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According to a press release, the Ministry of Civil Aviation is considering abolishing the development fee being levied at the Delhi and Mumbai airports. The Ministry has already asked the Kolkata and Chennai airports not to levy a development fee. According to the Ministry, this is being done to make air travel more affordable. Currently, development fee charged at the Delhi Airport ranges from Rs 200 to Rs 1300. At the Mumbai airport, the fee ranges from Rs 100 to Rs 600. It is pertinent to note that though, the Ministry has proposed abolishing the development fee, the airport operators may still levy a user development fee. In this blog we discuss some of the aspects of development fee and user development fee. What is a development fee and a user development fee? Development Fee (DF) is primarily intended to fund the establishment or upgradation of an airport. It is intended to bridge the gap between the cost of the project and the finance available with the airport operator. Currently only the Mumbai and Delhi Airports levy a DF. However, there are other types of tariffs, such as a user development fee (UDF), which may be levied by the airports. UDF is generally regarded as a revenue enhancing measure. It is levied by the airport operators to meet operational expenditure Section 22 A of the Airports Authority Act, 1994 (amended in 2003) gives the Airport Authority of India (AAI) the power to levy and collect a development fee on embarking passengers. The Act provides that the development fee can be utilised only for: (a) funding or financing the upgradation of the airport; (b) establishing a new airport in lieu of the airport at which is levied; and (c) investing in shares of a private airport in lieu of an existing airport . Unlike DF, UDF is not levied and collected under the Airport Authority of India Act but under Rule 89 of the Aircraft Rules, 1937. Under the Aircraft Rules, UDF may be levied and collected by either the AAI or the private operator. According to the Airport Economic Regulatory Authority, UDF is levied to ensure that the airport operators can get a fair return on their investments. What is the role of the Airport Economic Regulatory Authority? In 2008, the Airport Economic Regulatory Authority (AERA) was established to regulate aeronautical tariffs. Among others, AERA’s functions include determining the amount of DF and UDF for major airports. In case of non-major airports, the UDF shall be determined by the central government. What has been the role of the Supreme Court? In 2009, the central government permitted the Mumbai and Delhi Airports to levy a DF. The rate of was prescribed by the central government and not by AERA. In 2011, the Supreme Court held that this levy of DF was illegal. The Court based its decision on two grounds. Firstly, the court held that the rate of DF has to be determined by the AERA and not the central government. Secondly, the Court held that the power to levy the fee lies with the Airport Authority as the development fee can only be utilised for the performance of the purpose specified in the Act. The court held that while the Airport Authority can utilise the development fee for any of the functions prescribed in the Act, it can assign the power to levy a development fee to a private operator only for funding or financing the upgradation or expansion of the airport. Can private operators collect a development fee and a user development fee? In 2003, the government amended the Airport Authority of India Act to allow the AAI with the prior permission of the central government to: (i) to lease the premises of airports to private entities to undertake some of the functions of the AAI; (ii) levy and collect a development fee on the embarking passengers at a rate that may be prescribed. Till 2011, the power to collect the development fee lay only with the Airport Authority. However with the notification of the Airports Authority of India (Major Airports) Development Fees Rules, 2011, private operators have also been permitted to collect the development fee.
On January 17, 2020, the Ministry of Health and Family Welfare acknowledged the emergence of a new coronavirus (COVID-19) that was spreading across China.[1] On March 11, 2020, the World Health Organisation declared the COVID-19 disease to be a global pandemic. As of April 7, 2020, there are 4,421 confirmed cases of COVID-19 in India.[2] Of these, 326 patients have been cured/discharged and 114 have died.1
As the spread increased and more information about the virus was uncovered, the central government announced several policy decisions to contain it. Further, measures were also announced to support citizens and businesses who were affected by such containment measures. In this blog post, we summarise some of the key measures taken by the central government in this regard as of April 7.
Source: Ministry of Health and Family Welfare, PRS.
Movement restrictions
21-day lockdown in the country
The Ministry of Home Affairs announced a 21-day lockdown to contain the spread of COVID-19 from March 25, 2020 to April 14, 2020.[3] During the lockdown, all establishments, other than those providing essential goods and services, and those involved in agricultural operations, have been closed. Essential goods include items such as food, medicine, and electricity. Essential services include banking services, telecommunications, and pharmaceuticals. Transportation of all goods (essential or non-essential) will remain functional. [4],[5],[6],[7],[8]
All state/UT governments have been directed to: (i) arrange for shelter and food for the needy, including migrant workers, (ii) quarantine migrant workers for at least 14 days, (iii) direct employers to pay wages during the lockdown, and (iv) ensure landlords do not demand rent from workers and students for one month.[9]
Financial aid
Pradhan Mantri Garib Kalyan Yojana to provide relief against COVID-19
On March 26, the Finance Minister announced a relief package of 1.7 lakh crore rupees under the Pradhan Mantri Garib Kalyan Yojana for the poor.[10] Key features of the package are:10,[11]
Insurance cover of Rs 50 lakh will be provided to health workers (such as doctors, nurses, paramedics and ASHA workers) who are treating patients of COVID-19.[12]
Five kilograms of wheat or rice and one kilogram of preferred pulses will be provided for free every month to poor families for the next three months.
