infrastructure has got India to the cutting edge of
payments in the world, the data fiduciary model has the
potential to do the same.
Monika Halan is consulting editor at Mint and writes on
household finance, policy and regulation.
IS TOCKPHOTO
ering of GST rate will translate into significant savings for
homebuyers, especially those choosing the affordable seg-
ment.
Under GST rules, sale of a ready-to-move-in residential or
commercial property is not considered a supply of a good or
service. As a result, no GST is payable in such cases. The tax
only applies to under-construction property. Till now, ready
property was more in demand because there was no GST.
But the rate cut has reduced the price gap between under-
construction and completed projects in the affordable seg-
ment. This is likely to revive demand for under-construction
affordable housing projects, especially in newer markets and
emerging cities.
The redefinition of affordable housing and the GST rate
cut could breathe new life into the real estate sector. It will
also simplify tax rules for the real estate sector and improve
compliance.
Raj Khosla is founder and managing director, MyMoney-
Mantra
30 August 9 - August.15, 2019, SINGAPORE/KUALA LUMPUR www.mintasia.com

Mark to Market mintasia

LOSING POWER
For battery makers, replacement market
growth in 4-wheelers is losing momentum,
CLIFFORD ALVARES & APARNA IYER which can impact prospects in near term.

Four-wheeler battery Year-on-year growth

MARK TO MARKET 30
replacement volumes
(in million)
(in %)
(Right-hand scale)
15
We welcome your comments at marktomarket@livemint.com
25.2
25 12.5

With no friend in sight, India stock 20

10
10

markets may face further derating

15 7.5

10.9 7
10 5

I
5 2.5
ndian equity markets have no friend left either domestic or for-
eign. Domestic investors are miffed about the tax rules, while TAKING A HIT
foreign investors are worried that the latest move on Article 370 The MSCI India Index has been undershooting the emerging markets index 0 0
FY12 FY22
will stoke tensions with neighbouring countries. The ongoing trade in 2019 so far as selling by foreign institutional investors has intensified. (Forecast)
war between the US and China is making things worse. 115
MSCI index India EM Source: Society of Indian Automobile Manufacturers, Nomura India
On Monday, 5 August, the Nifty index declined 134.75 points, or
1.23%, in a sea of red that enveloped most emerging markets (EMs). 103.93 NAVEEN KUMAR SAINI/MINT
110
Indian markets have been underperforming the MSCI EM Index so
far in 2019 (see chart).
The scrapping of Article 370 notwithstanding, escalating US-China
105 Headwinds drain
trade tensions have been bogging down markets. “There is no earn-
ings growth. A lack of stimulus and a lack of direction is a dangerous
100

98.95
earnings power
combination,” says veteran market expert Ajay Bagga. “After today,
of battery firms in
95
we are expecting some reforms as the focus comes back on the
economy.” 90
31 Dec 2018 2 Aug 2019
The more pressing problem has been a lack of earnings, as is evi-
dent from the disappointing first quarter results. Barring some con-
sumer goods companies, earnings growth has been poor. Banks,
Base value taken as 100 Source: Bloomberg

which were supposed to lift earnings, haven’t been able to help.
Besides, markets across geographies are under stress because of
the escalating tensions between China and the US, and the slowing
growth rate in emerging market economies. “This is leading to a
derating of the market. We have lowered the Nifty’s earnings by
about 7-8% because of an overall slowdown in the economy and
corporate earnings,” Naveen Kulkarni, head of research at Reliance
Securities Ltd, said over phone.
Analysts at Morgan Stanley India Co. Pvt. Ltd noted that the global
trade war will lower international growth. “If the US lifts tariffs on
all imports from China to 25% for four-six months and China takes
countermeasures, we believe we will enter a recession in 3 quarters,”
said analysts at the firm in a note to clients.
The trade war has already hit the exchange rate. The rupee
breached the 70-mark against the dollar, and there is a real danger
SATISH KUMAR/MINT
spite of decent Q1
that it could slip further. The risk perception of rupee assets has
undergone a change every time geopolitical risks associated with the
country’s neighbours have resurfaced.
That said, the currency’s biggest problems arose because of the
U ntil now, battery manufacturers coped
well with the slowdown in auto sales.
But the ride ahead looks tough.
Chinese yuan, which dropped past a key level against the dollar. A Fortunately, replacement market sales of
weaker Chinese currency could hit the competitiveness of Indian automotive batteries, good offtake in UPS
goods in international trade. Analysts believe that if these escalations (uninterrupted power supply) systems and
persist, both in the global markets and the domestic geopolitical home inverters have charged revenues of
space, the rupee could weaken beyond 71 to a dollar. both Exide Industries Ltd and Amara Raja
Indian markets are at the receiving end of a barrage of negative Batteries Ltd. This compensated for the dou-
news and a positive counter to tip the scales is crucial. Global devel- ble-digit drop in original-equipment (OE)
opments will weigh on sentiments, but what the market needs is a demand, leading to flat revenue that was
revival in earnings of companies. Some relief is expected from the in-line with estimates.
Reserve Bank of India in the form of a rate cut on Wednesday. A Profit growth, though, came from lower raw
stimulus from the government would not hurt. material costs. Lead prices fell by about 20%
year-on-year. Hence, in spite of low operating
leverage, the Ebitda (earnings before interest,
tax, depreciation and amortization) margins

Purchasing Managers’ Index: Reversal in of both manufacturers expanded.

Exide’s margin rose by about 60 basis
points year-on-year to 14.7%, while Amara
Raja’s leapfrogged by 300 basis points to

services sector activity may be temporary 15.4%. However, Exide’s shares plunged 35%
in the past year, while Amara Raja’s fell 20%.
Exide’s warranty costs were high, which
hurt profitability, said analysts. This could

