**Executive Summary**
This Office Memorandum, dated August 20, 2020, from the Department of Economic Affairs, Government of India, circulates the unclassified Monthly Summary for July 2020, pertaining to important policy decisions. It highlights macroeconomic conditions, other important developments, and meetings. No action items or explicit deadlines are mentioned.
**Key Points / Main Content**
* **Macro-economic Overview:**
* Most high-frequency indicators improved following the initial economic unlocking.
* Rising COVID-19 cases and intermittent lockdowns may pose a risk to sustained recovery.
* Normal monsoon forecasts and enhanced Kharif sowing are expected to cushion the pandemic's economic shock.
* Foreign exchange reserves crossed half a trillion USD as of June 26, 2020.
* **Other Important Developments:**
* Special Liquidity Scheme of ₹30,000 crores for NBFCs and HFCs implemented from July 1, 2020.
* Five proposals worth ₹3090 crores sanctioned.
* 35 more applications seeking financing up to ₹13776 crores are under review.
* No Objection communicated to RBI for USD 400 Million currency swap arrangement with CBSL.
* Loan Agreements signed with World Bank (IBRD):
* MSME Emergency Response Development Policy Loan: US$750 million (signed July 6, 2020).
* Second National Ganga River Basin Project: US$ 381 million (signed July 7, 2020).
* Chairman appointed for International Financial Services Centres Authority (IFSCA).
* Finance Act, 2019 provisions amending Indian Stamp Act, 1899 implemented w.e.f. July 1, 2020.
* Line of Credit extended to Nigeria: USD 74.96 million for two solar projects.
* Draft Note for CCEA for the VGF Scheme approved by the Finance Minister; comments were incorporated after review by the PMO and Cabinet Secretariat.
* Cabinet Note for signing and ratification of agreement between Government of India and NDB for establishment of Indian Regional Office of NDB was considered by the Cabinet and approved.
* **Important Meetings Held in July 2020:**
* India represented in the G20 3rd Finance Ministers and Central Bank Governors (FMCBG) Meeting.
* Meeting to review the status of the SWAMIH Fund chaired.
* Meeting on setting up a museum on Numismatics and Trade in Kolkata.
* Attended the 4th Meeting of the G20 Finance and Central Bank Deputies.
* G20 Framework Working Group (FWG) meeting co-chaired.
* DEA's Screening Committee for externally aided projects held.
* Committee of Secretaries meeting on NIP Projects & other Priority Public projects held.
* G20 Sherpas' Second Extraordinary virtual meeting held.
* Bilateral Investment Treaty (BIT) discussion with Russia was held through Video Conference.
* EFC meeting held on “Capital Infusion into NIIF Infrastructure Debt Financing Platform comprising Aseem Infrastructure Finance Limited (AIFL) and NIIF Infrastructure Finance Limited (NIIF IFL)".
* **Other Points:**
* Encouraging use of ICT in submission of Information.
* Non-Compliance of ACC directions/orders: Nil.
* 10 FDI proposals are awaiting approval in the Department.
* Several tables are included with data for growth, inflation, monetary development, trade performance, balance of payments, foreign exchange reserves, and exchange rates for July 2020.
**Impact Analysis**
**All Members of the Union Council of Ministers, Vice Chairman of Niti Aayog, Cabinet Secretary, Secretaries to the President and Vice-President of India, Principal Secretary to the Prime Minister, Chairman of Union Public Service Commission, All Members of Niti Aayog, Secretaries to all the Ministries/Departments, PS to MOS (F), PPS to Finance Secretary, PPS to Secretary (EA), PPS to Secretary (Revenue), PPS to Secretary (Expenditure), PPS to Secretary (DIPAM), Chief Economic Adviser, DEA, Additional Secretaries, Principal Economic Adviser, DEA, Heads of Divisions in Department of Economic Affairs**
**Impact**
Informed of key policy decisions, macroeconomic overview, and important developments within the Department of Economic Affairs for July 2020.
**Action Required**
Review the provided information to stay informed on policy matters.
**Ministry of Railways, NITI Aayog, Infrastructure Ministries**
**Impact**
Recommendations from the Committee of Secretaries' meeting regarding NIP Projects and other Priority Public projects have been communicated to the Ministry.
**Action Required**
Implement actions as directed in DO dated 23.07.2020, related to NIP projects and priority public projects.
