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Make modest opening of road, air transport to start economic activity: Chidambaram

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Senior Congress leader P Chidambaram on Monday urged the government to allow operation of road and air transport, saying it was the only way economic and commercial activities can effectively resume. He also welcomed the government's decision to start select inter-state train services.

The government has decided to start train services from May 12 connecting Delhi to some select stations across the country, bookings for which will begin from Monday by the IRCTC.

"We welcome the decision of the government to cautiously start operation of inter state passenger trains. The same modest opening should be started with road transport and air transport," the former finance minister said.

"The only way economic and commercial activity can effectively begin, is to open road, rail and air services for passengers and goods," Chidambaram said on Twitter.

The Congress has been demanding restarting of economic activities which have come to a standstill in view of the complete lockdown enforced due to coronavirus.

The Congress has also demanded a relief package for the poor and an economic stimulus package to help the industry.

Govt working on financial package for all sectors, says official

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The government is working on a comprehensive financial package not only for MSMEs but for all sectors of the economy, a top official said on Thursday. "Government of India, Prime Minister's Office and the Department of Economic Affairs are already working on a package, which includes not only the MSME but also the entire industry. All sectors of the economy being taken care of by a comprehensive package, being worked out in the government," said Giridhar Aramane, Secretary in the Ministry of Road Transport and Highways.

He was speaking during an interaction with members of SIAM (Society of Indian Automobile Manufacturers) Institute via video conferencing.

Participating in the same meeting, Union Minister for MSME and Road Transport and Highways Nitin Gadkari also said "a package is going to be declared".

The demand for a package to stimulate the economy has been growing from various quarters, including industry bodies and MSME sector experts.

India's micro, small and medium enterprises (MSMEs), which contributes 29 per cent to the country's growth and 48 per cent to exports, is a major employment generator.

However, the sector is facing a huge crisis amid coronavirus pandemic, with millions of units staring at losses and the prospect of job cuts as they struggle to survive.

Government extends last date for filing annual GST return for FY19 until September

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The government has extended the last date for filing annual GST return for financial year 2018-19 by three months till September 2020.

In another trade-friendly move, the Central Board of Indirect Taxes and Customs (CBIC) has also extended the validity of e-way bills that were generated on or before March 24, and had expiry between March 20 and April 15, 2020.

A notification has been issued to extend the time limit for furnishing of annual (goods and services tax) return and reconciliation statement for the financial year 2018-19 till September 30, 2020, CBIC said in a tweet.

EY Tax Partner Abhishek Jain said, "With most part of the country under lockdown or partial lockdown, it would have been difficult for the industry to meet the timeline of June end. The extension provides much-needed relief to the industry and demonstrates the accommodative stance of the government."

A nationwide lockdown to contain the spread of coronavirus was imposed on March 25, which has now been extended till May 17.

Last month, CBIC had extended the validity of e-way bills generated on or before March 24, and had expiry between March 20 and April 15, till April 30.

In view of the extension of lockdown and helping industry that has goods stuck in transit, the validity has now been extended till May 31.

Government looking to lure businesses moving out of China with seamless land acquisition policy: Report

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With countries looking to reduce dependence on China after the coronavirus pandemic, India is looking to seize the chance to lure foreign investors searching for new shores.

India is preparing 461,589 hectares of land across the country, for businesses looking to migrate out of China, sources told Bloomberg. Twice as large as Luxembourg (243,000 hectares), the land pool includes areas in Maharashtra, Gujarat, Andhra Pradesh and Tamil Nadu, it said.

Moneycontrol could not independently verify the report.

The central government is working along with the states to smooth the processes and availability of land as the scope now is huge, it noted. Presently, investors have to acquire land on their own, where disputes with small land owners holding on to plots delay projects.

Thus, providing accessible land would solve a major hurdle and attract investors who openly expressed their intent to move away from China. Many companies suffered global supply chain disruptions as the concentration of business in China proved to be harmful when regions locked down due to the COVID-19 pandemic.

COVID-19 | Q1 global contractions indicate a deepening crisis

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Due to the spread of coronavirus and the global lockdown, multilateral organisations and international agencies have been predicting the worst economic downturn since Great Depression. All are almost unanimous on this view for two main reasons. First, the virus has affected both the developed and developing economies simultaneously. Its geographical coverage is now expanding. It is not just China, Europe and the United States; it is now spreading fast into Russia, Turkey, South Asia, West Asia and Latin America.

