Hot Off The PressNews

It has been reported to the Department that most of the honey brands sold in the market are adulterated with sugar syrup.

This is a serious matter as it will compromise our health in the troubled times of COVID 19 and add to the risk of Covid-19. The Department has asked the Central Consumer Protection Authority(CCPA) to look into the matter. The CCPA, in accordance with Section 19(2) of the Consumer Protection Act 2019, after preliminary examination, has referred the matter to the FSSAI, the food regulator, to take appropriate action in the matter and has offered to extend cooperation in the investigation of the matter for taking class action as envisaged in Section 10 of the Act.

The Department takes the consumer issues seriously.

Recently, taking note of an incident where a 40-year – an old man set himself on fire in a Rohini mall and got burn injuries after mobile phone service centre allegedly refused to replace a phone he had bought for his niece, a 12th class school student for her online classes, the Department took up the matter with the mobile phone company concerned. The mobile company has informed that they have decided to compensate the consumer with Rs. 1,00,000/- and a new Mobile handset.

Use of proper accurate and standards weights and measures are very important for effective functioning of any economy, as it plays an indispensable role in consumer protection as protection from malpractices of underweights or under-measure is an important function of the Government. The Legal Metrology (Packaged Commodities) Rules, 2011 are framed to regulate the pre-packaged commodities. Under these rules, the pre-packaged commodities have to comply with certain mandatory information on e-commerce platform by the seller in the interest of consumers. It was observed that some e-commerce entities are violating the mandatory requirement of declaration of information of the product on e-commerce platforms. Therefore, notices have been issued to various e-commerce entities for non-compliance.

The Department of Consumer Affairs in the Ministry of Consumer Affairs, Food & Public Distribution, Government of India, is the nodal department for consumer protection and it has been taking several measures for the protection of the interests and rights of the consumers. The Consumer Protection Act, 2019 has come into force from 20th July 2020, which provides for three-tier quasi-judicial machinery to provide simple and speedy redressal to consumer disputes. A Central Consumer Protection Authority (CCPA) has been established to regulate matters relating to violation of rights of consumers, unfair trade practice and false or misleading advertisements which are prejudicial to the interests of public and to promote, protect and enforce the rights of a consumer as a class.


Ministry of Consumer Affairs, Food & Public Distribution

[Press Release dt. 10-12-2020]

[Source: PIB]

Op EdsOP. ED.

Background

In the background of the unprecedented slump that the Indian economy is currently going through on account of the Covid-19 pandemic and the resulting lockdowns, it had become imperative to bring in some long awaited changes to the Indian labour laws to provide businesses with more leeway to operate and adapt to stay competitive in the global markets. This was also necessary from the point of view of making India self-sufficient. But as the three Codes (recently passed by Parliament in the absence of any significant opposition) set about to revamp the entire Indian Labour Law, what does it entail for the Indian industry and its workmen? In this article we shall be taking a closer look at the Industrial Relations Code, 2020[1].

The Industrial Relations Code, 2020 seeks to consolidate and modify the laws relating to trade unions, conditions of employment in industrial establishments or undertakings and investigation and settlement of industrial disputes. It shall replace the Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946 and the Industrial Disputes Act, 1947.

Changes to legal terms

Interestingly, the explanation for the term “appropriate government” mentions that the Central Government shall continue to be the appropriate Government for the Central Public Sector Undertakings even where the Government has divested its stake to below 50%. This could potentially provide a pathway to the Government to undertake further divestment in the PSUs in the future while assuaging the redressal demands of the PSUs employees.

The scope of coverage has been widened to include all employees including supervisory, managerial and administrative staff that were up to now excluded from the ambit of the Industrial Disputes Act. The scope of the term “employer” has also been widened to include almost all employer including contractors and legal representatives of a deceased employer, which were up to now not a part of the said term under the Industrial Disputes Act. Similarly, the definition of the term “workers” (which replaces the term “workman” used in the Industrial Disputes Act) also includes persons employed in supervisory work and even includes working journalists and sales promotion employees. By extension, the widening of these terms also serves to extend the ambit of “industrial dispute” itself.

The definition of the term “industry” has also been elaborated upon to include most enterprises for production, supply and distribution of goods while excluding charitable organisation, sovereign function of the Government and domestic workers.

