December 2020 Economic Affairs

Sakshi Education

Government plans $60-bn investment to bolster gas infrastructure
The Government of India is to increase the share of Natural Gas in the primary energy mix of the country from 6.2% to 15% by 2030. In order to achieve this, 60 billion USD is to be invested over next four years to create rigid gas infrastructure in the country. This includes city gas distribution network, pipelines and LNG terminals.

The following are included in the plan of GoI to increase the share of Natural Gas

India is to adopt Clean Mobility Solutions with greater use of LNG as a transportation fuel. This includes long hauling trucks as well.

In 2019, PM Modi “One Nation One Gas Grid”. Under this, India is to expand its Natural Gas Grid by adding 17,000 kilo metres of gas pipeline.

The regasification capacity of the country is to be increased from the current 42 million tonnes per annum to 61 million tonnes per annum. This is to be achieved by 2022.

In November 2020, the Government of India announced that it is to double its oil refining capacity in the next five years.

Earlier India established the first automated national-level gas trading platform in the country to facilitate trading. Also, the City Gas Distribution projects have been expanded to more than 232 geographical areas spread over 400 districts. This covers 53% of the Geographic areas of the country and 70% of the population.

The Government of India has planned to set up thousand LNG Fuel stations.

Huge biomass is to be tapped through National Biofuel Policy. The GoI is to set up five thousand CBG plants by 2023-24. This is to be achieved through an investment of 20 billion USD.
Reliance, British Petroleum (BP) begin gas production from R Cluster of the KG Basin
Reliance Industries Ltd. and British Petroleum (BP) have announced the start of gas production from the R cluster of the KG Basin, the deepest off-shore gas field in Asia.

RIL has a participating interest of 66.7% in the KG-D6 block and BP has a participating interest of 33.3% in the block.

The field is the first of three deepwater gas projects in the KGD6 block.

The R cluster, along with the Satellite Cluster and MJ gas fields in the Krishna Godavari Basin are expected to produce around 30 MMSCMD (million standard cubic meters per day) of natural gas or about 15% of India’s projected demand for natural gas by 2023.

The R cluster field alone is expected to have a peak production of 12.9 MMSCMSD or about 10% of India’s current natural gas output.

The three projects are a key part of the plan to boost domestic production of natural gas to increase the share of natural gas in India’s energy basket from 6.2% now to 15% by 2030.

Increased domestic production of natural gas is an important aspect in reducing India’s dependence on imports and improves energy security.

This will be beneficial to City Gas Distribution (CGD) companies and also help achieve the government’s goal focus of boosting the share of natural gas in India’s primary energy mix.

RIL and BP are jointly set to invest a total of Rs 40,000 crore on these three fields.

Production of gas from the R cluster was expected to start in May 2020 but was delayed due to the impact of the Covid-19 pandemic.

The satellite cluster is expected to start production in the next fiscal.

The field (R cluster) is located about 60 kilometers from the existing KG D6 Control & Riser Platform (CRP) off the Kakinada coast and comprises a subsea production system tied back to CRP via a subsea pipeline.
Positive Pay System for cheques above Rs. 50,000

The Reserve Bank of India is to introduce “Positive Pay System” from January 1, 2021 for cheque transactions above Rs 50,000.

The concept of Positive Pay involves a process of reconfirming key details of large-value cheques.

Under this process, the issuer of the cheque submits electronically, through channels like SMS, mobile app, Internet banking and ATM, certain minimum details of that cheque (like date, name of the beneficiary, or payee and amount) to the drawee bank, details of which are cross-checked with the presented cheque by Cheque Truncation System (CTS).

Any discrepancy is flagged by CTS to the drawee bank and presenting bank, who then take redressal measures.

Only the cheques that are compliant with the new system are accepted under the Dispute Redressal mechanism. The member banks shall implement similar arrangements for cheques collected outside the Cheque Truncation System as well.

Banks will enable the new system for all account holders issuing cheques for amounts of Rs 50,000 and above.

While availing of this facility is at the discretion of the account holder, banks may consider making it mandatory in case of cheques for amounts of Rs 5,00,000 and above.

