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As of April 27, 2020, there are 27,892 confirmed cases of COVID-19 in India. Since April 20, 10,627 new cases have been registered. Out of the confirmed cases so far, 6,185 patients have been cured/discharged and 872 have died. As the spread of COVID-19 has increased across India, the central government has continued to announce several policy decisions to contain the spread, and support citizens and businesses who are being affected by the pandemic. In this blog post, we summarise some of the key measures taken by the central government in this regard between April 20 and April 27, 2020.
Source: Ministry of Health and Family Welfare; PRS.
Lockdown
Relaxation of lockdown for shops in specific areas
On April 25, the Ministry of Home Affairs passed an order allowing the opening of: (i) all shops in rural areas, except those in shopping malls, and (ii) all standalone shops, neighbourhood shops, and shops in residential complexes in urban areas. Shops in markets, market complexes, or shopping malls in urban areas are not allowed to function. Only shops registered under the Shops and Establishments Act of the respective state or union territory will be allowed to open. Further, no shops can open in rural or urban areas that have been declared as containment zones. The order also specifies that the sale of liquor continues to be prohibited.
Functioning of Central Administrative Tribunals to remain suspended
The functioning of Central Administrative Tribunals will remain suspended until May 3, 2020. Once functioning begins, certain days already declared as holidays may be reassigned as working days. This decision was made keeping in mind that most of the Central Administrative Tribunals are located in COVID-19 hotspots.
Financial measures
RBI announces Rs 50,000 crore special liquidity facility for Mutual Funds
The Reserve Bank of India (RBI) has decided to open a special liquidity facility for mutual funds (SLF-MF) worth Rs 50,000 crore. This will ease liquidity pressures on mutual funds. Under the SLF-MF, RBI will conduct repo operations of 90 days tenor at the fixed repo rate. The SLF-MF will be available for immediate use, and banks can submit their bids to avail funding. The scheme is available from April 27 to May 11, 2020, or until the allocated amount is utilised, whichever is earlier. RBI will review the timeline and amount of the scheme, depending upon market conditions. Funds availed under the SLF-MF can be used by banks exclusively for meeting the liquidity requirements of mutual funds. This can be done through: (i) extending loans, and (ii) undertaking outright purchase of and/or repos against collateral of investment grade corporate bonds, commercial papers, debentures, and certificates of deposits held by mutual funds.
RBI extends benefits of Interest Subvention and Prompt Repayment Incentive schemes for short term crop loans
The Reserve Bank of India has advised banks to extend the benefits of Interest Subvention of 2% and Prompt Repayment Incentive of 3% for short term crop loans up to three lakh rupees. Farmers whose accounts have become due or will become due between March 1, 2020 and May 1, 2020 will be eligible.
Protection of healthcare workers
The Epidemic Diseases (Amendment) Ordinance, 2020 was promulgated
The Epidemic Diseases (Amendment) Ordinance, 2020 was promulgated on April 22, 2020. The Ordinance amends the Epidemic Diseases Act, 1897. The Act provides for the prevention of the spread of dangerous epidemic diseases. The Ordinance amends the Act to include protections for healthcare personnel combatting epidemic diseases and expands the powers of the central government to prevent the spread of such diseases. Key features of the Ordinance include:
Definitions: The Ordinance defines healthcare service personnel as a person who is at risk of contracting the epidemic disease while carrying out duties related to the epidemic. They include: (i) public and clinical healthcare providers such as doctors and nurses, (ii) any person empowered under the Act to take measures to prevent the outbreak of the disease, and (iii) other persons designated as such by the state government.
An ‘act of violence’ includes any of the following acts committed against a healthcare service personnel: (i) harassment impacting living or working conditions, (ii) harm, injury, hurt, or danger to life, (iii) obstruction in discharge of his duties, and (iv) loss or damage to the property or documents of the healthcare service personnel. Property is defined to include a: (i) clinical establishment, (ii) quarantine facility, (iii) mobile medical unit, and (iv) other property in which a healthcare service personnel has direct interest, in relation to the epidemic.
