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Wednesday, January 29, 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


Pin-up CEO or Mr Fixit? The curious case of Aditya Ghosh

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From posing for a groupfie with former French President Nicolas Sarkozy to golgappas in Goa to sitting on a dinghy boat art installation at the Serendipity Arts Festival, the bromance between Ritesh Aggarwal, Oyo's frenetic founder and Aditya Ghosh, till recently the most high-profile CEO catch for the entire Indian start up eco-system, always seemed absolutely tailor made for Instagram likes.PDAs apart, when Ghosh, a former lawyer turned high-profile corporate executive who took IndiGo to soaring heights decided to check into Oyo Hotels and Homes as its CEO for India and CEO, in November 2018, the move was billed as strategic. Be the brain trust, confidante and consigliere to Agarwal. Someone who will have a calming influence on the 26-year old restless entrepreneur from Puri. Many would even compare Ghosh to an Eric Scmidt who lent business expertise to Google's founders Larry Page and Sergey Brin. Or Steve Ballmer who succeeded Co-founder and CEO Bill Gates in Microsoft And pivoted the tech corporation towards a devices and services strategy. But barely a year later, on December 2nd, Ghosh was catapulted to the board of India's second most valuable firm as a non executive director in a management transition that seemed as intriguing as it was perplexing. Since then, sources within the company said, Ghosh does not have any executive responsibility or operational role."The perspective I hope to bring, is two-fold - One, having run a large, publicly-traded profitable business for a long period of time, and second, having the unique experience of being the person on the board, who would have also run a large region for Oyo, for about a year," Ghosh had told ET after "stepping up."But not everyone is buying that. "This is not a global board like Google. Oyo is no Oracle. This is a soft landing for Ghosh," quipped an investor in the company on condition of anonymity.For an executive who was obsessed about transparency and internal communication, he also has stopped coming to office daily. Instead works out of a different location said officials in the company. Interestingly, one of them claim Ghosh has not sent out an email since the last one month to the team. The last email he sent was on December 2nd, the day he was announced as moving to the board. The email mentioned that he will "actively focus" on 5 areas -- safety and security, stakeholder relations, corporate governance and customer experience and revenue management." All absolute musts before a planned IPO.Today two Mckinsey alums – Rohit Kapoor, CEO India and South Asia and Mandar Vaiya, CEO - South East Asia & Middle East – are believed to be Agarwal's A team along with Maninder Gulati, Chief Strategy Officer who oversees European operations and Abhinav Sinha –the Paolo Alto based COO. "There is an IIT, ISB, Mckinsey, BSG cohort that is as thick as thick can be.. Ghosh could never break through," said another employee who recently quit the company. "Aditya has joined the board of Oravel Stays Pvt Ltd. As a consequence, objectivity and impartiality in decisions and accountability for actions require that he recuse himself from day-to-day executive responsibilities of the kind that were typical during his time as CEO for India SA," an Oyo spokesperson said.So what gave? ET spoke to several past and current employees, investors, close associates to piece together the tale behind the transition.Many would argue this product vs growth argument is at the core. While Ghosh over emphasised improving the product to minimise customer complaints, for Agarwal it was business growth at any cost. Incidents such as murder and an alleged rape in an Oyo property seemed to bothered him incessantly. Yet others claim Ghosh was not as hands on as he was expected to be. "He was a rather ineffectual leader who gave up early," said an employee. Over the last year since taken charge, business development managers were given stiff targets to meet, especially in Tier 1 cities (Delhi, Mumbai, Bangalore, Chennai, Kolkata etc), where there was saturation, and the concerns and pain points were around operational stability. So losses swelled more than sixfold to Rs 2,384.69 crore in the fiscal year ended 31 March 2019, even as revenue jumped more than fourfold during the same period, according to a valuation report filed with the Registrar of Companies (RoC) in November.In hindsight, even when Ghosh joined he was meant to head and oversee two markets – India and Nepal while Agarwal personally kept an iron grip of new frontiers like China and Japan. Even currently, Agarwal is based in the Valley."Ghosh was the face of Indigo but in reality everybody knew the entire credit goes to the co-founders Rakesh Gangwal and Rahul Bhatia," said an old colleague from the airline who has followed Ghosh's career path closely. "They coached Ghosh perfectly."But a handful did follow Ghosh to Oyo including people like Srikrishna R, who had worked in Indigo for over a decade before joining last year as VP of Sales and Distribution. Similarly, Ashish Banga, who is heading HR, Oyo International as per their Linkedin profile is another example.On November 20th last year, while travelling to Miami, Florida, Agarwal ordered a cheesecake for Ghosh in a late night impromptu party as he completed 365 days in the organisation. "Every day I have learnt something new; unlearned and learned all at the same time; experienced highs and lows; challenged my own assumptions and perceptions; evolved as a person; pushed the boundaries" Ghosh wrote in a social media post and went on to add "To many more mountains to climb ahead! ?? Still Day Zero." A few days later Ghosh was "elevated."

