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Monday, January 20, 2020

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


Coming up: An EMI scheme for India's 'deserving' taxpayers

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MUMBAI: What does the taxman do when the money market dries up and businesses struggle? It tries to figure out a way to inch towards a punishing tax target that the government has set by giving a little breathing space to companies and businesses — the prime taxpayers.Mumbai, which accounts for the highest contribution to income tax in the country, is trying it out.Amid tight liquidity and a tough business environment, tax commissioners in the financial capital decided on Monday to allow "deserving" assessees pay in instalments the amount they are required to fork out after challenging a tax demand order.After receiving a demand order from the assessing officer of the Income Tax (I-T) department, a tax payer has to pay 20% of the demand within a month once the order is challenged before the Commissioner of Income Tax (Appeals), the first appellate authority. This amount can now be paid in multiple instalments till end March."However, this will be on a case to case basis and is not part of any rule. Instructions have gone out to commissioners in Mumbai to consider genuine requests from assesses so that don't have to pay the entire 20% at one go. The payments can happen in three or five or six instalments, depending on the case," a senior tax officer told ET.The tax demands pertain to assessment year 2017-18 (or, the financial year 2016-17 when the Narendra Modi government demonetised all Rs 500 and 1000 rupee currency notes). A flurry of notices, raising tax demand, were issued by the I-T department before December 31, 2019 when assessments for FY 2016-17 became time-barred. The department questioned the authenticity of deals that resulted in surge in cash deposits with banks following demonetisation of currency bills. 73464558 "This is a small relief given liquidity positions of assesses. No revenue is being sacrificed," said the official. While tax officials said this might not have been the first time that payments in instalments were permitted, tax professionals felt that the department appeared a little considerate this year — probably due to a sluggish growth in demand.The 20% payment rule on challenging a tax order is in accordance with the guideline of the Central Board of Direct Taxes and not part of a statute. While the ruling on the appeal before the Commissioner of IT (CIT) Appeals may take a long time to come, the 20% payment has to happen soon after a month."Assessees may try to buy some time by first writing to the assessing officer (AO). Once the AO rejects the application, which typically happens immediately, the assessee can move the principal commissioner followed by the chief commissioner. Normally, if an application is pending before a higher authority, the lower authority will take any action. But such applications within the tax administration may help the taxpayer delay the 20% payment by only a few weeks.. While some feel that the department may be offering an instalment mechanism to save time, I feel it is primarily driven by the present business climate," said a tax practitioner.

How to cover debt MF from a Voda meltdown

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Mumbai: The markdown in papers of Vodafone Idea by Franklin Templeton, which has led to markto-market losses of 4-6 per cent for investors in schemes that held the paper, has revived worries about the safety of debt mutual fund products. In the last two years, there have been mark to market losses in various debt schemes due to schemes holding paper of IL&FS, DHFL and some ADAG companies. Investors have been hit across categories of mutual funds — be it ultra short term, duration or credit. This has perturbed debt mutual fund investors who are increasingly wary of putting money into these schemes.Small investors, who do not have the skills to research mutual funds themselves or find it unviable to hire financial advisors, would be better off sticking to traditional fixed income products such as bank deposits, PPF and post office deposits. "Retail investors who do not understand the nuances of debt mutual funds would be better off sticking to plan vanilla bank deposits till the environment improves," said Ashish Shanker, head (wealth advisory), Motilal Oswal Wealth Management. 73466307 But investors with a higher tax outgo should invest more of their fixed income corpus in debt mutual funds, said advisors. The investments, however, should be done on the basis of risk appetite."When investing in debt follow the principle of safety first followed by liquidity and capital appreciation.," said Anup Bhaiya, MD, Money Honey Financial services. Debt funds have a portfolio of securities which lowers risk compared to holding a single company security. Investors in the higher tax bracket have preferred debt mutual funds in recent years because of the better tax treatment."For investors who are in the high tax bracket, debt funds are a substitute for fixed deposits with tax arbitrage," said Vishal Dhawan, chief financial planner, Plan Ahead Wealth Managers.If investors hold debt mutual fund schemes for three years, they get the benefit of long-term capital gains with indexation benefits, lowering the tax outgo significantly. ET has compiled debt mutual fund plans for conservative, moderate and high risk investors based on inputs from financial advisor.

