8 ISSUES AND INSIGHTS MUMBAI | WEDNESDAY 13 MARCH 2019 >

than Hindi. Over 53 per cent of total TV in a variety of languages. Why then > CHINESE WHISPERS viewership goes to GECs and a bulk of doesn’t it grow? The real drama on TV what people watch on them is drama And that brings me to the third — so fiction rules. That is what OTT important thing. How things remain The world’s second largest TV market continues to grow and surprisetrends show too. the same. These proportions, of GEC, Confessions of an ally After GECs movies dominate having FILMS, kids, sports etc, have remained The All India Anna Dravida Munnetra second largest TV market — India. A over 2017. Over 30 billion impressions, risen from about 12 per cent of total roughly the same over the 18 years Kazhagam (AIADMK) might be the joint venture between advertisers, 75 new channels, 24,076 movies and viewership in 2010 to 24 per cent now. that I have been tracking this industry. third-largest party in the current Lok broadcasters and media agencies it 989 billion man minutes of TV viewing It underlines once again that movies GECs have always been roughly half Sabha and part of the National keeps tabs on 595 channels by sifting per week are the other big, bull-dozer are the fuel that drive both TV and OTT of all viewing, kids five to six per cent. Democratic Alliance (NDA), but that through 7.5 petabytes of data. This like numbers that hit you. And for viewership — across male and female Films is the only genre that has shown does not make it "a decisive political gives the industry a currency that pow- the over the top (OTT) enthusiasts here or urban and rural viewers. exceptional growth. Twenty eight force", said party Spokesperson Avadi ers $5.7 billion of advertising and con- is a comparison — the 480 million Unfortunately news remains the years after private television began, Kumar during a debate. Then, much to tent spends. The ~74,000 crore Indian Indians with broadband connections third most watched genre at 7.2 per cent drama, films and news continue to the chagrin of his party colleagues, he television business is the largest chunk spend about 50 minutes a day watching — the fall in the standards of news drives viewership. In the 90s it was said in the upcoming election, his of the media and entertainment indus- VIDEO online. TV on the other hand broadcasting simply seems to have Tara and Amaanat now it is Naagin party's focus would be on the by- try (45 per cent) and impacts 4.5 mil- averages 3 hours and 45 minutes and attracted more people to it. and Ishq Subhan Allah. That is true elections to the 18 Assembly lion jobs. BARC’s insights then are crit- continues to grow. It reiterates what What I was really looking forward for OTT as well. Netflix saw a huge constituencies rather than the Lok MEDIASCOPE ical to anyone tracking this business — this column has maintained — the to was seeing a jump in sports viewer- surge in subscriptions when it Sabha. "With 37 members in a 534- VANITA KOHLI KHANDEKAR advertisers, broadcasters, investors or growth of online has been supplemen- ship after all the noise about kabaddi, released its first Indian original, member Lok Sabha, we are just a content creators. tary not cannibalistic. badminton, football et al. Over the Sacred Games in June last year. We droplet," he said comparing the fate of Take the first — the sheer numbers. The second takeaway is the one that decades, cricket has dominated both still look for a good story. Mostly we his party to that of the Dravida he numbers, the diversity and India’s 197 million homes house 836 always fascinates me — India’s diver- the broadcast business and the sport- watch it on a GEC or on a movie Munnetra Kazhagam, which was part the sense of sameness. Those million TV viewers who watch every- sity. The social reality of India’s 29 ing ecosystem to the detriment of channel. At time news channels offer of the United Progressive Alliance. T are the big insights from the thing from general entertainment states and 22 key languages is so evi- every other sport. Thankfully, kabaddi that with their hyper-dramatised, Broadcast Audience Research channels (GECs) to films and sports in dent in our TV viewing habits. The has become huge. It is second only to frequently fictionalised version of Council’s or BARC’s year-end com- a largely single TV market. That is up biggest languages are Hindi, Tamil, cricket and accounts for 15 per cent of events. But each and every time, it Battle for Chhindwara pendium, “What India Watched 2018.” from 790 million in 2016 when the last Telugu, Malayalam, Kannada and oth- total sports viewership. But the sports is our search for a story, for drama that Currently at 40,000 homes covering establishment survey, the study that ers. What is interesting is that the time pie itself remains disappointing — it drives us to a screen and keeps more than 180,000 individuals BARC updates the base number on which the spent on Tamil, Telugu or other GECs has inched from the two per cent it us there. is by the far the world’s largest audi- sample is chosen, was done. Television that cater to a smaller numbers of peo- was at for years to three last year. ence measurement system tracking its viewership rose by 13 per cent in 2018 ple compared to Hindi, is way higher There is now a variety of sports on TV http://twitter.com/vanitakohlik

