WEDNESDAY, 7 OCTOBER 2015

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VOLUME XX NUMBER 39

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> IN BRIEF
IMF cuts India’s growth BEEF ROW

Dadri-like cases hurt

IIT council refers fee
increase to committee
The Indian Institutes of Technology (IITs)
forecast for FY16 to 7.3% India’s image: Jaitley
will consider a fee increase for their
programmes after a committee studies
Growthexpectedtobouncebackto7.5%inFY17onthebackofreforms
the matter. At its council meeting in BS REPORTER
Mumbai on Tuesday, the IITs referred the
matter of a fee rise to a committee, which
BS REPORTER
GLOBAL New Delhi, 6 October

OUTLOOK
New Delhi, 6 October
will submit a report to the Ministry of Finance Minister Arun Jaitley became the

T
Human Resource Development, which he International Monetary first authoritative voice from the govern-
The IMFin its latest
will decide on the extent of the hike. 8 > fund (IMF) has lowered India’s ment to unequivocally disapprove of the
World Economic
growth forecast for FY16 to attack on a Muslim family in Dadri, Uttar
Outlooksaidworld Pradesh, by a mob. The attack, which left a
7.3 per cent from its July forecast of
Physics Nobel for Kajita, McDonald 7.5 per cent. Growth is expected to
GDP,which grewat 50-year-old man dead and his son injured,
Takaaki Kajita of Japan and Arthur McDonald bounce back to 7.5 per cent in 2016-17 3.4% lastyear, is now followed rumours the family might have
of Canada have won the Nobel Prize in on the back of reforms, a pick-up in expected to growat consumed or stored beef.
physics for the discovery of neutrino investment and lower commodity 3.1% in 2015 against the “India is a mature society. We need to
oscillations. The Royal Swedish Academy of prices, it said in its latest World earlier forecast of 3.3% rise above these kinds of incidents because
Sciences said the two researchers had made Economic Outlook (WEO). these certainly don’t give a good name as far
Policymakers in India are not
World Economic Outlook projections, October 2015 (% change) as the country is concerned,” he told
key contributions to experiments showing
that neutrinos changed identities. 6> confident of the country’s economic Actual 2014 2015 projections 2016 projections reporters after a lecture at Columbia
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> expansion at 8.1-8.5 per cent for the University, New York, on Monday. “I have
also said they could amount to policy diver-
‘7,500 km of highway projects at risk’
current financial year projected by 7.36.8 7.3 7.3 7.5
the Economic Survey. Unlike IMF, 6.3 sions in that context. So, it is the responsi-
Around7,500kmofhighwayprojects— they are, though, sure that GDP bility of every Indian in his action or com-
4.6
5,100kmunderconstructionand2,400km would grow over 7.5 per cent. On 3.4 3.13.6 4.0 4.5 ment to stay clear of unfortunate and
2.6 2.8
1.8 2.0 2.2 2.4
operational—awardedbetweenFY10andFY12 Tuesday, the United Nations condemnable instances such as this.”
1.6
onabuild,operate,transferbasisareathigh Conference on Trade and 0.9 1.5 The Bharatiya Janata Party (BJP) had been
risk,accordingtoCRISILRatings. 4> Development also projected the trying to play down or equivocate on the inci-
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> economy to expand 7.5 per cent for World GDP Advanced United Euro Emerging China India dent, terming it “an unfortunate accident”
2015-16. growth economies States area markets & rather than a conspiracy to attack a particular
Uflextoinvest~1,500crinSanandunit If economic growth indeed stands developing community.
Flexible packaging company Uflex will at 7.3 per cent as projected by IMF economies Prime Minister Narendra Modi is yet to
invest ~1,500 crore for its new plant at for the current financial year, the comment on the incident, though he has said
Sanand, citing proximity to customers such expansion would be same as in 2014- at several platforms that his government is
as Nestlé, Nivea and Colgate. It would invest 15. Even then, the economy would 4.8 committed to harmony between communi-
~580 crore in the first phase to set up a be the fastest growing large econo-
4.1 4.0 4.2 3.6 4.4 3.4 3.9 ties, adding any move to oppress minorities
3.3 3.2 3.4 3.13.4
Finance Minister Arun Jaitley at the
