Monthly Summary for Cabinet July 2021

No. A-45O1 1 I 4 I 2O2l-Ildmr-.lll Government of India Ministry of Flnance (Departnent of Economlc Affairef *B New Delhi, 106 September,2O2l 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'"';:"'=,,"-L5,,*, Deputy Secretary to the GovemmS:Sfr$g? To 1 A11 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 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 @A), PPS to Secretary (Revenue), PPS to Secretary (Expenditure), PPS to Secretar5r (DTPAM). 11. Chief Economic Adviser, DEA. 12. Additiona-l Secretary (Shri A. Giridhar) Cabinet Secretariat, Rashtrapati Bhavan, New Delhi. 13. Shri K. Rajaraman, Additional Secretary (Admn. & Investment), DEA. 14. Ms.Meera Swarup, AS&FA(Finance). 15. Shri A.M. Bajaj, Additional Secretary (FM), DEA 16. Shri Rajat Kumar Mishra, Additional Secretary (Budget), DEA. t7. Shri Sanjeev Sanyal, Principal Economic Adviser, DEA 18. All Heads of Divisions in Department of Economic Affairs.Sr.Adviser (C&C/FSLR/FS&CS)/JS (tPF)/Js(Budget)/JS (C&c)/ JS(Inv)/ Advisor(BC) /Adviser (Admn)/ Advisor (Investment) / Advisor (Economic Division) / Advisor (IER) / Advisor (IPF) / CAAA. 19. Shri Rajesh Malhotra, Addl.DG (M&C), M/o Finance, North Block, New Delhi. 20 Guard File - 2021.I No.A-450 1 1 / 4 /2O2L-Adrrr;n.Ifi I Government of India I Ministry of Finance I (Department of Economic Affairs) Subject: Monthly Summary on important policy decisions pertaining to Department of Economic Affairs (DEA| for the month of July,2021. I Macro-Economic Overview The lndian economy is showing signs of revival from the impact of the COVID-19 second wave on the back of targeted fiscal relief, monetary policy measures, and a rapid vaccination drive. The broad-based economic relief package, extended to mitigate the second wave, amounted to Rs. 6.29 lakh crore. RBI continues with its efforts to calm the nerves of the market and revive sectors with both backward and foruard linkages and multiplier effects on growth. Resilient tax collections of the Central Government and continued fillip to capital expenditure, particularly in the road and rail sector, augurs well for continued economic recovery driven by capital expenditures. The recently announced economic relief package is expected to further oil the wheels of the capex cycle via implementation of the PLI scheme and streamlining of processes for PPP Projects and Asset Monetization. Consumption sentiment is expected to pick up with further enhancement of employment support under Atmanirbhar Bharat Rozgar Yojana (ANBRY), targeted support to the urban poor through the credit guarantee scheme for onJending by micro-finance institutions, and wider Bharat-Net digitisation coverage. Free food-grain and enhanced fertilizer subsidies under the package along with continued MGNREGA implementation, on the other hand, would serve as a cushion for rural demand in the coming quarters. Maintaining a rapid pace on vaccination and quickly bridging health care infrastructure gaps across both urban and rural areas would emerge as the most sustainable stimulus for durable recovery of the lndian economy. As per the Provisional Estimates of GDP released by National Statistical Office (NSO), Ministry of Statistics and Programme lmplementation (MoSPl), real GDP growth is estimated to contract by 7.3o/oin2020-21 as against a grovvth of 4.0o/o in 2019-20 (Table 1 of the Annexure). As per the latest annual Periodic Labour Force Survey of 2019-20 released on 23'd July, 2021 ,labour force participation rate i.e. supply of labour, increased Contd./-I I l 2 l from 37.5% in 2018-19 to 40.1o/o in 2019-20 and the worker popuration Ratio i.e. labour force that was emproyed, improved from 35.3% to 3g.2%,, wrrite tre unemployment rate decreased from 5.g% to 4.go/o as per usual status estimate. The i sector-wise grovvth rates are given in the table at Annexure. I 2. Other lmportant Developments (i) Approval for 'signing of Multilateral Memorandum of Understanding (MMoU) by the lnternational Financial Services centre Authority (IFSCA) with multilateral agencies, namely, lnternational organisation oi securities commissions (losco) and lnternational Asiociation of lnsurance Supervisors(lAlS) was accorded by the Cabinet on 28th July 