Key Entities Referenced
Department of Economic Affairs: The primary subject of the monthly summary, responsible for economic policy decisions.
Ministry of Finance: The government ministry under which the Department of Economic Affairs operates.
NIIF Infrastructure Debt Financing Platform: The EFC meeting was held regarding capital infusion into this platform.
RBI: Referenced for Currency Swap Agreements with other Central banks.
VGF Scheme for Social Sectors: The CCEA was preparing a draft note regarding continuation and revamping this scheme.
No. A-450 1 I I 412020- Admn.III
Government of India
Ministry of Finance
(Department of Economic Affairs)
rl rr r!
New Delhi, 20th Atgust, 2020
OFFICE MEMORANDUM
The undersigned is directed to circulate herewith the unclassified portion of Monthly
Summary on important policy decisions in respect of Department of Economic Affairs for the
Month of Jdy,2020.
I
(Surinder Pal Singh)
Joint Secretary to the Government of India
Tel No. 23092100
To
1. All Members of the Union Council of Ministers, Government of India, New Delhi.
2. Vice Chairman, Niti Aayog, Yojna Bhawan, New Delhi'
3. Cabinet Secretary, Cabinet Secretariat, Rashtrapati Bhavan, New Delhi.
4. Secretary to the President of India, Rashtrapati Bhavan, New Delhi'
5. Secretary to the Vice-President of India, 6, Maulana Azad Road, New Delhi'
6. Principal Secretary to the Prime Minister, PMo, South Block, New Delhi
7. chairman, Union Public Service commission, Dholpur House, New Delhi.
8. All Members of Niti Aayog, Yojna Bhawan, New Delhi.
9, Secretaries to all the Ministries/Departments, Government of India, New Delhi'
10. PS to MOS (F), PPS to Finance Secretary, PPS to Secretary (EA), PPS to Secretary
(Revenue), PPS to Secretary (Expenditure), PPS to Secretary @IPAM)'
11. Chief Economic Adviser, DEA.
12. Additional Secretary (Shri A. Giridhar) Cabinet Secretariat, Rashtrapati Bhavan, New Delhi
13. Dr. C.S. Mohapatra, Additional Secretary (FS &CS), DEA
14. Shri K. Rajaraman, Additional Secretary (Admn. & lnvestment), DEA'
15. Sh.Sameer Kumar Khare, Additional Secretary GB&ADB), DEA
16. Ms.Meera Swarup, AS&FA(Finance).
17. Shri A.M. Bajaj, Additional Secretary (FM), DEA
18. Shri Sanjeev Sanyal, Principal Economic Adviser, DEA
19. All Heads of Divisions in Department of Economic Affairs.
S(Budget)/JS(BC&IER)/JS(lnv)/ Adviser(c&c/FSLR/FS&CS)/Adviser (lER)/
J
CAAA.
20. Shri Rajesh Malhotra, Addl.DG (M&C), IWo Finance, North Block, New Delhi.
21. Guard File - 2020.No.A-450 1 I I 4 12020 - Admn.III
Government of India
Ministry of Finance
(Department of Economic Affairs)
**{<
Subject: Monthly Summary on important policy decisions pertaining to Department of
Economic Affairs (DEA) for the month of July,2020.
1.
Macro-economic Overview
With India unlocking, the worst seems to be over as most of the high frequency
indicators, such as IIP, consumption of steel and production of cement, power generation etc,
have shown significant improvement in the month of May/June following unlocking of the
economy. However, rising COVID cases and intermittent state lockdowns in July may pose a
risk to quick and sustained recovery. With the forecast of a normal monsoon, unintemrpted
harvesting of Rabi crops, enhanced Kharif sowing and record procurement of wheat,
agriculture is set to cushion the shock of COVID pandemic on the Indian economy in 2020-
21. On the back of buoyant FDI, resurgence of FPI flows and current account surplus, foreign
exchange reserves have crossed half a trillion mark as on26th June. This safeguards almost a
year of India's imports that bodes well for a resilient external sector. The details of important
information in tabular form is given at Annexure.
2.
Other important Developments
2.1 The Special Liquidity Scheme of {30,000 crores for NBFCs and HFCs is being
implemented w.e.f. 1't July, 2020 as a follow up of one of the announcements under
AtmaNirbhar package made by the Hon'ble Finance Minister on 13th May, 2020. The
Scheme has been launched to improve the liquidity position of NBFCs/HFCs through a
Special Purpose Vehicle (SPV) to avoid any potential systemic risks to the financial sector.