B usiness activity in India’s services sector

reversed to an expansion in July from a
contraction recorded in June. The IHS Markit
Services Purchasing Managers’ Index (PMI)
rose to a one-year high of 53.8 in July, from
49.6 in June.
A PMI reading above the 50-mark sepa-
rates growth from contraction.
This sharp improvement was largely led by
new business inflows, which grew at the fast-
est pace since October 2016. Anecdotal evi-
dence suggested that new business was
secured from the public and private sectors,
as well as domestic and international mar-
kets, according to the survey.
New exports work rose for the fifth straight
month in July and the pace of growth was the
fastest since this measure was introduced to
the survey in September 2014.
In a rub-off, employment indices and opti-
mism among services provided showed
month-on-month improvement in July.
That said, this euphoria may be short-
lived. This is because India’s domestic con-
sumption demand and investment scenario
is unlikely to see a massive recovery in the
near term. Also, on the global front, there are
fresh fears with respect to the US-China trade
war.
According to Ambit Capital Pvt. Ltd, both
consumption and investment growth are
likely to come under pressure in FY20, so a
BACK IN FAVOUR
New business inflows into India’s services sector have risen
at the fastest pace since October 2016.
New Business Index
55 54.1
53
51
49 50.9
47
45
Jan 2016
turnaround appears distant
at this point in time.
“Private consumption,
which accounts for 60% of
India’s gross domestic
product (GDP), is headed
for a prolonged slowdown
given the declining share of
wages in GDP and given
that now even corporate
profits’ share in GDP is
coming under pressure,” it
said in a report on 2 August.
Further, private investment is at best
expected to remain flat in FY20 and govern-
ment capital expenditure is set to contract.
hamper future sales in the replacement mar-
ket as it raises questions on product quality. A
report by Nomura Research on Exide said the
jump in warranty costs was due to issues in
New Export Business 54.7
punch-grid batteries and e-rickshaws.
53.9 To be sure, both companies gained market
share from the non-regulated market after the
implementation of the goods and services
tax.
Still, during the analysts’ call, the Exide
management even hinted at slowing down
capacity expansion if the demand slowdown
continues. Besides, as some auto manufactur-
Jul 2019 ers might work on in-house lithium-ion bat-
Source: IHS Markit
teries, it clouds the long-term prospects of
PARAS JAIN/MINT
battery makers.
Also, India’s decision to Further, weak OE sales would lead to poor
steadily increase import tar- replacement sales in the next two years. “Our
India’s domestic iffs against the backdrop of analysis of four-wheeler automotive battery-
global trade growth coming replacement volumes indicate that growth is
consumption under pressure is likely to likely to slow from 10% in FY20 (estimate) to
hurt its exports over the next 6% in FY21 (estimate). This is due to weak
demand and 12-18 months, said Ambit volume growth of the OE segment in the past
Capital. few years, assuming a replacement cycle of
investment scenario While the Reserve Bank of three years for passenger vehicles and two
may not recover India is expected to respond
by loosening the monetary
years for medium and heavy commercial
vehicles, light commercial vehicles and trac-
policy further, the measures tors,” said Nomura Financial Advisory and
may not be enough to stoke demand quickly. Securities (India) Pvt. Ltd.
Hence, the jury is out on whether services For now, it seems like the stocks of domes-
will bring India the cheer that it has always tic battery makers may stay on low-charge for
brought. HARSHA JETHMALANI some time now. VATSALA KAMAT
 mintasia
MUTED SHOW
ITC’s Q1 FY20 cigarette volume growth at 3%
is the lowest in the past four quarters.
Cigarette volume growth (year-on-year in %)
8 7.5 7.5
6
6
4
3 while for several others, access to credit has
2 1.5
0 disbursals has continued even as it reduced lending to the
Q1 FY19 Q2 Q3 Q4 Q1 FY20
Source: Jefferies India
SATISH KUMAR/MINT
There is neither
smoke nor fire in
ITC’s Q1 results
C igarette-to-soap maker ITC Ltd’s shares
touched a new 52-week low of `257.65
on the National Stock Exchange on Monday.
Not without reason. Its June quarter results,
announced post market hours on 2 August,
are far from inspiring.
Volume growth of its mainstay cigarettes
business, which accounted for as much as
86% of the company’s overall June quarter
Ebit (earnings before interest and tax) is a key
disappointing factor.
“ITC’s Q1FY20 missed slightly operation-
ally as cigarette volumes grew 3% year-on-
year (versus our 4% expectation), and ciga-
rette Ebit grew 8% yoy (1% below estimate),”
said Varun Lohchab, an analyst at Jefferies
India Pvt. Ltd.
Kotak Institutional Equities’ analysts point
out, “A modest volume growth despite two
years of stable taxation could be due to share
loss to illicit/smuggled volumes, higher com-
petitive intensity in select sub segments and
perhaps some change in consumer preferen-
ces.”
Cigarette revenues increased by 6% helped
by volume growth and price/product mix. On
the other hand, ITC’s fast-moving consumer
goods business (non-cigarettes) saw a like-
for-like revenue growth of 8%, which is hardly
extraordinary. However, it is in keeping with
the broader trends of consumption slowdown
being witnessed in the economy.
Revenue growth from other businesses—
hotels, agri, and paperboards, paper and
packaging— was in double digits. The paper
business posted an Ebit growth of about 12%.
However, Ebit growth in the other two seg-
ments lagged relatively. Agri business Ebit
increased at a slower pace of 4%. Deprecia-
tion relating to new properties impacted
hotels’ profitability, resulting in an Ebit
decline of 21%. For better or worse, contribu-
tion from these segments to profits is rela-
tively smaller at the moment and as such
doesn’t move the needle dramatically for ITC.
Overall, the company’s net profit of `3,174
crore is marginally better than Bloomberg’s
consensus estimate of `3,153.70 crore. Note
that a whopping 54% growth in other income
to `620 crore helped ITC’s June quarter net
profit growth substantially. PALLAVI PENGONDA
Sterling and Wilson Solar initial share sale: quality at a handsome price
S terling and Wilson Solar Ltd’s initial pub-
lic offering (IPO) will test investor appetite
for large issues.
After receiving an approval to raise `4,500
crore, the promoters of the company have
decided to sell shares worth `3,125 crore.
At the higher end of the price band of `780,
the price-to-earnings ratio works out to about
20 times FY19 earnings. As such, there are no
direct listed peers for Sterling and Wilson in
India. Nonetheless, these valuations are simi-
lar to Larsen and Toubro Ltd (L&T), and sig-
nificantly higher than KEC International Ltd,
both of which derive sizeable overseas reve-
nues from EPC (engineering procurement
and construction) work, although from differ-
ent sectors.
Individual loans hold fort at HDFC as
corporate book remains a pain point
Changing focus
Housing Development Finance Corp.’s focus on individual loan
non-individual segment.
25 23
Individual
20
18
15 16
10
5
0
Q1FY18
*On the basis of assets under management
T he highlight of mortgage lender Housing
Development Finance Corp. Ltd’s
(HDFC’s) June quarter earnings was its
loan book growth, which has now fallen to
13%, compared to 18% growth in the year-ago
period. Analysts, however, said the results were
good, seen in light of the poor state of the
economy and relative to the rest of the indus-
try. Indeed, even HDFC’s growth has remained
in double digits only because of its strong indi-
vidual loans franchisee. Here, growth has
stayed rock solid at 17%, marginally down
from the 18% growth in the year-ago quarter.
But its non-individual loan book, that is cor-
porate loans, posted an all-time low growth of
a mere 2%. In the past one year, HDFC’s expo-
The risks from RBI’s rule relaxations for ECBs
I n these troubled times, the Reserve Bank of
India’s (RBI’s) decision to relax rules on the
end use of external commercial borrowings
(ECBs) looks like the much-needed solace,
especially if you were a defaulting company
running from pillar to post to get some funds
for survival.
The intent is clear. When domestic lenders
are loathe to give money due to the toxic pile
of debt they already have, sophisticated for-
eign peers who are better placed to price risk
would be willing to lend a hand. After all, the
economy is in dire need of funds to wake up
the animal spirits of private investment. The
timing is also right as dollar liquidity is plenti-
ful and investors are scouting for higher yield.
But there are many untold risks to the RBI’s
friendly leeway on ECBs. In particular, the
permission to use foreign currency loans to
pay back rupee loans is a concern. “It does
look that the risks are high in allowing
stressed companies to borrow from offshore
markets. I am not sure how safe it would be
for all the end-use restrictions to be
removed,” said Abheek Barua, chief econo-
mist and executive vice president at HDFC
Bank Ltd.
Barua said the spread of risk to offshore
Even so, Sterling and Wilson’s shorter exe-
cution cycles limit the working capital
requirement, thereby offering superior
returns. Furthermore, sizeable revenues
come from overseas, where execution risks
are comparatively lower. The promoters’
presence in a number of markets, industry
relationships and project management
expertise helps Sterling and Wilson Solar,
which partly explains the IPO valuations.
“It is not easy for a normal EPC company to
build such capability,” says Deepak Agrawala,
executive director (investment banking) at
Elara Capital (India) Pvt. Ltd.
Revenue and profit, on an average, have
grown 44-72% per annum in the last three fis-
cal years. The robust growth and steady prof-
MARK TO MARKET
August 9 - August.15, 2019, SINGAPORE/KUALA LUMPUR ° WWW.MINTASIA.COM
Loan growth* (in %)
Non-individual Total
17
13
2
Q1 FY20
Source: Company
SATISH KUMAR/MINT
sure to this category has declined. And it looks
like it has deliberately adopted a cautious
stance here. In the backdrop of the recent
liquidity-related concerns and slowdown in
the real estate sector, HDFC’s vigilance isn’t
surprising.
“Given the uncertainty and risk averseness
in the lending environment for non-individual
loans, the corporation opted to be prudent by
curtailing some of its lending to non-individ-
ual loans,” HDFC said in a release.
Addressing the company’s annual general
meeting, chairman Deepak Parekh said:
“Banks are reluctant to lend and there has
been a flight to safety where a select few, high
rated NBFCs and HFCs have access to funding,
SHOPAHOLICS IN A GLOBAL MARKET
Registrations of external commercial borrowings
have grown in recent months, an indication that
Indian companies are shopping abroad for funds.
Amount (in $ billion) Weighted average tenure
(Left-hand scale)
14
12
5.6
10
8 4.8
6 5.4
3.92
4 2.4
2 1.2
0 0
Apr 2018
Source: RBI, Centre for Monitoring Indian Economy
NAVEEN KUMAR SAINI/MINT
lenders would morph into another risk of
exchange rate for the borrowing companies
in the future.
Indian companies are not able to repay
back loans for a host of reasons, including the
slowdown in the economy, an uncertain pol-
icy environment and even global headwinds.
In many cases, defaulters have intentionally
refrained from paying back lenders. In short,
balance sheets are weak and still highly lever-
aged.
In allowing the use of foreign currency
itability underscores Sterling and Wilson’s
competitive advantage in utility scale pro-
jects.
That said, given the short execution cycles
of solar power projects, it is crucial that the
order book is replenished quickly. Note that
excluding other income, the company’s prof-
itability has remained stable despite the
steady decline in tariffs across the globe. This
was helped by high exposure to overseas pro-
jects, which are more remunerative than pro-
jects in India.
Even so, Sterling and Wilson’s Ebitda mar-
gin (excluding other income) of 7.8% is lower
than 11.6% clocked by L&T and 10.5% by KEC
for FY19. Ebitda is short for earnings before
interest, tax, depreciation and amortization.
31
been chocked. As a result, a number of NBFCs
and HFCs have curtailed disbursements. One
is hopeful that normalcy will be restored soon
and, by the time the festive season sets in,
some of the risk averseness should taper off.”
For now, HDFC continues to focus on lend-
ing to the affordable housing segment. “The
challenge in the housing sector has been with
the upper-middle segment and high-end lux-
ury housing. I would like to reiterate that the
demand for smaller sized homes at affordable
price points is still strong,” Parekh added. In
FY19, 37% of the home loans approved in vol-
ume terms and 18% in value terms have been
to customers from the economically weaker
section and lower-income group segment.
Even though the mortgage lender is trying to
compensate by focusing more on the individ-
ual loans category, some repercussions could
be felt on its overall margin growth, going
ahead. In the June quarter, net interest margin
remained flat at 3.3% on a quarter-on-quarter
basis. It should be noted that between the two,
the non-individual loans segment is a higher-
margin business. But as they say, better safe
than sorry.
The markets have rewarded HDFC’s cau-
tious and steady approach, too. Its stock trades
at a rich one-year forward price-to-book mul-
tiple of four times.
