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Saturday, June 15, 2019

economic news of india - world economic news - economics news for students - indian economy news

economic news of india - world economic news - economics news for students - indian economy news


Thought it couldn't get any worse for Anil Ambani? Think again

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MUMBAI: Anil Ambani-led Reliance Infrastructure (RInfra) has reported a net loss of Rs 3,301 crore in the fourth quarter of 2018-19, its biggest ever, as the company undertook impairment and write-offs of over Rs 8,500 crore. The auditors have raised questions about the company's ability to continue in business. RInfra set-off exceptional losses against Rs 6,616 crore from general reserves to reduce the net impact, without which the losses would have been higher. Total consolidated income in the March quarter was Rs 4,234 crore, against Rs 3,709 crore a year ago, the company said while announcing its results after 11:30 pm on Friday, after deferring its board meeting for the financial results twice.The auditors said they do not have sufficient evidence to determine if the result gave a "true and fair" view of the losses and income. The auditors — BSR & Co LLP and Pathak HD & Associates — also said RInfra has investments and recoverable worth Rs 7,083 crore with entities that were doing engineering, procurement and construction jobs for the company. RInfra has also extended corporate guarantees during the year worth Rs 1,775 crore in favour of these entities. The auditor said they did not have sufficient and appropriate audit evidence about the relationship of these companies with RInfra, or the reason behind these transactions, and so they can't assess the implication. The company also booked losses on its investments in Reliance Power, where it owns 33.1%, after huge impairments and write-offs in the March quarter. The exceptional loss on Reliance Power also included loss on sale of shares of Reliance Power pursuant to invocation of pledge of Rs 1,261 crore. The auditors said the depreciation method adopted by Reliance Power was not in line with accounting standards.Given that the group, its associates and joint ventures incurred a net loss of Rs 2,426.82 crore during the year ended March 2019, and due to other factors, the auditors said there was "material uncertainty" that cast "significant doubt" on the group's ability to continue as a going concern.RInfra said its standalone debt was down by nearly 70% to Rs 5,960 crore in March 2019 from Rs 19,143 crore in March 2018. "The company aims to be zero debt in the next financial year or earlier based on liquidity events," it added.

India hits back at US with retaliatory tariffs

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NEW DELHI: India will impose higher tariffs on 28 American products including almonds, apples and walnut effective June 16, the government said in a notification on Saturday. The retaliatory tariffs, triggered by the US announcing higher duties on Indian steel and aluminium last year, were deferred multiple times in view of the trade dialogue between the two countries.The new tariffs are expected to bring in $220 million of revenue to India as the government dropped one item- artemia-from the list.New Delhi had decided to levy higher tariffs following Washington's withdrawal of preferential benefits for $6.35 billion of Indian exports early this month.The move comes ahead of meetings between US President Donald Trump and Prime Minister Narendra Modi at the G20 summit on June 28-29 in Osaka. Also coming up later this month is a visit by US secretary of state Mike Pompeo to India for bilateral talks with counterpart S Jaishankar. Pompeo said on Thursday that the US was open to discussions on the Generalized System of Preferences (GSP).