The definitions of “lay-off”, “lock out” and “retrenchment” have not seen much of a significant change. The term “strike” will now include absenteeism or refusal to work of more than 50% workers. The term “wages” for the purposes of this Code will now constitute basic pay, dearness allowance and retaining allowance, while specifically excluding bonus, HRA, PF contribution of employer, conveyance allowance, overtime allowance, commission, gratuity and any other retirement benefits.

A positive role for the Trade Unions

The new Code prescribes that to be registered and recognised any Trade Union must have (and must continue to have post registration) at least the subscription of 10% workmen or 100 workmen employed in an industrial establishment, whichever is less. Despite being considered body corporates unto themselves the Trade Unions shall be excluded from the purview of the Societies Registration Act, 1860, the Cooperative Societies Act, 1912, the Multi-State Cooperative Societies Act, 2002 and the Companies Act, 2013.

Despite retaining the concept of a Works Committee, the new Code also recognises the recognised Trade Union (the Trade Union with the subscription of 51% or more workers in case of more than one Trade Union) as the sole negotiating union or the negotiating council. Disputes between rival Trade Unions or between Trade Unions and its constituent workers will be adjudicated by the Tribunal. As a precautionary measure to the overtaking of such Trade Unions by external vested interest or mere political aspirants, the Code provides that at least a half of the office bearers of the Trade Union in an unorganised sector shall be persons actually employed in the establishment or the industry.

The Standing Orders under the new law shall apply to every industrial establishment with 300 or more workers (up from the Industrial Disputes Act where this threshold was 100).  The Central Government shall make model standing orders and the employers shall follow suit with their draft standing orders based thereupon within 6 months therefrom. The Trade Unions shall be consulted therein and the draft Standing Orders shall then be certified by a Certifying Officer.

Push for Alternate Dispute Redressal mechanisms  

In my opinion, where the new Code truly shines is in its significant push to avail multiple avenues outside of the traditional labour courts for grievance and dispute redressal. A laudable initiative in the new Code is the provision for the constitution of a Grievance Redressal Committee in all establishments employing 20 or more workers as an in-house redressal mechanism for fast-track redressal (within 30 days) of the grievances of individual workers. The appeal there from goes to the Conciliation Officer. The appeal from the Conciliation Officer in turn goes to the Industrial Tribunal.

Further, in keeping with the times, the new Code has done well to introduce Alternate Dispute Resolution in the Industrial Dispute Redressal mechanism by providing for the provision for voluntary reference and redressal of disputes by way of arbitration. The new Code further provides recognition to settlements (both within and outside conciliation proceedings) and arbitration awards by making them binding on the parties involved.

Besides the usual Industrial Tribunal, the new Code also provides for the establishment of one or more National Industrial Tribunals which shall adjudicate such disputes (by consensus), that are deemed to be of national importance or concern establishments in more than one States, as are referred to it. A very important aspect of the new Code is that it shall also affect all pending disputes which will be transferred to the appropriate forum under the new Code and adjudicated either de novo or from the present stage as deemed fit.

An interesting aspect of the Code is that the appropriate State Government or the Central Government gets a choice to exercise veto on enforcement of any award on “public grounds affecting the national economy or social justice” subject to the subsequent approval of such executive action by the State Legislature or Parliament as the case may be.

The new Code also allows workers to recover money from their employers by initiating proceedings in the prescribed manner with the appropriate Government.

Hire and Fire or Misfire?

The general provisions for continuous service, lay-offs, retrenchment and notice before the closure of business remain more or less the same in the new Code as in the Industrial Disputes Act, 1947. However, where the new Code is a game-changer is in providing employers with more flexibility in hiring and firing by way of appointing fixed-term workers. At the same time, the new Code seeks to balance the scales by extending all the statutory benefits including gratuity to such fixed-term employees as are employed for over a year.

In another much-needed initiative, the new Code also provides for setting up a worker’s reskilling fund for retrenched workers with contribution from both, the employers as well as the appropriate Government.

While the new Code provides a breather for businesses by raising the threshold for the Standing Orders and also takes some laudable initiatives on the disputes redressal side, the major provisions pertaining to layoffs, lockouts and retrenchment (outside of the fixed term workers) remain largely the same and hence, continue to be severely regulated. Given the largely dismal outlook of the economy in the near future and the loss of several huge investments opportunities in the recent past, I fear that this may not be enough and that more sacrifices may be required for the revival of the badly hit Indian industry and to ensure that it is able to compete competitively with the more favourably placed economies for a bigger pie of the global trade of goods and services going forward.


