No interest cut on small savings #GS3 #Economy
Hours after notifying significant cuts in small savings instruments’ returns for this quarter, the government backtracked and reversed the sharp rate cuts that sent the Public Provident Fund (PPF) return to a multi-decade low.
The rates notified for the April to June 2021 quarter were 40 basis points (0.4%) to 110 basis points (1.1%) lower on different instruments. This is the first time that the Centre has scrapped the notified interest rates on small savings schemes after switching to a quarterly interest rate setting system for them, beginning April 2016.
Interest rates of small savings schemes of GoI (Government of India) shall continue to be at the rates which existed in the last quarter of 2020-2021, i.e., rates that prevailed as of March 2021. Orders issued by oversight shall be withdrawn.
It has been decided that the rate of interest on various small savings scheme for the first quarter of FY 2021-22… shall remain unchanged from those notified for the fourth quarter of the FY2020-21. This has the approval of competent authority.
The ongoing Assembly elections may have influenced the government to rethink the rate cut following a sharp backlash overnight on various social media platforms about the middle class being squeezed further even as retail inflation, and fuel and LPG cylinder prices, are soaring.
The government resets the interest rate on small savings instruments every quarter, but this round of rate cuts was significant after three quarters of the rates being left untouched. The last round of rate reductions was in the April to June quarter of 2020.
The sharpest cut was proposed in the quarterly interest rate paid on one-year term deposits, from 5.5% in the January to March quarter to 4.4% in this quarter. The rate of return on the Senior Citizen Savings’ Scheme was cut from 7.4% to 6.5%. The rate of return on the popular Public Provident Fund (PPF) scheme was reduced from 7.9% to 7.1% last April and further slashed to 6.4% for this quarter, before the Minister announced the rollback.
Pakistan freezes plan to open imports from India #GS2 #IR
Just a day after announcing its plan to allow import of cotton and sugar from India, the Pakistan government on Thursday said it was “deferring” the decision and linked any “normalisation” in ties to moves by New Delhi on Jammu and Kashmir.
The U-turn was seen as an embarrassment for the Imran Khan government and, in particular, for the newly appointed Finance Minister Hammad Azhar, who had addressed a press conference on Wednesday announcing clearances by the Economic Coordination Council (ECC) for imports from India, which have been suspended since August 2019.
GST mop-up hits a record in March #GS3 #Economy
The gross GST collections in March hit a record of Rs. 1,23,902 crore, the Union Finance Ministry . This is the sixth month in a row that GST revenues have remained above Rs. 1 lakh crore. The GST collections for March have created a record; it has never been so high. We have crossed the record collections by a good margin.
The indirect tax collections in March were 27% higher than that in March 2020, with revenues from import of goods 70% more than a year ago, and the revenues from domestic transaction, including import of services, 17% higher.
GST revenues crossed above Rs. 1 lakh crore mark at a stretch for the last six months and a steep increasing trend over this period are clear indicators of rapid economic recovery post pandemic, pointing to the 14% growth in revenues in the fourth quarter of 2020-21, compared with a 41% decline in the first lockdown-hit quarter.
Apart from a recovery in the economy, GST collections were also bolstered by closer monitoring against fake-billing, deep data analytics using data from multiple sources, including GST, Income Tax and Customs IT systems, and effective tax administration over the past few months. The all-time high GST collection … shows a sustained economic recovery and also is a result of audit closures and the government tightening compliance and anti-evasion measures.
BIMSTEC meet skirts Myanmar violence #GS2 #IR
India expressed commitment about taking the Bay of Bengal community to “new heights”. The statement was made by External Affairs Minister S. Jaishankar at the ministerial meet of the BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation), which was held virtually. The meeting drew participation from all the seven-member States, including Myanmar which is witnessing a large-scale crackdown against anti-military protesters.
Our National Security Advisers have met thrice since 2017. They have been working closely and have moved forward in several aspects of security cooperation including counter terrorism, intelligence sharing, coastal security, cyber security, etc in a tangible manner.
Cohesion among the members has been difficult to achieve mainly because of the Rohingya refugee crisis which created bitterness between Myanmar and Bangladesh. This affected the working of the organisation to some extent as it could not develop a common charter.
However, Mr. Jaishankar announced that the organisation will soon have the common set of rules and goals. The 17th BIMSTEC Ministerial, chaired by Sri Lanka, however, avoided any reference to Myanmar’s current crisis.
‘Younger people at risk during second wave’ #GS3 #SnT
The second surge of COVID-19 puts children and younger adults at high risk with the situation being very grim especially in rural and tribal areas which were spared in the first wave, warn experts.
Children and young adults are mostly uninfected so far and therefore are at high risk of contracting the infection. The schools and colleges are functioning in most States resulting in higher risk of transmission in closed settings. Young adults have resumed working from office and are again at higher risk in closed spaces.
He said there are multiple super spreader events happening in schools, colleges, offices, public transport (metros).
There is no doubt that many States are surging and as a result, the country is witnessing a rise in cases amounting to the ascending phase of a second wave. Based on some of the results of modelling done by experts at the COVID-19 study group, the peak of this wave seems to be around May, 2021. If the rise in cases continues as steeply as they are now, there will be a strain on the health system.
Stating that rural and tribal areas are facing a grim situation now, Ravi Wankhedkar, member, Indian Medical Association (IMA), said malnutrition leading to decreased immunity, not following safety norms and lack of proper quarantine facilities have increased the incidence of infection.