How flying over Arunachal is rife with risks

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The AN-32 crash in Arunachal Pradesh has become another grim reminder of the reality that flying over the mountainous state continues to be fraught with risks.For World War II pilots, this eastern Himalayan region was the "Skyway to Hell" and despite advances in flight technology since then, the stretch of deep valleys and high mountains is still one the deadliest flight routes in the world.And once a plane goes down, the dense foliage and cloudy hills make it hard to even find the wreckage, as was the case with the Indian Air Force transporter en route from Jorhat in Assam to Mechuka in Arunachal Pradesh. The plane with 13 people on board remained missing for eight days.The wreckage was finally spotted on Pari Hills in Siang district. When rescuers managed to reach the crash site, at a height of nearly 12,000 feet, they found no survivors.AVIATION CHALLENGES:Thick cloud form by 1 pm, particularly in pre-monsoon season Rapid changes in weather coupled with occasional strong winds Rugged terrain, deep gorges and steep valleys rising above 10,000 ft Low population density, poor road network hamper search operations.Crashes in Arunachal13 Air crashes since 1995* including 2 AN-32s and a Su-3010 of these are chopper crashes106 No. of deaths (including that of Arunachal CM Dorjee Khandu), due to these crashes594 No. of Allied forces' aircraft that crashed in "the Hump". The area comprises of today's Arunachal and parts of China and Myanmar81 No. of Allied aircraft that are still missing345 No. of people, mainly from the US, listed as missing in these crashes*Data for accidents between 1947 and 1995 are not available Source: Ministry of Defence, news reports, Defense POW/MIA Accounting Agency, USOnce Upon The HumpFlying over the unforgiving eastern Himalayas has often been tragic.In April 1942, when the Japanese Army blocked Burma Road (the 1,150-km mountain highway between Lashio in present-day Myanmar and Kunming in China), US-led Allied forces had to undertake arguably the biggest airlift in aviation history. For the next three years, the C-47, C-46 and C-109 planes transported nearly 650,000 tonnes of supplies (fuel, food and ammunition) from airfields in Assam to those in Yunnan, China.The Allied pilots nicknamed the route as "the Hump" because their aircraft had to navigate deep gorges and then quickly fly over mountains rising beyond 10,000 feet. "The Hump" is none other than today's Arunachal Pradesh and parts of Myanmar and Tibet. Over 650 aircraft crashed in "the Hump", killing more than 1,000 fliers, mostly pilots, according to Lt Gen William Tunner, then commanding the US Military Air Transport Service.Also, 81 aircraft went missing in the region, with searchers failing to spot any wreckage. It took around 70 years before the debris of two such planes — a C-109 from Jorhat to Hsinching and a B-24J from Kunming to Chabua — was spotted in the hills of Arunachal by trekkers and villagers.13 Since 1995Planes may have become more advanced, but this region's rugged terrain and severe weather conditions remain the same as they were during World War II.Based on readily available data, Arunachal Pradesh has witnessed 13 air crashes since 1995. This included 10 choppers, two AN-32 transporters and a Sukhoi Su 30 fighter jet.Plane accidents in the state before the 90s were rare since there was hardly any aircraft activity in the mountainous north. After the Allied airlift ended in 1945, there was no urgency for planes to fly over "the Hump".Even the IAF, till about a decade ago, had restricted flights over this region till 1 pm because of rapid formation of thick clouds in pre-monsoon days along with other weather hiccups. But with the Chinese military aggressively strengthening its airbases on the other side of the McMahon Line that demarcates China and northern Arunachal Pradesh, New Delhi shed its complacency. The government soon handed over eight strategic airfields in Tuting, Mechuka, Aalo, Tawang, Ziro, Pasighat, Walong and Vijaynagar to IAF for upgradation. That was a decade ago.By then, the IAF also began flying in the evening and also experimented with limited night sorties.To Stay Out of Danger Commercial flights in Arunachal Pradesh first started in the mid-1980s when state-run Vayudoot Airlines (now defunct) flew 19-seater fixed wing aircraft to Pasighat and Ziro. But operations were abandoned mainly because the airline could not recover costs.Then last year, when Air India subsidiary Alliance Air started flying a passenger plane (a 46-seater ATR 42) to one of the upgraded airfields — the Advanced Landing Ground in Pasighat, the issue of safe landing was made top priority.Navigational aides were installed; some trees near the airfield were uprooted and drains along the runway were covered to enhance safety, Alliance Air CEO CS Subbiah had told this writer in May 2018.The government is now looking at expanding civilian air operations to Arunachal Pradesh's other airfields under the regional air connectivity scheme called UDAN. State capital Itanagar however does not have an airport yet.But landing in Ziro or Pasighat located near the plains of Assam is easier than landing in high-altitude Tuting, Mechuka or Walong located near China.Air Marshal Pranab Kumar Barbora, who retired as vice chief of air staff in 2010, has the distinction of piloting all types of military aircraft in Arunachal. He says flying over the state's mountains has three challenges: the weather, the terrain and technical issues. "If weather is coupled with terrain or technical (issues) is coupled with either terrain or weather, it's difficult to stay out of danger," he told ET Magazine.Due to these factors, IAF does not allow new recruits to venture into valley flying (with mountains on both sides) in Arunachal Pradesh, he says.In May 2008, Barbora flew an AN-32 to Daulat Beg Oldie airstrip located at a height of 16,614 feet in Ladakh and vouched for the technical robustness of the aircraft. But he also said that the transporter was unsuitable for flying at extreme heights."IAF has now begun to procure powerful planes," he said. "For example, the C-130 Hercules has four engines (as against two in AN-32). In case the pilot suddenly finds himself flying towards a hill, he can make a steep ascent in a C-130. An AN-32 cannot do that."We do not know yet why the AN-32 crashed on June 3 since its black box was recovered only on June 13.Siang deputy commissioner Rajeev Takuk was at the base camp of the mountain on which the plane crashed when he spoke to ET Magazine on the phone. He said: "Weather