HARSHA JETHMALANI
proceeds to pay back rupee loans, there is
simply a transfer of risk to the offshore len-
der. “The credit risk is being exported or
rather spread to offshore balance sheets.
There could be temporary relief, but a weak
balance sheet won’t be able to finance a new
(in years)
8.4 forex loan. This is needless risk taking,” said
5.4 7.2 an economist on condition of anonymity.
(May)
6 But, perhaps, it may not come to that at all.
The condition of having a weighted average
3.6
tenure of 10 years for an external commercial
loan defeats the purpose of the freedom to
raise money, say analysts. As the adjoining
Jun 2019 chart indicates, weighted average tenures of
forex loans was a little over five years in May
and has been five-six years. To raise long-
term foreign currency funding, the borrower
will have to pay a premium. The ceiling of 450
basis points above the benchmark rate cho-
sen, typically the London Interbank Offered
Rate, prevents the borrower from giving
higher return. Therefore, attracting dollars
would be difficult.
In sum, while RBI may have intended to
help Indian firms get funding more easily, the
central bank may have inadvertently encour-
aged riskier borrowing even with weak bal-
ance sheets. APARNA IYER
Further, as projects in the overseas markets
are increasingly being awarded through com-
petitive bidding, suppressing tariffs, analysts
fear profitability of the industry stakeholders
will be compressed or capped.
According to one domestic market
observer, the pressure ultimately comes on
EPC. “We are living through a revolution in
the costs of renewable power technology.
Lower costs will boost wind and solar genera-
tion’s share of the power mix from the current
6% to a much higher level in coming years.
This will create both opportunities and dis-
ruption in the industry,” Alex Whitworth,
research director at Wood Mackenzie, said in
a recent note on renewables in Asia-Pacific.
R. SREE RAM
32 MARK TO MARKET
August 9 - August.15, 2019 , SINGAPORE/KUALA LUMPUR° WWW.MINTASIA.COM
Marico’s profit
margin gets a
boost from soft
copra prices
A
t a time when investors are edgy about fast-
moving consumer goods’ (FMCG) outlook
given the consumption slowdown, Marico Ltd’s
June quarter results are comforting.
The company, popular for its Parachute
coconut hair oil brand, has clocked 6% domes-
tic volume growth in the last quarter. Consider-
ing that volume growth in the base June 2018
quarter was relatively high at 12%, the current
year’s performance doesn’t look that bad.
Marico’s volume performance in the June
quarter was helped by good growth in Para-
chute rigid packs (blue bottles), which saw vol-
ume market share gain. That’s nothing to
sneeze at especially when copra, a key raw
material, is in a downcycle. On the other hand,
Saffola edible oil’s performance continues to be
an area of pain.
Meanwhile, copra prices fell sharply by 25%
year-on-year during the June quarter. This has
helped the company benefit on the profit mar-
gin front. On a consolidated basis, Marico’s
Ebitda (earnings before interest, taxes, depreci-
ation and amortization) margin for the June
quarter expanded 323 basis points year-on-year
to 21.3%. This is despite a sharp increase in
advertisement and sales promotion expenses.
“The company has not passed on lower
copra prices through price cuts in this downcy-
cle given much stronger brand franchise and
relative competitive position versus local and
regional brands in wake of liquidity crunch and
wholesale channel disruption since GST,” said
Varun Lohchab of Jefferies India Pvt. Ltd in a
report on 2 August.
Marico has told analysts that there might be
an increase in copra prices in the second half of
the fiscal year. As such, analysts don’t seem per-
turbed as of now and, in general, margins are
broadly expected to improve in FY20. “We
model Ebitda margin expansion in financial
year 2020 (+160 basis point year-on-year)
driven by benign input cost environment (man-
agement guidance of 15-20% correction in
copra prices in FY2020),” said ICICI Securities
Ltd.
At a time when demand woes are clouding
sentiments for FMCG stocks, Marico appears to
be enjoying a cushy spot. Currently, the stock
trades at about 43 times FY20 estimated earn-
ings, not as expensive as some of its peers.
PALLAVI PENGONDA
Burdened by stressed loans, SBI starts seeking divine intervention
I ndia’s largest lender is in a bind. After hav-
ing knocked on all doors, including the
presumably empowered insolvency courts,
State Bank of India (SBI) has now fallen on
divine intervention in search of resolution.
Chairman Rajnish Kumar said every morn-
ing he looks at the sky and prays for the reso-
lution of big accounts that are doing the
rounds of insolvency courts. He is quick to
add, though, that he is hopeful resolution will
happen. “There are many accounts in the
final stages of resolution in NCLT,” he
explained as reason for his confidence.
Whether Kumar’s prayers will be answered
depends on a host of factors. The key is how
fast insolvency courts resolve big cases, such
as Essar Steel, which have stretched beyond
the 270 days stipulated by the Insolvency and
Bankruptcy Code. The wheels of 14 insol-
vency courts are grinding rather slowly on
2,192 insolvency cases, with many of these
cases languishing in litigation.
To be sure, SBI has provided for nearly 90%
of the large accounts admitted to insolvency
courts. That said, future recoveries will be
crucial for a whiplash effect on interest
Government action is key for any
course correction in the auto sector
THE SLOW LANE
The Nifty auto index has fallen 35.4% from a year ago,
compared to the benchmark Nifty index's 2.2% decline,
as weakness in the auto sector intensified.
110
100
90
80
70
60
2 Aug 2018
Base value taken as 100
W hether you blame it on cyclical fac-
tors, liquidity crisis, technological
change or weak consumer senti-
ment, one thing is certain—the auto industry
has slipped into a deep gorge. It is high time
policymakers take cognizance of this and
give the industry a shot in the arm to revive
demand for vehicles.
With July auto sales plunging to the worst
in two decades, hopes of a revival in the sec-
ond half of FY20 are dashed. The country’s
largest carmaker, Maruti Suzuki India Ltd,
posted the steepest fall of 36.7% in sales year-
on-year, even as sales of other firms fell by
10-15%. Two-wheeler sales across firms fell
11-15%. Commercial vehicle sales were
pathetically low, falling by about 40%.
Amid this gloom, the government’s inac-
tion is glaring. “The industry needs immedi-
ate government intervention to spur demand
for vehicles as we are unable to see any posi-
tivity in the system,” said Sugato Sen, deputy
director general of Society of Indian Automo-
bile Manufacturers (Siam).
Three-four consecutive quarters of sales
and margin contraction have now started
denting ancillaries, dealers and other stake-
holders. Recently, the Automotive Compo-
nent Manufacturers Association of India said
that a million jobs could be at stake if the
slowdown persists.
Siam’s recommendations to the govern-
ment to lower the goods and services tax
(GST) to 18% from 28%, at least temporarily,
incentivize scrappage of old vehicles and
increase depreciation rate for cars from 15%
to 25%, have gone unheard, so far.
In fact, there have been precedents of the
STRESSED BANK OF INDIA
Despite its valiant efforts towards resolving stressed loans, SBI has seen
a jump in its slippages and has had to write off a chunk of loans too.
Loan loss provisions Slippages
20000
14,349
16000
13,038
12000 10,080
8000
4000
0 relies on a recovery in economic activity and
Q1 FY19
income and in bringing down the toxic loan
pool.
SBI’s recoveries also rely on peers agreeing
to the contours of a resolution plan in cases
that are outside the insolvency courts. Inter-
creditor agreements facilitate this, but the
lender also saw a `2,000 crore loan slip into
the non-performing category in the June
quarter, because its resolution was not imple-
mented in a timely manner by another bank.
97.80
Nifty
64.60
Nifty
Auto
2 Aug 2019
Source: Nifty
PHOTOGRAPH BY BLOOMBERG; GRAPHIC BY SARVESH KUMAR SHARMA/MINT
government stepping in to support the auto
industry. In the last decade, during two
instances (2008-09 and 2012-13) when auto
sales were hit badly, the government cut
excise duty and placed orders for buses
through state transport undertakings to sup-
port demand.
“Incentives are not uncommon even in
developed markets. The ‘cash for clunkers’
offer in the US in 2008-09 that incentivized
buyers to scrap old vehicles and subsidize
new ones pushed up sales,” said Kavan
Mukhtyar, partner and leader-automotive at
PwC India. Government intervention is
needed before there is further deterioration
in sales because the auto industry has a mul-
tiplier effect on the economy, with linkages
to consumer demand and industrial
demand, he said.
But leave alone timely help, the govern-
ment appears to be making things worse
through its new rules and regulations for the
sector. Hasty regulations and a slew of unex-
pected policy decisions by various governing
bodies and ministries have worsened the cri-
sis. Anant Goenka, managing director of Ceat
Tyres Ltd, said the timing of the recent pro-
posal to raise vehicle registration fees is
bizarre. When sales are abysmal, hiking reg-
istration by 5-10 times is unprecedented and
irrational, he added.
Likewise, the increase in vehicle insurance
costs and the cess on fuel that have increased
the cost of ownership of a vehicle.
The need of the hour is a corrective course
of action by the government that will at least
stop vehicle sales from falling further.
Also, the government’s thrust is on electric
Write-offs (in  crore)
16,995
15,482
11,648
Q1 FY20
Source: Company
PHOTOGRAPH BY REUTERS; GRAPHIC BY NAVEEN KUMAR SAINI/MINT
Since many of the stressed accounts are
still a work-in-progress with regards to resolu-
tion, SBI has fallen on its tried-and-tested
method to shore up as much insurance as
possible through provisioning. The public
sector bank had to set aside `11,648 crore as
provision towards bad loans during the June
quarter. In addition, it has provided around
`2,300 crore towards two large stressed
accounts, which includes defaulter Dewan
mintasia
vehicles (EVs), which reflects prioritizing the
environment over economic growth.
To be sure, there is nothing wrong in
incentivizing EVs through a cut in GST from
18% to 5%. But according to Nilesh Shah,
managing director of Kotak Mahindra Asset
Management Co.: “Earlier, the country
moved from BS I to BS VI in an orderly man-
ner. Now, if regulators aspire to move from
third-world to first-world standards of tech-
nology and efficiency, it must be done in
consultation with manufacturers, financiers,
component suppliers, financiers, etc. The
income of people, too, has to rise such that
demand expands. Aspirations are good, but
targets need to be realistic.”
In short, the push towards EV may be a
tad premature in the Indian context, some
argue.
While commensurate income growth did
not happen in the last few years, credit lines
that drive retail auto demand also dried up
with the crisis in the non-banking financial
companies industry.
The onus is on the regulators to ensure
that repo rate cuts by the Reserve Bank of
India purported to enhance credit flow into
the system are passed on to end users.
Industry experts say that excessive borrow-
ing by the government is crowding out pri-
vate borrowers, including retail. Besides,
high deposit rates in national savings
schemes mean transmission of the central
bank’s rate cuts isn’t all that effective.
Meanwhile, auto dealers stuck with high
inventory of 40-50 days across segments are
staring at losses. With banks demanding
25-30% collateral, along with upfront tax
deduction under GST, it has made survival
tough for dealers.
Obviously, industr y angst is not
unfounded. Until a year ago, they were gear-
ing up only for one big cost by way of transi-
tion to BS VI emission standards to be imple-
mented by 1 April 2020. As one commercial
vehicle maker told analysts recently, BS VI
alone will increase truck costs by 15-20%.
Of course, cyclical factors are also at play,
aggravated by a deficit monsoon and liquid-
ity crunch in the economy.
Along with industry and consumers, the
resulting fall in auto share prices has burnt
deep holes in investors’ pockets.
The Nifty auto index has plummeted by
35.4% compared to the benchmark Nifty,
which is down 2.2% in the past year.
VATSALA KAMAT
Housing Finance Corp. Ltd.
In cases where provisioning hasn’t been
enough, SBI has written loans off. For the
June quarter, write-offs amounted to `15,482
crore, nearly three times the amount of loans
it recovered or upgraded.
Be that as it may, SBI is still facing challen-
ges on asset quality. Slippages surged in the
June quarter, thanks to the emerging stress
from non-banking financial companies and
conglomerates such as the Essel Group.
For stress to reduce on its books, SBI also
the current deepening slowdown isn’t help-
ing the lender at all. It is understandable that
Kumar was non-committal on the pace of
recovery, and even growth. Loan growth fore-
cast is a modest 12% for the current year, and
this hinges on the hope that the busy season
in the second half of FY20 will give opportu-
nities.
Meanwhile, investors pushed the stock
down nearly 3% on 2 August because of the
disappointing results. SBI’s net profit missed
estimates by a wide margin and even core
income left much to be desired. APARNA IYER
 www.mintasia.com 33
August 9- August.15, 2019, SINGAPORE/KUALA LUMPUR

