The Economic Times 3 April 2018

The one sector that could ease Modi's job woes as 2019 nears

NEW DELHI: Recently, the railways received more than two crore applications for about one lakh vacancies. So many people chasing so few low-level government jobs points out that there is a dearth of jobs in the private sector and people fall back on government jobs due to uncertainty in the jobs market. Job creation has become a major challenge for Prime Minister Narendra Modi as he has only one year left to face the people in Lok Sabha polls in 2019. He had promised to create 10 million jobs a year during his campaign for the 2014 Lok Sabha elections. The labour ministry’s figures released on March 12 show India added 136,000 workers across eight sectors between July to October 2017. However, in the week ended Feb. 25, India’s jobless rate rose to 6.1 per cent compared to 5 per cent in January, the highest monthly rate in the past 15 months, according to the data from the Centre for Monitoring Indian Economy showed. 63595318 Amid the crisis of jobs all over the economy, one sector stands out as a ray of hope—the auto industry. India’s automobile industry just had its best fiscal year with data from manufacturers showing all-time high sales across segments. Analysts expect the momentum to continue in the new financial year, as economic activity is improving as well. Cumulative domestic vehicle sales growth in the past year was 13-15%, hitting the double-digit mark for the first time since fiscal 2012.According to industry experts, there are several reasons behind this spike in sales — introduction of GST, which resulted in free movement of goods; crackdown on overloaded vehicles; increased investment in infrastructure; efficiency improvement in load carrying, especially by the ecommerce segment; increase in last-mile connectivity in hundreds of cities and towns; and pent-up demand and deferred purchase due to demonetisation, GST implementation and new emission regulations. The commercial vehicle segment, seen as a barometer of economic activity, is estimated to have recorded sales of over 8.8 lakh units in the past fiscal year, growing 23% from the year before, with medium and heavy vehicles eclipsing the previous peak posted in FY12 The two-wheeler, three-wheeler and commercial vehicle segments have each posted record double-digit growth, despite uncertainty over the implementation of GST and transition to new emission standards. In passenger vehicles, the industry is projecting a high-single-digit expansion for fiscal 2018. The local two-wheeler market is estimated to have crossed the 20-million-unit milestone, with sales growing 14%, helped by strong demand in the rural areas after good rains last monsoon. The three-wheeler output (domestic and exports combined) likely ended the year close to the 1-million mark, with growth of more than 25%. 63595517 The Indian automobile sector is set to witness a pickup in hiring over the next 12 months, largely driven by the passenger vehicle segment which has seen many launches in the last year, in addition to the advent of new technologies in areas such as electrified and driverless vehicles. A recent study carried out by HR services firm PeopleStrong predicts the automobile industry to hire 8-12% more employees in fiscal 2019.Maruti Suzuki and Tata Motors, India’s top two vehicle makers, will together add as many as 4,500 employees this fiscal year to deal with their growing product portfolio and sales. A Tata Motors spokesperson said hiring at Tata Motors was largely for replacement last year, but this year it was much higher and incremental in order to manage growth.A bulk of the hiring will be concentrated in the research and development (R&D) segment with a lot of it happening in areas of design, engine and fuel side, says the study. The R&D segment will see a 12-15% increase in fiscal 2019 in hiring.

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Here's what the Insolvency & Bankruptcy Code panel has to say for home buyers