and terrain are the main challenges for the rescue team. The crash is on a hill. One has to trek for a day from the nearby village of Gate [pronounced Ga Te]. We sent five mountaineers, Tekseng — had climbed Everest last year." 69804998 Hard to Spot PlanesSince the plane was missing for days, is it not odd that no one in the villages saw it fall out of the sky since the crash occurred in the afternoon? Actually not.Arunachal Pradesh has a low population density — 17 people per square km against the national average of 382. Gate — the only village in the vicinity — has just 256 residents, according to the 2011 Census, making it unlikely that anyone noticed the crash.Then there would have been clouds. During the ongoing pre-monsoon season, ground temperature in Arunachal rises quickly to 28-30 degrees Celsius, and by noon, the sky is covered in thick clouds, say weather experts.Pilots can usually take their planes out of non-communication zone in the gorges provided there is visibility.The AN-32 went off the radar at 1 pm, never to regain connectivity. The crash site is slightly off the usual flight path.So when a plane falls off the sky on a cloudy day, there are chances that villagers would not notice. That is why it takes days and even years to find the wreckage.On April 30, 2011, when a Pawan Hans EuroCopter B8 chopper carrying Arunachal chief minister Dorjee Khandu and four others went missing, its wreckage was spotted five days later in Luguthang, also near the China border. There were no survivors. 69805049 Far Away from RoadsThis is the dilemma. While flying in Arunachal is risky, air connectivity is indispensable as road network is poor.During the recent Lok Sabha elections, as many as 434 polling stations in the state could not be reached by roads.In a booth in Cheppe village in Anini constituency, polling officials walked for five days, with night halts in Anelih, Thyee, Engalin and Awoka, chief electoral officer Kaling Tayeng told ET Magazine.No wonder so many World War II aircraft are still missing in action in the peaks and valleys of Arunachal.Memories of a Forgotten War — a 2016 documentary by Utpal Borpujari, a national award winner — ends with visuals of the wreckage of a US aircraft in the hills of Arunachal. "The story of World War II in the Northeast is not yet over. The Americans will continue searching for missing planes," he says. two of them — Taka Tamut and Kison.Lost & FoundJan. 25, 1944: B-24J bomber flies from Kunming in China on a mission to Chabua in Assam but goes missing with four other aircraft on the same route2006: An American hiker spots wreckage of an aircraft near Damro village in Arunachal 2008: Indian government grants access to US investigators who confirm the wreckage is of B-24J2009: Excavation does not lead to any conclusion about the crash2015: Remains of victims recoveredPilots Face 3 Challenges in Arunachal: Techincal, Weather & TerrainRetired Vice Chief of Air Staff Pranab Kumar Barbora achieved the rare feat of flying an AN-32 to Daulat Beg Oldie airstrip at a height of 16,614 ft in 2008, reopening the airbase after decades. Barbora, who has also flown planes in Arunachal, told Shantanu Nandan Sharma how rapid weather changes, along with gorges and mountains, challenge pilots. Edited excerpts:How robust is the AN-32 aircraft?AN-32 is the workhorse of the Indian Air Force. It's highly essential. We have more than a hundred of this aircraft which is used mainly for air-maintenance (ferrying of goods). But its load carrying capacity is on the lower side, about five tonnes or so. Yes, I flew one to Dawaltbaigh Oldi, but the aircraft is not suitable for such elevations. After all, it has only two engines. IAF has, however, started getting powerful planes now. For example, the C-130 Hercules has four engines. In case the pilot suddenly finds himself flying towards a hill, he can make a steep ascent in a C-130. An AN-32 can't do that.Having flown over Arunachal Pradesh for many years and knowing the topography well, what could be the possible reasons for the recent AN-32 crash?The reasons will be known only after an inquiry. My reading is it could be because of weather. The crash site is a little away from its flight path; so there could be other technical issues also. But there was no radio transmission about any technical problem. So, only a probe can put together all these pieces of jigsaw puzzle. So far as the 2009 crash of an AN-32 in the same area is concerned, it was found that weather and terrain lead to the crash.Why is flying over the high mountains of Arunachal considered risky, right from the days of World War II?The planes used during World War II were archaic. Those were slow-moving propeller aircraft which could not climb very high and were highly susceptible to weather. A large number of aircraft vanished. But the Americans don't forget their dead; so they try to retrieve the bodies even today. If locals or mountaineers spot any plane part, they swing into action and begin investigations.The vegetation in Arunachal Pradesh is unbelievably thick. There are many areas where sunlight does not reach the earth. The undergrowth is even worse. When we lose an aircraft, which happened many a time, we always instruct the members of a search party to fasten themselves with a rope. Otherwise, there are risks of rescuers themselves getting lost.So what is the main challenge — the terrain or the weather?In a hilly terrain like Arunachal Pradesh, there is high vegetation and high moisture. As the day gets hotter, thick cloud formation takes place. Earlier, we limited our operations to those areas till about 1 pm. If you can't see what is ahead because of clouds, flying in that terrain is very difficult. There are high mountains all around. There are mainly three constraints — weather, terrain and technical. If weather is coupled with terrain or technical (issues) is coupled with either terrain or weather, it is very difficult to get out of danger.But isn't our inability to fly anytime of the day an issue when the Chinese are so active on the other side?As communication systems and other technology had improved, we were able to fly during afternoons and even at nights in Arunachal Pradesh. We formulated stricter standard operating process. About a decade ago, we developed limited night operations capability in and around Mechuka (that borders China). We had to do that as the Chinese bases came up right on the other side.What was your first reaction when you reached Dawaltbaigh Oldi airstrip flying an AN-32?I was relaxed. I wanted to light a cigarette. But I could not. There wasn't enough oxygen for me and the cigarette.

