February 2021 Economic Affairs

Sakshi Education

Prime Minister Narendra Modi launches slew of infra projects in Kerala
The Prime Minister said development and good governance do not know caste, gender, religion or language. “Development is for everyone. This is the essence of SabkaSaath, Sabka Vikas, Sabka Vishwas".

The PM inaugurated the 2000-MW Pugalur (Tamil Nadu)-Thrissur high voltage direct current (HVDC) system through video conference. This is the first power transmission project in the country in which VSC converter technology has been used.

The system will facilitate the transfer of a large quantum of power to the state.

The HVDC equipment used in this project has been made in India. This will make our Atmanirbhar Bharat movement stronger,’’ he said.

Prime Minister Modi also launched the 50-MW Kasaragod Solar Project and a water treatment plant in Thiruvananthapuram, with a capacity of 75-million litres per day.
Gadkari urges 100% localisation of auto components; may hike customs duty
Union Minister of Road Transport and Highways recently asked automobile manufacturers to increase the localisation of components to 100%, failing which he said the Centre would consider raising basic customs duty on imports.

Union Minister said the present level of localisation of parts in the Indian auto sector was about 70% and “at any cost, we need to stop imports of auto components.

Union Minister urged both vehicle and auto-component manufacturers to increase localisation of components to the maximum.

MInister said India is fully competent in all the things. He requested automobile manufacturing companies to take it very seriously otherwise for imports of components India will think in the direction of increasing customs duty on them.

Society of Indian Automobile Manufacturers sought government support for localisation of electronic components, especially semiconductors which are currently facing a global shortage, stating it would need huge investments.
Embargo lifted on grant of government business to private banks: Finance ministry
The embargo lifted government business authorizations for private banks.

The Government lifted the embargo on private sector banks (previously only a few were allowed) to conduct Government-related banking transactions, such as tax and other income payment facilities, pension payments, small savings schemes, etc.

This step is expected to further improve customer convenience, stimulate competition and improve the efficiency of customer service standards.

This move is expected to help private sector banks at the forefront of absorbing and implementing the latest technology and innovation in the banking industry to become equal partners in India’s economic development and government’s social sector initiatives.

With the lifting of the embargo, the Reserve Bank of India no longer prohibits private sector banks (in addition to public sector banks) from authorizing Government business, including Government agency business.
‘Bad bank’ idea: Government guarantee for ARC paper likely
To ensure that the ‘bad bank’ mechanism proposed in the Budget takes off, the Finance Ministry is planning to provide a guarantee against security receipts to be issued by the Asset Reconstruction Company (ARC) to banks against the value of their bad assets being taken over.

The ARC, according to government officials, is likely to take over Rs 2-2.5 lakh crore of stressed assets that remain unresolved in around 70 large accounts.

Stressed loan accounts of more than Rs 500 crore each are expected to be transferred to the new entity.

Even though there will be no equity contribution by the government in the proposed ARC, the government will provide guarantee to ensure the success of this structure.

The proposed ARC will provide banks 15 percent cash and 85 percent security receipts against the value of bad assets that will be taken over from the banks.

The ARC will be set up by state-owned and private sector banks, and there will be no equity contribution from the government.

It will have an Asset Management Company (AMC) to manage and sell bad assets.

For the banks it will be a cash neutral kind of exercise, because for the capital they will contribute to the ARC, they will get some portion back as cash and rest as security receipts against transfer of the stressed assets.

For security receipts, the regulator requires some kind of provisioning, for which the banks are asking the government to provide guarantee that the RBI (Reserve Bank of India) requires.

For the 85 percent SRs portion, banks need provisioning of around 15 per cent. Banks are seeking sovereign guarantee for that, which we will provide as we go forward. We are going to give a sovereign backing to support the banks.

If the government guarantees the security receipts issued by the ARC, then banks can transfer stressed assets to the proposed entity without having to make additional provisions.

The RBI’s 2016 guidelines require banks to make provisions for assets assigned to ARCs.