A trimmed Budget cheque for India's farmer

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NEW DELHI: The agriculture ministry has sought 20% less funds for the PM-KISAN scheme — that pays farmers Rs 6,000 a year — for 2020-21 because some states have been slow in identifying beneficiaries, and many existing recipients are yet to be Aadhaar verified.The ministry has sought Rs 60,000 crore for the Pradhan Mantri Kisan Samman Nidhi Yojana for the next fiscal while the government had allocated Rs 75,000 crore for this year, an official familiar with the development told ET.This is because the government has been able to disburse only Rs 44,000 crore so far this fiscal under the scheme, the person said.The government had initially hoped to transfer money to 145 million beneficiaries, but so far only 95 million farmers have been registered under the scheme out of which 75 million have been Aadhaar verified.The rest 20 million registered farmers will get the benefit only after verification of their Aadhaar details, as agriculture minister Narendra Singh Tomar had last month said PM-KISAN funds will only be transferred to Aadhaar-authenticated bank accounts of eligible farmers.The ministry has sought a lower amount for the scheme to align the allocation with realities such as zero beneficiaries identified by West Bengal, the official said. "We have asked for a more realistic budget based on our existing database and potential beneficiaries," he said."We have to depend on state governments to verify the beneficiaries before we can transfer instalments," the official said. 73752584 'Scheme helped agriculture sector'"States are not keeping pace with our speed. Therefore, we are lagging a bit, " the official said.Apart from West Bengal, which refused to participate in the scheme, some states have been slow in implementing it. Bihar, for example, has registered only one third of its farmers because of lack of digital data. Madhya Pradesh, Rajasthan, Maharashtra, Andhra Pradesh and Karnataka have identified 55-60% of their farmers as beneficiaries while Chhattisgarh has verified less than half of its farmers. Uttar Pradesh has verified 85% of the 25 million farmers it has, as per the agricultural census of 2016, while Rajasthan has registered 80% of its farmers.The government had launched this scheme in February 2019, covering small and marginal farmers owning up to two hectares of land. It disbursed over Rs 6,000 crore in last fiscal out of the budgeted Rs 20,000 crore.After getting re-elected, the Narendra Modi government had relaxed the landholding criteria, making the scheme open for large farmers as well.Experts believe the scheme has benefitted the agriculture sector.PK Joshi, fellow at National Academy of Agricultural Sciences, said farmers in Uttar Pradesh used money to buy farm inputs. "We conducted a study where we found that money of PM-KISAN was used in buying fertilisers when it was disbursed before the sowing season," he said."It's a very good scheme. Its success, however, will depend on the timing of disbursal. If it's given before the onset of sowing, money will be utilised for farming purpose, else it will be diverted. States should actively participate."Former agriculture secretary SK Patnaik said it is far too ambitious to expect such a large scheme to cover each and every beneficiary. "Since the success of this scheme depends on data from states, the Centre has done a great job in pushing them," he said. "West Bengal, which has around 70 lakh beneficiaries, refused to participate in this scheme. Similarly, many states are struggling with farmer data, slowing down the pace. I believe in the coming years, this scheme will have more farmers under its ambit," he said.