Indian internet cos face stiff contest from global giants

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Christie Arokiaraj, 23, is a welder who works from a small store outside the teeming Krishnarajapuram Railway Station on Bengaluru's eastern periphery. For nine to 10 hours a day, his gaunt frame is crouched over pieces of metal to meet a steady stream of orders from small businesses and homeowners in the vicinity. His life sparks up after 9 pm, when Arokiaraj gets together with four or five friends and unwinds on platform 4 of the station. Using the free WiFi on offer, the youth use their smartphones to surf the web and check out videos on YouTube, Facebook and WhatsApp, between chat sessions. The latest forwards are exchanged and jokes are sniggered. However, over the past three to four months, another app has caught their fancy: TikTok, the short-video sharing app owned by Bytedance, the world's most valuable startup that was valued at $75 billion in late 2018. For 20-30 minutes daily, Arokiaraj and his friends watch slapstick comedy, cheer strangers mimicking Tamil and Bollywood movie stars and ogle at women dancing to slow music from far away Madhya Pradesh and Mumbai — all on the app.In the last 12 months that TikTok has been operational in India — including six months when it survived a ban — the upstart has rapidly racked up some 200 million users as of June, according to its own data. The app has been downloaded over a billion times across the world. "We are enabling people from every corner of the country with a global platform that gives them unlimited opportunity to capture and share their creativity," says Sachin Sharma, director-sales and partnerships, Bytedance India. "TikTok is popular pan-India because we recognise that creativity is not just limited to audience belonging to certain towns or users speaking a particular language." 69806495 The gaiety of the group on platform 4 shows Sharma is on the mark. Arokiaraj says TikTok has become the new musthave app among his peer group. Videos on the online platform dominate latenight conversations, held between loud train whistles.But not everyone is thrilled by TikTok's explosive growth. The app's detractors say it was built in China in a walled garden — with virtually no threat from foreign rivals — funded by local investors and first launched in a familiar market. Cash-rich developers launched the app here later. Chinese companies such as vernacular content provider Helo, beauty and lifestyle app Club Factory and UC Browser have profited from this strategy. The financial muscle of American companies such as Amazon and Walmart — which acquired Flipkart — have also queered the pitch for homegrown players, who get overshadowed, they say.This, say observers, has led to a growing disquiet in the market, which has been cleaved into two — homespun entrepreneurs worrying about being muscled out by foreign investors and multinationals who claim success is determined by market forces and not financial heft. It has also forced entrepreneurs to take hard decisions. Craftsvilla, for example, had to rapidly shrink its operations over the past 12 months, says Manoj Gupta, CEO of the platform that sells ethnic apparel and fashion accessories. "It has become impossible to defend your business model with this kind of competition and the money they have. Local entrepreneurs need to be protected." 69806504 Vinay Bagri, CEO and founder of fintech startup NiYo, says: "The looming Chinese and American threat is something we consider daily when we fret over the viability of our venture."Industry watchers say shifting market dynamics have worsened the odds of success for some of these entrepreneurs. Over the past five years, even as starting up has gone mainstream, the number of early backers for these fledgling businesses have become fewer. Later-stage investors have also started hedging their bets, preferring to invest only in the top few players in each segment. "In many cases, this is a tough, winner-takes-all market," says Anand Lunia, founder of India Quotient, an early stage investor in startups. "The flush of foreign capital and ideas has only exacerbated a rough market."Foreign capital accounts for 80-90% of all investments in India's startups, according to industry estimates. Even as some companies build up their desi flavour — Vijay Shekhar Sharma of Paytm, for example, has consistently claimed his company is as local as Maruti and SBI even though Softbank and Alibaba Group are his biggest investors — the influence of overseas investors is evident. Large investors such as Softbank, which has invested $2 billion in India and plans to add $2-3 billion more, provide key (and rarely available) later stage capital to the ecosystem. After Independence, India had a protectionist economy to help domestic industries. But the economy was opened up in the 1990s and global collaborations became almost a given, especially in the tech space. The voices of protectionism seem to be returning now with local entrepreneurs starting to vocalise their pain. "American startups have market depth and Chinese startups have wallet depth. They are infiltrating the country. What do Indian startups have?" says a technology startup founder on the condition of anonymity. "We need protection the way China had. Look at how big their tech industry has grown." 69806514 Companies like TikTok have raised the bar. Its largest homespun rivals, ShareChat, started with a bang in 2015 and racked up some 50 million users by June 2019. But today, potential investors ask ShareChat tough questions about how it can tackle deep-pocketed foreign competitors.Executives at companies such as Amazon bristle at the suggestion that their growth has hobbled the odds of success of homespun entrepreneurs. A spokesperson for the firm tells ET Magazine the protectionist narrative is dated and untrue and the $200 billion behemoth is a value generator in India. "Amazon. in is a thriving marketplace with the primary role of enabling Indian small businesses for online commerce. With its continued investment in technology and infrastructure, it has enabled more than 450,000 small and medium business to scale into successful national online retailers," says a company statement. As a result, Amazon has facilitated over $1 billion in exports from sellers to the US, the UK, Japan and Persian Gulf countries. "Amazon continues to work closely with the local small business ecosystem with multiple programmes such as Launchpad, Amazon Easy, I Have Space. Amazon remains completely compliant to the laws of the land."Sharma of Bytedance says TikTok's combination of great product experience and localised and personalised content recommendations has been a hit with users. "We will continue to focus on enhancing the product experience. We recently started monetising the platform and are working closely with brands to further build our ad solutions to understand what works for their audiences, and if TikTok can collaborate to help reach their consumers across the country," he says. 69806519 Protectionist voices in India's startup ecosystem worry about some sort of colonisation of India's internet economy by foreign companies. "I think we have an opportunity to build great internet companies from India," Sachin Bansal, then the executive chairman of Flipkart, told the audience at a business conference in February this year. "At the same time we should do that by not creating an unfair playing field for some companies and instead create a level playing field across for everyone. I believe that if you create a level playing field, Indian companies will be at a great advantage and we will be able to build companies which will go global overtime."In 2018, Bansal sold his stake in the ecommerce company he cofounded from a flat in Bengaluru to Walmart. He has since become a key early investor in startups. In 2019, he invested $100 million in Ola. The CEO and cofounder of the ride-sharing giant, Bhavish Aggarwal, has recast shareholders' voting rights to keep predatory investors at bay. Japanese conglomerate SoftBank, which holds a substantial chunk of Ola, had recently wanted to invest $1 billion in the cab aggregator. But Aggarwal had reportedly turned down the offer as it would have meant diluting his shareholding rights.Regulators have reacted to some of the concerns of homegrown entrepreneurs. A notable move was the order on data localisation, which aims to protect private citizens' data. This diktat — supported by fintech firms such as Paytm and Phone Pe and opposed by multinational firms — seeks to compel companies to house the data they generate within India's geographical boundaries.Data LocalisationHowever, opponents of this move say such a seismic shift is unrealistic, with technological and operational issues likely to slow down implementation. "There are many issues to consider when you localise data," says Anirudh Rastogi, CEO of Ikigai Law, a legal outfit in Delhi that works on tech and policy law. "Where do you find enough space to build these server farms to house this mass of data? Does housing all the data in one country mitigate risk?"The boom in mobile users in India is expected to generate 2.3 million petabytes of data by 2023, from 40,000 petabytes in 2010. One petabyte is equal to 1,000 terabytes or 1,000,000 gigabytes. Parminder Jeet Singh, executive director of IT for Change, says company data generated in India should be treated as a national asset. "There is no reason to sign away our lives so easily. Let the government devise a policy that makes these companies pay to tap these resources." 69806525 69806532 It isn't the content segment alone that is attracting protectionist attention. From fintech to fashion, lobbies are hard at work trying to put homegrown entrepreneurs' interests first. For example, India Tech, a lobby that counts MakeMyTrip, Ola, and Quikr as members, wants to ensure a level playing field for the ecommerce industry, says the unit's CEO Rameesh Kailsasam. "There is a fear that foreign companies may be bending the law with regards to regulatory issues. We want to ensure Indian companies aren't at a disadvantage when it comes to critical regulatory issues."In early June, a bunch of startup investors, with around $800 million in capital, banded together under the Funders Forum Collective to take on foreign investors and to act as an advocacy platform.With India's ecommerce market expected to top $1 trillion by 2021 — according a February report from the Retailers Association of India and Deloitte — the battle is only expected to intensify. No matter who wins, the customer shouldn't lose.

