The Himalayan Mail8 JAMMU WEDNESDAY NOVEMBER 18, 2020 NEWS

NEW DELHI, NOV 17:Equity benchmark Sensexsurged 315 points to close ata fresh lifetime high onTuesday, driven by heavybuying in metal, industrials,banking and finance stocks.

After touching its all-timepeak of 44,161.16 during thesession, the 30-share BSEindex settled 314.73 pointsor 0.72 per cent higher at43,952.71.

Similarly, the broaderNSE Nifty touched a freshintra-day high of 12,934.05.

It finally finished 93.95points or 0.74 per cent up atits closing record of12,874.20.

Tata Steel was the topgainer among the Sensexconstituents, surgingaround 6 per cent, followedby SBI, HDFC Bank, BajajFinance, Axis Bank, LT,

Maruti, IndusInd Bank andHDFC.

On the other hand, NTPC,HCL Tech, ONGC, Infosys,

ITC, PowerGrid, and Hin-dustan Unilever were in thered.

Elsewhere in Asia,

bourses in Shanghai andSeoul ended in the red,while Hong Kong andTokyo closed with gains.

Sensex rallies over 300points to hit fresh peak

NEW DELHI, NOV 17:After Punjab, Chhattisgarhand Rajasthan, all threewith Congress-run govern-ments, have come up withtheir own versions of farmBills, to blunt the impact ofthe Central Acts and protect“the interests of the farm-ers”.

However, question re-mains on the admissibilityof the Bills and how they canbecome law, but the piecesof legislation have thrownopen another path of con-frontation between the Cen-tre and states.

Though the Bills of Pun-jab and Rajasthan have a lotof similarities, the one ap-proved by the ChhattisgarhAssembly is structurally dif-ferent.

None of the three hastried to address a key de-mand of the agitating farm-ers in full, which is to makeall payments below the min-imum support price (MSP),within and outside mandis,illegal.While the Punjab leg-islation says none can com-pel a farmer to sell his pro-duce below the MSP, it alsosays that no sale of wheatand paddy in the state willbe valid unless it is sold at aprice equivalent to the MSPor more than that.

In other words, the Pun-jab Bill ensures MSPs, butonly for wheat and paddy.Experts say in the state sev-eral crops, such as maizeand cotton, are regularlysold below the MSP.

The reason is not difficultto find. Punjab is a majorcontributor of wheat andpaddy to the Central stocks,and Food Corporation of In-dia (FCI) annually pur-chases 24-26 million tonnesof those crops from thestate.This in 2019-20 wasmore than 30 per cent of thecountry’s procurement for

the Central pool.The Punjab Bill tries to

ensure that FCI in no condi-tion buys wheat and paddyfrom the state at below theMSP because it is the largestpurchaser, but at the sameit continues to pay taxes andlevies the state charges onsuch purchases.

A provision in one of theBills also says the state willhave the powers the levyfees or charges on all trans-actions in the trade area.

“Trade area”, according tothe Central legislation, is anarea that lies outside thedesignated mandis, agricul-ture produce marketingcommittees (APMCs), orany other place that hasbeen declared “deemedAPMC” in terms of the statemandi Act concerned.

The amendment to theCentral Contract FarmingAct, as proposed by the Pun-jab government, says thatno sale or purchase of wheatand paddy will be valid un-der any contract unless theprice paid is more than theMSP.

But NITI Aayog memberRamesh Chand in a recentarticle argued against anymove to guarantee MSP and

said economic theory, aswell as experience, indicatesthat a price level that isn’tsupported by demand andsupply cannot be sustainedthrough legal measures.

Critics also say this provi-sion is flawed because thereis hardly any contract farm-ing done for wheat andpaddy in Punjab.

Sukhpal Singh, professorand chairperson at the Cen-tre for Management of Agri-culture in IIM-Ahmedabad,in an article written for theonline edition of this paper,said in sum though, throughthe amendments to thethree Central laws, the stategovernment had tried to as-sert its federal rights, theBills did not have any tangi-ble benefits for the farmers.