India's electronic cos catch Chinese flu

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KOLKATA: Smartphone and consumer electronics companies in India said they were staring at production cuts and possible delays in launch of new products due to the coronavirus outbreak in China that has disrupted component supplies. The scale of the impact would depend on how long the disruption continues.China accounts for 75% of total value of components used in TVs and almost 85% in case of smartphones. All critical components like mobile displays, open cell TV panels, printed circuit boards, capacitors, memory and LED chips are imported from China. Air conditioner compressors and washing machine motors are also among sourced from that country.Chinese vendors have hiked component prices by 2-3% due to supply shortages triggered by factory shutdowns, and this could rise further unless the situation improves in the next few days.'Not prepared for extended holiday'The hike in component prices, in turn, could result in an increase in product prices in India.The coronavirus has been blamed for more than 130 deaths so far, with nearly 6,000 confirmed cases as of Tuesday. The virus has rapidly spread across China and to 16 other countries. Media reports said industrial activity in China has come to a standstill, and may be impacted further."Factories in India were prepared for the usual Chinese New Year shutdown. But several cities there have extended the holiday, and companies have asked workers not to report for work for the next few days. This will likely have an impact on manufacturing in India since the extended holiday was not factored in," said a senior executive at a leading smartphone brand, who requested anonymity.Vacation extendedThe New Year holiday was scheduled to end on January 31, but authorities in several Chinese cities have extended the vacation till February 9, and this could get prolonged further. Hong Kong, the main gateway to China for freight and business, too has suspended cross-border travel for now. "Production will be badly hit. There will be at least 15-20 days' delay in supply of components. We have closed our purchase office there. New product launches will be delayed. If this continues, there will be chaos since no company holds stock in large quantities due to fluctuating input prices and subdued domestic demand," said Avneet Singh Marwah, CEO of Super Plastronics, the company that sells Kodak and Thomson brand televisions in India.BPL India chief operating officer Manmohan Ganesh said several Chinese component makers had hiked prices by 2-3%. "This could go up further if the shortage continues, and then brands will be forced to hike prices," he said. Two industry executives said Chinese smartphone brands may face problems in software R&D work and component supplies, which would hit India production. A spokesperson for Xiaomi said India operations weren't affected right now since the company had planned for the shutdown during New Year. 73753018 Alternative suppliersApple CEO Tim Cook said during an earnings call on Wednesday that the company is working on a mitigation plan to make up for any production loss in China, and is tapping alternative suppliers. Consumer Electronics & Appliances Manufacturers Association president Kamal Nandi, however, said it would be difficult to quickly develop alternative supply sources for components. Nandi, also the business head at Godrej Appliances, said the industry operates with 20-30 days of raw material inventory.Sunil Vachani, chairman at homegrown contract manufacturer Dixon Technologies, said shortages and production disruptions were likely if Chinese factories didn't open after the extended holidays.

DHFL siphoned off Rs 13K cr through 1L fake borrowers

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MUMBAI: The Enforcement Directorate (ED) has told a dedicated court dealing with money laundering offences that Rs 12,773 crore was allegedly siphoned off over the past decade from DHFL through about one lakh fictitious borrowers which were created to route the money into about 80 shell companies.The agency, probing arrested promoter of the embattled home financier Kapil Wadhawan, told a Prevention of Money laundering Act (PMLA) court that the Wadhawans had allegedly used a part of these funds to pay the late drug lord Iqbal Memon, alias Iqbal Mirchi.The agency arrested Kapil Wadhawan on Monday. His brother, Dheeraj, is out on bail."Wadhawan, through five shell companies, purchased three properties at Worli from Iqbal Mirchi. The value of these properties, as per book accounts, was shown Rs 111 crore, but a payment of more than Rs 150 crore was made in Dubai through the hawala channel. The loans were given to these shell companies by DHFL in a circuitous manner, and a part of this loan was used to make payments to Mirchi," said an officer privy to the probe details. "An amount of Rs 12,773 crore (yes)was actually siphoned off through fraudulent loans to 100,000 fictitious customers, using 79 paper companies."The ED is probing a property deal comprising the purchase of three dilapidated buildings in Worli, which were illegally acquired by Mirchi and subsequently sold to Sunblink Real Estate, an alleged front company of the Wadhawans. The ED has relied on the statement of Heena Cheda, partner at Hariyani & Co, to claim that the Wadhawans paid Rs 199.50 crore to Mirchi for the purchase of these properties.The agency believes the money is actually Mirchi's proceeds of crime.ED told the court that DHFL had given Rs 1,500 crore in loans to Faith Realtors, Marvel Township, Able Realty, Poseidon Realty, and Random Realtors around 2010-2011. These loans were outstanding in the books of DHFL until July 2019, with total outstanding of Rs 2,186 crore."Investigation has revealed that there are no documents available with the office of DHFL with regard to these loans. At the time of sanctioning these loans, no collateral was taken/given. These companies appear to be shell companies as deposed by their respective directors. These persons also deposed that the beneficiary owners of these companies were the Wadhawan brothers," said the agency's earlier remand application.The court remanded Kapil Wadhawan to ED's custody until Friday.