Green power fights heat wave blues

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NEW DELHI: A sharp rise in generation from renewable and hydel sources has kept spot power prices in check, making adequate power available at affordable rates for meeting record demand due to the heat wave sweeping across the country."There is no shortage of power. There is plenty of renewable power available. Hydel systems like Bhakra-Beas have stored adequate water. Thermal plants are doing well. We are prepared (to meet demand spike)," power minister R K Singh told TOI. A 24% increase in generation from renewable energy projects and 10% increase in supply from hydel projects in the April-May period have checked spot power prices in the region of Rs 3.40 in spite of the demand spike. This has allowed states to buy power to keep blackouts at bay.Consider: Energy supply gap during April-May declined to 0.4% of the demand from 0.7% in the same period of 2018. Similarly, peak shortage stood at 0.5% against 0.7% in the same period last year. 69798337 Higher renewable and hydel generation have also prevented faster depletion of fuel stock at coal-fired plants, which increased production by just 2.5% from a year-ago period. This will allow them to be better position to tackle additional demand due to sweltering heat seen from July onwards when rains also impact coal supply.A concerted effort by the coal and power ministries over the last few months have built fuel inventories good for 15 days operation at 112 out of 114 power plants monitored by the Central Electricity Authority. Gneration from coal-fired plants accounted for 72% of total generation in the April-May period.

