**Executive Summary**
This document is an Office Memorandum issued by the Department of Economic Affairs, Ministry of Finance, Government of India, dated August 2nd, 2021. It circulates the unclassified Monthly Summary on important policy decisions pertaining to the Department of Economic Affairs for June 2021. The document provides an overview of macroeconomic conditions, other important developments, and significant meetings that occurred during the month.
**Key Points / Main Content**
* **Macro-Economic Overview:**
* Real GDP growth is estimated to have contracted by 7.3% in 2020-21 as against a growth of 4.0% in 2019-20.
* The second wave of COVID-19 moderated economic recovery.
* **Other Important Developments:**
* RBI, in consultation with DEA, introduced measures to streamline G-Sec settlement and provide operational flexibility to FPIs.
* Authorized Dealer Category-I Banks can place margins on behalf of FPIs and the window for reporting Over-the-Counter transactions on Negotiated Dealing System -Order Matching (NDS-OM) has been extended by three hours.
* The Committee report on positioning IFSC as a hub for offshore INR trading was released.
* Agreements were signed for:
* Mizoram Health Systems Strengthening Project (USD 32 million with the World Bank).
* Sikkim Major District Roads Upgradation Project (USD 2.5 million with the Asian Development Bank).
* Tamil Nadu Industrial Connectivity Project (USD 484 million with the Asian Development Bank).
* A line of credit (USD 50 million) was extended to the Government of Palestine.
* India conveyed its stand on the IMF Quota formula.
* **Important Meetings Held in June 2021:**
* The Finance Minister chaired meetings to review infrastructure projects and capital expenditure plans for FY 2021-2022 involving various ministries (Railways, Power, Telecom, Road Transport & Highways, Atomic Energy, Housing & Urban Affairs, Steel, Petroleum & Natural Gas, and Space).
* The Finance Minister attended a meeting with the US-India Strategic Partnership Forum (USISPF) on June 24th, 2021.
* India agreed to support discussions on fresh SDR allocation for low-income countries at the IMF Board Meeting on June 25th, 2021.
* The Secretary (EA) revalidated final approval for the Ministry of Railways' passenger train operations on PPP mode on June 14th, 2021.
* The DEA Screening Committee met on June 22nd, 2021, to consider financing proposals from multilateral/bilateral agencies.
* DEA participated in IDA-20 2nd replenishment meeting from 28th-30th June 2021.
* DEA participated in meetings of the Financial Stability Board (FSB) on June 3rd, 17th, and 22nd 2021.
* DEA attended meetings of the Social Development Foundation (SDF) Board of Directors on 8th and 9th/10th June 2021.
* India was represented at the G20 Sustainable Finance Working Group meeting on June 18th, 2021.
* The board of members of National Investment and Infrastructure Limited (NIIFL) met on June 17th, 2021.
* Discussions were held between India and Canada on the Bilateral Investment Treaty (BIT) on June 22nd, 2021.
* DEA participated in meetings of the Asian Infrastructure Investment Bank (AIIB), African Development Bank (AfDB), International Fund for Agricultural Development (IFAD), and New Development Bank (NDB).
* Four meetings of the Empowered Group on Economic Welfare (EGEW) were held in June 2021.
* **Minimum Government, Maximum Governance**
* Use of ICT in submission of Information is being encouraged.
* **FDI Proposals**
*17 FDI proposals are awaiting approval in the Department.
**Impact Analysis**
**All Members of the Union Council of Ministers, Secretaries to the Government of India, and Officials within the Department of Economic Affairs (DEA):**
* **Impact:** Informed about the important policy decisions and developments in the DEA for June 2021.
* **Action Required:** Review the circulated summary for awareness and incorporation of relevant information into their respective functions.
**Reserve Bank of India (RBI):**
* **Impact:** Collaboration with DEA on streamlining G-Sec settlements and providing flexibility to FPIs.
* **Action Required:** Implement the introduced measures and continue collaboration with DEA.
**Foreign Portfolio Investors (FPIs):**
* **Impact:** Operational flexibility in meeting margin requirements and reporting of trades.
* **Action Required:** Adapt to the new measures for G-Sec settlement and trade reporting.
**Asian Development Bank (ADB) and World Bank (IBRD):**
* **Impact:** Signing of loan agreements for projects in Mizoram, Sikkim, and Tamil Nadu.
* **Action Required:** Facilitate the disbursement and implementation of the agreed-upon projects.
**International Monetary Fund (IMF):**
* **Impact:** India communicated its stance on the quota formula.
* **Action Required:** Consider India's inputs during the next GRQ meeting.
Key Entities Referenced
Department of Economic Affairs: The primary subject of the memorandum, responsible for the monthly summary of policy decisions. The document summarizes the important policy decisions pertaining to the Department of Economic Affairs (DEA) for the month of June, 2021.