Mining waste is an environmental time bomb The Chhindwara Lok Sabha seat in ILLUSTRATION BY BINAY SINHA Madhya Pradesh is key for both the The industry has consistently displayed a Congress and the Bharatiya Janata Party (BJP). For the coming Lok Sabha cavalier approach to safety when it comes election, Chief Minister Kamal Nath's to disposing of waste (pictured) son Nakul Nath will represent the seat on a Congress ticket. This is the second time since 1980 that Kamal KUNAL BOSE Alunorte suffered an identical crisis in Nath will not contest the seat. As chief 2009. The two wastewater leaks at minister he will fight an Assembly seat he world mining industry Alunorte facilities were a wakeup call instead. Earlier, in 1996, he couldn't always had an image problem for New Delhi since the country has a contest the seat after being accused in T relating to the hollowness of growing profile in bauxite mining and the Jain hawala case and denied a safety-first claim and poor corporate refining of alumina. party ticket. On its part, the BJP senses governance. The image was dented fur- The fact is, what happened in Brazil a reasonably fair chance to win the ther and quite badly so in the past four could too occur elsewhere, including seat this time around. The party is years as a result of three major acci- India unless a regular audit is done of expected to field former union minister dents. As it would happen all the three the storage of mines and alumina refin- Prahlad Patel there. Like Nath, Patel mine disasters took place in Brazil ery waste materials and corrective steps hails from the tribal-dominated where crony capitalism has taken deep are taken without postponement that Mahakaushal region. roots. In one of the worst tailings could harm the environment and people tragedies in history, a dam holding as dearly as in Brazil. Indian Bureau of sludge of a mine owned by the world’s Mines gives the message that manage- largest iron ore producer, Vale, in Minas ment of a tailings dam, which is typically Backbench leader Gerais state of Brazil collapsed on an earth-fill embankment dam, should The Congress January 28 claiming a few hundred be “an integral part of large-scale mining Working lives. The tragedy is a pointer operations.” Safety apart, Committee (CWC) to serious lapses in corporate the mining sector in India aquatic life. Because of grievous Even then, a certain amount of seepage good condition, every producing coun- meeting in governance since the compa- suffered from many other injuries that bauxite could do to the takes place, damaging soil in surround- try should have a target for recycling of Ahmedabad on ny was warned last year that ills, exposing the lack of environment, governments every- ing areas and all life forms. a certain percentage of RM. China, the Tuesday marked the dam had heightened risk effective corporate gover- where, under pressure from environ- Embankment breaches and spill over world’s largest producer of alumina and the debut of of rupturing. nance for the correction of mentalists and NGOs, are putting from RM storage ponds during heavy aluminium, is chasing a target of 10 per recently Earlier in November 2015, which the Supreme Court increasingly stringent conditions on rains always remain a possibility. As cent recycling of RM a year. appointed a tailings dam linked to a had to make game-chang- the opening of new mines. recently as August 2016, two villages in In an attempt to recover wealth from general secretary Brazilian mine jointly owned ing interventions in What is of no less concern is the stor- the Henan province of China were sub- waste, Indian mines secretary Anil of the party, by Vale and Anglo-Australian Karnataka, Odisha and Goa. age of highly alkaline red mud (RM) gen- merged in RM following the collapse of Mukim wants recovery of iron from RM. Priyanka Gandhi Vadra, as a member BHP Billiton breached Bauxite is an important erated as a by-product in the Bayer pro- a waste pond dam. Here there was no The Chinese aluminium maker Chalco of its highest decision making body. unleashing a tidal wave of mining activity in India, cess of extraction of alumina from bauxite human casualty, though a mass evacu- is credited with finding ways to recover However, at the customary photo-op about 40 million cubic metres of min- which, after its processing into alumi- by using a hot solution of caustic soda ation of people had to be undertaken iron and rare earth metals from alumina of all the participants of the CWC, she ing waste that killed 19 people and na, supports an annual white metal and lime. Depending on bauxite quality and large tracts of farmland were cov- by-product. RM contains 25 to 30 per stood in one of the last rows along caused incalculable damage to a river production of around 3.5 million and refinery operational efficiency, any- ered in RM. But when a similar acci- cent iron. A few pilot projects to extract with some of the junior leaders, while and surrounding villages and acres and tonnes (mt). Whatever the industry thing between 1 and 1.5 tonnes of red mud dent happened at Ajka in Hungary in iron from RM are in operation and Congress President Rahul Gandhi and acres of farmland. Then in February may say, unless the miners make fool- containing six major oxides and several 2010, ten people died and a large num- Mukim wants “such recovery to be made UPA Chairperson Sonia Gandhi, along 2018, Brazil had to contend with anoth- proof arrangements of environment minerals is generated for every tonne of ber sustained severe chemical burns. feasible on a commercial scale.” The with some other top leaders, stood in er environmental crisis when toxic protection, the dust generated in the alumina. Because of its high alkanility The world is sitting on a pile of at twin goals are to find a solution to RM the front row. Interestingly, the party wastewater leaks at the world’s largest process of excavating bauxite will affect and traces of toxic heavy metals, the dis- least 3 billion tonnes (bt) of RM and is menace and create a new revenue had organised for modified golf carts alumina refinery Alunorte owned by the health of workers and people in sur- posal and storage of RM remain a massive producing annually over 150 mt of the stream for alumina makers. RM too to ferry the elderly among its leaders Norwegian Hydro following heavy rounding areas. Then, the leaching of challenge for alumina producers. toxic alumina by-product. While alumi- could be used for making a host of build- to the meeting venue at the Sardar rains poisoned drinking water and bauxite in streams and rivers will do RM is disposed of in ponds, lakes na units will have to stay alert that ing and construction materials, includ- Vallabhbhai Patel National Memorial. farmland in nearby plant areas. considerable harm to soil fertility and and streams after building a lining wall. embankment lining walls remain in ing cement and bricks.