packaging line that would employ around my, as China’s economic expansion 2.9 will be dealt with firmly Columbia School of International and
250 people. 2> is projected to come down to His ministers, however, have been Public Affairs in New York PHOTO: PTI
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> 6.8 per cent in 2015 from 7.3 per cent 1.3 upbraided for making anti-minority remarks.
in the previous year. “This (incident) should be considered as an act against whoever is responsible for it.”
CARE downgrades JPVL loans The economy grew seven per cent accident, without giving any communal Home Minister Rajnath Singh said, “What
World trade Advanced Emerging market & Advanced Emerging market &
CARE Ratings has downgraded ratings for in the first quarter of the current volume (goods economies developing economies colour to it,” said minister of state for tourism happened in Dadri was unfortunate. It is the
economies developing economies
Jaiprakash Power Ventures’ loans for the financial year, against 7.3 per cent in and services) and BJP MP from Noida, Mahesh Sharma. “I responsibility of everybody to maintain peace
Nigrie Thermal Power Project from ‘BB’ the previous quarter. IMPORTS EXPORTS feel this incident occurred due to some mis- and harmony.”
to ‘D’ due to ongoing delays in servicing Recently, Asian Development Note: For India, data and forecasts are presented on a financial year basis and GDP from 2011 onward is understanding and the law should truthfully Turn to Page 18 >
based on GDP at market prices with FY11-12 as base year
of credit. 7> Bank had slashed India’s economic Complied by Ishan Bakshi Source: World Economic Outlook, October 2015, IMF
growth for 2015-16 to 7.4 per cent
from its earlier projection of by the Reserve Bank of India (RBI),
India fastestgrowth 7.8 per cent. but cautioned it against cutting the
ECONOMY
Services growth loses steam in
4>
Labs at ports to UP Police for FIR > AirChief
Marshal
market for PwC, EYin FY15
>
As inflation remains subdued, IMF real rate (adjusted for inflation). September: Nikkei PMI
India is turning out to be a bright spot
saw room to cut nominal policy rate Turn to Page 18 >
check beef export against ministers ArupRaha
reactedto
to do business in for marquee Mohammad
accounting, audit and advisory firms.
In their annual reports for FY15, both
Hope to roll out GST in 2016, says Modi Amidaragingcontroversyoverthe
exportofbeefaftertheDadrikilling,
Trouble appears to be brewing for
Union minister Mahesh Sharma
Akhlaq‘s
lynchingin
PricewaterhouseCoopers (PwC) and EY Ahead of the winter session of Parliament, the government appears to be hopeful of theCentreonTuesdayannounced and BJP MLA Sangeet Som, with UP
Dadriwith
on Tuesday said their India business introducing the goods and services tax (GST) from the next financial year. This is despite thesettingupofspeciallabsat Police seeking action against them
recorded the fastest growth revenue- majorportstocheckillegalexportof for alleged violation of prohibitory thepromise
the fact that the Congress is yet to express support for the Constitution amendment Bill
wise, globally. PwC said India was the [Link] orders in Bishada village. A report thathisfamily
for the new indirect tax regime in its present form. “We have introduced the GST Bill in
fastest growing market in the PwC agricultureSanjeevKumarBalyan filed by the police with the District wouldget
Parliament and hope to roll it out in 2016,” Prime Minister Narendra Modi (pictured)
network for FY15, recording revenue madetheannouncementaftera Magistrate of Gautam Budh refugeat
said at an event organised by Nasscom in Bengaluru on Tuesday. Meanwhile,
growth of 17 per cent. EY said its India reviewmeetingonillegalexportof Nagar recommended filing of first anIndianAir
addressing students and faculty at Columbia University in the US, Finance Minister
business grew 19.7 per cent in the cowmeatwithofficialsofagri- information reports against the two Forcestation,
financial year ended June. Jaitley said GST would be the government’s priority. From the US, the FM will travel to exportpromotionbody,APEDA,the leaders and also against BSP leader reportsAAJAI
SUDIPTO DEY reports Lima, Peru, to participate at a World Bank-International Monetary Fund meeting. 4 > foodprocessingministryandthe and former minister Naseemuddin
2>
SHUKLA 20 >
agricultureministry. Turn to Page 18 > Siddiqui. PTI