* Advocate-on-Record, Supreme Court of India and disputes resolution lawyer at various Commercial Courts and Industrial Tribunals in Delhi. Author can be reached at gaggar.aditya@gmail.com

[1] The Industrial Relations Code, 2020  

COVID 19Hot Off The PressNews

The proposals presented today by the Finance Minister are designed to stimulate spending in a fiscally prudent manner as some of the proposals are for advancing or front-loading of expenditure with offsetting changes later while others are directly linked to increase in GDP. The present announcement by Sitharaman highlights the active intervention by the Government of India to combat the economic slowdown created by COVID-19.

The details are as follows: –

CONSUMER SPENDING

  1. Leave Travel Concession (LTC) Cash Voucher Scheme

While announcing the scheme, the Finance Minister said, “The biggest incentive for employees to avail the LTC Cash Voucher Scheme is that in a four-year block ending in 2021, the LTC not availed will lapse, instead, this will encourage employees to avail of this facility to buy goods which can help their families.”

Central Government employees get LTC in a block of 4 years in which air or rail fare, as per pay scale/entitlement, is reimbursed and in addition, Leave encashment of 10 days (pay + DA) is paid. But due to COVID-19, employees are not in a position to avail of LTC in the current block of 2018-21.

Therefore, the Government has decided to give cash payment in lieu of one LTC during 2018-21, in which:

  • Full payment on Leave encashment and
  • Payment of fare in 3 flat-rate slabs depending on class of entitlement
  • Fare payment will be tax-free

An employee, opting for this scheme, will be required to buy goods/services worth 3 times the fare and 1 time the leave encashment before 31st March 2021.

The scheme also requires that money must be spent on goods attracting GST of 12% or more from a GST registered vendor through digital mode. The employee is required to produce GST invoice to avail the benefit.

If Central Government employees opt for it, cost will be around Rs. 5,675 crore. Employees of Public Sector Banks (PSBs) and Public Sector Undertakings (PSUs) will also be allowed this facility and the estimated cost for them will be Rs. 1,900 crore. The tax concession will be allowed for State Government/Private Sector too, for employees who currently are entitled to LTC, subject to following the guidelines of the Central Government scheme. The demand infusion in the economy by Central Government and Central PSE/PSB employees is estimated to be Rs. 19,000 crore approx. The demand infusion by State Government employees will be Rs. 9,000 crore. It is expected that it will generate additional consumer demand of Rs. 28,000 crore.

2. Special Festival Advance Scheme

A Special Festival Advance Scheme for non-gazetted employees, as well as for gazetted employees too, is being revived as a one-time measure to stimulate demand. All Central Government employees can now get an interest-free advance of Rs. 10,000, to be spent by 31st March, 2021 on the choice of festival of the employee. The interest-free advance is recoverable from the employee in maximum 10 installments.

The employees will get a pre-loaded RuPay Card of the advance value. The Government will bear Bank charges of the card. Disbursal of advance through RuPay card ensures a digital mode of payment, resulting in tax revenue and encouraging honest businesses.

The one-time disbursement of Special Festival Advance Scheme (SFAS) is expected to amount to Rs. 4,000 crore; and if the SFAS given by all State Governments, another tranche of Rs. 8,000 crore is expected to be disbursed.

CAPITAL EXPENDITURE

  1. Special Assistance to the States:

While announcing measures related to Capital Expenditure, Smt. Sitharaman said that money spent on infrastructure and asset creation has a multiplier effect on the economy. It not only improves current GDP but also future GDP. The Government wants to give a new thrust to Capital Expenditure of both States and Centre.

Giving a new thrust on Capital Expenditure, Smt. Sitharaman said that money spent on infrastructure and asset creation has a multiplier effect on the economy. It not only improves current GDP but also future GDP. The Government wants to give a new thrust to Capital Expenditure of both States and Centre. Smt. Sitharaman said that the Central Government is issuing a special interest-free 50-year loan to States of Rs. 12,000 crore Capital Expenditure. The Scheme consists of 3 Parts.