Home buyers should be treated as financial creditors which will allow them to equitably participate in an insolvency resolution process, a high-level panel has recommended to the government.The 14-member panel has also suggested relaxations for Micro, Small and Medium Enterprises (MSMEs) under the Insolvency and Bankruptcy Code.63598614 A slew of other changes to the Code, which came into force in December 2016, has also been suggested by the panel.Constituted by the Corporate Affairs Ministry, the committee had the mandate to identify and suggest ways to address issues faced in the implementation of the Code.In a detailed report, the panel has recommended that home buyers should be treated as financial creditors owing to the unique nature of financing in real estate projects and the treatment of home buyers by the Supreme Court in ongoing cases."Notably, classification as financial creditors would enable home buyers to participate equitably in the insolvency resolution process under the Code," it added.The recommendation, once implemented, would provide relief for home buyers facing hardships due to incomplete real estate projects.Some realty firms are facing insolvency proceedings.Under the Code, financial creditor implies any person to whom a financial debt is owed. The financial debt can include money borrowed for interest.According to the report made public by the ministry, the government should exempt MSMEs from application of certain provisions of the Code. "Illustratively, since usually only promoters of an MSME are likely to be interested in acquiring it, applicability of section 29A has been restricted only to disqualify wilful defaulters from bidding for MSMEs," it noted.Section 29A of the Code pertains to ineligibility criteria for bidders.Besides, the panel has suggested that only those who contributed to defaults of the company or are otherwise undesirable should be ineligible from bidding for stressed assets under the Code."Moreover, being mindful of the Non-Performing Assets (NPA) crisis in the country, the need to encourage the market for NPAs was felt and accordingly several carve-outs from section 29A have been recommended for pure play financial entities."In order to prevent retrospective application of any proposed change, it has been recommended to add a provision that the amendments shall be applicable to resolution applicants that have not submitted resolution plans as on date of coming into force of the said amendment," the report said.Against the backdrop of rising number of cases coming up under the Code, the committee has recommended certain measures to prevent possible misuse.In this regard, the provision to provide for special resolution passed by the corporate debtor's shareholders or resolution cleared by at least three-fourth of the total number of partners of the corporate debtor has been recommended.To provide for withdrawal of resolution application in exception circumstances, the panel has suggested that in such cases, there should be approval from the Committee of Creditors (CoC) with ninety per cent of voting share."In order to facilitate successful implementation of the resolution plan by the successful bidder, it has been proposed to allow one year time to obtain necessary statutory clearances from central, state and other authorities or such time as specified in the relevant law, whichever is later," the committee said.In January, the Code was amended to prevent unscrupulous persons from misusing the law. Wilful defaulters and those whose accounts have been classified as non-performing assets, among others, are barred from bidding for stressed assets.The Code provides for market-determined and time-bound insolvency resolution process.

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India can do a Silicon Valley if it expands its innovation ecosystem: World Bank

NEW DELHI: India has the potential to innovate on the lines of Silicon Valley but it needs to do more for expanding the innovation ecosystem as it aspires to become a middle income country, World Bank India head Junaid Kamal Ahmad said today.He said what drives productivity is pertinent when it comes to innovation and is a very relevant question for India as it seeks to move up the ladder from low middle income to high income country.Releasing a World Bank report on innovation in developing countries, he said: "I think we can do a Silicon Valley in India in the next five years..as the world is changing, we can leapfrog."I believe firm size, firm capability and innovation have a strong relationship. More needs to be done in the innovation ecosystem in India where firms continue to remain stagnant."In developing countries, the concept of national innovation system must be expanded, said the World Bank Chief Economist for Equitable Growth, Finance and Institutions, William F Maloney.According to the report, investments for innovation often consist of marginal improvements in process or products, rather than significant technology adoption or new product imitation."They very rarely involve frontier research...if a firm (or country) invests in innovation but cannot also import the necessary technology, contract or hire trained workers and engineers, or draw on new organisational techniques, the returns to that investment will be low."Returns from investments in research and development (R&D) rise initially, but lack of complementary factors over time result in their decline, the report said."The policy maker's conception of the national innovation system (NIS) must go beyond the usual institutions and policies designed to offset standard innovation-related market failures. The scope of the NIS must include broader complementary factors and supporting institutions," it added.Further, innovation cannot be supply driven, there must be demand from firms that have the capabilities to innovative."On this demand side, the firm and its decisions to innovate, policy makers must be concerned with the incentives for firms to accumulate the necessary physical, human and knowledge capital," Maloney said.