The National Payments Corporation of India (NPCI) will develop the facility of Positive Pay in CTS, and make it available to participant banks.

The Cheque Truncation System is currently available all over India. It presently covers 2% of the retail payment in terms of volume and 15% of the retail payment in terms of value.
Implementation of CARO order deferred by one year: MCA
The Ministry of Corporate Affairs has announced the notification of Companies (Auditor’s Report) Order, 2020 (CARO). CARO 2020 would come into effect from financial years commencing on or after April 1, 2021.

Earlier, CARO 2020 was to come into force from financial year starting on or after April 1, 2020.

The new reporting regime of CARO 2020–which was introduced by MCA in consultation with National Financial Reporting Authority in February this year— had superseded CARO 2016.

Under the new regime, an auditor was required to report/certify several details which were so far not required to be certified.

As many as 21 items required detailing in the new CARO-2020.

The CARO requires companies to comply with disclosure on various issues, including whistle blower complaints and default in repayment of borrowings.

Disclosure of details of proceedings against company for holding Benami property.

The auditor should provide details of investments made by the company.

Fraud committed by the company or on the company should be reported.

The cash losses in the financial year and the preceding financial year should be reported.

The report should hold details of loan repayment period and amount to be repaid.

The CARO 2020 enhances the information available to both investors and financial institutions. It is a major step for transparency in accounts.
Union Cabinet approves 100% FDI in DTH services
The Union Cabinet recently approved revised guidelines for Direct to Home (DTH) broadcasting services.

Direct-to-Home (DTH) television is a method of receiving satellite television by means of signals transmitted from direct-broadcast satellites.

The government permitted the reception and distribution of satellite television signals in November 2000.

On the other hand, in a Cable connection, the cable TV operators receive the signals from satellite and transmit to nearby areas through cables.

In DTH, the customers are directly connected to the satellites.

It has increased the license period to twenty years. Earlier, it was ten years.

The guidelines allow 100% Foreign Direct Investment (FDI) in DTH. Till now, the FDI cap was limited to 49 per cent.

The license fee has been revised to 8% from 10% of the Adjusted Gross Revenue.

The broadcasting firms will have to pay the license fee in quarterly basis. The firms are now paying in annual basis.

The guidelines also enable the DTH service providers to invest more coverage leading to increased operations and higher growth.

The Government of India has allowed the DTH operators to share the infrastructure. The service providers shall share common hardware for their Conditional Access System applications and Subscriber Management System.
Dept of Posts & India Post Payments Bank unveil new digital payment app ‘DakPay’
Department of Posts and India Post Payments Bank unveiled a new digital payment app DakPay.

The App is launched as part of its ongoing efforts to provide Digital Financial inclusion at the last mile across India.

DakPay is a digital payment app and a suite of digital financial and assisted banking services provided by India Post and India Post Payments Bank (IPPB) through the trusted Postal network across the nation to cater to the financial needs of various sections of the society.

DakPay service will give access to banking services and postal products online, also it is a unique concept where one can order and avail postal financial services at doorsteps.

This innovative App will help people transfer and receive money (DMT-Domestic Money Transfer) with ease and those who do not have smartphones can also do money transaction on this App with the assistance of postmen.

One can scan QR code and make payments for services/merchants digitally (Virtual debit card & with UPI), enabling cashless ecosystem through biometrics, providing interoperable banking services to the customers of ANY BANK (AePS) and Utility Bill Payment services.
RBI’s dollar mopping spree could slow down as US puts India on currency watchlist
The US Treasury Department included India on its watch list of currency manipulators. Vietnam and Switzerland are marked as currency manipulators.

In 2019, the U.S. Treasury Department removed India from its currency manipulators watch list of its major trading partners.

This is a label that the US government puts on a country that intends to deliberately devalue its currency against the U.S. dollar for "unfair currency practices".

This practice means that the country is artificially reducing the value of its currency to gain an unfair advantage over other countries.