Uber Eats goes to Zomato for $350 million

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BENGALURU| MUMBAI: Online food delivery and restaurant discovery platform Zomato has acquired the Indian operations of Uber Eats, the food delivery business run by Uber, for around $350 million (Rs 2,485 crore), two people in the know of the deal said.The all-stock transaction will give the US-based ride-hailing company about 10% shareholding in Gurgaon-based Zomato, they told ET.Uber Eats will cease to exist as a separate brand locally and users on its platform will be redirected to Zomato's app, said one of the people privy to the details.Zomato will not absorb Uber Eats' team in India. This means around 100 executives will either be reallocated to Uber's other verticals here or laid off.First big move for consolidationZomato and Uber declined to comment when ET contacted them.The transaction, which has been in the works for more than a year, marks the first big consolidation move in the hotly contested and cash-intensive online food-delivery market, led by Swiggy and Zomato.With the acquisition going through, the combined entity of Zomato and Uber Eats India is expected to corner more than a 50-55% market in terms of the number and value of orders, pulling it ahead of Swiggy."The deal is signed and customers are going to be directed away from Uber Eats to Zomato," said one of the people familiar with the matter. Zomato, he said, expects to transition 90% of Uber Eats users onto its platform."For Zomato, buying the distant third player helps it consolidate the market and puts it ahead of its arch-rival Swiggy. It is one less competition for the company to deal with," said the second person."In parts of Tamil Nadu, Kerala, and Madhya Pradesh, Uber Eats has a stronger foothold compared to Zomato with an about 30% market share," an Uber executive, who didn't want to be named, told ET. The acquisition, therefore, will give increased access to Zomato in certain micro-markets, he said. 73466216 The Uber Eats buyout comes on the back of Zomato's latest fundraising led by existing investor Ant Financial, an Alibaba affiliate, which pumped in $150 million at a $3 billion valuation. There had been talks of Uber also participating in the recent funding with primary capital of about $100-200 million, as reported by ET on December 16. However, those talks are on hold, said the two people.Uber which has underperformed the market after going public last year, has been shuttering or downsizing its loss-making units and geographies. With a cash burn of $20 million per month in India, the business was among the low-priority ones for the company. Last year, Uber said in its quarterly results announcement that the Indian food delivery business has been a drag for it.According to regulatory disclosures made in India, Uber had projected an operating loss of Rs 2,197 crore in its food delivery business for the five months through December 2019. This loss was larger than what was expected to be incurred by its core ride-hailing business, which was Rs 1,645 crore according to a valuation report prepared by KPMG affiliate BSR and released in November.Uber Eats has been on the block for a year. In February last year, Uber had come close to selling the business to Swiggy but the deal fell through, as reported by ET.Over the last six months, Uber chief Dara Khosrowshahi has been flagging analysts during quarterly calls about India's food delivery market being very competitive and admitted to being the number three player in the space.In fact, since early last year, the company had started its cutbacks. It had halved its annual cash allocation to the food-delivery business in India to $90-120 million, which took a direct impact on the order numbers. At the same time, Uber's India rival Ola too had pulled its focus away from its food-delivery business, Foodpanda, and started to sell private brands on marketplaces.Uber entered the food delivery business in 2017 when Swiggy and Zomato had already roped in major restaurants and chains in exclusive partnerships. Uber relied heavily on discounting to acquire and retain users. While it has been able to establish market leadership in some small towns and cities, the two larger food delivery companies continued to fight for market leadership.