INSIGHT > LETTERS

result in a concomitant decline in cash credits on the threshold limit above Reshaping India's financial markets income velocity of money as it could A matter of trust ~1 lakh with the repo rate of the Reserve then be used more for precautionary Bank of India. Accordingly, the rate on purposes. Apropos “Foreign fund inflow propels savings deposit above ~1 lakh is repo rate The linking of lending rates to markets to 6-month peak, rupee to 2- (6.25 per cent) minus 2.75 per cent that We need to diversify the forex, credit external benchmark also needs to month high” by Sundar Sethuraman and comes to 3.5 per cent and for cash credits factor in two key developments Samie Modak (March 12), the inflow of and overdrafts above ~1 lakh, it is 6.5 per and interest rate risks across the announced during the last four years. $3.8 billion in less than three weeks is cent (6.25 plus spread of 2.25). The lower financial market In December 2018, the RBI unprecedented — something to be cher- rate on the savings deposit will lead to announced guidelines on the ished and celebrated — and calls for ded- the conversion of the savings deposit into minimum level of “loan component” icated efforts to sustain this kind of con- short-term fixed deposits and flight of time depositors from the vagaries of for large corporates that could be fidence of international investors in our these deposits to acquire other forms of market fluctuations. It may also be carved out of working capital loans. country and our corporate world. It is a assets. But if all the financial intermedi- noted that the RBI allows a differential The key intent of the guideline was strong endorsement of our robust ecosys- aries proceed for such changes, the con- interest rate structure for saving bank to instill credit discipline among tem including government policies. version of financial assets into other deposits only beyond ~1 lakh and the large borrowers. Large corporates Arguably, the biggest boost to this has forms of assets will not take place and deposit insurance cover is also appli- responded to the RBI intent and cor- come from our measured, well thought will not adversely impact the business cable up to ~1 lakh. porate bond issuances swelled from out and strong response to the terrorist and profitability of the individual bank The Indian banking sector has a ~5.84 trillion in FY15-16 to ~6.77 tril- attack at Pulwama and consequently, that went for such a change. deposit base (as of March '18) of ~114 lion in FY2017-18, reporting around 8 global condemnation of Pakistan’s overt The transmission of the policy rates trillion, of which 32.9 per cent or ~37 per cent CAGR. During the nine- and covert support to militants. into the economy will be complete if only trillion is SB deposits with almost 70 month FY19 period, ~4.70 trillion has The foreign portfolio investor invest- all the financial intermediaries pass it. SOUMYA KANTI GHOSH per cent of the SB deposits with pub- been mobilised. ment of an eye popping $545 million in a Partial transmission of the changes in lic sector banks. Nearly 75 per cent Thus, raising corporate single day — March 11 — is proof of the the repo rate is against the purpose for of SB deposits are above ~1 lakh and bonds/CPs/ECBs/masala bonds/NCDs world welcoming the strong possibility of which the changes have been initiated. he decision by the State Bank if the banking sector goes ahead with etc at fine pricing for large well-per- the present regime retaining power for The banking regulator has to advise all of India (SBI) to expedite the this move then a 25 bps change in ceived borrower meant transmission another five years and thus assuring conti- the financial intermediaries in general T transmission of policy rate by the repo rate will have an impact of of rates was already being factored in nuity of policies and ushering in greater and the banking sector in particular to linking the asset and liability sides ~70.6 billion on the liability side in Aligning the repo rate with the through competitive market offerings, stability and continuity. make corresponding changes in the could reshape the Indian financial either direction. savings bank rate over the ~1 lakh allowing for market decided price dis- Krishan Kalra Gurugram deposit and lending rates to speed up markets. On March 8, the SBI decided On the asset side, for All Schedulad threshold would be a win-win for the covery. The process of tapering aggre- investments. to link savings bank (SB) deposits Commercial Banks (ASCBs), the out- bank, customer and the regulator gate fund-based credit limit within the Speed up investment VSK Pillai Kottayam with balances above ~1 lakh to the standing cash credit (CC) and over- scheduled time appears to be running repo rate; all cash credit accounts and draft (OD) above ~1 lakh amount to viduals if T-bills are used as an exter- its course. Thus, this SBI step could This refers to “Quicker transmission” Letters can be mailed, faxed or e-mailed to: overdrafts with limits above ~1 lakh 22.30 per cent of the total ASCB nal benchmark. A more compelling potentially usher in a better all-round (March 11). Despite the growing compe- The Editor, Business Standard will also be linked to the repo rate. advances. If all banks link CC/OD to argument could be that term deposits price discovery and complement the tition among the financial intermediaries Nehru House, 4 Bahadur Shah Zafar Marg The