Of the existing ARCs, only 3-4 are adequately capitalised, while more-than-dozen are thinly capitalised, necessitating the need to set up a new structure to resolve stressed assets urgently.

The transfer of stressed assets to the ARC will happen at net book value, which is the value of assets minus provisioning done by banks against these assets.

This structure will reduce the load of stressed assets on the bank balance sheet and look to resolve the bad debt in a market-led way.

With most banks expected to be on board this company, the resolution is expected to be faster.

Since most commercial loans are granted by a group of 8-10 banks, under the existing resolution mechanism some banks would typically oppose the resolution due to differences, which slowed the resolution process. The proposed structure is expected to resolve this.
Exim Bank to provide $400 million for Maldives project
The Reserve Bank of India announced that the Export-Import Bank of India (Exim Bank) will provide USD 400 million for the Maldives project. It will provide funding for the "Great Male Connection" project.

The Export-Import Bank has signed an agreement with the Maldives government to provide a supported credit line of US$400 million on October 12, 2020.

The Greater Male Connectivity project is the project from Male to Thilafushi Link project in the Maldives. The credit line agreement will come into effect on January 28, 2021. The service life of the terminal is 60 months after the project completion date.

The Greater Male Connectivity Project (GMCP) project is the electoral pledge of the current President of the Maldives Ibrahim Mohamed Solih.

The project will connect Gulfafaru Port and Thilafushi Industrial Zone through a 6.7-kilometre-long bridge.

This is a landmark project that will simplify the connection between the four islands of Maldives, Villingili, Gulifahu and Thilafushi. This will help promote economic activity and create employment opportunities. It will also promote the overall urban development of the Male region in the Maldives.

The relationship between India and Maldives was established in 1966. India is one of the countries that recognized the Maldives after gaining independence in 1965. The two countries have race, language, religion, culture and business ties. Currently, there are 25,000 Indians in the Maldives. Both countries are founding members of SAARC.

India also considers the Maldives to be part of its "neighbourhood first" policy. In this regard, India is part of the Maldives’ “India First” policy.
RBI sets up panel for strengthening UCBs
The Reserve Bank of India has set up of an eight-member expert committee on urban co-operative banks (UCBs) to examine their issues and provide a roadmap for strengthening the sector.

The panel will take stock of regulatory measures taken by the central bank and other authorities in respect of UCBs and assess their impact over last five years to identify key constraints and enablers, if any, in fulfilment of their socio-economic objective.

It will also review the current regulatory and supervisory approach and recommend suitable measures to strengthen the sector, taking into account recent amendments to the Banking Regulation Act, 1949.

The panel will also suggest effective measures for faster rehabilitation or resolution of UCBs and assess potential for consolidation in the sector.

It will consider the need for differential regulations and examine prospects to allow more leeway in permissible activities for UCBs with a view to enhance their resilience.

It will draw up a vision document for a vibrant and resilient urban co-operative banking sector having regards to the Principles of Cooperation as well as depositors’ interest and systemic issues.
Retail investors to be able to buy G-Secs directly: RBI
The Reserve Bank of India (RBI) said it would allow retail investors to open gilt accounts with the central bank to invest in government securities directly and without the help of intermediaries.

It is proposed to provide retail investors with online access to the government securities market both primary and secondary directly through the Reserve Bank (Retail Direct)

It is debt instruments issued by the government to borrow money from open market.

The two key categories are treasury bills – short-term instruments which mature in 91 days, 182 days, or 364 days, and dated securities – long-term instruments, with fixed interest rate which mature anywhere between 5 years and 40 years.

This will broaden the investor base and provide retail investors with enhanced access to participate in the government securities market.

This measure together with HTM [hold to maturity] relaxation, will facilitate smooth completion of the government borrowing programme in 2021-22.

The RBI will soon come out with modalities for opening of such accounts. The provision would not in any way hinder flow of investors’ funds into mutual fund schemes and bank deposits.

The Allowing retail participation in the G-Sec market is a bold step towards the financialisation of a vast pool of domestic savings and could be a game-changer.
RBI proposes 24x7 helpline for digital payment services
The Governor of the Reserve Bank of India, Shaktikanta Das, recently announced that the Central Bank will establish a 24 * 7 hotline service platform to strengthen digital payment services in India.