Second, it has drastically reduced both demand and supply. When the governments themselves have directed industry and services to shut operations, traditional stimulus packages have little meaning.

Now it is not just forecasts, actual GDP numbers for Q1 2020 for some major economies are out. The extent of their decline has surpassed some earlier predictions. The European Union’s (EU)’s statistical agency, Eurostat, has reported that for the 2020 first quarter, the GDP in 19 Eurozone economies has shrunk by 3.8 percent. The same figure for 27 EU economies is minus 3.5 percent. France, the second-largest economy in the EU, has announced that its GDP has dropped by minus 5.6 percent, its biggest drop since 1949. This drop is much bigger than recorded during the financial crisis in Q1 2009 (–1.6 percent) or during political upheaval in Q2 1968 (–5.3 percent). Except food, all sectors have seen contraction, with the sharpest decline in engineering goods and construction

Compared to the previous quarter, the Italian GDP dropped by 4.7 percent. Similarly, the Spanish economy contracted by 5.2 percent  and the Austrian economy by 2.5 percent. When released, the German economic numbers may show similar trends. Christine Lagarde, President of the European Central Bank (ECB), says that the euro area is “facing an economic contraction of a magnitude and speed that are unprecedented in peacetime”. The ECB now estimates that in 2020, the fall of euro area GDP could be between five and 12 percent.

The United States has also reported that in Q1-2020, its GDP has decreased by minus 4.8 percent. In the previous quarter, the US had shown a healthy growth of 2.1 percent. China, the second-largest economy, which was affected first, earlier declared a 6.8 percent decline in the first three months of 2020 from a year ago. This is the first time China has seen this kind of decline since it started recording quarterly data since 1992.

With more than 42,000 infections and already close to six weeks of national lockdown, India’s growth story cannot be very different. Earlier, the International Monetary Fund (IMF) predicted about 2 percent GDP growth in India in 2020. With the developing global recession, India will be fortunate if it is able to achieve this. The economy was already weakening when lockdown started. Still, developing economies such as India, may perform slightly better. Agriculture and basic food items are lest affected by lockdowns. Also, a large number of people in these countries still depend on agriculture and spend significant part of their earnings on food items. India is also less integrated with global value chains.

Since lockdowns started in March in many countries, a much bigger downturn is expected in the second quarter. IMF chief economist Gita Gopinath predicts that the cumulative loss from the pandemic to global GDP in 2020 and 2021 “could be around $9 trillion, greater than the economies of Japan and Germany, combined”.

To offset these impacts, all major economic powers are infusing huge amounts into their economies. The collective response from the EU and its member states is well above 3 trillion euros. The US package of $2trillion include relief to big corporates and small businesses, individuals, states and local governments as well as public health. Japan has announced a $1 trillion relief package. These measures, however, will only be useful if at least some treatment is found by the third quarter and economies start opening up.

Despite massive relief packages, a joint global effort is vital to resolve the health problems first. On May 4, the EU — along with Canada, France, Germany, Japan, Norway, the United Kingdom, and current and future G20 presidency Saudi Arabia and Italy — is hosting a pledging event: the Coronavirus Global Response Initiative.

Co-convened by WHO and World Bank, the initiative aims to garner at least $8 billion for jointly developing solutions to test, treat and prevent the disease from spreading. New diagnostics, treatments and vaccines needs to be affordable and available to all. With its strong pharmaceutical industry, India could be a valuable partner to these global solutions. The hydroxychloroquine episode has already proved its strength.

The first quarter GDP results from major economies indicate the seriousness of the economic recession. The next quarter could be worse. Massive relief packages by major powers could be useful to the global economy. However, they will only work if a joint global effort is successful in developing affordable health solutions soon.

COVID-19 impact | Railways privatisation may get a shot in the arm

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Infrastructure sector has been deeply affected due to the COVID-19 crisis. Despite the debilitating impact of the pandemic on the economy, Railways may see continuity in investment despite the economic slowdown, according to an expert.

Investment in railways, especially through the private route, was considered an important area as seen in the National Infrastructure Pipeline (NIP), which included planned investment of Rs 13 lakh crore towards railway infrastructure.

"The NIP also foresees up to 30 per cent of the 750 stations privatised and involvement of the private sector in rolling stock operations. The government has set an overall target of 40 per cent modal share of railways in freight operations," said Sameer Bhatnagar, Partner – Transport and Logistics, KPMG India.

Aimed at improving efficiency of the national transporter through involvement of private organisations, Indian railways aims to transport up to 30 per cent of net cargo volumes and 500 passenger trains by 2025 by private players.