risk premiums over and above repo rate and there is 25 bps change with ASCBs have an average balance current mechanism. for garnering low-cost resources, the New Delhi 110 002 Fax: (011) 23720201 · E-mail: [email protected] the floor rate would continue to be in repo, the net interest income of of ~2.75 lakh equivalent to a monthly With India currently a $2.6 trillion State Bank of India linked its interest All letters must have a postal address and telephone based on the risk profile of the ASCB will change by around ~49 bil- interest income of ~1,610 (at the rate economy it is imperative that the rates on savings deposit, overdrafts and number borrower. lion. Furthermore, MCLR linked rates of 7 per cent per annum) against a interest rate derivative market also SB deposits typically serve the could change by ~22.7 billion, taking monthly income of ~9,416 (per capita expands with this move. Put in a dif- transaction needs of the depositor. the total impact on advances to ~71.5 income of Indians is ~1.13 lakh). The ferent way, currently, all kinds of risks > HAMBONE Aligning the repo rate with the savings billion. Hence, the total impact of the interest income, therefore, forms up — be it FX, credit or interest rates — bank rate over the ~1 lakh threshold repo rate change is likely to be net to 17 per cent of the income — too big all are largely warehoused in the would be a win-win for the bank, cus- interest margin neutral for the bank- an amount to be left to the whims of banking system and with the tomer and the regulator. The option is ing sector. market determined rates. It may be economy growing, we need to diver- always available with the customer to One of the primary reasons for link- noted that SB interest is around 2 per sify this risk across the financial mar- shift the extra SB balance to time ing the SB rate with the repo rate and cent of our private final consumption ket. The current step could just be deposits, which will help the banks to not T-bills is that T-bills are more expenditure, and less prone to market a beginning. plan their asset-liability management volatile than the policy repo rate and volatilities and hence the decision to accordingly. Setting the limit at ~1 lakh this could introduce a noise element link SB is perfectly justified. The The author is group chief economic advisor, is primarily aimed to protect the small- into consumption expenditure of indi- volatility in rate movements could State Bank of India. Views are personal OPINION 9 > STAY INFORMED THROUGH THE DAY @ WWW.BUSINESS-STANDARD.COM

Volume XXIII Number 150 ILLUSTRATION: BINAY SINHA Chinese government bonds in determining their MUMBAI | WEDNESDAY, 13 MARCH 2019 benchmarks. Just recently, Bloomberg Barclays Global Aggregate, which is the most prominent in this field, has announced that it will, over a 20- month period, include 363 Chinese securities in its benchmark index , with a weight of 6 per cent. Other Fighting fuel dependence Indices such as J P Morgan Government Bond Index India has to think strategically to ensure macro stability and Citi World Government Bond Index are likely to follow suit. The inclusion of Chinese stocks and ndia’s dependence on fuel imports continues to grow. India imports bonds in these international indices would auto- over 80 per cent of its crude oil and the largest sources are Iraq, Saudi matically direct funds to Chinese financial markets since many international sovereign wealth funds Arabia and sanctions-hit Iran. Overall, India’s import dependency in and pension funds allocate money passively tracking Iits energy mix has risen sharply from 21 per cent in 2000 to 36 per cent such indices. It is estimated that there may be, in in 2015 — and could be as much as 50 per cent in 2040 even if energy pro- the first year itself, a $ 80-billion inflow into Chinese duction domestically grows faster than it has in the past. This is clearly a stock market, while purchases of Chinese bonds major, continuing problem and there are no easy solutions. As India mod- may be at $250-$300 billion. It may be noted that this could result in deflection of such financial flows ernises its economy, it will clearly move away from older, less dense forms from countries like India. of energy — such as biomass — to more dense ones. India largely lacks In the context of Chinese efforts to promote the proven resources of oil, gas and metallurgical coal on the scale required. China’s quest for a use of RMB internationally, one must also consider However, the consequence of this continued dependence for the external the success of Union Pay which has become the world’s balance and for overall macro-economic stability is unwelcome. A spike in largest credit card issuing company. It was established in 2002 and having issued 7 billion cards, commands the price of oil, for example, drives up domestic inflation, stresses the fiscal 56 per cent of the global market. It has been used main- deficit and can — as it did in 1991 and nearly did in 2013 — drive India close new financial order ly by the rapidly growing outbound Chinese tourists to a crisis in terms of its balance of payments. but currently there are 100 million card holders outside What are the alternatives? It is true India does have extensive resources The step by step opening up of its markets offers unprecedented China. The card can be used in as many as 150 coun- of coal. However, not all of the proven reserves are of