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Tuesday, March 14, 2023
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US banking crisis continues to
weigh on stocks
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Oscar glory for The Elephant
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EXECUTIVE ENGINEER (PROJECT) W-VIII
A-BUILDING, JHANDEWALAN, NEW DELHl-110005
Email:- eeprojectw8@gmail.com
PRESS NOTE/PUBLIC NOTICE
Due to interconnection of 1100 mm dia West Delhi main at Wazirpur to Punjabi Bagh, the water supply of following colonies/areas
will not be available or will be available at low pressure in the evening of 15.03.2023. The areas affected are as under.
Raja Garden, Ramesh Nagar, Khyala, Rani Bagh, Moti Nagar, Sharda Puri, Tagore Garden, Tihar Village, Tilak Nagar, Varun Niketan,
Rajouri Garden, Karam Pura, Saraswati Garden, Hari Nagar & its adjoining area, Mansarovar Garden, Vishnu Garden, Subhash
Nagar, Part of Uttam Nagar, Part of Mohan Garden, Ganesh Nagar, Krishna Puri, J.J. Colony Khyala, Ravi Nagar & Chand Nagar and
adjoining area.
Residents of above said areas are advised to store adequate water. The water tanker will be available at following Telephone Nos.
WATER EMERGENCY
TELEPHONE NOS.
1. Punjabi Bagh
011-25223658
2. Shivaji Enclave
011-25193140/25174140
3. Paschim Vihar
011-25281197
4. Central Control Room
1916, 011-23527679/23634469
Inconvenience caused to the public is deeply regretted.
ISSUED BY P.R.O. (WATER)
Sd/STOP CORONA: “Wear Mask, Follow Physical
Distancing, Maintain Hand Hygiene”
Advt. No. J.S.V. 545(2022-23)
E.E. (Project) W-VIII
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VOL. 17 NO. 61
Tuesday, March 14, 2023
livemint.com
CPI inflation above 6% for 2nd
month on costlier food
uP1
Hyundai to acquire GM’s
Talegaon plant
uP1
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VOL. 17 NO. 61
Tuesday, March 14, 2023
livemint.com
mint primer
QUICK EDIT
Why local banks
are insulated
from SVB ripples
Inflation:
Fog of war
BY SHAYAN GHOSH
The collapse of Silicon Valley Bank has caused ripples across the
financial world but is unlikely to affect Indian lenders. There are a few
reasons why. Mint explains how stressed banks were managed in the
past.
Safety net
India's deposit insurance has been revised multiple times since 1962.
13.38
Ratio of deposit insurance to
per capita income
8.16
4.99
3.6
3.01
2.17
Mexico
Romania
Portugal
USA
India
Sweden
Note: Data in US dollar terms as at end-December 2021.
1.62
1.31
0.86
Singapore
South
Korea
Source: DICGC annual report FY22
Russia
SARVESH KUMAR SHARMA/MINT
1
Has India faced bank
failures in the past?
India has also had its share of bank
failures in the past, both pre- and
post-Independence. In fact, the
failure of Laxmi Bank and Palai
Central Bank in 1960 prompted
the government to introduce the
Deposit Insurance Corporation
(DIC) Bill in August 1961 to protect
depositors. According to the
Reserve Bank of India (RBI), when
DIC started operations in the early
1960s, 287 banks were registered
as insured. But in the next five
years, this shrank to 100 as RBI
pushed “reconstruction” and
amalgamation of small and
financially weak banks. In 1968,
the Act was amended to widen its
ambit to cover co-operative banks.
3
2
What is the impact of
SVB on Indian banks?
As of now, there seems to be
limited impact on Indian banks as
they have little exposure to Silicon
Valley Bank. Experts said that
given how tightly local banks are
regulated, they are unlikely to face
a similar fate in the foreseeable
future. Macquarie Capital says
Indian banks largely do not fund
startups and hence any impact on
the startup world should be
manageable to a large extent. In
December, RBI’s stress tests found
that banks would be able to
withstand severe stress. It found
that even if customers withdraw
15% of uninsured deposits, liquid
assets equivalent to 12.2% of total
assets would be available.
Do local bank depositors
have their deposits insured?
Deposit insurance started with a sum of
₹1,500, way back in 1962. This was
gradually increased to ₹100,000 in 1993
and most recently, to ₹500,000 in 2020.
In dollar terms (as of end-December 2021),
this comes to 3.01 times India’s per capita
income. In the US, the deposit cover is at
$250,000 or 3.6 times that nation’s per
capita income.
4
How has RBI handled
recent cases of stress?
Recent examples include Yes Bank
and Lakshmi Vilas Bank from
2020. These cases show how the
regulator and the government
acted in time to stitch together
rescue plans. In the case of Yes
Bank, private and public sector
lenders were brought together to
take stakes and bail out the bank.
For Lakshmi Vilas Bank, RBI roped
in foreign lender DBS Bank’s local
arm for a merger. These banks
were first put under a short
moratorium to check for outflow
of funds till the final plans were
drawn up.
5
How are Indian banks
expected to perform?
Although the brisk pace of credit
growth is expected to slow down
in FY24, banks are at their best
shape in decades. Led by fewer bad
loans, better recovery of legacy
stressed assets and significantly
high provisions as buffer, banks
have been able to clean up their
balance sheets. That said, the
sector is not without its challenges,
including the problem of
convincing depositors—some of
whom had left for higher returns
in other investment avenues—to
return to park their funds with
banks.
India’s retail inflation eased to
6.44% in February from 6.52%
in January, according to government data released on Monday. This, however, is hardly
comforting, given that it’s still
well above the Reserve Bank of
India’s (RBI) 6% upper bound.
The rate will now have to drop
substantially in March for RBI’s
5.7% estimate for this quarter to
come good. An anticipated
cool-off in food prices might
help, but core inflation remains
sticky and could compel the
central bank to revisit its calculations. Elevated inflation also
strengthens the case for continued rate hikes. But with economic growth slipping to 4.4%
in the quarter ended December
and other weaknesses expected,
that decision may not be
straightforward. Meanwhile,
which way monetary policy
goes in the US, which will have
a bearing on RBI’s approach, is
going through another round of
guessing. After Silicon Valley
Bank’s collapse was followed by
Signature Bank’s in quick succession, Goldman Sachs no
longer sees the Federal Reserve
hiking its policy rate next week.
Sudden clouds of uncertainty
have arisen from the very war
against inflation. And that
makes policy calls even trickier
for central banks to take.
MINT METRIC
by Bibek Debroy
A UP shopkeeper caused some cheer,
Offering free supplies of beer
On purchase of a smart phone.
The resultant rush was overblown,
Has been arrested for reasons unclear.
QUOTE OF THE DAY
While AI offers many
opportunities, it also raises
concerns related to
transparency and fairness.
These issues include the impact
of AI on privacy, bias and
discrimination in AI systems...
GIRISH CHANDRA
MURMU
COMPTROLLER AND
AUDITOR GENERAL
MINT PODCASTS
INVESTOR HOUR
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THE SKETCH
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core principles of investing. Look no
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weekly podcast,
Equitymaster chief
executive Rahul
Goel speaks to the
best investment
minds on a host of
issues, including India’s economy
and its challenges, and even the next
stock rally.
Here is what you need to know about
employer-employee relationship,
and the latest compensation and
retention trends
adopted by India
Inc. This podcast
also tells you why
the right HR policies are as crucial as aiming for
aggressive business strategies and
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In this podcast, Mint’s editor-in-chief
Sruthijith K.K. speaks with business
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conversations, the podcast aims to
paint in the listeners’ mind, a sketch.
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PLAIN FACTS
Our shrinking base of
mid-income taxpayers
By hOwiNdiAlivES.cOm
T
he number of middle-income taxpayers in India has declined dramatically after 2018-19, falling 17% in the subsequent
two years, from 49.8 million to 41.1 million. In the same period, the number of high-income taxpayers rose 15%, underscoring how the pandemic accentuated inequities.
Last month, the government released data in the Lok Sabha on the number of individual taxpayers by three income bands:
up to ₹5 lakh, ₹5-10 lakh, and above ₹10 lakh. The total taxpayers rose from 40 million in 2015-16 to 65.4 million in 2018-19,
reflecting an overall expansion of the taxpayer base. In 2020-21, however, this fell to 63.3 million.
The share of those earning up to ₹5 lakh a year had started to decline even before the pandemic—from an 81% share in
total in 2014-15 to 76% in 2018-19. In 2020-21, this fell to 65%. Post-covid, the decline was also in absolute terms. Thus, the
shrinking of the lowest tax brackets dramatically worsened due to economic disruptions caused by covid.
As incomes rise, taxpayers move up income slabs. But another major reason for these shifts is greater income inequality.
The pandemic has exacerbated an existing divide between rich and poor, shows an ICE360 survey of about 120,000 urban
households across 100 districts.
Of the five income bands, the three lowest bands saw their mean household income fall between 2015-16 and 2020-21.
In contrast, the richest 20% saw a 39% increase in income.
Number of taxpayers in the lowest
income band has fallen
Covid has deepened distress in
lowest-income households
Number of individual taxpayers by annual income (million)
Mean household income ( lakh per year) by income category
Up to 5 lakh
5 lakh-10 lakh
Above 10 lakh
2015-16
2020-21
50
1.37
Poorest 20%
0.65
40
41.2
1.85
Lower middle 20%
1.25
30
2.25
Middle 20%
2.05
20
14.1
3.01
Upper middle 20%
10
3.22
8.1
5.26
Richest 20%
0
7.31
2014-15
2020-21
Source: Lok Sabha question, 13 February 2023
Source: ICE360 survey
Pre-pandemic Trend
The income share of the lowest tax
bracket is falling
DRIVEN BY this top end, over these five years, average income
among direct tax payers rose 8.4% to ₹3.23 lakh per annum.
While the pandemic made things worse, the income share of
taxpayers in the lowest tax bracket (up to ₹5 lakh) was falling
even before the pandemic, from 44% in 2013-14 to 33% in 201819. Meanwhile, the share of the other two brackets (above ₹5
lakh) in the overall income rose by the same amount.
One reason why people at the top are earning more could also
be diversity of income. The non-salary income component of
the higher-income bracket has increased over the years, but
decreased for the lower-income bracket. Demonetization, the
migration to goods and services tax (GST) regime (which
disproportionately hit smaller firms employing lower- and
middle-income workers) and the pandemic all combined to
pare down the relative position of middle-class Indians in the
income pie.
Share of total income by annual income (%)
Up to 5 lakh
5 lakh-10 lakh
Above 10 lakh
100
80
60
40
20
0
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
Source: Income tax return statistics, various years
The proportion of salaried in urban
India has reduced
Less Secure
Urban workers employed in a salaried
job with regular wage (%)
THE SALARIED middle class forms the backbone of the
urban economy. Yet, as the government’s Periodic Labour
Force Survey shows, the proportion of workers in urban India
who are salaried has declined since the pandemic, from 48.8%
in 2019-20 to 46.4% in 2020-21. Across both rural and urban
areas, the share of salaried workers fell from 23.8% in 2018-19 to
22.9% in 2019-20 and further to 21.1% in 2020-21.
Women were affected more. While the proportion of male
workers who were salaried fell by 1.9 percentage points, the
decline for women was 4.1 percentage points over the same
period. At the same, ‘informalization’ and casualization of the
workforce increased. The proportion of casual labour in the
workforce has risen from 13.4% in 2019-20 to 14.1% in 2020-21
in urban India, suggesting that lower-income groups shifted to
informal employment due to a severe job crunch during and
after the pandemic.
2017-18
47
2018-19
48.7
2019-20
48.8
2020-21
46.4
Urban workers employed in casual labour (%)
2017-18
14.7
2018-19
13.5
2019-20
13.4
2020-21
14.1
Source: Periodic Labour Force Survey
Corporate Impact
THE SHIFTS in income structure of the Indian consumer has
far-reaching, longer-term implications for the economy.
Internet businesses is one place where this plays out. Firms like
Zomato, Swiggy, MakeMyTrip, Naukri, and Paisabazaar are
essentially relying on their consumer base to grow as a result of
more people entering the formal workforce and moving up in it.
But if the middle-income category, which forms a majority of
the urban household population, is not growing at a brisk rate,
then such companies will find it difficult to expand beyond a
point. The tapering in the average monthly transacting user
base of food-delivery company Zomato points to the challenges
of maintaining growth. Increasing inequality and a bleak overall
employment market, with people leaving the formal workforce,
is a conundrum that the economy is yet to solve.
www.howindialives.com is a database and search engine for
public data.
Zomato's customer base is
growing at a slower rate
20
Average monthly transacting customers
of Zomato (million)
17.4
15
10
5
0
6
Q2
2020-21
Q3
2022-23
Source: Zomato financial statements
PARAS JAIN/MINT
PEANUTS by Charles M. Schulz
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New DeLhI, MUMBAI, BENGALURU, kOLkATA, CHENNAI, AHMEDABAD, HYDERABAD, CHANDIGARH*, PUNE*
VOL. 17 NO. 61
Rs. 10.00 . Price with Hindustan Times Rs. 15.50
20 PAGES
Tuesday, March 14, 2023
Should you buy or rent? That
depends
uP10
livemint.com
SENSEX58,237.85
897.28
NIFTY 17,154.3
258.6
DOLLAR ₹82.13
₹0.08
EURO ₹87.66
₹0.83
OIL $78.73
Biden reassures markets, says
banks will be accountableuP9
$4.05
GOLD ₹56,754
US crisis continues
to weigh on stocks
Costlier food keeps
CPI inflation above
6% for 2nd month
India to set
up AIIMS-like
institutes to
train nurses
Indian stocks extend losses as risk of banking contagion looms
Ravi Dutta Mishra &
priyanka.sharma@livemint.com
Saurav Anand
NEw DELHI
Ujjval Jauhari & Ram Sahgal
DomINo eFFeCT
ujjval.j@livemint.com
S
ravi.dutt@livemint.com
tocks extended their losing streak for the third day
as concerns about the US
banking crisis continued
to weigh on investor sentiment. The benchmark Nifty and
Sensex indices closed 1.49% and
1.52% lower on Monday, marking
their lowest levels in seven months.
The ripple effects of Silicon Valley
Bank’s closure were felt globally,
wiping out ₹4.04 trillion of investor
wealth in India alone on Monday.
Foreign portfolio investors (FPIs)
sold a provisional ₹1,547 crore, worsening the losses. The National Stock
Exchange’s total market capitalization plummeted to ₹256.56 trillion
from ₹260.6 trillion on Friday, with
four out of five stocks declining.
Bloodbath was seen in the global
market as the fallout of the Silicon
Valley Bank shutdown was followed
by turmoil at Signature Bank, keeping investors worried about the
strength of the US banking system,
said Vinod Nair, head of research at
Geojit Financial Services.
The domestic indices that had
opened with some gains on Monday, however, started declining
again in line with global equities. A
Sunday joint statement by the US
The benchmark Sensex closed 1.52% lower, marking its lowest level in seven
months, while the fear index, India VIX, jumped 21% on Monday.
Sensex
India VIX
59,500
30
(In ₹)
25.68
25
59,000
59,033.77
58,237.85
20
16.22
58,500
15
58,000
9.15am
3.30pm
10
14 Mar 2022
13 Mar 2023
Source: Capitaline and Bloomberg
NO RESPITE
SvB closure wiped
out ₹4.04 trillion in
India on Monday
FPIs offloaded a
provisional ₹1,547 cr,
worsening the losses
TURmoIL continued
despite the assurances of
safety of depositor money
SARVESH KUMAR SHARMA/MINT
Treasury, the Federal Reserve and
the Federal Deposit Insurance
Corp. on the safety of depositors’
money were not enough to calm the
markets for long.
The turmoil in the global markets
continued despite news of HSBC
agreeing to buy the British arm of
the troubled US tech startup-focused lender for £1.
“We are clearly in an uncertain
time with the upheavals in the US
banking system,” said Bhavesh A.
Shah, managing director, InvestTURN TO PAGE 4
SVB depositors face wire
transfer hurdle
>P4
I
6% since January 2022. The
Reserve Bank has projected
retail inflation at 6.5% for FY23.
“While vegetables continued
to remain in the deflationary
mode for four consecutive
months, it is cereal inflation
which is pushing retail inflation
outside the comfort zone of
RBI. Cereals and product inflation in February 2023
increased to 16.73%, the sixth
consecutive month of doubledigit inflation. Consumer food
inflation declined 5 basis points
in February 2023 from January
2023,” said India Ratings.
Inflation in rural areas stayed
higher than in urban areas as
the food basket, especially
TURN TO PAGE 6
TURN TO PAGE 6
Cereals and product inflation
in Feb ’23 rose to 16.73%. ISTOCK
DON’T MISS
Priyanka Sharma
ndia aims to establish a nursing health cadre to supply
skilled nurses to the world,
capitalizing on the country’s
reputation as a source of topquality healthcare professionals. As part of the plan, the government plans to set up institutes for training nurses
modelled on AIIMS.
The government plans to set
up the first All India Institute of
Post-Graduate Nursing Education and Research in Gauripur,
West Bengal. The institute will
offer advanced courses, including PhDs, post-graduate diplomas and Master of Science
(MSc) programmes. It will offer
nurse practitioner programmes in seven clinical specialities, including critical care,
forensic nursing, neonatal
nursing, burns and plastic surgery nursing, orthopaedic
nursing and oncology nursing.
The aim is to position India as
the world’s top producer of
post-graduate nurses, as outlined in the National Health
Policy of 2017. Currently, India
doesn’t have a comprehensive
specialized nursing education
and training curriculum.
R
etail inflation stayed
above the Reserve Bank
of India’s upper tolerance level of 6% for the second
consecutive month in February
on costlier cereals, milk and
spices, putting pressure on the
central bank to raise interest
rates further.
Inflation based on the consumer price index (CPI) slipped
marginally to 6.44% in February from 6.52% in January, data
released by the Ministry of Statistics and Programme Implementation (MoSPI) on Monday
showed.
“High CPI inflation, above
6% for the second consecutive
month, is concerning. CPI
inflation for February was led
by an uptick in food inflation
and a strengthening of price
pressures in non-food categories such as housing, household
goods and services and health.
But, worryingly, core inflation
has remained elevated at 6.3%,”
said Rajani Sinha, chief economist at Care Edge.
Apart from November and
December of 2022, retail inflation has remained above the
RBI’s upper tolerance level of
₹1,313
India against trade settlement in
yuan for imports from Russia
On account of its long-running political
differences with China, India has asked
banks and traders to avoid using the
Chinese currency yuan to make payments
for imports from Russia, Reuters reported
citing unnamed people.
>P8
Ability of companies to repay
debt remains under pressure
High cost of funds and employee expenses
have nullified any relief on raw material
costs for Indian companies and kept their
ability to repay debt under pressure, an
analysis of companies on the BSE500 index
has shown.
>P6
LIC’s debt exposure to Adani
group cos falls to ₹6,183 crore
Life Insurance Corporation of India’s
outstanding debt exposure to Adani group
companies declined from ₹6,347 crore at
the end of 2022 to ₹6,183 crore on 5 March,
finance minister Nirmala Sitharaman told
Parliament on Monday.
>P4
NLC to pick 51% in green joint
venture with APDCL for ₹1k cr
NLC India Ltd plans to invest ₹1,000 crore
for a 51% stake in a green energy joint
venture it is setting up with Assam Power
Development Co. Ltd . The proposal for the
investment has already been moved for the
Union government’s consideration.
>P2
Hyundai to acquire Stricter ad rules
GM’s Talegaon plant for edu institutes
Alisha Sachdev
Varuni Khosla
alisha.sachdev@livemint.com
varuni.k@livemint.com
NEw DELHI
NEw DELHI
H
yundai Motor India has
reached a conditional
agreement with General Motors to acquire the latter’s shuttered manufacturing
plant in Talegaon.
However, before the sale is
completed, the American carmaker will need to resolve legal
disputes with its employees’
union following the collapse of
a previous sale agreement with
Great Wall Motor of China last
year.
Assuming the latest transaction secures regulatory and
government clearances, Hyundai Motor India may be able to
start trial production at the idle
plant within the next 18
months, two people familiar
with the development said.
“The term sheet covers the
POWERING THE
GROWTH
ASPIRATIONS
A
Hyundai Motor may start trial
production in 18 months.
HT
proposed acquisition of land
and buildings and certain
machinery and equipment for
manufacturing situated at General Motors India, Talegaon
plant. The proposed acquisition is subject to the signing of
the ‘Definitive Asset Purchase
Agreement’ and fulfilment of
TURN TO PAGE 6
dvertising rules for educational institutes are
set to get more stringent, with the Advertising
Standards Council of India
(ASCI) introducing new draft
norms stipulating that institutions can no longer make
unsubstantiated claims about
job placements or guarantees
of academic success on enrollment.
Additionally, institutions
must provide the full name and
date of publication for any
competitive rankings referenced in their advertising.
These new rules mark a significant change in how educational institutions can market
themselves to prospective students. The draft rules prohibit
ads from guaranteeing a stu-
The rules prohibit ads from
guaranteeing a student a rank. HT
dent a rank, high marks, a job,
admission to institutions, job
promotions, salary increase,
etc., unless it can substantiate
this. The rules will likely come
into effect in a month after the
body consults with industry
stakeholders and the general
public.“We want to ensure
Keynote Speakers
Dinesh Kumar
Khara
TURN TO PAGE 6
Chairman,
State Bank of India
Oscar glory for Elephant Whisperers, RRR song
Reuters
feedback@livemint.com
I
ndians erupted in celebration on Monday after Naatu
Naatu, the breakout hit
from the action movie RRR,
won the Academy Award for
best original song, making history as the first movie from the
country to win the honour.
The song—a fast-paced
number that has found fans all
over the world, spawned a
TikTok challenge and has
millions of views on YouTube—won a standing ovation when it was performed at
the 95th Academy Awards on
Sunday night.
Indians had won Oscars
previously, but no Indian film
had won an Academy Award
before Sunday night in Los
Angles. RRR and The Elephant
Whisperers, which won best
documentary short film, gave
the country two Oscar-winning films in one night.
(Left) Kartiki Gonsalves and Guneet Monga with the Oscar for
The Elephant Whisperers, and (right) composer M.M. Keeravaani
and lyricist Chandrabose with the award for Naatu Naatu.
AP
“No words can describe this
surreal moment. Dedicating
this to all our amazing fans
across the world. THANK
YOU!!,” the Twitter account
for RRR posted.
Television showed images
of people dancing to the song
in the streets, minutes after
the award was announced,
even as #NaatuNaatu was a
top trend on Twitter.
“The popularity of Naatu
Naatu is global. It will be a
song that will be remembered
for years to come,” Prime
Minister Narendra Modi
posted on Twitter, congratulating the team behind the
song.
“Entire India is proud. They
have brought India to the
world stage,” singer Prudhvi
Chandra, one of the singers of
Naatu Naatu, told the India
Today news channel.
In the film, made in Telugu,
and directed by S.S. Rajamouli, Naatu Naatu begins
when the two leads, played by
Ram Charan and N.T. Rama
Rao Jr, flaunt their dance skills
after being bullied as the only
Indian people invited to a
British party in colonial times.
When a young British man
aims racist insults at the leads,
they decide to educate him
using the song Naatu Naatu.
Composer M.M. Keeravani
burst into song while accepting the award on stage, along
with songwriter Chandrabose.
“I feel this is about just the
beginning of everything so
that the world—particularly
the Western World—focuses
more on Indian music and
Asian music, which is long
due,” Keeravani said backstage after winning the award.
The Elephant Whisperers is
about a couple in South India
who adopt a baby elephant
and care for him.
Hitendra Dave
Chief Executive O cer,
HSBC India
17th March
2023
06:30 PM
onwards
Four Seasons
Mumbai
To register,
visit cnbctv18.com
or scan the QR code
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02
ECONOMY & POLICY
TuesDay, 14 March 2023
New Delhi
LIVEMINT.COM
NLC to pick up 51%
in green JV with
APDCL for ₹1k cr
‘It’s time for India to pause rate
hikes to salvage manufacturing’
Utpal Bhaskar
Gireesh Chandra Prasad
utpal.b@livemint.com
gireesh.p@livemint.com
NEW DELHI
NEW DELHI
I
S
tate-run NLC India Ltd
(formerly Neyveli Lignite
Corp. Ltd) plans to invest
₹1,000 crore for a 51% stake in a
green energy joint venture it is
setting up with Assam Power
Development Co. Ltd (APDCL),
two people aware of the development said.