The Scheme has received a very positive response. As on 23'd July,2020, five (5) proposals
involving an amount of t3090 crores have already been sanctioned. Further, 35 more
applications have been received seeking financing upto{13776 crores, which are under
process.
2.2 Currency Swap Agreement between the RBI and Central Bank of Sri Lanka
(CBSL): No Objection was communicated to RBI for entering into USD 400 Million
curency swap arangement with CBSL under the 'Framework of Currency Swap
Arrangement for SAARC Member Countries, 2019-22.
2.3 (a) Loan Agreement for the MSME Emergency Response Development Policy Loan of
amount US$750 million was signed with the World Bank (IBRD) on July 6,2020.
(b) Loan Agreement for Second National Ganga River Basin Project was signed with the
World Bank (IBRD) on July 7,2020 for loan assistance of US$ 381 million of US$ 400
million.,2
2.4 (a) Appointment of Chairman, International Financial Services Centres Authority
(IFSCA) has been made.
b) The relevant provisions of the Finance Act, 2019 amending the Indian Stamp Act, 1899
and the Indian Stamp (Collection of Stamp-Duty through Stock., Exchanges, Clearing
Corporations and Depositories) Rules, 2019 had been Notified on 1Otn December, 2019 and
the said Act & Rules have been implemented w.e.f. 01st July, 2020.
2.5 During the month of July, 2020, with the approval of Hon'ble FM, One Line of Credit
(LoC) has been extended to Nigeria of USD 74.96 million for two solar projects viz. (i) 50
MW Solar Power Plant in Bauchi, GoN (USD 66.60 million) and (ii) Solar PV Renewable
Energy Micro Utility (REMU) in six political zones of Nigeria (USD 8.36 million).
2.6 Draft Note for CCEA for the continuation and revamping of VGF Scheme for Social
Sectors was prepared and the same has been approved by the Finance Minister. The Note
was sent to the PMO and Cabinet Secretariat for the comments. After incorporating the
comments of the Cabinet Secretariat, the Final Cabinet Note has been prepared. Some
queries were received from PMO and the replies on the same have been sent vide OM dated
8th July 2020.
2.7 The Cabinet Note for signing and ratification of agreement between Govemment of India
and NDB for establishment of Indian Regional Office of NDB was considered by the Cabinet
and approved.
2.8 Following important meetings were held during the month of July,2020z -
i. Hon'ble Finance Minister, Smt. Nirmala Sitharaman and Governor, RBI represented
India in the G20 3'd Finance Ministers and Central Bank Govemors (FMCBG)
Meeting under the G20 Saudi Presidency which was held virtually on July 18,
2020. During this meeting, the G20 Finance Ministers and Central Bank Govemors
endorsed the G20 FMCBG communique, July 2020.
ii. Hon'ble Finance Minister, Smt. Nirmala Sitharaman chaired a meeting on 23.7.2020
to review the status of "special Window", SWAMIH Fund.
iii. Secretary (EA) took a meeting on 4.7.2020 with all the stakeholders including CEO,
Development of Museums and Cultural Spaces (DMCS) and SPMCIL on the issue of
setting up of a museum on Numismatics and Trade in historic Old Mint Building
Kolkata, as per Budget para 7511) of year 2020-21.
iv. Secretary pe; attended the 4th Meeting of the G20 Finance and Central Bank
Deputies under the G20 Saudi Arabia Presidency as India's G20 Finance Deputy
which was held virtually on July 16 & 17,2020.
v. G20 Framework Working Group (FWG) under the G20 Saudi Arabia Presidency met
virtually on July 7 &.8,2020. The G20 FWG is co-chaired by India and UK and Shri
Sanjeev Sanyal, Principal Economic Advisor co-chaired the meeting.J
vi. Shri Sameer Khare, Additional Secretary (FB&ADB) chaired the 108th meeting of
DEA's Screening Committee for extemally aided projects, which was held on 15th
Ju|y,2020.
vii. A meeting of the Committee of Secretaries was held on 02.07.2020 under
Chairmanship of Cabinet Secretary on the NIP Projects & other Priority
Public projects on 2nd July 2020. The CoS recommendations have been received and
also communicated to NITI Aayog, Railway Board and infrastructure Ministries for
action vide DO dated 23.07.2020.
viii.