mintasia Leisure
IS BENGALURU HEADING
TOWARDS DAY ZERO?
Bengaluru is a city divided by access to water. Expanding rapidly, with a projected population of
20 million by 2030, its water story is only going to get more complex
AFP
B Y S HRABONTI B AGCHI &
S OMAK G HOSHAL
·······································

S aul Kere Lake, off Sarjapur Road in Ben-

galuru, is a pleasant sight early in the
morning. A slight mist hangs over it and
the ground is still wet after the light rain that
fell in the night. Despite the chill in the air,
several morning walkers take the lake path.
The lake itself is not exactly brimming over
with water, though it looks less dry than it did
a month ago when Bengaluru witnessed a
weak early monsoon through June and up to
the middle of July, with 30% deficit in rainfall.
Surrounded by mammoth apartment com-
plexes and tech parks, in a part of Bengaluru
that has transformed in the past decade and a
half from farmlands cleaved by a straggly
highway to a bustling area of high-tech com-
merce, Saul Kere is part of the city’s legendary
network of lakes, once linked by a system of
interconnected stormwater drains called raja
kaluve.
About half a kilometre from Saul Kere is a
square plot enclosed by concrete walls. The
plot is surrounded by squat two-storey
houses, small apartments, “PGs for men”, a
few “Iyengar bakeries” and grocery stores—
the kind of buildings that invariably spring up
around large special economic zones (SEZs)
in Bengaluru, serving the needs of the secu-
rity guards, maintenance workers and low-in-
come employees who keep the mega tech
parks running. This plot is not likely to be
built over though, for it is a “borewell farm”—
farmland that is entirely given over to the
extraction of water.
Over the years, even as farmers and land-
holders started selling their land to develop-
ers interested in building large-scale com-
mercial and residential complexes in this part
of the city, some patches of land continued to
be cultivated till the water economy kicked in.
Rising demand for water in these outlying
areas of the city, which largely don’t have
access to piped municipal water, led savvy
businessmen to invest in fleets of water tank-
ers. Alongside, they bought or leased the
remaining small farms to sink borewells,
often zeroing in on land near lakes where the
water table was shallow.
This morning, there are four tankers draw-
ing water from the three borewells on the
small farm near Saul Kere. One of the drivers
says a couple of borewells are 800ft- 1,000ft
deep (the average depth of borewells in Ben-
galuru is around 600ft). The drivers are not
very talkative—once their tankers are full,
they drive off quickly, dripping a trail of water
from the crude taps attached to the end of the
drum-like body of the tanker.
These tankers are the lifeline of Bengaluru,
supplying at least a third of the city’s water
needs (some estimates put this as high as
50%). But most of the estimated 4,000-5,000
tankers have been operating illegally, accord-
ing to multiple reports in Bengaluru newspa-
pers. There is no clarity on which government
body regulates tanker operators. Even in
areas of the city where the Bangalore Water
Supply and Sewerage Board (BWSSB) sup-
plies “Cauvery water” from reservoirs like the
KRS dam near Mysuru, many residents need
to supplement it with water from tankers. It is
a well-established system going back over a
decade, when the city started expanding in all
directions and the infrastructure in its peri-
urban areas remained underdeveloped com-
pared to the core, older neighbourhoods.
The availability of groundwater and the
Water crisis: (Top) women from a low-income area line up to fill water from a private tanker, and
(above) a private water tanker at a south Bengaluru apartment complex.
tanker network that plumbs it are some of the
factors that set Bengaluru apart from Chen-
nai, which famously “ran out” of water this
summer when the four reservoirs supplying
water to the city went dry. Chennai also suf-
fers from the problem of a shallow aquifer,
which hits the saline water table after a depth
of 500ft or so. Even as images of Chennai resi-
dents—especially those from the hardest-hit
low-income areas—lining the streets for a few
bucketfuls of water emerged, the question of
“who’s next” started doing the rounds.
Predictably, Bengaluru, which has often
been in the news for water-related crises—be
it violent protests over the sharing of Cauvery
water with neighbouring Tamil Nadu or the
burning Bellandur Lake—was in focus. Will
Bengaluru be the next Indian city to hit Day
Zero? After all, a little over a year ago, the
government policy think tank NITI Aayog had
JITHENDRA M./MINT
listed it as one of the 21 major Indian cities
which would run out of groundwater by 2020,
and the BBC had run a story naming it as one
of 11 cities in the world that would soon hit
Day Zero, like Cape Town in South Africa and
Sao Paulo in Brazil.
The truth is a bit more nuanced: Whether
or not Bengaluru runs out of water depends
on which Bengaluru you are talking about.
Challenging as the city’s water story is, it is
made more complex by the fact that Benga-
luru is not one but two cities divided by
access to water, says Veena Srinivasan, fellow
at the Ashoka Trust for Research in Ecology
and the Environment (Atree).
For some residents, every day is Day Zero,
if you define Day Zero by its universal mean-
ing of no reliable municipal water supply,
Srinivasan says. “The KRS dam, which sup-
plies water to Bengaluru, also supplies water
for agricultural needs in Mandya district. But
even if the monsoon fails or is scanty (as it
has been this year), it is the farmers who get
cut off, not the city. Bengaluru won’t reach
Day Zero easily,” she says. “Of course, it
depends on the area. Bengaluru’s water story
is a suburban story,” she adds.
Srinivasan herself lives in Sadashivnagar,
one of the older areas of the city, which has
constant municipal supply; the water table in
this area is as shallow as 10-20 ft owing to
seepage from pipes bringing in Cauvery
water. She says it’s common to see tankers
filling up water from empty plots in these
areas to supply other parts of the city. The
city’s core and peripheral areas have different
problems and should have different solutions,
Srinivasan says.
BWSSB engineer-in-chief, Kemparamaiah,
acknowledges this dimension even as he says
that currently there is “no crisis” within the
575 sq. km jurisdiction of BWSSB, approxi-
mately 70% of the city. “We are spreading to
110 villages, adding another 225 sq. km to our
jurisdiction,” he says. “But they are not too
interested to take our water connection.” The
110 villages he’s talking about are on the
periphery of Bengaluru—small villages that
are being added to the city as it continues to
spread.
Anxiety and unease were evident in these
outlying areas earlier this year, through a rela-
tively dry April, May and June. According to
data from the India Meteorological Depart-
ment, there continues to be a rainfall deficit
of 13% in Bengaluru for the season starting 1
June, largely because of scanty pre-monsoon
showers and a weak early monsoon. There
was widespread water rationing in several
apartment complexes and panic when resi-
dents faced a scarcity of tankers. The situa-
tion was so precarious in April and May that
often they didn’t know when the next water
tanker was coming while overhead tanks had
already run dry.
TURN TO PAGE 34
34 LEISURE
August 9 - August.15, 2019 , SINGAPORE/KUALA LUMPUR° WWW.MINTASIA.COM
IS BENGALURU HEADING TOWARDS DAY ZERO?
FROM PAGE 33
M. Venkatesh, the duty manager at a 150-
apartment complex on Haralur Road, a busy
residential locality off Sarjapur Road, saw this
firsthand. “Most days, I would go and stand
on the main road at 4am and hail passing
tankers, begging them to come to our apart-
ment. They would charge exorbitant
amounts, but we were forced to pay because
tankers supply 90% of our water needs—we
have just one borewell, which supplies about
two tankers worth of water while we need 20
every day,” he says. Prices of each tanker went
from `550 a year ago to `800 (they have since
come down to `620).
In the skewed demand-supply situation,
tanker owners called the shots and went to
the highest bidder; there were even scuffles
between residents and estate managers of
neighbouring apartment complexes.
The BWSSB’s assertion that “many of these
areas are not interested in taking our water”
sounds bizarre, but has a kernel of truth—a
situation unique to Bengaluru. Since these
newer areas are already dependent on a tank-
er-based supply system, and since it costs
money to get a BWSSB connection, many
apartment complexes are reluctant to pay
upwards of `1 lakh per household for it. The
situation is complicated by the fact that many
homeowners had paid builders this money
while purchasing their flats and villas—in
some cases, over 10 years ago, when a BWSSB
connection wasn’t even a glimmer in their
eye—and are reluctant to pay up another `1
lakh-plus now that the civic agency is finally
extending its services to their areas. Some
have filed court cases against the builders to
retrieve their money, but it’s an uphill battle.
The BWSSB connection might not ensure a
permanent solution in any case. In apart-
ments that have started getting piped water,
supply is rudimentary and erratic.
Historical anomaly
If we were to take a bird’s-eye view, Benga-
luru’s water situation may well resemble the
proverbial elephant being inspected by six
blind men. In the urban analogy, the latter
would be represented by the various stake-
holders of the city, while the elephant would
symbolize the nebulous issue of supply and
sustainability of water reserves. And as in the
legend, there is no unanimous verdict about
the shape of the beast we are dealing with
here.
At one end of the spectrum are those who
believe the city will run out of water, like
Chennai, and hit Day Zero in the foreseeable
future. With water rationing and water wars
looming, they see no sign of redemption, and
certainly no cause for optimism. Then there
are those experts who claim that the city has
enough water to meet the demands of its 12
million residents if the civic authorities har-
ness existing resources better.
Somewhere between these two views are
the everyday realities faced by citizens whose
relationship with water is defined by their
economic and social standing as well as the
parts of the city they live in. Their current
predicament is the result of centuries of mis-
management of water resources, aggravated
by geographical peculiarities.
Historically, the question of access to water
has always been fraught in Bengaluru. Lying
in the semi-arid rain-shadow region of the
Western Ghats, Bengaluru is an anomaly of
sorts, since urban civilizations are usually
known to grow and thrive around areas close
to steady, and preferably perennial, sources
of water. In stark contrast, Cauvery, the river
closest to Bengaluru, is some 100km away
from the city, and is the cause of a long-
standing feud with Tamil Nadu over water
sharing. However, this has not stopped state
authorities from transporting water from the
river to the city through a network of pipe-
lines—around 1,450 million litres per day
(MLD) every day. Over the next five years, an
additional supply of 775 MLD from Cauvery
under the fifth stage of the Cauvery Water
Supply Scheme will be added, says the
BWSSB.
Changing ecosystem: (Top) Firefighters at Bellandur Lake, after it ‘caught fire’ in January 2018,
and (above) water levels at the KRS dam continue to be low this year, with live storage at
8.5 TMC on 1 August, compared with 42.4 TMC on 1 August 2018.
City of lakes?
In the 16th century, when the local chief-
tain Kempe Gowda founded Bengaluru, the
bulk of the city’s water needs were supplied
by over 1,000 lakes spread across an undulat-
ing terrain. Rainwater collected in each of
these structures and the excess flowed into
the one at the level immediately below it. This
self-sustaining model was disrupted in the
1890s as the city began to expand, and piped
water became its lifeline.
With the transformation of Bengaluru into
India’s Silicon Valley over the last two dec-
ades, leading to massive population pressure
(the city’s population is slated to grow by an
incredible 124.4% between 2011-2031,
according to the Bangalore Development
Authority) and a real estate boom, the inter-
connected system of lakes has been broken.
The lakes have been encroached on steadily
to build houses, leading to the disintegration
of the water ecology—the number of lakes
has dwindled to 200-300. Today, much of the
city’s waste is dumped into these water bod-
ies, turning them into toxic swamp land. Bel-
landur Lake, covered by a layer of noxious
froth and periodically bursting into flames,
has attained notoriety, making headlines
worldwide.
While citizen initiatives to revive some of
these lakes have brought in transformative
change, not every change is an unqualified
blessing. The Kaikondrahalli Lake on Sarja-
pur Road, for instance, is a case of a polluted
water body being given a fresh lease of life by
the collective efforts of the locals and munici-
pal authorities. Once out of bounds for resi-
dents because of its foul state, it now provides
a reprieve from the concrete jungle around it.
But the flip side, as Prof. Nagendra says, is
that “from being a productive ecosystem that
once supplied food, fodder and water”, this
urban lake has become “visualized exclu-
sively as a pristine ecosystem, to be mainly
used for recreation and nature watching, and
perhaps for groundwater recharge”.
Lakes like Kaikondrahalli were once used
by people in the adjoining slums to wash
PTI
IS TOCKPHOTO
clothes. Edible greens, meant as cattle fodder,
used to grow at the shallow ends, while per-
missions were granted for fishing at the deep
end. Turning such a vibrant social ecosystem
into a cultural landmark for the rest and rec-
reation of an urban population is akin to tak-
ing away layers of historical dimensions.
Who owns groundwater?
It is telling that for a city so dependent on
groundwater, the main civic agency monitor-
ing groundwater in Bengaluru, the Karnataka
Groundwater Authority (KGA), is a six-mem-
ber organization “to manage 4 lakh (400,000)
borewells”, says S. Vishwanath, director of the
Biome Environmental Trust, a non-profit that
has worked extensively on rainwater harvest-
ing and groundwater recharge.
Meera K., a citizen activist and editor of the
civic news website Citizenmatters.in, pithily
calls the BWSSB “a bus service for water”.
“There is complete apathy towards ground-
water. They are only focused on transporting
water from one place to the other, and they
don’t even have a trained hydrogeologist,” she
says.
To dig a borewell, one must take permis-
sion from the KGA, but the truth is, a large
percentage of borewells in the city are illegal,
says Vishwanath. If a borewell is found to be
operating illegally, the owners can pay a
nominal fine and get it legalized. The absence
of any reliable data on how many borewells
Bengaluru’s deep aquifers can sustain is per-
haps the biggest hindrance in managing the
city’s water.
In an essay in Mint in 2018, Rohini Nilek-
ani, founder-chairperson of Arghyam, a foun-
dation working to provide safe, sustainable
water, pointed out the paucity of reliable data
about borewells in India. “There are esti-
mated to be more than 33 million borewells
and open wells in India, though no one has
an exact number,” she wrote. “Most of these
are privately owned, largely by farmers. There
is no published data on how many of these
wells have failed permanently, or on how
many new wells are being dug or drilled every
year.”
mintasia
Getting this data is immensely complicated
because groundwater is tied to the complex
issue of land use. While you may be within
your rights to dig on a track of land that
belongs to you, the water you may end up
extracting actually belongs to a natural aqui-
fer which is much larger than the land desig-
nated to you, says Priya Desai, coordinator
and manager of the knowledge platform India
Water Portal. In such a case, you are
encroaching on resources that belong to a
common pool.
“We think 50% of citizens rely on alternate
sources of water—but there’s no good data, it
is a best-guess scenario,” says Anu Sridharan,
co-founder and CEO of NextDrop Technolo-
gies, a non-profit that aims to use Internet of
Things (IoT) device data mashed with human
crowd-sourced data to create what they call
the “internet of water (IoW)”. They hope their
work will allow cities to answer three key
questions: How much water do they have?
What is its quality? And what is it used for?
A couple of years ago, NextDrop started
working with tanker operators in Bengaluru
to collect data on groundwater. “It was a hard
place to start though it was also the most
interesting,” says Sridharan about the project,
which has hit pause—largely because the
data was hard to come by.
NextDrop is joining a consortium of orga-
nizations working for water security to quan-
tify and test water in the city’s lakes. Srid-