Bring back five-year plans to boost growth: Rakesh Mohan

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In the last few years, both policy makers as well as economists have been concentrating too much on the issue of transfers and too little on the issue of growth, says Rakesh Mohan, Former Deputy Governor, RBI. In an exclusive interview with ETNOW, Mohan says like Arvind Subramaniam, he has also been raising similar issues and would be presenting a paper in end-June. It is difficult to understand some parts of what has been happening in the Indian economy because of inconsistencies and indicators, says Mohan, who is also a former Chief Economic Adviser.Edited excerpts: Let me start with the data credibility debate. Former Chief Economic Advisor Arvind Subramanian, who was an insider of sorts to say the Modi government, has said that there is a problem with the GDP methodology. This issue is something that he had raised earlier also during his tenure. He is saying, wrong methodology could have led to 2.5% overstatement of GDP growth. Does his argument hold ice with you?First let me mention that I was also the Chief Economic Advisor but almost 18 years ago now. So does the argument of the former Chief Economic Advisor hold ground?In some sense, one would hope that having been in a position like that, what he says should be well considered and needs to be looked at seriously. Having said that, issues have been raised about the new series of national accounts ever since it was introduced. I have looked at his papers, I have not really fully examined the exact methodology that he has employed and also, I do not have a good method of really coming or judging his estimates of 2.5% of GDP overstatement on a cumulative or on a compound growth rate basis but that is actually a huge. But if you reduce the growth rate by 2.5% since 2011-2012 or thereabouts, cumulatively there comes to something like 20% or thereabouts in terms of the current estimate of GDP in absolute terms. So it is a very serious issue. As I said, I do not have the methodology or the time yet in a sense to evaluate that particular number. Having said that, I have also been raising similar issues. He has particularly talked about manufacturing and I am in fact in the process of writing a paper which we will be presented in a seminar in Brookings on June 28th where I have raised this issue, saying it is difficult to understand some parts of what has been happening in the Indian economy because of inconsistencies and indicators. You are saying there are inconsistencies with respect to indicators, but MOSPI is saying that whatever we are doing here in India with respect to the methodology is in line with the global practices. It has been approved by IMF. So, between problems with the manufacturing side of data and the methodology that the former CEA has used, where do the problems lie and what is the best way to deal with it?As I have already said, I have not examined the exact methodology and what one can do is evaluate it on a numerical basis. What I am saying is that if you look at manufacturing growth, there are two-three indicators that are inconsistent with the value-added growth calculated in the GDP of National Account Statistics. If you look for example at manufacturing goods exports, these have been staggered in absolute dollar terms for six to seven years. That is number one. Number two, the indicators for capital goods production in the manufacturing sector show zero growth for the same period. If you look at capital goods imports, those are firm numbers. But those are also zero growth or slightly negative actually in the last six to seven years. Further, other indicators like the index of industrial production, the annual survey of industries for the last six-seven years, provided annual growth rate of under 4%. Whereas there is a new methodology, there is a new data source through the ministry of corporate affairs data, I do not have the privilege of knowing what exactly they are doing with the data and what the data consists of . So, I cannot contest the methodology they are using but there are inconsistencies that stare you in the face. Similarly, if you consider credit growth to industry, that has been very low for the last six-seven years. The point I am making is that there are objective indicators which are difficult to argue with and which are inconsistent with the manufacturing growth indicators in the national accounts. My view on this is, given that these inconsistencies exist, it is very important for the National Accounts Statistics or the CSO for the government to provide enough information to explain the discrepancies. What is the problem here? Should we perhaps have an independent panel looking into it?The CSO is supposed to be independent. It always has been and the point that Arvind Subramanian has made is that these inconsistencies did not exist in earlier periods. He is right there. Similarly, the indicators that I have given, those inconsistencies did not exist in the earlier period. There has always been issues with the quality of the IIP. There are some issues to do with the quality of ASI (Annual Survey of Industries), but there are no issues with the quality of import data or the export data. The simple point I am making is that given that these issues have been raised ever since the series was introduced, now he is making a further point that for the credibility of India as a whole and for Indian statistics national accounts, which have always been held with high repute domestically and internationally that it is very important for the government, for the CSO, for the statistics authorities to come out with explaining look how can we reconcile the inconsistency between different indicators and the national account statistics. Would you also say there is a need for an independent committee to look into the methodology?As I said, it is important for them to explain the discrepancy. How they do it -- whether it is through a government committee, a departmental probe, an independent committee -- is for them to decide but something that ought to provide enough data, enough analytical explanations for there to be adequate debate by professional statisticians and economists. Since you are saying that there have been inconsistencies with respect to the manufacturing side data, would you also say that perhaps this led to a faulty policy approach from the government as well as bureaucrats'end?I would not say a faulty approach but I would say that to be able to design policies to achieve the objective that you want, obviously you are handicapped if the data is not good. On the other hand, if the data are indeed good, then you have been in good shape. How damning is it for a country like India to be dealing with the entire issue on data credibility on GDP credibility?I would not say damning but I would say once again that we had a very high reputation on the overall quality of our data for a long period of time and it saddens me as someone who has worked in the government in technocratic positions in different places. I used to be part of the ministry of Economic Advisor. I used to compile the IIP data and I knew many of the problems that existed in that data but the point is that sunshine is the best policy in data. When there are issues with data, you need to make it as transparent as possible so that it can be evaluated without partisan positions. It also saddens me to see that some of the debate on this issue has now been politicised when data should not be politicised. Interpretation of data yes, there will always be different policy views, different orientations of different analysts, but not on that data itself. Let me also shift focus to the growth figures. Everybody is talking about a slowdown in the economy, the kind of numbers that we are seeing on auto sales as well as FMCG, are pointing to a large slowdown, that we had not really anticipated. What is the way out of this? First, the government must be able to actually recognise the issue that you cannot cure an ailment until you first observe that you have an ailment. Second, that you have diagnosed it and third, find the treatment, given the diagnosis. It will be very important for the new government to come to