Govt moves to take on coronavirus challenge, plays down price rise concerns

The Uniongovernment is likely to announce “immediate measures” to address the operational issues being faced by industry and ease congestion at ports on the east coast as consignments from China pile up amid the coronavirus scare.
“We will come up with immediate measures that are required to address the challenges, be it at ports, related to logistics or freight movements. Freight clearances at ports will be expedited and manpower requirements will be increased, along with 24x7 services,” Finance Minister Nirmala Sitharaman told the representatives from various industries at a meeting in New Delhi. The meeting was held to assess the impact of the coronavirus epidemic on Indian industry.
The government is expected to hold a series of meetings starting from Wednesday and will announce the first set of measures in the coming few days.
Sitharaman said coronavirus would not lead to any price rise, but added this was a major concern highlighted by the industry representatives who cited congestion at ports. Senior officials said the government was exploring various measures to tide over the situation, including giving relief to micro, small and medium enterprises in servicing their loans.
“Banks will be encouraged to extend the window of servicing the loans by MSMEs by 15 days or so, as it will be a ‘force majeure’ event,” an official said. Another official said that to enable banks to do so, firms across sectors might invoke ‘force majeure’ with their suppliers and partners in China.
Force majeure refers to a clause that is included in contracts to remove liability for natural and unavoidable catastrophes that interrupt the expected course of events and restrict participants from fulfilling obligations. The government will also actively consider the suggestion of airlifting formulations of essential pharmaceutical products and raw materials that will be exempt from or have lower import duties.
ALSO READ: As coronavirus asserts itself on the world, industry asks for duty cuts
India depends heavily on China for active pharmaceutical ingredients (APIs). In 2018-19, India imported bulk drugs and intermediates worth $2.4 billion from China, making up 68 per cent of the imports, according to CARE Ratings.
A representative from the pharma industry is learnt to have suggested that India should list all the raw materials and products for which it is 100 per cent dependant on China. “If we can make special logistical arrangements to bring those items to India, as soon as the situation allows, we should airlift them,” the person said.
The industry also fears that China might soon block export of certain APIs for essential drugs to India, since it would need these for its own use. The industry has requested that India should talk to China to ensure such curbs on imports don't take place.

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According to sources in the meeting, some sectors expressed concerns about a slowdown in activity, either due to raw materials not coming in from China or being stuck at ports, or because China and neighbouring Southeast Asian countries being major destinations for their exports. These sectors were pharma, solar, chemicals, iron, metals and steel, and marine food. Consignments are stuck at ports due to the Chinese not being able to provide paperwork from their end. A relaxation regarding such paperwork has been given at Chennai port and is being extended to other ports.
Some representatives said there were Indian manufacturers of the components that were needed from China, but these firms are fully export-oriented. "It will be of help if there are some export restrictions and we can use these locally-made components," said a person at the meeting.
At the briefing, Sitharaman said various secretaries of the finance ministry would take stock of specific sectors and interact with their counterparts in the relevant ministries before suggesting sector-wise and broad solutions to her on Wednesday. She said the Centre would come up with a road map for the short- and the medium-term for addressing “undue situation” that may arise due to coronavirus.
The FM acknowledged congestion at eastern ports, especially concerns raised by the fertilisers industry related to import of raw materials. She asked the industry whether western ports were also facing similar issues. She said the government would be alert to the fact that piling up of inventories did not cause price distortion. “We will not spend much time on measures, and interventions will come immediately,” Sitharaman said.

India's fiscal deficit rises to 115% of target in 8 months of FY20

Fiscal deficit of the Uniongovernment rose to 114.8 per cent of the target in the first eight months of the fiscal year, the data released by the Controller General of Accounts showed.
The gap between the government’s revenue and spending stood at Rs 8.07 trillion at the end of November — Rs 1 trillion (13 per cent) more than the full-year target.