The announcement was issued through the "Development and Regulatory Policy Statement".

In addition to the past measures to correct user dissatisfaction, RBI also provides many security protections functions.

The announcement will further enhance the digital payment experience of Indian users.

The Reserve Bank of India released the "Payment System Vision" document.

The document emphasizes the need to set up a 24×7 hotline service phone to resolve customer inquiries about digital payment products.

According to the guidelines, major payment system operators must assist in the establishment of a centralized 24×7 service hotline before September 2021 to resolve customer inquiries.

In addition to this hotline, outsourcing guidelines will be issued for operators and participants of authorized payment systems.

In addition, the Reserve Bank of India also announced that it will launch a comprehensive monitor program for banks, NBFC and digital transactions in June 2021. The plan will be launched to simplify the appeal process.
RBI to conduct OMO for Rs.20,000 crore on 10th Feb
The Reserve Bank of India (RBI) have announced that it will purchase four government securities (G-Secs) that amounts to Rs.20,000 crore. The central bank will purchase it on February 10, 2021 under the open market operations (OMOs).

This move was announced in aftermath of the yields that was moving up to touch the intra-day high of 6.1634 per cent recently. The RBI was concerned about the higher government borrowing.

After the announcement of the OMO purchase was made, yield on the benchmark 10-year G-Sec slowed down by 3-4 basis points. It now carries a coupon rate of 5.77 per cent as opposed to its previous closing yield of 6.1283 per cent.
Government to work with RBI to execute bank privatisation announced in Budget: FM
Union Finance Minister Nirmala Sitharaman addressed business leaders, chartered accountants and tax professionals in Mumbai that the central government will work with the Reserve Bank of India (RBI) to implement the bank privatization plan.

The minister further stated that the centre has not yet planned to establish any bank investment company to accommodate the government's bank assets.

The Finance Minister recently announced the privatization of two banks when introducing the 2021 Union budget.

The announcement was made in accordance with the Center’s disinvestment plan. But the bank union opposed the plan.

The central government is planning to privatize more than half of state-owned banks. The government is planning to reduce the number of government-owned lenders to five.

India has 12 state-owned banks. In 2019, the government also merged ten state-owned banks into four large banks.

All about NPCI PayAuth Challenge – Global Hackathon Challenge!
The National Payment Corporation of India (NPCI) announced that it will launch the "NPCI PayAuth Challenge". This is a global hackathon that will be organized to obtain an alternative method of unified payment interface (UPI) transaction authentication. One such alternative is to use biometrics when conducting transactions.

APIX supports the NPCI PayAuth Challenge hackathon. In addition to being a sandbox platform, APIX is the world's first cross-border and open architecture API market.

The sandbox platform is used to test or run programs without affecting the application under test.

The purpose of this hackathon is to explore the feasibility of alternative payment authentication mechanisms.

It also attempts to study user behavior related to authentication mechanisms.

The aim is to find alternative solutions such as biometric verification and similar innovations to authorize payments on the UPI platform.

To explore options, NPCI invited fintech, solution providers and developers to submit their unique solutions. The solution should be simple and integrate innovative technologies into UPI.

The hackathon will be a global competition for individuals and businesses. It will provide payment technology solutions particularly suitable for start-ups.

The hackathon also provides participants with the opportunity to collaborate with NPCI to develop a solution that may change the digital payment landscape in India. It reserves $20,000 in prize money for the winner, and the runner-up of the challenge will receive $10,000. In addition, other winning teams will have the opportunity to cooperate with NPCI for proof of concept (PoC).

The National Payment Corporation of India (NPCI) is a non-profit organization. It operates a retail payment and settlement system in India. It was established in 2008 by the Reserve Bank of India and the Indian Banking Association. Registered in accordance with Article 8 of the 2013 Company Law.
Economic Survey predicts 11% growth next fiscal
India’s economy is firmly in the middle of a V-shaped recovery and will bounce back to record 11% growth in 2021-22 after an estimated 7.7% contraction this year, as per a “conservative” estimate in the Economic Survey for 2020-21.

