Economy This Week (3rd Apr to 9th Apr 2021)

Economy is an important part of the UPSC prelims and mains exams; this series titled ‘Economy This Week’ has been initiated to address the need to read and analyse economic articles in various business-related newspapers. The round-up of the Economy/Business section news for 3rd Apr to 9th Apr 2021 is given below. Business news is essential for IAS exam preparation.

ETW 3rd Apr to 9th Apr 2021:- Download PDF Here

TABLE OF CONTENTS

1. RBI keeps policy rates unchanged (TH 8/4/21)
2. Incentives for white goods and solar energy (TH 8/4/21)
3. IBC amendment to ease resolution of MSME (BS 6/4/21)
4. India pitches for better BRICS coordination on IMF Quota (ET 7/4/21)
5. NITI considers separate PLI scheme for MSMEs (BS 7/4/21)
6. US questions India’s RoDTEP Scheme at WTO (ET 6/4/21)
7. Cairn dispute cannot be settled via Vivad Se Vishwas scheme (BL 7/4/21)
8. Vivad Se Vishwas Scheme - VSVS (IE 7/4/21)

1. RBI keeps policy rates unchanged (TH 8/4/21)

• The Monetary Policy Committee (MPC) has decided to –
  • Hold the interest rates i.e. repo rate at 4%.
  • Continue with an accommodative stance as long as necessary to sustain growth on a durable basis.
  • Economic prospects for FY22 have strengthened with the progress of vaccination, but recent surges in infections have led to added uncertainty over the outlook.
  • The inflation projection for Q1 and Q2 FY22 was kept at 5.2%; for Q3 FY22 at 4.4% and 5.1% for Q4.
  • The central bank has announced G-SAP 1.0 (G-Security Acquisition Programme) whereby the central banker would be purchasing ₹ 1 lakh Cr of these bonds from the secondary market in the first quarter. This is expected to provide a stable and orderly evolution of yields on G-sec.

2. Incentives for white goods and solar energy (TH 8/4/21)

• The Union Govt has approved two PLI schemes for white goods (air conditioners and LED lights).
  • The govt has taken yet another step towards Atmanirbhar Bharat by promoting PLI worth ₹ 6238 Cr.
  • The scheme would be extending incentives of 4% to 6% on incremental sales of goods made in India for five years.
  • The scheme is expected to increase the investment by ₹ 7920 Cr, production worth ₹ 1.68 lakh Cr and create 4 lakh jobs over the course of the next five years.
• Cabinet has also approved the PLI scheme for high-efficiency solar PV modules with an outlay of ₹ 4500 Cr – National Programme on High Efficiency Solar PV Modules.
  • Solar capacity addition currently depends mainly upon imported solar PV cells and modules as domestic manufacturing has a limited operational capacity.
  • This scheme will reduce import dependence.
  • Scheme expects to lead to an additional capacity of 10000 MW and additional investments of ₹ 17200 Cr.
  • Lead to direct job generation for 30000 people and 1.2 lakh indirect jobs.

3. IBC amendment to ease resolution of MSME (BS 6/4/21)

• Govt has amended the IBC to allow a pre-packaged insolvency resolution of the MSMEs and allowed the corporate debtors to propose a resolution plan for stressed companies.
• The threshold default level will be announced as part of the regulation. To begin with, the minimum threshold has been fixed at ₹ 10 lakh.
• The pre-packaged scheme has provided a semi-formal structure for the pre-insolvency stage.
• It has been done to ensure that the process is quicker, cost-effective and value maximising for all the stakeholders.
• A pre-packaged scheme is one where the promoter of the stressed company proposes a resolution plan to the creditors before the company goes for insolvency proceedings.
• This will also provide a legal sanction to the plan which has been accepted by the creditors.

4. India pitches for better BRICS coordination on IMF Quota (ET 7/4/21)

• India has pitched for greater coordination among the BRICS economies on the review of International Monetary Fund (IMF) quotas.
• This has been put forward to ensure that developing countries will have more say.
• As per the IMF Resolution, 16th General Review Quotas should be concluded by 15th December 2023.
• Any adjustment in the quota shares will give more voting powers to the emerging markets (as quotas are decided based on the relative position of a country in the global market).

5. NITI considers separate PLI scheme for MSMEs (BS 7/4/21)

• NITI Aayog is working on a separate Production Linked Incentive (PLI) Scheme for MSMEs.
• The think tank is thinking of breaking the scheme into two parts:
  • One for covering big corporates
  • Another covering smaller companies
• Earlier the NITI Aayog had recommended extending the scheme for medium-sized enterprises so that the country will be moving towards self-reliance, along with promoting domestic production.
• PLI Scheme:
  • Covers 13 sectors.
  • Provides incentives to firms on incremental sales for five years over the base year of 2019-20.
  • The scheme has been targeted at larger companies and smaller companies have not been benefited from this.
  • It is felt that this should be extended to cover smaller companies but should be a demand-based application wherein they benefit.

6. US questions India’s RoDTEP Scheme at WTO (ET 6/4/21)

• The US has questioned India’s Remission of Duties and Taxes on Exported Products (RoDTEP) scheme at WTO and has sought details about its operational status as well as coverage of farm products (eg., rice) under it.
• The US administration on 27th March proposed to impose retaliatory tariffs up to 25% on nearly 40 Indian products in response to equalisation levy or digital services tax imposed in India on non-resident e-commerce operators.
• India has notified RoDTEP from 1st Jan to replace the MEIS scheme.
• The US has also raised questions over India’s tariffs on cotton and support for sugar and biofuels.
  • The US has argued that Indian support prices for cotton has increased to 40% and govt purchase of cotton had reached record levels.

7. Cairn dispute cannot be settled via Vivad Se Vishwas scheme (BL 7/4/21)

• The dispute cannot be settled under the scheme as the scheme is closed now (31st March 2020).
• Under the scheme, if the case is already decided in favour of the assessee and the department appeals against this then the disputed value will be reduced to 50%.
• In December last year, an arbitration tribunal had awarded Cairn Energy ₹ 1.2 bn (excluding interest and other expenses) against India.

8. Vivad Se Vishwas Scheme – VSVS (IE 7/4/21)

• VSVS has led to a resolution in one-third of all the direct tax disputes and the govt has been able to collect a tax revenue of ₹ 54005 Cr.
• The govt had originally targeted ₹ 2 lakh Cr by the end of March 2020.
• The covid led pandemic has upset the calculations of the govt.
• In terms of reduction in legacy disputes, the scheme has been successful in reducing the disputes.

ETW 3rd Apr to 9th Apr 2021:- Download PDF Here

Download the PPT of the video lecture from the link below:

ETW (3rd Apr to 9th Apr 2021):- Download PPT Here