Table of Contents
Lockdown beyond April 14?
- The Centre is looking at extending the lockdown beyond April 14 after many state governments and health experts suggested such a course of action on the ground that the coronavirus threat is still looming large.
- The current speculation is that an extension of about two weeks until April-end is under consideration.
hydroxychloroquine
- India relaxed a ban on exports of paracetamol and hydroxychloroquine (HCQ), both used in Covid-19 therapies, and placed them in the licensed category.
- Doctors and scientists are divided over the efficacy of the drug, used to treat malaria and auto-immune diseases, in combating Covid-19.
- The panel led by drug pricing regulator Shubhra Singh had been tasked with assessing the capability and the manufacturing capacity of domestic pharmaceutical companies.
- Almost 30% of India’s pharmaceutical exports are to North America, 16% to Europe and 17% to Africa.
Shortage of Trucks and Labour
- Daily wages and compensation of truck drivers, labour and even delivery front staff shot up 25-30% in the past fortnight.
- The companies are facing the dual challenge of acute labour shortage because of migration and fear of the Covid-19, which are creating demand-supply imbalance, leading truckers and loaders to charge exorbitantly.
NBFCs
- Several lenders are trying to convince the trade big daddy State Bank of India (SBI) to cover non-banking finance companies (NBFCs) under the moratorium announced by the regulator as part of the COVID-19 relief package.
- The moratorium allows deferral of loan interest servicing and repayment for three months.
- The Reserve Bank of India (RBI) notification and the subsequent FAQ from the industry lobby IBA does not specifically exclude NBFCs from the moratorium.
- However, an internal SBI circular says that currently financial intermediaries, NBFCs, housing finance companies and micro-finance institutions will not be covered.
- In the past few days, large banks, including some of the state-owned as well as private sector lenders, have reached out to SBI to put across the point that in the absence of a moratorium some of the small and medium NBFCs could run into serious cash-flow problem.
- According to banking circles, it’s possible that SBI’s stance is based on discussions with the central bank and the ministry.
- The LTRO announced by RBI covers a large part of the installments of NBFCs due over next three months… if the banks give such a facility to non-bank lenders their own liquidity could come under pressure,” said a government official.
- The banking industry’s loan outstanding to NBFCs is about Rs 12 lakh crore (about 12 % of the total loans).
- A large part lies in the books of SBI.
- LTRO auction amounts to the sector which lends to MSMEs, infrastructure and real estate sectors that have been severely impacted by Covid-19 outbreak.
States could borrow
- The central government has allowed 28 states to cumulatively borrow up to ₹3.2 lakh crore from the open market in the first nine months of this fiscal year.
- This means the states could borrow the total amount in April itself if required, to meet their expenses related to the Covid-19 outbreak.
- In a letter dated March 23, the finance ministry asked the Reserve Bank of India to make the necessary arrangements in consultation with the states to raise up to 50% of their net borrowing ceiling for fiscal 2021.
- Maharashtra has been allowed to borrow ₹46,182 crore and Tamil Nadu, up to ₹28,880 crore. West Bengal can borrow up to ₹20,362 crore, Rajasthan up to ₹16,387 crore and Punjab as much as ₹9,098 crore.
- The decision has come at a time when the states are facing a sharp decline in tax revenue owing to the lockdown.
- While the RBI has increased the ways and means advances to states by 30%, the finance ministry has released ₹17,287.08 crore in revenue-deficit grants and state disaster response mitigation funds for FY21.
- While both Maharashtra and West Bengal have sought packages worth ₹25,000 crore from the Centre, Maharashtra has also asked the central government to clear its dues of ₹16,654 crore and West Bengal has asked for arrears of ₹36,000 crore.
- Among others, Punjab has asked the central government to release GST compensation worth ₹6,000 crore until March 31 and clear GST arrears of another ₹2,000 crore.
- Tamil Nadu has sought a package of ₹4,000 crore along with other financial support.
EComm Moratorium
- India along with South Africa has raised concerns over a proposal at the WTO seeking to expand the scope of global moratorium to include digitized and digitizable goods such as books, video games, software and music.
- New Delhi has maintained that the globally agreed ecommerce moratorium has led to loss of revenue besides restricting use of tariffs as a trade policy and hence, should be done away with.
- Introduced in 1998, the moratorium has been extended by the World Trade Organization (WTO) every two years.
- It got temporarily extended for six months in December 2019 and a final decision to continue it or not is expected in June.
Question
- Rating company ICRA scaled down its forecast for India’s economic growth to ___ for FY21
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