Economic Survey 2020-21 has termed this a “lockdown dividend” from the country’s stringent response to the COVID-19 pandemic.

Survey has made a strong pitch for the government to loosen its purse strings to spur the economy with a “counter-cyclical fiscal push” till the country returns to its pre-COVID-19 growth path.

The Survey which was tabled in Parliament on Friday, defended the conservative fiscal stimulus during the initial phase of the pandemic, stating that pushing down on the accelerator while the brakes are clamped “only wastes fuel”.

With Indian economy’s resurgence from the collapse in the first two quarters, Chief Economic Adviser Krishnamurthy Subramanian indicated that it was time to switch fiscal gears to a more aggressive approach.

CEC indicated that the Union Budget for 2021-22 could be cautiously expansionary.

“The V-shaped economic recovery while avoiding a second wave of infections make India a sui generis case in this unique, synchronised global recession,” the Survey said.

It added that a rapid vaccination roll-out this year could boost recovery in the services sectors as well as stir up private consumption and investment.

While absolute growth numbers may be remarkable in 2021-22 due to the low base effect, returning to pre-pandemic growth and output levels would take longer.

India is expected to emerge as the fastest growing economy in the next two years as per International Monetary Fund.

The Survey argued that the country’s ‘mature policy response to this “once-in-a-century” crisis provides important lessons for democracies to avoid myopic policy-making and demonstrates the significant benefits of focusing on long-term gains’.

The global economy, including India, has been set back in time by the pandemic induced crisis.

In the five years before 2020-21, Indian economy grew at an average growth of 6.7%. In 2021-22, a sharp recovery of real GDP growth of 10%-12% is expected based on a low base effect and inherent strengths of the economy.

It is assumed that the economy grows at its trend growth rate of 6.5% in 2022-23 and 7% in 2023-24, aided by the structural reforms.

If two scenarios of 12% growth and 10% growth in 2021-22 are envisaged, India would be 91.5% and 90% below the trend level of output, respectively, by 2023-24,” the Survey noted.

Centre set to allow steel from recycled scrap to be used in road, bridge projects
In what could be a jolt to major steel makers of India, the Centre is set to allow steel made from recycled scrap to be used in construction of roads and bridges.

This will liberate the construction sector from the compulsion of having to use steel made only by the top few iron and steel companies in the country.

Steel industry in general and the top few premium steel makers in India in particular have hiked the price of steel by at least 50 per cent in the past six months.

The move is expected to give a clear cost-advantage to the Centre’s various road projects. The decision will make thousands of suppliers of recycled steel and smaller players in the sector eligible to vie for the business so long as their steel meets the required technical standard set by the ministry for roads and bridges.

A steel industry body last month wrote to Prime Minister NarendraModi, defending the hike in prices and citing reasons behind it.

Citing the pandemic, the industry body wrote that a global shortage of steel had triggered the rise in prices and that the price of iron ore had also soared.

There will also be a requirement to set a stringent inspection regime for quality control at the ground level, officials said. About 40 per cent of the expenditure in road projects goes into procuring steel and cement.

Ministry sources said an estimated 10,000 suppliers in India will potentially be eligible to bid for contracts to supply steel after the move, introducing competition and also enhancing the size of the sector.

Over 60 per cent of the domestic steel demand is generated from construction sectors like real estate and roads.

The road sector the world over has been toying with a number of alternative technologies and materials that can replace steel. Composite and reinforced fibre bars claim tensile strength five to six times that of steel.

Gadkari, who had been criticising the increase in steel prices for the past two months, recently publicly warned steel makers about its impact on road projects.
Government agrees to maintain States’ share in the divisible pool of taxes
The government has accepted the Fifteenth Finance Commission’s recommendation to maintain the States’ share in the divisible pool of taxes to 41%. This has been done for the five-year period starting 2021-22.

