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April 2020 - Economy News



  • Chief executives of OBC, UBI designated as OSD in PNB
    After the merger of the Oriental Bank of Commerce (OBC) and the UnitedBank of India (UBI) into Punjab National Bank (PNB), the government has designated Chief Executives of OBC and UBI as "officers on special duty" in Punjab National Bank. The officers are not assigned any portfolio so far.

    The PNB merger has created the country's second-largest state-owned bank with Rs 7.7 lakh crore advances. Also, OBC chief executive Mukesh Kumar Jain, who is now in PNB, will be retiring in July.



  • RBI announced Rs.50,000 crore liquidity for Mutual Funds
    The Reserve Bank of India (RBI) announced Rs.50,000 crore liquidity support for Mutual Funds (MFs) on 27 April 2020. It approved the funds under the special liquidity facility scheme effective from 27 April.

    RBI's move comes after Franklin Templeton's decision to close 6 debt funds and put redemptions on hold indefinitely.

    Highlights:
    Under this move, the RBI will conduct repo operations of 90 days tenor at the fixed repo rate. The facility will be on-tap and open-ended, and banks can submit their bids to avail funding on any day from 27 April- 1 May.

    The funds availed under the scheme can be used by banks exclusively for meeting the liquidity requirements of MFs by extending loans, and undertaking the outright purchase of and/or repo against the collateral of investment-grade corporate bonds, commercial papers (CPS), debentures and certificates of Deposit (CDs) held by MFs.
    The move by the Central Bank will increase confidence among investors.
    RBI has also added liquidity support that can be availed under the scheme which would be eligible to be classified as held to maturity (HTM), even in excess of 25% of the total investment that is permitted in the HTM portfolio.

    Exposures under this facility will not apply under the Large Exposure Framework (LEF). The face value of securities kept in the HTM category will not be reckoned for computation of adjusted non-food bank credit (ANBC) for the purpose of determining priority sector targets.

    The support extended to MFs under the Special Liquidity Facility for Mutual Funds (SLF-MF) shall be exempted from banks' capital market exposure limits.



  • GoI, ADB signs USD 1.5 billion to figainst COVID-19 pandemic
    The Government of India and the Asian Development Bank (ADB) signed a $1.5 billion loan that will support the government's response to the novel coronavirus disease (COVID-19) pandemic.

    Highlights:
    The loan focuses on immediate priorities including disease containment and prevention, and social protection for the poor and economically vulnerable sections of the society, especially women and disadvantaged groups.

    Under this move, response measures to the coronavirus pandemic to implement COVID-19 containment plan to rapidly ramp up test-track-treatment capacity, and social protection for the poor, vulnerable, women, and disadvantaged groups to protect more than 800 million people over the next three months will be done.

    ADB's financial and technical support will contribute to the sound implementation of the government's far-reaching emergency response programs launched in March 2020.

    Earlier, the ADB's Board of Directors approved the loan to provide budget support to the government to counter and mitigate the adverse health and socio-economic impact of the pandemic.



  • States sought GST compensation beyond 2022 to tide over COVID-19 crisis
    States including Punjab, Kerala, and Delhi have sought the Government of India for extension of goods and services tax (GST) compensation to the states for two years beyond 2022 to overcome the crisis that is expected to be faced post-COVID-19 pandemic.

    Highlights:
    The State Ministers made this move due to the problems arising because of lockdown, including the urgent requirement of some form of aid for micro, small and medium enterprises (MSMEs), which have been affected the most, besides relief for the services sectors.

    Some states are currently undergoing a financial crisis and have sought additional funds from the Centre.

    The states also raised the issue of releasing GST compensation pending since December 2019.

    The Centre recently paid Rs.34,053 crore in pending GST compensation cess for October and November, in two tranches, with the second tranche released in April 2020.



  • Government notifies International Financial Services Centres Authority
    The Ministry of Finance has established the International Financial Services Centres Authority (IFSCA) through a notification on 27 April.

    Highlights:
    The headquarters of IFSCA will be located in Gandhinagar in Gujarat.

    IFSCA will regulate all financial services in International Financial Services Centres (IFSCs) in the country.

