Maharashtra's GDP to contract 8% in ’20-21

The extent to which the pandemic and the lockdown crippled the state is revealed in Maharashtra’s economic survey that forecasts a negative growth rate of -8% for 2020-21. This is a historic low for the state and a huge slide from 2019 when the revised economic growth rate was 5%. The survey also projects a decline in the state’s per capita income.

The Indian economy is also expected to grow at -8% in 2020-21. The parallel with the state’s growth rate is not surprising since Maharashtra contributes the highest share to the nation’s nominal GDP at 14.2%.

The only sector set to show positive growth is agriculture and allied services, expected to grow by 11.7%, almost twice the 6.1% in 2019-20. This sector benefited from a plentiful monsoon and exemption from lockdown restrictions. The industrial sector is expected to contract 11.3% compared to 0.2% growth last year and services sector at -9%, down from 8.3%.

Within industry, manufacturing and construction were the sectors hardest hit in 2020-21, with the survey forecasting growth of -11.8% and -14.6% respectively. In 2019-20, manufacturing had growth of -1% and construction 1.7%.

Services sector was affected mainly because of the “hard impact of the pandemic on trade, repairs, hotel & restaurants and the transport sector,” the survey says.

Although agriculture is set to show dramatic growth, its impact in computation of economic activity is limited. It accounts for 11.7% of Gross State Value Added. Industry accounts for 32.6% and services 55.7%.

Fall in economic activity is also reflected in other parameters. Nominal GSDP is set to decline by Rs 1.56 lakh crore in 2020-21, from Rs 28.2 lakh crore in 2019-20 to Rs 26.6 lakh crore in 2020-21.

Per capita income is set to fall to Rs 1.88 lakh in 2020-21 from Rs 2.02 lakh in 2019-20. In 2019, Maharashtra was ranked fifth in per capita income, behind Haryana, Telangana, Karnataka and Tamil Nadu.

The survey also shows how revenue collection has been impacted. Actual revenue received by the state in April-Dec 2020 was Rs 1.76 lakh crore, 50% of the annual target.

The state’s debt is expected to be Rs 5.2 lakh crore for 2020-21, 19.6% of GSDP and within fiscal limits, says the survey.

FDI inflows to the state in April-Sept 2021 were Rs 27,143 crore, lower than to Gujarat (Rs 1.19 lakh crore) and Karnataka (Rs 27,458 crore). However, between April 2000 and Sept 2020, the state attracted Rs 8 lakh crore of FDI, the highest in the country.

In terms of projects, Maharashtra accounts for highest number of approved industrial projects between Aug 1991 and Oct 2020. Its 20,909 projects account for 18% share in the country. However, investments generated are lower than Gujarat and Karnataka. Its share of investments is 10.7%, that of Gujarat is 14.9% and Karnataka is 11.2%.

Exports from Maharashtra have also declined during the pandemic. Exports from the state dropped from Rs 5 lakh crore in 2018-19 to Rs 4.6 lakh crore in 2019-20. Figures for April-Sept 2020-21 are Rs 1.72 lakh crore.


Dwarka E-Way snippets

The Dwarka Expressway will be completed before August 15, 2022. This was stated by Union minister for road transport and highways Nitin Gadkari on Thursday. The 29 km expressway, which starts near Shiv Murti on NH-8 and terminates near Kherki Daula toll plaza, is being constructed at a cost of Rs.8,662 crore.

After reviewing the progress of work, the minister said nearly 12,000 trees had been transplanted and their survival rate was 84%. “This is the first time that trees have been transplanted on such a massive scale in the country. We have spent over Rs.25,000 for transplanting one tree using new technologies. Based on this experience, the method will be replicated across the country,” added Gadkari.

The eight-lane Delhi-Gurgaon section of NH-8, which is a part of the Delhi-Jaipur-Ahmedabad-Mumbai arm of the Golden Quadrilateral, currently carries traffic of over three lakh passenger car units, which is beyond its design capacity. This leads to severe congestion. With this project, 50-60% of traffic on NH-8 would be reduced.