Government gave an ‘in-principle’ nod to the panel’s suggestion to set up a separate non-lapsable fund for defence and internal security modernisation.

The Fifteenth Finance Commission (XV-FC or 15-FC) is an Indian Finance Commission constituted in November 2017 and is to give recommendations for devolution of taxes and other fiscal matters for five fiscal years, commencing 2020-04-01.

The commission's chairman is Nand Kishore Singh, with its full-time members being Ajay Narayan Jha, Ashok Lahiri and Anoop Singh. In addition, the commission also has a part-time member in Ramesh Chand. Shaktikanta Das served as a member of the commission from November 2017 to December 2018.

The Fourteenth Finance Commission had raised States’ share to 42% of divisible revenues.

The Fifteenth Finance panel had reduced the share to 41% in its interim report for 2020-21, citing the conversion of Jammu, Kashmir and Ladakh into Union Territories. The Commission’s report with the government’s action taken report on its suggestions, has recommended additional revenue deficit grants of Rs. 2.94 lakh crore for 17 States over the next five years.

The government has accepted this recommendation as well as the panel’s suggestion to enhance State’s borrowing ceilings in 2021-22. The government’s acceptance of the 41% vertical share for States recommended by the Commission as a sign of its commitment to fiscal federalism.

Government has allowed a normal ceiling of net borrowing for the States at 4% of Gross State Domestic Product (GSDP) for the year 2021-2022. A portion of this ceiling will be earmarked to be spent on incremental capital expenditure.

An additional borrowing ceiling of 0.5% of GSDP will also be provided based on meeting specified reforms in the power sector. States are expected to reach a fiscal deficit of 3% of GSDP by 2023-24, and maintain that level till 2025-26, as per the Commission’s report.

The Centre has accepted ‘in-principle’ this quantum of net borrowing ceilings for the States, as per the action taken report. While the Commission has suggested the additional ceiling for power sector reforms be offered up to 2024-25, the government has said it will examine recommendations related to States’ fiscal road map separately.

The Commission has also recommended to overhaul the Fiscal Responsibility and Budget Management law to ensure legislations are in sync with fiscal sustainability frameworks. The Commission has recommended creating a separate non-lapsable fund for modernisation of defence and internal security, a term of reference the Centre had sought its views on.

To bridge the gap between defence budget allocations and the projected budgetary requirements, the panel has mooted a fund of Rs. 2.38 lakh crore for the coming five-year period.

It has recommended that Rs. 1.54 lakh crore of this fund be transferred from the Consolidated Fund of India, partially using receipts from the disinvestment of defence public sector enterprises and land monetisation.

The government has said the modalities and sources of funding will be examined in due course.

The Commission has sought to assuage the fears of southern States about losing some share in tax transfers due to the reliance on the 2011 Census data instead of the 1971 census, which could penalise States that did better on managing demographics.

It has done so by giving a 12.5% weightage for demographic performance in its tax-transfer calculations.The revenue deficit grants proposed for Andhra Pradesh and Kerala are far higher than the previous Commission’s period, while Tamil Nadu has also been earmarked for marginally higher grant on this front.
Centre to amalgamate market laws into single code
The Centre announced setting up of a Single Security Market Code by consolidating the provisions of SEBI Act, 1992, Depositories Act, 1996, Securities Contracts (Regulation) Act, 1956 and Government Securities Act, 2007. This was announced by Union Minister for Finance and Corporate Affairs Nirmala Sitharaman, while presenting the Union Budget 2021-22 in Parliament.

According to analysts, this move will improve ease of doing business in the country’s financial markets, cut down compliances, reduce cost and do away with friction between various stakeholders. In order to instil confidence among participants in the corporate bond market during times of stress and to generally enhance secondary market liquidity, the Budget has proposed to create a permanent institutional framework.

The proposed body would purchase investment grade debt securities both in stressed and normal times and help in the development of the bond market. It will clearly help to deepen the corporate bond market which continues to face liquidity challenges.

This will be fairly positive for debt mutual funds particularly credit funds which had witnessed significant outflows last year due to poor liquidity in certain corporate papers. This will also help to reduce the volatility in secondary market yields of relatively lower rated bonds in the AA and A category.