The proposal for the investment has already been moved
for the Union government’s
consideration, with the JV to
set up a 1 gigawatt (GW) initial
solar power capacity in Assam
at an investment of around
₹5,500 crore. These solar
power projects are expected to
cost ₹5.5 crore per megawatt
(MW) and will be set up in a
phased manner with 200 MW
to be added annually.
“This equity will be put up by
NLC from its internal accruals.
NLC had inked an MoU with
APDCL last year which
included plans for green
energy projects including
hydropower projects,” one of
the two people cited above,
requesting anonymity.
Queries emailed to the
spokespersons of coal ministry, NLC and APDCL remained
unanswered till press time.
Attracted by India’s green
energy trajectory, conventional state-run miners are
firming up clean energy plans,
such as Coal India Ltd (CIL) that
plans to have an installed solar
power generation capacity of 3
India has installed renewable
energy capacity of 167 GW. MINT
GW by investing around
₹15,000 crore by 2024.
India has an installed
renewable energy capacity of
167 GW, with the country’s
electricity demand growing
from the current levels of per
capita electricity consumption
of around 1255 kilowatt-hour
(kWh). India’s electricity
requirement expected to grow
by 9.5% in the current fiscal,
with the peak electricity
demand growth of 6.82%.
India recorded an all-time
high electricity demand met of
211.6 GW in June 2022; with
the expectation to reach 225
GW during the coming summer season.
NLC has taken the JV route
to grow, and has set up Neyveli
Uttar Pradesh Power Ltd
(NUPPL), NLC TamilNadu
Power Ltd (NTPL), MNH
Shakti Ltd and Coal Lignite
Urja Vikas Pvt. Ltd (CLUVPL).
NLC currently has clean
energy capacity of 1.421 GW
and has 660 MW in pipeline.
t is time India’s interest rate cycle
decoupled from the rest of the
world’s, said Bajaj Finserv CMD
Sanjiv Bajaj, citing high interest
rates that were crimping domestic manufacturing. Bajaj, who is also
president of the Confederation of
Indian Industry (CII), said in an interview that the economic recovery has
been uneven with the rural sector
lagging behind in consumption.
Broad-basing exports and pausing
on rate hikes to support manufacturing will lead to steady economic
growth in coming years, Bajaj said.
Edited excerpts:
Although the economy is forecast
to grow at 7% this fiscal, gross
value added in the manufacturing sector has been declining in
absolute terms. What is going on?
There are two reasons for this. As a
result of the pandemic and thereafter,
inflation and the interest rate hikes
which were needed (to tame inflation), domestic growth has been unequal. Spending by the middle class
and above, which ended up saving
money, has increased. Same for
urban India. But the lower income
classes got hit the hardest due to the
pandemic and then because of inflation. Rural India got hit harder than
the urban India. And this has caused
our growth to be unequal.
The second reason is about exportled growth. Now, export accounts for
a significant part of our economy, and
we know that many of the global
uncertainties still remain.
We are starting to see lower export
So, it is showing that India is exhib- one. and that is an early sign because
iting the ability to produce world- that means that other sectors are
class competitive goods for the most investing in equipment. Raw materideveloped markets. If Apple can als like steel and chemicals are seeing
make its latest phones here and sup- capex. We’re starting to see capex in
ply to all over the world, that’s a tre- a few sectors now. I believe in the
mendous show of confidence. How third quarter, a large part of the incredo we broad-base our export basket mental capex was from the private
to more geographies and more prod- sector.
ucts to reduce the concentration risk So, if we are to boost consumpin export in coming years? This is tion now, what is it that the govimportant for exports. Pausing on ernment can do?
I think the government has done a
rate hikes is important for domestic
growth. A combination of these lot with the actions that it has taken in
should give us steady growth in the the last few years. At this stage, the
single biggest ask is to decouple our
coming years.
interest rates and pause the interRBI speaks about double-digit
est rate cycle, keepcredit growth, but
ing in mind the other
household consumption seems to Our inflation is roughly economic indicators.
have some weak- half of where it is in the Then, (the other)
ness...
developed world and it suggestions to the
government are a set
What is interesting is that the more is trending downwards. of actions for continual opening up of the
expensive televi- Our economy is ready
economy, ease of
sions, mobile phones
to grow.
doing business,
etc. are selling. But
Sanjiv Bajaj
operationalizing
the volume of the
CII president
more and more free
lower priced ones is
trade agreements
reducing. It is again
showing a K-shaped recovery. So, if and ensuring that we execute the
you even look in consumer durables ones that are under discussion and
over the last nine or 10 months of the negotiation right now and for ensuryear, in value terms, it has grown a lit- ing that the PLI schemes are aligned
tle bit but in volume terms, it has to benefit from these FTAs. Also, the
fallen, which is exactly showing this RoDTEP (Refund of Duties and Taxes
unequal recovery. Yes, you see credit on Exported Products) scheme can be
growth, but it is not uniform across all extended by another three years to
segments, which is what we need to provide the support needed. Greater
coordination among the Centre and
ensure now.
What is the scene on private sec- states on concurrent issues like land,
tor capital expenditure? Are busi- labour and power would further help.
These are some of the areas to supnesses borrowing only for mainport in addition to the very strong
tenance and not for capex?
We’re seeing capex taking place in action that the government has
some sectors. Machinery sector is already been taking.
‘
growth as well. Both these things and service sectors where the world
have contributed to our overall wants to invest in India, buy from
growth remaining moderated. Yes, India and where our own governwe have to keep in mind that we are a ment, through production-linked
part of the global economy. In a situa- incentive and other schemes, is creattion like this, we are the fastest grow- ing the opportunity for growth. In
ing large economy in the world.
such a situation, we have to be nimble
At the same time,
enough where we
we at the CII believe
believe that it is timely
INTERVIEW
that it is opportune for
to pause the interest
us to go back to the
hike cycle and to move
pre-covid era, and look at our own to at least a neutral stance.
economic situation and decouple our
This we think will help to create
interest rate cycle from the rest of the new growth, demand in the country
world. Our inflation is roughly half of and expand private sector investment
where it is in the developed world. It cycle to many more sectors. Curis clearly moderating and trending rently, private capex has already
downwards. Our economy is ready to started in sectors like steel, textiles
grow.
and chemicals and also, interestingly,
We are seeing significant opportu- in new sectors like electronics and
nity across multiple manufacturing mobile phones.
m
New model to monetize pipelines on cards India-Finland migration and
mobility pact may face delays
Rituraj Baruah &
Subhash Narayan
rituraj.baruah@livemint.com
NEW DELHI
T
he Centre is considering
creating a transport system operator (TSO) —
which could be a corporate
entity or a special purpose vehicle —to hive off and monetize
the gas pipelines assets of staterun GAIL.
A person aware of the development said the TSO may be
formed either under the ministry of petroleum and natural
gas or as an arm of GAIL.
“The concept of TSO is being
looked at wherein the gas pipelines of GAIL may be brought
under the new entity, which
may either be under the ministry or GAIL. If this model is
eventually adopted all the pipelines would be shifted to the
entity only after the projects
under the national gas grid are
completed,” the person said,
adding that both the government and the PSU are trying to
find viable modes of monetization.
“It is being considered and
GAIL is likely to come up with a
proposal for the same,” added
the person.
The TSO, if put in place, may
m
The TSO may be formed either under the ministry of petroleum
and natural gas or as an arm of GAIL.
MINT
manage the common carrier Investment and Public Asset
part of the gas pipeline infra- Management
(DIPAM)
structure. It would be entrusted remained unanswered till press
with the task of booking pipe- time.
line capacity for transport of
The idea of monetizing gas
gas from producers to the con- pipelines through a TSO was
sumers on payment of a fee to considered earlier, but it did
not make much
be decided by the
regulator. The The government’s progress.
Monetization
proposed TSO
ambitious asset
of oil and gas
structure may
monetization
assets have not
house assets from
plan was
across energy
announced in the picked up as
energy companies
PSUs,
said
another person, union budget for found the initial
FY22
option of forming
adding that the
Infrastructure
government may
Investment Trust
later sell its stake
(InvIT) to be an expensive way
in it.
Queries sent to the ministry of raising capital.
Following this, the governof petroleum and natural gas,
GAIL and Department of ment agreed to shelve the plan
MINT SHORTS
Updated returns fetch tax
dept ₹1,250 crore more
New Delhi: The income tax department has collected
about ₹1,250 crore in 2022-23 after assessees updated
their tax returns for previous
years under a facility offered to
encourage voluntary compliance, backed by some “nudging”, Central Board of Direct
Taxes (CBDT) chairman Nitin
Gupta said at a briefing.
GIREESH CHANDRA PRASAD
Mahindra Group sells over 6%
stake in Mahindra CIE
New Delhi: Mahindra & Mahindra on Monday said it has
but told them to come up with
alternatives. The companies
told the ministry that with high
credit ratings they can raise
capital easily and at a lower
cost, which would be beneficial
compared to the returns they
would have to offer InvIT
investors.
On 3 November, 2022, Mint
reported that the petroleum
ministry has ordered state-run
oil and gas companies to go
back to the drawing board after
failing to come up with “comprehensive“ plans to monetize
their assets.
The government’s ambitious
asset monetization plan was
announced in the union budget
for FY22 to increase financial
resources for the National
Infrastructure Pipeline.
The total indicative value of
the national monetization
pipeline for core assets of the
central government has been
estimated at ₹6 trillion over the
four-year period of FY22-25.
In terms of gas pipelines, the
assets considered for monetization during FY22-25 include
pipelines with an aggregate
length of 8,154 km, of which
7,928 km are from the existing
operational pipeline assets and
the rest from pipelines that are
expected to become operational during the period.
sold over 6% stake in Mahindra CIE Automotive. The
company has sold 22,980,000 equity shares representing
6.05% of the paid-up share capital of Mahindra CIE Automotive Ltd, a listed unit of the company, the auto major
said in a regulatory filing. The sale has been executed on
the stock exchanges at a gross price of ₹357.39 per share,
it added.
PTI
Shashank Mattoo
shashank.mattoo@livemint.com
P
lans by India and Finland
to sign a migration and
mobility deal have hit the
skids, according to persons
aware of the matter.
Finland, which has a rapidly
aging population, has tried to
attract Indian students and
professionals to live and work
in the country. According to
Finnish minister of employment Tuula Hataainen, India is
the first country with which
Finland plans to sign a migration and mobility agreement.
A joint declaration of intent
to conclude this pact was the
highlight of Hataainen’s visit to
India in December.
However, complications
related to European Union
immigration law have posed an
obstacle to an early conclusion
of the agreement, say the persons cited above. These complications need to be ironed out
at Finland’s end.
The country is a member of
the European Union and part of
visa-free Schengen Area, and
therefore needs to conclude
the agreement in accordance
with those processes. Mean-
Finland has moved aggressively
to court Indian professionals
and students.
ISTOCK
while, India’s preoccupation
with G20 Presidency has also
delayed an early agreement.
Queries to the ministry of
external affairs and the Finnish
ministry of economic affairs
and employment went unanswered at press time.
Finland has moved aggressively to court Indian professionals and students. In an
interview with Mint in December, Hataainen said Indian ICT,
healthcare and services professionals were a particular target
for Helsinki. The country
hopes to double its intake of
skilled migrants and triple foreign students in the years to
PNB Housing’s ₹2,500 cr
rights issue gets Sebi nod
Over 21,200 cases pending
before NCLT till January-end
New Delhi: As many as 21,205 cases were pending before
the National Company Law Tribunal at the end of January
this year, the government said. Currently, one principal
bench and 15 other benches of NCLT are operational.
In a written reply to Lok
Sabha, Union minister Rao
Inderjit Singh said the
benches of NCLT and NCLAT
are being set up in a phased
manner depending on quantum of workload and other
factors.
PTI
come in order to replace its rapidly declining working age
population.
Finland is home to around
15,000 Indian professionals
and 1,300 students. In recent
years, the country has made a
series of legislative reforms to
attract Indian talent. More generous student visa programs
and post-study work visas are
part of the changes. According
to the persons cited above,
Finnish universities are also
planning to vastly expand their
outreach to Indian students
with a visit of university heads
planned in recent months.
For India, which has a vast
pool of professionals and students who work and study
overseas, migration and mobility agreements are a priority.
New Delhi has concluded such
agreements with Germany, the
UK and Austria. India also
agreed to have a dialogue with
Australia on a similar agreement in 2020. Migration and
mobility partnerships tend to
serve two purposes. First, they
include provisions to allow easier movement of talent and
professionals across borders.
Second, they help settle pressing issues like illegal migration.
Categories added in national
policy for rare diseases
New Delhi: In a relief to rare
disease patients, the union
government has incorporated
six categories of rare diseases
such as Laron’s syndrome,
Wilson’s disease and hypophosphatemic rickets, under
the National Policy for Rare
Diseases (NPRD), 2021.
By Ravi Dutta Mishra &
Subhash Narayan
ravi.dutt@livemint.com
T
he government on Monday sought Parliament’s
permission to spend
another ₹2.71 trillion in FY23,
primarily to fund fertilizer
subsidies, GST compensation
to states, and the One Rank
One Pension scheme for
defence personnel.
The Centre’s net additional
spending will stand at ₹1.48
trillion, as per the second and
final batch of supplementary
demand of grants tabled in the
Lok Sabha by junior finance
minister Pankaj Chaudhary, as
gross spending will be
matched by savings of ministries and enhanced receipts/
recoveries aggregating to ₹1.22
trillion.
The need for additional
expenditure has arisen as the
fertilizer subsidy burden has
exceeded the budget estimates
following the Russia-Ukraine
war.
CORRECTIONS AND
CLARIFICATIONS
Mint welcomes comments,
suggestions or complaints
about errors.
Readers can alert the
newsroom to any errors in the
paper by emailing us, with your
full name and address to
feedback@livemint.com.
PRIYANKA SHARMA
SC to hear Torrent’s plea in
Reliance capital matter
New Delhi: PNB Housing Finance, an arm of stateowned Punjab National Bank, has received capital
market regulator Sebi’s go ahead to raise up to
₹2,500 crore through a rights issue of shares. The
company intends to utilize the net proceeds from
the issue towards augmenting its capital base. PTI
Parliament’s
nod sought
for ₹2.7tn
spending
Mumbai: The Supreme Court has agreed to hear Torrent
Investments’ plea challenging the National Company Law
Appellate Tribunal (NCLAT) order that allowed the lenders of Reliance Capital to hold the second auction for the
insolvent firm. This comes after Torrent moved the top
court on 4 March to seek relief in the matter.
It is our policy to promptly
respond to all complaints.
Readers dissatisfied with the
response or concerned about
Mint’s journalistic integrity may
write directly to the editor by
sending an email to
asktheeditor@livemint.com
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newsroom is available at
www.livemint.com
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DEALS, TECH & STARTUPS
LIVEMINT.COM
m
MINT SHORTS
Major cryptocurrencies stabilize
after US intervenes on SVB
Major cryptocurrencies stabilized on Monday after US authorities announced plans to limit the fallout from the collapse of
Silicon Valley Bank (SVB) and the issuer of the USD Coin stablecoin said it remained redeemable with the dollar. USD Coin,
also known as USDC, recovered to $0.9917, up from a record
low of $0.87 hit on Saturday, far below its intended peg of 1:1
against the dollar.
REUTERS
Twitter rival Koo integrates
ChatGPT to help users
AFP
Koo, an India-based social media app that aims to rival
Twitter, has integrated OpenAI’s ChatGPT to help users
more easily create posts, the company’s co-founder said.
Koo users will be able to use ChatGPT directly within the
app to help them draft posts about current events, politics or pop culture, said Mayank Bidawatka, co-founder
of Koo, said.
REUTERS
General Motors explores using
ChatGPT in vehicles
General Motors Co. is exploring uses for ChatGPT as part of its
broader collaboration with Microsoft Corp, a company executive said. “ChatGPT is going to be in everything,” GM vice president Scott Miller said. The chatbot could be used to access information on how to use vehicle features normally found in an
owners manual, programme functions such as a garage door
code or integrate schedules from a calendar, Miller said. “This
shift means,” he said “that customers can expect their future
vehicles to be far more capable and fresh overall when it comes
to emerging technologies.”
REUTERS
Sixth Sense leads $12.2 mn Series A
round in The Ayurveda Co
Bengaluru: Ayurvedic direct-to-consumer (D2C) brand The
Ayurveda Co. has raised Series A funding of $12.2 million (around
₹100 crore) led by Sixth Sense Ventures. The round also saw participation from actor Kajal Agarwal, along with a host of startup
founders and venture debt funds. The Gurugram-based startup
will use the fresh capital to grow its offline presence, boost product stack and digital outreach.
K AMOGHAVARSHA
TuesDay, 14 March 2023
New Delhi
‘Startups will need to find
self-sustaining models’
AI sees muted pace
of adoption in stock
market trading
Beena Parmar
Shouvik Das
beena.parmar@livemint.com
shouvik.das@livemint.com
MUMBAI
NEW DELHI
L
S
ightbox Ventures, the backer of
startups such as Rebel Foods,
Dunzo and Paymate, plans to go
slow on launching its fourth fund
and instead focus on exits from its
first two funds over the next few months.
In an interview, Sandeep Murthy, partner at the Mumbai-based venture capital
firm, said it is doubling down on its current
portfolio and working closely with entrepreneurs on self-sustaining business models amid the uncertain macro-economic
scenario. Edited excerpts:
How have things
changed amid the
funding winter and
changes in the
macro environment?
The venture opportunity in India centres around organizing the unorganized.
Many segments don’t have large incumbents, so there is an opportunity to leverage
technology to build market leaders that
deliver a unique, defensible proposition to
consumers. Three of our portfolio companies, Zeno Health, Bombay Shirt Co. (BSC)
and Amaha, have used this funding downturn to narrow their focus and strengthen
their customer proposition by leveraging a
hybrid approach of online and offline
channels to reach customers. In these businesses technology is not the end all and be
all; it is an enabler in the system. This
understanding enables these businesses to
build on their core value proposition and
emerge from the funding winter stronger.
What kind of exits are you aiming for?
As funds reach the end of their life cycles,
exits become increasingly important. The
lack of clarity on the IPO market has
increased the effort towards M&A and secondaries. However, technology M&A in
India is still in its infancy. Traditional companies are not yet willing to value the future
potential of young tech companies at the
levels that venture investors have valued
them. Young venture-backed companies
need to quickly prove themselves and demonstrate their value to traditional businesses. This usually means they need to
show some level of free cash flow or a clear
path to getting there. As this happens, we taining models, then this will be the time to
can expect to see some consolidation. The find an appropriate home for the business.
other path to M&A will come from super So, in effect, we are doubling down on our
consolidators looking to bring new areas existing portfolio and working closely with
under their umbrella. We’ve seen these the entrepreneurs to determine if they have
super consolidators in the US and China in a long-term proposition or if now is the time
the form of FAANG and BAT. In India, we to move on.
are hopeful that some of the companies that What is the update on your fourth
go public will have the cash balance and fund?
currency to actively look at acquisitions
Timing of that will be driven by
as a way to strengthen
where the market is and
their value propositions.
how our current portfolio
Three of our portfolio performs. The focus is on
Several investors are
doubling down on
companies have used strengthening the portfoexisting portfolios? Are
the funding downturn lio and delivering exits
you doing the same?
from the first two funds.
to narrow their focus India is a bright spot in an
The macro situation is
and strengthen their
fraught with uncertainty,
otherwise difficult global
which means you can no customer proposition
landscape. If we achieve
longer rely on external
some of our objectives in
Sandeep Murthy
sources of capital to supthe first half of this year, I
Partner, Lightbox Ventures
port businesses. So, busiwill be keen to launch a
nesses will need to grow
new fund thereafter.
and find their own means of supporting Are you changing the way you look at
themselves. This is a natural cleansing pro- sectors?
cess in the system that will ensure that busiI’ve always been interested in consumpnesses with true value propositions can tion. Whether we are in a boom market or
begin to prove that they have the chops to an uncertain time, people are still going to
build self-sustaining models. Sometime they consume. What changes is how those prodneed a little support from existing investors ucts or services are manufactured, delivto get there. In that case, I am happy to help ered, or marketed to customers. You’re
them get over that final hump. However, if always going to eat, you’re always going to
they have not been able to identify self-sus- need healthcare, finance, education.
‘
tock markets and investment advisors have
taken a slow approach
towards adopting artificial
intelligence (AI) in everyday
operations even as AI leads the
digital transformation of multiple legacy industries. For
brokerages, market advisors
and traders alike, AI continues
to play a bit-part role in most
operations, despite the heavy
dependence on data and analytics in investment and market analysis sectors.
Industry experts said while
there is some market interest
in using AI in analytics and
end-user features, most of it is
still in the nascent stage.
Tejas Khoday, co-founder
and chief executive at brokerage Fyers, said these include
fundamental issues that continue to plague numerous brokerages.
“Brokerages are still focusing on using technology to
reduce latencies, and make
their platforms fail-safe from
downtimes and
threats of crashing
— incidents that
can lead to massive
losses. It’s not improbable for
brokerages to invest in creating AI recommendation and
analysis models on their own
platforms akin to the available
charts and data, but this would
be a factor of when the market
generates demand for techdriven advisories,” he said.
Sonam Srivastava, founder
of Wright Research, an equities research and advisory
firm, concurred, and said,
“While we have a clear reliance on using AI to analyze
data and create trends that we
then feed to our machine
learning system, our market is
Kedaara Cap
buys majority
stake in
derma clinic
Priyal Mahtta
priyal.mahtta@livemint.com
BENGALURU
P
rivate equity firm
Kedaara Capital bought
a majority stake in
Hyderabad-based dermatology chain, Oliva Skin and Hair
Clinic, in the third investment
in the single-specialty healthcare segment.
The size of the stake and the
transaction value wasn’t disclosed. Kedaara said in a statement on Monday that the deal
will provide an exit to earlystage investor Invascent.
VCCircle first reported in
August last year that Kedaara
will likely invest ₹350 crore for
a majority stake in Oliva, giving a full exit to InvAscent,
which owns about 30% stake
in the company. Kedaara’s
o t h e r
investm e n t s
from its
third fund are ASG Eye Hospitals and Oasis Fertility.
Oliva, founded by Prashant
Soma in 2009, runs 23 clinics
in seven cities. The company,
operated by Sreyas Holistic
Remedies Pvt. Ltd, counts
venture debt and alternative
credit platform BlackSoil Capital and Bengaluru-based
Entrust Family Office Investment Advisors among its other
investors. Oliva raised capital
from InvAscent-managed
India Life Sciences Fund in
2014, when it picked a minority stake in the dermatology
chain, gradually increasing its
exposure across multiple
rounds.“Kedaara, with its
operational expertise and
experience in healthcare, will
support Oliva in the next step
of its growth journey and in
realizing its vision of becoming the most trusted brand for
world-class medico-aesthetic
dermatology services in
India,” said Ashutosh Sardesai,
director at Kedaara Capital.
03
Answering the WHATs, WHYs, HOWs and more!
Introducing
Explainer Videos on the Mint app
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Interest in using AI in stock
market is still at a nascent
stage.
ISTOCK
still not ready for AI to become
a standalone factor for which
investors would flock to a platform,” she said.
Both officials highlighted
key factors of how the stock
market operates, due to which
AI upstarts haven’t seen their
growth surge. For most funds,
tech expenses are centred
around fundamental infrastructure, or in using the data
to draw statistical analysis that
is then delivered to clients
through human brokers and
advisors. As Srivastava said,
nearly 90% of her clients
approach her to
gain from her
nearly two decades
of experience as a
market researcher and advisor
—and not for the AI or tech
component of her offering.
As a result, firms are keeping away from investing in AI
to boost customer offerings,
since customers themselves
are wary of simply trusting AI
for making investments.
This, according to market
traders, originates from how
the market functions, too.
Abhay Bhatia, a Mumbaibased trader and investor, said
one of the key reasons why AI
may not be an instant hit in the
stock market is due to how
market trends work.