In the case of Chhattis-garh and Rajasthan, the is-sues are different and,therefore, the state govern-ments have approached theBills in a different way.

Chhattisgarh hasemerged as one of the majorcontributors of rice to theCentral pool and annuallycontributes 5.5-6 milliontonnes of rice to it.

The state could ill affordto take on the Central agen-

cies because that would dis-turb the delicate equationsit has with the Centre.

Therefore, in its farm leg-islation, it has not even spo-ken about the Central laws.

In fact, while participatingin a discussion on the farmBills, the state’s agricultureminister, RavindraChoubey, said the legisla-tion did not violate any pro-visions of the Central laws.

The Chhattisgarh Bill islargely an amendment to itsAPMC bylaws, which seekto designate warehouses, si-los, and private storagespaces mandis.

This will enable the stateto levy fees and charges onthem.

Similarly, the RajasthanBills, which, just like thosein Punjab, are an amend-ment to the Central Acts, aresilent on enforcing MSPsexcept in the case of con-tract agreements.

In another piece, Singhwrote the Rajasthan Bills,just like those in Punjab,tried to assert the state’s fed-eral rights but there wereseveral lacunae that wouldmake many provisions toprotect farmer interests inef-fective.

States' own versions of farm Bills arefalling short on farmers' needs

NEW DELHI, NOV17: Senapathy (Kris)Gopalakrishnan, co-founder and former co-chairman, Infosys, hasbeen appointed as the firstchairperson of the Re-serve Bank InnovationHub.

In August, the centralbank had announced thatit will set up the ReserveBank Innovation Hub(RBIH) to promote inno-vation across the financialsector by leveraging ontechnology and creatingan environment thatwould facilitate and fosterinnovation.

"The Reserve Bank hasappointed Senapathy(Kris) Gopalakrishnan,co-founder and former co-chairman, Infosys, as thefirst chairperson of theRBIH," RBI said in a

statement on Tuesday.Gopalakrishnan is cur-

rently the Chief Mentor ofStart-up Village, an incu-bation hub for start-ups.

RBIH would be guidedand managed by a govern-ing council led by a Chair-person, the central banksaid.

Other members of thegoverning council are CEO(to be appointed); Ashok

Jhunjhunwala (InstituteProfessor, IIT, Madras); HKrishnamurthy (PrincipalResearch Scientist, IISc,Bengaluru); Gopal Srini-vasan (CMD, TVS CapitalFunds); A P Hota (FormerCEO, NPCI); MrutyunjayMahapatra (former CMD,Syndicate Bank); T RabiSankar (Executive Direc-tor, RBI); Deepak Kumar(CGM, Department of In-

formation Technology,RBI); and K Nikhila (Di-rector, Institute for Devel-opment & Research inBanking Technology, Hy-derabad).

The RBIH shall create aneco-system that would fo-cus on promoting access tofinancial services andproducts, RBI said, andadded "this will also pro-mote financial inclusion".

The Hub will collaboratewith financial sector insti-tutions, technology indus-try and academic institu-tions and coordinateefforts for exchange ofideas and development ofprototypes related to fi-nancial innovations.

It would develop inter-nal infrastructure to pro-mote fintech research andfacilitate engagement withinnovators and start-ups.

'Kris' Gopalakrishnan is firstchair of RBI's innovation hub

NEW DELHI, NOV 17:It’s been a mixed bag forthe business performanceof internet verticals acrosssegments, with some man-aging to exceed pre-pan-demic revenues and therest failing to recover toearlier levels.

Education technology,grocery, fashion, food de-livery and UPI paymentssurpassed volumes or rev-enues of February, in theSeptember-October pe-riod.

However, ride-sharing,classifieds, lending, air-lines, and hotels were yet toshow recovery to pre-Covidlevels, according to a Gold-man Sachs analysis.

In many sectors, thesedevelopments have has-tened consolidation. A fewbig players control the mar-ket with their substantialmarket share.