The government also announced establishing a system of regulated gold exchanges in the country.

For this purpose, SEBI will be notified as the regulator. The Warehousing Development and Regulatory Authority will be strengthened to set up a commodity market ecosystem with arrangements including vaulting, assaying and logistics in addition to warehousing.

To provide protection to investors, the Finance Minister has proposed to introduce an investor charter as a right of all financial investors across all financial products. A significant change, the impact of which would be felt across industries, is the proposed introduction of the securities market code.

Also an important proposal, on expected lines, has been the introduction of certain dispute resolution mechanisms – reduction of the limitation period to 3 years should help in bringing certainty to taxpayers.
ESIC, other social security safety nets to cover gig economy workers
With the Covid-19 pandemic increasing the focus on gig economy and its workers, Finance Minister said that the law on minimum wages would now apply to workers of all categories including those associated with platforms. Such workers would now be covered by the Employees State Insurance Corporation (ESIC).

Employees' State Insurance (abbreviated as ESI) is a self-financing social security and health insurance scheme for Indian workers.

The fund is managed by the Employees' State Insurance Corporation (ESIC) according to rules and regulations stipulated in the ESI Act 1948. ESIC is a Statutory and an Autonomous Body under the Ministry of Labour and Employment, Government of India.

Women will be allowed to work in all categories and also in the night-shifts with adequate protection.

At the same time, compliance burden on employers will be reduced with single registration and licensing, and online returns. The Labour Ministry defines a gig worker as any person “who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationship”.

The Budget for 2021-22 (April-March) also proposes to launch a portal that would collect relevant information on gig economy workers, including those working in building and construction, among others. This portal will help formulate relevant policies for health, housing, skill, insurance, credit and food schemes for such workers.

Extending safety net of ESIC and other social security to gig economy workers was proposed by the government as a part of the reforms to the three labour codes, passed by the LokSabha in September last year. The safety net, however, came with its own set of limitations as the same set of reforms to the labour codes allowed firms greater flexibility in hiring and firing workers without any permission from the government.

Currently, neither the central government nor the states have any data on the possible number of gig economy workers in the country. Industry executives, however, estimate that there could be over 130 million gig economy workers with many more expected to join the freelance work force as formal jobs slowed dry up.

The extension of safety net to gig economy workers was welcomed by platforms such as Urban Company and Snapdeal, who said it will help the sector grow in a sustained manner. Apart from the workers, the budget for 2021-22 has also proposed measures aimed at easing the compliance burden for startups as well as larger companies.

Having decriminalised several procedural and technical compoundable offences under the Companies Act, the government now aims to do the same for the Limited Liability Partnership Act. Companies which have paid up capital of up to Rs 2 crore and turnover of up to Rs 20 crore, up from Rs 50 lakh and Rs 2 crore, respectively, will be considered under the definition of small companies from the new fiscal, Sitharaman said.

The government has proposed to incentivise the setting up of one-person companies (OPC) by allowing them to grow without any restrictions on paid-up capital and turnover, with an option to convert into other companies at any other time. The residency limit for an Indian citizen to set up an OPC has also been cut down to 120 days from 182 days, while also allowing non-resident Indians to start OPCs in India.
No changes in income tax slabs, rates, deductions, exemptions in Budget 2021
Union Finance Minister Nirmala Sitharaman did not propose any changes to the income tax plan in the "2021 Union Budget". However, some relief for the elderly has been announced. Announced that seniors over 75 years old are exempted from paying income tax returns.

The government has announced the establishment of a national anonymous income tax court for small-scale taxpayers. The government also extended tax incentives to senior citizens over 75 years of age. They also do not need to file an income tax return.

New rules have been formulated to avoid double taxation on NRI. In addition, NRI has been allowed to establish and operate one-person companies in India. The tax audit limit has been increased from 50 million to 10 million. The minister announced that affordable housing projects will now be able to take advantage of the tax holiday until March 31, 2022.