New payments formula for creditors in the works

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NEW DELHI: The government is considering a new formula for payments to creditors of distressed companies resolved through the insolvency and bankruptcy law, which would give a better deal to unsecured lenders and operational creditors.There are two options under consideration, a government official told ET.Under one of the plans, the resolution amount would be split into two parts – liquidation amount set by the valuers before the resolution is started, and anything in excess of this amount.Liquidation amount would be distributed to company's creditors in accordance with the "waterfall" mechanism set out in Section 53 of Insolvency and Bankruptcy Code, as per the plan. 73450839 Under this mechanism, all claims of secured financial creditors must be fully paid before payments are made to unsecured financial creditors, who must in turn be fully paid before operational creditors.Any amount in excess of the liquidation value would be split on a pro-rata basis among all creditors – secured, unsecured and operational.The government has also proposed this formula for distribution of proceeds from the resolution of debt-ridden Infrastructure Leasing and Financial Services Group (IL&FS)."One formula is that everyone has contributed to enterprise value, so up to liquidation value, secured creditors will have the first claim. Till liquidation value, Section 53 (waterfall mechanism) will apply. On the balance, everyone has a claim," said a government official.The second formula being considered is to set aside a fixed proportion of 5% or 10% of sale proceeds for operational creditors.The government is looking at the National Company Law Appellate Tribunal (NCLAT), which is set to decide on the formula proposed by the government for distribution of proceeds from the sale of IL&FS group entities, before finally taking a call.IL&FS is not formally under IBC resolution but the process is being overseen by the NCLAT."We are awaiting judgement in the IL&FS case," said the official.Experts however point out that while the move may help protect the interest of operational creditors, which are often small businesses, it may push financial creditors to opt for other options for recovery."It is important to protect the interest of operational creditors because they are very vulnerable, smaller in size and not as capable of protecting their interests but the hurdle is that because the decision making remains with secured lenders, they may try to explore other options for resolution or push the company towards liquidation," said Major Kumar, partner at law firm Corporate Professionals.

India’s electric car ambitions could stumble on lack of lithium

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By Swansy AfonsoIndia's ambition of becoming a global hub for making electric vehicles faces one major hurdle: its lack of access to lithium.Home to some of the most polluted cities on the planet, the South Asian nation is pivoting toward new-energy vehicles to clean up its toxic air. But with meager resources of lithium, the mineral essential to make batteries for electric vehicles, it is having to scour for resources overseas.India's EV production will rely on imports from China of lithium chemicals used to make cathodes and battery cells, according to Jasmeet Singh Kalsi, director at Manikaran Power Ltd., which is exploring setting up India's first lithium refinery. "China has a thriving lithium chemical, battery cathode, battery cell and EV supply chain. India has none."Prime Minister Narendra Modi's administration unveiled a slew of measures in 2019 to promote the clean-energy vehicles, including a $1.4 billion plan to make India a manufacturing hub for EVs and cutting taxes to spur purchases. While electric cars in India remain a small segment, with an estimated 3,000 sold in 2018 compared with the 3.4 million fossil fuel-powered cars in the same year, the nation is forecast become the fourth-largest market for EVs by 2040, when the segment will comprise nearly a third of all vehicles sales, according to BloombergNEF.Import RelianceSeveral plans are under way to build lithium-ion battery factories in India. Meanwhile, China -- the largest electric vehicle market in the world -- is dominant in the battery supply chain. Around three-quarters of battery cell manufacturing capacity is in China, and Chinese companies have unparalleled control of required domestic and foreign battery raw materials and processing facilities, according to BNEF."Indian companies have been involved in trying to prospect for stakes in overseas resources, and possibly on-shoring more raw materials production capacity in India," said Sophie Lu, head of metals and mining for BloombergNEF. "But there are very little synergies right now because further up the value chain, battery components manufacturing capacity does not seem to be planned extensively for India."A joint venture called Khanij Bidesh India Ltd. has been formed between three state-run companies -- National Aluminium Co., Hindustan Copper Ltd. and Mineral Exploration Corp. -- to acquire lithium and cobalt mines overseas. Amara Raja Batteries Ltd., the country's second-biggest traditional battery maker by value, will build a lithium-ion assembly plant, while Suzuki Motor Corp. along with Toshiba Corp. and Denso Corp. is setting up a lithium-ion battery manufacturing plant.Manikaran signed an agreement with Australia's Neometals in June to jointly fund the evaluation of developing a lithium refinery in India with a capacity of 10,000 tons to 15,000 tons of the finished product. That capacity falls short of India's projected requirement of 200,000 tons of lithium hydroxide by 2030, Kalsi said.Electric vehicles are "slowly going to take off, not with the speed the government perceives it to be, but going ahead the market is going to get pretty huge," he said.

