Innholdsfortegnelse for 23-Feb-20 i Business Today

There is a reason why Piyush Goyal’s Interim Budget and Nirmala Sitharaman’s Budget 2019 failed to kick-start India’s growth engines – but Budget 2020 could. Goyal’s Interim Budget was tasked with winning the elections with sops to the poor and the farmers. It succeeded there but failed to revive the economy. Sitharaman’s first Budget, the Economic Survey and subsequent announcements idealistically pointed at China’s growth model and aimed at rekindling the “animal spirits” in the economy, cutting corporate taxes, consolidating banks, incentivising exports and real estate and injecting liquidity. But the assumption in both the Budgets that India’s slowdown was deepening due to failing investment cycle and lack of growth in exports was a woefully wrong diagnosis. India’s exports have been flat since 2013, and private investments have been slowing…

On February 1, Finance Minister Nirmala Sitharaman made a Budget speech that will be remembered for its length and sobriety. It lasted for almost three hours – the longest in the history of Indian Parliament – and lacked the number games that are often associated with Budget announcements. No claims of astronomical increases in budgetary allocations, no unrealistic revenue projections. What the minister did was to present a string of measures that are expected to improve the financial health of agrarian and rural India, leave some money in hands of taxpaying citizens and improve investment opportunities for private enterprises, both foreign and domestic. The immediate response of stock markets – the BSE Sensex ended the day down by 988 points, the steepest Budget day fall in a decade - suggests…

The government has bitten the fiscal bullet and taken the option of diverging from the fiscal deficit glide path in favour of stimulating growth. The Budget, presented by Finance Minister Nirmala Sitharaman, has taken the 0.5 per cent escape route provided by the Fiscal Responsibility and Budget Management (FRBM) Act and relaxed the fiscal deficit — the amount by which its expenses exceed receipts — target from 3.3 per cent to 3.8 per cent of GDP in 2019/20. This without taking into account the ₹1.72 lakh crore raised through extra-budgetary resources. If these are added, the fiscal deficit goes up to 4.6 per cent. The government plans to raise ₹1.86 lakh crore through extra-budgetary resources in the next financial year. Finance Minister Nirmala Sitharaman, in her post-Budget media briefing, explained…

Chemicals and Petrochemcials Nonylphenol Status: Duty was not continued; imports increased significantly after duty expired Country involved: Chinese Taipei Hexamine–I Status: Duty was not effective; industry continued to be in loss; sunset review was not initiated Countries involved: Saudi Arabia, Russia 4, 4 Diaminostilbene-2, 2 Disulphonic Acid Duty was effective against imports, but it was not continued Country involved: China Acetone–I Duty was not effective, as there is continued injury. Duties have been discontinued. Countries involved: South Africa, Singapore, US, EU, Chinese Taipei Steel, Other Metal Products, Electrical Glass and glassware, steel wheels, etc. Duty effective against imports. Country involved: China Aluminium road wheels Domestic industry continues to face injury; duties continued. Countries involved: China, South Korea, Thailand DVD-Recordable No application filed for SSR. Countries involved: China, Hong Kong, Chinese…

It is rather ironic that I am writing about inclusion being the future of work. This shouldn’t have to be the future; it must be our present. Not just at our workplaces, but in the communities we build, relationships we foster, and people we choose to become. Godrej was founded during India’s Swadeshi movement. Back in 1897 it was freedom and the original ‘Make In India’. Ardeshir Godrej, our founder and an ardent nationalist, donated a significant share of our profits to the Tilak Swaraj Fund, making it the single largest contribution back then. We believed – and continue to believe – strongly in the values of trust, integrity and importantly, equality. This was a core idea for me, along with what my father emphasised – trusteeship of wealth; that…

Ensuring that one of New York’s most storied investment banks stays on track is just one part of Goldman Sachs Chairman and CEO David Solomon’s persona. The other side is diametrically opposite to the boardroom avatar. When not chairing meetings at Goldman Sachs, the 6-foot-2 Solomon is busy making people dance to his tracks. Better known as DJ D-Sol, he is also a disc jockey. Spinning tracks started years ago as a Sunday-afternoon hobby and remained so for years. He has come a long way since then. His EDM tracks have thousands of admirers on social media – over five million streams on Spotify and 23,000-plus followers on Instagram. DJ D-Sol’s first release was a groovy rendition of Fleetwood Mac’s hit ‘Don’t Stop’. But in February 2019, he released his…

Cycling is not just recreation but also therapy for Rohan Kumar, one of two co-founders of Toffee Insurance, an insurance-tech start-up that offers bite-sized covers for loss/damage to bicycles, backpacks, gym injuries and even accident during daily commute. Although an amateur cyclist, Kumar’s life revolves around the activity. He can easily pedal his way up to 150 km in one session. He cycles all the way from Gurugram to India Gate to watch the sun rise. “It is about 65 km (both ways) that I complete one way in an hour or so. I have explored a lot of places in Delhi-NCR riding on my bicycle,” he says. Kumar loved to cycle as a child but could not continue as an adult. He began pursuing his passion only three years…