04
MARK TO MARKET
TuesDay, 14 March 2023
New Delhi
S&P BSE Sensex
Nifty 50
Nifty 500
Nifty Next 50
LIVEMINT.COM
Nifty 100
S&P BSE Mid-cap
S&P BSE Small Cap
CLOSE
PERCENT CHANGE
CLOSE
PERCENT CHANGE
CLOSE
PERCENT CHANGE
CLOSE
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58,237.85
-1.52
17,154.30
-1.49
14,454.45
-1.54
37,594.95
-1.28
16,997.30
-1.43
24,169.74
-1.82
27,371.95
-2.08
PREVIOUS CLOSE
OPEN
PREVIOUS CLOSE
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59,135.13
59,033.77
17,412.90
17,421.90
14,679.85
14,681.55
38,083.20
38,101.05
17,244.30
17,257.25
24,617.91
24,529.45
27,952.11
27,799.69
HIGH
LOW
HIGH
LOW
HIGH
LOW
17,358.55 16,960.00
24,676.91
24,122.67
27,961.03
27,313.33
HIGH
LOW
HIGH
LOW
HIGH
LOW
HIGH
LOW
59,510.92
58,094.55
17,529.90
17,113.45
14,752.85
14,420.50
38,268.25
37,535.60
m
MINT SHORTS
Billions worth of crypto trades
at risk with bank shutdowns
The digital-asset market is coming off of a turbulent
year featuring a number of high-profile blowups. Now,
three shutdowns in the banking industry—SVB Financial Group’s Silicon Valley Bank, Silvergate Capital
Corp. and Signature Bank—have set off a fresh set of
stresses. SVB’s failure triggered a knock-on effect in the
crucial market for stablecoins after digital-asset giant
Circle Internet Financial Corp., one of the biggest issuers of the widely used tokens known for their perceived
safety, revealed it had $3.3 billion of reserves with the
bank. The news caused Circle’s token, USD Coin, to slip
below its intended 1-for-1 peg with the dollar, sending
a shock through the market. On Sunday, regulators in
New York closed Signature Bank. As of 8 March, the
bank still held $16.5 billion in crypto-related deposits.
“All depositors of this institution will be made whole,”
the regulators said.
BLOOMBERG
Since last year, investors have accumulated over $8 bn to
invest in European real estate debt.
ISTOCK
Investors pile into property
debt as banks bail on landlords
With banks reducing lending to Europe’s wobbly real
estate markets, investors are stepping into the breach
to provide financing for strapped property companies.
Since last year, pension funds, insurers and private
equity firms have accumulated over $8 billion to invest
in European real estate debt, making it the second most
popular bet in the sector, according to data from
research firm Preqin. Without new financing sources,
landlords face pressure to sell properties to pay off
loans, a scenario that would further weigh on valuations and trigger a downward spiral. But the fresh cash
is just a fraction of the looming funding gap. PGIM Real
Estate expects European banks to withdraw as much as
€125 billion ($132 billion) from property lending, just as
about €200 billion in debt matures this year and next.
The extent to which new lenders can fill the gap will
start taking shape at the annual Mipim property conference in Cannes this week.
BLOOMBERG
Jawa’s new job: How
to make HUL bigger
With IndusInd CEO
issue out of way, focus
is back on earnings
Vineetha Sampath & Pallavi Pengonda
Bavadharini KS & Harsha Jethmalani
vineetha.s@livemint.com
Relatively stronger
bavadharini.ks@livemint.com
Hindustan Unilever’s earnings per share growth in the last ten years has been
higher than many peers.
H
industan Unilever Ltd
(HUL) is all set to pass the
25
reins to Rohit Jawa, who will
Earnings per share compound annual growth rate (in %)
take over as the managing
director (MD) and chief
20
executive officer (CEO) with effect from
27 June. Jawa will succeed Sanjiv Mehta,
who is due to retire after heading the
15
company for a decade.
HUL’s performance under the leadership of Mehta has been notable. As the
10
chart alongside shows, the fast-moving
consumer goods (FMCG) company’s
earnings per share is set to grow by 11% on
5
a 10-year compound annual growth rate
(CAGR) basis. This is ahead of many
FMCG peers. HUL now accounts for a
0
Britannia
Marico
Hindustan
Godrej
Dabur
Nestle
Colgate
Emami
third of Unilever Plc’s market capitalizaIndustries
Unilever
Consumer
India
India
Palmolive
tion versus less than 10% a decade ago,
Products
(India)
said analysts at Jefferies India.
Note: Compound annual growth rate is from FY13 to FY23 (estimated)
Source: Company data, Jefferies
Against this backdrop, it helps that
SATISH KUMAR/MINT
Jawa comes with rich experience across
Asian consumer markets in his career of tions, enhancing GlaxoSmithKline Con- – February remaining broadly similar to
about 35 years. He has served as chairman sumer Healthcare portfolio and dealing muted trends witnessed in the previous
quarter, especially in November –
for Unilever China and Philippines. Dur- with the rising competitive intensity.
Leadership changes in FMCG firms are December, which saw a slowdown after a
ing his stint, revenues at Unilever China
grew at a CAGR of 9% over 2017-2021, often seen as exciting. Recall that shares festive-related boost in October,” said
compared to 5% in the previous five years. of Godrej Consumer Products Ltd had analysts at Jefferies in a 12 March report.
“We believe this change of guard will surged by 22% in a day post the The FMCG industry saw 7-8% value
provide HUL an enhanced boost versus announcement of Sudhir Sitapati’s growth in January with volumes declinpeers, given both countries (China and appointment as MD and CEO in May ing mid-single digits and rural continuing
the Philippines) under Mr Jawa have not 2021. However, HUL’s shares have not to lag urban, they added.
HUL’s year-on-year (y-o-y) revenue
only undergone a consumer evolution budged in the past two trading sessions
growth hereon would modahead of India, but also
erate as gains from price
experienced transformaCHALLENGE AHEAD
hikes fade. But woes on martion leading to these comOTHER focus
RURAL demand
gin front have likely botpanies growing faster,” said THE change in
areas will include
recovery has been
comes at
tomed out even as commodNomura Financial Advisory leadership
scaling up
slow, and worries
a time when the
ity costs are up y-o-y. Lately,
and Securities (India) ana- domestic market is
recent buys, tackling
about El Niño loom
hike in royalty fees payable
lysts in a 13 March report. subdued
rising competition
large
to Unilever has weighed on
This was led by volume
investor sentiments as this
growth, rising penetration
(despite being over 85% levels) and mar- after news of Jawa’s appointment. “GCPL would hit profitability. Hence, new CEO’s
was going through a rough phase and efforts to expand margin will be watched,
gin expansion, they added.
Note that the change in leadership, investors hoped the leadership change especially considering HUL has seen its
which is along expected lines, comes at a would improve performance. But that is Ebitda margin expand by about 10 pertime demand conditions in the domestic not the case with HUL, which is already centage points over FY12-FY22. HUL’s
market are subdued. Rural demand on a strong footing when compared to shares are 10.5% below their 52-week
recovery has been slow and there are wor- peers,” an analyst said requesting ano- highs seen in December. The stock trades
ries about the possibility of 2023 being an nymity. As such, the near-term outlook at 48.5 times FY24 estimated earnings,
El Niño year. For Jawa, the other focus remains dull. “Our industry interactions showed Bloomberg data, which is not
areas include scaling up recent acquisi- indicate FMCG market growth in January exactly inexpensive.
U
Holding on
IndusInd Bank’s shares have
marginally beaten the Nifty Bank
index in the last one year.
ncertainty surrounding the
extension of the term of
IndusInd Bank
Nifty Bank
IndusInd Bank Ltd’s man150
aging director and chief executive
officer Sumant Kathpalia has been
140
put to rest.
On Friday, the Reserve Bank of
117.56
130
India (RBI) approved Kathpalia’s
tenure extension only for a period
of two years versus investor expec120
tations of three years. Recall that in
September, IndusInd’s board had
114.53
110
approved an extension of three
years.
100
“The RBI typically grants a one- or
three-year renewal, so two years is
90
unprecedented,” Nuvama Researchs
said in a report. IndusInd’s shares fell
80
by as much as 7% on Monday.
11 Mar 2022
13 Mar 2023
Commenting on the developValues rebased to 100
Source: Capitaline
ment, Shivaji Thapliyal, head of
SATISH KUMAR/MINT
research and lead analyst at Yes
Securities Ltd, said, “We interpret stead.
But with rising interest rates, the
this as RBI desiring to examine
IndusInd Bank’s performance again fight for mobilization of deposits is
in a relatively shorter timeframe of likely to get intense among banks.
two years before any potential deci- Garnering deposits is a key concern
sion of further reappointment can for IndusInd Bank in the coming
quarters, cautioned Gaurav Jani,
be considered.”
The lack of clarity on Kathpalia’s research analyst at Prabhudas Liltenure extension had been a key ladher. This is because the bank has
overhang for the IndusInd stock, a higher share of wholesale deposits, compared to its
which has fallen by 13%
larger peers, that are
so far in 2023 amid the
The lack of
not usually as sticky as
muted sentiment in the
clarity on
equity markets.
Kathpalia’s tenure retail deposits, he
added. Given this,
So, with this issue out
extension had
investors should keep a
of the way now, the
been a key
tab on the trends in the
Street’s focus is likely to
overhang for the bank’s cost of funds.
shift back to its earnings
IndusInd stock
Notwithstanding the
performance.
losses in recent months,
The good news here
shares of IndusInd have
is that in the December
quarter, the bank’s asset quality had risen by nearly 18% in the past one
been stable with a sequential dip in year, marginally ahead of the Nifty
Bank index.
slippages.
Analysts point out that a meaningLoans grew by 19% year-on-year,
and deposits rose by 14%. Although ful improvement in the bank’s return
microfinance lending is seeing a slow on equity and return on assets would
recovery, decent traction in its vehi- be gradual.
This may cap sharp upsides in the
cle financing segment is expected to
keep the overall loan book in good stock hereon.
Mark to Market writers do not have positions in the companies they have discussed here
SVB depositors face ‘Indian banks are cushioned’ LIC’s debt exposure to Adani
wire transfer hurdle
Group cos falls to ₹6,183 crore
Bloomberg
feedback@livemint.com
Sneha Shah &
I
Ranjani Raghavan
MUMBAI
I
ndian startups with
accounts at Silicon Valley
Bank had trouble moving
funds out of the bank on Monday morning because international wire transfers from the
beleaguered bank were suspended due to a heavy load on
the banking system, startup
founders and fund managers
said.
Due to restrictions on overseas transfers from SVB
accounts, most Indian companies that had parked funds
overseas moved them to other
US banks.
According to the people
cited above, not all transactions were successful.
Indian startups, especially
those with international operations, wanted to move some
money out of SVB to another
overseas bank or to an Indian
bank registered with Gift City.
“International payment services are currently suspended,
while USD wire transfers and
bill pay within the US remain
available. Wire transfers that
were initiated after 9 March
2023 that have not been
marked as completed or sent
will need to be initiated again,”
an email from the bank to a
startup said. Mint has
reviewed a copy of it.
“Current update is that
international wires are suspended. One can’t move
money to India,” said a startup
founder on condition of anonymity.
The bank was under a heavy
load as most clients were
trying to move money out of
the bank.
AP
The bank was under a heavy
load as most clients were trying to move money out of the
troubled bank.
On early Monday morning,
several US authorities led by
the Federal Reserve said that
all SVB depositors would be
made whole.
“On Monday, 13 March
2023, the FDIC transferred all
deposits, both insured and
uninsured , and substantially
all assets of the former Silicon
Valley Bank of Santa Clara,
California, to a newly created,
full-service FDIC-operated
‘bridge bank’ in an action
designed to protect all depositors of Silicon Valley Bank,”
the note from FDIC read reassuring the customers.
The note further added that
the “depositors will have full
access to their money beginning this morning, when Silicon Valley Bank, NA, the
bridge bank, opens and
resumes normal banking
hours and activities, including
online banking.”
sneha.shah@livemint.com
ndian banks’ large reliance
on local deposits cushions
them as global peers are
facing potential contagion
from the woes emanating
from Silicon Valley Bank,
according to Macquarie
Group Ltd.
Amid all the “gloom and
doom” in global banks,
Indian lenders are distinguished with “hardly any
exposure directly or indirectly to SVB,” Macquarie
analyst Suresh Ganapathy
wrote in emailed comments
on Monday.
The sector has “a domestic
deposit funded system with
investments in Indian government securities,” he wrote.
Financial companies in
India outperformed regional earnings upgrade cycle conpeers Monday as Jefferies tinues for the banking secFinancial Group Inc. echoed tor,” the analyst wrote, raising the sector’s earnings
Macquarie’s outlook.
The nation’s banking sector growth estimates by 3-9% for
gauge rose as much as 0.6% the years through March
before erasing gains, while the 2025.
Jefferies also said SVB
MSCI AC Asia Pacific FinanFinancial Group
cials
Index
poses “low potendropped as much
Indian lenders
as 1.3% to add to
have “hardly any tial risk” to India,
Friday’s 2.2% exposure directly as a subsidiary
was sold in 2015
slump.
or indirectly to
In a Friday
SVB,” Macquarie and a rebranded
version of that
note, Ganapathy
analyst Suresh
company has
retained his bullish outlook for Ganapathy wrote “good credit rating and stable
Indian lenders,
liquidity.”
expecting
a
Analyst Prakhar Sharma
“goldilocks scenario” for the
next two years due to strong echoed his view on Monday,
saying the nation’s banks are
asset quality.
“Despite concerns of a “well-placed” as more than
slowdown in loan growth 60% of deposits are household
and margin compression, the savings.
Saurav Anand &
Subhash Narayan
NEw dELHI
L
ife Insurance Corp.’s (LIC)
outstanding debt exposure
to Adani Group companies
declined from ₹6,347 crore at
the end of 2022 to ₹6,183 crore
on 5 March 2023, finance minister Nirmala Sitharaman told
Parliament on Monday.
Sharing details of LIC’s debt
exposure to Adani Group companies, Sitharaman said the
state-run insurer has debt
exposure of ₹5,388.60 in Adani
Ports and SEZ as of 5 March.
The exposure in Adani Power
(Mundra) was ₹266 crore,
Adani Power Maharashtra Ltd-
LIC’s debt exposure to Adani
Group was ₹6,347 cr at the end
of 2022.
PTI
Phase I (₹81.60 crore), Adani
Power Maharashtra Ltd-Phase
III (₹254.87 crore), Raigarh
Energy Generation Ltd (₹45
crore) and Raipur Energen Ltd
(₹145.67 crore), as per her reply.
State-run banks have informed
that loans are sanctioned after
assessing the viability of projects, prospective cash flows,
risk factors and availability of
adequate security and repayment of loans are ensured by
the revenue generated by the
project, Sitharaman said.
“As per inputs received from
RBI, in order to protect banks
from risk, it has implemented
large exposure framework
which limits exposures that a
bank can take to a single counterparty and a group of connected counterparties to 20%
(extendable to 25% by board of
the bank under exceptional circumstances) and 25%, respectively, of eligible capital base of
the bank,” she said.
saurav.anand@livemint.com
US banking crisis continues to weigh on investor sentiment
FROM PAGE 1
ment Banking at Equirus.
Shah said investors are worried about a potential contagion risk that could arise from
these events and emphasized
that all eyes are now on the Federal Reserve’s actions and any
potential mergers and acquisitions in the banking industry to
mitigate these risks.
Emerging uncertainty
around several mid and smallsize banks in the US has created
nervousness among global
investors about the health of
the US banking sector, said Siddhartha Khemka, head of retail
research at Motilal Oswal
Financial Services Ltd.
Investors remained cautious, and there was a sentimental impact on banking
stocks.
Not surprisingly, banking
indices led the selling pressure
on Nifty and others as realty,
infrastructure, autos and IT
sector sectors indices also saw
steep losses on a day when all
the sectoral indices ended in
the red. Reliance Industries
saw 52-week lows of ₹2,275
during intraday trading.
The broader indices
plunged sharply as well, indicating participants were
uncomfortable because of the
US banking crisis and were
Investors remained cautious,
and there was a sentimental
impact on banking stocks.
reducing positions, said Ajit
Misra, vice-president of technical research at Religare
Broking Ltd.
Experts said that all eyes
would be on the Fed’s decision
in the upcoming meeting,
which will have a crucial impact
on the market, as the consensus
is reversing to a slower or even
no rate hikes. In this regard, the
US inflation data due on Tuesday will also have a vital impact
in the short term as the market
anticipates a cool-down from
January levels.
Goldman Sachs Group Inc.
economists said the investment bank no longer expects
the Fed to deliver a rate
increase next week. The risk of
a banking crisis highlights the
tension between Fed’s efforts
to cool the economy and tame
inflation with increasing concerns that 4.5 percentage
points of rate hikes in the
space of a year will trigger a
recession and a collapse in
riskier assets, said Deepak Jasani, head of retail research at
HDFC Securities.
Meanwhile, the rupee
closed 8 paise weaker at 82.12,
thanks to a sell-off in global
equities and safe haven bids in
the dollar.
Huge bearish bets were
mounted on banks, with the
open position of the Bank
Nifty futures contract rising
19% as the index shed over 2%.
Open interest refers to the outstanding buy or sell positions
This PDF was uploade To Teligram channel_ LBS Newspaper platform (https://t.me/LBSNEWSPAPER) @LBSNEWSPAPER
of market participants. A rise
in open interest accompanied
by a fall in price implies bearishness.
The benchmark Nifty
futures contract saw open
interest rise by 5.5%, accompanied by the fall in the Nifty,
which is also a bearish marker.
“Things are very fluid with
Silicon Valley Bank hitting
global markets like a bolt out of
the blue,” said Sunil Singhania,
the founder of Abakkus Asset
Manager. “Markets will stay
nervous, and we will have to see
how the SVB event unfolds.
However, the medium to longterm prospects of the Indian
market remains intact.”
CORPORATE
LIVEMINT.COM
GIC, ADIA
buy Sona
stake from
Blackstone
Global demand, tech to fuel
disruption in auto parts mkt
MUMbaI
S
ingapore’s sovereign
wealth fund GIC, Abu
Dhabi
Investment
Authority (ADIA), and a clutch
of other investors purchased
shares of Sona BLW Precision
Holding (Sona Comstar), as
private equity Blackstone Inc.
sold its 20.5% stake in the auto
components firm.
GIC acquired shares worth
about ₹993 crore ($120 million), according to data from
the BSE. Monetary Authority
of Singapore purchased shares
worth ₹237 crore.
Blackstone sold around 120
million shares for ₹410 apiece,
or about ₹4,917 crore ($600
million) on Monday in a block
trade. Investors also included
HDFC Mutual Fund, Societe
Generale, BNP Paribas and the
affiliates of Fidelity. ADIA may
have picked up shares worth
$150 million, a person in the
know said, but the exchanges
were not informed about it.
The trade was arranged by
JM Financial. Shares were sold
at a discount to Friday’s stock
price of ₹436.9 apiece. Sona
BLW shares ended the day at
₹409.85 apiece, down 6.06%.
The deal is one of Blackstone’s
most profitable exits in India.
Sona Comstar’s strategy is
well set with a strong order
book and business development plans. It is well-placed to
play an important role in the
global transition to green and
safer mobility, said Amit Dixit,
head of Blackstone PE in Asia.
Sunjay Kapur, non-executive chairman of Sona Comstar
said Blackstone had supported
strategic acquisitions and R&D
investments, and enabled it to
go public last year with their
capital markets expertise.
05
UPS open to Indian
buyouts, works on
decarbonizing ops
Rituraj Baruah &
Ranjani Raghavan
ranjani.raghavan@livemint.com
TuesDay, 14 March 2023
New Delhi
Subhash Narayan
The China-plus-one strategy is seen as playing out well for India’s aftermarket sector
Alisha Sachdev
alisha.sachdev@livemint.com
New DelhI
I
ndia’s $75-billion auto parts market
is on the brink of disruption triggered by fast-evolving technologies,
emergence as a global outsourcing
hub, and increasing localization, as
well as changing customer preferences
in the domestic market, said Sunjay
Kapur, president, Automotive Component Manufacturers Association of India
(Acma).
The auto aftermarket business, the
smallest contributor to the sector, which
is primarily driven by supplies to original equipment manufacturers and
exports, is benefiting significantly from
these opportunities. In FY22, it comprised over $10 billion of total sales.
“I feel that a lot of the internal combustion engine business, which tier-I
suppliers in the West are not interested
HT
in will come to India, because of the fact In FY22, the auto aftermarket business, the smallest contributor to the sector, comprised over $10 billion of total sales.
that tier-one suppliers in those markets
According to Acma, demand is also and prolonged use of cars is leading to
are clear that they will only work with kind of products we require will change
electric vehicle OEMs and platforms. too. Ten years from now, for example, increasing on the back of customers’ higher demand, Mehta said. “The sale of
Then, there is the aspect of traditional 3-D printing of parts will play a big role. decision to upgrade their existing vehi- second-hand cars has increased, particmanufacturing that may not hold for This is an opportunity in an evolving cles with lifestyle-related convenience ularly due to chip shortage. E-comlong in the US or Europe, where compa- market. So, whether it be in connectiv- features. “Conventional cars in existing merce second-hand sales channels that
nies want to outsource a lot of their forg- ity, telematics or data-driven solutions, vehicle parks that don’t have lifestyle or refurbish vehicles, and offer a limited
ing and castings, for instance, and that or the ecosystem, it will play a big role in convenience features such as parking warranty on these vehicles, is creating
opportunity will come to India. So, I feel, electrification, and the aftermarket will assist or navigation systems, are creating further demand. This is also leading the
used car market to organize, which
we are in a great position to build on
helps the industry.”
the export opportunity,” he said.
tEch tonic shift
Acma is also working on stan“The China-plus-one strategy is
3-D printing will play
DEmanD is also
Growth is also
dards for workshops to support
playing out well for us in our indus- ExpErts say that
years from now,
a big role be it in
increasing on the
backed by rising
unorganized firms. “The real game
try, because investments in addi- 10
the 3-D printing of
connectivity,
back of customers’
vehicle park. The
changer in the aftermarket will be
tional capacity that must be done is parts could play a
telematics or datadecision to upgrade
longer use of cars is
when we have the right-to-repair
already being invested in India. We big role in the sector driven solutions
vehicles they own
raising demand
mandate. The commerce ministry
see that many international purhas initiated discussions, and they
chase offices are exploring opportudemand in the aftermarket, as people want consumers to have more informanities to grow their businesses here. be a piece of that growth.”
“Opportunities for growth in the aft- want these features. So, retrofit with tion on where they can get the services.
India itself is a large market, and has
proved to be a good manufacturing ermarket outside of India are immense. electronics and entertainment systems In right-to-repair, a customer will have
The truck aftermarket alone in the US is are creating opportunities,” Vinnie a choice to decide if he wants to go to a
base,” Kapur added.
garage or OEM to get vehicles repaired.
“The market will disrupt because the $45 billion. So, you don’t have growth Mehta, director-general, Acma, said.
The auto aftermarket is also growing It’s not yet a law, but there is some connature of the vehicles will change. And, issues, but it is about managing expectabecause the vehicle park is increasing, versation in that direction,” Mehta said.
therefore, the kind of services and the tions of the OEMs,” he said.
New DelhI
U
nited Parcel Service
(UPS) is open to making
acquisitions in India to
grow its operations, executive
vice-president Laura Lane said.
The American logistics company is focusing on expanding
its presence in the domestic
logistics market, and is plan- Laura Lane, executive
ning to electrify its fleet in line vice president, UPS.
with similar growth in Europe
and China, Lane said in an operations as there is an “appetite for growth”.
interview.
UPS has set its net-zero tar“We are a company that
looks always to grow organic get at 2050, in line with the
and inorganic, and so, we are global push to decarbonize.
“Every company that is in
looking across the globe,
including here in India, about logistics is still trying to find out
additional ways to grow,” she how to decarbonize aviation,
that’s why we made a carbonsaid.
The logistics giant has been neutral commitment by 2050,
present in India since 1989 and because we know that there are
employs more than 3,000 peo- still innovation gaps that need
to be closed, in terms of how to
ple in the country.