Sabka Vishwas kitty hits over Rs 38,000 cr

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Mumbai: The government has surpassed its target under a scheme launched last year for settling pending disputes over service tax and central excise by collecting over Rs 38,000 crore in taxes, said people aware of the matter.They said the finance ministry received around 189,000 applications under the Sabka Vishwas (Legacy Dispute Resolution Scheme) 2019, which kicked off in September and concluded on January 15."The government had set a target of 184,000 taxpayers with tax collection of over Rs 35,000 crore. However, with the extension of the scheme (from the initial deadline of December 31), around 5,000 more applications were filed," said an official. "The initial response to the scheme was tepid, but it subsequently picked up. We can safely say that it's a successful scheme and the figures are more than our conservative estimates were."Finance minister Nirmala Sitharaman had unveiled the scheme in the budget for 2019-20, with an aim to assist taxpayers in clearing the baggage of disputes under legacy taxes (service tax and central excise), which are subsumed in the goods and services tax (GST).State-run and private companies that settled their cases under the scheme include the State Bank of India (SBI), Kellogg's, GTL Infrastructure and Maharashtra's City and Industrial Development Corporation (CIDCO), according to the people cited earlier.While SBI and CIDCO paid taxes of more than Rs 100 crore apiece, GTL Infrastructure paid Rs 55 crore, Kellogg's paid Rs 35 crore and Tops Security paid Rs 30 crore.Mumbai's central GST unit received over 10% of the total applications. Of the 20,450 applications it received, 6,650 were litigation cases, 7,200 pertained to arrears, 4,700 were of voluntary disclosures and in nearly 1,900 cases audit was required."Mumbai managed to collect Rs 7,700 crore in taxes. Of this, Rs 5,500 crore was adjustment of pre-deposits and Rs 2,200 crore was the fresh amount paid," said an official.Four types of disputes could be settled under the scheme, the official said. First, litigation cases, where the matter was pending under litigation either at first adjudication level or at some appellate level. Second, arrears cases, where the matter had attained finality but the dues to government had yet to be recovered. Third, investigation or audit cases, where the amount was quantified but a show-cause notice had yet to be issued. Besides, there were declaration cases, where a fresh case of non-payment or short payment was to be declared subject to certain conditions.In the case of Kellogg's, the company was classifying its product Chocos under chapter 19 of the Central Excise Tariff with a lower rate of duty, whereas the Central Excise Department contented that it contained chocolate beyond a threshold percentage. "Given this it is more appropriately classified under chapter 18 of tariff, with a higher rate of duty. The dispute was pending before the tribunal. Kellogg's settled the dispute by opting for the scheme and paying Rs 35 crore to the government," said a third official.Emailed queries sent by ET to the SBI and Kellogg's remained unanswered until press time on Wednesday. GTL declined to comment on the matter.In the case of GTL, an official said, section 66E (e) of Finance Act, 1994 stipulates that agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act is a 'declared service' and it is taxable."Collection of damages or any amount by a company from the client company for any shortfall of supply/contract is a declared service. Aircel did not honour the contract with GTL for hiring a certain number of telecom towers and consequently had to pay a certain amount to GTL, which settled its service tax liability on such amount by opting for the scheme and paying Rs 55 crore," said the official.