    At present, the banking, capital markets, and insurance sectors in IFSC are regulated by multiple regulators such as Reserve Bank of India (RBI), Insurance Regulatory and Development Authority of India (IRDAI), and Securities and Exchange Board of India (SEBI).

    It also brought into effect certain provisions of the IFSCA Act, 2019.

    The authority will regulate financial products such as securities, deposits or contracts of insurance, financial services, and financial institutions.

    The IFSC Authority body will constitute a chairperson, and one member each nominated by the regulators namely SEBI, RBI, IRDAI, and The Pension Fund Regulatory and Development Authority. There will also be two members of the central government and full-time or part-time members.




  • RBI extends regulatory benefits announced under SLF-MF
    The Reserve Bank of India (RBI) extended the regulatory benefits announced under the special liquidity facility for mutual funds (SLF-MF) scheme to all banks, irrespective of whether they avail funding from RBI or deploy their own resources under the scheme.

    Highlights:
    Any bank that meets with the liquidity requirements of mutual funds by extending loans and undertaking outright purchase or repos against the collateral of investment-grade corporate bonds, commercial papers, debentures and certificates of deposit held by mutual funds will be eligible to claim all regulatory benefits.

    To avail the regulatory benefits, the bank should submit a weekly statement containing consolidated information on entity-wise and instrument-wise loans and advances extended or investment made to eligible entities to financial markets and the Department of Supervision on every Monday till the closure of the scheme.
    On 27 April, the RBI announced the SLF-MF to ease liquidity strains on mutual funds. This intensified the redemption pressures related to the closure of some debt mutual funds and potential contagious effects.




  • IMF Chief confirms World economy to suffer severe recession in 2020
    IMF chief Kristalina Georgieva confirmed the world economy was already sluggish before the coronavirus outbreak now bound to suffer a "severe recession" in 2020.

    Addressing the Development Committee Meeting during the annual Spring Meeting of the International Monetary Fund (IMF) and the World Bank, the IMF Managing Director said a massive global contraction in the first half of this year was inevitable.

    She said the coronavirus pandemic hit the world economy when it was already in a fragile state as it was weighed down by trade disputes, policy uncertainty, and geopolitical tensions.

    The global coronavirus outbreak is a crisis that is like no other and poses daunting challenges for policymakers in many emerging markets and developing economies (EMDEs), especially where the pandemic encounters weak public health systems, capacity constraints.

    Countries that were affected early-such as China, South Korea, and Italy-have suffered massive contractions in manufacturing activity and services, exceeding the losses recorded at the onset of the global financial crisis.

    The idea of a trade-off between saving lives and saving livelihoods is a false dilemma.




  • CBDT refunds over five thousand 204 crore rupees to help MSME
    CBDT informed the Income-tax refunds are obtained over eight lakh small businesses worth over five thousand 204 crore rupees issued in the last ten days. Income tax refunds will help MSME to carry on their business activities without pay cuts and layoffs in COVID-19 pandemic situations.

    Income tax department issued nearly 14 lakh refunds up to five lakh each to date to help taxpayers. CBDT will issue refunds worth of Rs.760 crore.

    CBDT gave its request to taxpayers to respond regarding reconciliation queries about outstanding tax demands. Around one lakh 74 thousand cases, responses are awaited from taxpayers.




  • Finance Minister attended 5th Annual Meeting of Board of Governors of NDB
    Union Minister of Finance & Corporate Affairs Nirmala Sitharaman participated in the 5th Annual Meeting of Board of Governors of New Development Bank (NDB) through video-conference in New Delhi on 20 April.

    Conference Highlights:
    NDB's efforts to deliver its mandate successfully by taking a more sustainable and inclusive approach were highlighted.

    The Minister discussed the bank's effort on fast-tracking of financial assistance of about $5 billion to BRICS countries including Emergency Assistance of $1 billion India to combat COVID-19 pandemic.

    The Bank has directed the bank's assistance under this facility to be enhanced to $10 billion.

    The bank has initiated the creation of a COVID-19 Emergency Fund and supported India's efforts in supplying critical medicine to the needy countries to tackle the COVID-19.