“I have to say that our pres- decarbonize aviation. It’s why
ence has been growing. With we are working to increase the
the launch of our partnership supply of sustainable aviation
fuel in the key airwith InterGlobe
with MOVIN UPS has set itself ports around the
world and it is also
Express, we are
the target to
why we are trying
now looking at
achieve carbon
to be part of a
growing a bigger
neutrality by
share of our
2050, in line with solution for electrifying air operadomestic service
offerings here. the global push to tions.”
decarbonize
She said UPS
We have been trahas been looking
ditionally more
at ways to use
engaged in the
import-export side of green hydrogen, and is already
things...but we are trying to also testing hydrogen fuel cell vehigrow the domestic operations cles in California, US.
“In India, we are looking at
so that we can provide greater
end-to-end solutions to end ways to electrify our fleet. In
customers on all sides,” said Europe and China, we are movLane, who is also the com- ing faster in terms of moving
pany’s chief corporate affairs towards alternative fuel vehicles,” Lane said. The company
and sustainability officer.
UPS and InterGlobe Enter- has over 13,000 ground vehiprises formed MOVIN in May cles powered by alternative
last year. Lane said UPS is plac- fuels.
ing major focus on its Indian
rituraj.baruah@livemint.com
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06
CORPORATE
TuesDay, 14 March 2023
New Delhi
Firms’ ability to repay
debt under pressure
High interest costs, employee expenses and capex spending raise burden
Ujjval Jauhari
ujjval.j@livemint.com
New DelHI
Repayment weakness
The interest coverage ratio, an indicator of repayment ability of companies, in the
December quarter was significantly lower than the year-ago measure of the same.
T
Interest coverage ratio (Number of times)
he ability of Indian companies to
Number
of
companies
(738)
Number of companies (77)
Number of companies (383)
repay debt remains under presBSE small-caps
BSE mid-caps
BSE-500
sure as their financing and
employee expenses remain high
8.35
despite relief on raw material
7.84
7.22
costs, an analysis of leading listed compa6.58
6.19
6.12
nies has shown.
5.77
5.55
5.19 4.97
The analysis, covering 383 companies in
4.44
4.39
4.30 4.16
the BSE 500 index, showed that their inter3.75
est coverage ratio (ICR) stood at 6.19 times
in the December quarter, marginally better
than 6.12 times in the September quarter,
and significantly lower than 7.84 times in
the December 2021 quarter. The analysis
Dec 2021
Mar 2022
Jun 2022
Sep 2022
Dec 2022
excludes banks, insurance and financial
Data excludes companies in BFSI.
Source: Capitalmarket
services (BFSI) companies.
SATISH KUMAR/MINT
ICR improved only marginally in the
December quarter, compared with multi- demand expanded capacities.
employee costs had risen 15% from a year
A.K. Prabhakar, head of research at IDBI earlier and around 5% sequentially, limitquarter lows in the September quarter that
saw input cost pressures weigh on operat- Securities, said that companies in the capi- ing improvement in operating performing performance. ICR is derived by divid- tal goods and chemicals space had seen a ance. The jump in employee cost has been
ing a company’s earnings before interest, significant rise in capex spending. Till the the highest increase in the last five quartaxes, depreciation, and amortization free cash flows improve after newly-added ters, said CareEdge.
capacities come onstream, the pressure on
(Ebitda) by its interest cost.
It is not surprising that while revenues
Companies’ financing costs have accel- ICR for these companies will remain.
grew in double digits, operating profits did
ICR has seen pressure due to a rise in the not see much improvement.
erated in the past two quarters, highlighted
analysts at CareEdge. In the third quarter, cost of capital for the companies, said
Smaller companies have been facing relinterest expenses of corporates surged 23% Neeraj Chadawar, head of quantitative atively higher stress. ICR for small-caps
from a year earlier, compared with a 2% equity research at Axis Securities. For (738 companies under BSE small-cap
decline witnessed the previindex) stood at 3.75 times in
ous year, they said.
Q3, deteriorating from 4.30
BATTLING COSTS
Interest coverage ratio is
times in Q2 and was signifiFOR companies
EBITDA of exportunder pressure from rising RATE hikes by RBI
cantly lower than 5.19 times in
sustained credit
adding capex, ICR
oriented companies,
interest costs, said V.K. Vijaya- and
the year-ago quarter. Even 77
demand have raised
will remain under
has taken a hit due
kumar, chief investment strat- interest costs for
companies under the BSE
pressure until free
to lower realization
egist at Geojit Financial Servi- companies
Mid-caps, excluding banks
cash flows improve
and export volumes
ces. Continuous interest rate
and financials, showed ICR at
hikes by the Reserve Bank of
4.39 times in the December
India and the sustained credit demand in export-oriented companies, Ebitda has also quarter, significantly lower than 4.97 times
the economy have pushed up interest costs taken a hit due to lower realization and in December 2021 quarter and only slightly
of companies, said Vijayakumar, highlight- export volumes, and the overall increase in better than 4.16 times in the September
ing that this is more evident in the case of raw material cost, he added.
2022 quarter.
firms in infrastructure where the debt-eqApart from interest costs, higher
Experts feel that larger companies are
uity ratio is high.
employee costs are also putting pressure on better off in managing inflation and, having
Capex spending too had picked up in the operating performance. Data collected by cash on books, will be able to handle preslast one year as companies expecting better Mint for 3,484 companies showed that total sure in a high-interest environment.
LIVEMINT.COM
Premium phones to drive 2023 volumes
Gulveen Aulakh
gulveen.aulakh@livemint.com
New DelHI
H
igh-end Apple, Samsung and OnePlus
smartphones will be
driving higher sales in 2023, as
the Indian consumer upgrades
to premium devices at a faster
rate than the previous years to
mark a clear shift in consumption patterns, analysts said.
Growth trend in 2023 will be
fuelled by consumers moving
to 5G-enabled handsets, smartphones with larger storage, and
new form factors such as foldable or flip phones being offered
by more brands, as retailers and
smartphone brands offer better
financing schemes and buynow-pay-later plans.
Apple’s renewed push in the
Indian market may also influence consumers to shift to premium devices as they upgrade
their 4G handsets. “Premium
segment is likely to grow over
last year to reach 13% by volumes this year, and other segments may decline. Consumer
demand is changing, and taking to more high-end phones
Apple’s renewed push in the Indian market may also influence
consumers to shift to premium devices.
REUTERS
largely due to more financing
options. At the same time, the
transition from 2G to 4G is also
slowing, and entry level segment is seeing degrowth,” said
Prachir Singh, senior research
analyst at Counterpoint
Research. The research firm
specializing in products in the
technology, media and telecom
industry pegs India’s smartphone market at $38 billion. In
2022, Apple had a 42% premium segment market share,
followed by Samsung at 24%
and OnePlus at 14%.
“Apple is also likely to drive
iPhone sales in India this year,
with the iPhone 15 coming later
in the year which will prompt
price cuts for iPhone 14 and
Pro. They are likely to do up to
7 million phones this year in
India, up from 6-6.2 million in
2022,” said Navkendar Singh,
associate vice president, devices research at IDC India,
South Asia, and ANZ.
India’s smartphone market
has been historically driven by
large volumes of entry-level or
budget phones owing to the
price sensitive nature of consumers, while the premium
segment, which is upwards of
₹30,000, remained a marginal
contributor. However, 2022
saw premium segment volumes rise to 11% share of the
market and 35% by value of
total sales. Singh said the highest selling premium segment
smartphone was iPhone 13 in
2022, with a base price of
₹79,000, but was being offered
at under ₹65,000 after discounts and easy payment plans.
India has a large base of 4G
smartphones, which will now
get upgraded to 5G devices of
₹15,000 or more. This, according to a section of telecom sector executives, may drive sales
in the mid-segment. However,
replacement cycles for phones
has increased from 18-20
months earlier to 36 months.
High inflation and low disposable income of consumers was
also affecting entry-level and
mid-segment smartphone volumes as consumers delayed
purchase decisions.
“Premium smartphone consumers are immune to recessionary forces, and consider
their smartphone an extension
of their lifestyle,” Prabhu Ram,
head of industry intelligence
group, CMR, said.
CPI inflation stays above 6% for 2nd month
FROM PAGE 1
cereals and spices, scores
higher. While rural inflation
stood at 6.72%, urban inflation
for February came in at 6.10%.
Moreover, food prices contribute to about 40% of the CPI basket. Economists expressed
concern over rising prices of
cereals, milk and spices that
drove up food prices. Food
inflation also remained little
changed at 5.95% in February
compared to 6% in the previous
month, as cereals inflation
jumped 16.7% due to ongoing
heat waves in parts of the country that has cast a shadow on the
prospects of wheat crop.
“There is concern about milk
inflation at 9.7%. The prices down,” said Madan Sabnavis,
have been raised often this year chief economist at Bank of Bar– at least three times to adjust oda. “There was a relatively
for higher fodder costs. These larger step-up in prices of some
prices will never come down. services in the post-pandemic
period following
Spices inflation
has peaked at Global inflation is the reopening of
the economy.
20%,
which
forecast to rise
though it has a from 4.7% in 2021 However, annual
changes in the
small share in the
to 8.8% in 2022,
basket, is signifibefore dipping to services segment
are likely to be of a
cant in terms of
6.5% in 2023 and smaller quantum
reflecting
to 4.1% by 2024
going ahead,
demand-supply
which may lead to
mismatches. Presome tempering
pared meals/
foods have witnessed inflation in the core inflation in FY24,”
of 8% as costs have been passed said Icra chief economist Aditi
on. Here, it should be remem- Nayar.
RBI has raised interest rates
bered that prices are seldom
reduced even when costs come by 250 basis points since May
last year to control rising prices.
The latest rate hike of 25 basis
points in February took the
policy rate to 6.50%.
Inflation has risen globally
since the Ukraine war broke
out in February last year.
According to the International
Monetary Fund (IMF), global
inflation is forecast to rise from
4.7% in 2021 to 8.8% in 2022
before declining to 6.5% in
2023 and to 4.1% by 2024.
Global growth is forecast to
slow from 6% in 2021 to 3.2% in
2022 and 2.7% in 2023. This is
the weakest growth profile
since 2001, except for the
global financial crisis and the
acute phase of the covid-19
pandemic, IMF said.
Hyundai Motor India moves to Institutes to train nurses planned
acquire GM’s Talegaon plant
FROM PAGE 1
FROM PAGE 1
The font size of disclaimers in advertisements must now match
the size of the claims made.
HT
ASCI to introduce
stricter ad rules
for institutes
FROM PAGE 1
consumers are not misled by
these ads. The four key points
we have added include one
which says that no ad should
normalize unhealthy habits
like depicting students compromising on sleep or meals.
We also want ads to stop showing a relationship between
marks or exams with real-life
success,” said Manisha Kapoor,
chief executive officer of ASCI.
The font size of disclaimers
in advertisements must now
match the size of the claims
made, according to the proposed regulations by the advertising watchdog.
Furthermore, ads cannot
make unverifiable claims about
job placements or make use of
fictitious visual infrastructure.
Testimonials used in advertising must also come from students who have completed relevant programmes, exams, or
subjects at the advertising institution.
According to a KPMG report,
India’s online test prep market
is expected to grow to $3.96 billion by 2025, with non-governmental exams contributing
nearly 95% of the revenues in
2024.
It added that the Indian
edtech market was $2.76 billion
in 2020 and is expected to rise
to $10.27 billion in 2025.
Furthermore, an advertise-
ment stating the number of students placed for jobs will also
have to give out the total number of students passing out
from the placed class.
While an advertisement may
feature students of any gender,
the advertisement must not
suggest that certain subjects
are associated with particular
genders alone.
Mayank Kumar, co-founder
of upGrad and co-chair of the
Indian EdTech Consortium,
said there are several issues
with advertising in the education sector, particularly in traditional and offline segments.
He added that ads should not
resort to hyperbole.
“A lot of the problems at
present in the advertisements
are coming out of the traditional education system and
offline coaching centres,
which make sweeping promises like “world-class libraries”, etc. While also confusing
parents, communication
should be kept transparent to
foster accuracy of information
or claims made so that parents
can make sound decisions,”
Kumar said.
In the past, ASCI stipulated
that an advertisement offering
a degree, diploma, or certificate, which by law requires to
be recognized or approved by
an authority, will have the
name of that authority specified for that particular field.
conditions precedent and
receipt of regulatory approvals
from relevant government
authorities and all the stakeholders related to the acquisition,” Hyundai Motor India said
in a statement on Monday.
The South Korean carmaker
had been in discussions with
suppliers based in Pune to
explore the feasibility of the deal
for at least the last couple of
months, the people cited above
said, requesting anonymity.
Although it remains unclear
whether the plant will focus on
electric vehicles or conventional engine products, Hyundai executives said the company
is proceeding with caution and
may divide its electric and nonelectric operations between
Pune and Chennai initially, with
internal combustion engines
being added to Pune at a later
time. GM’s Talegaon manufacturing base will give Hyundai an
additional capacity to produce
130,000 vehicles annually.
GM stopped operations in
Talegaon in 2020.
BLOOMBERG
In India, Hyundai faces a
challenge from both smaller and
larger rivals. While Maruti Suzuki’s new SUV offensive targets
the mid-sized segment that is
Hyundai’s stronghold, Tata
Motors has on multiple occasions surpassed it to become the
second-largest automaker in
India last year. Its existing
capacity of up to 850,000 vehicles a year at its plant near Chennai leaves it vulnerable in the
market as both Tata Motors and
Maruti Suzuki are building significant capacity.
While GM discontinued
manufacturing operations in
Talegaon in 2020, it is currently
embroiled in several legal cases
with its 1,100-member strong
employees union. The union
had approached a court to seek
a formal clarification from the
company on whether it was
looking to sell the site to Hyundai. GM did not furnish a
response. The union also sought
a stay on a potential sale till the
issue of the retrenchment of the
workforce was resolved. There
are over 15 active cases in the
industrial, district, high courts
and the Supreme Court in the
matter. A court-ordered mediation in the case has not led to any
progress.
Last year, China’s Great Wall
Motors decided to abandon its
Indian operations after failing to
secure approvals from the
Indian government for its $1 billion foreign direct investment
proposal at Talegaon amid tense
political ties between New Delhi
and Beijing following a deadly
border clash between the two
armies in June 2020.
“Public health is incomplete
without nursing, and it is a very
crucial component that was
missing. Setting up state-of-art
nursing colleges is the need of
the hour and a priority of the
government. We want to
project nursing education and
research as the world’s top producer of post-graduate nurses,
as mentioned in our National
Health Policy 2017. Simultaneously, Indian Nursing Council
is being revamped, and newer
courses will be added gradually,” an official said, requesting
anonymity.
The plan also involves setting up a National Nursing
Commission, for which a cabinet note has already been
moved, a second official said.
Queries sent to a health ministry spokesperson remained
unanswered.
“These will be post-graduate
nursing institutes of national
standards. It will be beneficial to
patients and doctors at large to
avail of specialized nursing care.
As of now, we do not have specialized nursing care. For exam-
The plan also involves setting
up a National Nursing
Commission.
ple, a nurse is trained in paediatrics for a few months and can
get transferred to some after
department. Actually, there is a
very small number of postgraduate skilled nurses, and we
need to upgrade it. Besides, it
will also stop the brain drain of
the nurses and further create
job opportunities for nurses in
India. So, we want India to be
the hub of nursing cadre for the
entire world,” said the first official.
As part of its Union budget
on 1 February, the government
announced plans to establish
157 new nursing colleges alongside existing medical colleges
set up since 2014.
Since states oversee healthcare, these institutes will fall
under state jurisdiction. Currently, only a handful of nursing colleges in Delhi are under
the central government’s purview, including Lady Hardinge
Hospital, Dr Ram Manohar
Lohia Hospital, and Rajkumari
Amrit Kaur College of Nursing.
The government also
intends to introduce a public
health speciality in nursing as
part of the initiative.
“This campus will be constituted as a second nursing campus of the main campus of Gauripur. This institute will help us
in producing MSc in community health nursing and general
nursing and midwifery, along
with a diploma in public health
nursing,” the official said.
According to the Indian
Nursing Council, India needs
86,000 post-graduates in general nursing and midwifery,
and hardly any institution is
producing such trained nursing professionals.
Netflix pivots to film licensing in India as originals disappoint
Lata Jha
lata.j@htlive.com
New DelHI
N
etflix is rejigging its
content strategy in
India, betting more on
tent-pole films to attract new
subscribers and retain existing
ones as viewers find more affinity towards films such as RRR
and Gangubai Kathiawadi on
the platform. Indian films also
regularly feature in the platform’s global non-English top
10 weekly lists, while no Indian
original series has been a part of
the list lately.
The platform, which will
stream multiple big-ticket
southern films featuring stars
such as Vijay, Vikram, Karthi
and Ajith Kumar, besides Shah
Rukh Khan-starrer Jawaan
and Ranbir Kapoor’s recent
release Tu Jhoothi Main Makkaar in the coming months,
hasn’t renewed originals like
Call my Agent: Bollywood and
The Fame Game. Some shows in
the development or shooting
stage have already been
canned, as the global parent
doesn’t see the investment in
local originals paying off much
anymore.
Producers say the team in
India is taking much longer to
get back to producers on
pitches and struggling with a
lack of expertise on the ground.
Overall, the Indian content
budget is down by 35-40%,
industry insiders say.
“There has been a de-escalation of India in the global
scheme of things, and the sense
is that a lot of local originals are
not meeting quality standards.
Originals anyway take a lot
According to industry insiders, overall, the Indian content budget
is down by 35-40%.
AP
more time and deeper relationships in the industry to put
together, so if numbers are
coming from licensed films,
why not redirect investments
there?” said a senior film producer on condition of anonymity. The person said the service
is increasingly turning to the
game that Amazon Prime
Video had opened in India—to
outbid everyone else to license
the biggest movie titles. Plus,
the international team doesn’t
really distinguish between
licensed films such as RRR or
Gangubai Kathiawadi from business strategies. However,
originals
commissioned people close to the company
in-house. The only perform- point out that the platform has
ance indicators that matter at renewed shows such as Misthe end of the day are revenue matched, Class and Fabulous
and engagement.
Lives of Bollywood Wives for
Speaking at the Global Busi- another season.
ness Summit last
A senior execumonth, Netflix Producers say the tive at a content
co-chief executive
studio said Netflix
Netflix team in
officer Ted Saranis yet to see that
India is now
dos said India saw
one big breakout
taking much
a 30% increase in
longer to get back title and pointed
engagement and
out that its first
to producers on major success
watch time and a
pitches
25% rise in reveSacred Games was
nue in 2022. He
released in 2018.
also named RRR
“Movies are still
and Gangubai Kathiawadi as getting some subscriptions, but
breakout successes in the West. the India originals don’t seem
“We’ve had the best year of our to be delivering for Netflix,” the
existence in India,” he had said. person said.
A spokesperson for Netflix
The company has also realIndia declined to comment on ized that drama, as a genre, is
Mint’s queries on changing not working for it.
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CORPORATE
LIVEMINT.COM
Kellogg’s to
raise focus
on Muesli,
granola
Demand for mock interviews
rises as job market worsens
New DelHI
C
ereal maker Kellogg’s
India will focus on selling more muesli and
granola while ditching
attempts to scale up Indian
breakfast options such as
ready-to-cook upma, said a top
executive at the company.
Muesli and granola could
draw a third of the sales for the
maker of Kellogg’s Chocos and
Froot Loops cereals up from
the current 20%. The move
comes after young, upmarket
urban consumers have shown
a propensity to spend more on
muesli—a category priced at a
premium to breakfast cereals.
“Within the overall readyto-eat breakfast cereal space,
the muesli and granola segment is the fastest growing,”
Prashant Peres, Managing
Director, Kellogg South Asia,
said in an interview with Mint.
“The reason it’s going faster is
because it’s starting from a
smaller base. Globally, too, the
category is doing well. It is a
significant growth driver in
markets like Korea, Japan,
Australia, Middle East, etc.”
The move comes as the
company plans to double its
household reach over the next
four years. “We serve around
40 to 50 million people in
India today—we want to double that,” Peres, who joined the
company in early 2022, said.
While the staple Kellogg’s
cornflakes and brands such as
Chocos will continue to drive
household penetration with
their lower priced packs, Peres
said muesli will lead the company’s growth at the top-end
of the market. The move is also
in line with other fast moving
consumer goods makers premiumizing their portfolio.
07
Brokerages wary
of IndusInd CEO’s
reduced 2nd term
Gopika Gopakumar
Suneera Tandon
suneera.t@htlive.com
TuesDay, 14 March 2023
New Delhi
gopika.g@htlive.com
Fear of a looming global recession has skewed the labour market in favour of employers
Devina Sengupta
devina.sengupta@livemint.com
C
oncern over a looming
global recession has
skewed the labour market
in favour of employers,
and the odds of clearing an
interview is decreasing rapidly for job
aspirants, following the hiring frenzy
just a few quarters ago, said industry
executives.
More and more candidates are preparing for interviews with the help of
coaching firms and are willing to cough
up ₹2,500 for two preparatory sessions,
they added. Rising demand for mock
interviews have prompted job portals
to tie up with interview outsourcing
firms, which appoint industry executives to train candidates on responding
to probable questions and tests.
For instance, Flocareer, an interview
outsourcing platform, has partnered
job portals for offering two mock inter- Job aspirants queuing up for mock interviews is in stark contrast to the situation a year ago.
view sessions for ₹1,200-2,500 for canUntil a few quarters ago, for IT firms, negotiation powers are no longer with
didates who want to apply for a profile. has received several requests from its
“It is now an employer’s market and we clients to design stricter mock tests for coders were in demand, but knowing the candidates.
Job aspirants queuing up for mock
are getting 1,000 candidates per month interviews. “When it was an employee’s details about the different programmes
who are willing to pay to get interview market, some specialized skills were in on the cloud, and certifications, were interviews is in stark contrast to the sitready,” said Mohit Jain, co-founder and demand, but peripheral skills were not not essential, but now companies are uation a year ago, when Indian companies were short of interviewers who
head of India operations at Flocareer. essential. Now, the market has turned asking for them, he added.
The reversal in trend for the job mar- could ask the right questions to job
The Bengaluru-based firm started and even peripheral skills are included
the business of preparing candidates under essentials,” said Vishal Madan, ket has taken place over the last three aspirants. The shortage had forced
some companies to outsource the
just three months ago and also
interviews sessions because there
offers interview panellists to India
TALK TIME
weren’t enough senior executives
Inc.
THE reversal in trend TOUGHER selection REJECTION rates of
to close hiring mandates.
Typically, companies like Floca- CANDIDATES are
to pay ₹2,500
for the job market
criteria kicks in when candidates have
In fact, according to Saran Balasreer stack up interviews with free- willing
for two sessions that has affected IT firms
talent pool is large
risen by up to 50%,
undaram, founder of HanDigital, a
lancers or working professionals prepare them for
and the startup
and candidates lack
says recruitment
tech recruitment firm, said rejecfrom a sector where demand is interviews
sector
power to negotiate
firm HanDigital
tion rates of candidates have risen
high, to train aspirants. The first
by up to 50%. Now the company
session is a technical round while
quarters, especially for IT firms and the has started training recruiters on Java,
the second revolves around discus- head of engineering, iMocha.
In the last three months, 10-15 clients startup sector. Besides, mass scale lay- Devops and other programmes, so that
sions. A candidate looking for an IT
sector job may be tested on her coding have asked for more questions for the offs and a hiring freeze, most firms have they can assess, train, and interview
skills in the first round, and those for assessment tests and mock interview made their interview processes strin- candidates better, Balasundaram said.
the retail sector on the costing propos- sessions to make the process better, gent for the must-have job openings. A “ We have started training them for six
said Madan. “We expect more requests tougher selection criteria kicks in when weeks to bring down the rejection rates
als of products, executives said.
the available talent pool is large and the from clients’ side.”
iMocha, a skill assessment platform, in the coming few months.”
T
he Reserve Bank of India
(RBI)’s decision to give a
two-year extension to
IndusInd Bank’s chief executive officer Sumanth Kathpalia,
instead of three years, has surprised analysts and investors.