the quality needed. In tries and a deliberate policy has been adopted to pro- opportunities for global banking and financial firms mote its use in BRI partner countries. order to ensure that Indian coal burns relatively cleanly, it would have to be Chinese banks are encouraged to establish a strong processed or washed — which can greatly add to water stress in the area hina is committed to full internationalisation in the world after the US and Europe. In 2017, China overseas presence. They currently hold $2 trillion in around a coal plant. Areas already short of water, such as for example of its national currency, the Renminbi (RMB), set up the Bond Connect which allows qualified and overseas assets. The Bank of China is ranked sixth Vidarbha in Maharashtra, can hardly afford a cluster of new coal-fired plants. Cbut is unwilling to embrace the liberalisation designated foreign financial entities such as banks, among the top 10 international banks. China set up 12 Besides the effect of coal-fired plants’ emissions on greenhouse gas con- of its financial markets with consequent prospects of sovereign wealth funds and central banks, to invest financial Free Trade Zones to experiment with a num- centrations and their more direct health effect on those living near them exchange rate volatility and potential capital flight. in Chinese bonds through authorised entities in ber of financial sector reforms and liberalisation, with Its efforts so far have been to promote the use of the Hong Kong. However, the current foreign holding Shanghai occupying the pride of place. However, these also need to be taken into account. Coal is, in many ways, on the way out — RMB in trade settlement, in investment products and of Chinese bonds is a mere 2 per cent of the total initiatives have yielded disappointing results. The Glencore, for example, has promised to cap its coal production. So where as reserve currency to enhance its international profile. but rising rapidly. In November 2018, the Chinese focus has shifted in these zones to a broader economic does that leave India? It may well be dependent on coal for many years into The Belt and Road Initiative (BRI) also enables China government announced that foreign investments reform agenda not limited to the financial sector. For the future, but it is clear that alternatives will have to be found. Gasification to expand the use of the RMB in project related finance in the bond market would be exempt from corporate example, Chengdu in the inland Sichuan province, is of coal is one possibility. in partner countries. A major initiative was taken in income tax and value added tax for the next three being developed as a logistics base to cater to the March 2018 when the Shanghai International Energy years. The quota for foreign investors using the Bond Eurasian corridor which is part of the BRI. Renewable energy sources are, of course, a major source of hope, espe- Exchange was set up to promote a petro-yuan market Connect has been raised to $300 billion in the cur- Taken together these various developments add cially as they are currently competitive in terms of variable costs. However, to rival the petro-dollar market. Since rent year. It may be noted that up to a substantial agenda of financial reform solar and wind power are not perfect substitutes for current energy sources, China is the world’s largest importer Chinese domestic investors do not through a step by step integration with the global given that they are variable in terms of output — wind farms produce power of oil, it is encouraging the settlement have the permission to invest in financial system. China is leveraging its weight as when the wind is blowing, and solar farms when the sun is shining. Thus of oil contracts in its own currency. foreign bonds and this detracts the second largest economy in the world and the The Shanghai Exchange deals in oil from the creation of a truly inter- attraction of its vast and expanding market, to obtain India will have to think strategically about the effect of a continuing import futures rivalling those in New York national and open bond market. access and deeper working arrangements with estab- dependence. There are two dimensions it must consider: First in terms of and London and could potentially set An important gain for China last lished international players. This is in sharp contrast survival during a crisis, and second in preventing macro instability. For the price benchmarks in the Asian region. year was the inclusion of select to the headwinds the country is encountering on first, it needs to ensure that there are sufficient reserves on its own soil — The Shanghai Exchange dealt with 6 Chinese A-shares traded on the the trade and technology fronts . The gains it is mak- the strategic reserves being set up in cooperation with the UAE and Saudi per cent of the spot market in just one Shanghai stock market in the MSCI ing in the global financial markets may suffer a set- year of trading. Fifteen per cent of the Emerging Market Index. These back if its economy heads into a serious slowdown Arabia are a good step in that direction. And, for the second, there is no futures are held by foreign entities. SHYAM SARAN shares have a current weight of 0.7 or even a crisis triggered by the ongoing US-China alternative to ensuring that the balance of trade becomes healthier. If India The petro-yuan market has also been per cent in the index, but MSCI