CONSUMPTION BOOST Positives • New tax exemption system to leave more money in hands of taxpayers• Agricultural credit target of ₹15 lakh crore for 2020/21; PM-KISAN beneficiaries covered• Turnover threshold for audit of MSMEs increased• Enhanced social security through pension and insurance penetration Negatives • Doubling farmers' income is conditional to several measures to be adopted by states and the Centre. No short-term measures to increase farm incomes• Payment delays by troubled discoms can derail solar power generation-based income plan for farmers INVESTMENT PUSH Positives • No Dispute But Trust Scheme – ‘Vivad Se Vishwas’ Scheme – to unlock large amounts stuck in litigation• Tax concession for sovereign wealth fund of foreign governments and other foreign investments• A scheme to provide subordinate debt for MSME entrepreneurs• Concessional corporate tax rate…

Finance Minister Nirmala Sitharaman presented her second Union Budget in the midst of a desperate economic situation – a slowdown that hasn’t seen the bottom yet; consumption, private investment and exports refusing to pick up and even public expenditure suffering a setback due to lower than expected tax collections in FY20. It was imperative to kick-start at least one or the other growth engines of the economy to bring the fast decelerating economy back on track. Instead, Sitharaman aimed at two engines – consumption and investment cycle – in the hope that disposable income in the hands of individuals and money with corporates would restart the two engines. She answered the call with a new personal income tax regime offering more money to tax payers, protectionist import tariff hikes to strengthen…

Income tax slabs remain unchanged for those who wish to use existing deductions and exemptions Reduced income tax rates for various income levels; applicable if deductions/exemptions not availed Dividend distribution tax abolished; mostly benefits investors in lower income tax brackets The ₹1.5 lakh benefit on interest paid on affordable housing loans extended by a year to March 2021 ESOP tax payment deferred for five years for start-ups Insurance cover on bank deposits raised from ₹1 lakh to ₹5 lakh to help depositors New limit of ₹7.5 lakh on employer contribution to PF, NPS and superannuation fund. This adversely impacts people earning higher salaries Owners can sell property for up to 10 per cent lower value than the circle rate…

In its compliance audit report of the revenue department in 2017, the Comptroller and Auditor General (CAG) mentions 29 cases of incorrect assessment of customs duties, mostly due to non-levy of applicable anti-dumping duty and safeguard duty on imports. The report also points out 28 instances where assessing officers misclassified various imported goods. The two together led to a loss of about ₹27.48 crore in customs duties. The report mentions various other examples as well. Sixty seven consignments of goods like hexamine, methylene chloride, albendzole, electronic calculator, aluminum alloy wheels and phenol, which carry anti-dumping duties, were imported from specified jurisdictions such as Saudi Arabia, China, Singapore, US, European Union and Taiwan by 29 firms without payment of anti-dumping duty amounting to ₹6.23 crore. An example of misclassification names Cabury…

Their importance Helps reduce dependence on crude and with it the oil import bill that rose to $111.7 billion in 2018/19 With no tail pipe emissions, it curbs air pollution. India is one of the most polluted countries in the world With just a dozen moving parts compared to over 2,000 in cars today, maintenance cost of an EV is a fraction Pain points Lack of charging infrastructure is the biggest deterrent in adoption of EVs Cost of lithium-ion batteries has come down but still continues to be high for a low-cost market like India Policy flip-flop has repeatedly hampered the growth of the EV industry in India…

When one talks of nation building, there seems to be a tendency to look at applied research more than basic or fundamental research. From where India is right now, what sort of research do you think is more important? In India, where there is a lot of poverty, and lots of other problems, we have to focus on solving the problems around us. For example, healthcare, education, agriculture, human work productivity, infrastructure are problems. These need solutions. To that extent, most focus should be on applied research. On the other hand, I would not want to distinguish between fundamental research and applied research because fundamental problems are ‘not-yet-applied research’ problems. Look at quantum mechanics. Without it, we wouldn’t have transistors, DVDs, laser printers or laser surgeries. We wouldn’t have quantum…

SCHNEIDER ELECTRIC’S smart factories in Hyderabad and Bangalore have been equipped with EcoStruxure Augmented Operator Advisor that offers real-time information for improving operational efficiency MG MOTOR India’s showroom in Bengaluru allows customers to experience the exterior and interior of MG cars through AR SIEMENS HEALTHINEERS is working on combining AR with cinematic rendering technology. Blending holograms with real medical world improves communication with referrers and patients. It also helps in better pre-surgical planning LODHA GROUP uses AR to provide buyers a detailed virtual tour of the property and locality GLOBALLOGIC’S Guided Installation solution is used in the construction industry for more efficient assemblies…