Telecom companies seek modification in AGR ruling, move SC

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Mumbai: Bharti Airtel and Vodafone Idea have moved the Supreme Court in a bid to delay payments that are due Thursday. Tata Teleservices has also done so, said people with knowledge of the matter. The operators want to be allowed to negotiate conditions and schedules for payment of statutory dues with the Department of Telecommunications (DoT), according to their petitions.Vodafone Idea told the court that if no relief is forthcoming, it will have to shut."The company does not have any other resource available for the purpose of this payment," Vodafone Idea said in its plea, which ET has seen. "If a suitable and appropriate arrangement is not made available, it will lead to immediate closure of one of the oldest and largest telecom companies in India."The 'modification' applications were filed on Monday after the Supreme Court last week rejected the pleas of the three phone companies to review the October 24 verdict that widened the definition of adjusted gross revenue (AGR). That left the three companies facing more than Rs 1.02 lakh crore in additional licence fees, spectrum usage charges (SUC), penalties and interest.Telcos Seek Urgent Hearing TodayThe court's supplementary order had stipulated that the AGR-related dues need to be paid by January 23. The phone companies have asked the apex court for an urgent hearing on Tuesday.Vodafone Idea was under "huge financial stress and in no position to make either upfront payments of the amounts due or provide any financial bank guarantees to securitise the amounts due," it said. "Any coercive order for immediate payments etc. could be against the interest of thousands of employees, multiple banks and institutions and all connected stakeholders."The company said the investments by promoters had dwindled."The value of Rs 1,90,000 crore of equity investments by promoters is less than Rs 10,500 crore currently, with virtually no prospect of recovery," it said.73465749 Vodafone Idea said it's not getting much support from banks."Even banks and financial institutions do not have enough security to lend monies to the appellant for payment to the DoT to comply with the orders of the court," stated the application.'COMPLEX CALCULATIONS' Bharti Airtel said the calculations that need to be made are "complex" and cannot be done within the 90 days stipulated by the court.This will "require further interaction with the respondent as it covers licences across 22 circles and a period of over 15 years and post submission of the same to the respondents, the parties will have to reconcile all these calculations," Bharti Airtel said in its modification application that was seen by ET .Both telcos highlighted the impact on their subscribers and employees. Vodafone Idea also said its closure will see DoT losing out on spectrum dues.The case was not mentioned in the cause list for Tuesday and the petitioners plan to mention the matter and its urgency before the bench on Tuesday, said one of the persons cited above.If the court accepts the pleas for modification, the next step will be up to the DoT, which has the power to extend the payment deadline."With few days left for the deadline, there are lots of calculations that are yet to be done," said a legal source aware of the developments. "It is a mammoth task, even they (DoT) agree. There are many issues which need to be clarified and for that telcos need more time."Bharti Airtel, Vodafone Idea and Tata Teleservices did not respond to ET's queries.Vodafone Idea and Bharti Airtel face statutory dues of Rs 53,039 crore and Rs 35,586 crore, respectively. Tata Teleservices, which has sold its consumer mobility business to Bharti Airtel, faces dues of Rs 13,823 crore.While Bharti Airtel has the cushion of $3 billion it just raised through qualified institutional placements and bond sales, Tata Teleservices could potentially rely on parent Tata Sons for support. Vodafone Idea has said previously that it would be hard pressed to carry on without some relief. It may, however, offer to pay about Rs 4,000 crore to avoid the tag of defaulter, ET reported on its January 18 edition.Still, investors reposed faith in the stocks. Vodafone Idea closed at Rs 4.86, up 7.8% on the BSE Monday. Bharti Airtel closed at Rs 509.25, up by 1.9%. Tata Teleservices closed at Rs 2.62, up 1.2%.Apart from these three, 12 other companies in the telecom business need to pay more than Rs 1.47 lakh crore to the government by January 23. Licence fees and SUC are calculated on the basis of AGR.OTHER OPTIONSIf the latest appeals are rejected, the next step that the phone companies could take is filing a curative petition that will highlight the blow to employees and economic growth if they don't get relief and the sector is reduced to a duopoly of Bharti Airtel and Reliance Jio Infocomm.Some non-telcos with telecom licences, including public sector units such as GAIL India, Power Grid Corp. of India Ltd (PGCIL) and Oil India, have been served demand notices totalling over Rs3 lakh crore. They are also likely to file separate review petitions.The DoT has sent a demand notice for Rs 48,000 crore to Oil India against AGR dues, which include interest and penalties. The public sector unit, which uses an optic fibre network for internal communications, will contest DoT's demands in the Telecom Disputes Settlement and Appellate Tribunal (TDSAT)."We have received a demand notice for paying payments by January 23. We plan to challenge it in TDSAT," Oil India chairman and managing director Sushil Chandra Mishra said in New Delhi. This follows the notice sent to gas utility GAIL, from which the telecom department has sought Rs 1.72 lakh crore.Prior to this, state-owned RailTel Corp. had moved the Supreme Court, seeking a modification or a clarification to the effect that the AGR order pertains only to Access Service Provider licence holders such as telcos, not to Internet Service Providers (ISPs) and National Long Distance (NLD) service provider licence holders such as the state-run company.Mahesh Agrawal of Agrawal and Associates represents Vodafone Idea while Harsh Kaushik and Manali Singhal represent Airtel and Tata Teleservices.