According to Bhatnagar, Railways has proven to be a key contributor in India's response to COVID-19 crisis. Freight and parcel trains have been transporting essential commodities and other items when other modes of transport have come to a halt. Thus, it appears imminent that this sector would be in the spotlight going ahead.

However, this would require policy support, financial support, innovative funding and other reforms to enable spending.

The Union Cabinet in March approved a Memorandum of Understanding (MoU) signed between Railway Ministry with Germany's DB Engineering and Consulting GMBH for technological cooperation in the railway sector.

The government has also stated earlier that there is a proposal to outsource commercial and on board services of a few trains and to permit private players to induct modern rakes to run trains on select routes to provide improved service delivery to passengers.

While India appears to have better economic outlook for growth than other countries, investors are expected to be cautious about privatisation after the crisis, said Bhatnagar.

However, investors with deep sector expertise, sufficient capital and long term focus could bid lower but more reasonably and comparably between peers, offering more long term sustainability. As bids are expected to be lower, this may indicate better returns for investors.

As passenger trains may take more time to return to normalcy, track infrastucture and coaches may have less occupancy. This would provide a window of opportunity for maintenance, upgradation and expediting various railway works.

Shipping Minister assures quick evacuation of 30,000 stranded Indian seafarers

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Union Minister of State for Shipping Mansukh Lal Mandaviya assured various seafarers associations of quick evacuation of stranded Indian seafarers whenever the situation turns favourable.

India has about two lakh seafarers working on ships. More than 30,000 Indian seafarers are stuck in their ships at ports in COVID-19 affected countries like the US, UK, Italy and Spain.

Acknowledging the importance of seafarers for smooth supply chain movement, Mandaviya directed associations to provide details of Indian seafarers stranded abroad for future evacuation plans.

"The seafarers are essentially transport workers involved in moving essential goods. Thus, they need to be treated in the same manner and allowed to go home once they complete their tenure on ship," says Captain SM Halbe, CEO, Maritime Association of Shipowners, Ship Managers and Agents (MASSA).

Prolonged stay on board, away from their families, is not only bad for their morale but also detrimental to safe operation of ships.

Mandaviya interacted through video conference with various stakeholders of the shipping industry including ship liners, shipping companies, maritime associations and seafarers unions regarding the change of crew at Indian ports and assessed the situation of Indian seafarers working as well as stranded in International waters.

The participants of the video conference include representatives of the associations like Indian National Ship Owners’ Association (INSA), Maritime Association of Nationwide Shipping Agencies – India (MANSA), National Union of Seafarers of India (NUSI), The Indian Maritime Foundation (IMF), The Maritime Union of India (MUI), The Maritime Association of Ship Owners Ship managers and Agents (MASSA).

Mandaviya also directed officials of the Ministry of Shipping for easing out the process of sign on and off of seafarers at the Indian ports..

Coronavirus impact | Govt mulls 6-month pause on GST payments for affected sectors: Report

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Amid the nationwide lockdown, the government may provide a six-month freeze on goods and services tax (GST) as relief for most affected industries, according to a report by The Economic Times.

India is currently in a nationwide lockdown to contain the spread of COVID-19. That only essential items and services can be provided during this period has hurt several sectors.

The pause on GST payments might be extended to industries such as aviation and hospitality, and a lower rate might be set for the real estate sector, the report said.

There is also a recommendation to move to a cash-based method of calculating tax from the existing invoice-based system, The Economic Times reported.

The Centre may also provide GST relief on sales for which payments have been received during the lockdown by treating them as bad debts, the report said.

The government is also considering liquidity relief measures for cash-strapped businesses, the report said.

"There is a thinking that for these service sectors, the government should at least spare its dues," a government official told ET.

The government may also waive other statutory charges on a temporary basis, the report added.

The GST Council will make the final decision on the recommendations, the report said.

India's GDP growth likely to range up to 1.5% in FY21: CII

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India's GDP is likely to range between a decline of 0.9 percent and a growth of 1.5 percent in the current financial year, with the economy undergoing a "turbulent" phase caused by the coronavirus-induced lockdown, according to a report.

The Confederation of Indian Industry (CII) in a paper - A plan for economic recovery - has laid out its growth expectation under three os and suggested "urgent" fiscal interventions.

In the baseline scenario, the Gross Domestic Product (GDP) is expected to grow at just 0.6 percent on an annual basis as economic activity is expected to remain constrained due to continuing restrictions on the free movement of goods and people beyond the lockdown period.