haran admits that this is possibly an easier
task, given the active citizen-led movements
for lake rejuvenation and a more organized
environment. “Every year someone asks me
how much water Bangalore has, and I have to
say I don’t know. Nobody will be able to
answer this fundamental question—and it is
scary that we can’t.”
“Digging borewells is a quick fix, as
opposed to rainwater harvesting, which
requires long-term investment,” Desai says.
“Often, we get people writing on our portal
about their borewells going dry, asking how
they can recharge those. But the more impor-
tant question that doesn’t strike them is, why
have their borewells gone dry in the first
place?”
Hope floats
This doesn’t mean attempts are not being
made by the government and civic-minded
private organizations to replenish groundwa-
ter. Bengaluru is blessed with an engaged and
aware citizenry—perhaps more than in any
other Indian metro—which takes an active
interest in the city’s governance. From citi-
zen-led urban beautification project The Ugly
Indian to Vishwanath’s Biome, Meera’s Citi-
zenmatters.in and collectives like Friends of
Lakes, Bengaluru’s residents have relentlessly
pushed for change.
In a recent heartening development,
treated sewage water from three treatment
plants in north Bengaluru is being used to
recharge lakes and groundwater. Krishna Byre
Gowda, MLA of the north Bangalore constitu-
ency of Byatarayanapura, tweeted on 15 July:
“Extremely happy to share with you—started
filling up of 13 lakes in Jala Hobli of BTPura
constituency with treated waste water from
BLR. This will recharge depleted ground
water, help increase green cover, boost agri-
culture, nurture plants, birds, animals.”
The project involves supplying 210 million
litres of treated water every day to water bod-
ies—even those upstream, by using pumps.
Authorities are hopeful that in the long term
this water will help revive four rivers that flow
close to the city, improving its water security,
reported The Times Of India on 18 July.
Alongside, there are public-private initia-
tives. The Biome Environmental Trust is cur-
rently engaged in a project called A Million
Recharge Wells, a campaign to revive the
city’s open wells and recharge groundwater
through recycled water and rainwater har-
vesting.
What about that ominous pronouncement
of the city hurtling towards Day Zero? Per-
haps not just yet.
Sharan Poovanna contributed to this story.
shrabonti.b@livemint.com
 mintasia
Risky travel: Walking on roads is easier but in touristy places, like the Zoji La route, vehicles often
exact a heavy price in livestock casualties.
NOMAD’S LAND
The annual migration to high
Himalayan pastures by the
Bakarwals of Jammu and
Kashmir is threatened by a
changing climate
BY S ANKAR S RIDHAR
·······································
E ach year, as the snow melts, streams
brim over and meadows return to life,
Bakarwal pastoralists begin a long
march from the lower reaches of Jammu to
the alpine pastures of Kashmir.
These keepers of sheep—which is what
their name translates to—remain on the
move from May till autumn, when the wilder-
ness is ablaze in hues of red, yellow and rust.
Their “territory”, if we could call it that, covers
a host of different terrain—from the Kashmir
Valley to the Kishtwar region, Zanskar and
even Spiti. But the tribe that is divided by
mountain passes during migrations is united
by its lifestyle: living in makeshift shelters, fat-
tening its flock for a winter many months
away, while also protecting the animals from
rustling and predation.
While their time in the high Himalayan val-
leys may seem like the perfect idea of a vaca-
tion, it’s far from it. Protecting the flock
against wild animals, timing the move from
one valley to another to perfection, treks over
several days to restock rations, weathering
everything the elements throw at them—the
list of challenges is long. And yet, by compul-
sion or choice, it’s an affair undertaken annu-
ally, and completed successfully, thanks to
the Bakarwals’ survival skills, honed over
time and passed on from one generation to
the next.
Today, though, new and more fearsome
odds face this community. Roads run through
many sections of the migratory routes and
Morning diaries: The first signs of spring appear as tufts of grass on mountainsides, but snow on the
valley floor means the sheep have slender pickings while on the move. The Bakarwals begin their
day early to take advantage of lower temperatures that allow them to walk longer distances.
LEISURE 35
August 9 - August.15, 2019, SINGAPORE/KUALA LUMPUR ° WWW.MINTASIA.COM
PHOTOGRAPHS BY SANKAR SRIDHAR
Greener pastures: A young Bakarwal rounds up his horses, preparing to load them with the family’s
possessions and set out for the next pasture.
Shepherd’s tale: Mushtaq (centre) and his son Mateen (beside him) keep an Economic activity: Shearing is an early summer activity, usually carried
eye on their animals as they warm themselves up for dinner. Mateen, who out in the mid-reaches of the mountains. While most Bakarwals can
studies at a school in Jammu, took a bus and then walked for three days shear sheep, they usually employ community members who specialize in
to meet his father during his summer vacation. this activity.
speeding vehicles often exact a heavy toll on
flocks. Meadows that were once the sole
reserve of Bakarwals have turned into hot
spots where the only herds welcomed are
those of tourists. The weather too, they say,
and we know, is turning stranger by the year.
As the younger generation is weaned away,
some through education, and others by the
glitter and prospects promised by towns and
cities, it will be only a matter of time before
the meadows and valleys lose their zero-car-
bon footprint visitors, and we lose the indige-
nous knowledge they possess.
This truth isn’t lost on the Bakarwals but
they refuse to mope about the future just
because it looks grim. Their attitude stems
partly from the hazards they face daily, and
partly from a resignation to fate. And between
these two truths, they are left with the option
of adapting and hoping for the best.As Per-
vez, a Bakarwal elder, puts it: “We might as
well enjoy the peace as long as we are able
to.”
Sankar Sridhar is a Delhi-based photogra- Survival skills: Bakarwals lead some sheep—most of them old or ailing—from their flock to try and
pher and travel writer. sell them to butchers in a nearby town.
Natural abode: A Bakarwal family in its stone hut. Pastoralists construct stone shelters in the valleys
where they stay longer, and to which they return every year.
36 LEISURE
August 9 - August.15, 2019 , SINGAPORE/KUALA LUMPUR° WWW.MINTASIA.COM
Gaimanvision
With their demand for
sustained, serialized
storytelling, are television
shows the new comic books?
And if so, is Neil Gaiman the
man of the hour?
B Y R A JA S E N
·········································
T elevision is hailed as art now. It is fre-
quently likened to the novel, and to cin-
ema. I believe these comparisons miss
the mark because the genius of television lies
not merely in merit, but in sustained, serialized
storytelling—in the way we discover characters
and experience narratives over episodes and
seasons, months and years. The closest current
equivalent, I venture, is that TV may be the
new comic book.
Comic writers work precisely like TV show-
runners. They write scripts for artists, tell sto-
ries over elaborate arcs, they chip away to
reveal characters bit by bit—even finding new
facets to characters created decades ago. They
are required to find emotion, drama as well as
buy-the-next-issue cliffhangers.
Neil Gaiman is stepping up to this very
wicket.
Gaiman, 58, is the eternally leather-jacketed
creator of the enormously acclaimed comic
series Sandman; novels American Gods,
Anansi Boys and Coraline; books on subjects as
far removed as Norse mythology and Duran
Duran; and several superhero comics—one of
which reimagines Spider-Man as a 16th cen-
tury boy trying to help Queen Elizabeth I.
Gaiman flops into a chair in front of me in
London on an overcast afternoon, a day after
the world premiere of Good Omens at the end
of May. He has converted the 1990 novel he
wrote with iconic fantasy novelist Terry Pratch-
ett into a preposterously absurd series for
Amazon Prime. Gaiman insists he has made
the show for one person and one person alone.
“Terry asked me to make it so that he could
see it—and then he died,” says Gaiman, who
started writing episode 1 as soon as he got
home from Pratchett’s funeral in 2015. “My
attitude was that I am going to make a Good
Omens that Terry would have loved. That sort
of changes the way you make it. Because your
audience, if you will, the person that you are
making it for in your head, becomes somebody
for whom it’s very important that it is the
book.”
Asked if those unfamiliar with the book
might find themselves at sea with the series,
Gaiman firmly says it hasn’t been made for
them. “Books can be best-selling without being
beloved, but you have seen people’s copies of
Good Omens. They are these wonderful bat-
tered things they carry around with them. They
matter.”
The author feels these loving readers needed
comfort and loyalty. “They have been abused
over the years. They know that things they love
may or may not turn up in the form that they
love them, and they are just waiting for some-
body to say is it like the book, or not.” Oh, it is.
Good Omens is a dazzlingly inventive romp
where an angel and a devil sabotage the end of
the world because they would rather collect
rare books and drive cool cars. Pratchett, a
dozen years older, was eight novels deep in his
Discworld series when Gaiman brought up a
story idea that compelled Pratchett to suggest a
collaboration. Gaiman, frequently referring to
this invitation as “Michelangelo ringing you up
to come paint a ceiling together,” says Terry
had not yet grown into his legend.
“I knew he was Terry Pratchett,” he says,
unmistakably italicizing the I with a cartoon-
ishly long syllable. “I had been Terry’s friend
since 1985, and I knew how good he was. I
remember saying to Terry, it’s somewhat like
AFP
record shops: The day you stop being
‘Miscellaneous, P’ and become the
‘Terry Pratchett-aisle’ is the day things
are going to change.” One of Pratchett’s
early-draft readers, Gaiman used to
help with plotting, and suggested gags.
He’s visibly proud to point out that he
coined the word “inhume” for Pratch-
ett’s novel Pyramids.
Writing together happened mostly
over the phone. “You know the E.L.
Doctorow analogy where he says, ‘I write
a novel like somebody driving through the fog
with one headlight out. You’re moving slowly
forward, but you can drive from New York to
Los Angeles like that.’ That, for me, was how
Terry plotted.”
Gaiman describes it as being a journeyman
alongside a master craftsman. “What I learnt
was not so much structure as it was trusting
your intuition. And trusting the process. That
we are craftsmen and we are trying to build
something that works, as a construction”—he
thumps a chair as he talks—“it’s got four legs
and you can sit on it.”
I recount my own Pratchett boast—how I
once bought him a beer, and a year later he
named a dragon “Raja”—but I promise I wasn’t
(specifically) angling to appear in a future Gai-
man adventure. I brought it up because
Pratchett, recommending Good Omens to me,
had said that regardless of what I think of his
work, “At least you will love all of Neil’s bits.”
Gaiman, moved, lets out an exclamation, “Oh,
bless!” On the 28 May world premiere at the
Odeon in Leicester Square, Pratchett’s hat
occupied the seat beside his.
“One of the reasons people think they know
who wrote what is a theory that Terry obviously
wrote all the funny bits. I have seen descrip-
tions of Good Omens which basically say Neil
Gaiman wrote a solid horror novel and Terry
Turning showman: (Clockwise from top, left)
British writer Neil Gaiman; Gaiman turned
screenwriter for the show ‘Good Omens’; ‘Luci-
fer’ is based on a character from Gaiman’s
‘Sandman’ comics, and ‘American Gods’ is a
heady adaptation of Gaiman’s fantasy novel.
Pratchett came behind, scattering jokes like lit-
tle flowers as he went.” This would ring daft to
any Gaiman reader: This is, after all, the same
chap who snuck a tiny f-word (in a tiny font)
into his fable Stardust to reassure grown-ups
they too were meant to enjoy the book.
Gaiman’s shaggy hair shakes as he laughs.
“The truth is, both Terry and I spoke fluent
classic British humour. It’s something that goes
through P.G. Wodehouse, Alan Coren, various
other people, includes Douglas Adams,
includes Monty Python.”
Gaiman is overjoyed that Python members
Terry Gilliam and Eric Idle loved the show.
Their straight-faced silliness is a clear influ-
ence. “Before making it, we were talking about
the combination of seriousness and absurdity.
Nobody in Life Of Brian makes any jokes.
Everybody believes what they are saying.”
Brian’s mother does indeed think her son is
not the messiah, just a very naughty boy. “She
does! Nobody’s saying that to be funny.”
The point of Good Omens is defiantly
mintasia
human. “Peace is better than war, talking is
better than shooting, killing people to prove
that you are right is fundamentally immoral.
And we only have this one planet, and it’s a
fantastic place to live, and it has tea, and it has
toast, and it has sushi, and it has Beethoven
music, and, despite everything else going on in
the entire universe, there isn’t any more tea or
toast or Beethoven music as far as we know
anywhere out there. We should be looking after
this planet and handing it over to our kids.”
This isn’t the only Gaiman show. He had
written the 1996 BBC series Neverwhere, and
when it came out as a novel—my most re-read
Gaiman book—the “liner notes” explained
how he accepted changes from television exec-
utives and creative ignominy, forever telling
himself he would “fix it in the book”. Now the
shoe is on the other foot. Perhaps both feet.
Lucifer (Netflix) is based (very loosely) on his
characters, while American Gods (Amazon
Prime) adapts his most ambitious novel, and
had a dazzling first season (where Gillian
Anderson briefly dresses as David Bowie). It
fell off the rails last year during its second sea-
son—when Gaiman was supposed to take
charge. “They made an announcement that I
had become co-showrunner on season 2. I
don’t know how Chris Albrecht (head of the
Starz network) thought or said that, because at
the time I was in England doing 16-hour days
in post-production on Good Omens. I think
they just wanted people not to panic—but I
think it did me no favours.”
“There was one scene I stopped Bryan
(Fuller, the showrunner) doing in episode 1,”
he says, about the American Gods makers
wanting Gaiman’s hero, the morally upright
Shadow, to get a blowjob on his dead wife’s
grave. “I said, ‘Yeah, you are not going to do
that.’ And they said, ‘We think it works, he has
been in prison, hasn’t gotten to fuck a woman
for three years, and it’s going to be this amaz-
ing sex scene.’ I just said, ‘No. If you do that, I
will step in front of a bus, leaving a note saying
this is why.’”
He remains chipper about the show’s future,
having discussed seasons 3 and 4 with the
incoming showrunner. This underlines
another way television is starting to behave like
comic books: Someone can come along and
mess up issues of Batman for a few months,
but then another team takes over and makes it
all better. As shows spin off and reboot with no
end in sight, we may well be headed to a time
when a bad season or two might not damn an
entire series.
Gaiman wrote every scene of Good Omens
but doesn’t plan to do that again, despite a
multi-year deal to develop content for Amazon
Prime. This surprises me. Television in its cur-
rent incarnation is heralded as the ultimate gig
for a writer, especially one who gets to hold the
reins: well-staged worlds and characters cre-
ated over time, written with the care of a novel
but in serialized doses, work that is more lucra-
tive and more eagerly lapped up than litera-
ture. “Ah, but I can do just that with a comic,”
Gaiman interjects. “Or even a radio play, where
you can make people build up the pictures in
their heads. But if I write a comic book or a
radio play, I can get enough sleep and see my
family.”
Gaiman cites Good Omens as the reason for
not being in India this January, despite con-
firming his attendance at the Jaipur Literature
Festival. “I promised (organizer William Dal-
rymple) that I would go, but in January I was
still grading the picture and finishing the
effects, finishing episode 6. I couldn’t leave.
There’s a lot of very upset people,” he sighs. “I
very much hope I get to India at some point.”
An astonishingly prolific writer, he cracks
out novels, children’s books, short stories and
non-fiction too quickly to keep track. There’s
no coming back after you dive into the exqui-
sitely literary comic The Sandman, stories
about the telling of stories. There are too many
flavours of Gaiman: Neverwhere, a personal
favourite about a subterranean London under
the real thing, the disconcertingly creepy chil-