Part – 1 of the scheme provides for:

  • Rs. 200 crore each for 8 North East states (Rs. 1,600 crore)
  • Rs. 450 crore each Uttarakhand, Himachal Pradesh (Rs. 900 crore)

Part – 2 of the scheme provides for:

  • Rs. 7,500 crore for remaining states, as per 15th Finance Commission devolution.

The Finance Minister said that both Part 1 and Part 2 of interest-free loans given to States are to be spent by 31st March, 2021 and 50% will be given initially, the remaining 50% will be given upon utilization of first 50%. Unutilised funds will be reallocated by the Central Government.

Under Part – 3 of Rs. 12,000 crore interest-free loans to states, Rs. 2,000 crore will be given to those states which fulfill at least 3 out of 4 reforms spelled out in Aatma Nirbhar Bharat Package (ANBP) vide Department of Expenditure’s Letter F.No. 40(06)/PF-S/17-18 Vol. V dated 17th May 2020. Rs 2,000 crore is over and above other borrowing ceilings.

Following are the features of this Scheme:

  • It can be used for new or ongoing capital projects needing funds and / or settling contractors’/ suppliers’ bills on such projects
  • CAPEX to be spent by 31st March 2021
  • This funding will be over and above all other additional borrowing ceilings given to states
  • Bullet repayment after 50 years, no servicing required for 50 years
  1. Enhanced Budget Provisions:

The Finance Minister said that additional budget of Rs. 25,000 crore, in addition to Rs. 4.13 lakh crore given in Union Budget 2020, is being provided for Capital Expenditure on roads, defence, water supply, urban development and domestically produced capital equipment.

To allow smooth conducting of Government business, allocations will be made in forthcoming Revised Estimate discussions of Ministry of Finance with concerned ministries.

It may be recalled that a package of Rs 1.70 lakh crore under Pradhan Mantri Garib Kalyan Package (PMGKP) was announced on 26th March, 2020 and the Aatma Nirbhar Bharat Package (ANBP), a Special economic and comprehensive package of Rs 20 lakh crore – equivalent to 10% of India’s GDP – was announced on 12th May, 2020 by Hon’ble Prime Minister Shri Narendra Modi. He gave a clarion call for आत्मनिर्भर भारत अभियान or Self-Reliant India Movement and also outlined five pillars of Aatmanirbhar Bharat – Economy, Infrastructure, System, Vibrant Demography and Demand.


Ministry of Finance

[Press Release dt. 12-10-2020]

[Source: PIB]

COVID 19Hot Off The PressNews

Given the prevailing circumstances in which the world is increasingly moving towards adopting digital force-multipliers for productivity, the Government of India has decided to follow this best practice.

There is to be no activity towards printing wall calendars, desktop calendars, diaries and other such material for use in the coming year by any Ministries/Departments/PSUs/PSBs and all other organs of the government.

All such activity shall go digital and online.

There is to be a concerted effort towards incorporating innovative methods in such matters. Using technological innovations for planning, scheduling and forecasting is well known to be economical, efficient and effective.

Prime Minister Narendra Modi and his governance model have always seen technology as an enabler. Integrating technology into our work is in line with his vision.

Therefore all calendars, diaries, schedulers and similar other materials, which were earlier printed in physical format, will now be done digitally. Publication of Coffee Table books will also be stopped and appropriate use of E-Books is encouraged. All Ministries/Departments/PSUs/PSBs and all other organs of the government are to adopt innovative means to use digital or online methods for the same. Innovative digital and online solutions that will achieve the same result as physical calendars or diaries are to be prioritized and to be put into practice.

Necessary order has been issued to all concerned.( Please See)


Ministry of Finance

[Press Release dt. 02-09-2020]

Op EdsOP. ED.

We are living in a digital age, much more so after the onset of Covid-19. Business, meetings, interaction, banking, even education has shifted to online mode. Every person is accessing and sharing so much of data that it is very scary as one never knows who hands your data lands up in.

With this, concerns about data privacy have become more important than ever before in everyone’s mind.

Data can be classified into two categories as personal and non-personal. With the advancement of digital technology, there is a tremendous upsurge in storage, handling and processing of data by companies and humans in digital format.

It reflects the need to establish distinct regulatory mechanism for handling and processing of personal and non-personal data to preserve the confidentiality and secrecy of such data.

The Central Government is on course to develop a mechanism for regulating the collection, storage and usage of personal data and non-personal data separately.