“The project will also provide around 50,000 direct or indirect employment opportunities. It will be the firstever elevated urban expressway in India and will immensely help reduce air pollution,” said the minister.

Considering connectivity and congestion, Dwarka Expressway was conceptualised essentially as a bypass for Gurgaon. It would also connect Dwarka to Terminal 3 and take off around 5.3km away from near the railway underbridge, thereby providing alternate connectivity to IGI Airport from west Delhi and Haryana. Besides, direct connectivity would also be provided to the upcoming India’s International Convention Centre, which is being built over 90 hectares in Sector 25, Dwarka.

“We will also build a 5km tunnel from Shiv Murti to Nelson Mandela Road to reduce traffic. The work may start this year. The demand of Gurgaon residents of shifting Kherki Daula toll plaza will also be met. It will be removed before the expressway is inaugurated,” said Gadkari.

The minister added, “The project will be an engineering marvel and have several unique features. It will have the longest (3.6km) and widest (eight-lane) urban road tunnel in India. The road network will comprise four levels — tunnel/underpass, at grade road, elevated flyover and flyover above flyover.”

“The project, which will be equipped with intelligent transportation system, will have India’s first 9km-long eight-lane flyover (34m wide) built on a single pier with six lane service roads. The tolling system will be fully automated at the 22-lane toll plaza,” Gadkari said.

Somewhere in Odisha....


Mumbai, TN ports & 10 power assets faced China cyberattack

Cyberattacks by RedEcho, the actor group with China links, on India’s power infrastructure have been more widespread than previously known and the activity continues even after military de-escalation in Ladakh’s Pangong area, American security enterprise Recorded Future has revealed.

According to Christopher Ahlberg, CEO of Recorded Future, the Massachusetts-based security enterprise that detected the intrusions, 10 Indian power sector assets and Mumbai and Tamil Nadu’s V O Chidmabaranar ports came under attack.

On the Union power ministry’s statement that no installation was affected as safeguards were already in place, Charity Wright of Insikt, Recorded Future’s threat research group, said it showed the government responded to alerts.

On power minister R K Singh blaming the Mumbai blackout in October last year on human error, Ahlberg said there was insufficient data to prove a cyberattack caused the massive Mumbai power outage.

Recorded Future observed through its network intelligence significant, high-volume, network traffic from Indian power sector assets to servers used by China-linked group RedEcho… The adversary infrastructure is still active and activity continues,” Ahlberg said in a presentation on the group’s findings on Thursday. Wright said the location of targeted infrastructure covered the length and breadth of India’s geography as well as the demography.

A New York Times report had last Sunday reported these intrusions, citing findings by Recorded Future. It raised doubt that Chinese hackers may have caused the October 12 power outage in Mumbai as a warning against strong Indian pushback to PLA’s border transgressions in Ladakh. Targeting the Indian energy sector offers limited economic espionage opportunities. But the group believed “gathering future operational activity, pre-positioning destructive malware, as a warning/show of force during heightened bilateral tensions; and potential information operation to disturb Indian population” could be the possible objectives.

Wipro buys UK firm Capco in $1.5bn deal

Wipro will acquire London-based global management and tech consultancy Capco for $1.5 billion to bolster its presence in the banking, financial services & insurance space. The deal, which is Wipro’s largest acquisition ever, will also give the Indian tech services giant a strong consulting footprint.

The deal comes under CEO Thierry Delaporte, who took over in July last year, and demonstrates a desire to regain the momentum the company has lost to rivals over the past several years. Wipro’s other big acquisitions include those of US-based cloud consultancy firm Appirio for $500 million in 2016, and of UK-based Infocrossing for $600 million in 2007.

Capco clocked $700 million in revenue in the 2020 calendar year. Wipro said the acquisition creates a global financial services business of $3.2 billion, up from the current $2.5 billion, with a strong consulting and business transformation footprint.

Capco, founded in 1998, gives Wipro access to 30 new large BFSI clients. It has over 5,000 consultants based in more than 30 global locations across 16 countries. It works with more than 100 clients and has many long-standing relationships with leading financial institutions.