    The various measurements of the bank to support India in tackling the COVID-19 pandemic include an allocation of $2 Billion by GoI to strengthen the healthcare system.

    It also announced a scheme of social support measures amounting to $25 Billion to alleviate the hardship of the poor and the vulnerable and provided insurance cover of $67,000 per person to over 2.2 million frontline health workers.

    It also provides others provision of relief to firms in statutory and regulatory compliance matters and easing of monetary policy by the RBI.

    It was suggested that the bank take appropriate measures to join the G-20 forum along with other Multilateral Development Banks (MDBs) and the International Financial Institutions (IFIs).




  • World Bank forecasts FY21 India growth at 1.5-2.8 percent
    The World Bank in its "South Asia Economic Focus report" said that India's economy is expected to grow 1.5% to 2.8% in the 2020-21 fiscal year which started on 1 April 2020.

    It stated that India might record its worst growth performance since the 1991 liberalization in the current fiscal year 2020-21 due to the coronavirus outbreak which severely disrupted the economy

    Report Highlights:
    The report estimated India will grow 4.8% to 5% in 2019-20 fiscal that ended on 31 March.

    COVID-19 pandemic will further slow down the Indian economy which was already slowing due to persistent financial sector weaknesses.

    It also stated that growth is expected to rebound to 5% in the Fiscal year 2022 (FY 2021-22) when the impact of COVID-19 dissipates.

    Other forecasts:
    Other forecasts include the Asian Development Bank (ADB) which said that India's economic growth is slipping to 4% in the current fiscal. S&P Global Ratings slashed India's GDP growth forecast for the country to 3.5% from a previous downgrade of 5.2%.

    Fitch Ratings has estimated India's growth at 2% and India Ratings & Research has revised its FY21 forecast to 3.6% from 5.5% earlier.




  • CBDT refunded Rs.4, 250 crore to help taxpayers in COVID-19 pandemic situation
    The Central Board of Direct Taxes (CBDT) stated that it has already issued over 10.2 lakh refunds totalling to around Rs.4,250 crore as of 14 April 2020. The move is in pursuance to the Government of India's decision to issue pending income tax refunds up to Rs.5 lakh in order to help taxpayers in a COVID-19 pandemic situation, on 8 April.

    Highlights:
    CBDT refunded over and above the 2.50 crore refunds already issued in FY 2019-20 till 31 March 2020 totalling up to Rs.1.84 lakh crore.

    About more than 1.75 lakh refunds are in the process of issuance in the upcoming days.

    The refunds by CBDT will be credited directly to the taxpayer bank account in 5-7 business days from issuance.

    Also, around 1.74 lakh refund cases, email responses are awaited from taxpayers regarding reconciliation with their outstanding tax demand for which a reminder email has been sent. The taxpayers have been asked to respond within 7 days so that the refund can be processed accordingly.

    CBDT has requested taxpayers to check and respond to their email and login to their e-filing account to respond to the I-T Department immediately.

    The CBDT also clarified the necessary routine process-related communications to the taxpayers to seek a response on defective ITRs, prima facie adjustments and where confirmation is sought about certain claims made by them. It is expected that a quick response from the taxpayer would enable the I-T Department to process their refunds expeditiously.




  • Nirmala Sitharaman attended the 2nd virtual session of G20 FMCBG
    Union Minister for Finance & Corporate Affairs Nirmala Sitharaman participated in the virtual session of the 2nd G20 Finance Ministers and Central Bank Governors (FMCBG) meeting on 15 April.

    The meeting was held under the Saudi Arabian Presidency. The Ministers discussed the global economic outlook amid the evolving COVID-19 pandemic crisis.

    Highlights:
    Saudi Arabia was appreciated for its tireless efforts in delivering on the outcomes as mandated by the G20 Leaders during the Extraordinary Leaders' Summit.

    As per the direction, Saudi prepared the G20 Action Plan in Response to COVID-19.

    The Action Plan was prepared with an aim to protect lives, safeguard jobs and incomes. It also included measures to restore confidence, preserve financial stability, revive growth and recover stronger.

    The plan included providing help to countries that need assistance, coordinate on public health and financial measures and minimize disruption to the global supply chain.