A persistent contraction in gross tax revenue, with expenditure growing consistently, has put pressure on government finances, resulting in a larger deficit well before the end of the fiscal year.
While the corporation tax collection contracted 1 per cent in April–November on the revenue side, budgetary capital spending on roads took the worst hit on the expenditure side. Income support to farmers and food subsidy bills have taken a graver hit in terms of revenue expenditure.
Non-tax revenue, especially in the form of dividend from public enterprises (including public sector banks), lower devolution to states owing to higher devolution in previous year, probable revenues from telecom company dues, and a slice of cash from the legacy service tax and excise disputes scheme, could help the government restrict fiscal slippage.
The situation was similar last year, with a 15 per cent overture in the first eight months of FY19. In FY17, fiscal deficit stood at a comfortable 86 per cent of the target.
The government would need to prune spending or depend upon funds to remain unspent with ministries to save on the expenditure side, and retain fiscal deficit to the budgeted Rs 7.04 trillion.
This target was projected to be 3.3 per cent of India’s gross domestic product (GDP), assuming that the GDP would grow 11 per cent in FY20, to nearly Rs 210-211 trillion.
However, after taking into account the nominal GDP estimate assumed in the National Infrastructure Pipeline (NIP), which the government released on Tuesday, fiscal deficit would touch 3.45 per cent of GDP, even if it is restricted to the budgeted Rs 7.04 trillion.
The NIP report assumes that India’s nominal GDP would beRs 205.3 trillion in FY20, growing at 8 per cent, substantially lower than the Budget expectation.
Experts said that capital spending has taken a bigger hit from subdued revenues, and asserted that the probability of deficit being higher than targeted has only risen.
Aditi Nayar, principal economist at ICRA, said concerns on the extent of fiscal slippage still persist.
“Given the likely shortfall in tax collections and lack of clarity on revenue from telecom license holders and disinvestment, expenditure cuts may have to be undertaken to prevent fiscal deficit from rising too sharply,” she said.
While gross tax revenue contracted 2.6 per cent in November, revenue spending rose 7 per cent.
India's fiscal deficit rises to 115% of target in 8 months of FY20
As a result, productive capital spending contracted 12 per cent. ICRA said that this is a “discomfiting trend”. In April-November, gross tax revenue grew by a paltry 0.8 per cent.
Some experts highlighted that the divestment of Bharat Petroleum is crucial for the fiscal balance this year.
“Attaining the disinvestment target of Rs 1.05 trillion will remain a challenge as there is uncertainty in the completion of the BPCL stake sale before the current fiscal year. Given the challenges on the revenue front, fiscal deficit would be in the range of 3.8 to 4 per cent of GDP,” said Madan Sabnavis, chief economist at CARE Ratings.

Power discoms suffered losses worth Rs 27000 crore in FY19: Minister

Power distribution companies in the country suffered losses worth Rs 27,000 crore in 2018-19, UnionPower Minister R K Singh has said.
The Centre aims to reduce electricity transmission and distribution losses in the country to 15 per cent in next two years, Singh said here on Saturday.

He met Goa Power Minister Nilesh Cabral at the Power Grid Corporation's facility at Colvale, located about 20 km from here.
After the meeting, Singh said, "The total loss of all power distribution companies in the financial year 2018-19 was Rs 27,000 crore. That is huge. Because of the losses, the discoms are under stress."
He noted that the discoms were facing issues related to purchase of power, maintenance and others.
"I have to help the discoms of all states to make them viable by reducing their losses," he said.
Listing the targets for 2020, Singh said in some states the transmission and distribution losses were very high. In addition, there were also commercial losses, related to metering, billing and bill collection.
"Overall, last year the aggregate transmission and distribution loss for the entire country was 18.5 per cent. We want to bring it down to 15 per cent in next two years," the minister said.
Talking about achievements of the NDA government, Singh said the power sector has a undergone huge transition.
"Before our government came to power, we had a power deficit. We did not generate enough power for our requirements before 2014. There used to be load-sheddings. We have made the country surplus in power generation," he said.
Singh said India was now exporting power to Bangladesh, Nepal and Myanmar.
"Now, the whole country is unified into one grid...we can generate power in Kashmir and supply to Kanyakumari," he added.

MHA orders withdrawal of over 7,000 paramilitary personnel from Kashmir

The UnionHome Ministry has ordered "immediate" withdrawal of over 7,000 paramilitary troops from Kashmir after a security review, officials said on Tuesday.
A total of 72 companies of Central Armed Police Forces (CAPFs) have been ordered to "revert" to their locations across the country, they said. One such company has about 100 personnel.