grips with what has happened and what is happening. I must say the two cabinet panels that the Prime Minister has announced on investment and employment is exactly the way to go forward. But under those cabinet committees, they must start intensive technocratic analysis of what has happened to recognise what the issues are and then start devising ways. Are we headed for a large period of slowdown or a sub 7% growth?I do not know because first of all talking about GDP statistics we need to have a cleaner understanding of what those GDP growth numbers really are and if there has been indeed a problem? However, I would make an additional general point that I have observed that during the last few years, there has been an inadequate attention to the issues of growth. One of the characteristics of the Government of India since independence has been a high focus on growth. All through the period, we always had five-year plans. Each of them had a growth target and you could then evaluate yourself against those longer term targets and which of course are annual targets as well. One of the interesting things about analysing the growth data since independence is that interestingly enough, the five year plan targets was 90% met actually. The five year plans…Well I would say we should bring back the five year plans. We may want to name it differently and you notice the Prime Minister has already asked every ministry to come up with a five-year plan, five-year roadmap. But I do not see an overall an attempt to explain how these things are going to be put together. I do believe that no country can achieve high growth on a consistent basis. By high growth I mean 7% plus. We need really to move to 8% to 9%. You cannot achieve it without the highest focus on growth. Whatever has happened over the last few years is there has been much more focus on how to distribute more efficiently, particularly through cash benefits, direct benefit transfers etc. I have nothing against either cash transfers or direct benefits transfers etc, but I believe that it ought to be a part of a broader strategy focusing on growth within growth and the kind of policy one should have for social welfare, direct benefits etc. In the last few years, both policy makers as well as economists have been concentrating too much on the issue of transfers and too little on the issue of growth.When you are saying you should focus on growth, would you say focus on certain sectors, on manufacturing to provide incentives, to help MSMEs? What would you want to see because the government is in the midst of a budget making exercise. Which are the issues that need to be addressed?Lots of fruits are low hanging or high hanging as of now. Which sectors would you say then?I want to pick only sector. I believe there has to be a huge focus on manufacturing and industry overall and particularly on labour. One of the key problems that exists and we have seen with reference to the unemployment numbers, that we have only 14 million people employed in organised sector manufacturing. In China, it is over 100 million. So it is not the case that they are 30 we are 14. They are 100 and we are 14, with similar magnitudes of population. Whenever we talk of manufacturing, you hear both the government as well as the private sector, private industry talking about artificial intelligence, high level industry etc. You almost never hear about setting up manufacturing which employs lots of people and for consumer goods clothing, textiles, shoes, furniture everything that you and I have in our homes. We have, in fact, lost our advantage to our neighbouring nations.Absolutely. Somehow I do not find private sector being interested in this. No country has grown at 7% plus on a sustained basis without high manufacturing growth -- double digit growth - and particularly no country whether it is China, Korea, Japan in its earliest stages, the southeast Asian and other countries etc. has grown without high growth in manufactured products which are labour intensive. Our per capita income is about a third or a fourth of China's. We have the labour cost advantage. It has to be utilised and then must you focus that. Would you also say that this is a long-term strategy. In the short term, everybody has been talking about the liquidity concerns owing to the NBFC crisis. The NBFCs are demanding a special liquidity window. Do you think a liquidity window is going to solve the current issues of the NBFC sector?There are two kinds of comments on that. One is that as far as liquidity issues are concerned, you had to distinguish between liquidity problems and insolvency. The central bank in any country cannot solve insolvency problems and should not. The central bank in principle can address liquidity problems. I do not have enough knowledge to know whether the NBFC problems are to do with insolvency or illiquidity. In terms of the answer to your question, it can only be given once if one knows where the insolvency problems, where the illiquidity problems. Sometimes it does happen that something that starts as an illiquidity problem becomes insolvency problem if it is not addressed. I think that is where we should look at. However, there is one other very broad general issue which is pervading the whole financial sector and that is puzzling me that from the early 1990s till the late say around 2010 or thereabouts, household sector financial savings had been in the region of around 10% of GDP. Since around 2011-2012, we saw the tide turn and from 2011-2012, they have come down around 7% of GDP. It is a huge fall. It is similar to the early 80s and if you coupled that with the fact that total government borrowing that the centre plus the states is around 7% of GDP, it is not surprising that there is a problem of liquidity because it is not high enough financial savings in the country and one recent indicator of this general problem is the artificial insemination of liquidity the Reserve Bank has done in the last couple of months in borrowing $10 billion through forex swaps from the banks to inject domestic liquidity. There is two of them…Yes, a combined amount of about $10 billion which is about Rs 70,000 crore.The Reserve Bank felt it necessary that there is not enough liquidity and then they could not inject this liquidity through open market operations (OMOs). Does that mean that there is not enough financial resources in the country? What do you do, you go out and get the banks to raise dollar resources and then swap them. You then set up a liability for the Reserve Bank for the future but temporarily you inject that here. I am just mentioning this as an indicator of a broader financial savings problem. This is one of the other issues. The government plus RBI should really set up a committee or analytical group to understand what has happened. I do not. I had some understanding between 2011 and 2013 when inflation rates have gone up to around 10% and so, many real interest rates have become negative. A lot of people had switched to gold from financial savings but that is not the case now when the interest rates are really positive. Since you are also a member of the Economic Capital framework, we are given to understand that there are differences of opinion within the panel. Is that the reason that there is going to be another meeting that the ECF panel? Does that mean the recommendations would be favouring the government a lot more?One thing I can tell you is that almost all the work is done. Some final finishing touches have to be given to the report. This is always the case when you have a committee report, particularly technical in nature.The final report has to be completely clean. We had a meeting yesterday and the report is almost ready. Can we expect it by the end of the month?Yes, I would think so. Can you give us a hint on which way the panel is headed? As I said, because the committee has not finished its work. I am not able to comment on that. I hope you talk to us after the report is submitted.Yes, once the report is submitted and I am permitted by the Chairman and the Reserve Bank, I will be very happy to.., Would you at least say that yes the RBI has enough reserves?I wouldn't like to comment on this issue at all until the committee's work is finished.