Work on the non-personal data bill is going in parallel with the Personal Data Protection Bill, 2019. The Central Government had constituted a panel to develop a draft report on non-personal data governance.

The prime job of panel is to perform extensive research and to study all vital aspects associated with governance and regulation of non-personal data.

According to the draft report, non-personal data means data which is not personal. The panel has submitted its report to Central Government for review. The Central Government has invited comments from general public along with all stakeholders concerned by 13-8-2020 in this regard.

The idea of seeking comments from public is to give final shape to draft in progress to address all concerns and issues related to non-personal data in a comprehensive method.

An interesting outcome of the research by panel is that companies with largest data pools are unbeatable and have techno-economic advantages over small-medium companies.

According to available statistics, few startups established during the period (1990-2000) has emerged as larger corporations with economic capacity of USD 1 trillion market due to their stronghold in collection and analysis of users’ data.

Some interesting facts about larger corporations:

(a) 60% of internet advertising market in the United States is being dominated by Google and Facebook.

(b) 37% of online e-commerce market controlled by Amazon in United States.

These statistics reflects the power of right collection and processing of data.

According to the draft report, companies which are gathering and collecting data beyond certain limits will come under the ambit of a “data business” and have to register as “data business” in India. Such companies need to report the method of data collection and mode of data usage to regulatory authority.

Development of a data sharing framework is critical to:

(a) address and resolve privacy concerns in a timely manner;

(b) condense the side effects related to non-personal data processing; and

(c) generate social, public and economic value creation.

Establishment of data sharing platform reflects in transparency in data usage and handling, quantify efficiencies and better quality services.

It is expected that sharing of non-personal data could encourage companies to come up with new and innovative services and products to cater the needs of public at large.

Establishment of regulatory authority is a decisive connection in non-personal data governance – such authority should be empowered with the right set of legal and administrative tools to monitor data sharing acts of companies, collection and reviewing of data from companies and to resolve data privacy-related disputes.

Certain companies are misusing the data for their benefit causing considerable data privacy issues to the users — it is about time to develop distinct laws and mechanism for handling, processing and usage of personal and non-personal data to curb misuse of personal and non-personal data by companies.

Inception of separate laws for regulation of personal and non-personal data along with right implementation would result in:

(a) streamline the process of data handling and collection;

(b) make companies collecting and processing data more accountable and responsible;

(c) improve transparency standards in collection and usage of data; and

(d) provide more control to users on the aspect of collection and usage of their data.


*Bhumesh Verma is Managing Partner at Corp Comm Legal and can be contacted at bhumesh.verma@corpcommlegal.in. **Paruchuri Baswanth Mohan, Research Associate and can be contacted at  paruchuribaswanthmohan@gmail.com

Case BriefsCOVID 19High Courts

Allahabad High Court: A Division Bench of Siddhartha Varma and Ajit Kumar, JJ., while addressing the present Public Interest Litigation stated that, amidst the phased re-opening of the country from the nationwide lockdown due to COVID-19 Pandemic,

people have got a wrong impression that they can now freely mix with each other and move around.

It was noted that along with the revival of economy amidst COVID-19 Pandemic, various news reports suggest that the infection is also speedily rising.

The cause for the above is stated to be because of the fact that denizens of the State of Uttar Pradesh do not understand the concept of “Unlock-2”.

By Unlock-2, the experts of the Government had meant that even though economic and other activities would open up, people would have to be more careful. They would have to observe physical distancing in letter and spirit and also would have to stick to various precautions.

Bench has observed that that people are not at all bothered of the physical distancing norms and also about the taking of various precautions.

Primary Question

How the concept of physical distancing should be implemented and also as to how the wearing of masks should be enforced compulsorily?

Additional Advocate General, Manish Goyal assisted by A.K. Goyal submitted that they would be having a high level meeting with regard to the issue.

Bench adds on in the line of suggestions that incarceration and high fines be thought of.

We cannot understand why the Uttar Pradesh Epidemic Disease COVID-19 Regulations, 2020 is not being implemented properly which clearly envisages action under Section 188 of the Indian Penal Code. Also we cannot understand why Section 144 of the CrPC., which we are told is in force, is not being used.

Court has further asked Principal of Moti Lal Nehru Medical College to filed an affidavit giving details of the plan of the Plasma treatment and the availability of various medicines with them .