    India:
    Finance Minister highlighted the role of Finance Ministers and Central Bank Governors in safeguarding the lives and livelihood of people while maintaining macroeconomic stability in a sustainable manner.

    Sitharaman stated that India has disbursed financial assistance amounting to $3.9 billion to more than 320 million people on direct benefit transfer through digital technology so that the exposure of beneficiaries to public places is minimized.

    The monetary policy measures undertaken by GoI, Reserve Bank of India and other regulators have helped de-freeze the market and catalyze credit flows.




  • RBI announced 2nd set of measures to preserve financial stability
    The Reserve Bank of India (RBI) has announced the second set of measures to preserve financial stability and help put money in the hands of the needy and disadvantaged during the extended lockdown due to the COVID-19 crisis. The information was announced by the RBI Governor Shaktikanta Das.

    The move by the Central Bank aims to maintain adequate liquidity in the system and its constituents in the face of COVID-19 related dislocations, facilitate and incentivize bank credit flows, ease financial stress, and enable the normal functioning of markets.

    Measures announced by RBI:
    1) RBI has approved to conduct a second set of targeted long-term repo operations (TLTRO 2.0) for an initial aggregate amount of Rs.50,000 crore. This will facilitate funds flow to small and mid-sized corporates, including NBFCs and MFIs, who have been more severely impacted by the disruptions due to COVID-19.
    2) Special refinance facilities for a total amount of Rs.50,000 crore will be provided to National Bank for Agriculture and Rural Development (NABARD), the Small Industries Development Bank of India (SIDBI) and the National Housing Bank (NHB) to enable them to meet sectoral credit needs.
    3) Reverse repo rate has been reduced by 25 basis points (bps) from 4.0% to 3.75% with immediate effect. The move is to encourage banks to deploy surplus funds in investments and loans in productive sectors of the economy.
    4) Ways and Means Advances (WMAs) Limit of states and union territories (UTs) has been increased by 60% over and above the limit as on 31 March 2020. The aims are to provide support to states/UTs for undertaking COVID-19 containment and mitigation efforts, and also to help them plan their market borrowing programs better.
    5) RBI has decided that the payment moratorium period for the Non-Performing Assets (NPAs), which lending institutions have been permitted to grant as per RBI's announcement on 27 March 2020, will not be considered while classifying assets as NPAs. Hence, NBFCs will have flexibility under the prescribed accounting standards to provide such relief to their borrowers.
    6) Resolution Timeline of stressed assets or accounts has been extended by 90 days.
    7) Scheduled commercial banks (SCBs) and cooperative banks shall not make any further dividend pay-outs from profits pertaining to FY 2019-20 in order to enable banks to conserve capital so that they can retain their capacity to support the economy and absorb losses in an environment of heightened uncertainty.
    8) Liquidity Coverage Ratio requirement for scheduled commercial banks has been brought down from 100% to 80% with immediate effect. It aims to improve the liquidity position for individual institutions.
    9) The treatment available for loans to commercial real estate projects with respect to the date for commencement for commercial operations (DCCO) has been extended to NBFCs, in order to provide relief to both NBFCs and the real estate sector.




  • RBI released 49th round of OBICUS
    The Reserve Bank of India (RBI) released the 49th round of quarterly OBICUS (Order books, inventories, and capacity utilization survey) of the manufacturing sector. The survey includes the reference period January-March 2020.

    OBICUS:
    The OBICUS survey will provide valuable input for monetary policy formulation.

    The Central Bank has conducted the OBICUS of the manufacturing sector on a quarterly basis since 2008.

    The data collected in the survey includes quantitative data on new orders received during the reference quarter, backlog of orders, pending orders, total inventories with a breakup between work-in-progress (WiP) and finished goods (FG) inventories and item-wise production.

    RBI also stated that the company level data collected during the survey will be treated as confidential and never disclosed.

    In the 48th round of the OBICUS for the quarter, October-December 2019 over 704 manufacturing companies were covered. The last survey showed that capacity utilization (CU) had declined to 68.6% in the third quarter of 2019-20 from 69.1% in the previous quarter.