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Air India delays payment of March salaries

VADODARA: Disinvestment-bound Air India has delayed the payment of salaries for the month of March and is yet to intimate the employees about reasons for the delay, sources said.The debt-laden carrier has over 21,000 employees, including more than 11,000 on permanent rolls.Generally, salaries are paid by the 30th or 31st of every month and in case of bank holidays around these dates, then payments are made in advance.Sources at the airline told PTI that March salaries remain unpaid till today and that employees have not received any communication from the management as to when the salaries would be disbursed."Since the banks were closed till Monday, we were expecting the salary payment by today, though the practice is of making the salary payments in advance in the eventuality of banks being closed around 30 or 31st of the month," one of the sources said.When contacted, an Air India spokesperson said salaries for March are likely to be paid by Thursday.On March 28, the Civil Aviation Ministry came out with the preliminary information memorandum for seeking Expression of Interest (EoI) for the strategic disinvestment of Air India.Air India had 11,214 permanent employees as on December 1, 2017., as per the memorandum.The government has proposed selling 76 per cent stake in the airline as well as transfer management control to private players. Besides, Air India would divest 100 per cent stake in Air India Express and 50 per cent shareholding in AISATS, an equal joint venture with Singapore-based SATS, according to the memorandum.Last month, full service carrier Jet Airways had informed its employees that it was postponing payments of March salaries, citing "circumstances beyond its control."

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Marriott International plans to open 50 new projects in India

MUMBAI: American hospitality group Marriott International today said it has more than 50 signed projects in its pipeline in the country at present. The hospitality major sees huge opportunity to continue working with owners to open hotels from across it's extensive bouquet of brands, especially in the upper midscale, upscale and luxury segments, given India's robust economy and rising middle class. "India is one of our most important markets in Asia, with the second highest number of hotels and rooms after China," its chief development officer Paul Foskey said at the opening of its 100th hotel - Sheraton Grand Bengaluru Whitefield Hotel - in the country. Marriott expects to open more than 50 new hotels in India and raise inventory to more than 30,000 rooms over the next few years due to the growing demand for mid-market hotels, he added. The world's largest hotel chain currently has more than 20,000 rooms and 15 brands in 32 cities in the country. It employs 30,000 people in India and is expecting to recruit another 3,000 this year, according to Foskey. "Growth prospects in the secondary and tertiary markets will continue to be a major focus for Marriott in 2018, leveraging strong demand for its select-service brands and the growing demand for its upper upscale and luxury portfolios," he said.

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Government asks PNB to share scam details with ICAI

NEW DELHI: The government has asked PNB and probe agencies to share details of the Rs 13,000 crore scam with chartered accountants' apex body ICAI, which is looking into the systemic issues related to the fraud, an official said.A high-level group constituted by the Institute of Chartered Accountants of India (ICAI) is studying specifically the systemic issues involved in Punjab National Bank fraud and would also suggest remedial measures for strengthening the banking system.The 10-member panel, which has met at least three times, is awaiting more information, ICAI President Naveen N D Gupta said today.Speaking to reporters here, he said the government has asked the bank, the CBI and Enforcement Directorate to share information about the scam with the institute.A multi-agency probe is progressing into the more than Rs 13,000 crore scam at PNB, involving diamond merchants Nirav Modi and Mehul Choksi. The fraud was mainly perpetrated through issuing of fraudulent Letters of Undertaking (LoUs) with the help of PNB officials.The panel has made some preliminary conclusions based on available information, which indicates possible lapses at the lender, according to S B Zaware, who is the convenor of the committee.In the wake of the fraud coming to light, Gupta said, the institute has also sent out notices to PNB auditors."The objective of such study is two-fold -- one to suggest changes to strengthen the existing banking system and the other to guide the chartered accountants conducting audits to verify the systems in place accordingly," the institute had said last week.