dren’s book Coraline, the beautifully mytholog-
ical American Gods, his Batman comic What-
ever Happened To The Caped Crusader? Oh,
and that one time he wrote an erotic Cherry
Poptart story.
Raja Sen is a film critic and the author of The
Best Baker In The World (2017), a children’s
adaptation of The Godfather.
 mintasia
Trashing the magic of
CHARLES CORREA
Panaji’s storied Kala Academy,
designed by the iconic
architect, is threatened
with demolition by the
Goan state government
B Y V IVEK M ENEZES
·······································
S till reeling from the unprecedented
flooding that paralysed Panaji last week,
residents of Goa’s pocket-sized capital
were further shocked and dismayed when the
state minister of art and culture announced
that the Charles Correa-designed landmark
arts centre, Kala Academy, faces the wrecking
ball. “The open-air auditorium cannot be
repaired or renovated,” said Govind Gaude,
“the structure is fragile. For the past 9-10
months, we have stopped accepting bookings
for it. Being from the government, some
answers need to be stated in a concrete man-
ner. We have to demolish and reconstruct it.”
Gaude stands out as impressively matter-
of-fact in a state polity notorious for double-
crossing. A rare independent in the legislative
assembly, he has retained his cabinet seat
despite the extraordinary political shenani-
gans roiling Goa after the death of former
chief minister Manohar Parrikar, capped last
month by the wholesale defection of 10 MLAs
from the Congress to the ruling Bharatiya Jan-
ata Party. Yet, even he was clearly unprepared
for the anguished collective response to the
Kala Academy announcement. In O Heraldo,
once the last Portuguese daily in Asia—it is
now printed in English and is still the state’s
most widely read newspaper—veteran editor
Alexandre Moniz Barbosa dismissed the “pre-
posterous” demolition plan, adding “that
pièce de résistance” is “the best we have and
the best has to be preserved”.
In fact, Correa’s Kala Academy has cultural
significance far beyond being Goa’s most
loved building. It is the only government-run
arts institution in the country with separate
faculties for both Western and Indian classi-
cal music, and also offers courses in theatre
and dance. Few venues in India host such
diverse programming throughout the year,
from the DD Kosambi Festival of Ideas lecture
series (previous speakers have included the
Dalai Lama) and the nearly four-decade-old
Surashree Kesarbai Kerkar Sangeet Samaroha
(which has featured virtually every luminary
from the Hindustani classical world) to the
tightly contested state Tiatr and Mando com-
petitions. All these run to packed houses in
the 954-seat Dinanath Mangeshkar Kala
Mandir auditorium, named after the Goa-
born musician father of Lata Mangeshkar and
Asha Bhosle.
Countless signature moments of contem-
porary Goan culture are connected to the
Kala Academy. In 1990, the all-time great fad-
ista Amália Rodrigues visited for the first
time, and sang for an emotional postcolonial
audience overflowing with what the Portu-
guese call saudade (loosely, yearning). It was
much the same in 2016, when the 84-year-old
genius of the Jaipur-Atrauli gharana, Kishori
Amonkar, delivered what turned out to be her
last concert in her ancestral homeland. I was
present on that occasion, sitting rapt amidst
the spillover crowd with my eldest son, as the
famously cantankerous diva won us over by
speaking in our native Konkani, then warmed
up for 75 minutes straight (not one person
dared leave) before blowing us all away with
imperious vocal mastery.
But it is as an architectural landmark that
the Kala Academy truly acquires global signifi-
cance, one of the jewels of Correa’s world-fa-
CHARLES CORREA ASSOCIATES (ARCHITECT/PLANNERS) COURTESY CHARLES CORREA FOUNDATION
Cultural hotpot: (Top) The airy, open feel of Panaji’s Kala Academy is enhanced by its dramatic
location by the Mandovi river, and (above) an archival image of the amphitheatre, taken just after
the completion of the Academy’s construction in 1983.
mous oeuvre. His daughter Nondita Correa
Mehrotra, also an architect, and director of the
Panaji-based Charles Correa Foundation
(CCF), told me: “Kala Academy was the first
building Charles designed in Goa, a place with
which he had a very special relationship, and
particularly important as it was his first cul-
tural centre—he later designed Bharat Bhavan
in Bhopal and the Jawahar Kala Kendra in Jai-
pur. He just loved the site—he loved the way
the building could connect to (the old Goan
neighbourhood of) Campal and the Mandovi
river. Many important components came
together for him, seemingly effortlessly. Yet he
spent a lot of energy in getting it all right.”
In the course of writing this, I asked several
of India’s leading thinkers whether any other
important public buildings in the country are
as welcoming. No one could suggest a worth-
while rival. As Himanshu Burte wrote in Art
Connect, the biannual magazine of The India
Foundation for the Arts in 2008: “The founda-
tional act of design at Kala Academy is that of
opening up. The architecture…clears the
ground, literally, letting the gaze (and moving
feet) sweep clean through from the pavement
outside to the river beyond. In principle, this
place says it is open to the city. No architec-
tural sign of exclusion—apart from the gate
which is kept generously wide and low—is
visible from the footpath to discourage us
from entering. Indeed quite the opposite.
This is a building without a plinth, walls and
doors with which to keep the world at bay.”
It is precisely this remarkable degree of
August 9 - August.15, 2019, SINGAPORE/KUALA LUMPUR ° WWW.MINTASIA.COM
FABIAN FRANCO
democratic accessibility that has made the
Kala Academy so beloved. The great Russian
cellist Mstislav Rostropovich performed here,
but so have innumerable children, making
their stage debuts. It would be hard to find
anyone in Goa who has not enjoyed the
premises at some time or the other, even if
only to sit down and enjoy the riverside scen-
ery. Responding to my email query, Burte
says it is this precise characteristic which
makes the building “not just important for
Indian architecture but for the international
heritage of modern architecture. It is a
remarkable lesson about how a public build-
ing can actually focus on being a shelter for
unprogrammed gathering and exploration,
rather than on making a statement of self-im-
portance.”
That is an essential insight, because it is
amply evident that the trademark architec-
tural statements of India’s 21st century are all
egregiously supersized, like the eye-water-
ingly hideous “world’s tallest” Statue of Unity
in Gujarat, or Mukesh Ambani’s monstrously
priapic Antilla, “the world’s most expensive
home”. In many ways, the architectural
embodiments of our times are airports, with
wall-to-wall corporate logos, where the illu-
sion of limitless capitalist cornucopia can
only be maintained by the round-the-clock
toil of faceless armies of contract workers.
The Kala Academy is different. Poet and
critic Ranjit Hoskote says it “dissolves the dis-
tinction of inside and outside, architecture
and nature. The street is internalized by the
LEISURE 37
building, which opens itself to the sky, vege-
tation and the river. The ritualistic pathway,
the interplay of sight-line and screen, the
open-to-sky spaces, the gradients linking var-
ious levels in a gentle terracing—all these
classic features of Correa’s architecture are
present. And let us not forget the laterite that
forms its key medium—it articulates the flesh
and blood of Goa’s architecture, it comes
from the soil of Goa, from the soul of Goa.”
Such motivations were very important to
Correa, whose grandest buildings are scat-
tered all over the world, capped by the stun-
ning career-ending trio: the McGovern Insti-
tute for Brain Research at the Massachusetts
Institute of Technology (the architect’s alma
mater), the Champalimaud Centre for The
Unknown in Lisbon, and the Ismaili Centre
(attached to the Aga Khan Museum) in
Toronto. Albeit cosmopolitan to the core,
Correa was also disarmingly proud of his
ancestral roots in India’s smallest state. I
recall sheer delight playing on his face when
discussing Goa’s history of profound cultural
connections, while we sat companionably in
his beautiful riverside garden on the opposite
bank of the Mandovi from the Kala Academy.
It is true we are left with only one part of
what Correa’s intended legacy was for Goa. At
the end of his life, even from his hospital bed,
Correa sought to redesign all aspects of the
state university so it could strive to belong
among the best in India. That plan was
shelved, and it is painful to note that succes-
sive administrations that paid him gaudy lip
service—in 2010, he was awarded the
Gomantak Vibhushan, the state’s highest
order—otherwise openly ignored the great
man’s good sense.
Correa was often not heard in Mumbai as
well, most recently regarding proposals for
the ex-mill lands that would have considera-
bly improved the city’s quality of life. But
coming from Goa, there is no doubt that the
slights hurt more. It is probably a good thing
Correa is not around to hear Gaude blithely
declaring that the Kala Academy is beyond
repair.
After the minister’s statements became
public, I got in touch with Prof. Mustansir
Dalvi of the Sir JJ College of Architecture. He
told me: “Our notions of heritage are some-
times stuck in the mythical past. We need to
appreciate that good works of architecture
made in our own times are equally deserving
of preserving for posterity. Sometimes it
seems that modern architecture comes with
an expiry date, but colonial buildings do not.
This means that today, all significant build-
ings constructed using contemporary materi-
als and technologies are at risk.”
Dalvi pointed to the Union government’s
destruction of Raj Rewal’s iconic Hall of
Nations in 2017, saying: “I grieve for it. A very
significant building of world heritage value
was lost. It was perhaps the only space frame
in the world constructed in RCC and
designed and erected using Indian ingenuity.
The Hall of Nations was as home-grown as
the Chandrayaan mission but this value was
not recognized.”
But that loss is connected to others, as Hos-
kote reminded me with great feeling: “Con-
sider the destruction of Rewal’s Hall of
Nations, the demolition of Habib Rahman’s
WHO building, both in Delhi, and the demo-
lition of G.B. Mhatre’s Goldfinch in Mumbai.
Will the Kala Academy go to the guillotine
next? Will amchem Goem (our Goa) allow
this?”
It’s a big question, with no easy answer. My
own thinking is dominated by the memory of
gliding fast towards the Champalimaud Cen-
tre, on an evening sailboat ride in Lisbon’s
famously golden light. We cast anchor exactly
where Vasco da Gama set off down the Tagus
towards India, right next to where Correa voy-
aged all the way back to deposit his greatest
masterpiece. Heart-stopping minutes in the
lapping water, then epiphany. First, I recog-
nized Correa’s unmistakable design vocabu-
lary, and then realization dawned that the
greatest Indian building of the 21st century
isn’t in the subcontinent. What is more, it is
an unmistakable cousin of the Kala Academy.
When I closed my eyes, I could hear Correa
laughing uproariously at his magic trick.
Vivek Menezes is a Goa-based writer and
photographer.
38 LEISURE
August 9 - August.15, 2019 , SINGAPORE/KUALA LUMPUR° WWW.MINTASIA.COM
THE NEYMAR ENIGMA
The Brazilian superstar has become the epitome of footballing superstar excess but back home,
the fans love him with a passion
B Y P U L A S TA D H A R
·······································
O n a nondescript intersection sur-
rounded by narrow alleys and shops,
a plain building in Praia Grande in
São Paulo state comes to life. Children in
worn-out football jerseys scurry out of alley
corners as vans carrying futsal players pull up
in front of two main gates. This is the Neymar
Jr Institute, where thousands of children and
families are given a chance to get their lives
back on track through free education curated
around the ideals of sport. The children reach
out to touch those who walk through the tem-
porary barricading, but the man they really
want to touch is beyond their reach. A black
helicopter hovers high above the intersection
with the letters NJR printed on it. Neymar
grew up on these streets, but the superstar
now arrives from the skies.
Amidst feverish speculation about his club
future, the 27-year-old has returned home for
the world finals of the Red Bull Neymar Jr’s
Five, an international futsal tournament
(12-13 July). Qualification tournaments are
held in several countries, and the winners of
those national finals are flown to Brazil on an
all-inclusive trip to fight for the world champi-
onship. The reward, in addition to experienc-
ing the footballing culture of Brazil, is playing
against Neymar himself, and then travelling to
watch him play for whichever club he ends up
in. India’s Kalina Rangers from Mumbai are
also here, having won the India finals in
which more than 3,000 teams took part.
As children scream and wave at Neymar,
who watches the finals perched on top of the
stands set up around the futsal courts of the
institute, the Brazilian probably knows that
these are his last few days of rest and relaxa-
tion before he returns to Paris Saint-Germain
(PSG), the club which paid a world-record
€222 million (around `1,687 crore now) to sign
him from Barcelona in 2017, but has just
announced that they will let him go if the right
offer comes in.
After scoring 105 goals and creating
another 76 in just 186 matches for Barcelona,
Neymar had decided to leave Spain for
France, hoping to escape the indomitable
Sports star’s journey: (Top) Neymar poses with fans at the Neymar Jr World Finals in Praia Grande
last month, and (above) Neymar playing for PSG.
shadow of Lionel Messi and assert himself as
the best in the world. But it hasn’t been easy
for him in Paris. Despite winning two league
titles with PSG, Neymar has been troubled by
injuries, fought with his teammates, smacked
an opposition fan for taunting him, and was
turned into a meme for rolling around too
much at the 2018 World Cup. To make matters
worse, the emergence of Kylian Mbappé
means he isn’t the most wanted player at PSG
any more. Just a day after the world finals of
his tournament, he said his best football
memory was beating his current club while he
was with his former club.
“You want me to tell you about Neymar the
player or Neymar the person?” asks Danniel
Ottoni, a journalist who has covered football
in Brazil for a decade. It is a common query
when one asks about the man whose face is
graffitied on the walls across the country.
“Neymar the player is immensely talented.
Tremendous potential, no doubt. But there
are sections who believe that some of his
behaviour is hampering what can be a special
PHOTOGRAPHS FROM GETTY IMAGES
career,” Ottoni adds. Another journalist, who
covers football for a newspaper in Belo Hori-
zonte and didn’t want to be named, calls him
“a baby with terrible advisers who keep whis-
pering all the wrong things in his ears”. In
2010, after a match against Neymar’s Santos,
then Atlético Goianiense coach René Simões
had said Brazil were “creating a monster” by
tolerating his behaviour.
Two months ago, the footballer also had to
deal with an allegation of rape. Neymar
denied the allegation and his management
has claimed it was part of an extortion
attempt. The case was closed by the São
Paulo police owing to lack of evidence and
will now be evaluated by prosecutors.
“Jealousy plays a huge role in what people
here think about Neymar. For me personally,
he is the best Brazil currently has, but those
here only scrutinize the matches he plays for
the country. Even then, he is just 20 goals
behind Pelé in the all-time international scor-
ers’ list. The commentators on TV here kill
him—the tiniest mistakes are amplified and
mintasia
most of the people who play him down don’t
really understand the pressures of being the
most popular player in Brazil,” says former
Mohun Bagan and East Bengal player Edu-
ardo Ferreira, who is from Região dos Lagos,
120km from Rio de Janeiro. When Neymar
went out injured in the 2014 World Cup, cap-
tain David Luiz and goalkeeper Júlio César
held his shirt while singing the national
anthem before the semi-final loss against Ger-
many.
Even in Brazil, however, Neymar is a divi-
sive figure. It is as easy to see why he is dis-
liked as it is to see why he is adored. On the
pitch with the winners of Neymar Jr’s Five,
and with limited fitness, he plays as long as
time permits. He displays his repertoire of
flicks, rainbows, step-overs—the lightness of
his touch and the ease with which he moves
is a delight to watch. He is one of the few Bra-
zilians who will pull off a move learnt on the
streets at the biggest stage in the world. Every
touch is greeted by a roar, and, during the
breaks, he obliges those requesting selfies.
Watching him thus, it is hard to envision Ney-
mar as a difficult person, and blame is almost
