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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.
Last month, the Pension Fund Regulatory and Development Authority (PFRDA) issued revised guidelines for the registration of the Pension Fund Managers (PFMs). These guidelines are for the PFMs to manage the National Pension System (NPS) in the non-governmental and private sector. See here. The NPS was implemented in 2004 for all government employees and later extended to the private sector in 2009. The guidelines bring about the following changes in the NPS:
Although NPS was made accessible on a voluntary basis to non-government employees and those working in the private sector since 2009, the subscription to the schemes under NPS was lower than expected. In August 2010, a committee was set up under the chairmanship of Mr. G.N. Bajpai to review the implementation of NPS in the informal sector. The Committee noted that since NPS was opened to the general public there were only 50,000 private sector subscribers until May 2011. According to the Committee, the low subscription was due to the low-to-negligible distribution incentive to the PFMs to distribute the different schemes to the subscribers to invest their funds. The Committee thus recommended that PFRDA should consider revising the structure of the NPS so as to increase subscription. It suggested making the fee structure dynamic for PFMs. The Committee had also suggested that there should be some revision in the bidding as well as the selection process for the PFMs to increase competition and thereby incentivise them to distribute the schemes. These changes, as suggested by the Bajpai Committee and now notified by the PFRDA, are different from the original design of the NPS. The Old Age Social and Income Security (OASIS) Report of 2000, which had initially suggested the establishment of pension system for the unorganised sector in the country, had recommended a low-cost structure for the pension system. The Report had stated that the choice of PFMs should be based on a bidding process where the lowest bidder should be made a PFM under the NPS. The rationale for the auction base for the PFMs was that it would provide a system to the subscribers whereby they could make investments for their old age by paying a minimal fee. A set uniform fee was meant to eliminate the large marketing expenses which would ultimately get passed on to the subscibers. In addition, the intent behind keeping the fund managers from the distribution and marketing of the schemes was to prevent any mis-selling (misleading an investor about the characteristics of a product) that may happen. Recent newspaper reports have raised doubt if these new rules would help in increasing the penetration of the NPS in the markets. However, the chairman of PFRDA, Mr. Yogesh Agarwal, in a recent interview explained that it was important to bring about changes in the structure of the NPS. According to him a scheme which was mandatory for the government sector could not be expected to perform as well in the private sector (where it is voluntary) without any changes made to its structure. He also stated that the NPS should be able to compete with other financial products such as insurance and mutual funds in the market. See here for the PRS Legislative Brief on the PFRDA Bill, 2011. Notes: The seven PFMs are LIC Pension Fund Ltd., UTI Retirement Solutions Ltd., SBI Pension Funds Pvt. Ltd., IDFC Pension Fund Management Co. Ltd., ICICI Prudential Pension Funds Management Co. Ltd., Kotak Mahindra Pension funds Ltd., and Reliance Capital Pension Fund Ltd..