has trade war. However, it is unlikely that the overall wants to be confident, it can always pay for imported fuel, but it needs to given a boost by imposition of US announced that it will quadruple the trend will see a reversal. For the major international ensure that exports grow sustainably. That is the only way macro stability sanctions on Russia and Iran, provid- number of Chinese shares to be banking and financial firms, the opening up of the can be paid for. ing an alternative to dollar-designated contracts. As included in its index by November this year, increasing Chinese securities and bond markets offers unprece- the functioning of the Exchange matures, it is likely their weight to 3.3 per cent. The Standard and dented profit opportunities . China may well achieve to rival the West Texas International and Brent as Poor(S&P) Index and the Financial Times Security its aim to become a global financial hub. The global benchmark for oil prices globally. Exchange(FTSE) Index have also followed suit in financial system is being reshaped in ways that are Another significant development during 2018 was including Chinese shares in their Emerging Market only dimly understood. 737 concerns foreign access granted to China’s bond market, which benchmarks. is currently worth $12.7 trillion, and likely to double in With the liberalisation of the Chinese bond mar- The writer is a former Foreign Secretary and is currently DGCA’s decision to ground planes is appropriate the next four years. It is the third largest bond market ket, China has been pressing these indices to include Senior Fellow, CPR. he crash on Sunday of an Ethiopian Airlines Boeing 737 MAX 8 airliner flying from Addis Ababa to Nairobi, killing all 157 people on board, has sent shock waves through the aviation community. TThe crash is unexplained at the moment. The aircraft was new, less than six months old; and it was being flown by Singapore versus Mauritius an experienced pilot. Ethiopian itself, a member of the Star Alliance, which he sheen of the Modi government’s perfor- 18, the services sector has once again recovered with enjoy, till recently. But these advantages began to includes Air India, is a well-respected airline with a solid safety record. Worse, mance in attracting foreign direct investment FDI equity flows of $6.59 billion in the first three be phased out from 2017 in an attempt to prevent this crash comes within a few months of another tragic incident — in October, T(FDI) to India has worn off considerably. Last quarters of 2018-19. tax evasion, curb revenue loss and streamline the a Lion Air jet from Indonesia went down, killing 189. That was also a Boeing year, i.e. 2017-18, total FDI inflows improved by just Computer software and hardware as a sector is flow of investments. 737 MAX 8, the latest version of the venerable aircraft. Concern has begun to over 1.25 per cent over $60.22 billion recorded in the other steady performer. FDI equity inflows into Thus, in August 2016, the Indian government spread about the planes, about 350 of which are currently in active service. 2016-17. In the current year, such inflows are expect- this category are estimated at about $5 billion in the notified a revised tax treaty with Mauritius, which About 40 per cent of them, however, have been grounded in the past few ed to decline over those in the previous year. In the April-December 2018 period, compared to $6.15 bil- in effect levied capital gains tax on investments rout- first three quarters of 2018-19, total FDI inflows at lion in the whole of 2017-18. Trading and telecom- ed through that country. From April 1, 2017, the cap- days while more information is built up about the crashed planes. Ethiopia, $46.62 billion fell by over 3 per cent over the same munications have also continued to attract reason- ital gains tax on such investments from Mauritius Australia and Singapore were among the first to ban the aircraft, alongside period of 2017-18. If this trend continues, the current ably large FDI equity flows. Sectors that have done was imposed at half of the prevailing domestic rate; the civil aviation authority of the People’s Republic of China — the market year will see the first annual decline in FDI inflows poorly in comparison include construction and and the full duty without any rebate will be imposed where about 20 per cent of Boeing jets are sold. Multiple other countries, during the five years of the Modi regime. pharmaceuticals. from April 1, 2019. such as India, the UK, Germany, France, Argentina, Malaysia and South To be sure, the first two years of the Modi regime The only manufacturing sector that continues A few months later, in March 2017, the govern- did see a healthy rise in FDI flows — by 25 per cent to maintain steady performance is the automobile ment notified a similar amendment to its tax treaty Korea, have taken similar decisions, while in some cases airlines — such as and 23 per cent, respectively, in industry. At $2.1 billion in the first with Singapore. As a result of this change, all invest- Aeromexico and South Africa’s Comair — have taken a decision on their own 2014-15 and 2015-16. In the third three quarters of 2018-19, this sec- ments into India from Singapore began attracting to ground their 737 MAX 8s. Other airlines, however, are holding out, including year, the growth decelerated to just tor has already exceeded the total capital gains tax at the source of such investments. some