G20 Sherpas' Second Extraordinary virtual meeting under the KSA Presidency was
held virtually on 24thJdy,2020.India's G20 Sherpa Shri Suresh P. Prabhu
participated in the virtual meeting. From DEA side, Advisor (IER) and Director (IER)
assisted Sherpa during the meeting.
ix.
A round of Bilateral Investment Tieaty (BIT) discussion with Russia was held on 8th
July 2020 through Video Conference.
x.
EFC meeting held on21.7.2020 on "Capital Infusion into NIIF Infrastructure Debt
Financing Platform comprising Aseem Infrastructure Finance Limited (AIFL) and
NIIF Infrastructure Finance Limited (NIIF IFL)".
3. Minimum Government, Maximum Governance
In particular, use of ICT in submission of Information is being encouraged.
4. Non-Compliance of ACC directions/orders
Nil
5. FDI proposals cleared during the month and status of FDI proposals awaiting
approval in the Department
Awaiting Approval in the Department: 10Annexure
Important Economic DeveloPment
(In Tabular Form)
Table 1: Growth of GVA at Basic Prices bY Economic Activity and GDP at
r
Market Prices
Growth rate at constant
Sectors
tt-12 rrces cent
I
2017-l 2018-19 2019-20
2"d
& 5 2 4
6.3 4 0
6 1 5.5
S
VA at basic 6. 6. J
DP at market 7 6.
National ,S/,atistical office (NSo)
'otes 2'd RE: Second Rev'isedEstimat'CS Itt RE. FirstRevisedEstimates, PE: Provisional
Table 2: Quarter-wise Growth of GVA and GDP at Constant (2011-12)
Prices cent
2018-19 2019-20
a a a
Q2
Sectors
ture, forestry & fishing J1 2.5 2 1 J J J1 5
7.5 5 4 0
7 7 7 8 5.5 6 5 4
A at basic price 6. 6.r 5 5 4. 4.3 J J1
at market prices 7 5 4.1 3.1
urce: National Statistical Olfice (NSO)
Table 3: INFLATION- CPI-C, WPI (in per cent)
Jun-19 May-20 Jun-20
CPI-C 3.18 6.27 6.09
WPI 2.02 -3.21 -1.81
Source: NSO for CPI-C and OEA, DPIIT for WPI4:
Table MONETARY DEVELOPMENT
Item lTtn July 2o2o
Policy Repo Rate 4.0
10-Year G-Sec Par Yield (FBIL) 5.8
Bank Credit Year-on-Year growth # 6.t
ote: # as on J 2020
Table 5: Merchandise Trade Performance (Customs Basis) (in US$
billion)
Exports Imports Trade Balance
June,2019 25.01 40.29 -t5.28
2t.tl
June,2020 2t.91 0.79
6:
Table Services Trade Performance (in US$ billion)
llay,2020 16.77 9.94 6.83
Source: Provisional data as per the Press Release dated 15.07.2020 of the Department of
Commerce.
7:
Table Balance of Payments
Items 2018-19 Q4 20te-20 (P) Q4
Current Account Balance -4.6 0.6
(in US$ billion)
-0.7 0.1
Current Account Balance /GDP (Per cent)
Source: Reserve Bank of India.
8:
Table Foreign Exchange Reserves (in US$ billion)
March,2020 477.8
77'n tuly 2o2o 5t7.6
Source: Reserve Bank of IndiaTable 9: Exchange Rate of the Indian Rupee (Rupee per unit of foreign
Pound
US Dollar Euro Japanese yen
2 July,2020 74.7620 95.8937 87.5289 70.7900
Reserve Bank of India.
Table 10: External Debt (US$ Billion)
as at end of as at end of Percentage
March 2019 PR March 2020 P variation
*100
I 1
Total External debt outstanding 543.1 558.5 2.8
ource: Quarterl on External Debt AS at end-March 2020,Reserve Bank ofIndia.
Table 1L: Industrial Production g
Mo Growth March-2019 March-2020
Production Growth Rate
2.7 -18.3
Growth 2018-19 2019-20
-March 3.8 -0.8
* As per the Quick Estimates released by the NSO, MOSPI (based on new series of
20tr-t2)
Table 12: Core Industries*
Growth Mav-2019 N{.ay-2020
Growth of Eight Core Industries. 3.8 -23.4
Growth 2019-20 2020-21
I 4.5 -30.0
*Released by DPIIT, of Commerce &
***rr