As per the Health Ministry, the total number of novel coronavirus (Covid-19) cases in India have reached a tally of 3,619,169. This consists of 2,772,928 people who have recovered from the virus and 64,617 patients who have died. The country’s Covid-19 recovery rate is at 76.74% and the case fatality rate has further dipped to 1.79%. Globally, the virus has infected 25,382,850 and killed 850,544 people.
GST compensation roadmap
For a quick decision on the GST options by the states, the Finance Ministry laid out details of the two borrowing options presented to states under which they can borrow money to make up for the Rs 2.35 lakh crore shortfall in Goods and Services Tax (GST) revenues expected in the ongoing fiscal.
First option is a special window that allows states to borrow at a reasonable interest rate the amount of Rs 97,000 crore. The amount can be repaid after five years (of GST implementation) ending 2022 from cess collection. The special window will endeavour to ensure steady flow of resources by keeping the cost equal to the G-sec yield, and in the event of the cost being higher, will bear the margin between G-secs and average of State Development Loan yields up to 0.5% (50 basis points) through a subsidy similar to the flow under GST compensation on a bi-monthly basis. It will be coordinated by the ministry of finance under Article 293 for this amount, over and above any other borrowing ceilings eligible under any other normal or special permission notified by the department of expenditure. The period for the cess may be extended as required to cover the entire amount. The borrowings will not be treated as debt of the state for any norms which may be prescribed by the Finance Commission etc.The second option before the states is to borrow the entire Rs 2.35 lakh crore shortfall under the special window through issue of market debt. The principal on the amount under this will, after the transition period, be paid from proceeds of the Cess. The states will not be required to repay the principal from any other source. But, The interest shall be paid by the States from their resources. The borrowing for this case too will not be treated as debt of the State for any norms which may be prescribed by the Finance Commission, etc.
Both options will be available to the states only for the current fiscal and the ministry has requested the states to communicate their preference and views thereon within seven working days. In April 2021, the Council will review and decide action for the next year. A meeting of state finance secretaries with the Union finance secretary and secretary (expenditure) has been scheduled to be held on September 1, 2020 for clarifying issues, if any, tweeted the finance ministry.
Fiscal deficit to touch 7% in FY21
Highlighting the impact of lockdowns, Brickwork Ratings indicates that India’s fiscal deficit is expected to touch 7% of GDP in 2020-21 fiscal, with revenue collections being hit amid disruptions in economic activities. “The impact of the lockdown on economic activity shows up starkly in the trends in the central government revenue collection during the first three months of fiscal 2020-21,” the agency said in a report.
US FDA considers fast-tracking vaccine
In a bid to curb Covid-related devastation, Stephen Hahn, the U.S. Food and Drug Administration (FDA) is willing to fast-track a Covid-19 vaccine as quickly as possible, reported Financial Times. He said that the agency was prepared to authorise a vaccine before Phase Three clinical trials were complete.
Telangana relaxes quarantine norms for Vande Bharat passengers
Giving respite to stranded Indians returning on Vande Bharat flights, the Telangana government has relaxed quarantine norms at Rajiv Gandhi International Airport, Hyderabad airport for asymptomatic passengers. As per the latest guidelines, passengers on business trips to the state who have return tickets and a negative RT-PCR test report conducted within 96 hours prior to departures will not be quarantined. Special consideration of 14 days of home quarantine has been mandated for some categories of asymptomatic passengers without negative RT- PCR test report. These include expectant ladies, parents traveling with children 10 years or below, or those traveling on medical emergencies. The rest of the asymptomatic passengers without negative RT-PCR test results will have to undergo seven days of institutional quarantine followed by home quarantine.
Since July, India has so far established air bubbles with the US, the UK, France, Germany, the UAE, Qatar and the Maldives to allow airlines to carry citizens who need to return to their work, homes or families between the two countries under Vande Bharat Mission (VBM) flights. Indian authorities are in talks with many more countries like Australia, Italy, Japan, New Zealand, Nigeria, Bahrain, Israel, Kenya, Philippines, Russia, Singapore, South Korea, Thailand, Sri Lanka, Bangladesh, Afghanistan, Nepal and Bhutan to create additional air bubbles. India had suspended scheduled international flights since the nationwide lockdown in March which has been extended till September 30. Though the restriction is not applicable on international all-cargo operations and flights specifically approved by the DGCA. India had resumed scheduled domestic passenger flights on May 25, after a gap of two months.
Debt recast review on Thursday
Finance Minister Nirmala Sitharaman will hold a review meeting on September 3 with bankers and heads of non-banking financial companies (NBFCs) for smooth and speedy implementation of one-time debt recast for resolution of Covid-19 related stress in bank loans. “The review (meeting) will focus on enabling businesses and households to avail of the revival framework on the basis of viability, necessary steps like finalising bank policies and identifying borrowers, and discussing issues that require addressing for smooth and speedy implementation,” said the Finance Ministry in a statement.
Earlier this month, the Reserve Bank of India (RBI) permitted one-time restructuring of both corporate and retail loans. Governor Shaktikanta Das has asked banks to go-ahead with board-approved restructuring plans for Covid-affected businesses by the end of the month and they need not wait for the K V Kamath committee’s report as the RBI appointed committee will come out with a report by September 6 and will only recommend financial parameters that banks must use for restructuring. These will be only for business loans and not personal loans.
On August 6, to bolster the economic activity amid the pandemic, RBI governor Shaktikanta Das announced a to-do list to deal with an additional special liquidity facility of ₹10,000 crore for National Housing Bank (NHB) and National Bank for Agriculture and Rural Development (NABARD), resolution framework for Covid-19-related stress, constitution of committee for recommendations of the sector-specific financial parameters, restructuring of Micro, Small and Medium Enterprises (MSMEs) debt and review of priority sector lending guidelines under KV Kamath, the former head of the New Development Bank set up by the BRICS. The central bank, in its monetary policy review also allowed one-time restructuring of loans with necessary safeguards.
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