These units drawn from the CRPF, BSF, ITBP, CISF and the SSB were sent to the Kashmir Valley after the Centre abrogated Article 370 provisions in Jammu and Kashmir.
As per the order issued on Monday, while 24 companies of the Central Reserve Police Force are being withdrawn, 12 each of the Border Security Force, Central Industrial Security Force, Indo-Tibetan Border Police and Sashastra Seema Bal are being sent back.
About 20 such companies were withdrawn from the valley early this month.

No cut in spectrum price as govt okays airwave auction by April 2020

The Uniongovernment has set the ball rolling for the next round of airwave auction by approving the sale of 8,300 MHz spectrum across all 22 telecom circles, including for 5G services, in March-April at a reserve price of Rs 5.23 trillion. The Digital Communications Commission (DCC), the apex decision-making body in the telecom department, has kept the spectrum price unchanged as it accepted the recommendations of the Telecom Regulatory Authority of India (Trai).
Although the industry is disappointed with the government decision not to lower spectrum prices at a time telcos are saddled with over Rs 4-trillion debt and an estimated Rs 1.43-trillion licence fee dues, the DCC has relaxed the payment structure to offer some relief to the financially stressed sector.

Critical of the DCC decision to proceed with spectrum auctions in the near future, Rajan Mathews, director general, Cellular Operators Association of India (COAI), said it wouldn’t be easy for the industry. “With spectrum reserve prices four to six times higher than that of similar spectrum sold recently in several countries, high levels of debt and prevailing financial stress in the sector, telecom service providers will find it very difficult to raise funds to participate in the auctions.”
Of the spectrum to be put on sale, a lion’s share of 6050 MHz has been set aside for 5G spectrum that will enable services using cutting-edge next-generation mobile technology. It’s another matter that most telcos including Vodafone Idea and Bharti Airtel have maintained that they would stay away from 5G auction due to high spectrum price in the midst of financial stress. To lift the industry mood, Telecom Minister Ravi Shankar Prasad had said at an event in October that the government would bring in reform in spectrum pricing, but that hasn’t happened.
While there’s no spectrum price reduction, the DCC has decided to offer a two-year moratorium on payment for the airwaves across bands, besides relaxation in upfront payments.
Trai had given recommendation for radio waves at a reserve price of Rs 4.9 trillion. While setting the spectrum value at Rs 5.23 trillion, DoT has increased the quantum of airwaves, thereby maintaining the Trai price.
The quantum is up by a little over 150 MHz as the DoT has also included additional spectrum which will be free after licences of Reliance Communications, Bharti Airtel in eight circles and Vodafone and Idea Cellular in four circles each expire.
Installments will be spread over a period of 16 years, with a two-year moratorium for payment after the upfront amount is given. This means that installments will have to be paid from the third year, in 16 annual tranches.
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This is a change from the previous auction when spectrum payments had to be made in 10 annual installments. Subsequently, in January 2017, the DCC revised the payment methods extending the duration for installments.
“The DCC has today approved the recommendations of Trai and we are hopeful that the auctions should be conducted sometime in March-April,” Telecom Secretary Anshu Prakash told reporters.
For less than 1000 MHz spectrum (or 1GHz), the upfront payment is 25 per cent of the total amount and for higher bands (above 1000 MHz), the upfront payment is 50 per cent.
It would be further relaxed to 10 per cent upfront payment (for sub 1GHz band) and 20 per cent upfront payment (for above 1GHz band), in case the spectrum is not available for allotment within 30 days of announcing the successful bidders.
“The companies will have to make the remaining upfront payment a month before the allocation of the spectrum,” Prakash said.
In the 2020 auctions, the DoT will also offer the spectrum, the licences for which would expire in December 2021. The 4G spectrum to be allocated to Bharat Sanchar Nigam (BSNL) and Railways would be excluded from these auctions.
Based on views sought by the government, Trai on August 1, 2018, had recommended auction of spectrum in the 700MHz, 800MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz, 3300-3400 MHz, 3400-3600MHz bands.
Bids from agencies to conduct e-auction have already been invited. Interested companies can submit their bids by January 13, for which financial bids will be opened on January 24. When asked about the approval to Chinese gear maker Huawei for 5G trials, Prakash said, “No decision has been taken as yet and will be taken soon and it will be in the best national interest.”
Meanwhile, the DCC at its meeting on Friday, also approved submarine fibre cable connectivity between Kochi and Lakshadweep island, and under the plan, 11 islands will be connected.
The proposal that entails Rs 1,072 crore outlay — capital expenditure of Rs 837 crore and operating expenses of Rs 235 crore — will require Cabinet approval. There will be two-way connectivity between and among the islands.
After award of the contract, 24 months will be required to complete the project.