Online travel portalshave been particularly hithard. Volumes and rev-enues of bookings for ho-tels in September-Octoberwere a mere 30 per cent ofFebruary. For air travel, itwas 35 per cent.

This is of a piece with thefact that domestic air travelat Delhi airport, for in-stance, in terms of passen-gers in October, is 43 percent of last year and thenumber of flights is 53 percent, according to airportsources.

Even worse is interna-tional travel where, exceptfor the bubble flights, thingshave not taken off.

Travel companies saythat even if flights resumeand tourist visas are givenby November-end, they donot expect inbound touriststo be more than 10 per centof the last financial year.

“Even if e-visas are al-lowed, inbound tourists

take three months to pre-pare to come.

"So we don’t expect morethan 10 per cent of what isnormal to come in the ini-tial stage.

"And the peak seasonfrom Europe is October toFebruary,” said PronobSarkar, president, IATO.

However, airlines likeVistara, have been lookingat adding more flights in thedomestic sector now thatthe government has just in-creased the cap on flightsfrom 60-75 per cent of pre-Covid-19 levels.

With quarantine rules be-coming easier for domesticinterstate travel, many In-dians are going on holidaysthough they prefer destina-tions which are at a mo-torable distance.

Whatever the mode oftravel, it is a relief for hotels.

Ride hailing also has seenslower pick up as the pan-demic has made people pre-fer their own private trans-port.

Based on app downloaddata from Sensor Tower,rides have fallen to half ofpre-covid levels.

Yet, similar covid logic(private is better than publicand outdoors is better thanindoors) has led to auto-

rickshaws being preferredto cabs.

They have alreadyreached 80 per cent of pre-covid levels in places likeNew Delhi, according toUber India’s ride data.

The same logic hasboosted demand for onlinegrocery shopping and edu-cation technology.

Online grocery majorGrofers’ founder SaurabhKumar spoke of a sharppick-up in demand.

“We have seen a surge indemand that has stabilizedat 60 per cent higher thanpre-pandemic times.

"There has also been a 40per cent increase in basketsize compared to pre-covidand average bills have hitRs 1,800 even after the 30per cent discount which wegenerally give,” said Kumar.

At Big Basket too, SeshuKumar Tirumala, nationalcategory head, said that‘given the unmatched con-venience and safety ofhome delivery, we saw newcustomers increase by 84per cent compared to pre-covid and the retention ratewent up by 50 per cent’.

In EdTech, Byju hassigned up 25 million cus-tomers in the last fivemonths compared to 45

million in four years.As a result, Goldman

Sachs estimates that its rev-enues have gone up by 200per cent of pre-pandemiclevels.

Consolidation has led toByju claiming it has a 90per cent market share of thecountry’s online K-12 edu-cation.

It has also bought White-Hat Jnr, the coding plat-form for children, and islooking at a few more acqui-sitions.

Byju expects to hit a rev-enue of $1 billion in FY21,more than double the $450million it made in the last fi-nancial year.

In the jobs classified busi-ness, Info Edge dominateswith its 80 per cent marketshare.

This market is slowly re-covering close to its pre-covid levels at 75-80 percent.

The competitive pressureon MakeMyTrip has re-duced, despite numerousonline travel players such asYatra and Cleartrip and ho-tel aggregators such as Oyo.

Nonetheless, Make-MyTrip has over a 50 percent share of the market inhotels, air and bus book-ings, making it easier forthe company to tide overthe crisis while most of itscompetitors are facing chal-lenges.

In the UPI paymentsbusiness, PhonePe andGoogle Pay dominate thebusiness, controlling 40per cent of the market as aresult of more consumersshifting from cash to con-tactless payments.

But their cosy spacemight now come underchallenge with the entry ofWhatsApp.

Covid-19 pandemic was aboon for online biz

NEW DELHI, NOV17: Going by headlineprofits in the Septemberquarter (Q2) of FY20-21,India Inc has done well de-spite the disruptions due tothe pandemic.