This will lead to disruption in supply chains, slow pick-up in investment activity, labour shortages in the short-run and muted consumption demand on account of reduced household incomes, the industry body said.

In the optimistic scenario, which envisages a faster pick-up post the lockdown period, the GDP is forecast to register a growth of 1.5 percent in the best case.

In case of a more prolonged outbreak, where the restrictions in existing hot-spot regions get extended, while new regions are identified as ‘hot-spots' leading to intermittent stop and start in economic activity, GDP is likely to decline by -0.9 percent.

The urgent fiscal interventions, as suggested by CII should include cash transfers amounting to Rs 2 lakh crore to JAM account holders, in addition to the Rs 1.7 lakh stimulus already announced.

CII has also suggested additional working capital limits to be provided by banks, equivalent to April-June wage bill of the borrowers, backed by a government guarantee, at 4-5 percent interest.

In addition, the CII paper has suggested the creation of a fund or SPV with a corpus of Rs 1.5 lakh crore which will subscribe to NCDs/Bonds of corporates rated A and above.

The fund can be seeded by the government contributing a corpus of Rs 10,000-20,000 crore, with further investments from banks and financial institutions such as LIC, PFC, EPF, NIIF, IIFCL et al.

This will limit Government exposure while providing adequate liquidity to industry.

For MSMEs, CII has suggested a credit protection scheme whereby 75-80 percent of the loan should be guaranteed by RBI, i.e. if the borrower defaults, RBI should buy the loan and repay the bank upto 75-80 percent of the loan, so the risk to the lender is limited.

SIDBI could provide the guarantee for loans to industry and trade while NABARD could provide the guarantee for loans to agro-processing sectors.

“There is no doubt that the economy is going through turbulent times, and India will have to spend, for navigating its way out of the current crisis.

At this stage, the government must do whatever it takes to tide over the crisis," CII Director General Chandrajit Banerjee said.

“Given the extent of the damage to the economy from the disruption to business, the GDP growth in FY21 will likely be the lowest in many decades," he added.

According to him, without an increase in government spending in the near-term to drive an economic recovery, government revenue will dwindle, and high deficits will continue to be a problem in future.

Any significant revival in investment activity is unlikely as capacity utilization levels may remain suboptimal.

Consumption demand is likely to remain lacklustre as people's incomes have been impacted, CII said.

On the external front, as economies across the globe continue to struggle with the pandemic, global trade may decline by 13 to 32 percent in 2020, as estimated by the World Trade Organisation.

“Given the situation, government intervention becomes critical not only to sustain the economy but also to prevent any humanitarian crisis,” observed Banerjee.

Gold smuggling rises as COVID-19 crisis pushes up prices to all-time high

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With the ongoing coronavirus pandemic disrupting economies and markets, safe-haven options such as gold have increasingly become the choice of investment. Gold prices continue to soar, touching as high as Rs 47,000 per 10 gram last week, even as other sectors take a hit amid lockdowns employed by various countries to combat COVID-19.

But this increased interest in the precious metal has also fuelled another sector – smuggling, the Hindu BussinessLine 

The Customs Office at Chennai International Airport in Tamil Nadu, in particular, has recorded an all-time high in smuggling activity during FY20. As much as 375 kg of gold valuing Rs 134 crore was seized compared to 271 kg of gold valuing Rs 87 crore in FY19, the report noted.

Total 924 cases of smuggling were booked, compared to 461 in FY19 – a 100 percent jump. The number of arrested also increased from 56 to 136 year-on-year (YoY), data from Chennai Customs showed.

Another factor that can be attributed to the spike in smuggling is the increase in customs duty from 10 percent to 12.5 percent, and increase in GST from 1 percent to 3 percent. There is also the 5 percent additional GST charge on making of gold ornaments.

All these, coupled with the rupee depreciation against the US dollar and the already high price of the metal, have pushed up the cost of legal import, N Anantha Padmanaban, Chairman, All India Gem and Jewellery Domestic Council (GJC) told the paper.

“Today, if anyone brings 1 kg of gold (through smuggling), they earn more than Rs 6 lakh. Unfortunately, people who were not willing earlier have also started doing it and that’s the reason why you see news about smuggling every one or two hours,” Padmanaban added.

Among the methods used are concealing the gold in laptops, hard-disks, skateboards, packed food tins or even in the rectum. On February 14, Chennai Customs caught a passenger smuggling 1,164 gm of gold worth Rs 44.33 lakh in a meat cleaver, it added.

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