Brokerage JP Morgan has
downgraded the private sector
bank to neutral and reduced its
target to ₹1,060 per share. “We Kathpalia’s current term as the
note over past five trading ses- CEO ends on 24 March.
sions, IIB (IndusInd Bank) has
outperformed on expectations with Kathpalia as the MD and
of RBI granting a three-year CEO. “In our view, IIB’s MD
extension, and we expect the and CEO stabilised the bank,
stock to react negatively. So far, focused on retail liabilities, recno reason is provided for the ognised asset quality issues,
same by RBI which would and worked on improving balhighlight any operational con- ance sheet granularity, and
cerns,” said JP Morgan in its eventually improved its return
ratios. We are not sure if the
report on Monday.
IndusInd Bank shares fell whistleblower complaint
7.46% to ₹1,060 on Monday as regarding the MFI (microfithe market was disappointed nance) book played a role in
over Kathpalia’s reduced sec- RBI’s decision,” Macquarie said
ond tenure. IndusInd shares in a report on Monday.
Jefferies said a reduced secrose by 9.45% so far in this
financial year compared with ond term may mean a pullback
on growth and
Bank Nifty’s 6.5%
defer re-rating. It
rise, indicating its
IndusInd Bank
better performshares fell 7.46% trimmed loan
ance than that of on Monday as the growth estimate
by 100 basis point
the Bank Nifty.
market was
for FY24-25.”The
Kathpalia was
disappointed
lower term extenappointed as the
over Kathpalia’s
sion may be a
MD and CEO in
reduced tenure
reflection on the
2020, following
need to improve
Romesh Sobti’s
on controls (MFI
retirement. Last
September, the IndusInd Bank event), liabilities (retail mix),
board had approved a three- and underwriting (retail and
year extension to Kathpalia and less risky). We see this as reasent the proposal for final nod sonable time to demonstrate
to RBI. Kathpalia’s current progress as the bank already
term as the CEO ends on 24 made moves on these counts.”
The market will watch other
March. In February, the bank
appointed Sunil Mehta as the reappointments due this year,
new part time chairman for a such as that of ICICI Bank‘s
Sandeep Bakshi, HDFC Bank’s
period of three years.
Macquarie research said the Sashidhar Jagdishan, Kotak
investors are asking whether Mahindra Bank’s Uday Kotak
the central bank is comfortable and City Union’s N. Kamakodi.
Answering the WHATs, WHYs,
HOWs and more!
Introducing
Explainer Videos
on the Mint app
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08
NEWS WRAP
TuesDay, 14 March 2023
New Delhi
TWEETS & QUOTES
LIVEMINT.COM
Li Qiang
Narendra Modi
Trinh
Oliver Blume
Premier, China
Prime Minister
EM Asia economist, Natixis
CEO, Porsche
China and the US are closely
intertwined economically,
and both have benefited
from the other side’s development
Exceptional! The
popularity of ‘Naatu
Naatu’ is global. It will
be a song that will be
remembered for
years to come...India
is elated and proud
Southeast Asia & India doing
well at the Oscars, not just
longer term macroeconomic
trends! Yay for Michelle Yeoh
for Malaysia, Ke Huy Quan for
Vietnam (well, Vietnamese
American), and obvs India
We can adjust tax politics to make e-fuels
cheaper...politics
should support investments to make prices
more attractive
Govt sets defence
mfg target at ₹1.75 tn
SBI MF‘s new fund
gets ₹3,600 crore
SPRING IN THE STEP
T
S
he government has said it has set a target
of achieving defence manufacturing
worth ₹175,000 crore, including defence
exports of ₹35,000 crore by 2024-25.
Minister of state (MoS) for defence Ajay Bhatt,
replying to a question in the Rajya Sabha, said
the value of production undertaken by private
companies and state-run defence
manufacturers in 2021-22 was ₹86,078 crore
while the amount was ₹88,631 crore in 2020-21
and ₹63,722 crore in 2019-20.
The value of production was ₹50,499 crore in
2018-19 and ₹54,951 crore in 2017-18.
“The government has set the target of
achieving defence manufacturing worth
₹175,000 crore including defence exports of
₹35,000 crore by the year 2024-25,” Bhatt
said.
The minister also said the value of defence
exports in 2021-22 was ₹12,815 crore while it was
₹13,398 crore till 6 March in the current fiscal.PTI
BI Mutual Fund on Monday said it has
mobilized around ₹3,600 crore in its New
Fund Offer (NFO) for a dividend yield fund
offering, giving it a market share of over 25% in
the segment.
The fund house collected the amount on the
back of a strong promotion in regional
languages, with around 123,000 applications
from 70% of pin codes in the country and
around 40,000 new investors.
The New Fund Offer of SBI Dividend Yield
Fund was opened during 20 February to 6
March, and it will reopen for subscriptions on 17
March, the company said in a statement.
The fund house believes that the category has
a lot of potential and dividend yield funds should
be part of an investor’s portfolio, especially
those looking to invest directly in equity or
looking for a regular cash flow from dividends.
PTI
A woman examines the flowers of an almond tree at an orchard in Pulwama, South Kashmir, on Monday. Almond trees in full bloom signals the
arrival of spring season in the Valley.
Finance minister Nirmala Sitharaman.
PTI
E-rupee worth over
₹130 cr in circulation
D
igital or e-rupee worth over ₹130 crore is
in circulation on a pilot basis as of 28
February, finance minister Nirmala
Sitharaman said on Monday.
The Reserve Bank of India (RBI) had
launched pilots in digital rupee in the wholesale
segment (e₹-W) on 1 November and in the retail
segment (e₹-R) on 1 December 2022.
Nine banks, viz., State Bank of India, Bank of
Baroda, Union Bank of India, HDFC Bank, ICICI
Bank, Kotak Mahindra Bank, Yes Bank, IDFC
First Bank and HSBC, have been participating in
the digital rupee wholesale pilot, Sitharaman
said.
“As on 28 February, the total digital rupee—
Retail (e₹-R) and digital rupee—wholesale (e₹W) in circulation is ₹4.14 crore and ₹126.27
crore, respectively,” Sitharaman said in a written
reply in the Lok Sabha.
The e₹-R is in the form of a digital token that
represents legal tender. It is being issued in the
same denominations that paper currency and
coins are currently issued.
It is being distributed through financial
intermediaries, i.e., banks.
PTI
Shriram Fin aims to
raise ₹20,000 crore
India against trade settlement
in yuan for Russian imports
New Delhi prefers dirham though Moscow is keen on yuan as it can use in China trade
Reuters
feedback@livemint.com
I
ndia has asked banks and traders to avoid
using Chinese yuan to pay for Russian
imports, three government officials involved
in policy making and two banking sources
said, because of long-running political differences with its neighbour.
India, which has emerged as a top buyer of Russian oil as well as discounted coal, would prefer
the use of United Arab Emirates dirhams to settle
trade, three government officials said.
One of the government officials directly
involved in the matter said New Delhi is “not comfortable” with foreign trade settled in yuan but
said settlement in “dirham is okay.”
The second official said that India cannot allow
settlement in yuan till the relations between the
two countries improve.
The five officials did not say whether there
were also economic reasons behind India’s reluc- currency. They also said Russia was keen on yuan
tance to accept yuan settlement.
settlement as it helps them in purchases of goods
Last year India’s biggest cement producer from China.
UltraTech Cement used Chinese yuan for a cargo
For Indian refiners that in recent weeks started
of Russian coal, which raised some concerns settling some Russian oil purchases in roubles, as
among officials as relationship between India and Reuters reported, payments have been processed
China has deterioin part by the State
rated after deadly
Bank of India via its
Last year, UltraTech Cement used
border clashes in
nostro roubles
2020 in the remote
account in Russia.
Chinese yuan for a cargo of
Galwan Valley of
But the bulk of
Russian coal, which raised some
Ladakh. The govthe trade is still in
concerns among officials
ernment reviewed
other currencies as
the situation with
the rouble is parofficials of the centially convertible
tral bank and bank executives, following the and the two countries are yet to finalize a frameUltraTech deal, the second official said.
work. India’s foreign, finance ministry and RBI
Two banking officials, aware of the matter, said did not reply to requests seeking comment.
the Reserve Bank of India is not keen on foreign
The government expected majority of paytrade settlement in yuan, and confirmed that the ments to Russia in dirhams in the coming months,
government has discouraged them from using the the first official said.
Rating agencies take into account
parameters such as GDP.
I
ISTOCK
ndia is seeking an upgrade to its
sovereign credit rating, currently at the
lowest-possible investment grade, as
the Asian nation believes its economic
metrics have improved considerably
since the pandemic, a senior government
official said on Monday.
The country’s federal finance ministry
met representatives from the top three
rating agencies—Fitch Ratings, Moody’s
Investors Service and S&P Global Ratings
—after the government presented its
annual budget on 1 February, the official
said.
“Our pitch is that our economic
performance calls for an upgrade,” the
official said, requesting anonymity as the
discussions are private.
S&P and Fitch rate India ‘BBB-’ and
Moody’s ‘Baa3’, all indicative of the
lowest-possible investment grade, but
with a stable outlook. These ratings are
used to judge a country’s
creditworthiness, often impacting its
borrowing costs.
They take into account parameters
such as economic growth rate, inflation,
general government debt and short-term
external debt as a percentage of GDP, and
political stability, among others. REUTERS
Assistance will be provided to Assam, Himachal
Pradesh, Karnataka, Meghalaya and Nagaland. HT
₹1,816 cr disaster
relief for 5 states
A
India win Aus series as 4th test ends in draw; enters WTC final
I
ndia clinched the four-match series against Australia 2-1 after the final Test
ended in a draw on Monday in Ahmedabad following defiant half-centuries
from Travis Head and Marnus Labuschagne.
Even before the players shook hands India knew they had qualified for the
World Test Championship final after New Zealand edged out Sri Lanka by
two wickets in the opening Test in Christchurch.
India, who make their second successive WTC final after losing the
inaugural edition to New Zealand in 2021, will meet Australia in the title clash
on June 7-11 at The Oval.
Australia reached 175-2 in their second innings in the final session of play
on day five at the world’s biggest cricket stadium when the players of both
teams called it a day.
The left-handed Head (90) and Labuschagne (63 not out) snuffed out
India’s push for a victory on the final day with a stand of 139 after
nightwatchman Matthew Kuhnemann fell early for six.
AFP
India clinched the four-match series against Australia.
The decline was linked to a complex procurement
process, efforts to diversify arms suppliers . AFP
‘India’s arms import
declines by 11%’
I
ndia remained the world’s top arms importer,
but its imports declined by 11% between 201317 and 2018-22, according to a report released
on Monday by Stockholm-based defence thinktank SIPRI.
The decline was linked to a complex
procurement process, efforts to diversify arms
suppliers and attempts to replace imports with
local designs, the report said.
The Stockholm International Peace Research
Institute (SIPRI) said the five largest arms
importers in the world during 2018-22 were
India, Saudi Arabia, Qatar, Australia and China.
The five largest arms exporters were the
United States, Russia, France, China and
Germany.
The imports by Pakistan, the world’s eighthlargest arms importer during 2018-22, increased
by 14%, with China as its main supplier, the
report said.
PTI
CBI inquiry against
Red Cross Society
T
India bats for credit rating upgrade
S
hriram Finance is looking to raise as
much as ₹20,000 crore to fund its growth
in the next financial year starting April, a
senior company official told Reuters on
Monday.
The retail non-banking finance company
(NBFC) aims to grow its assets under
management (AUM) by 15% in fiscal 2024 to
around ₹1.9 trillion to ₹2 trillion, Umesh
Revankar, executive vice chairman of Shriram
Finance, said.
The company’s total AUM was ₹1.77 trillion
as of 31 December.
“We will mostly be looking at ECB loans
rather than dollar bonds. Right now, the
(dollar) bond market is very volatile,” Revankar
said, adding, “We are looking to utilise our
entire $750 million ECB limit next year.”
The loans will be anything between three to
five years, he said. ECBs, or external
commercial borrowings, are commercial loans
raised by domestic borrowers from recognized
foreign entities.
REUTERS
PTI
PTI
high level committee, headed by Home
Minister Amit Shah, has approved the
release of an additional ₹1,816 crore to five
states, including Karnataka, as central assistance
for the natural disasters faced by them. According
to an official statement, the assistance will be
provided to Assam, Himachal Pradesh, Karnataka,
Meghalaya and Nagaland for floods, landslides and
cloudburst that occurred during 2022. The HLC
under Shah’s chairmanship has approved the
additional central assistance under the National
Disaster Response Fund (NDRF) to five states, the
statement said. This shows the resolve of the Union
government under the leadership of Prime
Minister Narendra Modi to help the people of five
states who faced these natural disasters, it said.
While Assam will get ₹520.466 crore, Himachal
Pradesh will receive ₹239.31 crore and Karnataka
₹941.04 crore, it said. It added that ₹47.326 crore
has been approved for Meghalaya and ₹68.02
crore for Nagaland.
This additional assistance is over and above
the funds released by the Centre to the states in
the State Disaster Response Fund (SDRF),
already placed at the disposal of the states, it
said.
PTI
he Union government has initiated CBI
inquiry against Indian Red Cross Society
and five of its regional branches after
incidents of alleged corruption and financial
irregularities. States involved are Tamil Nadu,
Kerala, Assam, Karnataka and Andaman &
Nicobar Islands. Indian Red Cross is an
organization which offers relief in times of
disasters/emergencies and promotes health &
care of the vulnerable people and communities.
“We had received several complaints about the
alleged corruption in regional branches in
Tamil Nadu, Kerala, Andaman and Nicobar
Islands, Assam and Karnataka and accordingly
action is being taken,” said the health ministry
official. In Kerala, a case of misappropriation of
funds in 2019 allegedly by the chairman and
vice-chairman led to national headquarters
recommending dissolution of state managing
committee, the official said. PRIYANKA SHARMA
Embassy REIT to
invest ₹300 crore
E
mbassy Office Parks REIT on Monday said
it has committed over ₹300 crore for
ongoing green initiatives across its
commercial projects.
In a regulatory filing, Embassy REIT
informed that the company has “committed
over ₹300 crore to its ESG (environmental,
social, and governance) programme across its
43.6 million square feet pan-India portfolio”.
Embassy REIT said it has recently
commissioned the first phase of its 20 MW solar
rooftop project. This project aims to generate 30
million units of solar power, offsetting around
25,000 tonnes of CO2 emissions.
As part of its 2040 net zero carbon operations
goal, Embassy REIT aims to achieve 75%
renewable energy usage by 2025.
Apart from the existing 100 MW solar plant,
the REIT strategically plans to more than double
its current 120 MW onsite and offsite renewable
energy capacity by installing new solar plants
across Bengaluru and NCR.
PTI
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GLOBAL
LIVEMINT.COM
m
MINT SHORTS
Sanofi agrees to buy Provention
Bio in a $2.9 billion deal
Sanofi agreed to buy Provention Bio Inc. in a $2.9 billion deal
intended to bolster the French drugmaker’s portfolio of diabetes medicines with a new therapy recently approved in the US.
The takeover builds on an agreement between the two companies for the commercialization of the drug, a monoclonal antibody for the delay of clinical type 1 diabetes developed by
Provention Bio.
BLOOMBERG
Rolex accelerates Swiss
production to meet demand
Rolex SA will create three temporary production facilities
that will begin churning out luxury watches in 2025, as the
world’s largest maker of high-end timepieces seeks to boost
output amid unprecedented demand for its products. The
capacity follows plans to spend $1.1 billion on a major new
production site in Bulle, also in the canton of Fribourg, that
is expected to commence operations in 2029. BLOOMBERG
‘Everything Everywhere’
all-conquering at Oscars
Hollywood, US: Sci-fi film “Everything Everywhere All at Once”
dominated the Oscars, winning seven golden statuettes including
best picture. The movie also won best director, best actress, best
original screenplay, best editing, and both the best supporting
actor and actress prizes. Michelle Yeoh, who is Malaysian,
became the first ever Asian woman to win best actress.
AFP
Biden hosts UK, Australia to reveal
anti-China submarine pact
Washington: Leaders of the US, Australia and Britain are set to
unveil plans to provide Australia with nuclear-powered submarines on Monday, in a major push against China’s ambitions in the
Indo-Pacific. US President Joe Biden, Australian PMAnthony
Albanese and British PM Rishi Sunak will endorse details of the
so-called AUKUS project, which was first announced in 2021, at
the US naval base in San Diego, California.
REUTERS
Pfizer signs
$43 bn deal
in cancer
drug push
TuesDay, 14 March 2023
New Delhi
09
Biden vows to hold banks
accountable, reassures mkts
Reuters
feedback@livemint.com
P
fizer Inc on Monday
struck a roughly $43 billion deal for Seagen Inc to
bulk up its cancer treatments
portfolio, as the drugmaker
braces for a steep fall in covid-19 product sales and loss of
exclusivity for some top sellers.
The deal, Pfizer’s biggest in a
string of acquisitions after a
once-in-a-lifetime cash windfall from its covid-19 vaccine
and pill, will add four approved
cancer therapies with combined sales of nearly $2 billion
in 2022.
Pfizer will pay $229 in cash
per Seagen share, a 32.7% premium to Friday’s closing price.
The offer is also a nearly 42%
premium to the stock’s close on
24 February, a day before the
Wall Street Journal first
reported on a possible deal.
Seagen’s shares rose to $207
before the bell on Monday.
Pfizer has hit the deals route
in its quest to mitigate the
impact from an anticipated $17
billion drop in revenue by
2030 due to patent expirations
for top drugs and decline in
demand for its covid products.
“While Pfizer still has more
firepower to do deals, we think
integrating such a large company could make (Pfizer) take a
pause on M&A front,” Wells
Fargo analyst Mohit Bansal said
in a research note.
The drugmaker expects
more than $10 billion in “riskadjusted” sales from Seagen in
2030. Washington-based Seagen is a pioneer of antibodydrug conjugates, which work
like “guided missiles” designed
for a targeted destructive effect
and spare healthy cells.
He said all customers who had deposits at both banks can “rest assured they’ll be protected”
Bloomberg
feedback@livemint.com
P
resident Joe Biden
sought to reassure
jittery consumers
and markets that the
US financial system
is on solid footing, promising
to hold those responsible for
the collapse of two banks to
account and saying he would
urge Congress to strengthen
regulation of the banking system.
“Americans can have confidence that the banking system
is safe. Your deposits will be
there when you need them,”
Biden said Monday at the
White House after the collapse
of Silicon Valley Bank and Signature Bank raised fears of a
full-blown banking crisis.
The president said all customers who had deposits at
both banks can “rest assured
President Joe Biden speaks about the banking system in the
Roosevelt Room of the White House in Washington on Monday.
they’ll be protected and they’ll
have access to their money as
of today.”
Biden said no losses would
be borne by taxpayers, that he
would ask Congress to
strengthen banking regulations and that those responsible for the banks’ collapses
would be held accountable.
“Investors in the banks will
AP
not be protected,” he said.
“They knowingly took a risk
and when the risk didn’t pay
off investors lose their money.
That’s how capitalism works”
US authorities took extraordinary measures Sunday to
shore up confidence following
the bank failures, including a
new backstop for banks that
Federal Reserve officials said
was large enough to guarantee
the nation’s deposits. The collapse of SVB Financial Group
last week is the second-largest
bank failure in the US history,
stoking concerns about oversight of the industry.
Meanwhile, the US Federal
Deposit Insurance Corporation has transferred all deposits of Silicon Valley Bank to a
newly created bridge bank and
all depositors will have access
to their money beginning
Monday morning, the financial regulator said.
In a statement, the FDIC
said all customers of SVB
would automatically become
customers of the bridge bank,
which will hold “normal banking hours and activities,
including online banking.”
The announcement by the
Federal Reserve and Federal
Deposit Insurance Corp. came
near the end of a frantic week-
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end that saw the collapse of the
New York-based Signature
Bank along with mounting
concerns about spillover
effects from SVB and Signature on other regional lenders
and the broader economy.
A financial crisis would pose
a major challenge to Biden
ahead of the expected launch
of his 2024 reelection campaign. Republicans have
accused the president’s policies of fueling inflation, while
some on the left have questioned the pace of the Fed’s
rate hikes.
In a related development,
HSBC Holdings Plc is buying
the UK arm of Silicon Valley
Bank, the culmination of a
frantic weekend where ministers and bankers explored various ways to avert the SVB
unit’s collapse.
Reuters contributed to this
story
10
LONG STORY
TuesDay, 14 March 2023
New Delhi
LIVEMINT.COM
SHOULD YOU BUY OR
RenT? ThAT dependS
Financial influencers on Twitter would like you to rent a house. Their arguments are simplistic
Vivek Kaul
mint
SHORT
STORY
feedback@livemint.com
mUmBAi
W
here were you?” he
asked.
“Oh, mummy ji had
called,” she replied.
“The signal here was
weak, so I stepped outside to talk to her.”
“An early morning call from her is never
good news. What did she say?”
“Well, she was saying that we should
buy a flat. This living on rent was a waste.”
“Ah, the usual.”
“Not really,” she replied.
“Why?”
“Because this time she offered what she
thought was financial logic.”
“When emotion stops working,” he
said. “So, what was this logic?”
“It seems the rent that we pay every
month is going waste, given that we are
not using that money to create an asset out
of it. On the other hand, if we pay an EMI
towards a home loan, we will end up owning a flat and create an asset.”
“I had never thought about the issue in
this way,” he said. “Guess for once she
makes sense.”
“She doesn’t.”
“Doesn’t?”
The math
“Take this flat that we live in. We pay a
rent of ₹20,000 per month or ₹2.4 lakh a
year. The market price of the flat is around
a crore. If we were to buy it, we would also
have to pay a stamp duty of 6%, which
means a price of around ₹1.06 crore.”
“Ah, maths early in the morning,” he
said.
“So, we pay ₹2.4 lakh to live in a flat that
would cost at least ₹1.06 crore. This means
the rental yield is 2.3% (₹2.4 lakh divided
by ₹1.06 crore expressed as a percentage).”
“Where are you going with this?”
“Now, let’s say we decide to buy this flat
and take on a home loan of ₹80 lakh. Further, we offer ₹20 lakh as a downpayment
and ₹ 6 lakh as stamp duty. So, we need to
pay Rs 26 lakh from our savings. There is
a cost attached to all this.”
“Of course, an EMI will have to be paid.”
“Let’s say we pay an interest of 9% per
year for a home loan to be repaid over 20
years. The EMI on this works out to
around ₹72,000 per month, or around
₹8.64 lakh per year. Also, there is an
opportunity cost of making the downpayment and paying the stamp duty.”
“What opportunity cost?” he asked.
“That amount of ₹26 lakh could otherwise continue to remain invested and thus
earn a rate of return. If we were to invest it
in a fixed deposit at the rate of 7% per year,
we will earn an interest of ₹1.82 lakh on it.
We add this to the ₹8.64 lakh EMI and the
total amounts to ₹10.46 lakh.”
“I can see where this is going now.”
“So, we pay ₹2.4 lakh to live in this flat
right now. In order to own it, we will end
up paying ₹10.46 lakh. Of course, the
interest of up to ₹2 lakh paid on the home
loan can be deducted while calculating the
taxable income. That should bring down
the cost of owning this flat to slightly less
than ₹10 lakh for a while. Further, we will
no longer have to pay rent.”
“Which is why the idea that we aren’t
creating an asset out of paying rent basically doesn’t make any sense,” he said. “So,
this means that it doesn’t make any sense
to buy a flat?”
NiNe ReasoNs To buy
are settled in life.”
ow when did I say that?” she
“Fourth, every time you change a flat,
responded.
the address proofs need to be updated.
“You just did.”
And that can be a real pain.”
“Not at all. I was just trying to show that
“I haven’t forgotten the last time; you
mummy ji’s theory doesn’t work.”
totally dumped it on me.”
“So, does it make sense to buy a flat or
“Fifth, in a rental flat, one has to live
not?”
with the idiosyncrasies of the landlord and
“It depends.”
many societies treat tenants as second“On whom?”
class citizens.”
“The family buying it.”
“Oh yes. Every Saturday the landlord
“Like how?”
turns up and he wants
“Well, there are quite
stock tips.”
There are quite a few
a few advantages if one is
“Sixth, single people
buying a flat to live in it.”
have a really tough time
advantages if one is
“Tell me.”
looking for a flat.”
buying a flat to live in.