Women account holders under the Pradhan Mantri Jan Dhan Yojana will get Rs 500 per month between April and June, and poor families will be given three free gas cylinders over the next three months.
Extension and relaxation in payment of taxes
The Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 was promulgated on March 31, 2020.10 The Ordinance provides certain relaxations, such as extension of time limits and waivers of penalties, in relation to specified laws. These include the Income Tax Act, 1961 (IT Act), some Finance Acts, and the Prohibition of Benami Property Transactions Act, 1988. Key provisions under the Ordinance include:
Extension of time limits: The Ordinance extends the time limits (for the period between March 20, 2020 to June 29, 2020) for compliance of certain actions such as: (i) issuing notifications, completing proceedings, and passing orders by authorities and tribunals, (ii) filing of appeals, replies, and applications, and furnishing documents, and (iii) making any investment or payment for claiming deductions or allowances under the IT Act.
Interest and penalty: Payment of any tax, made before June 30, 2020 (or any further date specified by the government), will not be liable for prosecution or penalty. Also, the rate of interest payable for the delay in payment will not exceed 0.75% per month.
Donations to PM CARES Fund: Donations made by a person to the PM CARES Fund will be eligible for 100% tax deduction.
GST compliances: The central government may notify extension to time limits for various compliances under the Central Goods and Services Tax Act, 2017.
Measures by RBI to address the financial stress caused by COVID-19
The Reserve Bank of India (RBI) also announced several measures to address the stress in the economy caused by COVID-19.[13],[14],[15] Key measures are detailed below:
Cutting Policy Rates: The repo rate (the rate at which RBI lends money to banks) was reduced from 5.15% to 4.4%. The reverse repo rate (the rate at which RBI borrows money from banks) was reduced from 4.9% to 4.0%.
Liquidity management: Measures are being taken to expand liquidity in the market to ensure that financial markets and institutions can function normally. These measures include the reduction of the Cash Reserve Ratio (CRR) for all banks from 4% to 3% till March 26, 2021. CRR is the amount of liquid cash that banks have to maintain with the RBI, as a percentage of their total deposits. These steps are expected to inject total liquidity of Rs 3.74 lakh crore.
Relief to borrowers in repayment of loans: All banks and financial institutions (including NBFCs) are permitted to grant a moratorium of three months on payment of all term loan instalments (including agricultural, retail and crop loans) and interest on working capital loans (such as overdraft facilities), which are due between March 1, 2020 and May 31, 2020.
Short term credit to states
The Reserve Bank of India (RBI) has constituted an Advisory Committee to review the Ways and Means Advances (WMA) limits for states and UTs. WMA limits refer to temporary loans given by the RBI to state governments. Until the Committee submits its final recommendations, the WMA limit has been increased by 30% from the existing limit, for all states and UTs. The revised limits will be in force between April 1 and September 30, 2020.[16]
PM CARES Fund
The central government has set up a national fund to deal with emergencies like the COVID-19 pandemic. The public charitable trust known as the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund) will provide relief to those affected by COVID-19. The trust is chaired by the Prime Minister and includes members such as the Defence Minister, Home Minister, and Finance Minister.[17]
Donations made by a person to the PM CARES Fund are 100% tax deductible.[18] Non-residents can also contribute to the Fund through foreign inward remittances.[19]
Health measures
COVID-19 testing
Currently, government facilities are offering free of cost diagnosis to all individuals with COVID-19 symptoms.[20] Further, the government has approved certain private laboratories to test individuals for COVID-19. The cost of screening in private labs may not exceed Rs 4,500.[21] As of April 7, there are 136 government testing centres for analysing samples of COVID-19 and 3 additional collection centres.[22] Further, there were 59 private labs offering testing in 12 states. These states are Delhi, Maharashtra, Kerala, West Bengal, Uttar Pradesh, Telangana, Tamil Nadu, Odisha, Karnataka, Haryana, Uttarakhand and Gujarat.[23]
The Ministry of Health and Family Welfare has also laid down guidelines for those who may be tested at these laboratories. These include: (i) symptomatic contacts of those who have tested positive for COVID-19, and (ii) symptomatic persons with a travel history to COVID-19 affected countries, (iii) symptomatic healthcare workers, and (iv) persons with severe respiratory diseases.21
Containment plan for large outbreaks
The Ministry of Health and Family Welfare has created a plan to contain the spread of the COVID-19 disease. Some of the measures suggested in the plan include:[24]
Geographic quarantine: This strategy requires the restriction of movement of people to and from a defined geographic area where there is a large outbreak.