of the biggest purchasers of the 737 MAX 8s — the US’ Southwest and 8 per cent. That is why, perhaps, FDI equity inflows during the In a bid to reduce the jolt to the system, the govern- American Airlines, and flydubai. Boeing’s share price has, naturally, suffered. further deceleration in 2017-18 and entire period of 2017-18, which in ment also decided that from April 1, 2017, the capital a likely decline in 2018-19 will stand itself represented a 30 per cent gains tax would be levied at 50 per cent of the pre- Concerns about the MAX 8 have the potential to severely hamper the out in comparison. increase over the previous year. It vailing domestic rate and the full rate would be growth of the sector. While only 350 have been delivered so far, there are Of course, this performance would thus appear that the auto- enforced from April 1, 2019. over 4,500 orders in place — the 737 MAX 8 is likely to be the medium-haul looks better than the Manmohan mobile story in FDI equity inflows Significantly, there was no measurable impact workhorse just as its predecessors were of the past. It is essential for Boeing Singh government’s FDI show is very much intact. on FDI equity inflows from Singapore or Mauritius to work closely with national regulators and airlines to work out if there is a between 2009-10 and 2013-14. However, there is no denying in 2017-18, the first year when the tax benefits were During the Singh government’s five NEW DELHI DIARY that it is the services sector and not effectively cut by half. FDI equity inflows from problem and, if so, how to fix it. Matters have reached the point where, if a years, FDI inflows fell in as many A K BHATTACHARYA manufacturing that continues to be Mauritius that year were estimated at about $16 bil- perception takes hold that this jet is unsafe, it will be very difficult to get pas- as three years — by 10 per cent in the leading catalyst for dynamism lion, just about a per cent more than those in 2016- sengers to fly on one. Transparency and swift action are therefore essential. 2009-10, by 8 per cent in the following year and in India’s FDI equity inflows. This has its obvious 17. But Singapore showed a dramatic recovery and In India, SpiceJet and Jet Airways have the new variant 737s, although again by 26 per cent in 2012-13. There was a smart ramifications for the economy. As is to be expected, India’s FDI equity inflows from that country in 2017- Jet Airways — which in any case, thanks to other troubles, has grounded recovery of 34 per cent in 2011-12 and a 5 per cent the services sector is generally more suitable for the 18 rose by about 40 per cent to $12 billion. part of its fleet — has said it is not flying any of them at the moment. After pick-up in 2013-14. Thus, total FDI flows of $36 billion skilled category of workers and may not facilitate The trend so far in the first three quarters of cur- in the last year of the Singh government (2013-14) easy migration or redeployment of a large number rent year shows that India continues to see higher grounding the planes, the Directorate General of Civil Aviation has said its were even lower than the flows of $37.7 billion in its of agricultural workers, who are looking out for fresh FDI equity inflows from Singapore ($13 billion), while decision will remain in force till appropriate modifications and safety mea- first year (2009-10). opportunities outside the farm sector. the flows from Mauritius have taken a big hit, slow- sures are undertaken to ensure their safe operations. It is a wise decision, The Modi government will certainly do better The latest numbers on FDI equity inflows reveal ing down to just about $6 billion. even though it comes after the aviation regulator’s inexplicable statement than that. But its FDI performance has a few other another interesting trend. Two of India’s biggest It seems that the impact of the new tax laws has earlier in the day that it sees no immediate cause for concern. That kneejerk facets that need closer scrutiny. The services sector sources of FDI equity inflows are Mauritius and been negligible on Singapore, but significantly continues to attract the single largest amount of FDI Singapore. Cumulatively, these two countries adverse for Mauritius. Indeed, the flows from reaction was perhaps a result of the backlash after the National Front gov- equity. According to the government’s definition account for a little more than half of India’s entire Singapore have increased. A clearer indication will ernment in 1990 grounded the Airbus 320 in Indian Airlines’ fleet after a for FDI purposes, the services sector includes finan- FDI equity inflows in the last 18 years. This be available from 2019-20, when the entire capital crash, only to be later forced to reintroduce the planes into the fleet. However, cial entities, banks, insurance services, business out- amounts to over $2.1 trillion in this period. Such gains benefits for both the countries will be with- better sense has finally prevailed in the face of growing public concern. sourcing, research and development activities, large FDI equity flows have taken place mainly drawn from April 1, 2019. But a reasonable question courier services, technology firms, and testing and because of the kind of tax advantages, which that can be raised now is: Has Singapore gained at analysis companies. After seeing a decline in 2017- investments from these two destinations used to the expense of Mauritius?