Additional Advocate General may also inform the Court about the policy of the State with regard to the initiation of home quarantine/isolation and about the facility of treatment which might be extended to patients through various private Nursing Homes.

While parting, Court stated that it expects that the denizens of U.P. become sensitive to the issue of physical distancing and would also help the administration by providing information about persons who come from out of State and were not observing physical distancing and were not quarantining themselves.

State of U.P. has been asked to strengthen its computer system in the administration as also their own establishments so that maximum work is done through Video Conferencing.

Present matter will be listed again on 20-07-2020. [Inhuman Condition at Quarantine Centres and for providing better treatment to Corona Positive v. State of U.P., 2020 SCC OnLine All 864 , decided on 13-07-2020]

COVID 19Legislation UpdatesNotifications

In view of the Corona outbreak and its adverse affect of the economy, there is need to boost the economy by liberalization of the Rules.

Administrator, UT , Chandigarh in exercise of the powers conferred by Section 28 of The Punjab Shops and Commercial Establishment Act, 1958 as applicable to the UT, Chandigarh by virtue of the Punjab Reorganization Act, 1966 exempts all shops and commercial establishments covered under the Act of 1958 for a period of 3 months.

Employers of the shops and commercial establishments shall be allowed to open their outlets on all days of week during the aforesaid period subject to the following conditions:

  • Ensure that all the provisions of the Act/Rules relating to employment, working conditions, rest, interval, weekly off days and other restrictions specified in the aforementioned Act of 1958 must be complied with;
  • Opening and closing hours of al these shops and commercial establishment will remain the same on all seven days of week as notified by Chandigarh Administration from time to time;
  • Rotation of employees engaged should be done, so that mandatory weekly rest be given to them;
  • Order issued separately under Disaster Management Act regarding odd-even formula in selected markets will continue to be in operation.

Exemption Under The Shops And Establishment Act In Chandigarh


Chandigarh Administration

Labour Department

Notification dt. 09-06-2020

COVID 19Hot Off The PressNews

“It is when the horizon is the darkest and human reason is beaten down to the ground that faith shines brightest and comes to our rescue.”

RBI Governor Shaktikanta Das drew hope and inspiration from the 1929 statement of the Father of the Nation, as he announced yet another set of nine measures to smoothen the flow of finance and preserve financial stability in the turbulent and uncertain times ushered in by the COVID-19 pandemic. This follows the earlier sets of measures announced by RBI on April 17, 2020 and on March 27, 2020.

Making the announcements through an online address, the Governor stated that we must have faith in India’s resilience and capacity to overcome all odds. Expressing the confidence that we will together triumph over today’s traumatic trials, the Governor spoke with a sense of calling. He noted that the situation warrants that “central banks have to answer the call to the frontline in defence of the economy”.

Repo rate reduced by 40 basis points

The Governor has announced a reduction in major policy rates, in order to revive growth and mitigate the impact of COVID-19, while ensuring that inflation remains within the target. The repo rate has been reduced by 40 basis points from 4.4% to 4.0%. The Marginal Standing Facility rate and the Bank rate have been reduced from 4.65% to 4.25%. The reverse repo rate has been reduced from 3.75% to 3.35%.

 “Judging that the risks to growth are acute, while the risks to inflation are likely to be short-lived, the Monetary Policy Committee believes that it is essential now to instil confidence and ease financial conditions further. This will facilitate the flow of funds at affordable rates and rekindle investment impulses. It is in this context that the MPC voted to reduce the policy repo rate by 40 basis points from 4.4 per cent to 4.0 per cent” the Governor said.

Shri Das also announced a set of regulatory and developmental measures which he said complement the reduction in the policy rate and also strengthen each other.

He reiterated that the goals of the measures being announced are:

  • to keep the financial system and financial markets sound, liquid and smoothly functioning
  • to ensure access to finance to all, especially those that tend to get excluded by financial markets
  • to preserve financial stability

Measures to Improve the Functioning of Markets

  • Refinance Facility to SIDBI extended for another 90 days

In order to enable increased supply of affordable credit to small industries, the RBI had, on April 17, 2020, announced a special refinance facility of ?15,000 crore to SIDBI at RBI’s policy repo rate for a period of 90 days. This facility has now been extended by another 90 days.