This is because the devaluation of the currency will reduce the country’s export costs, thereby artificially showing a reduction in the trade deficit.

The US Treasury Department issues a semi-annual report, which must track the development of the international economy and check foreign exchange rates.

An economy meeting two of the three criteria in the Trade Facilitation and Trade Enforcement Act 2015 will be included on the watch list. This includes:

"Significant" bilateral trade surplus with the United States at least $20 billion in 12 months.

In 12 months, the current account surplus is equal to at least 2% of the gross domestic product (GDP).

The listing will not be punished and sanctioned in any form, but it will destroy the country’s global financial image in the foreign exchange market, including underestimating the currency to gain an export advantage.

India, Taiwan, and Thailand have joined the other seven countries on the watch list. Other countries on the list include China, Japan, South Korea, Germany, Italy, Singapore, and Malaysia.
Virtual Business Conclave with CLMV Countries Organised By Commerce and Industry Ministry
Union Minister for Commerce participated in the opening ceremony of the 6th India-CLMV Business Conclave 2020 jointly held virtually by the Ministry of Commerce and Industry of India and Confederation of India Industry.

The Conclave was held under the theme “Building Bridges for Constructive Development yesterday”.

During the conclave, India invited the CLMV countries to join International Solar Alliance and the Resilient Supply Chain Initiative.

During the conclave, India mentioned that it is ready to share COVID-19 vaccine with the CLMV countries.

There would be a virtual exhibition for over 15 days with enterprises from India and the CLMV countries showcasing their products and services across sectors such as

Agriculture (Agri& food processing, farm inputs, and allied services)

Manufacturing

Light industry (automobiles, textile, and machine tools)

Power and clean energy

Infrastructure, transport & logistics

Healthcare & pharmaceuticals

IT, skills and education
RBI keeps Repo Rate unchanged to Boost Demand
The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) has kept the Repo rate unchanged in the December policy. The repo rate currently stands at 4%. The Reverse Repo rate is maintained at 3.35%. Also, the Marginal Standing Facility and Bank Rate also remain unchanged at 4.25%.

The MPC announced this in view of reviving growth and mitigate the impact of COVID-19 and also aims to ensure inflation that remains within the target, going forward.

The committee has announced a set of additional measures with the objective of reviving the economy, enhancing liquidity support, deepen financial markets. It also focuses to conserve capital among banks and NBFCs, strengthen regulatory supervision, facilitate external trade, and upgrade payment system services.

The existing guidelines on Credit Default Swap will be reviewed in order to facilitate the development of the credit derivatives market.

Regional Rural Banks will now be permitted to access Liquidity Adjustment Facility (LAF) and Marginal Standing Facility of RBI and the call/notice money market.
Government decides to setup Export Promotion Council for Ayush products
Commerce, Industry and AYUSH ministries have decided to work together to set up an Export Promotion Council to boost AYUSH exports.

The Ministry of Ayurveda, Yoga & Naturopathy, Unani, Siddha and Homoeopathy is purposed with developing education, research and propagation of indigenous alternative medicine systems in India.

Trade and commerce in the AYUSH sector needed to upscale quickly in order to meet the growing demands from India and abroad, and to serve the larger number of people who are now looking up to these systems for maintaining their health.

The proposed AEPC can be housed at Ministry of AYUSH.

Standardization of HS Code for AYUSH will be expedited and the Ministry of AYUSH will work in collaboration with Bureau of Indian Standards to develop international standards for AYUSH products as well as services.

The ministry of AYUSH and AYUSH industry will identify best practice and promote them among the public.

The AYUSH industry will work on ensuring quality and standards of AYUSH products as well as to become price competitive and AYUSH will figure out brand India activities.

AYUSH based solutions for disease resistance and treatment during the difficult times of the CoVID-19 pandemic and called for upscaling trade and commerce in AYUSH sector in order to meet the growing demands from India and abroad

AYUSH immunity protocols and the National Clinical Management Protocol for CoVID-19 for Ayurveda and Yoga were timely interventions which provided relief to large sections of the population.
UN declares 'Invest India' winner of Investment Promotion Award 2020
The United Nations Conference on Trade and Development (UNCTAD) has declared 'Invest India' as winner of the United Nations Investment Promotion Award 2020.