Cluster Containment: This strategy will contain the disease within a defined geographic area by early detection of cases. Cluster containment will include geographic quarantine, social distancing, testing all suspected cases, and awareness amongst the public.
Restrictions on export of medicines and medical equipment
The central government placed restrictions on the export of certain medical equipment and medication so as to ensure its availability in India. For example, the export of ventilators, surgical masks, diagnostic kits, and medications such as paracetamol and hydroxychloroquine is restricted.[25],[26],[27],[28]
Travel restrictions
Domestic and international travel banned; issue of visas suspended
Civil Aviation: All passenger domestic air travel within the country is banned from March 24 till April 14, 2020.[29],[30] All international commercial passenger travel has been banned till April 14, 2020 (cargo and certain other flights are exempted).[31] All existing visas issued to nationals of any country except those issued to diplomats, officials, UN/international organisations, employment and project visas are suspended from March 13 till April 15, 2020.[32]
Railways: Indian Railways suspended all passenger trains till April 14, 2020.[33] Transportation of essential commodities will continue.[34] Railways has also made parcel vans available for quick transportation for e-commerce companies and other customers including state governments to transport certain goods. These include medical supplies, medical equipment, food, etc. in small parcel sizes.[35]
For a detailed summary of the main policy decisions taken by the central government with regard to COVID-19, please see here.
For more information on the spread of COVID-19 and the central and state government response to the pandemic, please see here.
[1] Novel coronavirus outbreak in China, Ministry of Health and Family Welfare, January 17, 2020, https://www.mohfw.gov.in/pdf/TraveladvisorytotravelersvisitingChina17012020.pdf.
[2] Ministry of Health and Family Welfare website, last accessed on March 31, 2020, https://www.mohfw.gov.in/index.html.
[3] Order No. 1-29/2020-PP, National Disaster Management Authority, March 24, 2020, https://mha.gov.in/sites/default/files/ndma%20order%20copy.pdf.
[4] Order No. 40-3/2020-DM-I(A), Ministry of Home Affairs, March 24, 2020, https://mha.gov.in/sites/default/files/MHAorder%20copy.pdf.
[5] “Guidelines on measures to be taken by Ministries/Department of Government of India, State/Union Territory Governments and State/Union Territory Authorities for containment of COVID-19 Epidemic in the Country”, Ministry of Home Affairs, March 24, 2020, https://mha.gov.in/sites/default/files/Guidelines.pdf.
[6] Second Addendum to Order No. 40-3/2020-DM-I(A), Ministry of Home Affairs, March 24, 2020, https://mha.gov.in/sites/default/files/PR_SecondAddendum_27032020.pdf.
[7] “Consolidated Guidelines on the measures to be taken by Ministries/Departments of Government of India, State/Union Territory Governments and State/Union Territory Authorities for containment of COVID-10 Epidemic in the Country, as notified by the Ministry of Home Affairs on 24.03.2020 and further modified on 25.03.2020 and 27.03.2020”, Ministry of Home Affairs, https://mha.gov.in/sites/default/files/PR_ConsolidatedGuidelinesofMHA_28032020.pdf.
[8] D.O. No. 40-3/2020-DM-I(A), Ministry of Home Affairs, March 29, 2020, http://164.100.117.97/WriteReadData/userfiles/3rd%20Addendum%20to%20Lockdown%20Guidelines%20on%20exempted%20Goods%20and%20Services.pdf.
[9] Order No. 40-3/2020-DM-I(A), Ministry of Home Affairs, March 29, 2020, https://mha.gov.in/sites/default/files/MHA%20Order%20restricting%20movement%20of%20migrants%20and%20strict%20enforement%20of%20lockdown%20measures%20-%2029.03.2020.pdf.
[10] “Finance Minister announces Rs 1.70 Lakh Crore relief package under Pradhan Mantri Garib Kalyan Yojana for the poor to help them fight the battle against Corona Virus”, Press Information Bureau, Ministry of Finance, March 26, 2020.
[11] “Monetary and Fiscal policy response by Government of Indian and Regulators”, Department of Economic Affairs, Ministry of Finance, March 27, 2020, https://dea.gov.in/sites/default/files/India%20economic%20policy%20response%20on%20%20COVID%2019%20Fiscal%20and%20Monetary%20as%20on%2027032020.pdf.
[12] “Pradhan Mantri Garib Kalyan Package: Insurance Scheme for Health Workers Fighting COVID-19”, Press Information Bureau, Ministry of Health and Family Welfare, March 29, 2020.
[13] Seventh Bi-Monthly Policy Statement 2019-20”, Press Release, Reserve Bank of India, March 27, 2020, https://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/PR2129F5E23A447E0F4A00955429716C53F5A2.PDF.