when she gives up the religion she was ensuring that women have equal partici- It is intriguing to speculate how born into, and defies her family by pation in the task of nation building. Pakistan would have developed as a Pioneer across the borders embracing Islam and Liaquat Ali Khan. It was Begum Ra’ana who encouraged nation if the two men instrumental in its Not a single member of her family young, middle-class Muslim women to creation — Jinnah and Liaquat Ali Khan of generations ago, Irene Margaret Pant on. Liaquat Ali Khan was a leading light attends her wedding and she never ever come out of purdah and train as nurses — had not died within a few years of its — as she was known in her early life — of the Muslim League and a close confi- sets foot in Kumaon again. and teachers so that they could contribute formation. Would their liberal instincts, was among the first women of her gen- dant and lieutenant of Mohammad Ali But enmeshed in the political world to their country, brushing aside the resis- the ones that Begum Ra’ana tried to trans- eration to get the benefit of higher edu- Jinnah. And Ra’ana, who had always of Delhi and bringing up her two sons, tance she encountered in what was still late into her work with women, have sur- cation, which she went on to put to good been politically inclined, soon became it is hard to gauge if Ra’ana ever missed a feudal and conservative society. And to vived and thrived? I guess we will never use by becoming a college lecturer. completely enmeshed in the freedom the hills amidst which she grew up. Or set an example, she worked in refugee know. But what is clear is that this is the BOOK REVIEW At a time when women were routine- movement, and in the push for a sepa- indeed, if she missed the country she camps herself, providing succor to those story of a truly remarkable woman, who ly married off at a young age to men that rate homeland for Muslims. grew up in once she crossed the border who had been rendered homeless and straddled two religions, two countries, SEEMA GOSWAMI their parents chose, Irene fell in love This early part of her life, on our side to take up residence in the newly-mint- penniless by Partition. and two lives. A woman who lived on her with and wed a man of her own choice. of the border, is told by Deepa Agarwal. ed state of Pakistan, of which her hus- But just five years later, Ra’ana’s life own terms at a time when women could y any standards, Begum Ra’ana That in itself was a bold enough move. As a fellow Kumaoni, Ms Agarwal brings band was the first Prime Minister. imploded, when her husband was assas- barely call their lives their own. And for Liaquat Ali Khan led a remark- What made it revolutionary was that alive the childhood of Irene Pant from From this point on in the book, the sinated, leaving her a widow with two that achievement alone, Begum Ra’ana Bable life. And it is a measure of Nawabzada Liaquat Ali Khan was much the perspective of an insider. We see the narrative is taken up by Tahmina Aziz young sons aged 14 and 11. It is a mea- deserves to live on in history. how remarkable her life was that it takes older than her, already married with a Pants being ostracised by polite society Ayub, a Pakistani writer, who is best sure of her steely determination that the two people, from two different coun- child, and a Muslim to boot. So, it was and, indeed, all their friends and rela- equipped to tell the Begum’s story as it Begum did not allow this tragedy to tries, to tell her story in all its complex- in the teeth of parental opposition that tives, because their grandfather, a caste unfolded in Pakistan. And in this destroy her life. Instead, she went on to THE BEGUM: A Portrait of ity and nuance. Irene converted to Islam (and was Brahmin no less, converted to recounting, Ms Ayub also gives us an become a trusted advisor to different Ra’ana Liaquat Ali Khan, Pak- Even if you boil it down to bare essen- bestowed the name Gul-i-Ra’ana, later Christianity, and all the strains and insight into the birth of a country. The Pakistani governments, was appointed istan’s Pioneering First Lady tials, Begum Ra’ana’s journey was quite shortened to just Ra’ana) and married stresses it puts on the family. Pakistan of this time is alive with Ambassador to such capitals as extraordinary. Born to a Kumaoni the man who had stolen her heart. In a strange twist of fate, many hopes and dreams, and Begum Liaquat Amsterdam and Rome, and soon Deepa Agarwal, Tahmina Aziz Ayub Brahmin family which had controver- It was that choice that would dictate decades later, Irene goes through the Ali Khan — who would soon earn the title attained the stature of a senior Penguin sially converted to Christianity a couple the trajectory of Ra’ana’s life from then same experience as her grandfather, of Madar-e-Pakistan — is at the forefront, stateswoman in her own right. ~599, 256 pages