E-bank for all pin codes

A large chunk of the Indian population will bridge the digital divide in the current financial year with post offices putting in place a core banking system and banks setting up digital banking units in 75 districts.

The Post Office Savings Bank has 19 crore savings accounts including those under the Mahatma Gandhi National Rural Employment Guarantee Act. While the post office has the reach, its customers do not have access to anytime-anywhere banking, which is available to the urban clientele.

With all the 1. 5 lakh post offices in the country coming under the core banking system, customers can access their accounts through net banking, mobile banking, and ATMs. They will also be able to transfer funds from their post office accounts to accounts in commercial banks.

“The Budget proposal to set up 75 DBUs in 75 districts is in sync with our ongoing digital banking initiatives,” said SBI chairman Dinesh Khara.

“For India to become a digital economy, all villages should have the same access to digital resources as urban areas. To augment this, the setting up of DBUs is a commitment to taking high-end tech to the bottom of the pyramid,” said Anand Kumar Bajaj, Founder, MD & CEO, PayNearby.

According to bankers, the setting up of DBUs will provide a concerted effort at building up a payment ecosystem that will benefit all the banks in the district. “The Jan Dhan Yojana has ensured that most households have bank accounts. The need now is to build an ecosystem so that they can use their accounts for all transactions without having to draw cash,” said a senior banker. He added that the details of the scheme were still awaited.

According to Bajaj, DBUs will ensure that the benefits of digital banking reach every nook and corner of the country in a consumer-friendly manner. “The objective of citizen empowerment with digital growth and supporting fintech will directionally encourage delivering of digitisation to India in its 100th year well ahead of time,” said Bajaj.

Tatas bag PSU steel co Neelachal

Tata Steel will take control of Neelachal Ispat Nigam after bidding Rs.12,100 crore, including equity and debt, the government said on Monday. The unit of Tata Sons plans to make Neelachal’s Odisha facility, currently defunct, the hub for its long steel business in the future. Long steel products refer to rods, rails and bars used in the construction sector.

The deal comes hot on the heels of Tata Sons acquiring Air India from the government through the privatisation process. The M&A is in line with Tata Steel’s strategy of doubling down on the India business after selling some unprofitable overseas ventures. In 2018, it had acquired Bhushan Steel for Rs 35,200 crore, the largest M&A under Tata Steel chairman N Chandrasekaran (who is also the chairman of Tata Sons) — the first India consolidation move as part of that strategy.

On Monday, the government said it has approved the highest bid of Tata Steel Long Products, a unit of the $21-billion Tata Steel, for a 94% stake in the loss-making Neelachal at an enterprise value of Rs 12,100 crore. Besides Tata Steel, billionaire industrialist Sajjan Jindal-controlled JSW Steel and a grouping of Jindal Steel & Power (owned by Sajjan’s younger brother Naveen Jindal) and Nalwa Steel & Power submitted financial bids for Neelachal.

Tata Steel will have to pay 10% of the bid amount when it signs the share purchase agreement. Neelachal’s debt exceeded Rs 6,600 crore, while its accumulated losses was Rs 4,228 crore as on March 31, 2021. This is the first instance of privatisation of a public sector steel manufacturing enterprise in India.

Eco shrank 6.6% in FY21

India’s economy contracted by 6.6% in 2020-21, narrower than the earlier estimate of 7.3% decline, highlighting that the economic damage inflicted by one of the strictest lockdowns in the world to ward off spread of coronavirus was less severe than estimated earlier.

Data released by the National Statistical Office on Monday also showed that the economic slowdown was sharper at 3. 7% expansion compared to the earlier estimate of 4% growth for 2019-20.

The use of latest available data from various agencies has resulted in some changes in both the levels of GVA and growth estimates for 2018-19 and 2019-20, the NSO said. The 7.3% contraction was the sharpest in nearly four decades as the Covid-19 induced lockdown had hurt the economy. But the revised data seems to show that the damage was lower than what was expected. The lockdown had hurt several key sectors of the economy, particularly the contact intensive sectors, such as tourism, hospitality, aviation and others.

The agriculture sector has been the mainstay of the economic revival, that has taken place after lifting of curbs. The sharp contraction had triggered a debate over the management of the economy and impact of lockdown.

Production of eight infrastructure sectors expanded by 3.8% in December 2021 against a 0.4% contraction in the same month last year on better show by coal, cement and refinery products, according to the official data released on Monday.

BKC: Bees Saal Baad

Looking at a satellite image of Bandra Kurla Complex today, it is difficult to imagine that 20 years ago, after reclamation, it was mostly vacant. Land was available there at a throwaway price of Rs 3,000 per square metre, or Rs 300 per square feet in the 1980’s. As the 90s approached, prices at BKC inched up to Rs 8,000 per sq metre. Liberalisation transformed the scene overnight. The last land auction at BKC occurred towards the end of the noughties. By then, prices had shot up to almost Rs 3. 5 lakh per sq metre. To meet demand, MMRDA increased BKC’s FSI from 2 to 4 for commercial plots and from 1. 5 to 3 for residential plots.

SC directs Discoms

Noting that total power dues across the country have crossed Rs 1 lakh crore, the Supreme Court on Monday warned that if state-owned distribution companies do not promptly clear dues to generators, the latter will shut and there will be no electricity.