It has been announced that details regarding capital gains and interest from banks and post offices will be pre-filled in order to simplify the submission of income tax returns. Employers are not allowed to deposit overdue deposits into employees’ provident funds as deductions.
Budget proposes 137% hike in health, well-being spend
Indian Finance Minister Nirmala Sitharaman announced two new central sponsorship plans, namely Prime Minister Aatma Nirbhar Swasth Bharat Yojana and Mission Poshan 2.0 while announcing the alliance budget for 2021. According to the announcement, a new central sponsorship program will be launched called PM Aatma Nirbhar Swasth Bharat Yojana

Prime Minister Aatma Nirbhar Swasth Bharat Yojana announced Rs. 661.8 billion, which is more than 6 years old. This was announced in addition to the National Health Mission (NHM). PM Aatma Nirbhar Swasth Bharat Yojana includes the following interventions:

Support is provided in approximately 17,788 rural and 11,024 urban health care centers. Establish PM national lifetime medical institutions.

15 health emergency operations centers and 2 mobile hospitals have been established. Established 4 regional national virology institutes.

Comprehensive public health laboratories have been established in all regions, and 3,382 public health departments have been established in all 11 states. Establish intensive care hospital districts in 602 districts and 12 central institutions.

Strengthen the National Center for Disease Control (NCDC), 5 regional branches and 20 large-city health surveillance departments. Expand the comprehensive health information portal to all states and UT to connect all public health laboratories. Establish a three-level biosafety laboratory. 17 new public health departments were established and 33 existing public health departments were strengthened. Establish a WHO regional research platform in Southeast Asia.

Mission Pushan 2.0 will be launched, with the goal of improving nutrient content, provision, extension and results. The plan will merge the slope mountain Abidjan and the supplementary nutrition plan. The mission is to improve nutritional outcomes in 112 Aspirational Districts.

Aspirational Districts are those areas that are affected by poor socioeconomic indicators in India. These areas are ambitious, because if any improvement is made in these areas, it may lead to an overall improvement in human development in India.
India’s gig economy workers to get social security for the first time
When introducing the "2021 Union Budget", the Minister of Finance announced that the government has proposed a plan to launch a portal to develop a social security plan for workers in the gig economy in India.

The framework of the plan will be developed by collecting relevant information about the population of gig and migrant workers.

The announcement was made before the implementation of labor laws.

The social security program for gig workers will help improve the compliance of on-demand companies such as e-commerce and ride-hailing companies.

The proposed plan may initiate the expansion of the human resources management department for blue-collar workers.

This is the first time in the world that social security benefits have been extended to performance and platform staff.

According to the plan, the minimum wage will apply to all categories of workers.

Workers will also be protected by the employees' national insurance company.
Budget 2021 unveils scheme for setting up mega textile parks in India
The government announced the launch of the Mega Investment Textiles Parks (MITRA) scheme in the 2021-22 Union Budget to make the Indian textile industry globally competitive

The goal of the scheme is to make the textile industry globally competitive, attract large amounts of investmenst, and promote job opportunities and exports.

This scheme is a supplement to the PLI scheme.

FM announced that it will establish seven textile parks within three years.

Such parks have appeared in countries such as China and Vietnam, which help promote the development of the textile industry.

India has been losing its competitive advantage in Bangladesh and Vietnam due to its lower labor costs, wider business scale, and the Free Trade Agreement (FTA) advantage enjoyed by them.

The textile industry is the country’s second largest employment opportunity after agriculture, so the budget announcement means that the industry has taken an important step forward.

Following a turbulent year in the textile and clothing industry in 2020, the industry has experienced a series of job losses, cancellation of orders and severe financial resource constraints.

According to data from the National Investment Promotion and Facilitation Agency for Investment in India, by 2024-25, exports of the textile and apparel industry are expected to reach 300 billion U.S. dollars, and India’s market share will triple from 5% to 15%.