Ministry of Finance: The ministry under which the Department of Economic Affairs functions. The office memorandum is issued under the authority of the Ministry of Finance.
Reserve Bank of India: Consulted by the Department of Economic Affairs (DEA), has introduced important measures in for streamlining the G-Sec settlement process and providing operational flexibility to Foreign Portfolio Investment (FPIs) in meeting margin requirements and reporting of trades.
New Delhi: Location from where the office memorandum is issued and where several meetings are held. It is also the location of many of the recipients mentioned.
National Statistical Office: The source of the GDP data reported in the document
No. A-4SOLL I 4 I 2O2 l-Admn.III
Government of India
Ministry of Finance
(Department ofEconomic Affairs|
New Delhi, 2nd August,2O2l
Deputy Secretary to the Government of India
Tel No. 23095091
To
Members of the Union Council of Ministers, Government of India,
1 A11
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 Secretar5r to the Vice-President of India, 6, Maulana Azad Road, New
De1hi.
6 Principal Secretary to the Prime Minister, PMO, South Block, New Delhi
7 Chairman, Union Public Service Commission, Dholpur House, New
Delhi.
8 A11 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 Secretary
(DIPAM).
,
11. Chief Economic Adviser, DEA.
12. Additional Secretary (Shri A. Giridhar) Cabinet Secretariat, Rashtrapati
Bhavan, New Delhi,
13. Shri K. Rajaraman, Additional Secretary (Admn. & Investment), DEA.
L+. Ms.Meera Swamp, AS&FA(Finance).
15. Shri A.M. Bajaj, Additional Secretary (FM), DEA
16. Shri Rajat Kumar Mishra, Additional Secretary @udget), DEA.
17. Shri Sanjeev Sanyal, Principal Economic Adviser, DEA
18. A11 Heads of Divisions in Department of Economic Affairs.Sr.Adviser(C&C / FSLR/ FS&CS) /JS(BC&IER) / JS(Inv) /Adviser
(rER)/CAAA
19. Shri Rajesh Malhotra, Addl.DG (M&Cl,M/o Finance, North Block, New
Delhi.
20.
Guard File - 2021.
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iNo.A-450 tt I 4I2021-Admn.III
Government of India
Ministry of Finance
(Department of Economic Affairs)
Subject: Monthly Summary on important pollcy decisio,rs pertaining_
to Deparlment of pconomic Affairs (DEAI for the month of
June, 2O2t.
Macro-Economic Overview
1
As per the provisional Estimates of GDP released by National Statistical
Office (NSO), real GDP growth is estimated to contract by 7.3% in 2O2O-2t
as against'a growth it +.Oy, in 2Ol9-2O. Ttre momentum of economic
,""orr-"ry witneJsed since second half (H2) of 2O2O-2L has, however, been
moderited by the second wave of COVID-l9. Unlike the first wave, the effect
of the wave has been asynchronous in its onset across states and
wider in"r " io tsr r sd p read, particularly in the rural hinterland. This necessitated a
differentiated, statellevel p -ro al pic iy d response in close coordination with the
Central Government for re6oodng of health infrastructure and
effective implementation of 'Test, Track, Treat, Vaccinate and COVID-
appropriate behavior'. The prospects of a good monsoon forecasts bode well
foi momentum in agricultural growth. With state-level lockdown
res" tro ir cr tt ii onu ne sd b eing more adaptive to learnings from the first wave,
manufacturing and construction activities are expected to experience a
softer shock in the current quarter. A ramp up in the pace and
spread" " oo f r vo a* c- ci" in ation on a war footing is critical to help India restrain the
impact of the pandemic. The sector-wise growth rates are given in the table
at Annexure.
2 Other Important DeveloPments
l. Reserve Bank of India, in consultation with Department of Economic
Affairs (DEA), has introduced important measures in for streamlining the
G-Sec settlement process and providing operational flexibility to Foreign
portfolio Investmerrt 1fels1 in meeting margin requirements and reporting
of trades.
Authorized Dealers Category-I (AD-I) Banks have been allowed to place
11.
margins on behalf of Foreign Portfolio lnvestments (FPIs) within their
credit risk management framework and the window for reporting of Over-
the-Counter transactions on Negotiated Dealing System -Order Matching
(NDS-OM) has been extended by three hours.Report of the Committee on positioning IFSC as a hub for offshore
111.
trading in INR was released by IFSCA.
lv kgal agreements for the M2oram Health Systems Strengthening Project
with loan amount USD 32 million were signed with t1le World Bank
(IBRD) on 17ft June 2021. The project aims to improve management
capacity and quality of health services in Mizoram.