Apple’s strong India show may sustain on price cuts, aggressive marketing: Analysts

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India was mentioned twice by Apple chief executive officer Tim Cook during an investor call after posting record quarterly results, courtesy double-digit growth in iPhone sales in the country. Apple's iPad sales also grew robustly in India.Analysts in India now expect Apple to continue its strong performance in the world's second-largest smartphone market in 2020, backed by further price cuts for older iPhone models and aggressive marketing. "We had double-digit growth in many developed markets, including the US, the UK, France and Singapore, and also grew double digits in emerging markets led by strong performances in Brazil, mainland China, India, Thailand and Turkey," Cook said during the analyst call.Apple's iPhone revenue in the December quarter climbed 8% from a year earlier to about $56 billion, driven by "exceptional demand for the iPhone 11, iPhone 11 Pro and iPhone 11 Pro Max," Cook said. The models were launched in September.The company has ramped up manufacturing in India and started production of the iPhone XR in the country last year for the domestic market and exports.73755382 "I think 2020 will be even better for Apple, especially with the kind of portfolio it will have, starting with iPhone 8, XR, 11 series and upcoming 9/SE2 smartphone," said Tarun Pathak, associate director at Counterpoint Technology Market Research. "Apple revamped its channel strategy in India in 2018, which has helped it in 2019 as well.""In 2020, as Apple manufacturing in India ramps up, we expect similar efforts by the brand in terms of maintaining price points and active price correction on previous-gen models to make it affordable for aspirational Apple buyers," said Navkendar Singh, research director at IDC India.However, Singh said Apple will face intense competition in fast-growing segments where consumers are looking to upgrade, with Xiaomi, Oppo, OnePlus and Samsung planning devices in the mid-premium price points of ?30,000 to ?50,000. "It becomes imperative for Apple to go aggressive on marketing and price point play to sustain this momentum during the year," he added.There are now close to 12 million active iPhone users in India, as per TechArc data. TechArc's founder-analyst Faisal Kawoosa said the feeder segment to iPhone is widening as the premium segment continues to grow, which means in the next two to three years, there will be a sizeable number of mobile users who could explore iPhone as their next purchase. He added that Apple would have to wait two to three years to double its market share by volume to about 5%.As per IDC, after a slower first half of 2019, Apple revived volumes in the second half by lowering prices of older generation models such as iPhone XR, 7, 8 and Plus series. The iPhone 11 received a good response in India due to a lower launch price than the previous base model iPhone XR ($699 compared with $749)."The attractive launch price clubbed with EMI and affordability schemes helped Apple in Q4 of 2019," Singh said, adding that the quarter is expected to have the highest shipments for Apple in 2019.As per Counterpoint's estimates, iPhone shipments grew 6% in India in 2019, after a 43% decline the year before. For the October-December quarter, it grew 41%, more than double the pace of the premium smartphone market, where Counterpoint said the expansion was slower than the full-year average of 20%.Apple also saw growth in sales for its iPads, Apple Watches and AirPods in 2019."Price reductions on Apple Watch Series 3 and the promotional discounts on Apple Watch Series 5 made the device a popular purchase among consumers," Singh said.

Global currency markets show signs of surviving virus scare

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A sense of apathy about the coronavirus appears to be taking root in global foreign exchange markets. Haven currency, the Swiss franc, slipped to nearly a threeweek low against the dollar on Wednesday, even after Hong Kong initiated travel bans to contain the disease. The Japanese yen, another traditional refuge for investors, has failed to gain since then, while the Australian dollar is showing signs of weathering the outbreak.Currency markets may be becoming desensitised even as headlines about the virus have helped dictate sentiment across other asset classes. The move in the franc in particular indicates some traders have already adjusted their portfolios and may be looking toward other risks instead.Previous outbreaks of deadly diseases suggest currencies may be relatively resilient toward the spread of coronavirus, Nordea Bank said in a research note earlier this week. While traditional bellwethers of risk appetite such as equities may face a temporary sell-off and bonds gain ground, moves in currencies are likely to be more contained, the bank predicted. Option markets are now signaling less bearish sentiment on the Australian dollar, a commodity-linked currency influenced by the country's trade with China. One-week risk reversals, a barometer of positioning and sentiment, rallied in favor of buying the Australian dollar by the most in five months on Wednesday.Signs are also emerging that the euro could be about to strengthen against the Swiss franc. An indicator of whether the euro is oversold against the franc rebounded from a five-year low on Wednesday. The so-called relative strength index rose above 30, a level seen as signaling a reversal in direction. On technical charts, a candle pattern on the euro's spot price against the franc on Tuesday suggested the shared currency could rise, or at least that a short-term bottom is in place.Moreover, the euro-franc pair closed above a key long-term level at 1.0673, the 38.2 per cent Fibonacci retracement of its gains since January 2015.