The combined net profitof listed companiesreached a record Rs 1.52trillion — up two and halftimes on year-on-year(YoY) basis.

In comparison, thesefirms had reported a com-bined net profit of Rs11,200 crore in Q1 FY21and a combined net loss ofRs 450 crore in Q4 FY20.

Not surprisingly, equityinvestors are bidding-upstock prices across sectorsand the broader market isnow more valuable thanpre-Covid levels.

The surprise upside onearnings came despite acontinued contraction insales volumes and rev-enues.

The combined net salesof listed companies (inter-est income in case of banksand non-bank lenders)were down 5.2 per centYoY during Q2 — markingthe fifth consecutive quar-ter of revenue decline.

For comparison, netsales were down 0.7 percent YoY during Q2 FY20and it was down 27 percent YoY during Q1 FY21.

The trend in revenuessuggests a sharp reboundin economic activity on se-quential basis but it is yetto recover to its pre-Covidhigh.

The analysis is based onthe quarterly results of2,672 companies includingtheir listed subsidiaries.

Company-wise and sec-

toral break-up of earningsgrowth, however, suggestsrecovery in earnings ismuch more muted thanwhat headline numberssuggest.

Nearly two-third of theswing in net profits in Q2FY21 was accounted for byBharti Airtel and VodafoneIdea.

The two mobile opera-tors reported a sharp de-cline in losses on YoY basisas they no more have tomake provisions for ad-justed gross revenue(AGR) dues.

Vodafone Idea reportednet loss of Rs 6,451 crore inQ2 FY21 against net loss ofaround Rs 50,000 crorelast year.

Airtel net loss declinedfrom around Rs 23,000crore a year ago to Rs 776crore in Q2 FY21.

Oil marketers such as In-dian Oil, Bharat Petro-leum, and Hindustan Pe-troleum reported largeprofits on account of in-ventory gains, despite 20per cent plus decline intheir net sales.

These exceptional gainswill vanish now.

Bank earnings also sur-prised on the upside asthey didn’t have to reportbad loans and make provi-sions for them thanks toSupreme Court morato-rium on loans.

The result was a sharprise in profits despitemuted growth in newloans.

Some help also camefrom decline in benchmarkinterest rate.

The net profit of compa-nies — excluding oil andgas, banks and financials,and telecom — was up 7.8per cent YoY, while theiradjusted net profit was up3.5 per cent YoY in Q2.

These companies’ netsales were down 3.2 percent YoY against 31.4 percent YoY contraction in Q1FY21 and 3.1 per cent YoYdecline a year ago.

“We need to discount theearnings growth in thisquarter as a large part of itcame from exceptionalgains and extremely lowbase last year.

"Besides companies inmany sectors gained frompent-up demand and re-stocking by the trade postthe lockdown, which willnot be there in forthcomingquarters,” said GChokkalingam, founderand MD, Equinomics Re-search & Advisory Services.

In the manufacturingsector, earnings were alsoboosted by a sharp declinein input prices that ex-panded gross and operat-ing margins in most sec-tors.

On top of it, many manu-factured goods such asmetals, cement, tyres, andglass, among others, saw asharp rise in prices due to acombination of disruptionin domestic manufacturingand import restriction.

Analysts, however, ex-pect many of these tail-winds to vanish as com-modity prices rally andeconomic activity nor-malises.

“India Inc witnessed astrong profit after tax in Q2on account of gains fromcorporate tax cut and sharpdecline in operating ex-penses for a considerablenumber of companies.

"This is not likely to sus-tain once the economycompletely unlocks andbusinesses reach their pre-Covid levels,” said NiraliShah, senior research ana-lyst, Samco Securities.

Stock prices, however,suggest this has raisedearnings expectationsamong equity investors,which may not be easy forIndia Inc to meet, givenrecord high valuations inmost sectors.

Despite Covid-19, India Inccombined profit at Rs 1.5 trn