Protection for healthcare personnel and damage to property: The Ordinance specifies that no person can: (i) commit or abet the commission of an act of violence against a healthcare service personnel, or (ii) abet or cause damage or loss to any property during an epidemic. Contravention of this provision is punishable with imprisonment between three months and five years, and a fine between Rs 50,000 and two lakh rupees. This offence may be compounded by the victim with the permission of the Court. If an act of violence against a healthcare service personnel causes grievous harm, the person committing the offence will be punishable with imprisonment between six months and seven years, and a fine between one lakh rupees and five lakh rupees. These offences are cognizable and non-bailable.
For more details on the Ordinance, please see here.
Financial aid
Progress under the Pradhan Mantri Garib Kalyan Package
According to the Ministry of Finance, between March 26 and April 22, 2020, approximately 33 crore poor people have been given financial assistance worth Rs 31,235 crore through bank transfers to assist them during the lockdown. Beneficiaries of the bank transfers include widows, women account holders under Pradhan Mantri Jan Dhan Yojana, senior citizens, and farmers. In addition to direct bank transfers, other forms of assistance have also been initiated. These include:
40 lakh metric tonnes of food grains have been provided to 36 states and union territories.
2.7 crore free gas cylinders have been delivered to beneficiaries.
Rs 3,497 crore has been disbursed to 2.2 crore building and construction workers from the Building and Construction Workers’ Funds managed by state governments.
For more information on the spread of COVID-19 and the central and state government response to the pandemic, please see here.
Recently, the central government launched the Pradhan Mantri Sahaj Bijli Har Ghar Yojana (or Saubhagya).[i],[ii] The scheme seeks to ensure universal household electrification (in both rural and urban areas) by providing last mile connectivity. The scheme is expected to cover three crore households. Note that currently about four crore households are un-electrified. A rural electrification scheme has also been under implementation since 2005. In light of this, we discuss the current situation of, and key issues related to rural electrification in the country.
Regulatory and policy framework
Under the Electricity Act, 2003, the central and state governments have the joint responsibility of providing electricity to rural areas. The 2003 Act also mandates that the central government should, in consultation with the state governments, provide for a national policy on (i) stand-alone power systems for rural areas (systems that are not connected to the electricity grid), and (ii) electrification and local distribution in rural areas. Consequently, the Rural Electrification Policy was notified in August 2006.[iii]
The Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY), launched in 2005, was the first scheme on rural electrification. In December 2014, Ministry of Power launched the Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY), which subsumed the RGGVY.[iv] Components of DDUGJY include: (i) separation of agricultural and non-agricultural electricity feeders to improve supply for consumers in rural areas, (ii) improving sub-transmission and distribution infrastructure in rural areas, and (iii) rural electrification by carrying forward targets specified under the RGGVY.
The total financial outlay for DDUGJY over the implementation period (until 2021-22) is Rs 82,300 crore which includes budgetary support of Rs 68,900 crore. The central government provides 60% of the project cost as grant, the state power distribution companies (discoms) raise 10% of the funds, and 30% is borrowed from financial institutions and banks.
Status of rural electrification
As of August 2017, about 1% of the villages in India remain un-electrified (3,146 villages). However, with regard to households, around 23% (4.1 crore households) are yet to be electrified. Table 1 at the end of this post shows the status of rural electrification across all states.
Issues with rural electrification
Definition of an electrified village
An electrified village is defined as one that has the following: (i) provision of basic infrastructure such as distribution transformers and lines in the inhabited locality, (ii) provision of electricity in public places like schools, panchayat office, health centers, dispensaries, and community centers, and (iii) at least 10% of the total number of households in the village are electrified.[iv]
Therefore, a village is considered to be electrified if 10% of the total number of households in the village have been electrified. This is apart from the basic infrastructure and electrification of certain public centers in the village. The Standing Committee on Energy (2013) had observed that according to this definition, a village would be called electrified even if up to 90% of households in it do not have an electricity connection.[v] It also noted that the infrastructure being provided under the scheme is highly inadequate, unreliable and unsustainable. The Committee recommended that the actual electrification requirement of villages must be assessed, and it should be ensured that the state discoms provide electricity to the remaining households in the village.