The award ceremony took place on at the UNCTAD headquarters in Geneva.

The award recognises and celebrates the outstanding achievements of the world's investment promotion agencies.

The evaluation was based on UNCTAD's assessment of work undertaken by 180 national investment promotion agencies across the world.

UNCTAD highlighted good practices followed by 'Invest India' such as the Business Immunity Platform, Exclusive Investment Forum webinar series, its social media engagement and focus COVID-19 response teams.

National investment promotion and facilitation agency Invest India has also shared long-term strategies and practices being followed for investment promotion, facilitation and retention at UNCTAD's high-level brainstorming sessions.

The award is testament to Prime Minister's vision of making India a preferred investment destination with a focus on both ease of living and ease of doing business. It bears testimony to his focus on bringing excellence within the government.

UNCTAD is the central agency that monitors performance of investment promotion agencies and identifies global best practices. Germany, South Korea and Singapore have been some of the past winners of the award.
Launch of first training plan under HAL-IISc Skill Development Centre
Hindustan Aeronautics Limited (HAL) formally launched the first training programme being organised under the HAL- Indian Institute of Science (IISc) Skill Development Centre (SDC) at Challakere, Chitradurga – a workshop on IoT and Embedded Applications.

The Centre's activities will start with five courses planned to be offered in the first cohort in the virtual mode during December 2020 to February 2021.

The programmes offered are in the niche engineering areas of aerospace, mechanical, electrical and electronic sectors, and in line with the “Make in India” mission.

The experienced engineers, supervisors and faculty members of various technical institutes will be trained in the Centre.

Faculty members will be selected from Indian Institute of Science and other leading organisations including HAL.

The HAL-IISc skill development programme is ambitious and meets the needs of the country by training the trainers, therefore having a multiplier effect.

The training will cover both skill upgradation as well as developing new skills.

The uniqueness lies in their emphasis on learning by doing. Trainees will spend more than 50% of the course duration in labs, conducting experiments.
Ministry Of Shipping Issues Draft Guidelines for Floating Structures for Public Consultation
Ministry of Ports, Shipping and Waterways issues draft guidelines for technical specifications of floating structures, with a vision to set up and deploy world-class floating infrastructure all along the coastline and issued the same for public consultation.

The draft guidelines along with proposed Specifications / Schedule of Technical Requirements (SOTR) are issued for seeking the feedback and suggestions from the public.

The Ministry has entrusted IIT Chennai to work out the technical specifications of sustainable floating structures like floating jetties, water-aerodromes, floating marinas, fish landing facilities etc so that precise and stringent technical specifications are established.

The deployment of floating jetties, especially in locations having a large tidal range, where conventional quay poses problems during low tide periods, is convenient.

Floating jetties, at such locations, provide constant freeboard, ease embarkation of ship's stores and straightforward unloading of the fishermen's catch.

It consequently leads to increased productivity as well as safety of the fishermen in the long run.
Petroleum board’s new unified tariff structure
The Petroleum and Natural Gas Regulatory Board - PNGRB has notified 14 new tariff structures for natural gas pipelines. The purpose is to reduce the cost of natural gas for users who are away from the gas and LNG receiving terminals on the west coast of the country.

The purpose of the New Unified Tariff Structure is to reduce the cost of natural gas for users who are away from the gas and LNG receiving terminals on the west coast of the country.

Under the new flat-rate structure, buyers will be charged a fixed rate for natural gas transportation within 300 kilometres from the source, and a fixed rate for natural gas transportation within 300 kilometres of a single pipeline network.

This will be much cheaper for buyers who are far away from the gas source. These buyers charge earlier based on the number of pipes used and the distance from the gas source.

Therefore, buyers who use multiple channels may benefit a lot from this change.

Changes in tariffs are likely to stimulate more investment in natural gas transmission infrastructure, as natural gas prices are becoming increasingly affordable for users far from the country's west coast.