“First, one does not
“Don’t remind me of
have to live in the insethat. I have some real
Families with children
curity of having to
horror stories. Once, a
and retired parents need
vacate when the rental
landlord asked me what
agreement runs out.”
do I do with chicken
some stability.
“Yes,” he replied.
bones that remain after
“Thankfully, this time
eating. ”
around, we managed to sign a three-year
“Seventh, every time you rent a flat you
agreement.”
need to go through an agent. That means
“Second, families with children need paying a commission. Now with the intersome stability. Children need to continue net there is some chance of dealing
going to the same school. Have a set of directly with the landlord. Nonetheless,
friends. And so on.”
the best flats are still with agents.”
“Makes sense.”
“That’s so true.”
“Third, the same applies to retired par“Eight, during the process of searching
ents, if they live with the family. They also for a new flat, you have to go through a set
need their stability, a set of friends, a fam- of prospective landlords, who may judge
ily doctor they can visit on a regular basis, you for everything, from your eating haband so on.”
its to your religion.”
“Indeed.”
“Yes. And the feeling that their children
N
WHAT
On Twitter, people are arguing
about buying a flat versus
renting it. Some financial
influencers say it makes more
sense to rent a flat and invest in
equity mutual funds.
SO
It is a simplistic argument.
If people feel the need to
own a flat, and if they are
financially in a position to
repay the loan, they should go
ahead and buy.
BUT
The ticket size of a flat is
very big in comparison to all
other forms of investment. If
something goes wrong—and
it does in real estate—the
cost is very high.
“I don’t, but I do know,” she said. “So,
the point is one needs certain things at
certain points of time in life.”
“That’s true.”
“So, if one feels the need to own a flat to
have some stability in life and due to many
of the other reasons I have already talked
about, and one is financially in a position
to make the downpayment and has the
ability to repay the home loan, one should
go ahead and buy.”
“Hmmm.”
“In such a situation, the comparison
with an SIP is basically being stupid. It fulfils the need of financial influencers to say
simplistic things that can go viral and help
them increase the number of followers on
social media.”
Risks aNd RewaRds
hat about investing in a flat in our
hometown?” he asked.
“Looks like you have got a call from
your mummy ji.”
“Yes,” he said. “She called yesterday
evening when you were out for a jog.”
“I would rather invest in stocks, mutual
funds, fixed deposits, gold, etc.”
“Why?”
“First, the ticket size of a flat is very big
in comparison to all other forms of investment.”
“So?”
“If something goes wrong, the cost of
that mistake will be very high.”
“Like?”
“Well, builders have been known to disappear in the past. Projects can get endlessly delayed. ”
“But one can then take the builder to
court?”
“Yes, one can, but it’s a fight between
ASHISH ASTHANA/MINT
David and Goliath. In most such fights,
Goliaths ultimately win or they can manage to drag the case for years.”
“How about buying a flat that is ready
for possession and putting it on rent?” he
asked.
“Rental yields largely vary between
that flat and the rent of that flat—in equity 2-3%. Why take so much risk for earning
so little? Plus, we will have to take on a
MFs, through the SIP route.”
“Hardly surprising. If you look at the RBI home loan to buy the flat. That means payHouse Price Index, it has given a return of ing an interest of 9%. Then we need to pay
9.6% per year from its inception in April to an annual property tax, an annual mainteJune 2010 to October to December 2022. nance charge to the society and so on.
Much of this return was until 2015. The Plus, one will have to keep sorting out any
return between December 2016 and issues that the tenant has.”
“How about buying a flat and keeping it
December 2022 is just 3.9% per year. The
return one could have earned by doing an locked?” he asked. “We can sell it whenSIP on equity MFs is considerably higher ever it appreciates.”
“I would hate doing
than this.”
anything like that,” she
“Hmmm.”
Owning a flat can be
almost burst out. “You
“Of course, the disend up wasting so many
claimer here is that the all
a hassle. Rental yields
things. Money, sand,
India real estate return is
are low. And besides
cement, steel and, most
the average return of 10
importantly, water… It
cities, and returns vary
repaying the home
pains my heart to see
across cities and across
loan, one has to pay an
lakhs of flats across our
localities in cities. Nonecities which have been
theless, unless one got a
annual property tax.
bought and locked up. If
really cheap real estate
they were opened up,
deal, chances are one
would have ended up better by investing in the quality of life in our cities would
improve quite a lot.”
equity MFs.”
“Calm down!”
“So, those on the side of renting are
“So, what else did my mother and your
right” he asked.
“Not at all. It’s actually stupid to use math mummy ji have to say when she called?”
here. It’s the kind of argument you often she asked.
“Now that we have bought a car, we
see being made on social media. If you
hadn’t bought vests but invested in the should buy a flat.”
“There we go again,” she said. “Their
stock of a company making vests. If you
hadn’t bought hawai chappals and invested aspirations never end but it’s all about loving your parents.”
in the stock of a company making them.”
(The example is hypothetical).
“And I thought you didn’t have a TwitVivek Kaul is the author of Bad Money.
ter account.”
W
“Ninth, so many landlords expect a portion of the rent to be paid in cash. In the
process, our hard-earned money gets converted into black money.”
“Now I almost feel like buying a flat,” he
said. “Your arguments are spot on.”
Five ReasoNs To ReNT
old on dear,” she said. “I have counterarguments to these arguments.”
“So, bring it on.”
“First, as I have already explained, there
is an opportunity cost to buying a flat.”
“That you have.”
“Second, clearly, our young and restless
lives will come to an end.”
“As in?”
“I mean, eating out every weekend will
no longer be possible. Ordering dinner at
the drop of a hat will have to stop. You will
have to go slow on buying clothes. And me
on buying books.”
“Yes, because we will have to pay the
EMI,” he said.
“Third, if we want to buy this flat, we
will have to really stretch ourselves financially. The other option is to buy something cheaper, but then that would mean
moving away from this central locality
which will lead to both of us having to
travel longer to get to our workplaces.”
“Now, I hadn’t thought of that,” he said.
“Basically, one can afford to live in a better
locality on rent than one will be able to do
while owning the flat because one can
earn enough to pay rent but probably not
H
earn enough to be able to pay the EMI.”
“Fourth, as and when we buy a flat, then
our families will want us to get to the next
level of being settled in life.”
“You mean have a baby?”
“Yes, and I am not ready for such a huge
responsibility.”
“Neither am I.”
“Fifth, both of us have ambitions of
doing a PhD in a few years. Hence, I think
it makes sense for us to be physical asset
light, until we figure out where we end up
with our lives.”
“But we can always sell the flat, if and
when we decide to do a PhD,” he said.
“Yes, we can. But selling a flat isn’t
always easy. It takes time. Plus, by the time
we get around to selling it, there will be an
emotional baggage involved and two sets
of parents who will be after our lives to not
sell it,” she explained.
“That makes sense.”
“It has to. I have really thought through
this.”
TwiTTeR debaTes
ou know, I have been following this
debate on Twitter where people are
arguing about buying a flat versus renting
it and investing money through a systematic investment plan (SIP) in equity mutual
funds (MFs).”
“What about that?” she asked.
“It seems it makes more sense to rent a
flat and invest the difference—between
the prospective EMI if one decides to buy
Y
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MINT MONEY
LIVEMINT.COM
TuesDay, 14 March 2023
NeW Delhi
Is cash trading in the stock market
profitable for retail investors?
There is a possibility of making quick gains from short trades but investors face a greater risk of losing money
Satya Sontanam
satya.sontanam@livemint.com
Trading in the cash market
D
o all retail investors analyse stocks thoroughly
and then invest for the
long term? Not all. Many
of them rely on fund
managers and invest indirectly
through mutual funds, while some of
them, try their hand at cash trading to
make quick profits. This short-term
trading is based on the daily price
movement of a stock mostly triggered
by factors such as macro data or corporate announcements, be it of earnings, new orders, projects and special
situations. And, if it is an intra-day
trade —in which traders buy and sell
the stock on the same day—market
participants also make use of debt to
buy more stocks.
While there is a possibility of making quick gains from this, investors
also face a greater risk of losing
money as the fluctuation in stock prices is generally higher in the short
term.
Also, traders can easily give into
fear and greed as there is no conviction on the traded stock, a prerequisite for long-term investing. Needless
to say, luck plays a major role in the
success or failure of all such trades.
Mint spoke to a few individuals
who trade in the cash market. Note
that the cash market trading here
doesn’t include options and futures
trading in the derivative segment.
(Mint does not suggest trading for the
short term as it is extremely risky for
retail investors.)
All the participants that Mint spoke
to said they abided by the following
rules: One, they did not treat gains
from trading as the primary source of
income. Two, the holding period
lasted a few weeks to two years.
Three, they set aside a core portfolio
designed for the long term. Four, they
re-invested gains back into the market. And five, they followed risk-mitigating practices such as having a
stop-loss order in place.
Not the core portfolio
For most of these participants, the
capital to trade in the cash market is
only a small percentage, about 10%, of
the overall portfolio.
Nirali Shah, a 30-year old resident
of Mumbai, says the income generated from cash trading is only ancillary income. “I categorically divided
my portfolio into long-term investing
and short-term trading. The latter
does not account for more than 10%
of my portfolio. I know my core portfolio can only generate wealth in the
long run. Income from cash trading is
only ancillary and I do not depend on
it,” she adds.
Ditto for Rishi Kothari from Gujarat, who has been investing and
trading in the stock market for more
than 25 years now. He says, “I have
about 72 stocks in my universe. Of
this, I have currently invested in 12-13
stocks that form part of my core portfolio. I am holding some of those
stocks for more than a decade.”
As to why he still trades in the cash
market, he says, “Trading is part of
my satellite portfolio. As I keep track
SHILPA
SHAH
55
RISHI
KOTHARI
40
NIRALI
SHAH
30
ABHIJIT
YELEGAONKAR
39
Yes, stocks and
mutual funds
My father and father-in-law
take care of it
12 stocks and
1 MF scheme
Blue-chip stocks
Stocks
1-1.5 year
Intra-day
18-24 months
Less than a year
Till either a stop loss hits
or a target is achieved
For how long have you
been trading?
8 years
9 years
25 years
6 years
5-6 years (been a full-time
trader since two years)
% trading corpus of
overall portfolio
8-10%
95%
10%
10%
30%
Fundamentals
Trading classes
Companies with special
situations
News and discussions with
family who are also investing
Technical analysis
Not now
Sometimes, yes
No
The mental stress
was bad
I invest only small
amount. Never took
trades seriously
I incurred losses
continuously from 2008
to 2012. I learnt from it
I realised I cant make profit
on each trade
By analysing my
mistakes
Stop loss;
avoiding intra-day
Not to get too greedy
Through research
Stop loss
Strict stop loss
I took up trading
to challenge
myself
I don’t mind
admitting loss. I
exit if my thesis is
wrong
I know my core
portfolio only can
generate wealth in
the long-run
I journal my
trades- why I
bought and what
went right/wrong
CHIRAG
MAHAWAR
27
Do you have a core
portfolio for long-term?
What is the period of
holding for trades?
Strategy to
pick stocks
Do you take
leverage?
Your experience of
dealing with losses
Risk management
measures
I reinvest the
profits made in
trading in small cap
mutual funds
of the stocks in the universe, I make check the valuations of the stocks and
use of any special situations that pro- also whether the company is profitavides trading opportunities in the ble or not,” he says.
short-term. There will not be more
Yelegaonkar belongs to the camp
than 25 such trades in a year.”
of investors that firmly believes in
Triggers
technical analysis. To exit a stock, he
While all of them have been target- depends on charts such as ascending
ing quick cash in the short-term, their triangle breakout and rectangle
stock-picking methods vary: They breakout to set targets.
either use technical charts or fundaChirag Mahawar, a 27-year old,
mentals including corporate actions doesn’t believe that trading has much
or a mix of both.
to do with science. “I don’t think techShah’s mother, 55-year-old Shilpa nical analysis is any definitive science.
Shah, has been dabbling in intra-day Otherwise, I would have earned endtrading since 2014.
less money from this and
“After both my children
would have never failed.
It is important
settled down, I wanted
Markets can be more
to have a
to take up something
irrational than the time I
portfolio
challenging and so
approach rather can be rational,” he says.
started to learn intra-day
than an individual Mahawar adds that he
trading,” says Shilpa
first tries to understand a
Shah. She religiously stocks approach, good stock idea fundaas per experts
attends the Ignite sesmentally during the
sion (an educative sesweekend and enters
sion on trading) offered
only when the time is
by Sharekhan online trading plat- appropriate.
form everyday from 8:45 am to 9:30
Some of these participants also use
am. She analyses and selects stocks the leverage in intra-day trading. This
based on the information gleaned is called trading on margin. Day tradfrom these sessions.
ing on margin allows traders to borAbhijit Yelegaonkar, a full-time row funds from a broker and buy
trader, is into swing trading for the more stocks than they can afford to.
last 5-6 years. He uses both technical The leverage can amplify the returns
and fundamental metrics to pick a generated from trades but can result
stock for trading in the cash market. in bigger losses if the bet goes wrong.
“I look at the stocks with 52-week
Most participants believe that takhighs, volume spurts and open inter- ing leverage is either risky or that the
est (OI) spurts data that NSE discloses current Sebi norms on margin
every day. I also look at multi-year or requirements make it unattractive.
multi-month breakouts using techniNot without losses
cal charts. On the fundamental side, I
Note that even those well experi-
Returns (in %)
Fund Manager
VIVEK KAUL
We welcome your views and comments at
mintmoney@livemint.com
WHY INDEX FUNDS
AND ETFS ARE NOT
VERY POPULAR
Equity fund
Archit Gupta
Government bond fund
Corporate debt fund
Aditya Birla Sun Life Pension
8.53
16.08
10.93
4.56
5.47
8.52
3.40
6.52
8.19
HDFC Pension Fund
8.58
16.99
11.93
4.22
5.38
8.61
3.54
6.92
8.44
ICICI Prudential Pension Fund
8.23
17.19
11.30
4.03
5.21
8.33
3.32
6.59
8.04
Kotak Pension Fund
9.60
17.28
11.32
4.19
5.30
8.55
3.16
6.00
7.29
LIC Pension Fund
9.63
18.06
10.72
4.34
5.38
9.24
3.17
6.70
8.12
SBI Pension Fund
8.48
16.30
10.74
3.74
5.21
8.35
3.23
6.49
8.14
UTI Retirement Solutions
8.94
17.33
10.91
4.43
5.16
8.21
3.21
6.20
7.64
Nifty 50 Total Return
6.27
17.05 11.62
CCIL All Sovereign Bond-TRI
4.33
in not succumbing to the thought
that the stock price may go up after
some time, say experts.
Over the years, Kothari practiced
the art of admitting to his losses and
exiting the stock the moment he realizes his thesis is wrong.
Yelegaonkar, too, knows the
importance of stop-loss orders. “I
maintain a journal for all my trades. It
includes the reason for buying the
stock, the chart pattern observed, target I set and whether it worked or not.
One can only learn from experience”
he adds.
“Also, one should define the universe of stocks to trade. Ideally, one
should stick to highly liquid, wellknown stocks and trade in them” says
Vikas V Gupta, chief executive officer
and chief investment strategist,
OmniScience Capital. Having said
that, he believes that retail investors
should stay away from trading in any
form any day.
Prashanth Bisht, deputy CIO of
True Beacon asks traders to be cautious of the costs that they would
incur.
“Transaction costs are higher (in
cash market) compared to F&O, so it
will eat into a more significant chunk
of profits made,” he added
It is also important to have a portfolio approach rather than an individual
stocks approach. Paying heed to how
the overall portfolio is performing
rather than focusing on the outperformance or underperformance of
any individual stock is important, as
per experts.
ndex mutual funds (MFs) and exchange traded funds (ETFs)
are great products, at least theoretically. But can the same
thing be said at a practical level? Are enough retail investors
getting around to investing in these funds?
An index MF tries to mirror a broader stock market index by
investing in stocks that constitute that index in the same proportion as the weightage of the specific stocks in that index. Given
this, the returns on such funds are closer to the overall return of
the broader market index. Further, an ETF is an index fund that
can be bought and sold on a stock exchange.
As of January, the total amount of money invested in index
funds and equity ETFs stood at ₹4.3 trillion. The total amount
of money invested in actively managed equity MFs was at ₹15.1
trillion. Thus the amount of money invested in index funds and
equity ETFs was at 28.3% of active funds. This sounds quite
large.
But a lot of money invested in the four largest equity ETFs
is institutional money coming in from the Employees’ Provident Fund Organisation (EPFO). Ultimately, the money
invested by the EPFO is also retail money being invested into
the index. But this isn’t an active choice being made by the
retail investor.
Once we ignore the four largest equity ETFs, the total amount
of money invested in other ETFs and index funds, stood at ₹1.3
trillion. This is around 8.4% of the amount invested in actively
managed MFs and a better representation of active choice. A disclaimer needs to be made here. There is some retail money
invested in the four biggest equity ETFs and there must be some
institutional money invested in other equity ETFs and index
funds. There is really no way one can adjust for this.
Nonetheless, there are 202 other
equity ETFs and index funds. Of these,
As of Jan, the
total amount of 196 funds have total investments of less
₹5,000 crore. This implies that a
money invested than
bulk of money invested in these funds
in index funds
is basically retail money.
and equity ETFs
Clearly, not enough retail money
stood at ₹4.3 tn has been invested in index funds and
other equity ETFs. Why is that the
case? One school of thought possibly
can be that, in the Indian case, many actively managed equity
MFs have done better than the broader index like a Nifty or a
Sensex. This is true. Nonetheless, there is a small problem with
this argument. It is made with the benefit of hindsight.
As Eric Angner writes in How Economics Can Save the World:
“After the fact, you can always identify individual stocks or funds
that outperformed the market and did better than the index. But
before the fact, you can’t dependably identify which one it’s going
to be.” Clearly, most retail investors do not realize that such a risk
exists.
Further, what economists call the availability bias is at work.
When was the last time you saw a story in the media about someone who got rich investing in index funds? As Angner writes:
“Stories about successful investment strategies are legion. You
read them in the financial press and business magazines, under
headings such as ‘How I got rich’…I can’t recall ever reading a
story about somebody who made money investing in index
funds.”
Further, many investors seek excitement and a meaning in
their lives while investing. The index funds and ETFs are boring
and can’t deliver on those parameters.
Anyway, the fact that the retail investors are bombarded with
the kind of content that they are, leads to an availability bias. They
see stories of people getting rich by investing directly in stocks,
in actively managed MFs, in futures and options, in cryptos and
so on.
So, when it is time to plan their own investment strategy, these
are the things they end up investing in, because this is the material available in their minds; the material on the basis of which
they make their investment decisions.
The good thing is that the proportion of money going into
index funds and other equity ETFs has gone up a little over the
last few years. As of March 2021, the total amount of money
invested in other ETFs and index funds (adjusted for the top 4
ETFs) had stood at ₹50,560 crore or around 5.2% of the money
invested in actively managed equity MFs at that point of time.
Now, as mentioned earlier, it has gone up to over 8%. Hopefully,
in the years to come, this will keep going up further.
Vivek Kaul is the author of Bad Money.
How are NRIs taxed on rental income?
Tier-1 account
1 year 3 years 5 years
Yes
No
enced in the markets make losses.
The ratio is higher when it comes to
trading, either in the derivative market or the cash market.
While the participants shared that
they make net gains (gains minus any
loses) from their trades in a year, none
of them is an exception to incurring
losses and experiencing the mental
stress that comes along with it, at least
in the beginning phase of trading.
One such participant initially borrowed money from his father and
made losses. He said it was a pretty
bad experience and defined the
moment as the cost of learning the
markets.
Mahawar explains the reason why
he decided to stop intraday trading.
“The risk reward is skewed in the case
of intraday trading. There were
behavioural changes—being glued to
the screen, greed of earning more,
inability to concentrate on anything
else and thinking about positions all
the time. When I noticed these
changes, I began to realize there is
more to life than just earning money
through stocks.”
While losses are inevitable, most of
these participants have put in place
certain risk-minimizing plans to cut
down the extent of losses.
Mahawar now trades in the cash
market only when he finds good
opportunities but with a strict stop
loss order—an order placed with the
broker to sell the stock once it falls by
a certain percentage or to the specified price. Having a stop-loss order
and sticking to it is essential and helps
here are very few retirement products that help you accumulate a retirement
nest egg and one such product is the National Pension System (NPS). It is a
market-linked, defined-contribution product that needs you to invest regularly
in the funds of your choice. The returns are based on the performance of the
fund that you choose. There are eight pension fund managers to choose from
and one of the ways to do that is by tracking the returns. Here is a breakdown
of the performance of different funds—equity fund, government bond fund and
corporate bond fund—of the private sector NPS.
4.65
7.99
CCIL Bond Broad-TRI
3.75
7.48
8.76
Benchmark index
PARAS JAIN/MINT
THE MONEY
MIND
I
Check how your NPS
investments are faring
Returns as on 3 March 2023;
1-year returns are absolute returns
11
Source: Npstrust.org
My son is a non-resident
Indian (NRI) with a small
rental income of ₹30,000.
Neither he nor his tenant
can afford a chartered
accountant to submit the
tax deducted at source
(TDS) on this income to the
income tax department.
Can he pay TDS towards
the rent to the department
as advance tax?
—Name withheld on request
As per income tax rules on
TDS, the deductor is obligated
to deduct TDS and deposit the
same with the government
using the prescribed form and
timelines.
In case, the total income of
the deductee is less than taxable limit, the deductee can
seek a low TDS deduction or
zero TDS deduction certificate
from an income tax officer.
Based on this, the deductor
may not deduct any TDS.
m
ASK MINT
N R I TA X AT I O N
I have been working in
the US since 2002 and
sending money to my nonresident external (NRE)
account in India. Will tax
be levied on this? Should I
file tax returns in India?
—Name withheld on request
Non-residents are allowed
to transfer money to NRE
accounts held in India.
Deposits made to NRE
accounts are not taxable and
neither is the income earned
on such deposits made taxable
in India.
I am an NRI. Can I invest
in tax savings equity
mutual funds?
—Name withheld on request
ELSS, or equity linked savings scheme, allows taxpayers
to claim tax benefit in accordance with section 80C of the
income tax act. A deduction of
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₹1.5 lakh is available under section 80C. NRIs are allowed to
invest in ELSS provided they
meet the know your customer
(KYC) and other compliance
requirements of the fund
house.
Archit Gupta is founder and
chief executive officer, Clear.in.
Do you have a personal
finance query? Send in your
queries at
mintmoney@livemint.com
and get them answered by
industry experts.
12
VIEWS
TuesDay, 14 March 2023
New Delhi
LIVEMINT.COM
OUR VIEW
GUEST VIEW
REUTERS
Our e-courts project needs a big
rehaul to assure us transparency
A decentralized framework could end opacity and justify its budgetary allocation of ₹7,000 crore
to a basic performance review by the
parliamentary panel. Similarly, we do
not know how the e-committee co-opts
various outsiders for the expert panels it
has been setting up. Does it even conduct basic due diligence for conflicts of
interest? This remains unclear.
A rare attempt at transparency was its
decision to publish a draft of the Phase
III policy document prepared by privately funded think-tanks and invite
public comments. However, the final
draft after the consultation process, for
which the government has earmarked
funds, is unavailable. To understand
what the money would be used for, we
filed an application under the Right to
Information Act, seeking a copy of the
final proposal for the project’s Phase III.
The public information officer of the
Supreme Court refused to share the
proposal, stating that the e-committee is
working “in close coordination” with the
department of justice and that the final
proposal is still under consideration of
the government. How then was the budgetary funding obtained?
How was the ₹7,000 crore outlay
figure arrived at? What will the money
be spent on? What is the larger ambition
for this phase? The non-disclosure of
project details is worrisome and contrary
to the principles of public finance.
We suspect that a closer review of the
functioning of the e-committee will
likely expose a litany of problems with
the design of India’s e-courts project,
starting with its anti-federal structure.
The Supreme Court has consistently
ruled that high courts are in charge of
the administration of the district judiciary in Indian states. However, when it
comes to the e-courts project, the
e-committee ensured that Phase I was
implemented centrally. In the second
phase, the high courts were put in
charge of procurement and implementation, but the e-committee was still
responsible for the crucial function of
planning and setting standards; more
importantly, the purse strings were held
by it. While the Supreme Court has
ChiTRakShi Jain &
PRaShanT Reddy T.
are, respectively, a legal researcher and
a lawyer.