    The orders that were received in the third quarter of the year 2019-20 were less when compared with the previous quarter.




  • Amitabh Kant chairs Empowered Committee to review coordination for COVID-19-related response activities
    NITI Aayog CEO Amitabh Kant chairs Empowered Committee to review coordination between various stakeholders for COVID-19 related response activities.

    The committee constituted of members namely Vikram Doraiswami, (AS, MEA); Dr. Vijayaraghavan, PSA; Kamal Kishore (Member, NDMA); Sandeep Mohan Bhatnagar (Member, CBIC); Anil Malik (AS, MHA); P. Harish (AS, MEA); Gopal Baglay (JS, PMO); Aishvarya Singh (DS, PMO); Tina Soni (DS, Cabinet Secretariat); and the work of EG6 is serviced by Sanyukta Samaddar (Adviser, SDG, NITI Aayog).

    Highlights:
    The meeting discussed the issues faced and the expectations of the government.

    It aimed to formulated plans with three groups of stakeholders namely:

    The UN agencies, World Bank, Asian Development Bank

    Civil Society Organisations and development partners

    3)Industry associations namely Confederation of Indian Industry (CII), Federation of Indian Chambers of Commerce & Industry (FICCI), Associated Chambers of Commerce and Industry of India (ASSOCHAM), NASSCOM

    The committee appealed to over 92000 NGOs/ CSOs registered on the Darpan portal of NITI Aayog. The committee directed them to provide assistance to the government in identifying hotspots and deputing volunteers and caregivers to deliver services to the elderly, persons with disabilities (PwDs), children, transgender persons, and other vulnerable groups. It also directed them to create awareness about social distancing, prevention, isolation, and combating COVID-19 and provide shelter to homeless, daily wage workers, and urban poor families.

    It discussed all the proactive measures taken by the government to combat COVID-19.




  • Edible oil imports in India declined to 32.44 percent in March
    Trade body Solvent Extractors' Association of India (SEA) reported that India's edible oil imports have declined 32.44% to 9,41,219 tonnes in March 2020.

    The reason for the decline is due to government restrictions on the purchase of refined palm oil from the overseas market. India had imported 13,93,255 tonnes in March 2019.

    Report Highlights:
    India is the world's leading vegetable oil buyer.

    The share of palm oil is more than 60% of India's total vegetable oil imports.

    It highlighted that there was a 90% fall in import of refined, bleached and deodorized (RBD) palmolein at 30,850 tonnes in March 2020 against 3,12,673 tonnes in 2019.

    It highlighted that the import of RBD palmolein has been reduced drastically as the commodity has been put on a restricted list of trade since 8 January. In order to place palm oil in a restricted category, the importer will require licence or permission for the inbound shipment.

    SEA also stated that the import of crude palm oil (CPO) and crude palm kernel oil (CPKO) have declined by 38% to 3,04,458 tonnes during March 2020 against 4,89,770 tonnes during 2019.

    Also, the import of soyabean oil declined marginally to 2,92,410 tonnes in March 2020 against 2,92,925 tonne in March 2019.

    It highlighted that the November-March period of the 2019-20 oil year, total edible oils imports declined 10% to 53,91,807 tonnes against 60,05,067 tonnes in the year 2019.




  • CCI approved acquisition of GMR Kamalanga Energy Limited by JSW Energy Limited
    The Competition Commission of India (CCI) has approved the acquisition of GMR Kamalanga Energy Limited, the target, by JSW Energy Limited, the acquirer.

    The acquisition was done under Section 31(1) of the Competition Act, 2002 on 7 April.

    Acquisition:
    As per the move, JSW Energy Limited acquires the 100% shareholding of the GMR Kamalanga Energy Limited. JSW has a power generation capacity of 4,541 MW comprising of a portfolio of thermal (3,140 MW), hydro (1,391 MW) and solar (10 MW).

    GMR Kamalanga Energy Limited is engaged in the generation of power through its coal-based thermal power plant at Kamalanga village, Odisha.




  • I-T department to release all pending income tax refunds to benefit 14 lakh taxpayers
    The Centre has announced that it is to issue all the pending income-tax refunds up to Rs.5 lakh immediately. The move by the Centre is to provide immediate relief to the business entities and individuals.