The Indian government's goal is to increase the consumption of natural gas to 15% of the current level by 2030. The current consumption of natural gas accounts for 6.2% of India's energy consumption.
Which states turn 100% organic?
The Union Territory of Lakshadweep has been declared as Organic Agricultural Area by the Ministry of Agriculture and Farmer’s welfare. The UT is second after Sikkim to achieve the status of 100% organic region.

The proposal was approved October 26, 2020 after receiving required certifications and declarations under Centre’s Paramparagat Krishi Vikas Yojana (organic farming improvement programme).

Lakshadweep is physically cut off from the mainland; for the last 15 years, no chemical has been shipped into this territory, except medicines and some cosmetics.

This has made Lakshadweep 100 percent organic.

Lakshadweep administration formally declared that its entire farming community was practicing organic agriculture and using organic inputs such as compost, poultry manure, green leaf manure.

The UT was following organic or biological methods for plant protection as well.

Synthetic chemicals for agriculture were reduced in a phased manner and stopped completely by 2005.
India and UN-Based Better Than Cash Alliance organized a joint Peer learning exchange
India and UN-Based Better Than Cash Alliance organized a joint Peer learning exchange on fintech solutions for responsible digital payments at the last mile.

Based at the United Nations, the Better Than Cash Alliance is a partnership of governments, companies and international organizations that accelerates the transition from cash to responsible digital payments.

The Alliance has 75 members which are committed to digitizing payments.

The Alliance Secretariat works with members on their journey to digitize payments by:

Providing advisory services based on their priorities.

Sharing action-oriented research and fostering peer learning on responsible practices.

Conducting advocacy at national, regional and global level.

It was created in 2012. It was launched by the United Nations Capital Development Fund, the United States Agency for International Development, the Bill & Melinda Gates Foundation, Citigroup, the Ford Foundation, the Omidyar Network, and Visa Inc.
FDI inflows double in July-Sept quarter to $28.1 billion
In the July-September quarter, Foreign Direct Investment (FDI) inflows to the country reached US$28.1 billion.

In the second quarter of the 2020-21 fiscal year (July 2020 to September 2020), Foreign Direct Investment (FDI) inflows into India totalled 28.102 billion US dollars, of which FDI equity inflows were 23.441 billion US dollars or rupee. 174793 million.

This brings FDI equity inflows from the 2020-21 fiscal year to September 2020 to $30.04 billion, an increase of 15% over the same period in the 2019-20 fiscal year.

From April 2000 to September 2020, according to reports, the largest inflow of Foreign Direct Investment came from Mauritius, followed by Singapore and the United States.

From October 2019 to September 2020, Gujarat has been the main beneficiary of Foreign Direct Investment equity inflows, followed by Maharashtra and Karnataka.
NREGS demand still on rise, 96% of panchayats have applications
Data available up to November on the National Rural Employment Guarantee Scheme (NREGS) portal shows that demand for work has been at all time high.

The NREGS is a demand-based scheme and has emerged as a safety net during the pandemic for jobless migrant workers returning to their villages

Despite a progressive relaxation in Covid-19 curbs to revive the economy, 96% gram panchayats have logged work under the scheme in the financial year (2020-21) as compared to previous seven years.

The number of gram panchayats generating nil person days of work (panchayats with zero person days work) during the current financial year are at an eight-year low of only 3.42% of the 2.68 lakh gram panchayats across the country.

In 2019, the number of gram panchayats generating nil person days during the entire period was 3.91% of the total 2.64 lakh gram panchayats.

Over 96% of gram panchayats across the country have registered demand for work under NREGS from April till November-end.

Over 6.5 crore households, covering 9.42 crore individuals, have availed NREGS till November 2020, which is an all-time high.

Over 265.81 crore person days have been generated, which is higher than 265.44 crore generated in 2019.

1.98 crore households availed the scheme in October 2020, which is 82% higher than 2019.

Highest number of demand for work came from Tamil Nadu, West Bengal, Uttar Pradesh and Madhya Pradesh.