always deflected to his family—primarily his
father—who also act as his agents.
In early July, in an interview to French
sports newspaper L’Equipe, Neymar’s former
adviser Eduardo Musa blamed Neymar Sr for
most of his son’s troubles. “I think he has
stopped doing things with his heart, this is the
problem. Neymar and his staff are in perma-
nent conflict. Neymar is faithful to those who
have been there the longest, especially his
father, he (Neymar Sr) can direct every aspect
of his son’s career. Neymar himself is a guy
with class, he’s endearing and generous, but
the image the media has of him is completely
the opposite and his father is responsible for
that.
“Forget about his image, leave commercial
obligations to one side and forget about the
idea of being number one.... He has to recover
his love for football and this depends solely on
him,” Musa said.
Mumbai-based sports psychologist Nicole
Menezes concurs with how important a sup-
port system can be to a player like Neymar.
“In my opinion, one must be mindful while
choosing one’s team. A team you can trust, a
team that’s working towards flourishing and
not just surviving through the stardom. It
becomes extremely important to seek the
right emotional and mental support, since
dealing with stressors can exhaust you from
doing your job. Having the right people on
board only makes it easier to think clearly and
focus on what you are meant to do—in Ney-
mar’s case, go on the field and own the sport.”
Football-crazy Hugo Travassos, who works
as a receptionist at a hostel in Rio de Janeiro,
reflects the way most Brazilians think. “I think
the word we can best use to describe him in
Portuguese is vacilou (colloquially used for
someone who has let people down). That
said, we love watching him succeed, and
when he does something wrong, like lash out
at the fan in France, we understand. We Bra-
zilians are expressive and explosive people—
we are generally very polite, but if someone
taunts us and ribs us, we will give it back.
That’s what he did.”
As the sun sets behind the peaks on either
side of Rio’s most popular beaches, street ven-
dors display their wares for thousands of
locals and tourists. Many of them are selling
replicas of the Brazilian national team kit. The
manicured roads of Copacabana and
Ipanema turn into a sea of yellow. Many of the
jerseys have the names of players at the back.
A family of six from São Paulo has a loud
discussion on which child will get to wear
Neymar’s shirt because they sell out so
quickly. One of the children starts crying and
wins the battle. The other has to make do with
a Philippe Coutinho shirt. This, despite Brazil
winning the Copa América without Neymar in
the team.
This is a country and a sport where one
goal can turn millions to your side. It is clear
that Brazilians are still not done with Ney-
mar—as Travassos says, there is still time. “We
would just like to see him play again. For Bra-
zil. For himself. For the love of football.”
The writer was in Brazil at the invitation of
Red Bull, organizers of the Neymar Jr’s Five fut-
sal tournament.
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myview CAPITAL CALCULUS
ANIL PADMANABHAN
THE NITIN GADKARI PLAN FOR
BEHAVIOURAL CHANGE ON ROADS
T hirty-five years ago a Maruti
800 changed the way we drove.
Last week Nitin Gadkari,
Union minister for road transport
and highways, got the approval of
Parliament for a new law, which if
implemented in spirit and substance,
could give another drastic makeover
to the way we behave (if you can call
it that) on the road and implicitly
another nudge to India’s efforts to
imbibe a rules-based regime.
As most would say, this couldn’t
have come sooner. Anecdotally,
because it is so ubiquitous, we
accept wrong side driving as a way of
life, jumping lights as a fine art, bul-
lying pedestrians off the zebra cross-
ing as the accepted routine, and of
course helmetless driving as the
unofficial norm.
A presentation made to the minis-
try of road transport in the build-up
to the new legislation reveals some
startling statistics: On an average
every minute there is an accident
causing one death every four min-
utes. The accruing cost is estimated
to shave 3 percentage points off the
country’s gross domestic product
annually.
Frighteningly, according to the
2017 report of the Transportation
BARE TALK
V. ANANTHA NAGESWARAN
THE CAPITAL ADEQUACY NORMS FOR
BANKS COULD DO WITH REVISION
O n Wednesday, 7 August, the
monetary policy committee of
the Reserve Bank of India (RBI) will
announce its monetary policy deci-
sion. RBI is widely expected to cut
rates. It does not matter what the
magnitude is. The question of trans-
mission is a big one. Interest rate cuts
take much longer to be passed on, if
at all they are passed on. Moreover, it
is not even clear if interest rates mat-
ter in the current uncertain environ-
ment. There is much that the govern-
ment needs to do to dispel the
uncertainty for it has had quite a
substantial role in its creation. That is
the subject of another column, how-
ever. Here, we shall focus on what
the central bank should do.
According to data published by the
Bank for International Settlements
(BIS), India’s credit-to-gross domestic
product (GDP) gap has been nega-
tive since 2013 and is now running
well below trend. That is not a sur-
prise. Banks are unwilling to lend
and businesses are not keen to bor-
row either. There is not much confi-
dence that non-performing assets
will not see further accretion. The
understandable caution of banks
should not starve creditworthy bor-
rowers of credit. Both the govern-
ment and the central bank must do
Research and Injury Prevention Pro-
gramme at the Indian Institute of
Technology (IIT)-Delhi, the official
statistics are an underestimate. It
reveals that over the last two decades
the burden of road traffic injuries in
India has increased sharply. In 1990,
road accidents were the 13th leading
cause of death and in 2016 it had
moved up to the rank of eighth.
According to the same study, and
also an oft-ignored fact, a third of the
fatalities in road accidents are pedes-
trians (a logical given as most cities
don’t have pavements and if they do
then they are encroached, leaving
pedestrians more vulnerable to bad
driving).
Now Gadkari wants to change all
this. Immediately after the bill
cleared Parliament, the minister took
to Twitter and said: Congratulating
every citizen on passing of ‘The
motor vehicle amendment bill’
which will pave way to safer roads. I
am thankful to the members of the
house who realised the gravity of the
subject and voted in the favour of the
bill.
The amendments to the existing
law piloted successfully through Par-
liament by the minister will put in
place new rules, which among other
all that is within their powers to ease
the situation.
The country’s central bank, in the
credit boom years up to 2007, had
proactively adjusted risk weights to
dissuade banks from lending exces-
sively to certain sectors and busi-
nesses. Is there a case for doing so in
reverse now? I think so, and that
would be less risky than opening up
external commercial borrowings to
purely domestic players. That would
be the first step.
In the post-2008 phase, regulators
around the world have embraced
counter-cyclical capital buffers and
macroprudential norms to better reg-
ulate credit creation while interest
rates plumbed new lows. RBI could
use the mechanism of countercycli-
cal capital buffers to ease credit con-
ditions. Counter-cyclical capital buff-
ers mean exactly that. They have to
counter the cycle and not exacerbate
it. It is possible to do this with clear
expiration dates. Extraordinary meas-
ures must be withdrawn when times
become ordinary. There should be
other safeguards lest the bond mar-
ket react badly to such a move.
The central bank must apply the
many regulatory lessons that it must
have learnt from the recent and
ongoing episode of bad debts. Sec-
August 9 - August.15, 2019, SINGAPORE/KUALA LUMPUR ° WWW.MINTASIA.COM
things will effect a steep increase in
fines and also rewrite the norms for
the transport administration—with a
greater emphasis on a hands-free
approach to minimize contact with
the consumer and thereby the
opportunity for graft. At the same
time, it also provides cashless treat-
ment of road accident victims during
the golden hour, when the survival
rate of patients is at its best if provide
timely medical care, and protection
for good Samaritans who take the
initiative and rush the injured to hos-
pital.
There is no doubt that Gadkari
brings a certain passion to the task,
something most visible in the way he
upped the institutional ability in road
building in his first stint as minister
to a very impressive 200km a week—
that is the distance between Delhi
and Agra. Several would also recall
his dedication to road safety in his
frequent appeals aired on radio tar-
geting people driving two-wheelers
ond, it must act in concert with own-
ers of banks in enforcing lending dis-
cipline. Third, I had also written ear-
lier on the incongruity of the central
bank prescribing the marginal cost of
funds-based lending rate as the floor
in a so-called liberalized interest rate
environment. Fourth, the govern-
ment, on its part, must use the crisis
to legally enshrine non-interference
in the operational decisions of banks.
Fifth, the government must incentiv-
ize banks to augment their assess-
ment of credit worthiness and risk
assessment of loans on a continuous
basis. More specifically, capitalization
support and operational autonomy
must be made contingent on skill
upgradation and other quantifiable
performance measures. Finally, both
the government and the central bank
must be clear that as economic con-
ditions normalize, countercyclical
capital buffers must and will move in
the opposite direction.
It is not widely known that the
page relating to Basel III norms in
the website of BIS states rather
clearly: “Like all Basel Committee
standards, Basel III standards are
minimum requirements which apply
to internationally active banks.” A
substantial number of banks in India,
especially government-owned banks,
are not internationally active banks.
Their predominant shareholder is
the government and the deposits are
protected by the government in more
ways than one, both formally and
through an implicit understanding
that the government would not allow
the failure of banks owned by it, let
alone cause depositors to lose
VIEWS 23
HINDUSTAN TIMES
who, as he pointed out, derive a
peculiar pleasure from not wearing
helmets. But let us accept the basic
truth that the minister alone cannot
bring about this much needed
behavioural change on India’s roads.
What the newly amended law has
done is to provide the ecosystem to
effect the desired change. It is now
up to the administrators to imple-
ment the new norms in letter and
spirit and for road users like us to
adhere to the rules. So next time you
think of jumping a light or violating
the zebra crossing, stop yourself. Not
only will you be contributing to
much needed behavioural change on
the roads, but also in the process
avoid a hefty fine that could leave
your pocket considerably lighter.
Anil Padmanabhan is managing
editor of Mint and writes every week
on the intersection of politics and eco-
nomics.
Comments are welcome at
anil.p@livemint.com
money.
The bigger question, therefore, is
whether the capital adequacy norms
prescribed under Basel III should be
made uniformly applicable to all
banks in India or only to internation-
ally active banks. A lower capital
ratio for other banks will not only
reduce the capitalization burden on
the government but will also free up
lending capacity.
The problem is that the discourse
has become so puritanical that such
a move would be seen as a dilution
of prudence and credit discipline
and interpreted as another sign of
the central bank caving into pressure
from North Block or South Block or
both. Therefore, the government and
the central bank must approach this
in a calibrated manner and commu-
nicate clearly so that it is not painted
as another attack on institutions by
the government.
To begin the process, the govern-
ment and the central bank could
consider appointing a committee to
re-examine the relevance of capital
adequacy norms prescribed for inter-
nationally active banks in the Indian
context. The terms of reference for
such a committee should be formu-
lated in a manner that strikes a bal-
ance between India’s economic
growth and employment imperatives
and maintaining a sound banking
system. India should not prioritize
one at the cost of the other.
V. Anantha Nageswaran is the dean
of IFMR Graduate School of Business,
Krea University.
These are the author’s personal
views
24 VIEWS
August 9 - August.15, 2019 , SINGAPORE/KUALA LUMPUR° WWW.MINTASIA.COM
theirview
India’s competition policy must
keep up with emerging threats
A VISIBLE
HAND
Narayan Ramachandran
T he combined market capitali-
zation of just four compa-
nies—Facebook, Apple,
Alphabet (Google) and Amazon—is
greater than the gross domestic
is chairman, InKlude Labs. product (GDP) of India. In the US, in
China and, of late, in India, corpora-
tions which have a disproportion-
ately large share of their consumer
markets are rising. The current regu-
latory architecture is woefully inade-
quate to comprehend and determine
whether this corporate concentra-
tion gives rise to monopoly power.
The dictionary definition of
monopoly is “a market situation
where one firm, or a group of firms
acting in concert, controls the sup-
ply of a good or a service”. Histori-
cally, the economic implication of
this has been synonymous with high
prices and the restriction of output.
The intent and structure of regula-
tion around the world has therefore
attempted to mitigate or break up
monopolies in an attempt to negate
this abusive pricing power.
Even though competition laws
have been around for 2,000 years,
the design and intellectual roots of
the current framework for competi-
tion policy and anti-monopoly regu-
lation, called anti-trust in the US,
can be traced to justice Louis Bran-
deis of the US supreme court (1916-
A lot can happen over a
private equity-coffee blend
GENERAL
DISEQUILIBRIUM V .G. Siddhartha has many firsts to
his credit and that list now
includes the manner of his mysteri-
Rajrishi Singhal ous disappearance and the equally
is consulting editor of Mint. mystifying letter he has purportedly
His Twitter handle is left behind. While the circumstances
@rajrishisinghal and nature of his untimely demise
will be intensely debated in the com-
ing months, these conversations will
find it difficult to sidestep related
issues about regulatory red lines, the
tightening embrace between business
and politics, or the nature of certain
foreign investments. Many questions
have already been raised about the
linkages between Indian businesses,
the tax regime and the political eco-
system, but perhaps it is also time to
introspect on the friends of busi-
nesses: Private equity (PE) firms.
The manner of Siddhartha’s death
has forced many issues out in the
open and these must be answered or
resolved comprehensively. At stake is
India’s reputation as a business desti-
nation and its promise of unwavering
adherence to the rule of law. Siddhar-
tha’s last letter, apparently written two
days before he walked out of home
for the last time, captures his despair:
“I fought for a long time but today I
gave up as I could not take any more
pressure from one of the private
equity partners forcing me to buy
back shares, a transaction I had par-
1939). Brandeis, using Madisonian
principles, argued that there should
be a democratic distribution of
power and opportunity in the politi-
cal economy and that “industrial lib-
erty” must go hand-in-hand with
political and religious liberty. With
significant inputs from the Chicago
school, this “Brandeis philosophy”
has morphed into one of consumer
welfare, measured principally by the
price paid by consumers as the test
of policy effectiveness. The laws cod-
ified in the US before World War II
were transferred to Germany and
Japan after the war and became the
basis upon which competition policy
was documented in the European
Union (EU) and beyond.
In the US and Europe, the
increase in corporate concentration
has led to a lot of discussion about
the limitations of current law. The
EU, and its competition tsarina,
Margrethe Vestager, have used exist-
ing competition regulation to exam-
ine the “abuse of market concentra-
tion” with some zeal. Most recent
rulings on disrupting competition
and the abuse of market power in
the international arena have come
about in the EU. Landmark rulings
came in 2004 against the “lack of
interoperability” of the Microsoft
operating system and in 2017 against
tially completed six months ago by
borrowing a large sum of money from
a friend. Tremendous pressure from
other lenders lead to me succumbing
to the situation. There was a lot of
harassment from the previous DG
income tax in the form of attaching
our shares on two separate occasions
to block our Mindtree deal and then