Every time Rajesh Sethi, MD of NBA India, finds himself in a deadlock, he heads to the hills. Sethi finds hiking therapeutic. His favourite hiking terrain is Chamoli in Uttarakhand, where he goes at least four times a year. “I like to be all by myself in the midst of nature,” he says. Sethi believes the best part about being in the midst of the hills is that his phone doesn’t work, so he has all the time to introspect. “I make notes, as there are learnings of self-improvement. I try to understand where I need to improve, if I need to change my game plan professionally, and much more. I come back rejuvenated.” Sethi also finds hiking a great way to bond with colleagues. He recounts one of his…

Q. What was the best advice you ever got and from whom? A. I had returned to India at the height of the Maggi controversy. The problem was to do with reputation, business. A fourth of our turnover had come to a grinding halt, five out of eight factories had been shut. For us, trust and responsibility is the anchor and that was up in flames. It was an existential crisis. Q. Who did you approach for advice? A. The best advice I have ever got was from a non-corporate person. I had gone to meet my grandmother in Bangalore to take her blessings. Before starting this journey, I needed a confidence building measure. I told her about the huge challenge and asked her what her advice would be. Q.…

₹ 2.34 LAKH CRORE The spike is mostly due to the largest project announced – Interglobe Aviation’s proposal to purchase 300 A320neo aircraft ₹ 26,000 CRORE The cost of the largest public sector project announced – the Andhra Pradesh government’s solar power project in Kurnool district ₹ 8.76 LAKH CRORE New projects announced in March 2010 quarter, the highest in 10 years TOO OPTIMISTIC According to the first advance estimates released by the Ministry of Statistics and Programme Implementation, GDP growth for FY20 is expected to be 5 per cent, the lowest in 11 years. And even to reach this level, the economy will have to grow at 5.2 per cent in the second half, as the first half saw growth of only 4.8 per cent. This is a tall…

Did you have any particular constituencies in mind while preparing the Budget? I don’t think I had any specific constituency in mind. I didn’t go through a sectoral approach where I have to do something for a sector or industry. We were looking at the economy at large and the macro-economic fundamentals being what they are, how are we going to move forward. What were the assumptions behind the ₹40,000 crore income tax revenue forgone? That’s based on an approximate calculation. You have a taxation regime with over 120 exemptions. I’m an honest taxpayer and want to pay tax. From the income I get after availing all exemptions available to me which is my right, I can pay this much tax. I pick up a few exemptions for which I…

After 18% rise in FY20, the deficit target for FY21 looks ambitious Gross Fiscal Deficit Up (₹ lakh cr) Expected to Dip as % of GDP But Projected to Rise Slowly in FY21 Y-O-Y change (%) Breached the Budget FRBM Target in FY20 Revised estimates; Budget estimates; Source: CMIE and Budget documents Revenue Deficit Increasing Breaches Target in FY20 (% of Budget Estimates) Sharp Rise Projected for FY21 Top 10 Expenditure Items (₹ thousand crore) INTEREST SUBSIDY TRANSFER TO STATES AGRICULTURE, ALLIED ACTIVITIES RURAL DEVELOPMENT DEFENCE PENSION TRANSPORT TAX ADMINISTRATION HOME AFFAIRS Tepid Growth in Revenue Mop-up Government Bats for Sharper Capex Rise to Beat Slowdown *Revised estimates #Budget estimates Top 10 Ministries by Budget Allocation (% share in total Budget allocation) Top 10 Ministries Which Spent More Than the…

Last year, Varun Mittal, a Ludhiana-based manufacturer of knitted goods, observed an unusual trend in import of a key raw material (a fabric item) just after the government imposed anti-dumping duty on it to discourage imports. The import of this polyester component – trade items are identified by a globally recognised, harmonised system of nomenclature code (HSN Code or simply tariff code) – fell 99 per cent. But import under another tariff code, specified for a slightly different type of fabric item, went up by almost the same amount. “There are more than 400 HSN codes that deal with fabric. Each number has different rates. If you persuade the government to impose anti-dumping duty on some, the trade shifts to other tariff lines,” says Mittal. This is important as India…

When Marico Chairman Harsh C. Mariwala wanted to strike out from the family-owned Bombay Oil Industries in 1990, he realised that operating out of the bustling commodity market in Mumbai’s Masjid Bundar would be difficult. The location was not conducive to attracting talent. Many times, people who came once, never showed up again. Mariwala changed tack and started meeting people outside the office. By 1992, Marico shifted to a tony address in Bandra, which helped the company induct the right kind of professionals. This helped him become one of the early Indian businessmen to unleash the power of innovation. Among the first innovations was launching Parachute coconut oil in blue plastic bottles, a change from the tins in which it used to be sold till then. Soon after, competition followed…