2021. (ii) Following regulations have been notified by lnternational Financial I l Services Centre Authority (IFSCA) in Juty 2021 IFSCA (Banking) (Second Amendment) Regulations, 2021. I IFSCA (Procedure for making regulations) Regulations, 2021. I IFSCA (Bullion Exchange) (Amendment) Regulations, 2021. IFSCA (lssuance and Listing of Securities) Regulations, 2021. IFSCA (Banking) Regulations, 2020 (as amended up to 06-07-2021) I (iii) I A Gazette Notification was issued on July 19, 2021 for release of Commemorative Coin of the denomination of Rs. '125 to commemoratethe 125th Birth Anniversary of Srila A.C. Bhaktivedanta Swami Prabhupada. (iv) The Government of lndia has entered into a Loan Agreement and a Financing Agreement respectively with the World Bank on July 15, 2021 for a 'Creating Coordinated and Responsive lndian Social Protection System Development Policy Financing', comprising a loan for an amount of USD 387.50 million (Loan) from the lnternational Bank for Reconstruction and Development (IBRD) and a credit made up of a concessional credit of SDR 12.60 million and a non-concessional credit of USD 94.50 million from lnternational Development I Association (lDA). I (v)WiththeapprovalofHon,bleFinanceMinister,lndiahasagreedonJuly ia, zozt to contribute'12.7 billion SDRs (equivalent to about USD 17.9 billion) to rr'rrFt prop*"I of fresh SDR atlocation of 456 billion SDRs (equivalent to USD 650 billion) for the Eleventh Basic Period. Contd.l I I I \ \(,i) Legal Agreements for The Resirient Kerara programme (RKDp) with loan amount usD '125 million were signed with the world aa-nr ltano) on .luty to, 2021. The project aims to support the Rebuild Kerala lnitiative'for enhancing the state's resilience against the impacts of natural disasters and climate change. 3. Following important meetings were held during the month of July, 2021: i. Hon'ble Finance Minister Smt.Nirmala Sitharaman and RBI Governor represented lndia in the 3rd G20 Finance Ministers and Central Bank Governors meeting under the ltalian presidency held virtually on July 9-10, 2021. ii. Hon'ble Finance Minister met US lndia Business Council (USIBC) on July 16, 2021. iii. Secretary (EA) chaired the Wrap Up session on July 28,2021 of the Annual Article lV consultations between lndia and the lnternational Monetary Fund (lMF) which were held virtually during July 12-28, 2021 . IMF hetd interactions with Gol officials, and RBI to discuss the State of the lndian economy, climate change issues, reform initiatives and growth prospects. iv. Under the 2021 BRICS Chairship, lndia hosted the Second Meeting of BRICS Finance and Central Bank Deputies virtually on July 27,2021 . Secretary (EA) jointly chaired the meeting with Deputy Governor, Reserve Bank of lndia. v. Additional Secretary (MBC) represented lndia in the Fifth Steering Committee Meeting of South Asia Regional Training and Technical Assistance Center (SARTTAC) which was held virtually on July 7, 2021. The meeting witnessed discussion on SARTTAC operations and activities in FY21 and on proposed work plan of SARTTAC during FY 2022. vi. Additional Secretary (MBC) chaired the 118th meeting of the DEA Screening Committee for consideration of proposals seeking flnancing from Multilateral Development Banks/ Bilateral Agencies held on July 23' 2021. vii. The second meeting of lndia-UK sustainable Finance Forum was held on July 20,2021 under the co-chairmanship of DDG (BC&SF) and Deputy Director, HMTreasury,UKtodiscussUK-lndiaco-operationonthe..themes "Mobilisation of sustainable finance and greening the financial system" viii.DDG(BC&SF)representedlndiaintheThirdmeetingofSustainab.leFlnance woixi;ll orou'p (srwCi*ni"n was held on July 27,2021' The discussions were focused on various issues mentioned in the Synthesis Report and a multi-year G20 Sustainable Finance Roadmap' Contd /- \4 lx. f lgeting was held jointly by tvory Coast and the Wortd Bank on Juty 15, 2Q21 in Abidjan to discuss effective financing mechanisms for Airican Economies ahead of IDA-20 replenishment. This meeting was attended by officials of DEA virtually. x The 24th meeting of Early Warning Group (EWG) was hetd on Juty 28, 2021 . Director (FS&CS) is a member of the group and attended the meeting. The group discussed