Uncle Oscar and the tale
of a wonderful elephant
India’s Oscar haul this year has been impressive, but it’s hard to shake off the hunch that the
Academy’s lens is still not as wide-angled as it should be for our spectrum of artistic cinema
I
t’s a matter of pride that two Indian productions won Oscars on Sunday night in
Los Angeles, the home of Hollywood. A
Telugu dance track called Naatu Naatu
from the film R.R.R. was awarded Best
Original Song, while Kartiki Gonsalves’s
40-minute watch, The Elephant Whisperers,
won the coveted statuette for Best Documentary Short Subject at the 95th Academy
Awards. As the stated goal of America’s Academy of Motion Picture Arts and Sciences is to
advance the “arts and sciences” of movies, we
can assume its jury found both up to the task.
The song-and-dance sequence that won is
quite catchy. Its lyrics bustle with analogies of
energetic motion—a fierce bull kicking up
dust, for example—and the moves on display
are an acrobatic wonder of originality, especially the furious foot work. In contrast, the
documentary plods along, but only to snuggle
into our hearts with the story of an elephant
adopted and raised by an Indian couple. They
keep talking to the calf, which amazes us with
cuddly responses to all the cooing and coaxing
of its adoptive parents. Though it’s no tragedy,
the film has a lump-in-the-throat moment that
lends it its poise and poignancy. All in all, it’s an
ode to our capacity for compassion. Both these
winners deserve applause, as any such acclaim
does. Yet, it’s hard to shake off the hunch that
this is more about eastern exotica than artistic
cinema to many viewers in the West, perhaps
even to the Oscar jury.
We don’t have an adequate random sample
of perceptions to draw any conclusion, but
some of the Western chatter on social media
has been quite revealing. For more than a few
folks, the highlight of Naatu Naatu—literally
‘dance dance’—is where this caper was shot.
This marvel of choreography was filmed in
front of Mariinsky Palace, the obscure official
residence of Ukraine’s president before
Russia’s invasion last year thrust Zelensky into
the limelight as democracy’s latest hero. The
choice of this particular location in Kyiv was a
coincidence, of course, but has visibly boosted
the video clip’s appeal. Indeed, so upbeat does
it sound that a few listeners even had to be told
that its title had nothing to do with an alliance
called Nato. Nor was it a buck-up chant of any
kind; just a call to dance, that’s all. But then
again, all works of art are open to interpretation, including vain attempts, so maybe it’s
best to let people hear what they will.
Audio associations matter. The trumpet of
a tusker, for example, still rings an ‘India’ bell
in much of the West, thanks to Raj-era lore,
although elephants are found elsewhere too.
So it should not surprise us that The Elephant
Whisperers has generated a buzz around the
ancient Indian tale of six blind men and the
elephant. In this story, six sightless individuals
try to describe the animal. One touches a leg
and says it’s like a tree. Another feels the trunk
and likens it to a snake. A third identifies the
ear as a kind of fan. The fourth finds its tail
rope-like. The fifth senses its side as a wall. The
sixth pictures its tusk as a spear. As a parable,
it’s meant to illustrate how dicey subjective
truth can be; also, the danger of a monocleview getting the better of varied viewpoints. As
a trope, it suggests a heavy sigh over how tough
it is to grasp this exotic land of everything and
its opposite all at once. This is ironic: Uncle
Oscar’s lens may no longer be ‘orientalist’, but,
going by the particulars of its focus, it’s still not
wide-angled enough for a full-spectrum view
of Indian cinema at its artistic best.
T
he Union budget for 2022-23 has a
generous outlay of ₹7,000 crore
for the third phase of the e-courts
project administered by the e-committee of India’s Supreme Court in partnership with the ministry of law and justice.
The Chief Justice, as the chairperson of
the e-committee, has acknowledged that
these funds will improve the Indian legal
system’s efficiency.
This project, originally conceived in
2005, aims for computerization of district courts across the country, and while
₹2,605 crore has already been allocated,
there has not been much to show so far.
Sure, there have been small victories,
like easier availability of judgements and
case progression updates on the e-courts
website. But these are underwhelming.
The larger story of this project is one of
opacity, missed opportunities and dubious constitutionality. In December, a
parliamentary standing committee worryingly acknowledged that no money
was spent on the project in 2022-23. The
department of justice under the ministry
and the e-committee had failed to get the
necessary approvals in time. Who is
accountable for these delays?
As it stands, nobody really knows how
the e-committee is run by the Supreme
Court. It does not release any minutes of
its meetings. As far as we know, neither
the e-committee nor the e-courts project
has ever been audited by the Comptroller and Auditor General, or even subject
New Delhi, Mumbai, Bangalore, Kolkata, Chennai, Ahmedabad, Hyderabad, Chandigarh*, Pune*
www.livemint.com
Thursday, March 14, 2013
Vol.7
`3.00 in Delhi­NCR/`4.00 outside Delhi­NCR
No.63
attempted to democratize the committee’s composition by staffing it with high
court judges, it does not compensate for
the centralized manner in which the
planning is being done.
Chances are that high courts and state
governments will do a far better job than
the e-committee, since they have an
incentive to use e-technology to reduce
their own workload vis-à-vis the administration of the district judiciary. Such
decentralization can vastly improve
the efficiency of the e-courts project by
facilitating greater technological integration with the e-systems of state governments. The issue of interoperability
between e-courts and the prison system
grew stark during the Aryan Khan bail
fiasco, when it turned out that the star
child had to spend an extra night in jail
because there was no secure digital system to immediately communicate a bail
order to the prison system.
Why is it that the e-committee has
failed to take such basic steps? This is a
valid question in a democracy. As it
stands, our elected representatives can’t
question the e-committee during Question Hour in Parliament, since the law
minister has little say in how the e-committee functions. It is doubtful whether
the parliamentary standing committee
can summon the chairperson of the
e-committee (always a sitting judge of
the Supreme Court) for a hearing. These
are just some examples of the undemocratic and anti-federal nature of the
present structure of the country’s
e-courts project.
Perhaps a decentralized framework
with different high courts and state governments at the helm would’ve worked
better by encouraging competition
between states to modernize their own
judiciary. It is not too late for the Union
government to attempt reform. It should
get the e-committee’s buy-in for a law
enacted by Parliament to create a new
legal structure for India’s e-courts
project. It would be ill-advised to hand
₹7,000 crore over to the e-committee,
given its less than enviable record.
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Cash transfers may
cover jobs scheme
Attempt to broad­base
direct benefits transfer
plan may help shore up
the Congress’s standing
among rural population
B Y S URABHI A GARWAL,
K IRTHI V . R AO &
E LIZABETH R OCHE
·························
NEW DELHI
T
he Congress-led United
Progressive
Alliance
(UPA) government plans
to include its flagship rural job
guarantee programme in the
second phase of its ambitious
direct benefits transfer (DBT)
plan, under which beneficiaries of social welfare programmes will receive money
directly in their Aadhaarlinked bank accounts.
The attempt to broad-base
the cash transfer plan before
several state polls this year and
the general election due in
2014 may help shore up the
Congress party’s standing
among the rural population—
the vote bank that helped it
win back-to-back terms in
2004 and 2009. It will also provide much-needed momentum
to the programme.
Rural development minister
Jairam Ramesh confirmed that
beneficiaries of the Mahatma
Gandhi National Rural Employment Guarantee Scheme
(MGNREGS) will be covered in
the second phase of DBT.
The cash transfer plan,
billed as a potential gamechanger, will leverage the post
office network to deliver the
jobs scheme’s payments directly to beneficiaries. More
than half of the 86 million
MGNREGS accounts that have
been opened in the postal system will be upgraded to the
Aadhaar-linked
payment
bridge required for cash transfers.
With the post office network
becoming interoperable, these
accounts will provide cash
transfers the so-called last-
Mint is also available for R7 with
Hindustan Times in Delhi-NCR only
SYSTEM SPECIFICS
MGNREGS was initially not
included in the direct cash transfer
scheme as post office accounts
were not interoperable and could
not be migrated to the Aadhaarlinked payment system.
Of the 86 million MGNREGS bank
accounts, more than half are in
post offices.
The department of posts is now
implementing the core banking
solution to make the 150,000strong post office network
interoperable or at par with
normal bank accounts in terms of
access.
The jobs scheme will likely come
on-board the direct cash transfer
programme after the postal
system is networked in its first
phase by June.
The inclusion of MGNREGS in cash
transfers would add around 19.4
million people to the list of
existing beneficiaries across 26
government welfare payments,
mainly pensions and scholarships.
The linkage will help in checking
corruption and making access to
wages easier for the workers in
the scheme, which was one of the
factors credited with bringing the
United Progressive Alliance back
to power for a second time in
2009.
mile connectivity that’s crucial
in reaching the people at
whom DBT is targeted. India
Post has a network of 150,000
offices across the country, giving it an edge over the conventional banking system that’s
still struggling to improve its
rural reach.
Ramesh confirmed that post
office accounts are set to become interoperable by June,
which will make it possible to
migrate the accounts to the
Aadhaar-linked bank account
platform required for cash
transfers.
The jobs scheme will likely
come on-board DBT after the
postal system is networked.
MGNREGS, which comes
under the Mahatma Gandhi
National Rural Employment
Guarantee Act (MGNREGA)
passed in 2005, was one of the
factors credited with bringing
the UPA back to power for a
second time in 2009. The
scheme assures at least one
member of every rural household 100 days of work every
year at government-mandated
wages.
The government has budgeted a spending of `33,000 crore
on the programme in the fiscal
year that starts on 1 April.
Praveen Chakravarty, chief
executive officer of Anand
Rathi Financial Services Ltd,
said the lack of banking facilities in rural areas and absence
of interoperability in the postal
system had in the past created
hassles for workers who would
lose an entire working day to
withdraw money from far-off
bank branches.
“So from the government’s
point of view, this linkage will
mean weeding out the fakes
and the fraud from the system,
and from the worker’s point of
view, it means better and easy
access to wages,” said Chakravarty, who has worked on several financial inclusion initiatives of the Unique Identification Authority of India (UIDAI)
that’s overseeing the Aadhaar
project.
When the post office network is enabled with the socalled core banking solution,
or CBS, it will put post office
accounts at par with bank accounts in terms of facilities
such as the withdrawal of
money, mobile banking, Net
banking and so on, apart from
making them accessible from
anywhere in the country.
Also, linking the job guarantee scheme with Aadhaar is expected to weed out instances
of misuse, including one individual benefiting several times
from the scheme.
“I do not know how far it will
benefit the Congress politically, but it will benefit the people
economically,” said Sanjay
Nirupam, a Congress member
of Parliament in the Lok Sabha. “We have to ensure the
money reaches the real and actual beneficiaries. Currently,
reports show that around 2025% money is leaked into some
other hands and including the
scheme in the DBT project will
remove these anomalies.”
The inclusion of MGNREGS
in DBT over the next three
months would mean an addition of around 19.4 million
people to the list of existing
beneficiaries of the cash transfer plan. So far, 26 government
welfare payments, mainly pensions and scholarships, have
been delivered through DBT.
A senior government official,
who is closely involved with
the project, said the department of posts was “very actively pursuing” the goal of making
its network interoperable to
enable MGNREGS to be included in DBT.
“We are looking forward to
the post offices joining the system as it would fill a major
gap,” said the official, who
spoke on condition of anonymity.
A senior official in the department of posts added that
the first phase of the roll-out of
TURN TO PAGE 2®
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19,362.55
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13 Mar 2013
WHOLESALE PRICE INDEX
7.5 7.55 7.58 7.52
(% change)
8.01 8.07
7.32 7.24 7.18
Apr 2012
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EYE ON INFLATION
The Sensex, India’s benchmark equities gauge, fell 1.03% on Wednesday, its
biggest fall in a day this month. Stocks sensitive to interest rates continued
to retreat a day before key inflation data is released. The Wholesale Price
Index data for February could determine whether the central bank further
eases monetary policy on 19 March.
See Page 3
6.62
Jan 2013
Source: Department of industrial policy and promotion, Mint research, Bloomberg
States of
poverty
E
ight per cent of the
world’s poorest
people live in one Indian
state—Uttar Pradesh.
That means it accounts
for around one in every
five Indians in poverty.
Public debates on mass
poverty often take the big
view of national poverty,
but it is sometimes useful
to think about the
challenge at the level of
states, or even districts.
That is what World Bank
group president Jim Yong
Kim seems to have done
in his recent visit to India
(see Page 4). He said that
global poverty cannot be
rolled back without
success in Uttar Pradesh.
He also spoke of how
there are 200 million
people in the poorest
seven Indian states who
do not have access to
basic services such as
education and healthcare.
The inability of some of
these states to raise
incomes is partly because
of poor governance, and
the richer states ask why
the laggards should be
lavished with money. But
rolling back mass poverty
will require some federal
understanding.
SARVESH SHARMA/MINT
PM sees return
of growth; RBI
says policy
changes crucial
B Y L IZ M ATHEW
·························
&
A NUP R OY
ARVIND MAYARAM
There is a sense of
urgency in government
to revive investment
NEW DELHI/MUMBAI
P
rime Minister Manmohan
Singh told lawmakers on
Wednesday that robust growth
will be restored in two-three
years even as central bank governor D. Subbarao said in London
that this would be possible only
if the government is able to bring
about structural changes, a view
that could hold implications for
the next monetary policy review
on 19 March.
“The India growth story is not
inevitable,” Subbarao said in the
fifth I.G. Patel Memorial Lecture
delivered at the London School
of Economics on Wednesday. “It
will not materialize in the absence of vigorous and purposeful
structural and governance reforms. It is those reforms that
must continue to engage our attention.”
The central bank governor was
not responding to the Prime
Minister’s comment in his
speech.
India’s gross domestic product
growth is set to slump to a decTURN TO PAGE 2®
ALSO SEE
>Views: India’s battle with inflation >P22
Man’s capacity for
justice makes democracy
possible, but man’s
inclination to injustice
makes democracy
necessary.
RAMESH PATHANIA/MINT
B Y A SIT R ANJAN M ISHRA
asit.m@livemint.com
·························
NEW DELHI
A
rvind
Mayaram
took
charge as secretary of the
department of economic affairs in the finance ministry on
1 August 2012. He is an old
hand in the finance ministry,
having served earlier as joint
secretary handling the crucial
infrastructure division. In an
interview, Mayaram defended
the credibility of the budget
numbers and backed an investment-led recovery of economic growth. Ahead of the
monetary policy review on 19
March, he said there was a
case for the Reserve Bank of
India to further ease policy
rates to aid economic growth.
Edited excerpts:
The budget has been applauded for
being a balanced one. However, the
assumptions in the budget about
tax buoyancy and significant re­
duction in subsidies have been crit­
icized as unrealistic. How does the
finance ministry see this criticism?
In the current year, when the
projected economic growth is
anywhere between 5-5.5%, de-
Policy talk: Arvind Mayaram.
K A R L PAU L R E I N HOL D N I E BU HR
mint INTERVIEW
pending on which assumption
one takes, the revenue growth
has been 16.5%. The assumption for next year is 18%. If we
are saying the economy is going to grow at a higher rate
than it is today, whether you
take it at 6% or at 6.5%, then
the assumption of an increase
of 1.5 percentage points in
revenues over the current
growth rate cannot be termed
unrealistic.
But it is said that the government
has not taken into account any rise
in oil prices and has not sufficient­
TURN TO PAGE 3®
MY VIEW | TruTH, LIeS And STATISTICS
Measuring the health of a democracy is a big challenge
PRAMIT BHATTACHARYA
A
is a Chennai-based journalist.
His Twitter handle is pramit_b
s political temperatures soar ahead of
the 2024 Lok Sabha elections, the
health of Indian democracy is likely to
be in focus. One common strand in the statements issued by several opposition leaders is
a threat to it posed by the ruling Bharatiya
Janata Party (BJP)-led regime. “Vote BJP out,
restore India’s democratic health” is likely to
be part of their electoral pitch.
This concern about erosion of democratic
norms is not restricted to India. To many
observers, democratic norms appear to be
under siege globally, even as elections
become increasingly polarized.
At first glance, the available data seems to
back such a narrative. A number of global
indices of democratic health have been flashing red, suggesting that democratic values
are in danger. The most prominent and
widely cited of these, the V-Dem indices,
show that the share of autocracies has been
rising sharply over the past decade.
V-Dem indices are prepared by researchers at the Varieties of Democracy (V-Dem)
Institute at the University of Gothenburg in
Sweden. Its list of autocracies includes
‘electoral autocracies’ such as India and
Hungary, where rulers are elected through
a popular vote but other democratic norms
(such as freedom of expression) are not fully
honoured.
A closer look at these indices, however,
suggests that the conclusion of a global democratic retreat may be unwarranted. Analysing data for over a century, American political
scientist Daniel Treisman has argued that the
recent stasis in the global spread of democracy is neither unprecedented nor alarming.
“The proportion of countries in the world
that are democracies by any measure is either
slightly below or at an all-time high,” wrote
Treisman in a 2022 research paper. “While
some backsliding has occurred—especially in
the legal underpinnings of liberal democracy—it is far from reversing the massive
burst of democratization that occurred in the
last quarter of the twentieth century.”
Another research paper by Andrew Little
and Anne Meng of the University of California, Berkeley, published this year shows that
evidence on democratic backsliding is based
entirely on subjective indicators. If one were
to focus on objective measures of electoral
processes and outcomes, there is no evidence
of backsliding, Little and Meng argue.
Most indices of democratic health, including the V-Dem indices, combine easily
observable and verifiable data (such as the
share of population with voting rights, voter
turnout and allegations of fraud by international observers) with subjective data (such as
the impartiality of the election watchdog, the extent
to which the legislature is
able to hold the executive
to account and harassment
of civil society organizations). The V-dem indices
of electoral democracy and
liberal democracy are
based on an aggregation of
such subjective and objective indicators.
Trends in the two sets of
indicators have diverged
over the past decade. The
objective indicators point
to a trend of democratic stability, while the
subjective ones point to democratic backsliding, Little and Meng show.
Given that these subjective indicators are
scored by a panel of political experts, it is possible that their judgement is influenced by
global media coverage of autocracies over the
past decade, Little and Meng say. Hence,
expert assessments of a decline in democratic
health may reflect greater media attention on
this issue rather than an actual decline in the
‘true’ state of democracy. Their argument is
only a hypothesis at this stage, and needs further corroboration. Nonetheless, they raise
valid doubts on the subjective components of wellknown democracy indices.
A small sample of people
from similar backgrounds
can distort the scoring patterns of subjective indicators. Expanding the sample
size of such surveys, and
providing greater details on
respondent backgrounds
can help check bias and bolster the credibility of global
democracy indices.
In India’s case, there are
several objective indicators
that point to a deepening of democracy over
the past few decades: the growing turnout of
women voters, a decline in instances of
‘booth-capturing’ and the growing share of
legislators from socially marginalized castes.
Yet, there are valid concerns on issues that
elude objective measurement, such as the
Subjective views
need to be
captured by
a large survey
to gauge the
true shape of
our democracy
growing opacity around electoral funding,
rising bigotry in our public discourse, and the
harassment of civil society organizations
unaffiliated to the Sangh Parivar. India’s
decline in V-Dem indices since 2008 is
largely because of poor scores on the relatively subjective indicators.
Several questions pertaining to a country’s
democratic health—like the question of
media freedom, or whether a person from a
minority group is able to voice her opinions
freely, or whether the judiciary is acting independently—are inherently subjective. Yet,
answers to such questions are vital to gauge
the true state of a democracy.
The best way to get such answers is to organize a large-scale survey to elicit opinions
across the country. It would allow us to see
how democratic freedoms vary across
regions and demographic groups. Such a survey must be conducted by an independent
body and must be perceived as such for it to
be taken seriously.
This calls for a collaborative effort between
academics, media houses, businesses and
civil society organizations. The findings of
such a survey can help check democratic erosion across all tiers of government, enabling
all Indian citizens to realize the freedoms
envisioned by India’s founding fathers.
This PDF was uploade To Teligram channel_ LBS Newspaper platform (https://t.me/LBSNEWSPAPER) @LBSNEWSPAPER
VIEWS
LIVEMINT.COM
TueSDay, 14 March 2023
New Delhi
MY VIEW | MUSING MACRO
13
M I N T C U R AT O R
It takes a foundation of trust to
prevent SVB-like runs on deposits
SVB’s collapse also exposed the
fragility of crypto stablecoins
Doubt attends their ability to overcome the evil of broken promises
Silicon Valley Bank’s fall was a classic example of how panic can take down even a sound bank if public confidence is lost
REUTERS
Andy MukhERjEE
is a Bloomberg Opinion columnist covering
industrial companies and financial services
in Asia.
Ajit RAnAdE
is a Pune-based economist
W
S
ilicon Valley Bank (SVB) was ranked
among the top 20 by Forbes magazine in
its ‘America’s 100 Best Banks’ annual list
published on 16 February. This ranking
is based on the performance and credit
quality of all large publicly-traded banks
in the US. In less than three weeks of Forbes’ grand
anointment, SVB has crashed to zero value. This is
the fragility of trust. A precious asset that a bank
must have is intangible and not visible on its balance sheet. It resides in the minds of its depositors
but can be destroyed by mere whispers.
SVB’s implosion was a classic bank run. When all
depositors rush to the bank to withdraw their savings, only the first few lucky ones can get out their
full amount. The rest get a small amount insured
by the US Federal Deposit Insurance Corporation
(FDIC) and can potentially lose everything else.
Fearing this, there is a stampede to be the first and
beat others in the queue. What can cause such a
stampede? Gossip, misinformation, rumours. It
could be deliberate or organic. Just as there is no
smoke without fire, rumours too often have a basis
in something rotten in the bank’s assets.
But here’s the thing. A bank can be fundamentally sound, and can still be felled by a roaring fire
of panic caused by a small tinder of gossip. This is
called a “self-fulfilling prophecy” of doom, to
which a bank is most susceptible. This vulnerability to a bank run is due to the inherent nature of the
banking business model, which is heavily leveraged. It uses only 10% as owners’ capital. The rest of
what it deploys are funds borrowed from the public in the form of deposits, of which only a small
part is insured. Deposits can be demanded back on
short notice, whereas the assets of the banks (i.e.
loans) cannot be liquidated easily. This is the basic
maturity mismatch between assets (loans) and liabilities (deposits). In normal non-panic times,
banks don’t need too much liquidity to cater to the
demands of depositors. The public thinks their
deposits are safe because others think so. This is a
fragile equilibrium. The fact that small deposits are
insured (in the US up to $250,000 and in India up
to ₹500,000) helps keep avoid bank runs.
But in SVB’s case, 93% of the deposits were uninsured. How did the bank get away for so long with
such a large portion of uninsured deposits, presumably from informed and savvy large depositors? Because it was offering higher rates than
other banks. Hence, there was a deluge of deposits,
mostly from startups that had generous funding
from venture capitalists, of nearly $200 billion.
The bulk of these deposits were parked in mortgage-backed securities, i.e. bonds based on home
loans. The value of that home loan portfolio
crashed thanks to rising interest rates. This meant
that in a bank-run type panic, SVB would not be
able to return all its depositors’ money. The FDIC
decided to shut down SVB fearing a contagion that
could spread to other banks as well due to herd
behaviour.
Last year’s Economics Nobel Prize was given to
folks who developed a mathematical model that
explains this very behaviour. The remarkable
thing is that such herd behaviour can bring down
even a healthy bank. But alas, FDIC’s action did not
douse the flames of panic. There was a danger of
large amount of fund withdrawal, and soon other
banks would be singed by this fire. SVB is the most
dramatic bank failure since the implosion of Lehman Brothers back in 2008, but nowhere close to
causing systemic risk. And that this happened
despite thousands of pages of new regulation since
then in the form of the Dodd-Frank bill is proof
that greed and panic can always destabilize banking. American regulation believes that banks
should be allowed to fail, and depositors ought to
know that their money in the bank is not without
risk. But yet again, depositors of SVB and Signature
Bank (another one that crashed) have been assured
that their entire deposits would be returned.