    I-T refunds:
    An income tax (I-T) refund is due to a taxpayer/individual when the tax deducted from his/her income in a particular financial year is higher than his/her total income tax liability.

    The I-T refunds will benefit around 14 lakh taxpayers across India.

    The I-T department of the Ministry of Finance will also release all Goods and Service Tax (GST) and custom refunds to around 1 lakh business entities, including micro, small and medium enterprises (MSME).

    A total refund grant of approximately Rs.18,000 crore will be released to the business entities.




  • Centre to announce second coronavirus stimulus worth Rs.1 lakh crore to help small firms
    Centre is to announce around Rs.1 lakh crore ($13 billion) stimulus and focus on help for small and medium businesses that are suffering due to the coronavirus outbreak.

    Highlights:
    The second package is expected to focus largely on MSMEs.

    As per a government estimate, Small businesses in India account for nearly one-quarter of India's $2.9 trillion economies. The sector employs more than 500 million workers.

    The new package could include raising in the limits of bank loans for working capital needs, an increase in the threshold limits for availing tax exemptions and relaxing rules for deposits of income tax and other dues.

    The Industry body AIMO, which represents around 100,000 small manufacturers said that more than two-thirds of its members faced problems in paying salaries.

    Background:
    Earlier, India outlined an Rs.1.7 lakh crore ($22.6 billion) economic stimulus plan to provide direct cash transfers and food security measures to give relief to millions of poor hit by an ongoing 21-day nationwide lockdown to curb the spread of Coronavirus pandemic.




  • Government to sanction Rs.15,000 crore to strengthen Indias fight against COVID-19 outbreak
    The Government of India sanctioned Rs.15,000 crore package to strengthen India's fight against the novel coronavirus.

    The amount will be used for COVID-19 Emergency Response and Health System Preparedness Package.

    COVID-19 Funds:
    Out of the Rs.15,000 crore fund allocated by the Central government, Rs.7,774 crore will be used for immediate COVID-19 Emergency Response. The rest of the amount will be used for medium-term support of 1-4 years.

    The COVID-19 Emergency Response and Health System Preparedness Package will be implemented in three phases. The first phase will be from January 2020 to June 2020, the second phase from July 2020 to March 2021 and the third phase from April 2021 to March 2024.

    The fund will be shared among all states and union territories (UTs).

    The main objectives of the package include mounting emergency response to slow and limit COVID-19 in India through the development of diagnostics and COVID-19 dedicated treatment facilities.

    The fund also includes several measures like centralized procurement of essential medical equipment and drugs required for treatment of infected patients, setting up of laboratories and bolster surveillance activities, biosecurity preparedness, build resilient National and State health systems to support prevention and preparedness for future disease outbreaks, pandemic research and proactively engage communities and conduct risk communication activities.

    So far, the Health Ministry has already disbursed Rs.4,113 crore to all the States and UTs for dealing with the emergency COVID response.




  • Fiscal deficit may increase in March despite nationwide lockdown
    Data released by the Government of India stated that India's fiscal deficit stood at 5.07% of gross domestic product (GDP) in February 2020. The report stated that the government might not meet its revised target of 3.8% of GDP due to the COVID-19 pandemic.

    Report highlights:
    The fiscal deficit target was increased to Rs.7.66 lakh crore (3.8%) of the GDP in July 2019 by invoking the escape clause under the Fiscal Responsibility and Budget Management Act (FRBM).

    As per the data from the Controller General of Accounts (CGA), India's fiscal deficit reached Rs.10.36 lakh crore at the end of February 2020.

    It also stated that government revenues are likely to take a substantial hit in March, despite nationwide lockdown.

    It also highlighted that expenditures for the month should rise due to various costs arising from the virus containment efforts and enforcing the lockdown.

    According to the report, the state governments received about Rs.90,000crore as tax devolution and around Rs.29,000 crore for various schemes in FY20.




  • RBI to implement Mega Bank Consolidation Plan on 1 April
    The Reserve Bank of India (RBI) stated that the schemes for the merger of 10 state-run banks into four lenders will come into force from 1 April.