Promoters raising stake in these firms, should you buy, too?

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ET Intelligence Group: For the less keenly tracked small-and midcap companies, a change in promoter equity is often considered the most accurate barometer of immediate stock and operating performance. Promoters are among the first to know the inflection points in their own businesses. So increases in promoter equity are generally considered to point to 'good times' for a company. As minority investors, it is time to add such quality midcaps and smallcaps, therefore.ETIG presents a list of five such companies. Investors, however, must do their own homework before punching in 'buy' orders.RAYMONDIn November, the textile company announced the demerger of its lifestyle business, which will now house the top brands. This is expected to unlock value for investors. Furthermore, the management began a property venture on its land parcel in Thane, a sought-after Mumbai suburb. This business should generate ?1,100 crore in net profit over the next five years. Analysts believe the combined value of the two businesses is ?950 per share, while the current stock price is ?689.SASKEN TECHNOLOGIESThe Bengaluru-based digital services and products provider bought back shares in the December quarter at ?825 apiece, 25 per cent higher than the current market price, but the promoters did not tender their shares. While the management has been guiding strong revenue growth, it is yet to show any improvement. In the September quarter, the company reported revenue decline of 9 per cent sequentially after its biggest client sold a part of the business. The management expects to make up for this loss in the second half. The decision by promoters to skip the buyback points to a likely turnaround.VOLTAMP TRANSFORMERThe transformer company reported 3 per cent year-on-year revenue growth in the September quarter due to weak execution through the monsoon months, although order book expanded 60 per cent. Analysts expect revenue to grow 20 per cent for the next two years, boosting operating leverage and margins. It reported EBIDTA margin of nearly 11 per cent in the first half of FY20. The stock trades at a priceearnings (P/E) multiple of 11.BAYER CROPSCIENCEThe performance of the agriculture and pharma products company has been lacklustre in the first half, with a mere 2 per cent growth in sales. But the management has been working on a restructuring plan that includes integration of the Monsanto team, which would eventually lead to cost reduction and renewed marketing strategy. The multinational company has already introduced stricter sales policies with an incentive structure to make its products more attractive to distributors and farmers.GREAVES COTTONThe auto ancillary company acquired 100 per cent of Ampere, an EV (twowheeler) maker. The promoters raised stake notwithstanding the fall in the core operations in the September quarter, indicating that they are bullish on the prospects of the newly acquired company and the future of e-mobility. 73465092