The federal government of the US has said that
this is not a taxpayer-funded bailout. The Federal
Reserve will provide cheap loans to help SVB pay
back all its depositors. One fails to see how this
monetary camouflage of a fiscal bailout is not taxpayer funded. The bank’s shareholders have lost all
value, and its new owners will get to run the bank.
So, yet again, private losses have been socialized
through government action.
In India’s case, since the government is the dominant owner, a wipe-out of shareholders in a bank
run-type failure would mean that the Centre
would take the hit. And new capital infusion too
would require government funds. Either way, it is
taxpayers who carry the burden. By containing the
SVB crash, US regulators have prevented contagion, but at a big public cost. President Joe Biden
has promised to punish the guilty. He may discover
that at guilt here is the basic banking model, which
rests on the fragile confidence of depositors. The
security of this confidence requires extra-vigilant
regulators. For example, how did the FDIC miss
that SVB was sitting on 93% of uninsured deposits?
How did US regulators miss that SVB had huge
exposure to bonds which would lose value rapidly
with rising interest rates? Why did almost the
entire startup community park its idle funds with
just one bank? And how is it that only the losses of
banks are socialized, but not profits? In America,
taxpayers bear these failure costs indirectly
through bailouts, whereas in India’s public sectordominated system, there is a direct burden
through capital infusion and bad loan write-offs.
Either way, maintaining confidence is costly
to the exchequer.
hen the world’s second-largest
stablecoin got caught up in the
collapse of Silicon Valley Bank
(SVB), it reprised the now-famous maxim of
Nobuhiro Kiyotaki and John Moore. “Evil,”
the economists had claimed in a 2001 lecture, later made available as a paper of the
same title, “is the root of all money.” Turning a popular aphorism on its head was a
ploy to enliven a technical discussion. “Evil
is a strong word,” they wrote. “You may
find the moral category too severe for
something as mild as breaking a promise.
In which case, you may want to change the
title to ‘Distrust Is the Root of All Money.’
But that wouldn’t have quite the same
ring.” Events last week showed that the
professors may have been right, not just in
their analysis, but also in their hyperbole:
People accept and hold money not because
it circulates freely and stores value, but
because it helps overcome the scourge of
broken promises. For something to aspire
to money-ness, it must be free of even the
slightest doubt in that regard.
That was clearly not the case with Circle
Internet Financial’s USD Coin (USDC), the
No. 2 dollar clone after Tether. News that
around 8% of the crypto firm’s reserves
were held in Silicon Valley Bank, which was
closed down by regulators Friday, sent the
stablecoin’s price sharply below $1, falling to
less than 85 cents before recovering. In the
language of money-market funds, USDC
broke the buck. Circle may still keep its
promise of redeeming all its coins 1:1 for dollar. But a small doubt that it may not be able
to do so arose. Even if briefly, USDC has lost
its claim of being money.
None of this was the crypto company’s
fault. A lot of young firms kept their cash at
SVB, and not all of them are from Silicon
Valley. Over 60 Indian startups have their
money stuck, too, according to a survey
seen by TechCrunch. Based on what we
know so far, SVB went down because of its
executives’ greed for yield: its assets were
overexposed to long-term interest rates,
which are rising because of untamed US
inflation. The higher the rates, the lower the
value of mortgage securities on SVB’s
books. The bigger the unrealized unhedged
losses from those investments, the greater
the distrust among its depositors.
Circle tried to move its funds away to
another bank, but it was too late. And then
the misgivings being expressed by SVB
depositors began to infect USDC investors
as well. While deposits below $250,000 are
fully insured, no such safety net is available
to token holders, even though seven of the
10 largest so-called liquidity pools running
A dollar-pegged token called USDC ‘broke
the buck’ as its reserves shook ISTOCKPHOTO
on the Ethereum blockchain use USDC for
transactions.
Yale School of Management finance professor Gary Gorton and Fed attorney Jeffery
Zhang have highlighted this regulatory vacuum and how it prevents stablecoins from
becoming what they refer to as “no-questions-asked” money. Nobody should have to
do due diligence on a medium of exchange
because it’s supposed to be free of the evil of
broken promises. NQA money needs the
state’s blessing—and oversight.
Now that regulators have worked out a
solution for both insured and uninsured
SVB deposits, doubts about Circle’s ability
to redeem every coin at par may subside.
“Depositors will have access to all of their
money starting Monday, March 13,” the
Treasury Department, Federal Reserve and
Federal Deposit Insurance Corp said in a
joint statement Sunday. Finally, almost 77%
of USDC’s backing assets are in BlackRock’s
Circle Reserve Fund, which is 100%
invested in short-term US Treasury debt.
That part is both liquid and bulletproof.
The bigger concern is systemic. Tremors
like this aren’t novel in traditional finance.
In the US, sponsors of money-market funds
have absorbed losses in more than 200
instances since the 1980s to keep the promise—or keep up the pretence—of moneyness. Only twice (in 1994 and 2008) have
shareholders suffered losses, according to a
paper last year by the Federal Reserve
Board in Washington. Plus, there have been
two public bailouts, after the 2008 global
financial crisis and then in 2020. Still, traditional finance has access to a safe form of
money in the form of insured bank deposits.
By contrast, the emerging world of decentralized finance (DeFi) is handicapped. With
the recent collapse of Silvergate, investors
lost access to a platform for converting dollars into crypto assets. If blockchains are
going to host a parallel system for people to
save, invest, lend, borrow and insure, it can’t
possibly be at the mercy of stablecoins
whose values come into doubt, even sporadically. This isn’t likely to ever happen
with central bank digital currencies, but
CBDCs are experimental and it’s unclear if
they will have public blockchains. Earlier, it
looked like stablecoins would triumph over
the evil of broken promises after all. The
de-pegging of USDC, even if momentary,
has shattered that illusion. ©BLOOMBERG
MY VIEW | A vISIBLe hANd
The Ukraine conflict’s surprises offer valuable lessons
NARAYAN RAMACHANDRAN
T
is chairman, InKlude Labs. Read
Narayan’s Mint columns at
www.livemint.com/
avisiblehand
he ins and outs of the war in Ukraine
have been very widely reported. The
main points and timelines are well
known, and yet there are some surprising
lessons still to be gleaned.
Russian military underperformance: Russia’s assumption of a swift overrun of Ukraine
and regime change in Kyiv has proved
grossly incorrect. Despite superior firepower
and an array of modern weapon systems, the
Russian army’s poor logistic supply chain,
inadaptable weapon systems and inadequate
training and command structures have
resulted in a war of attrition with no clear
winners. It’s a reminder that people, training
and structures/incentives matter greatly in
every field of human endeavour.
Use of real or imagined history: Russia’s
military crossed the border on a bad
assumption and armed with Vladimir Putin’s
mistaken view of history that Nato had
reneged on a promise not to expand “even
one inch eastward” and that Ukraine does
not deserve to exist as a sovereign nation.
Unless a real or imagined view of history can
motivate troops to fight, it generally counts
as an assumption for all practical purposes.
Putin’s axiom that Ukrainians would welcome Russian troops turned out to be dead
wrong. To mix metaphors, the political use of
history can be a ‘double-edged sword’.
Weaponization of everything: This is a
strange war. While there are some red lines,
like ‘no fly zones’, no supply of Western aircraft to Ukraine and care taken not to cross
the Polish border, Russia and the West have
weaponized almost everything in sight. Russia has weaponized oil and gas supplies,
grain and fertilizer chains, and routes from
the Sea of Azov. The West has weaponized
central bank reserves, access to the Swift
transfer system and international sporting
events, and imposed sanctions on individuals and institutions. Moscow has shown disregard for the United Nations charter, even
as the West abandoned its obligation to go
by a ‘rules-based system’. Both sides have
lost the plot. In a major crisis, ‘principles’ are
often abandoned. Once dumped, they take a
long time to be credibly restored.
Nuclear détente means a long grind: With
so many nuclear weapons held on either side
of a conflict, wars in the 21st century are
likely to evolve into long grinds. Short con-
ventional wars are unlikely anywhere, other
than those involving very small countries. Of
course, irrational actors could mean that the
détente does not hold. Territorial wars are
unlikely to yield results.
Nato alliance rejuvenation: Paradoxically
for Russia, this conflict has rejuvenated what
was an ailing Nato. It is not
only more unified, it will be
expanding to Russia’s
shores with Finland and
Sweden joining. Turkey
will likely have to play ball
on expanded membership
in a quid pro quo to resuscitate its sinking, hyperinflationary economy, jolted as
it further was recently by a
disastrous earthquake.
Even if Putin ‘succeeds’ in
the odd battle, he may have
lost the war. Unintended
consequences can render the
original project meaningless.
Control of intelligence and the narrative:
Throughout this conflict, the quality of
American intelligence has been remarkable.
Even more than with money and ammunition, the US have helped Ukrainians with
intelligence. From the very beginning,
Ukrainian President Volodymyr Zelensky,
a former TV comedy star, has shaped and
controlled the narrative. The story matters.
German policy: As a direct consequence of
the war, German military and foreign policy
have undergone a sea change under new
Chancellor Olaf Scholz. It has made a surprisingly large €100 billion
commitment to its military,
shifted from decades of
dependence on Russian gas
and has slowly begun to
offer materiel and tanks to
Ukraine in a sharp reversal
of its post-World War II
policy not to ship lethal
weapons to conflict zones.
Germany and Japan (so
inspired) will likely join the
global arms race after an
eight-decade hiatus.
Russia’s influence with its
neighbours and friends: For
Russia’s ‘near abroad’ and its other friends, it
is one thing to have supported a short war,
but it is quite another to be on one side of a
long grind which is being recast as a ‘them
against us’ conflict. Belarus may have elected
to be associated with Russia, and the Baltic
states have already left the fold, but the
A whole range
of assumptions
held before
2022 did not
survive contact
with the reality
of this war
‘stans’, Georgia, Azerbaijan, Moldova and
other former Soviet republics will need to
work through strategic alternatives. All countries, including India and Turkey, will need to
make scenario-based strategic moves.
Nuclear rhetoric heightened: For the first
time in many decades, the rhetoric on
nuclear war has become louder. Although
the Zaporizhian nuclear-power plant in
southeast Ukraine is in cold shut-down now,
and risks have reduced, it was one missile
away from a major accident. And Russia has
not ruled out the use of nuclear weapons.
Détente works until it doesn’t, and what comes
after is unimaginable. One reason to stop this
war is to reduce that binary risk.
Leadership matters: At the beginning of
the war, Zelensky famously said, “I need
ammunition, not a ride.” He has galvanized
his country by consistently leading from the
front. He has surprised many with a combination of courage, empathy, forceful advocacy and overall competence. Historians generally say that the ‘hour’ matters more than the
‘man’, but leadership matters greatly and may
in fact shape outcomes.
P.S: “I know not with what weapons World
War III will be fought, but World War IV will
fought with sticks and stones,” said Albert
Einstein
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14
TuesDay, 14 March 2023
New Delhi
BUSINESS OF LIFE
WELLNESS
LIVEMINT.COM
ISTOCKPHOTO
Do calories counts on
menus help or harm?
Research proves that
knowing the calories of
a meal rarely stops
people from eating it.
Instead, work on learning
how to eat mindfully
3 things to help
you move more
this summer
Jen Thomas
feedback@livemint.com
I
distinctly remember seeing calories
listed on a fast-food restaurant’s menu.
It was almost ten years ago, and I was in
rural Ontario, Canada, looking at what
soft-serve ice cream treat I should get
from Dairy Queen. I saw these funny italicized
numbers beside the product name, and at first
glance, I wasn’t sure if I saw them right. I blinked
a few times, hoping the numbers would rearrange or disappear. My favourite order, an Oreo
Blizzard, boasted a whopping 620 kcal per serving – more than the salad I ate at lunchtime.
I already knew that an Oreo Blizzard constituted an “occasional treat” in my diet. However,
blindsided by the black-and-white starkness of
the calorie count, I desperately searched for an
alternative on the menu that felt more reasonable. I settled on a chocolate-dipped cone which
was still an eye-watering 330 kcal.
BECOMING A NORM
Over the years, calorie counts on menus have
steadily become the norm. Americans adopted
it in 2018, India in 2021, and the United Kingdom in 2022.
For me, it’s become an interesting exercise to
see if the foods I’m craving when I go to a restaurant resemble a bomb explosion of excess calories or if it neatly fits in with how much I should
consume in a day. Some days, I throw caution to
the wind and order the butter-drenched filet of
fish (which was a healthy option until the butter
was melted over it). On others, I opt for a healthier, less calorie-dense option and feel very virtuous after my meal.
Neither of these meals is better than the
other. For me, it comes down to the context of
the occasion, and its consequences are relative
to everything else I choose to consume.
However, I am the poster child, the “case in
point,” if you will, as to why calorie counts on
menus is a good thing. I can detach the calories
from the food and make decisions based on the
reality of my diet. This was likely the hope and
dream of every government official who greenlit these mandatory “improvements” to menus.
Having said that, I’m a little less certain we have
chosen the best way to educate consumers on
the food they eat. Every government initiative
I read cited that it was a step in the right direction. They claimed that the best way to fight the
obesity epidemic was by educating the customer at the till. However, knowing what I know
about calorie counting, obsessive food-related
behaviours, and how behaviour changes actually play out, it often feels like all this is lipstick
on a pig. It’s a desperate attempt to do something, anything, to look like we are battling the
rising obesity epidemic.
AN OBESITY EPIDEMIC
According to a recent study published by the
World Obesity Federation, “more than half of
the world’s population will be overweight or
obese by 2035 unless urgent action is taken to
curb the growing epidemic of excess weight,” it
Our picks of the best workout gear to
invest in for upcoming hot season
Shrenik Avlani
feedback@livemint.com
S
ummer is upon us, and our winter fitness gear needs to be
pushed into storage or retired. The warm weather also
brings with it different activities like swimming, so you
need to get apparel that let you stay cool while working out. From
breathable fabrics to workout in to the latest shoes for your HIIT
sessions, here are 3 great picks for an active summer.
The calories a burger contains can differ substantially based on the ingredients and the size.,
states. So yes, taking a critical look at our current consumption habits out of the home because
lifestyles, how we move, eat, sleep and manage these outings occur too infrequently to have a
stress is very important.
significant impact.
But is menu labelling really the way ahead?
More importantly, calories can differ wildly
Well, let’s look at some studies to start with. A between batches of food simply because each
literature review called The Influence of Calorie food ingredient will contain a vastly different
Labelling on Food Orders and Consumption, number of calories. One large apple, for exampublished in 2014, found numerous studies ple, may have 120 kcal but a medium one, 80
which concluded that although people recog- kcal. Food labellers and government bodies
nized the calories on the menu, very few people understand and accept this vast difference that
made choices influenced by them. For example, the FSSAI (Food Safety and Standards Authority
as the review notes, while 57% of youth in New in India) accounts for a 25% tolerable deviation
York were aware of the calorie notation on the in calorific values. That deviation is substantial;
menu only 9% of them
if you’re listing a hammade decisions based
burger at 500 kcal, its
We tend to underestimate our actual value could be
on these calories. A
study conducted by
upwards of 625 kcal or
calorie intake regularly by
the British Medical
as low as 375 kcal. We
forgetting the food we have
Journal also reflected
can only hope for the
these statistics, but in
nibbled on throughout the day latter.
the UK. Over three
But that desire for
years, calorie conrestaurants to oversumption decreased by 4%; however, it steadily value the calories listed on the food is human
began to rise again.
nature. We as humans tend to underestimate
There are a couple of reasons behind these our calorie intake regularly by forgetting the
numbers, one of which is location. Study data on food we have nibbled on throughout the day or
this topic is sparse and sometimes solely related simply not recognizing that the food we order in
to a city or region which may have different eat- restaurants is as calorific as it is. This is a situaing-out habits than a neighbouring community, tion where we argue that listing calories on the
province, or state. Just like how obesity rates are menu is a good tactic to create awareness. But
different in the other areas of India, some of awareness of what? Less prominent than the
these states have varying habits regarding home calories on the menu are the daily calorific
food consumption. Listing calories on menus in needs of men and women, broadly speaking,
areas where home food consumption is the which are 1900 kcal for women and 2100 kcal
norm may have little effect on the consumer’s for men. By focusing on the calories on the
ISTOCKPHOTO
menu rather than a person’s overall calorie
intake, we are asking people to make decisions
based on incomplete information and flawed
perceptions of calorie counting.
A TRICKY LINE TO TREAD
All I just said relates to the average consumer
who has no obsessive relationship with calorie
counting or an unhealthy relationship with
food. Now if you belong to the second category, having calories listed on the menu isn’t
just an inadequate way of keeping track of your
nutrition; it can be triggering. For these consumers, having calories listed on every food
item in every major restaurant must feel like an
exhaustive task to stay balanced among the
barrage of negative feelings that can be associated with food. It’s the trickiest line to tread;
how do you educate and protect the people
unconsciously making food decisions that
impact their long-term health while safeguarding the mental health of those who
struggle differently?
Ultimately, I can’t fault people for trying to do
their part in creating awareness about food choices. However, more work needs to be done on
educating people on reconnecting their physical needs with nutritional value foods. Mindful
eating and intuitive eating practices are essentially the only things that will work for long-term
success. Yes, they take time to implement and
learn, but they set consumers up for a lifetime of
smart decisions with their food consumption.
Jen Thomas is a Chennai-based fitness coach
UNIQLO ACTIVE WEAR
Uniqlo a consistently viable option for anyone who wants an
alternative to the usual big sportswear brands. Uniqlo’s quick
drying sportswear material is called Dry-Ex and it was good
enough for tennis ace Roger Federer. For those who prefer cotton tees, you could pick tees from the Dry crew neck collection.
They also have excellent extra stretch active shorts, which are
versatile enough to be used as casual bottoms. However, my
favourite has to be the Airism mesh crew neck tops and vests for
both men and women. They are the
best thing you could wear in the searThe warm
weather brings ing Indian summer heat. The brand
its active wear options under the
with it different lists
Sport Utility Wear section on its webactivities so you site. From ₹490. uniqlo.com
need to get the
right apparel
NIKE METCON 8
Nike launched the Metcon series of
workout shoes in response to the runaway success of Reebok Crossfit Nano. Nike has refreshed the
shoes’ looks and has made it even more functional in the Metcon
8, the workout shoes’ latest iteration. Though not cheap, the
shoes are extremely versatile and can be used for all kinds of
workouts including short runs, weightlifting, HIIT and boot
camps. ₹11,895; nike.com
VENOM 2 RANGE FROM HYPERICE
As awareness about fitness and health grows in India, more and
more people are beginning to talk about tools that help with
recovery. This focus has led to some really good products being
launched in India such as air compression sleeves and percussion
massage guns. However, another new exciting recovery aid is the
Venom range of products from Hyperice. The Venom 2 range
uses heat and vibration to ease the tightness in the muscles on
various parts of your body. There are dedicated products for
back, shoulders and legs and then you have the Venom Go, a
small pad that you can stick to any part of your body and deliver
heat and vibration to release the tension and tightness. From
₹13,999; Available online and partner stores in select cities.
Shrenik Avlani is a writer and editor and the co-author of The
Shivfit Way, a book on functional fitness.
Everything you need to know about sleep supplements
ISTOCKPHOTO
Regulating your sleep
cycle has many health
benefits. But establish
better sleep hygiene
before popping a pill
Aditi Sarawagi
feeback@livemint.com
T
hese days everyone is making several efforts for their physical and
mental health. But sometimes even
exercising, eating right, meditating and
even therapy fall short. A lot of ailments
have a simple solution: regulate your sleep
cycle. As Chandigarh-based fitness coach
Vaishnavi Boora points out, sleep helps
the body repair and regenerate tissues. It
also boosts the immune system and consolidates memories and learning, she says.
“Additionally, sleep helps regulate hormones that control hunger and satiety,
including ghrelin and leptin, which can
affect weight management,” adds Boora.
Getting in the recommended 8 hours,
as we all know, is harder than it seems,
especially if you are dealing with chronic
stress or have a history of insomnia. One
quick fix, which supposedly helps in regulating your sleep, is popping in one of the
many sleep supplements, ranging from
melatonin gummies, strips, and CBD oils,
that have flooded the market. So, what
actually are these supplements? Do they
have tangible health benefits? And are
there risks to ingesting them regularly?
“Sleep supplements are antioxidants
and naturally developed vitamins which
may help in reducing fatigue syndrome.
As a result, brain activity gets relaxed,
inducing sleep”, says Dr Azmat Karim,
Consultant, Pulmonology & Sleep Medicine, Fortis Escorts, New Delhi.
Some of the best known supplements in
the market , include
Melatonin: The most easily available
supplement among them has to be melatonin, a lab-made version of the hormone
released by our pineal gland that is
responsible for regulating your body’s circadian rhythm. A 30-year-old technical
analyst from Albany, New York, who prefers not to be named, talks about her own
experience of using melatonin, something
that she has been using for 10 years since
she suffers from insomnia. “Doctors told
me that the body only needs about 0.5 to
1 milligrams of melatonin and to have it a
couple of hours before I slept”, she says.
Since the body produces melatonin naturally and as its levels already rise in the
evening, the supplements help make the
most of one’s natural melatonin production. Melatonin is not considered addictive in nature. Even after she stopped
using it, she says that she had been able to
sleep well. “I no longer suffer from chronic
insomnia the way I used to,” she adds.
Magnesium: Magnesium plays many
crucial roles in the body, such as supporting muscle and nerve function and energy
production. People use it to supplement
magnesium deficiencies as well as to treat
muscle aches. Laura Gomez, a digital PR
specialist, from London swears by magnesium as a sleep supplement. “I’ve been
taking Magnesium Bisglycinate 500 mg
for over three months now, and I chose
magnesium because it helps relax the
nervous system”. Magnesium has other
health benefits as well such as helping to
recover after doing a high-strength gym
routine which also motivated Laura to
choose this particular supplement. “It has
helped me to sleep better but the difference will be noticed after a couple of
weeks, not just a few days. I sleep through
the night, which in the past I didn’t. Also,
I fall asleep much faster”, observes Laura.
CBD: Cannabidiol or CBD is another supplement taking over the market. Studies
have found that CBD may help with various sleep disorders, including insomnia,
sleep apnea, and REM sleep behaviour
disorder. Gaagan Goyaal, CEO, Twiee
Expect Miracles, a CBD-focused brand,
has witnessed good results with CBD in its
efficacy for better sleep. “CBD oil works
really well with botanicals like Goji Berry
Extract or melatonin and others as being
an adaptogen, CBD assists in faster and
better absorption of such botanicals”, says
Goyaal. Nadia Singh Bahl, co-founder of
Vitality Hours, a wellness discovery platform.Though CBD is a non-intoxicating
cannabinoid found in the cannabis plant
that has been shown to have potential
therapeutic benefits, including promoting relaxation and improving sleep quality, concerns regarding the safety of CBD
usage are bound to arise.
Dr Abraham Benavides, medical advisor
at Nature and Bloom, a CBD resource
website says that “CBD is generally considered safe for human consumption in
moderate amounts, it may cause some
mild side effects, such as dry mouth, dizziness, and changes in appetite and mood”.
He recommends consulting a healthcare
professional before using CBD.
While sleep supplements are all the
rage, it is important to fix your sleep
hygiene practices before resorting to
them. Therapist Mansi Poddar from
Kolkata recommends her favourite sleep
hacks which she favours over sleep supplements. “There has to be a wind-down
time before sleeping to let your body
relax,” she says, adding that physical
activity, yin yoga and relaxation practices
like yoga nidra are also effective tools.
And yes, “balancing one’s blood sugar
throughout the day along with getting
some sunlight every morning will help in
sleeping better”, adds Poddar. Boora also
does not prefer sleep supplements. “I
don’t recommend any sleep supplements
to my clients. Incorporating healthy sleep
habits such as maintaining a consistent
sleep schedule, avoiding caffeine and
alcohol before bed, and creating a relaxing bedtime routine can help in improving sleep quality.”
If you have incorporated all of the
above, and you still struggle to get restful
sleep, it may be worth resorting to a supplement temporarily. “Sleep supplements can be used for individuals who
have no medical, neurological or psychological reasons for sleep disorders,” says
Dr Karim. “It can be given to young and
middle-aged people who have sleep disorders because of lifestyle and nutritional
deficiencies”.
Aditi Sarawagi is an independent journalist and writes for children
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