Govt releases 5 survey reports after uproar, holds back study it junked

The Union government on Saturday released five sets of survey reports on key socio-economic trends, most of which were approved but withheld. The junked consumer expenditure survey was not among these.
The Ministry of Statistics and Programme Implementation (MoSPI) released the survey reports, ‘Household Social Consumption in India: Health’ and ‘Household Social Consumption in India: Education’. The survey for these was conducted along with that for the ‘Household Consumer Expenditure’ between July 2017 and June 2018.
This was a part of the 75th round of survey conducted by the National Statistical Office (NSO), earlier known as the National Sample Survey Office (NSSO).
It has also made public the unit-level data — essential for researchers and analysts to do their own analysis based on the raw survey data. All the reports have been signed by NSO Director General Vijay Kumar.
The government’s decision to release the reports comes two days after over 200 scholars from across the globe issued a statement demanding release of all withheld reports produced by the NSO, including the household consumer expenditure survey that was junked by the government last week.
The other reports released by the MoSPI on Saturday include periodic labour survey force report, which shows the trend of unemployment in urban areas for January-March 2019. It has also released results of its survey titled ‘Drinking Water, Sanitation, Hygiene and Housing Conditions in India’ — part of its 75th round of survey conducted between July and December 2018.
“It is a welcome move that the government has released these survey reports. It was starting to get really worrying after the annual report of the periodic labour force survey (PLFS) 2017-18 was initially withheld for release. The whole idea of conducting PLFS was to track employment on a real-time basis. The MoSPI should now put out a calendar for release of some of these data sets,” said former Chief Statistician Pronab Sen.
ALSO READ: Over 200 global economists seek junked NSO report details from govt
However, though the 75th round of household survey was meant to capture three broad trends — consumer expenditure, health and education — the government has decided to release only the last two and not the first one.
Business Standard reported on November 15 that consumer spending fell for the first time in over four decades by 3.7 per cent between 2011-12 and 2017-18, according to the NSO’s ‘Key Indicators of Household Consumption Survey’. The survey was approved for release by an expert committee on June 19 this year.
The statistics ministry had said it has decided to junk the survey because of “data quality” issues. This was the first time the government decided not to release a survey conducted by the NSO, a statistical body set up in 1950. It had even said that there were concerns about the ability of the NSO surveys to “capture consumption of social services by households especially on health and education.”

ALSO READ: Maharashtra, Haryana saw biggest drop in rural consumer spending: NSO data
During the fag end of its previous tenure, the government had withheld the Periodic Labour Force Survey of 2017-18 for five months. The survey, which showed the unemployment rate touching a 45-year high of 6.1 per cent, was approved by the National Statistical Commission (NSC), an autonomous body overlooking India's statistical system, in December 2018, but was released in May 2019 after the results for the Parliamentary elections were announced.
Two members of the NSC, including its chairman P C Mohanan, had resigned as the government was not releasing the data.
ALSO READ: NSO's junked consumer expenditure survey shows inequality gap declining
“This suppression of essential data is terrible for accountability and for ensuring that citizens have the benefit of official data collection that is paid for with their taxes. It is also counterproductive for the government, which may be kept in the dark about actual trends in the economy and, therefore, not be able to devise appropriate policies,” a statement issued by over 200 scholars had said on Thursday. Those who had signed the statement included Nobel laureate Angus Deaton, French economist Thomas Piketty, Oxford professor Barbara Harris-White, former Planning Commission members Abhijit Sen, and A Vaidyanathan.