  • Relaxation of Rules for Foreign Portfolio Investment under Voluntary Retention Route

The VRR is an investment window provided by RBI to Foreign Portfolio Investors, which provides easier rules in return for a commitment to make higher investments. The rules stipulate that at least 75% of the allotted investment limit be invested within three months; considering the difficulties being faced by investors and their custodians, the time limit has now been revised to six months.

Measures to Support Exports and Imports

  • Exporters can now Avail Bank Loans for Higher Period

The maximum permissible period of pre-shipment and post-shipment export credit sanctioned by banks to exporters has been increased from the existing one year to 15 months, for disbursements made up to July 31, 2020.

  • Loan facility to EXIM Bank

The Governor has announced a line of credit of ?15,000 crore to the EXIM Bank, for financing, facilitating and promoting India’s foreign trade. The loan facility has been given for a period of 90 days, with a provision to extend it by one year. The loan is being given in order to enable the bank to meet its foreign currency resource requirements, especially in availing a US dollar swap facility.

  • More time for Importers to Pay for Imports

The time period for import payments against normal imports (i.e. excluding import of gold/diamonds and precious stones/jewellery) into India has been extended from six months to twelve months from the date of shipment. This will be applicable for imports made on or before July 31, 2020.

Measures to Ease Financial Stress

  • Extension of Regulatory Measures by another 3 Months

The RBI has extended the applicability of certain regulatory measures announced earlier, by another three months from June 1, 2020 till August 31, 2020. These measures will now be applicable for a total period of six months (i.e. from March 1, 2020 to August 31, 2020). The aforesaid regulatory measures are: (a) 3-month moratorium on term loan instalments; (b) 3-month deferment of interest on working capital facilities; (c) easing of working capital financing requirements by reducing margins or reassessment of working capital cycle; (d) exemption from being classified as ‘defaulter’ in supervisory reporting and reporting to credit information companies; (e) extension of resolution timelines for stressed assets; and (f) asset classification standstill by excluding the moratorium period of 3 months, etc. by lending institutions. The lending institutions have been permitted to restore the margins for working capital to their original levels by March 31, 2021. Similarly, the measures pertaining to reassessment of working capital cycle are being extended up to March 31, 2021.

  • Provision to convert Interest on Working Capital into Interest Term Loan

Lending institutions have been allowed to convert the accumulated interest on working capital facilities over the total deferment period of 6 months (i.e. March 1, 2020 up to August 31, 2020) into a funded interest term loan, to be fully repaid during the course of the current financial year, ending March 31, 2021.

  • Increase of Group Exposure Limit to Increase Fund Flow to Corporates

The maximum credit which banks can extend to a particular corporate group has been increased from 25% to 30% of the bank’s eligible capital base. This has been done in order to enable corporates to meet their funding requirements from banks, in view of the current difficulties being faced by corporates in raising money from the markets. The increased limit will be applicable up to June 30, 2021.

Measures to ease financial constraints faced by State Governments

  • States allowed to borrow more from Consolidated Sinking Fund

The Consolidated Sinking Fund is being maintained by state governments as a buffer for repayment of their liabilities. The rules governing withdrawal from this Fund have now been relaxed, in order to enable states to enable them to repay their borrowings from the market, which become due in 2020-21. The change in withdrawal norms will come into force with immediate effect and will remain valid till March 31, 2021. The Governor added that the relaxation is being done, while ensuring that depletion of the Fund balance is done prudently.

Assessment of Economy

Presenting an assessment of the global economy, the Governor said that the macroeconomic and financial conditions are austere by all counts. He stated that the global economy is headed inexorably into a recession.

The domestic economy too has been severely impacted by the two-month lockdown, said the Governor. “The top 6 industrialised states that account for about 60 per cent of industrial output are largely in red or orange zones.” Demand has collapsed, production has come down, taking a toll on fiscal revenues. Private consumption has been dealt a severe blow.

The Governor said that agriculture and allied activities have provided a beacon of hope, amidst this encircling gloom. A ray of hope also comes from the forecast of a normal southwest monsoon in 2020 by the India Meteorological Department.

The Governor recalled that based on the incomplete data made available, food inflation, which had come down from its January 2020 peak for the second successive month in March, suddenly reversed and increased to 8.6% in April as supply disruptions took their toll, despite the current reduction in demand. India’s merchandise exports and imports suffered their worst slump in the last 30 years as COVID-19 paralysed world production and demand.