The Project Readiness Financing loal for Sikkim Major District Roads
Upgradation Project an amount of USD 2.5 million was signed with the
Asian Development Bank on 3.d June 2021 at New Delhi.
vl The loan for Tamil Nadu Industrial Connectivity Project an amount of
USD 484 million was signed with the Asian Development Bank on 16ft
June,2O2I at New Delhi.
vl1. With the approval of Hon'ble Finance Minister One Line of Credit (LoC) of
USD 50 million was extended to Govt. of Palestine during the month of
June,2021.
v111. India has conveyed its historic stand on the IMF Quota formula (as part
of informal discussions under the 16t1, GRQ in the IMF board meeting on
25tt June 2O2Ll i.e. out of 4 factors which determine the formula for the
quota shares. GDP' should predominate with maximum weight,
tariability should be dropped, Voluntary contributions' should not be
included, share of bpenness' and tariabilit5r' should be reduced and
status quo in the tompression factor'.
3.
Important meetings held during the month of June, 2021:
.
Hon'ble Finance Minister chaired the following meetings:
a. Meeting to review and discuss the implementation of infrastructure
projects, capital expenditure plan for FY 2O2L-2O22 and roadmap ahead
for M/o Railways and M/o Power (Including their Central Public Sector
Enterprises {CPSEs) on 4ft June, 2021.
b. Meeting to review and discuss the implementation of infrastructure
projects, capital expenditure plan for Ft 2O2t-2O22 and the roadmap
ahead for D/o Telecom, M/o Road, Transport & Highways (MoRTH) and
D/o Atomic Enerry on 1Ift June,2O2l.
c. Meeting to review and discuss the implementation of infrastructure
projects, capital expenditure plan for FY 2O2L-2O22 and the roadmap
ahead for M/o Housing & Urban Affairs (MoHUA), M/o Steel, M/o
Petroleum & Natural Gas (MoP&NG) & D/o Space on 29t*r June,2O2l.
Hon'ble Finance Minister attended a meeting with US-India Strategic
11.
Partnership Forum (USISPF) held on 24il: June,2O2l.
lll. With the approval of Hon'ble FM, India agreed to support the discussion
on fresh SDR allocation for low-income countries (LICs) to support
healthcare and economic recovery during the IMF Board Meeting on 25tn
Jttne,2O2l.lv, 104ft Meeting of the Public Private Partnership Appraisal Committee
(PPPAC) held on 14ft June, 2021 wder the chairmanship of Secretary
(EA) revalidating Final Approval to the project proposal of Ministry of
Railways for Passenger Train Operations on PPP mode.
Additional Secretar5r, DEA chaired the 17ft meeting of the DEA
1
Screening committee for consideration of proposals seeking financing
from Multilateral Development Banks/Bilateral Agencies held on 22oa
June,2O2l.
vi. Additional Secretary, DEA along with Executive Director India World
Bank, Senior Advisor to ED and Director (FB) participated in IDA-^O 2'a
replenishment meeting held from 28th - 30th June,2O2l.
vii. Senior Economic Adviser, DEA participated in the two meetings of
Financial Stability Board(FSB) Plenary held on 17ft June and 22"d June
2O2l to discuss learnings from COVID-l9, current outlook, review the
reports on climate-related linancial risks; and discuss progress report on
implementation of benchmark reform.
vlll. Senior Economic Adviser, DEA participated in the meeting of Financial
Stability Board (FSB) held on 3rd June, 2021 which is doing a peer review
on the subject to support COVID- 19 response efforts by examining
members' practices, experiences and lessons on out of court debt
workouts (OCWs), and the implications for linancial stability.
lX. DEA attended the 13ft Finance and Audit Committee Meeting of Social
Development Foundation (SDF) Board of Directors which was held
virtually on 8ft June 2021.
x. DEA also attended tle 34ft Meeting of SDF Board of Directors held
virtually on 9ft -1Oft June, 2021.
x1. Second meeting of the G20 Sustainable Finance Working Group was held
on 18tr Julne 2O2L. Deputy Director General from the Department of
Economic Affairs represented India, along with Reserve Bank of India.
xl1. Meeting of Board members of National Investment and Infrastructure
Limited (NIIFL) held on 17ft June,2O2t.
xl11. A round of discussion on between India and Canada on Bilateral
Investment Treaty (BIT) was held on 22"d June,2021.
xlv. Board of Directors meeting of Asian Infrastructure Investment Bank
(AIIB) held on 23.d -24tt June 2O2L.
xv. Annual Meeting of African Development Bank (AIDB) was held on 23.d
Jlone 2021.
xvl. Tripartite Portfolio Review Meeting of International Fund for Agricultural
Development (IFAD) was held on 25h June 2O2L.
xv1l. 31"t Board of Directors meeting of New Development Bank (NDB) was
held on 29th June 2021.
xvl1l. 113ttt Evaluation Committee Meeting of IFAD was held on 30ft June
202t.