It is estimated that by 2025-26, the scale of the industry will double to US$300 billion. For this purpose, 7 mega textile parks have been planned.
Agricultural infrastructure cess of 100% imposed on alcoholic beverages
While introducing the 2021 Union budget, Indian Finance Minister Nirmala Sitharaman announced the Agricultural Infrastructure and Development Tax (AIDC) for some commodities and announced that AIDC will provide support to industries that have become bright spots in the COVID-19 pandemic.

AIDC will be applied to a few projects. According to the specification, most products will not bring additional burden to consumers.

AIDC was announced because of the urgent need to improve agricultural infrastructure to produce more products, and to effectively protect and process agricultural products. The tax system will also ensure an increase in farmers’ remuneration.

The Minister of Finance proposes to propose AIDC for various commodities as follows: The price of gasoline is 2.5 rupees per litre. Rs 4 per litre of diesel. 5% of gold bars, silver bars and copper bars. 100% of alcoholic beverages. 5% of crude palm oil. 20% of crude soybean and sunflower oil. 35% of apples. Coal, lignite and peat account for 5%. Specify 5% of fertilizer. 30% of Kabuli chana. Lentils (Mosur) accounted for 20%. Bengal grams/chickpeas are 50%. Peas account for 40%. Uncarded cotton accounts for 5%.

The consumption tax on gasoline and diesel will not impose any additional burden on consumers, because non-branded gasoline has previously attracted a basic consumption tax (BED) of Rs 2.98 and a special additional consumption tax (SAED) of Rs 12 per litre.

Now, BED and SAED have dropped to 1.4 rupees and 11 rupees per litre respectively. Therefore, net consumers will not pay any additional fees. Similarly, the charge for alcoholic beverages is 150% of the BED, which has now reduced to 50%. The proposed AIDC is 100%, which will not impose any additional burden on consumers.
India’s weak fiscal position to remain a key credit challenge
The Union Budget’s focus on higher capital expenditure, financial sector reforms and asset sales would help to stimulate growth and supply broad-based credit support.

However, India’s weak fiscal position would remain a key credit challenge compared with its rating peers.

The budget projects a narrowing of the central government’s fiscal deficit to 6.8% of GDP in fiscal 2022 from an estimated 9.5% in fiscal 2021.

Moody previously expected a smaller central government deficit target of about 5.5% of GDP for fiscal 2022 down from around 7.5% of GDP in fiscal 2021.

However, compared with previous budgets, the gap between our forecasts and the government’s largely reflects increased transparency on subsidy spending and more credible overall assumptions.

The ratings agency said the widening of the deficit in fiscal 2021 was driven almost entirely by expenditure to support Indian households and the economy from the pandemic shock.

Given India’s very high debt burden, this gradual pace of consolidation will prevent any material strengthening in the government’s fiscal position over the medium term, unless nominal GDP growth were to pick up sustainably to historically very high rates.
For affluent, EPF is not nest egg but goose that lays golden eggs
More than 1.23 lakh “high net worth individuals” (HNIs) deposited more than Rs.62,500 crore into their Employees’ Provident Fund (EPF) accounts in 2018-19 alone.

The largest EPF account has a staggering Rs.103 crore balance.

Department of Revenue provided the statistics defending the Budget move to tax the income on employees’ PF contributions over Rs.2.5 lakh a year.

Any tax exemption is provided through taxpayers’ money. It was unfair to allow a small group of HNIs to misuse a welfare facility and earn wrongfully tax-free income as assured interest return.

Of an estimated 4.5 crore EPF accounts, the source said about 0.27% members had an average corpus of Rs.5.92 crore and so were earning over Rs.50 lakh a year as “tax-free assured interest”.

EPF accounts are mandatory for employees earning up to Rs.15,000 a month in firms with over 20 workers, with 12% of the basic pay and dearness allowance deducted as employees’ contribution and another 12% remitted by the employer.

The government had capped the contributions by employers into employee welfare schemes like the EPF or the National Pension Scheme or a superannuation plan, at Rs.7.5 lakh a year, in last year’s Budget.

However, government as well as private sector employees are allowed to make voluntary contributions over and above the statutory deductions into the general provident fund (GPF) or EPF, respectively.