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In response to the COVID-19 pandemic, the central and state governments have implemented several measures to reduce the spread of the disease and provide relief for those affected by the it.  In this blog, we look at some of the key measures taken by the Government of Chhattisgarh with regard to public health, ensuring supply of essential commodities and providing relief to affected persons.  

COVID-19 cases in the State

As of April 21, 2020, Chhattisgarh has 36 confirmed cases of COVID-19.  Of these, 11 are active cases, and 25 patients have been cured or discharged.   This is illustrated below in Figure 1. 

Figure 1: Day wise COVID-19 Cases in Chhattisgarh

 image

Sources: Ministry of Health and Family Welfare, Government of India; PRS.

Key measures taken by the State Government

On March 13, 2020, the Department of Health and Family Welfare notified the Chhattisgarh Epidemic Disease, COVID-19 Regulations, 2020.   Key provisions of the regulations include: 

  • The district collector can take necessary actions such as sealing geographical area of the district and ban vehicular movement, in order to prevent the spread of the epidemic.  Further, the district administration may take measures such as closure of schools, offices and banning public gatherings. 
     
  • In order to avoid rumours and unauthenticated information, no person or institution can use any print or electronic media for information regarding COVID-I9 without prior permission of Health Department.
     
  • All health facilities (including private) should have COVID-19 corners for screening of suspected cases.  Further, they should record travel history of a person if he has travelled to an area affected by COVID-19.  

Movement restrictions:  Following these regulations, the government announced several additional measures to restrict movement of people to contain the spread of COVID-19.

  • On March 19, the Transport department stopped running of all inter-state buses in the state to restrict movement to and from the state.  On March 21, all city bus services in urban areas of the state were suspended. This was followed by stoppage of all transport including auto, taxi and e-rickshaws.
     
  • On March 22, the government announced a lockdown in all urban areas of the state till March 31 during which all offices, institutions and other activities were to remain closed.   Essential services such as medical shops, vegetable shops, petrol pumps, electricity and water supply services were open.    
         
  • On March 25, the central government announced on a 21-day country-wide lockdown till April 14.  On April 14, the lockdown was further extended till May 3, 2020. 

Essential Goods and Services: Following the lockdown, the government notified certain additional essential goods and services that will remain unaffected by the lockdown.   These are noted below:  

  • On March 13, 2020, the central government notified hand sanitisers, surgical masks and N-95 masks as Essential Commodities.  This implies that the government can regulate the product, supply and pricing of these items.   Following this, the state government notified that the district administration should monitor the price of surgical masks, N-95 masks and hand sanitisers in each district of the state.
     
  • On March 24, the state department of Food and Public Distribution notified certain additional essential goods and services under the Essential Commodities Act, 1955.  These include: (i) wheat and rice mills, (ii) operations of items used in acquirement or storage of items under the Public Distribution System, such as fertilisers, (iii) supply of Petrol, Diesel, CNG and LPG, among others.
     
  • On April 15, the Ministry of Home Affairs issued guidelines on the measures to be taken by state governments until May 3.  As per these guidelines, select activities will be permitted in less-affected districts from April 20 onwards to reduce the hardships faced by people.  Permitted activities include: (i) health services such as hospitals, clinics, and vets, (ii) agriculture and related activities such as fisheries and plantations, (iii) MNERGA work, (iv) construction activities, and (v) industrial establishments.

Relief measures:  During the lockdown, the state government announced several measures to provide relief to the affected individuals.  Key measures include: 

  • Rice for two months will be provided in April to all beneficiaries under the Public Distribution System.  Antyodaya & Annapurna ration card holders will also get sugar and salt for two months in April.  Two quintal of rice is allocated to every gram panchayat, which can be utilised for distribution to individuals without ration cards, subject to a maximum of 5 kg for an individual. 
     
  • 4 kg of rice at primary level and 6 kg at upper primary level will be provided to school children under the Mid-day Meal Scheme, on account of closure of schools.  Further, arrangements will be made to provide ready to eat take home rations for undernourished children between the age of 3 to 6 at Aanganwadi centres.  
  • The government approved sanction of MLA funds for corona virus prevention and other necessary arrangements and support.  The Chief Minister announced that there will be no mandatory deduction from salaries of state government officials and employees for pandemic relief. 
     
  • The state’s Labour Department sanctioned Rs 3.8 crore to aid labourers affected due to lockdown. 
     
  • Pending taxes, interest and penalties of bus and truck operators of nearly Rs 331 crore to be waived off.  

Health Measures:  Over the last few weeks, the government issued several guidelines and orders on containment of the virus, patient handling and protection of healthcare workers.  Some of these are noted below:

  • On March 23, the government of Chhattisgarh declared Corona Virus as a "Notified Infectious Disease" under the Chhattisgarh Public Health Act, 1949.  Further, it notified measures to be taken for prevention of spread of COVID-19 at industries and workplaces.  These included restricting the number of employees at workplaces, and ensuring sanitisation at workplace.  
     
  • Guidelines regarding bio-medical waste in quarantine homes and camps were notified.  These guidelines provide that all workers involved in waste collection should be provided with personal protective equipment.  Further, vehicles carrying such waste should be sanitised with 1% hypochlorite after every trip. 
     
  • On April 11, the Department of Health and Family Welfare made it mandatory to wear a mask for all persons while stepping out of their house for any public place. 
     