Why BNP Paribas is overweight India despite slowing economy

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Foreign investors are more concerned about the specific numbers concerning the broader macroeconomy and corporate earnings than about other variables that the domestic Indian investor base or the market watchers may be concerned about, says Manishi Raychaudhuri, Asia Pacific Equity Strategist, BNP Paribas in an interview with ETMarkets.com.What is your stance on the Indian market vis-a-vis the Asian market and why? In our Asia ex-Japan model portfolio, we are currently overweight India. It may appear surprising in the context of the continuing economic slowdown in India but stock selection is relatively easier in India. There is a pretty wide universe of companies which generate excess returns routinely. That means return on equities is higher than cost of equities and these companies are strewn across a wide range of sectors like consumer discretionaries, consumer staples, private sector banks. Even IT companies have been staging recovery of late. In other words, foreign investors have a much wider canvas to choose from which is reaffirmed in the trend that we see in terms of foreign flows. Whenever it recovers in Emerging Markets, India is one of the key beneficiaries.While markets have touched record highs, the economy is at multi-quarter low and earnings are still illusive. How would you explain it?We have seen a liquidity-driven rally. Earnings growth estimates for FY20 kept on drifting down over the year and as a consequence, valuations for India have actually moved up as the market rallied. That said, I must also point out that there was a wide divergence in valuations across different classes of stocks. Everyone looks at the top tier high quality stocks. They are expensive at this point of time but the foreign institutional investors are still attracted to them not just because of their high quality but also the relative stability in their earnings estimates and the liquidity that they offer. If one goes down the top tier stocks to the midcap and small cap stocks, there is a degree of divergence even within those classes. The relatively high quality midcap stocks are way more expensive than the second and third tier ones. We think that while the market may appear expensive when one looks at headline valuations, it does offer stock picking opportunities and it would be possible to outperform the broader market with careful stock selection.Is it fair to say that 2020 would be a year of midcaps and smallcaps?I would hesitate to paint a broad brush picture saying that okay it would be a year of midcaps because within the midcap universe or even within the smallcap universe, there is a divergence in terms of quality and valuation. One would have to be selective in terms of stocks. It really would be a stock pickers' market.When do you think earnings recovery will come by and what would lead earnings recovery in India?There are a few macroeconomic factors that need to fall in place. Currently earnings growth in India is being predominantly led by financials, particularly the private sector banks and insurance and a few companies in the consumer staples and consumer proxy areas. We need to see a bit of divergence and broadbasing of that universe before we see a sustained earnings estimate recovery. One would have to see some degree of recovery in the industrial space which would happen once we begin to see a sustainable recovery in capacity utilisation which would in turn be triggered by a demand recovery. Now, obviously these are difficult to achieve in the near term and I do not think there is any magic bullet that is available either for the government or for the central bank. I would think that one would have to wait for maybe the second half of FY21 to see some of these variables fall in place. When would the economy recover from here and what would lead the recovery going ahead?If I look back at the key economic components, private consumption and investments in government consumption, the first attempt on the part of policymakers should be to improve private consumption or in other words consumption demand and that in turn can lead to private investments improving at a later date. It would mean some degree of fiscal support which unfortunately the government does not have at this point of time. So a more sustainable economic recovery, from pure base effect, it would take another two to three quarters at least. So, we come back to that same old equation that we can expect to see some degree of stabilisation in the second half of FY2021.Which are the sectors which could spew up compounders from here on?The sectors which have possibly spawned the most compounders in India are consumer staples, consumer discretionaries, private sector banks and IT services. These are the four sectors where you find most of them. Our ways to identify them are simply to look at excess return generation or in other words the companies that generate a return on equity higher than cost of equity on a sustained basis, over 15 to 20 years or so. The majority of these excess return generators fall into these sectors that I mentioned just now. Indian companies historically have been very careful. One could even use the word stingy about raising capital and investing because India was a capital starved economy historically and that is why Indian companies routinely generate higher ROE and ROCE than rest of the emerging markets. That is the characteristic which has stood the Indian market in good stead and also engendered FII interest on a sustained basis.What are your expectations from the Budget?The wish list would be basically that I am not really looking at an absolute number when it comes to fiscal deficit. I would rather be concerned about what goes inside the fiscal deficit or fiscal spending. I would look carefully at whether the measures are designed to support or invigorate private consumption. I would try to look at some of the structural ways of resource raising, structural in sustainable ways. If one gets a credible impression of the government trying to raise resources from either divestments or asset sales, that would clearly be a positive. One would also look for credible assumptions on tax revenue growth or broader GDP growth. In a nutshell, it is not just the headline numbers that we would look at, we would try to see what are the assumptions that have given rise to those headline numbers.We had Roubini the other day saying that a CAA protests have worried foreign investors. What are you hearing from your clients?In our conversations with our foreign investors, most of the questions are actually centred around the economy, corporate earnings to be more specific. What are the implications of the measures that the government or the central bank can take on these? In a nutshell, foreign investors at this point of time are more concerned about the specific numbers concerning the broader macroeconomy and corporate earnings than about other variables that the domestic Indian investor base or the market watchers may be concerned about.