The all-cash transaction is expected to be completed during the June quarter, subject to regulatory approvals and customary closing conditions. The transaction will be financed through internal cash and debt. Wipro has some $6 billion of cash reserves.

BFSI is a big spender on technology and is the largest industry vertical for the major IT services companies, accounting for almost a third of the revenue for many of them. Compared to TCS, Cognizant and Infosys, Wipro is weak in BFSI. The Capco acquisition seems to be an effort to address this gap.

Wipro believes there are significant synergies to be realised through cross-selling opportunities. Capco is said to be highly complementary to Wipro’s capabilities in building digital technology and operations solutions for helping clients achieve their transformation objectives.

Delaporte said, “Together, we can deliver high-end consulting and technology transformations, and operations offerings to our clients. Wipro and Capco share complementary business models and core guiding values, and I am certain that our new Capco colleagues will be proud to call Wipro home.”

Lance Levy, CEO of Capco, said, “We are incredibly excited to join our new colleagues at Wipro. Together, we will offer bespoke transformational end-to-end solutions, now powered by innovative technology at scale, to create a new leading partner to the financial services industry.”

In its investor presentation, Wipro said the acquisition will dilute Wipro IT services ebit (earnings before interest and taxes) margins by 2% in the first year, a large component of which will be a non-cash charge. It said margins will improve in the future based on revenue and cost synergies.

Although revenue synergies and growth acceleration are the primary objectives of the acquisition, there are identified cost synergies to be realised post-integration, Wipro said.

12 Indian institutes among global top 100

Twelve Indian universities and higher education institutions have achieved top-100 positions in their subjects. In total, 25 Indian programs achieved top-100 positions, one fewer than in 2020, in the11th edition of the QS World University Rankings by subject released on Thursday.

Two institutes of eminence achieved top-50 ranks for mineral and mining engineering: IIT-Bombay (41st, no change) and IIT Kharagpur (44th, up two places). These, along with IIT-Madras’s 30th place rank for petroleum engineering, are the highest ranks achieved by the government run IoE this year. IISc Bangalore retained top-100 ranks for materials science (78th) and chemistry (93rd). IIT-Delhi was 54th (down from 49th in 2020) in electrical and electronic engineering, 70th in computer science, and 79th in mechanical engineering. IIM-Bangalore and IIM-Ahmedabad were 76th and 80th, respectively, in business and management.

The rankings offer data on the performance of 253 programs at 52 Indian institutions, across 51 disciplines.

EPFO retains 8.5% payout for FY21

Amid declining interest rates, the Employees Provident Fund Organisation has managed to hold on to an 8.5% rate for the current financial year, providing relief to its nearly five crore active subscribers. 

The decision was taken at a meeting of the EPFO’s central board of trustees headed by labour minister Santosh Gangwar. The decision will need to be endorsed by the finance ministry, which is known to raise the red flag almost every year before holding itself back.

The retirement savings agency has relied on the stock market to offer higher returns.

“For FY 2021 (2020-21), EPFO decided to liquidate investment and the interest rate recommended is a result of combined income from interest received from debt investment as well as income realised from equity investment. This has enabled EPFO to provide higher return to its subscribers and still allowing EPFO with healthy surplus to act as cushion for providing higher return in future also. There is no over-drawl on EPFO corpus due to this income distribution,” an official statement said.

EPFO will be left with a surplus of around Rs 300 crore. At the current level, someone in the 30% income tax slab will earn annual returns of over 11% given the tax-free status enjoyed by it currently. In contrast, other investments, such as fixed deposits with banks don’t only offer such high rate but face tax if over Rs 1.5 lakh is parked even in maturity basket of over five years. Similarly, public provident funds deposits currently fetch 7.1% but the investment is capped at Rs.1.5 lakh annually.

Apart from returns, provident fund also comes with the power of compounding, which means if you stay long enough, based on compound interest on the corpus, your returns actually grow significantly with your annual contribution adding to the benefit.

Meanwhile, the government on Thursday said that EPFO has extended its coverage to establishments in J&K and Ladakh after the implementation of EPF & MP Act to the two Union Territories from the end of October 2019.