Govt starts monthly job data, may junk labour bureau's quarterly survey

The Union government has begun the process to do away with the only official enterprise-based quarterly jobs survey and has started releasing monthly payroll data for employment in the formal sector.
This is a part of the government’s efforts to overhaul official employment estimates.

Prime Minister’s Principal Secretary Nripendra Misra chaired a meeting with top bureaucrats on April 18 to discuss the roadmap for collecting employment data. The Prime Minister’s Office (PMO) has decided to set up a panel, led by former chief statistician T C A Anant, to deliberate on whether the enterprise-level quarterly data, which is released by the labour bureau, should be discontinued.
With the 2019 general elections, the government is under pressure to substantiate job creation in the economy as the present official estimates represent a small sample of the job market or have been captured with respect to the old timeframe.
During his rallies for the 2014 general elections, Prime Minister Narendra Modi had promised 10 million jobs for the youth every year. The Opposition has been critical of the government for ‘jobless growth’, which the government recently countered with first-of-its-kind estimates that showed 3.53 million new payroll jobs were generated during six months in 2017-18.
In its meeting last week, the PMO asked the NITI Aayog for periodic reports on payroll from June. These reports will include data from chartered accountants, company secretaries, doctors and lawyers.
The meeting was attended by NITI Aayog Chief Executive Officer Amitabh Kant, Ministry of Statistics and Programme Implementation Secretary K V Eapan, State Bank of India Chief Economic Advisor Soumya Kanti Ghosh and Manipal Global Education Chairman T V Mohandas Pai.
“The panel (led by Anant) will be asked to examine the relevance of the labour bureau’s quarterly survey. It will decide whether the survey can be replaced by payroll data gathered from the Employees’ Provident Fund Organisation (EPFO), the Employees’ State Insurance Corporation (ESIC) and the Pension Fund Regulatory and Development Authority (PFRDA),” said an official on condition of anonymity.
The EPFO, ESIC and PFRDA issued payroll data on Wednesday based on their month-wise subscriptions between September 2017 and February 2018. Data from the National Pension System (NPS) and EPFO show 3.53 million new jobs were generated during the six-month period. However, the ESIC data did not present a clear picture of job additions in the formal sector.
Anant declined to comment on the government's decision to set up a panel but said, “Payroll data from the EPFO, ESIC and NPS is a very good way of measuring the characteristics of the job market.”
Sources said the government would soon issue a notification to set up the panel.
“Payroll data from these three organisations will now be released every month. We may as well bid goodbye to the days of analyses based on random sample surveys,” the NITI Aayog stated on Friday.
Apart from payroll data, field work for survey on jobs created by the Mudra scheme — to disburse unsecured loans of up to Rs 1 million to small enterprises with the objective of generating self-employment — has also begun and the results may likely be released by the end of 2018.
Early indications of job creation in the government’s tenure that came from the labour bureau had painted a dim picture. The bureau’s yearly household estimates showed joblessness at a five-year high of 5 per cent in 2015-16 and the quarterly factory survey reflected job generation at a six-year low in 2015.
The yearly household survey of the bureau has been discontinued since and the quarterly survey was revamped in September 2016 to increase its coverage five-fold to 10,000 units. The government then appointed a task force, led by the then Niti Aayog vice-chairman Arvind Panagariya, in May 2017 to suggest ways to improve employment data in the country.
The proposal to replace the quarterly enterprise-level jobs survey comes months after the Panagariya-led task force had pointed out “serious limitations” in measuring jobs based on data from the EPFO, ESIC and PFRDA.
“First, there is a substantial overlap across them. Aggregation requires de-duplication… The second limitation is more serious. Additions to these data sets need not represent new jobs…. Therefore, administrative data can only be used to measure the extent of formalisation in the workforce,” the task force, led by Panagariya, had said in its draft report of July 2017.
The task force cited an example that companies with at least 20 workers were required to make provident fund contributions under the EPFO and if a firm with 19 workers added another worker to its payroll, it would begin contributing to the EPFO for all employees. “In the EPFO database, this will add 20 employees. Yet, only one of these 20 employees represents a new job,” the panel noted.
Though the panel was critical about several aspects of the quarterly data from the labour bureau, including low coverage and outdated sample frame, it had not recommended discontinuing the survey.