  • The department also released guidelines for patients cured of COVID-19.  These guidelines provide that such persons should be escorted to their home district from the hospital and regular monitoring and supervision of their health should be ensured by the district administration.   
     
  • Further, the department released guidelines for continuation of other hospital services during COVID-19 outbreak.  The guidelines provide that the patients should be advised on phone as far as possible, and should be given separate timings for in-person appointments to avoid congestion at hospitals.  On April 18, the Chief Minister announced an online health consultation website for patients, through which patients can seek free of cost advice from doctors.   

For more information on the spread of COVID-19 and the central and state government response to the pandemic, please see here.

At noon today, the Finance Minister introduced a Bill in Parliament to address the issue of delayed debt recovery.  The Bill  amends four laws including the SARFAESI Act and the DRT Act, which are primarily used for recovery of outstanding loans.  In this context, we examine the rise in NPAs in India and ways in which this may be dealt with.

I. An overview of Non-Performing Assets in India 

Banks give loans and advances to borrowers which may be categorised as: (i) standard asset (any loan which has not defaulted in repayment) or (ii) non-performing asset (NPA), based on their performance.  NPAs are loans and advances given by banks, on which the borrower has ceased to pay interest and principal repayments. Graph for blog In recent years, the gross NPAs of banks have increased from 2.3% of total loans in 2008 to 4.3% in 2015 (see Figure 1 alongside*).  The increase in NPAs may be due to various reasons, including slow growth in domestic market and drop in prices of commodities in the global markets.  In addition, exports of products such as steel, textiles, leather and gems have slowed down.[i] The increase in NPAs affects the credit market in the country.  This is due to the impact that non-repayment of loans has on the cash flow of banks and the availability of funds with them.[ii]  Additionally, a rising trend in NPAs may also make banks unwilling to lend.  This could be because there are lesser chances of debt recovery due to prevailing market conditions.[iii]  For example, banks may be unwilling to lend to the steel sector if companies in this sector are making losses and defaulting on current loans. There are various legislative mechanisms available with banks for debt recovery.  These include: (i) Recovery of Debt Due to Banks and Financial Institutions Act, 1993 (DRT Act) and (ii) Securitisation and Reconstruction of Financial Assets and Security Interest Act, 2002 (SARFAESI Act).  The Debt Recovery Tribunals established under DRT Act allow banks to recover outstanding loans.  The SARFAESI Act allows a secured creditor to enforce his security interest without the intervention of courts or tribunals.  In addition to these, there are voluntary mechanisms such as Corporate Debt Restructuring and Strategic Debt Restructuring, which   These mechanisms allow banks to collectively restructure debt of borrowers (which includes changing repayment schedule of loans) and take over the management of a company.

II. Challenges and recommendations for reform

In recent years, several committees have given recommendations on NPAs. We discuss these below.

Action against defaulters: Wilful default refers to a situation where a borrower defaults on the repayment of a loan, despite having adequate resources. As of December 2015, the public sector banks had 7,686 wilful defaulters, which accounted for Rs 66,000 crore of outstanding loans.[iv]  The Standing Committee of Finance, in February 2016, observed that 21% of the total NPAs of banks were from wilful defaulters.  It recommended that the names of top 30 wilful defaulters of every bank be made public.  It noted that making such information publicly available would act as a deterrent for others.

Asset Reconstruction Companies (ARCs): ARCs purchase stressed assets from banks, and try to recover them. The ARCs buy NPAs from banks at a discount and try to recover the money.  The Standing Committee observed that the prolonged slowdown in the economy had made it difficult for ARCs to absorb NPAs. Therefore, it recommended that the RBI should allow banks to absorb their written-off assets in a staggered manner.  This would help them in gradually restoring their balance sheets to normal health.

Improved recovery: The process of recovering outstanding loans is time consuming. This includes time taken to resolve insolvency, which is a situation where a borrower is unable to repay his outstanding debt.  The inability to resolve insolvency is one of the factors that impacts NPAS, the credit market, and affects the flow of money in the country.[v]  As of 2015, it took over four years to resolve insolvency in India.  This was higher than other countries such as the UK (1 year) and USA (1.5 years).  The Insolvency and Bankruptcy Code seeks to address this situation.  The Code, which was passed by Lok Sabha on May 5, 2016, is currently pending in Rajya Sabha. It provides a 180-day period to resolve insolvency (which includes change in repayment schedule of loans to recover outstanding loans.)  If insolvency is not resolved within this time period, the company will go in for liquidation of its assets, and the creditors will be repaid from these sale proceeds.


  [i] ‘Non-Performing Assets of Financial Institutions’, 27th Report of the Department-related Standing Committee on Finance, http://164.100.47.134/lsscommittee/Finance/16_Finance_27.pdf. [ii] Bankruptcy Law Reforms Committee, November 2015, http://finmin.nic.in/reports/BLRCReportVol1_04112015.pdf. [iii] Volume 2, Economic Survey 2015-16, http://indiabudget.nic.in/es2015-16/echapter-vol2.pdf. [iv] Starred Question No. 17, Rajya Sabha, Answered on April 26, Ministry of Finance. [v] Report of the Bankruptcy Law Reforms Committee, Ministry of Finance, November 2015, http://finmin.nic.in/reports/BLRCReportVol1_04112015.pdf. *Source:  ‘Non-Performing Assets of Financial Institutions’, 27th Report of the Department-related Standing Committee on Finance, http://164.100.47.134/lsscommittee/Finance/16_Finance_27.pdf; PRS.