    RBI also stated that the branches of merging banks will operate as of the banks in which the banks have been amalgamated.

    The banks sought to defer the merger schemes of lenders due to the lockdown triggered by coronavirus outbreak.

    Union Finance Minister Nirmala Sitharaman announced that the megabank consolidation plan would take effect from 1 April 2020 despite the COVID-19 pandemic.

    Background:
    On 4 March, the government of India notified the amalgamation schemes for 10 state-owned banks into four as part of its consolidation plan. The move aimed to create bigger size stronger banks in the public sector.

    The amalgamation of 10 PSBs into four Banks include:

    Oriental Bank of Commerce (OBC) and United Bank of India into Punjab National Bank (PNB)

    Syndicate Bank into Canara Bank

    Andhra Bank and Corporation Bank into Union Bank of India

    Allahabad Bank into Indian Bank




  • Tata Power commissioned Shuakhevi HPP in Georgia
    Tata Power Company's joint venture (JV) with Norway's Clean Energy Invest (CEI), and International Financial Corporation (IFC) began its commercial operation of a 178 megawatt (MW) hydropower project (HPP) in Georgia. The information was given by the Tata group utility on 30 March.

    About Joint Venture:
    Adjaristsqali Georgia LLC, a joint venture company, is setting up one of the largest projects in Georgia at an overall project cost of approximately $500 million. Once the 178 MW-Shuakhevi HPP is completed, the JV is planning to commission a 9 MW units, namely Skhalta Hydro Power project.

    The project is expected to generate around 450 GWh of clean energy to reduce the emission of greenhouse gases (GHG) by more than 200,000 tonnes a year. The commercial operation of the Shuakhevi HPP in Georgia is an important milestone for Tata Power and its partners.




  • ADB to invest $100 million in NIIF FOF
    Asian Development Bank (ADB) has joined the Government of India (GOI) and Asian Infrastructure Investment Bank (AIIB) as an investor under the instruments of the National Investment and Infrastructure Fund (NIIF) of India.

    Under the move, ADB will invest $100 million equivalent in the NIIF Fund of Funds (FOF).

    ADB's investment:
    With the investment now made by ADB into the NIIF platform, the FOF has now secured $700 million in commitments. NIIF's FOF is targeted at India-focused PE fund managers who rely on international investors for large-scale fundraising.

    The FOF invests in various sectors and strategies through third-party managed funds. FOF is committed to three funds, aggregating to over $350 million (Rs.2,600crores), that focus on green energy and climate, middle-income and affordable housing and entrepreneur-driven mid-market growth companies, operating across diversified sectors.




  • Finance Minister participated in G20 meeting of Finance Ministers
    Finance Minister Nirmala Sitharaman participated in the 2nd Extraordinary G20 Finance Ministers and Central Bank Governors meeting. It was hosted under the Chairmanship of Saudi Arabian on 31 March.

    The Ministers discussed the impact of COVID-19 pandemic on the global economy and coordinate efforts in response to this global challenge.

    The meeting was a follow up on the discussion of the 1st virtual meeting and to discuss the follow-up in line with the statement made by G20 Leaders during the G20 Virtual Leaders Summit held on 26 March.

    Highlights:
    The G20 members will provide an opportunity to all G20 members to not only share their individual experiences but also to work in better coordination.

    The meeting was held virtually on a regular basis to continue discussions on the evolution of the COVID-19 pandemic.

    They also discussed the impact on markets and economic conditions and take further actions to support the economy during and after this phase.

    The Ministers recommended a G20 Action Plan in Response to COVID-19 and asked a close cooperation with relevant international organizations.

    It aimed at providing an opportunity for immense cross-learning and critical insights.

    Discussions regarding regulatory and supervisory measures to support and quickly revive the economy was held.

    It was suggested that the International Monetary Fund (IMF) can develop innovative and ingenious methods to meet COVID-19 related financing requirements given that policy space is severely constrained in most countries in these unprecedented circumstances.




  • RBI introduced relief measures to deal with coronavirus pandemic
    The Reserve Bank of India (RBI) has announced relief measures for state governments, exporters. The Central Bank also provides relief to banks' capital concerns.