Nifty halting pullback at 50-DMA is negative signal for short term

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The stock market put up a better-than-expected show, as benchmark indices recovered from lower levels on the back of short covering on Wednesday. NSE Nifty opened on a positive note and maintained its gains throughout the day despite coming off day's high. The index finally settled with a gain of 73.70 points or 0.61 per cent at 12,129.50. We have expiry of the current derivative series on Thursday, and the session is expected to be dominated by rollovers. Nifty is placed at a crucial juncture, as it halted its technical pullback at the 50-DMA, which is at 12,130. The index is also hovering around its important Double Top level at 12,100, which it had breached to achieve a breakout. Nifty's price action against the 50-DMA level on a closing basis will continue to remain critical over the coming sessions. Thursday's session is likely to see a muted start, with 12,155 and 12,190 levels acting as important resistance. Support may come in at 12,085 and 12,000. 73739910 The Relative Strength Index (RSI) on the daily chart stood at 47.71 and was neutral, showing no divergence against the price. The daily MACD was bearish and traded below its signal line. No significant formations were seen on the candles. As per pattern analysis, Nifty has stayed within the broadening formation. The technical pullback halted at the 50-DMA, which is at 12,130. All in all, if the market has to avert significant weakness in the near term, it will have to crawl above the 50-DMA, otherwise, we may see some negative bias dominating Dalal Street again. As per weekly options data, the highest Call open interest (OI), which existed at 12,300, has come down to 12,200, bringing resistance levels lower. On the downside, the highest Put OI stands at 12,000. This suggests that there are fewer chances of Nifty moving past the 12,200 level. On the downside, 12,000 will act as crucial support.We would again advise traders to avoid aggressive positions and suggest to protect profit at higher levels. (Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)

Big social media companies may be asked to maintain database of active mobile number of users

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NEW DELHI: The Information Technology (IT) ministry has proposed that significant social media companies should maintain a database of active mobile numbers of all their users for verification purpose under a revised set of rules, according to a source.The proposal -- aimed at tackling issues related to anonymity of users in the fast-growing social media space -- has been mooted for the first time as part of the amendments likely to be made to the existing IT intermediary rules, the source said.Social media companies with more than fifty lakh users in India will be categorised as significant social media intermediaries. These companies will also have to comply with stricter obligations, including traceability of users, under the revised rules, the source said.The ministry has sent a draft of the revised rules to the law ministry for vetting.According to the source, the revised rules also seeks to draw a distinction between obligations and requirements of 'significant social media companies' as well as all other intermediaries and platforms.Significant social media intermediaries should do verification and maintain a database of active mobile numbers of all their users, the source told PTI.By putting in such a requirement, the IT intermediary rules would also be in sync with provisions in the Personal Data Protection Bill. The latter has a provision for verification of social media users, although on a voluntary basis."If you look at issues like traceability or anonymity on social media platforms, the problem is that it is largely confined to significant social media players and not all kinds of intermediaries."So, it has been proposed that there will be some rules that will apply to all platforms and some extra obligations only for significant social media intermediaries," the source said.Original draft of the IT rules did not mention about any requirement for maintaining active mobile numbers of all users by significant social media companies.The original draft said that intermediaries would be required to deploy technology-based automated tools for pro-actively identifying and removing or disabling public access to unlawful information or content while the proposed changes may now restrict the need for automated tools for detecting child sexual abuse material.The changes proposed by the government in the IT Intermediary Guidelines (Amendment) Rules, are also expected to help increase the accountability of big social media companies in the backdrop of spread of fake news through such platforms.The original draft of proposed amendments to the rules was put in the public domain in December 2018 for comments from stakeholders. Later, there were multiple rounds of discussions within the IT ministry on revising the rules.