The warning came from a bench of Chief Justice N V Ramana and Justices A S Bopanna and Hima Kohli on an application from Adani Power Maharashtra seeking at least 50% payment from Maharashtra State Electricity Distribution Corp Ltd and keeping in mind the large number of power generating companies moving the court against state-run discoms that have chronically defaulted on payment. Directing MSEDCL to pay 50% dues to Adani Power within four weeks, the bench said: “Every day the power generating companies supply electricity and you use it. Their money is with you. They cannot run their plants unless you pay up promptly. Otherwise, they will shut their plants and tomorrow there will be no electricity. ”

A similar order was passed by a bench headed by then Justice R F Nariman on February 16 last year directing the Uttar Haryana Bijli Vitran Nigam to pay 50% of its Rs 1,100-odd crore dues. A large number of independent power producers have moved the court against states on late payments, which are in many cases in the range of nine to 12 months.

According to statistics maintained by the Union power ministry, Maharashtra tops the list of defaulters with a current outstanding of Rs 21,249 crore. Tamil Nadu is a close second with a total outstanding of Rs 21,132 crore, Rajasthan 12,393 crore, Uttar Pradesh 11,307 crore, Madhya Pradesh 6,964 crore, Karnataka 6,202 crore, Jharkhand 2,773 crore, Bihar 1,781crore and Delhi 1,398 crore.

All northeastern states are shown to be promptly clearing their power dues with Arunachal registering the lowest outstanding of Rs 10crore, followed by Nagaland Rs 26 crore and even Assam has a low outstanding of Rs 234 crore. Uttarakhand has an outstanding due of Rs 54 crore, Himachal Pradesh Rs 257 crore, Odisha Rs 338 crore, Chhattisgarh Rs 738 crore, West Bengal Rs 946 crore and Gujarat1,149 crore.

The serial defaulting by states makes even the revival of private power plants, facing insolvency proceedings, that much more difficult. Jhabua power plant is a case in point as it is yet to be paid Rs 822 crore as of January 1 by the discoms. The ministry of power records show the overdue amount at the end of January was the maximum for IPPs, which cumulatively have not been paid Rs 55,377 crore.

The central public sector enterprises have not been paid Rs 23,511 crore, of which Nuclear Power Corporation of India Ltd alone has an outstanding of over Rs 10,000 crore and NTPC nearly Rs 7,000 crore. Though there has been a lot of emphasis on the renewable energy sector, the RE power generators have cumulative outstanding dues of Rs 19,783 crore.

Delhi is also our startup capital

Delhi added over 5,000 recognised startups—the highest among cities —between April 2019 and December 2021 against 4,514 in Bengaluru, the Eco Survey says. Maharashtra, with 11,308 recognised startups, tops the charts among states. At least 14,000 new startups were recognised in India last year, up around 20 times in 5 years. 

Last year, India’s booming startup ecosystem, too, set new records. While 44 startups became unicorns (valued at more than $1 billion), India overtook the UK to emerge as the country with the third-highest number of unicorns after the US and China that added 487 and 301 unicorns respectively in 2021.

In addition, at least 14,000 new startups were recognised in India last year, up around 20 times in five years. Only 733 startups were registered during 2016-17. Similarly, 555 districts had at least one new startup in 2021 compared to only 121 districts in 2016-17, according to the survey.

For the rapid progress, stalwarts in the startup sector lauded the government’s Startup India initiative launched in 2016. Government recognition offers several benefits to a startup, including exemptions on income tax and capital gains. Under the digital initiative, other than having access to alternative investment funds, startups enjoy the benefit of an easier winding down process, as well. India boasts over 80 unicorns with an overall valuation of around $278 billion, while the total number of recognised startups in the country currently stands at 61,400.

The department for promotion of industry and internal trade, which earlier said government-recognised startups have created around 6. 5 lakh jobs in the country, wants to register around 50,000 new startups in the four years. The survey also pointed to the growth of startups in the space sector that shot up from 11 in 2019 to 47 last year. The domestic space sector, which currently accounts for 2% of the $447 billion global space economy, is expected to capture a much larger share going forward.

Shape of eco’s recovery? It’s a tilted W

Like last year, the Survey records the sparkling performance of the farm sector, but also draws satisfaction from the recovery clocked by manufacturing and the fact that the second and third waves failed to knock down the services sector, which accounts for over 50% of the economy. It seems to heave a sigh of relief that the damage from the deadly Delta variant was not as severe as initially feared.

The document tabled in Parliament strikes a note of balance in that it neither predicts a V-shaped recovery nor succumbs to the pessimistic projection of a U-shaped long haul. When asked, principal economic advisor Sanjeev Sanyal described it as a tilted W, essentially meaning that predicting the exact shape of revival could be hazardous.

Unlike the past, when the Survey sought to provide the reform road map, the latest edition has focused more on the economic assessment for the current financial year, with just a sprinkling of steps that may be needed. For instance, it calls for policy measures to address seasonal price variations in products such as tomatoes and onions. Similarly, it argues in favour of higher investment in farming, especially via the private sector.

The key thrust of the annual paper is on listing out measures taken by the government over the last two years in supporting the poor and vulnerable and measures to aid various sectors, while pushing “process reforms”.

The finance ministry’s pre-budget analysis points to robust revenues, which gives the government much-needed fiscal headroom to provide a further boost, if necessary, and strengthen the growth impulses. In addition, it lists out other positives such as high foreign exchange reserves, rebound in exports, resilience of the farm sector and a strong vaccination drive adding to the overall confidence.