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F&O: Options show Nifty50’s range between 10,100 & 10,400

By Chandan TapariaThe Nifty50 index opened flat but managed to hold above the 10,171-10,180 zone and witnessed a rally towards the 10,255 level in the last hour of trade.The index managed to close near the falling supply trend line by connecting the swing highs of 10,631, 10,478 and 10,250. It formed a bullish candle on a daily chart, holding well above previous week’s high.Now, it has to hold above 10,222 to extend its move towards 10,276 and then 10,333 levels, while supports are seen at 10,180 and then 10,141 levels.On the options front, maximum Put open interest stood at strike price 10,000, followed by 9,800, while maximum Call OI was at 11,000, followed by 10,500.Put writing was seen at 10,000 and 10,100 while Call writing was seen at 10,300 and 10,400 levels. Options data suggested immediate trading range between 10,100 and 10,400 levels.India VIX fell 1.04 per cent to 15.19.Bank Nifty opened in the negative but witnessed buying interest in the last hour of trade and managed to close above 24,500 level. The index formed a bullish candle on the daily chart and showed signs of short-term stability.Now, it has to hold above 24,500 to extend its move towards 24,750 and then 25,000 levels, while on the downside, supports are seen at 24,350 and then 24,250 levels.Nifty March futures closed with a 0.16 per cent gain at 10,280. Long buildup was seen in MRF, Pidilite Industries, CEAT, Voltas, Apollo Tyre and Jet Airways while shorts were seen in Hindalco, TechM, OIL, Titan and Eicher Motors.(Chandan Taparia is Technical & Derivative Analyst at Motilal Oswal Securities. Investors are advised to consult financial advisers before taking an investment calls based on these observations)

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Tech view: Nifty50 forms bullish candle, forms higher high & low

NEW DELHI: The Nifty50 managed to settle above its immediate support level at 10,240, despite weak global cues. The index made a bullish candle on the daily charts and is expected to face immediate resistance at 10,276, and later around its 50-day moving average of 10,360. The index may find support near the 10,140 level.“The index has managed to close near its falling supply trend line by connecting the swing highs of 10,631, 10,478 and 10,250. Now, it has to hold above 10,222 to extend its upmove towards 10,276 and 10,333 levels. Supports are seen at 10,180 and 10,141," said Chandan Taparia of Motilal Oswal Securities.For the day, the Nifty50 rose 33.20 points, or 0.33 per cent, to close at 10,245. The index tested its 200-day moving average during the session. On the daily chart, it made higher high and higher low for the second straight session. "The bulls have approached the supply line of a 22-day-old downsloping channel, whose value is placed around the 10,240 mark. If they manage to successfully negotiate this resistance point with a sustainable breakout, a new target towards 10,600 is likely,” said Mazhar Mohammad of Chartviewindia.in. But before that, Mohammad said, a major hurdle is placed around the 10,360 level, which the bulls need to conquer on a closing basis. The expert advised traders to remain on the long side with an initial target of 10,350 with a stop loss placed below 10,117 on a closing basis.

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Cognizant fund freeze by taxman stayed by court; company told to pay 15% disputed amount

CHENNAI: The Madras High Court on Tuesday asked the Income-Tax Department to release bank deposits of over Rs 2,500 crore of software exporter Cognizant, which it had following a dispute over unpaid taxes on dividend it paid to its overseas parent.The court also directed Cognizant to deposit 15% or Rs 400 crore of the disupted amount as security deposit till it decides on the case.A lien, a form of a security interest, is to be created over the rest of the disputed amount until the case is resolved. The matter has been posted for further hearing on April 18. "It basically circles around their argument that the arrangement approved by the high court excludes any applicability of dividend distribution tax while our argument is that that is a clandestine arrangement done without the knowledge of the tax department," said Additional Solicitor General G Rajagopalan, who appeared on the behalf of the Tax Department, told ET. Cognizant did not comment immediately.The IT department had two weeks ago frozen a few bank accounts and deposits of over Rs 2.500 crore. The action was in connection with a notice sent in November last year over a share repurchase executed in May 2016 just ahead of the Finance Bill, 2016 which widened the scope of taxation for share buy-backs. The tax department is also said to be preparing for prosecution with the Economic Offences Court in Chennai against Cognizant in the Dividend Distribution Tax case.

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