Traders may have pocketed ~8,000 crore RBI pulls up bosses

during onion crisis: NITI Aayog analysis for IOB mess
SANJEEB MUKHERJEE million tonnes of onions a month. Retail of Nashik. Official figures show the average
MANOJIT SAHA
Mumbai, 6 October
NOT IN THE PINK owned banks cleared by
the United Progressive
New Delhi, 6 October onion prices had jumped to almost ~70 per retail price of onion across the country was OF HEALTH Alliance regime.
kg in many cities in August and September ~51 per kg on September 30, almost double The Reserve Bank of India IOB’s new manage-
An analysis by the NITI Aayog on this year’s this year, nearly ~40 more than the average the price a year ago. (RBI) has initiated corrective ment, however, failed to
onion crisis shows traders could price a year ago. The central government decided to action at Indian Overseas raise its return on assets to
have milked ~8,000 crore from The analysis brought out the need for import 10,000 tonnes of onions and the first Bank (IOB) on the grounds the threshold of 0.25 per
consumers in August and September by state-intervention in the onion market. The batch of 250 tonnes has already arrived. . that its management is cent that triggers corrective
manipulating prices. most agencies such as Nafed and SFAC Onion prices tend to move up between unable to revive it. action by the central bank.
The Aayog recently met the ministries incur on storing onions is ~100-200 crore, June and September, as the winter crop is IOB has reported low RBI summoned the IOB
TEAR-JERKER concerned to find a long-term solution to miniscule compared to what consumers exhausted before the early summer return on assets for four con- brass in the last week of
Retail price ofonion in selectcities (~/kg) recurring onion crises. It arrived at the cost paid extra in the country’s most recent harvest arrives. secutive quarters from July August to emphasise the
of market manipulation on the average onion crisis. This year, a large part of onions harvest- 2014. The bank’s branch need for greater coordina-
Aug 3, ‘15 Oct 5, ‘15 Change monthly consumption of onions in the “It is imperative to use price stabilisation ed in March-May was destroyed by rain and expansion and recruitment tion. “RBI has been telling
Delhi 45 57 12 country, multiplied by the extra amount instruments to deal with onion crises,” the [Link] have been curtailed but no banks to become more
consumers paid in these two months. official [Link] usea~500 dry weather in Maharashtra and Karnataka lending curbs have been proactive in order to
Mumbai 40 51 11
“The rough calculation comes to ~8,000 crore price stabilisation fund to intervene delayed early kharif sowing. This created an imposed. avoid further slippages,” a
Kolkata 45 58 13 crore, which is the price consumers were when onion and potato prices flare up. extended period of shortage, which was In a note to the Chennai- source said.
Chennai 42 40 -2 forced to pay to traders and middlemen this Nine states applied for money from the milked by hoarders. based bank, also marked to Corrective action is initi-
Agra 25 60 35 year,” a senior official, who participated in price stabilisation fund this year for inter- India is estimated to have produced the government, RBI said its ated if a bank’s capital ade-
the discussions, said. vention over onions. The Centre bears half 18.92 million tonnes of onions in 2014-15, management was not proac- quacy ratio falls below nine
Jabalpur 20 60 40 Officials from the ministries of agricul- the loss incurred by state agencies and the almost 478,000 tonnes less than the tive in arresting the decline per cent or its net non-per-
Ahmedabad 33 47 14 ture, consumer affairs and commerce, the entire expenses of central agencies in previous year. in performance. IOB posted forming assets (NPAs) rise
Guwahati 36 56 20 Indian Council of Agriculture Research procurement and distribution of onions NAFED and SFAC were provided inter- a loss of ~245 crore for June- ROA: Return on assets above 10 per cent or its
(ICAR), Nafed, and the Small Farmers Agri- and potatoes. est-free advances of ~7.94 crore and September 2014 and a loss of Source: Capitaline return on assets falls
Shillong 35 65 30 business Consortium (SFAC) took part in BetweenAugust16andAugust30,onion ~8.75 crore, respectively, to buy onions ~516 crore in October-
Compiled by BS Research Bureau
below 0.25 per cent. IOB’s
Lucknow 35 55 20 the meeting. prices spurted 50 per cent due to a sudden directly from farmers and they bought December 2014. RBI is capital adequacy ratio and
Source: Department of consumer affairs India usually consumes a little over a fall in supply to the main wholesale markets 8,368.52 tonnes in April at ~19-20 per kg. monitoring the bank every net NPAs are within
month. acceptable limits.
The government appoint- Shares of the bank fell
ed R Koteeswaran as chief P15 > nearly three per cent follow-
executive and managing ing RBI announcing restric-
ECONOMY P4 director of IOB on December tions. The stock fell 2.27 per
The legacy of the Nitish Kumar administration 31, 2014. The post was vacant
for almost six months before “We are on the job but
cent to ~36.50 on BSE. At
NSE, its shares declined
The 2014 Lok Sabha elections were cataclysmic for the the Janata Dal (United). It won that and in the two months it’s not going to be easy” 2.93 per cent to ~36.35.
two of the 40 seats. Bihar Chief Minister Nitish Kumar (pictured) thought he could prior to Koteeswaran’s R KOTEESWARAN Standard & Poor’s (S&P)
shrug the Bharatiya Janata Party off but the people of Bihar would still vote for appointment, the bank had MD & CEO, Indian on Tuesday said the bank’s
only one executive director, Overseas Bank rating could face downward
him because of his ‘kaam’. But the verdict was opposite. Worse, everywhere else Atul Agarwal. IOB is eligible pressure if the corrective
in India, regional leaders – whether Mamata Banerjee or Naveen Patnaik – did for two executive directors; action taken by RBI results
not lose the election; only Nitish did. For now, Nitish is fighting back grimly but BATTLEFOR and the second Pawan Bajaj, was appoint- in weakening of the bank’s credit profile.
is convinced that whatever the hue of the government, his is the road that it
will have to take. ADITI PHADNIS writes
BIHAR ed in March 2015. “We could also lower the rating on IOB if
After coming to power in May 2014, the the bank’s risk-adjusted capital ratio
National Democratic Alliance government declines to less than five per cent,”
had cancelled all appointments to state- S&P said.