The wage expenditure has also reached an all-time high of Rs. 53,522 crore during this period.

Tamil Nadu has reported the highest figure of households that availed the NREGS across the country, since July and has been followed by West Bengal.

These two states were not covered under the Garib Kalyan Rojgar Abhiyaan.
India signs $132.8-m loan agreement with ADB to strengthen Meghalaya’s power supply
The Asian Development Bank (ADB) has signed a US$132.8 million loan with the Government of India to strengthen and modernize the distribution network and improve the quality of electricity provided to households, industries and businesses in Meghalaya

Although Meghalaya has achieved 100% electrification, the remote rural areas of the state frequently cut out power due to overloading of the distribution grid and substations using outdated technologies, resulting in massive technical and commercial (AT&C) losses.

The Indian government and the Meghalaya state government have launched a "24×7 Meghalaya State Electricity Plan for all citizens", aiming to provide uninterrupted, high-quality, reliable and affordable power supply to all electricity users.

The project will build 23 substations; transform and modernize 45 substations, including the provision of control room equipment and protection systems; install and upgrade 2,214 kilometers of power distribution lines and related facilities, covering three of the six circles in the state.

The installation of smart meters will benefit approximately 180,000 households.

It is proposed to supplement the loan with a US$2 million grant from the ADB Japan Poverty Reduction Fund, which will fund renewable energy microgrids to improve power quality and support income-generating activities, especially for women and others Socially disadvantaged groups in three villages and three schools.
IFSCA obtains Membership of International Association of Insurance Supervisors (IAIS)
The International Financial Services Centres Authority (IFSCA) obtained membership of International Association of Insurance Supervisors (IAIS).

With this membership IFSCA would have access to IAIS’s global network and would be able to exchange ideas and information with other global regulators.

This would help in developing a vibrant global Insurance hub in IFSC at GIFT City.

Currently, 17 leading Insurance entities are operating from GIFT IFSC undertaking offshore Insurance and Reinsurance business.

This membership would go a long way in connecting IFSC with global insurance institutions and would facilitate IFSCA in joint development of global insurance business with other global centres.
FM Nirmala Sitharaman releases the ‘Smuggling in India Report 2019-20’
Finance Minister Nirmala Sitharaman on Friday inaugurated the 63rd Founding Day Celebrations of the Directorate of Revenue Intelligence (DRI). On the occasion, Mrs Sitharaman released the Smuggling in India Report 2019-20 which analyses organised smuggling trends on Gold and Foreign Currency, Narcotic Drugs, Security, Environment and Commercial Frauds.

Finance Secretary Dr Ajay Bhushan Pandey said that DRI has contributed to the economy of India by actively bringing to light some significant cases of commercial frauds and cross-border smuggling.

On the occasion, Bravery Awards were conferred upon Najimudheen T S of DRI Cochin Zonal Unit and Sumer Sen, an independent witness of a case booked by DRI, Jaipur.

The DRI Utkrisht Seva Samman, 2020 was awarded to B. Sankaran, an officer of the 1961 batch of the Indian Revenue Service.
Reserve Bank keeps repo rate unchanged at 4 %
Maintaining an accommodative stance, the RBI Governor Shaktikanta Das said that the Monetary Policy Committee has unanimously decided to leave the policy repo rate unchanged at 4 per cent. He said the marginal standing facility remains unchanged at 4.25 percent and reverse repo rate stands unchanged at 3.35 per cent.

The Reserve Bank of India’s Governor Dr. Shaktikant Das said that the RBI expects the economy to record positive growth in the second half of the current financial year.

While ensuring that the Monetary Policy Committee will keep on monitoring all threats to price stability, Dr. Das said that the Financial sector entities like banks and NBFC's should give highest priority to quality of governance, risk management and internal controls.

He informed that the RBI has decided to raise the limit for contactless card transactions from Rs 2,000 to Rs 5,000 per transaction from January 2021. Mr. Das said that the RTGS system will be made 24X7 in the next few days. He ensured that the RBI will use various instruments at the appropriate time while ensuring ample liquidity is available to the system.