Covaxin for those who got placebo #GS3 #SnT
On March 24, the Subject Expert Committee (SEC) permitted Bharat Biotech to unblind all “participants of age group of more than 45 years and offer to administer the vaccine free of cost as and when they become eligible for the vaccine in the national programme”.
The Committee recommended that the company unblind the participants as “vaccines [including Covaxin] are [already] available under the immunisation programme, and therefore all the eligible age groups under the immunisation programme should be permitted for unblinding for vaccination”.
Apparently, Bharat Biotech intends to carry out a phase 3 trial in a cohort in Brazil. The company is now required to submit the “detailed revised clinical trial protocol for inclusion of a cohort from Brazil along with the revised statistical calculation for assessing the efficacy of the vaccine”.
On March 3, based on 43 cases — 36 cases in the placebo group and seven cases in the vaccine arm — Bharat Biotech announced the first interim vaccine efficacy of 80.6% for Covaxin. The second the final time points for further analyses were 87 cases and 130 cases, respectively.
But with the Committee now allowing everyone above 45 years age to be unblinded, the trial can continue only in those below that age bar. “A significant number of participants will no longer be available to study the vaccine efficacy once unblinding of participants above 45 years is carried out. “With the current surge in cases, more younger people are getting infected.”
In all likelihood, the phase 3 trial may achieve its final endpoint of 130 cases but the trial will not include the most vulnerable population of participants above 45 years.
However, virologist Dr. Shahid Jameel, Director of the Trivedi School of Biosciences at Ashoka University, says the Indian regulator has taken the right decision by allowing Bharat Biotech to unblind everyone above 45 years. “It’s the correct and ethical thing to do,” he says.
In the U.S., even when three highly efficacious vaccines are available, the AstraZeneca phase 3 trial is continuing without unblinding even after the first interim analysis showed 76% efficacy based on 190 cases. “Every regulator looks at it differently,” says Dr. Jameel.
Dr. Jameel goes further to say that India should not insist on bridging studies especially in the case of Johnson and Johnson, Novavax, and Sputnik V vaccines, where there is an Indian company manufacturing the vaccines.
“Restricted use authorisation was granted to Covishield even before the bridging studies were completed. Today, there is a surge in cases across many States. More groups will be eligible for a vaccine if vaccine supply is not limited. Israel has demonstrated how large scale vaccination can control the pandemic.
Finance Ministry defends EPF’s tax-free thresholds #GS3 #Economy
The Finance Ministry has strongly defended its decision to grant a higher tax-free threshold of Rs. 5 lakh for Provident Fund contributions by government employees, compared with private sector workers whose income on annual contributions beyond Rs. 2.5 lakh will be taxed from this year.
There are two ways the contribution can be made — by the employer and by the employee. In case where the contributions are made by both of them, the employers’ contribution up to Rs. 7.5 lakh is exempt and for employees, it’s Rs. 2.5 lakh. So the total threshold for private sector employees is at Rs. 10 lakh.
For the government (or for such) funds where only the employee is contributing, we have put a threshold only of Rs. 5 lakh. So, in fact, it’s the other way round,” he said, stressing that private sector employees with higher salaries can have a contribution up to Rs. 10 lakh a year into their EPF accounts with tax-free interest, while those who only contribute themselves face a threshold of Rs. 5 lakh.
Mr. Bajaj said that it was incorrect to suggest the tax on EPF income amounted to double taxation as contributions beyond Rs. 1.5 lakh are made from tax-paid income.
Section 80C limits tax breaks on employees’ PF contributions along with other similar savings instruments to Rs. 1.5 lakh per year, so some experts have pointed out that a part of EPF contributions beyond Rs. 1.5 lakh will face taxation at the contribution stage and savings beyond Rs. 2.5 lakh will be taxed at the income stage as well.
“I think that’s a wrong interpretation. We are not taxing your contribution; we are taxing the interest income on your contribution. When you invest in FDs, when you invest in shares, when you invest in company deposits, you are doing the same thing. You are taxed for your income there also.
“It is quite possible that one has put Rs. 1.5 lakh in EPF, Rs. 1.5 lakh in an insurance policy, and then Rs. 1.5 lakh in PPF also. Then he doesn’t get any benefit under PPF. Basically, anything you invest is from your tax-paid income only, but the interest on that will be taxed as that is again your income.
Rawat launches joint logistics hub #GS3 #Defence
As part of measures to boost tri-service integration and resource optimisation, Chief of Defence Staff General Bipin Rawat operationalised the third joint logistics node (JLN) in Mumbai.
These JLNs will provide integrated logistics cover to the armed forces for their small arms ammunition, rations, fuel, general stores, civil hired transport, aviation clothing, spares and also engineering support in an effort to synergise their operational efforts.
The initiative would accrue advantages in terms of saving of manpower, economise utilisation of resources, besides financial savings.
Establishment and operationalisation of JLNs is a very important first step in the direction of logistics integration of our three Services. Acceptance of each other’s limitations and learning from each other’s strengths and best practices is essential to help improve the functioning and efficacy of these nodes. He also released the standing operating procedure of the JLN.
The government sanction letter for the establishment of the JLNs in Mumbai, Guwahati and Port Blair was signed on October 12, 2020. The JLNs in Guwahati and Tri-Services, Andaman and Nicobar Command, Port Blair, were operationalised in January this year.