taking position of our Coffee Day
shares although the revised returns
have been filed by us. This was very
unfair and has led to a serious liquid-
ity crunch.”
The elephant in the room is the tax
persecution to which Siddhartha has
alluded, but which remains unproven
so far. The income tax authorities
issued a press release on Tuesday, the
day the letter was disclosed to the
public, defending their actions and
accusing Siddhartha of tax evasion,
which he, sadly, is in no position to
counter. This is the tragedy’s unfortu-
nate aspect: Both have accused each
other without providing any proof
and it is now up to readers to draw
their own conclusions from this tragic
turn of events.
The questions will continue to lin-
ger. For one, why did the income tax
action unfold just before the elec-
tions, especially in light of Siddhar-
tha’s known links with the Karnataka
Congress? Or, what is Siddhartha hid-
Google’s Android operating system.
In the US, discussion among a
group of thinkers called “the New-
Brandeisians” is pushing lawmakers
to jettison short-term price effects
as the sole determinant of abuse.
Competition policy in India is
governed by the Competition Act of
2002. This Act establishes the Com-
petition Commission as the arbiter
of any activities that may have an
“adverse effect on competition in
India”. The Act is now inadequate to
deal with the changing business
environment in telecommunica-
tions, technology and e-commerce,
and the government’s own role in
distorting competition. The same
deficiency that plagues the rest of
the world, namely a requirement of
“dominance” and a test of price
“increases” restricts the commission
from challenging abuse.
Today, consumer data and behav-
iour is the “asset” around which a
monopoly or an oligopoly can exist.
Private corporations or the govern-
ment can abuse this asset by
monopolizing it to deliver a range
of goods and services. A govern-
ment may abuse its power to regu-
late by preferring large domestic
corporations over foreign ones, or
by interfering in pricing. In India,
you are beginning to see emerging
ing when he claims in his letter, “My
team, auditors and senior manage-
ment are totally unaware of all my
transactions. The law should hold
me and only me accountable, as I
have withheld this information from
everybody, including my family”?
The board, acting under an interim
chairman, has promised to probe all
past transactions. The clincher, one
that has the financial services indus-
try speculating, is a reference to a
“private equity partner”. While little is
known about this, larger questions
have arisen about the conduct of PE
players and whether the current reg-
ulatory framework is adequate to
govern their actions.
PE has been a saviour for the capi-
tal-starved Indian corporate sector.
Consulting firm Bain and Company’s
India Private Equity Report 2019
reported that PE investments in the
country during 2018 touched $26.3
billion from 793 deals. The report
also estimated the India-focused “dry
powder” at $11.1 billion, an indica-
tion of the capital available for high-
quality deals.
Here is where things get slippery.
With so much capital chasing so few
“good” assets, intensifying competi-
tion between PE firms for deals is
leading to all kinds of distortions and
forcing professionals to explore regu-
latory cracks. For one, there are
already doubts about the provenance
of investors in these funds, especially
since very few PE firms actually
deploy funds raised in domestic mar-
kets. In addition, competitive pres-
sures are forcing many PE firms to
mintasia
corporate concentrations in con-
sumer industries related to data and
e-commerce and payments. The
government’s role has been schizo-
phrenic; for instance, on one hand,
creating the only truly interoperable
backbone in the world for payments
(the Unified Payments Interface),
but on the other interfering directly
in the payments industry by abolish-
ing the merchant discount rate, and
promoting a government-created
consumer app called Bhim. The
long-standing Indian interference
tradition has led to landmark inter-
ventions that include the nationali-
zation of banks (1969), abolishment
of front-end loads for mutual fund
sales (2009) and the wide-spread
subsidy for LPG sales (until it was
changed recently).
The government has put out a
draft e-commerce policy for discus-
sion that brings up some of these
issues—such as predatory pricing
and consumer data abuse. This lim-
ited update of competition policy is
wholly inadequate. An updated
competition policy in India must
simultaneously focus on the objec-
tives of free and fair competition,
consumer welfare and the abuse of
monopoly power wielded by govern-
ment and companies.
The Competition Commission
must have the authority (and the
will) to investigate and charge the
government with “distortion of com-
petition” if it interferes micro-eco-
nomically with pricing or arbitrarily
favours private companies with reg-
ulation.
Comments are welcome at
theirview@livemint.com
design structured products for their
clients, which could include a credit
component. This gives rise to two
problems. One, PE firms—as well as
mutual funds (MFs)—have become
default credit dispensers, after com-
mercial banks and non-banking
financial companies turned risk-
averse, without necessarily having the
requisite credit appraisal expertise or
risk mitigation frameworks. But sec-
ond, and more important, credit mar-
kets are regulated by the Reserve
Bank of India and PE firms are
answerable mostly to the Securities
and Exchanges Board of India, which
doesn’t have any credit capabilities.
Consequently, a large segment of the
financial services industry involved in
dispensing credit is now operating in
a grey regulatory zone. This has pro-
found implications for contagion risks
in an interconnected market; it is well
known how some PE firms and MFs
have already made a number of rash
credit calls in the recent past, which
have contributed, perhaps partially,
to the credit market freeze.
There has been some discussion
about the role of MFs lending money
to entrepreneurs against the security
of their shares in either the holding
company or the operating firm, but
there is complete regulatory radio
silence about the ground rules
needed—perhaps similar to those
applicable to banks and NBFCs—for
PEs or MFs to qualify as credit ven-
dors. Hopefully, Siddhartha’s death
will now spur some regulatory action.
Comments are welcome at
theirview@livemint.com
mintasia
otherviews
CAFÉ
ECONOMICS
Niranjan Rajadhyaksha
is a member of the academic
board of the Meghnad Desai
Academy of Economics
EX MACHINA
Rahul Matthan
is partner at Trilegal and
author of Privacy 3.0 :
Unlocking Our Data Driven
Future
Lessons for J&K’s
economic integration
I n the course of his speech
defending the decision of the
Narendra Modi government to
withdraw the special constitutional
status given to the erstwhile state of
Jammu and Kashmir, home minister
Amit Shah said that the way ahead
will be determined by the ability to
offer economic opportunities to
young people in the Kashmir valley.
In other words, political integration
needs to be followed by economic
integration. The worst fears of his
many critics will be realized in case
this does not happen.
The story of the rest of India is
instructive in this context. India first
got politically integrated in 1950. Eco-
nomic integration followed more
slowly. This is in sharp contrast to
what happened in Europe after World
War II. Europe first became a com-
mon economic zone—from a small
initial agreement to coordinate steel
production to the ambitious creation
of a common currency. And it then
took a shot at political integration,
though that dream now seems in tat-
ters after the rise of nationalist par-
ties that are suspicious of transna-
tional governance.
India has been a common civiliza-
tional unit for many centuries. There
was some internal trade as well, but
most of it was rooted in traditional
A new framework for consent
to ensure user data privacy
R egular readers of this column
know that I have pretty much lost
faith in consent. As much as it has
served us well for decades, it no
longer effectively protects personal
privacy in our present data-rich
world.
In a recent paper, titled The Market
For Data Privacy, Tarun Ramadorai
and his co-authors describe an inter-
esting study they carried out on a
large sample of privacy policies to
evaluate the extent to which the con-
tent of these policies affected the
manner in which personal data was
transferred. They discovered that
even though large firms with only an
intermediate level of knowledge cap-
ital intensity had longer, more legally
watertight policies, they were more
likely to share the browsing history of
their users with third parties. On the
other hand, firms with the very high-
est level of knowledge capital inten-
sity usually had shorter, less legally
watertight policies, and tended to
share less user data with third par-
ties. Whether or not personal data
will be shared seems to have less to
do with the privacy policies of the
companies collecting them, and
more to do with their technical
sophistication and ability to process
data internally.
The reason companies get away
with doing what they do with our
caste networks. However, the eco-
nomic integration of the territory
began in earnest only under colonial
rule, especially after the British built
railways to move troops around,
bring raw materials to ports for
export to their home country, and
deal with famines. One indication of
the early economic integration
through the spread of railways was
the growing correlation between food
prices in various parts of India.
However, the big thrust towards
economic integration came from the
public sector in the age of planning.
Not enough importance is given to
the fact that the public sector—be it
the bureaucracy or industrial units—
had a big role to play in the creation
of a national middle class.
In 1966, the Planning Commission
appointed a committee headed by
economist R.K. Hazari to examine
whether there had been regulatory
capture of the industrial licensing
process by influential business
houses. Hazari found ample proof of
this. His report had a feature that
appears intriguing to the modern eye.
Most of the large business groups in
India had only a regional presence.
The Parsi groups had most of their
investments in Maharashtra and
Bihar. Punjabi investment was con-
centrated in the Delhi-Punjab area.
data, despite what is contained in
their privacy policies, is probably
because of how these policies are
designed. Consent is cumbersome to
obtain and so privacy policies are
drafted in the widest possible lan-
guage to give companies considerable
leeway in third-party data transfers so
much so that there is no need for
them to ever seek our consent again.
If consent can be made truly digital,
it should be possible for companies to
conveniently obtain consent as close
to the time the transfer actually takes
place as possible. Users will be able to
decide for themselves each time
whether or not to permit a particular
type of transfer and will be able to
revoke consent previously provided
dynamically at any time. If designed
properly, this sort of consent frame-
work could be integrated into the
commercial workflow with minimal
impairment to the velocity of transac-
tions. Once companies have to obtain
consent each time through a digital
consent framework like this, they will
be forced to engage more seriously
with the finer nuances of data protec-
tion—eventually resulting in a higher
standard of privacy protection all
around.
A couple of weeks ago, I attended
the launch of the account aggregator
framework in Mumbai and witnessed,
first-hand, a demonstration of this
August 9 - August.15, 2019, SINGAPORE/KUALA LUMPUR ° WWW.MINTASIA.COM
AFO
The south Indian groups had
invested in their part of the country.
Indian capitalism was regional in
nature. The only major exceptions
were the Marwari groups, which is
perhaps linked to the fact that they
had migrated across the country.
The pattern of public sector
investment during the high noon of
planning was far from regional. It
was spread all across the country.
The manifold failures of the Indian
public sector are common knowl-
edge. But it also created the manag-
ers, scientists, technicians, adminis-
trators and bankers who once
formed the backbone of the Indian
middle class. The public sector was
thus an important driver of eco-
nomic integration.
brand new service. Account aggrega-
tors are third-party consent brokers
who interpose themselves between
financial information users (FIU) and
financial information providers (FIPs)
for the purpose of facilitating the
movement of financial data between
these entities. When fully imple-
mented, this framework will allow a
distributor of financial products (FIU)
to request financial information from
any FIP. The FIP will then extract the
required information, digitally sign it,
and send it to the FIU through the
account aggregator. Once integrated
into the financial services industry,
this framework will result in the
development of a whole host of new
financial products aimed at those
currently underserved by the finan-
cial markets, including products that
range from flow-based lending to
robo-advisory services.
Central to all of this is the ministry
of electronics and information tech-
nology’s digital consent artefact, a
machine-readable electronic docu-
ment that records the parameters
and scope of every data share that a
user consents to, digitally signing it to
establish the identity of the person
providing consent, as well as the
nature of the permission granted.
This is the mechanism by which FIUs
and FIPs exchange data among
themselves, relying on the consent
provided by the user to pass data to
each other through the account
aggregator.
At first glance, this digital consent
artefact seems to be the solution we
have been looking for. It records the
exact nature of the consent, time-
VIEWS 25
That role has now been taken over
by the private sector. Large conglom-
erates are today not rooted in any
one part of the country. The creation
of a common Indian market through
the goods and services tax reflects the
rise of a truly national business class.
Migration is also a powerful driver of
economic integration, but it is a more
complicated issue given cultural sen-
sitivities in several states.
What are the lessons here for Kash-
mir? Economic integration will be a
very slow process, as was the case
with the rest of India. The govern-
ment may have to take the lead. The
old strategy of putting up public sec-
tor industrial units in the quest for
balanced regional development is no
longer viable, given the financial
health of enterprises owned by the
government. Infrastructure spending
is a more realistic option, especially if
it pulls in more tourism.
Private sector investment will be
needed, but that is unlikely to hap-
pen overnight given the current state
of investment activity across India.
Massive migration will unleash the
same cultural fears that periodically
bubble up to the surface in other
parts of India, and more so in a
former state witnessing a huge politi-
cal transition.
The end of the special status for
Kashmir is part of a political
project—and will largely be seen
through that prism. However, the
political project will flounder unless
it brings economic opportunity in its
wake.
Comments are welcome at
otherviews@livemint.com
stamping it with the digital signature
of the consenting party, thereby creat-
ing an irrefutable record of what was
agreed upon and by whom. Since it
has been designed to be universal, the
consent artefact could form the basis
for passing consent between multiple
entities, each of whom can rely on the
digital signature of the user as the
irrefutable basis for processing.
That said, all this consent artefact
does is register consent. In order to be
a full-blown tool for privacy protec-
tion, it will need to do much more.
For instance, where consent is pro-
vided for a particular purpose, the
consent artefact should ensure that
the recipient cannot use the data for
anything else. Once the purpose for
which the consent was provided has
been fulfilled, it should digitally
ensure that the transferred data is
expired, or otherwise prevented from
being stored by the transferee. When
consent is revoked, it should make it
possible for all data that has been
transferred before such revocation to
be digitally deleted. At present, the
digital consent framework does not
address any of these issues. However,
it can’t be hard to build these fea-
tures. If it is possible for us to incor-
porate these features into the digital
consent artefact by creating a consent
markup language that incorporates
key privacy principles into the design,
we will be able to create a framework
for consent that directly incorporates
privacy into its core architecture. And,
then perhaps, I can start believing in
consent again.
Comments are welcome at
otherviews@livemint.com
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