xlx. Four Meetings of Empowered Group on Economic Welfare (EGEW) held
in June 2021.4. Mlnlmun Government, Maximum Governance
In particular, Llse of ICT in submission of Information is being
encouraged.
o. Non-Compliance of ACC directlons/ orders
Nit
6. FDI proposals cleared durlng the month and status of FDI proposals
awaiting approval in the Departnent:
Awaiting Approval in the Department: 17
***Annexure
Tabte 1: Growth of GVA at Basic Prices by Economic Actlvity and GDP at
Market Prices (per cent)
Growth rate at constant
Sectors l2OLt-121 prices (per centf
20L9-2o 2o/2o,-21
lst RE PE
Agriculture, forestry & fishing
4.9 3.6
lndustry
-1.2 -7.O
Mining & quarrying
-2.5 -8.5
Manufacturing
-2.4 -7.2
Electricity, water supply & other utility
Bos,
2.t t.9
services
Construction
1.O -8.6
Senrlces
7.2 -4.4
Trade, hotel, transport storage
6.4 -t8.2
Financial, real estate & prof. services
7.3 -1.5
Public administration, defence and other
serylces 8.3 -4.6
GVA at basic prices
4.L -6.2
GDP at market prices 4.O -7.3
ource : National S Oflice (NSO), MoSPI
: RE: Revised Estimates PE: Provisional Estimates2oL9-20 2o/2o,-2t
Components
1"t RE PE
Consumption 5.9 -7.3
Government Consumption 7.9 2.9
Private ConsumPtion 5.5 -9.1
ss Fixed Capital Formation 5.4 -10.8
-3.3 -4.7
-o.8 -13.6
4.O -7.3
: National Statistical Office (NSO), MoSPI
ote : RE: Revised Estimates PE: Provisional Estimates
Table 3 : INFLATION- CPI-C, WPI (in Per Cent)
May 2O2O April 2O2L May 2O2L
CPI-C 6.27 4.23 6.30
WPI (-) 3.37 to.49 t2.94
NSO for CPI-C and oEA, DPIIT for WPI
ote 1 WPI inflation for last two month S and CPI C inflation for 1ast one month
2. CPI-C inflation for May 2O2O is imputed, which is based on limited set
bservations due to
COVID-19 Pandemic.
Table 4: MONETARY DEVELOPMENT
L8.6.2o/2L
Repo Rate 4.O
lo-Year G-Sec Par Yield (FBIL) 6.25
Credit Year-on-Year growth * 5.7
ote : # as on 04.6.2021Table 5 Merchandise Trade Performa Customs Basls ln US$ billton )
'lce
Itlports Trade Balance
E:rports
22.2 3.2
20/20 19.O
I[;ay 2O2l 32.3 38.6 (-) 6.3
Table 6: Services Trade Performance (in US$ billion)
A tlt2o/2L t7.6 9.9 7.7
t
ource: Provisional data as Per the Press Release daled 15.6.2021 of the DeP
f Commerce Minis of Commerce and Indus
Table 7 : Balance of PaYments
IteEs 2Ol9-2O lAPt- 2O2o-2L (P) (APr-Diec
Dec
nt Account Balance (tn US$ billion) -25.1 32.4
urrent Account Balance / GDP (Per t.7
-1.2
nt
f
ource Reserve Bank o India
Table a Foreign Exchange Reservea tn US$ billion )
477.8
March 2O2O
603.9
1A.6.2o/2L
ource: Reserve Bank of India
bleg:ExchangeRateofthelndianRupee(RupeePefunltofforeigncuffency
US Dollar Pound Sterllng Euro Japanese ye
7.6.2o/2t 72.aO87 ro2.7942 88.5087 66.4900
Source Reserve Bank of Ind 1a
Table 1O : Drternal Debt (US$ Billion)
as at end of as at end of
Percentage
December 2O19 December 2O2O variatio4
PR P
t(2/ 1)-1F1oo
2
1
tal Elrternal debt 564.0 s63.5 -o.08
utstan
ource: Quarterly RePort on External Debt as at end December 2O2O, DE,ACentl
Table 11 : Industrial Production Highllghtsly-o.y in Per
l
Monthly Growth Febnrary 2O2O March 2O2O Aprtl
lndustrial Production Growth Rate I
5.2 (-) 18.7 (-) s7.3:
ffiP)
Monthly Growth tr'ebnraty 2O2L March 2O2L April z0ldr
lndustrial Production Growth Rate
(-) 3.4 22.4 134 4
IIIP)
y
Table 12 : Eight Core ln Per Centf
Monthly Growth March 2O2O April 2O2O May 2O20
Growth of Eight Core Industries (-) 8.6 (-l 37.e (-l21.4
Monthly Growth March 2O2L April 2O2L I&.I,ay 2O21
Growth of Eight Core Industries LL.4 56.1 16.8
****