AI needs to be regulated: Alphabet CEO Sundar Pichai

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SAN FRANCISCO: Joining Microsoft President Brad Smith and Tesla CEO Elon Musk, Alphabet and Google CEO Sundar Pichai on Monday called for new regulations for Artificial Intelligence (AI), saying the only question now is how to approach it.Although new regulation is needed, "a cautious approach is required that might not see significant controls placed on AI," Pichai who was last month took over as the CEO of Alphabet, Google's parent company, in an editorial piece in The Financial Times."There is no question in my mind that artificial intelligence needs to be regulated. It is too important not to. The only question is how to approach it"."Companies such as ours cannot just build promising new technology and let market forces decide how it will be used. It is equally incumbent on us to make sure that technology is harnessed for good and available to everyone," Pichai wrote.According to CNET, the timing of the editorial coincides with a big push from Google to reveal some of the results of its own work in AI and bring tools it has developed out into the world.The Alphabet CEO stressed that "international alignment will be critical to making global standards work" on AI.We need to take a "principled approach to applying AI, said the company, while offering Google's "expertise, experience and tools.""We need to be clear-eyed about what could go wrong," he said.His comments come as lawmakers and governments globally are considering to limit the use of AI in fields such as face recognition system - an issue close to Microsoft President Brad Smith's heart who has often criticized the technology, urging governments to enact legislation regarding the technology."Unless we act, we risk waking up five years from now to find that facial recognition services have spread in ways that exacerbate societal issues," said Smith.Advanced AI which is beyond chat bots will soon be used to manipulate social media platforms like Facebook, Twitter or Instagram, Tesla CEO Elon Musk warned recently.In his famous debate with former Alibaba Chairman Jack Ma, Musk entered into a lassic argument over the capabilities of emerging technologies like AI.Musk said that computers will one day surpass humans in "every single way". He has predicted that a single company that develops "God-like super intelligence" might achieve world domination.If not regulated or controlled soon, AI could become an "immortal dictator" and there will be no escape for humans, the SpaceX CEO had warned.

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