[14] “Statement on Developmental and Regulatory Practices”, Reserve Bank of India, Press Releases, March 27, 2020, https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=49582.
[15] “COVID-19 – Regulatory Package”, Notifications, Reserve Bank of India, March 27, 2020, https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11835.
[16] RBI announces further measures for dealing with the COVID-19 pandemic, Reserve Bank of India, April 1, 2020, https://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/PR2167BA409AC37FA8460497BA0C9B283E5DD9.PDF.
[17] Appeal to generously donate to ‘Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)’, Press Information Bureau, Prime Minister’s Office, March 28, 2020, https://pib.gov.in/PressReleseDetailm.aspx?PRID=1608851.
[18] The Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020, Gazette of India, Ministry of Law and Justice, March 31, 2020, http://www.egazette.nic.in/WriteReadData/2020/218979.pdf.
[19] Rupee Drawing Arrangement – Remittance to the Prime Minister’s Citizen Assistance and Relief in Emergency Situations (PM-CARES) Fund, Reserve Bank of India, April 3, 2020, https://rbidocs.rbi.org.in/rdocs/Notification/PDFs/NOT2087A69F5158C174585A46C69B78BD96DBD.PDF.
[20] Strategy for COVID-19 testing in India, India Council for Medical Research, Ministry of Health and Family Welfare, March 17, 2020, https://www.mohfw.gov.in/pdf/LabTestingAdvisory.pdf.
[21] Guidelines for COVID-19 testing in private laboratories in India, Ministry of Health and Family Welfare, March 21, 2002 https://www.mohfw.gov.in/pdf/NotificationofICMguidelinesforCOVID19testinginprivatelaboratoriesiIndia.pdf.
[22] Government Approved Laboratories by ICMR, Ministry of Health and Family Welfare, April 7, 2020. https://icmr.nic.in/sites/default/files/upload_documents/Govt_Labs_functional_for_COVID19_testing_05042020.pdf.
[23] Private Approved Laboratories by ICMR, Ministry of Health and Family Welfare, April 7, 2020. https://icmr.nic.in/sites/default/files/upload_documents/Private_Labs_06042020.pdf.
[24] Containment Plan for Large Outbreaks, Ministry of Health and Family Welfare, April 4, 2020, https://www.mohfw.gov.in/pdf/3ContainmentPlanforLargeOutbreaksofCOVID19Final.pdf.
[25] S.O. 1171(E), Amendment in Export Policy of Masks, Ventilators and textile raw material for masks and coveralls, Ministry of Commerce and Industry, March 19, 2020, http://egazette.nic.in/WriteReadData/2020/218857.pdf.
[26] S.O. 955(E), Amendment in Export Policy of APIs and formulations made from these APIs, Ministry of Commerce and Industry, March 3, 2020, http://egazette.nic.in/WriteReadData/2020/216551.pdf.
[27] Notification no. 01/2015-2020, Amendment in Export Policy of Hydroxychloroquine, Ministry of Commerce and Industry, April 4, 2020, https://prsindia.org/files/covid19/notifications/1492.IND_Export_Restriction_Hydroxychloroquine_Apr_4.pdf.
[28] Notification no. 59/2015-2020, Amendment in Export Policy of Diagnostic Kits, April 4, 2020, https://prsindia.org/files/covid19/notifications/1491.IND_Export_Restriction_Diagnostic_Kits_Apr_4.pdf.
[29] AV. 11011/1/2020-US(AG) Office-MOCA, Ministry of Civil Aviation, March 23, 2020, https://www.civilaviation.gov.in/sites/default/files/Revised-%20COVID-19%20-%20Order%20under%20Section%208B.pdf.
[30] No.4/1/2020-IR, Director General of Civil Aviation, March 27, 2020, https://dgca.gov.in/digigov-portal/Upload?flag=iframeAttachView&attachId=130618666.
[31] No.4/1/2020-IR, Director General of Civil Aviation, March 26, 2020, https://dgca.gov.in/digigov-portal/Upload?flag=iframeAttachView&attachId=130618625.
[32] No.4/1/2020-IR, Director General of Civil Aviation, January 30 to March 17, 2020, https://dgca.gov.in/digigov-portal/Upload?flag=iframeAttachView&attachId=130617742.
[33] “Ministry of Railways extends Cancellation of Passenger Train Services till 2400 hrs of 14th April, 2020”, Press Information Bureau, Ministry of Railways, March 25, 2020.
[34] “Transportation of essential commodities to various parts of the country by Indian Railways continues at full speed”, Press Information Bureau, Ministry of Railways, March 30, 2020.
[35] “Indian Railways to run Special Parcel Trains for carriage of essential items in small parcel sizes during the complete lockdown in fight against COVID-19”, Press Information Bureau, Ministry of Railways, March 29, 2020.