financial system vulnerabilities and monitoring as well as major economic developments having bearing on risk outlook. xl. Training Directors meeting of SARTTAC was held virtually on July 01,2021. lndia was represented by officials of DEA in the said meeting. x1l. Several Meetings of Empowered Group on Economic Welfare (EGEW) were held during the month. xlll. Fifth round of discussion between lndia and UAE on Bilateral lnvestment Treaty (BlT) was held on July 6,2021 through VC. xlv. Third round of discussion between lndia and USA on lncentive lnvestment Agreement (llA) was held on Ju1y16,2021 through VC. A round of discussion between India and Saudi Arabia on Bilateral lnvestment Treaty was held on July 20, 2021 through VC. 3 Minimum Government, Maximum Governance ln particular, use of ICT in submission of lnformation is being encouraged. 4 Non-Compliance of ACG directions/orders Nit 5. FDI proposals cleared during the month and status of FDI proposals I awaiting approval in the Department: I Awaiting Approval in the Department: 20 I I I I \ ! \Annexure Table 1: Growth of GVA at Basic Prices by Economic Activity and GDp at Market I Prices (per cent) Growth rate at constant 1201 1 -121 prices (per cent) Sectors 2019-20 2020-21 1"t RE PE Agriculture, forestry & fishing 4.3 3.6 (rl lndustry 2 G) 7.0 Mining & quarrying (-) 2.5 (-) 8.5 Manufacturing o2.4 (-)7 2 EIectricity, gas, water supply & other utility services 2.1 1.9 I Construction 1.0 (, 8.6 Services 7.2 (r 8.4 Trade, hotel, transport, storage, communication, 6.4 (-) 18.2 I etc. Financial, real estate & prof. services 7.3 c) 1.5 Public administration, defence and other services 8.3 c)4 6 GVA at basic prices 4.1 G) 6.2 GDP at market prices 4.0 (r 7.3 Source: National Statistical Office, MoSPl. Notes: RE - Revised Estimates. PE - rovisional Estimates Table 2: Annual Real growth in demand side of GDP and iG components (per i cent) 2019-20 2020-21 Componenb 1st RE PE otal Consumption 5.9 c) 7.3 I 7.9 2.9 Government ConsumPtion 5.5 c) e.1 Private Consumption 5.4 (-) 10.8 ross Fixed CaPital Formation (-)47 xports G) 3.3 I I \ \ \I I lmports G) 0.8 (-) 13.6 DP 4.0 c) 7.3 I urce: National Statistical Office, MoSpl. Note: RE - Revised Estimate. PE - Provisional Estimate. Table 3: INFLATION - CPI-C, WPI (in Per Cent ) June 2020 May 2021 June 2021 cPt-c 6.23 6.30 6.26 i WPI (-) 1.81 12.94 12.07 Source: NSO for CPI-C and OEA, DPIIT for WPI I Note: 1. WPI inflation for last two months and CPI-C inflation for last one month is provisional. I I Table 4: MONETARY DEVELOPMENT Item 16.7.2021 I Policy Repo Rate 4.0 10-Year G-Sec Par Yield (FBIL) 6.14 Bank Credit Year-on-Year groMh # 6.1 Note: # as on 2.7.2021 Table 5: Merchandise Trade Performance (Customs Basis) (in US$ billion) Exports lmports Trade Balance June, 2020 21.9 21 .1 0.8 I June, 2021 32.5 41.9 G) e.4 Table 6: Services Trade Performance (in US$ billion) M@lIEtn,@ 7.1 ource: Provisional data as per the Press Release dated 15.7.2021 ol the DePartmen Commerce, Ministry of Commerce and lndustry. I I ! II Table 7 Ba ance of Payments Items 2019-20 Urrent Account Ba ance 2020-21 (P) n Us$ b on o24.6 24.0 urrentAcco Unt Balance I GDP Per ce c) 0.e 0.9 ource: Reserve Bank of lndia Note: P - Provisional I Tab Ie Fore sn Exchange Reserves (In US$ b II Ion) March 2021 577.0 't6.7.2021 612.7 ource: Reserve Bank of lndiS Table 9: Ex Ghanse Rate of the Ind an Rupee (Rupee pef unit of forergn currencv) US Dollar Pound Sterling Euro Japanese yen 1.7.2021 74.3943 102.7301 88.0819 66.9200 urce Reserye Bank of nd a Table 10: External Debt (US$ Biilion) as at end of March as at end of March 2020 2021 Percentage variation PR P [(?1)-rF100 (1) (2t otal External ebt outstandin! 558.4 570.0 2.1 ource o uarterlv Report on Externa Debt aS at end March 202 1 Reserve Bank of nd a Note: PR - Partial Revised. P - Provisional Table '11: lndustrial Production Highlights Monthly Growth (YoY) in per cent March 2020 April 2020 May 2020 lndex of lndustrial (-) 18.7 (-) 57.3 (-) 33.4 Production (llP) March 2021 April2021 May 2021 22.4 134 4 29.3Table 12: Eight Core lndustrieC Monthly Growth (YoY) in per cent April 2020 May 2020 June 2020 (-) 37.e (-) 21.4 (-) 12.4 Core lndustries April 2021 May 2021 June 2021 rcr) 60.9 16.2 8.9 { I \