Supply of electricity
The Standing Committee had also noted that while the rural electrification scheme looks at creating infrastructure, the actual supply of electricity to households rests with the state discoms.[v] These discoms are already facing huge financial losses and hence are unable to supply electricity to the villages. Discoms continue to supply subsidised power to agricultural and residential consumers, resulting in revenue losses. Further, the average technical and commercial losses (theft and pilferage of electricity) (AT&C losses) are at around 25%. While the Ujjwal Discom Assurance Yojana (UDAY) has eased off some of the financial losses of the discoms, it remains to be seen whether discoms are able to reduce the cost-tariff gap and AT&C losses in the future.
It has been recommended that generation capacity should be augmented so that states can meet the additional demand under the rural electrification schemes. Further, the assistance to financially weaker states should be increased so that they can better implement the scheme.[v]
Electricity to below poverty line (BPL) households
Under the rural electrification scheme, the cost for providing free electricity connection per BPL household is Rs 3,000. It has been observed that this cost per household may be inadequate.[v] Due to the low cost, the quantity and the quality of work has been getting compromised leading to poor implementation of the scheme. It has been recommended that the Ministry should revisit the cost provided under the scheme.[v]
The new electrification scheme: Pradhan Mantri Sahaj Bijli Har Ghar Yojana (or Saubhagya)
The new scheme, Saubhagya, seeks to ensure universal household electrification, that is, in both rural and urban areas. Under Saubhagya, beneficiaries will be identified using the Socio Economic and Caste Census (SECC) 2011 data. The identified poor households will get free electricity connections. Other households not covered under the SECC, will be provided electricity connections at a cost of Rs 500. This amount will be collected by the electricity distribution companies in 10 instalments.
The total outlay of the scheme will be Rs 16,320 crore, of which the central government will provide Rs 12,320 crore. The outlay for the rural households will be Rs 14,025 crore, of which the centre will provide Rs 10,588 crore. For urban households the outlay will be Rs 2,295 crore of which the centre will provide Rs. 1,733 crore.
The state discoms will execute the electrification works through contractors or other suitable agencies. Information technology (mobile apps, web portals) will be used to organise camps in villages to identify beneficiaries. In order to accelerate the process, applications for electricity connections will be completed on the spot.
So far the focus of electrification schemes has been on rural areas, where typically last mile connectivity has been difficult to provide. Saubhagya extends the ambit of electrification projects to urban areas as well. While DDUGJY has focused on the village as the principal unit to measure electrification, the new scheme shifts the targets to household electrification. While the target for ensuring electricity connection in each household will be a significant step towards ensuring 24×7 power, the question of continuous and quality supply to these households will still rest on the ability of the discoms to provide electricity. Further, while the scheme provides for free connections, the ability of these households to pay for the electricity they consume may be a concern.
Table 1: Status of rural electrification across states (as of August 2017)
[i] “PM launches Pradhan Mantri Sahaj Bijli Har Ghar Yojana “Saubhagya””, Press Information Bureau, Ministry of Power, September 25, 2017.
[ii] “FAQs on Pradhan Mantri Sahaj Bijli Har Ghar Yojana “Saubhagya””, Press Information Bureau, Ministry of Power, September 27, 2017.
[iii]. Rural Electrification Policy, Ministry of Power, August 23, 2006, http://powermin.nic.in/sites/default/files/uploads/RE%20Policy_1.pdf.
[iv]. “Office memorandum: Deendayal Upadhyaya Gram Jyoti Yojana”, Ministry of Power, December 3, 2014, http://powermin.nic.in/rural_electrification/pdf/Deendayal_Upadhyaya_Gram_Jyoti_Yojana.pdf.
[v]. “41st Report: Implementation of Rajiv Gandhi Grameen Vidyutikaran Yojana”, Standing Committee on Energy, December 13, 2013, http://164.100.47.134/lsscommittee/Energy/15_Energy_41.pdf.