Homegrown internet companies face stiff competition from global giants

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Christie Arokiaraj, 23, is a welder who works from a small store outside the teeming Krishnarajapuram Railway Station on Bengaluru's eastern periphery. For nine to 10 hours a day, his gaunt frame is crouched over pieces of metal to meet a steady stream of orders from small businesses and homeowners in the vicinity. His life sparks up after 9 pm, when Arokiaraj gets together with four or five friends and unwinds on platform 4 of the station. Using the free WiFi on offer, the youth use their smartphones to surf the web and check out videos on YouTube, Facebook and WhatsApp, between chat sessions. The latest forwards are exchanged and jokes are sniggered. However, over the past three to four months, another app has caught their fancy: TikTok, the short-video sharing app owned by Bytedance, the world's most valuable startup that was valued at $75 billion in late 2018. For 20-30 minutes daily, Arokiaraj and his friends watch slapstick comedy, cheer strangers mimicking Tamil and Bollywood movie stars and ogle at women dancing to slow music from far away Madhya Pradesh and Mumbai — all on the app.In the last 12 months that TikTok has been operational in India — including six months when it survived a ban — the upstart has rapidly racked up some 200 million users as of June, according to its own data. The app has been downloaded over a billion times across the world. "We are enabling people from every corner of the country with a global platform that gives them unlimited opportunity to capture and share their creativity," says Sachin Sharma, director-sales and partnerships, Bytedance India. "TikTok is popular pan-India because we recognise that creativity is not just limited to audience belonging to certain towns or users speaking a particular language." 69806495 The gaiety of the group on platform 4 shows Sharma is on the mark. Arokiaraj says TikTok has become the new musthave app among his peer group. Videos on the online platform dominate latenight conversations, held between loud train whistles.But not everyone is thrilled by TikTok's explosive growth. The app's detractors say it was built in China in a walled garden — with virtually no threat from foreign rivals — funded by local investors and first launched in a familiar market. Cash-rich developers launched the app here later. Chinese companies such as vernacular content provider Helo, beauty and lifestyle app Club Factory and UC Browser have profited from this strategy. The financial muscle of American companies such as Amazon and Walmart — which acquired Flipkart — have also queered the pitch for homegrown players, who get overshadowed, they say.This, say observers, has led to a growing disquiet in the market, which has been cleaved into two — homespun entrepreneurs worrying about being muscled out by foreign investors and multinationals who claim success is determined by market forces and not financial heft. It has also forced entrepreneurs to take hard decisions. Craftsvilla, for example, had to rapidly shrink its operations over the past 12 months, says Manoj Gupta, CEO of the platform that sells ethnic apparel and fashion accessories. "It has become impossible to defend your business model with this kind of competition and the money they have. Local entrepreneurs need to be protected." 69806504 Vinay Bagri, CEO and founder of fintech startup NiYo, says: "The looming Chinese and American threat is something we consider daily when we fret over the viability of our venture."Industry watchers say shifting market dynamics have worsened the odds of success for some of these entrepreneurs. Over the past five years, even as starting up has gone mainstream, the number of early backers for these fledgling businesses have become fewer. Later-stage investors have also started hedging their bets, preferring to invest only in the top few players in each segment. "In many cases, this is a tough, winner-takes-all market," says Anand Lunia, founder of India Quotient, an early stage investor in startups. "The flush of foreign capital and ideas has only exacerbated a rough market."Foreign capital accounts for 80-90% of all investments in India's startups, according to industry estimates. Even as some companies build up their desi flavour — Vijay Shekhar Sharma of Paytm, for example, has consistently claimed his company is as local as Maruti and SBI even though Softbank and Alibaba Group are his biggest investors — the influence of overseas investors is evident. Large investors such as Softbank, which has invested $2 billion in India and plans to add $2-3 billion more, provide key (and rarely available) later stage capital to the ecosystem. After Independence, India had a protectionist economy to help domestic industries. But the economy was opened up in the 1990s and global collaborations became almost a given, especially in the tech space. The voices of protectionism seem to be returning now with local entrepreneurs starting to vocalise their pain. "American startups have market depth and Chinese startups have wallet depth. They are infiltrating the country. What do Indian startups have?" says a technology startup founder on the condition of anonymity. "We need protection the way China had. Look at how big their tech industry has grown." 69806514 Companies like TikTok have raised the bar. Its largest homespun rivals, ShareChat, started with a bang in 2015 and racked up some 50 million users by June 2019. But today, potential investors ask ShareChat tough questions about how it can tackle deep-pocketed foreign competitors.Executives at companies such as Amazon bristle at the suggestion that their growth has hobbled the odds of success of homespun entrepreneurs. A spokesperson for the firm tells ET Magazine the protectionist narrative is dated and untrue and the $200 billion behemoth is a value generator in India. "Amazon. in is a thriving marketplace with the primary role of enabling Indian small businesses for online commerce. With its continued investment in technology and infrastructure, it has enabled more than 450,000 small and medium business to scale into successful national online retailers," says a company statement. As a result, Amazon has facilitated over $1 billion in exports from sellers to the US, the UK, Japan and Persian Gulf countries. "Amazon continues to work closely with the local small business ecosystem with multiple programmes such as Launchpad, Amazon Easy, I Have Space. Amazon remains completely compliant to the laws of the land."Sharma of Bytedance says TikTok's combination of great product experience and localised and personalised content recommendations has been a hit with users. "We will continue to focus on enhancing the product experience. We recently started monetising the platform and are working closely with brands to further build our ad solutions to understand what works for their audiences, and if TikTok can collaborate to help reach their consumers across the country," he says. 69806519 Protectionist voices in India's startup ecosystem worry about some sort of colonisation of India's internet economy by foreign companies. "I think we have an opportunity to build great internet companies from India," Sachin Bansal, then the executive chairman of Flipkart, told the audience at a business conference in February this year. "At the same time we should do that by not creating an unfair playing field for some companies and instead create a level playing field across for everyone. I believe that if you create a level playing field, Indian companies will be at a great advantage and we will be able to build companies which will go global overtime."In 2018, Bansal sold his stake in the ecommerce company he cofounded from a flat in Bengaluru to Walmart. He has since become a key early investor in startups. In 2019, he invested $100 million in Ola. The CEO and cofounder of the ride-sharing giant, Bhavish Aggarwal, has recast shareholders' voting rights to keep predatory investors at bay. Japanese conglomerate SoftBank, which holds a substantial chunk of Ola, had recently wanted to invest $1 billion in the cab aggregator. But Aggarwal had reportedly turned down the offer as it would have meant diluting his shareholding rights.Regulators have reacted to some of the concerns of homegrown entrepreneurs. A notable move was the order on data localisation, which aims to protect private citizens' data. This diktat — supported by fintech firms such as Paytm and Phone Pe and opposed by multinational firms — seeks to compel companies to house the data they generate within India's geographical boundaries.Data LocalisationHowever, opponents of this move say such a seismic shift is unrealistic, with technological and operational issues likely to slow down implementation. "There are many issues to consider when you localise data," says Anirudh Rastogi, CEO of Ikigai Law, a legal outfit in Delhi that works on tech and policy law. "Where do you find enough space to build these server farms to house this mass of data? Does housing all the data in one country mitigate risk?"The boom in mobile users in India is expected to generate 2.3 million petabytes of data by 2023, from 40,000 petabytes in 2010. One petabyte is equal to 1,000 terabytes or 1,000,000 gigabytes. Parminder Jeet Singh, executive director of IT for Change, says company data generated in India should be treated as a national asset. "There is no reason to sign away our lives so easily. Let the government devise a policy that makes these companies pay to tap these resources." 69806525 69806532 It isn't the content segment alone that is attracting protectionist attention. From fintech to fashion, lobbies are hard at work trying to put homegrown entrepreneurs' interests first. For example, India Tech, a lobby that counts MakeMyTrip, Ola, and Quikr as members, wants to ensure a level playing field for the ecommerce industry, says the unit's CEO Rameesh Kailsasam. "There is a fear that foreign companies may be bending the law with regards to regulatory issues. We want to ensure Indian companies aren't at a disadvantage when it comes to critical regulatory issues."In early June, a bunch of startup investors, with around $800 million in capital, banded together under the Funders Forum Collective to take on foreign investors and to act as an advocacy platform.With India's ecommerce market expected to top $1 trillion by 2021 — according a February report from the Retailers Association of India and Deloitte — the battle is only expected to intensify. No matter who wins, the customer shouldn't lose.