    RBI Measures:
    1) RBI extended the deadline for realization and repatriation period of export which is made up to or on 31 July. The period of export has been relaxed for up to 15 months from 9 months (at present).

    The move by RBI will enable exporters to realize their receipts within the extended period. It will also provide greater flexibility to exporters to negotiate future contracts with buyers abroad.

    2) RBI constituted an advisory committee to review ways and means limits for states and Union Territories (UTs). As per the committee's report, it has been decided to increase the ways and means limit by 30% from the existing threshold for all states/UTs.

    The move is expected to cause the relief to state governments to get through the pandemic. The revised limits by the Central Bank came into force with effect from 1 April and will be valid till 30 September 2020.

    3) RBI cancelled the counter-cyclical capital buffer for banks for a period of one year. RBI's framework views the credit-to Gross domestic product (GDP) gap as the main indicator, along with other supplementary indicators.

    The counter-cyclical capital buffer framework was introduced by RBI in 2015. The framework aimed to build up capital that may be used by them to maintain the flow of credit in difficult times. The framework aimed to prevent banks from indiscriminate lending in periods of excess credit growth.




  • CPSEs under the Ministry of Steel Pay Tax Dues under Vivad Se Vishwas scheme
    Ministry of Steel stated that Several Central Public Sector Enterprises (CPSEs) have made payment of due tax to the government under Vivad Se Vishwas scheme by 31st March 2020.

    As per the data shared by the Steel Ministry, NMDC settled a dispute to save Rs.1,868.80crore in possible tax payments by opting for the Vivad se Vishwas scheme of the Centre. SAIL settled a dispute of Rs.266.27 crore for Rs.186.72 crore.

    RashtriyaIspat Nigam Ltd (RINL) settled two disputes under the scheme, a dispute of Rs.577.32 crore was settled for Rs.275.88 crore, while another one of Rs.29.39 crore was settled for Rs.22.61 crore. Other CPSEs include MOIL, MSTC Limited, Kudremukh Iron Ore Company (KIOCL), and JKMDC.

    Vivad Se Vishwas scheme:
    The objective Vivad Se Vishwas scheme to reduce pending income tax litigation, generating timely revenues for the government and help taxpayers end their tax disputes by paying disputed tax and get a waiver from payment of interest and penalty.

    The Scheme aims to extend the scope to cover litigation pending in various debt recovery tribunals (DRTs). It will provide an opportunity to settle direct tax disputes within the current financial year by waiving interest and penalty on their pending taxes.




  • ICRA says Banks, NBFCs to see bad loans pile up post moratorium period
    Rating company ICRA stated that Banks and Non-Banking Finance Companies (NBFCs) will face a bad pile-up in bad loans post the moratorium period. It will worsen the credit profile of the Banks.

    ICRA Highlights:
    ICRA stated that lenders with a higher share of asset classes like microfinance, commercial vehicles, and small companies will be more vulnerable as their repayment ability depends on immediate cash flows.

    It stated that the asset quality stress of the banks will reflect with a lag of 1-2 quarters after the removal of the moratorium. The stress will vary across segments.

    ICRA estimated the GDP growth will be slowed down to 2.0% in the current fiscal from an estimated 4.4% in fiscal 2020.

    It is expected that the profitability (RoA) of financial sector entities will be adversely affected by 50-90 basis points (bps) this fiscal.




  • RBI increased short-term borrowing limit for states, UTs by 30 percent
    The Reserve Bank of India introduced new measures to relax the impact of the COVID-19 induced lockdown.

    The Central bank focused on the finances of the states that have announced the staggered payment of salaries.

    Measures:
    Short-term borrowing limits of States or ways and means advances (WMA) have been increased by 30%. It aims to enable the state governments to tide over the situation arising from the outbreak of the COVID-19 pandemic.

    The states have faced pressure on revenues as the economic activity came to a halt and the transfers from the Central government and less Goods and Services Tax (GST) collection.

    The decision came as the Banks that bear the moratorium would get some reprieve in meeting regulatory norms with respect to the capital needs.

    The revised limits came into force on 1 April 2020. It will be valid until 30 September 2020.



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