The Governor informed that the Monetary Policy Committee assessed that the inflation outlook is highly uncertain. The supply shock to food prices in April may persist for the next few months, depending upon the state of lockdown and the time taken to restore supply chains after relaxation. The elevated level of pulses inflation is worrisome, and warrants timely and swift supply management interventions, including a reappraisal of import duties.

Speaking of the road ahead for the economy, the Governor noted that the combined impact of demand compression and supply disruption will depress economic activity in the first half of the year. Assuming that economic activity gets restored in a phased manner, especially in the second half of this year, and taking into consideration favourable base effects, it is expected that the combination of fiscal, monetary and administrative measures being currently undertaken would create conditions for a gradual revival in activity in the second half of 2020-21.

Given all these uncertainties, GDP growth in 2020-21 is estimated to remain in negative territory, with some pick-up in growth impulses from H2: 2020-21 onwards. Much will depend on how quickly the COVID curve flattens and begins to moderate.


Reserve Bank of India

[Press Release dt. 22-05-2020]

[Source: PIB]

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Background:

Amidst the Corona crisis, PM announced  a special economic package with a new resolution. This economic package will serve as an important link in the ‘AtmaNirbhar Bharat Abhiyan” (Self Reliant India Campaign)‘.

What the Prime Minister said about the package?

In the recent past economic announcements made by the government related to the Corona crisis, which were the decisions of the Reserve Bank. The economic package that is being announced today, if added, comes to around Rs. 20 lakh crores. This package is about 10 percent of India’s GDP. With this various sections of the country and those linked to economic system will get support and strength of 20 lakh crore rupees. This package will give a new impetus to the development journey of the country in 2020 and a new direction to the Self-reliant India campaign. In order to prove the resolve of a self-reliant India, Land, Labor, Liquidity and Laws all have been emphasized in this package.

This economic package is for our cottage industry, home industry, our small-scale industry, our MSME, which is a source of livelihood for millions of people, which is the strong foundation of our resolve for a self-reliant India. This economic package is for that labourer of the country, for the farmers of the country who are working day and night for the countrymen in every situation, every season. This economic package is for the middle class of our country, which pays taxes honestly and contributes to the development of the country. This economic package is for Indian industries, which are determined to give a boost to the economic potential of India. Starting tomorrow, over the next few days, the Finance Minister will give you detailed information about this economic package inspired by the ‘Self-reliant India campaign’.

First press conference on the decoding Rs 20 Lakh Crore Package held today.

LIVE UPDATES

  • Focal point: Liquidity, Labour, Law and Land.
  • 6 Major steps for MSMEs
  • Collateral free Automatic Loans upto Rs 3 lakh Crores
  • 100 % credit guarantee
  • Additional Funds for MSME revival
  • Loans to be given till October 31st
  • Rupees 20 Crore for stressed MSMEs
  • 50,000 Crore equity to be infused for viable and potential MSMEs
  • New Definition of MSMEs — Investment can be upto 1 Cr and turnover upto 5 Crore
  • Global tender to be allowed upto Rs 20 Crores
  • Other interventions for MSMEs
  • Rs 2500 crores EPF support for businesses and Workers for 3 months
  • EPF contribution reduced for Business and Workers for 3 months — Rs 6750 Crores
  • Rs 30,000 crores liquidity facility for NBFC/HCs/MFIs
  • Rs 45,000 Crores Partial Credit Guarantee Scheme 2.0 for NBFC
  • Rs 90,000 CR liquidity injection for DISCOMs
  • Relief to contractors
  • Extension of registration and completion date of real estate projects under RERA; No individual applications needed; Suo Moto be done; Registered projects expiring on or after 25th March
  • Rs 50,000 crores Liquidity through TDS/TCS reductions till March 2021
  • Tax filing due date extended to 30th November, 2020
  • Pending refunds to charitable trusts and non-corporate businesses & professions including proprietorship, partnership, LLP and Co-operatives shall be issued immediately.
  • Due date of all income tax return for FY2019-20 extended from 31st July, 2020 & 31st October, 2020 to 30th November, 2020 and Tax audit from 30th September, 2020 to 31st October, 2020.
  • Date of Assessments getting barred on 30th September, 2020 extended to 31st December, 2020 and those getting barred on 31st March, 2021 will be extended to 30th September, 2021.
  • Period of Vivad se Vishwas Scheme for making payment without additional amount will be extended to 31st December, 2020