Economics Assignment

1.
Focusing on Facebook and Google’s monopoly misses the

point
By Noah Smith
The heads of four of the U.S’s biggest technology companies — Alphabet Inc., Apple Inc.
Facebook Inc. and Amazon.com Inc. — appeared before Congress earlier this week to
respond to criticism that they have too much market power. The hearing showed that
lawmakers are beginning to understand what is and isn’t important when it comes to
regulating these large businesses.
And it also showed an increased focus on the most important area of antitrust policy —
mergers and acquisitions and whether regulators have exercised enough vigilance.
In recent years, big tech has become ever more important to the U.S. economy and U.S.
financial markets. The five biggest tech companies (the four that testified, plus Microsoft
Corp.) now represent more than one-fifth of the market capitalization of the S&P 500. Their
value has only risen in the coronavirus pandemic.
When a few companies get this big and dominant, it makes sense to think about how they
might be using their size to unfairly control markets.
One typical defense against such allegations is that tech companies are not monopolies.
Whether this is true depends on how markets are defined -- for example, Google is
overwhelmingly dominant among search engines, but has only about a third of digital ad
revenues. Facebook Chief Executive Officer Mark Zuckerberg argued that his company
faces intense competition in many markets, especially from the other top tech companies.
But focusing on whether a company is a monopoly misses the point. Oligopolies, where a
few big companies dominate the market, also tend to wield some degree of market power. In
theory, that can allow powerful players to jack up consumer prices, underpay workers and
squeeze suppliers.
In the case of Big Tech, consumer prices are generally not the issue. Services provided to
consumers by Google and Facebook tend to be free, while Apple’s fat margins stem mostly
from consumer willingness to pay a lot for the brand value of an iPhone. Wages are a
slightly bigger concern. Big tech companies have already been caught and fined for
colluding to hold down engineers’ salaries, and there has been much attention paid to
Amazon’s warehouse low pay and unpleasant working conditions.
But Big Tech ultimately doesn’t employ very many people, and its proven anti-competitive
activities have largely involved highly paid workers. So, while Big Tech wage suppression
deserves to be monitored closely, it’s probably not yet a major threat to U.S. labor markets.
A bigger worry concerns suppliers. Platform companies depend on a network of third-party

companies -- merchants who sell on Amazon, websites that run Google ads, app developers
who sell on Apple’s App Store and so on. The platforms’ size potentially allows them to
extract a lot of value from these smaller companies, demanding a larger share of their
revenue or even creating and then favoring their own competing offerings.
In the long run, as tech publisher Tim O’Reilly has argued, big tech companies would
probably ossify and ultimately lose out from cannibalizing their own third-party ecosystems,
but there’s always the danger that short-term profits will prove too tantalizing. Thus, it’s a
good thing that Congress focused some of its attention on the need to maintain fair
relationships between platforms and suppliers. Ultimately, this issue will probably have to be
resolved with regulation because breaking up platform companies would eventually cause
new platforms to emerge and become dominant.
Another concern is the prices that online service companies charge advertisers. By some
estimates, more than half of digital ad spending now goes to either Google or Facebook, with
the fastest-rising competitor being Amazon. Advertisers are the true paying customers for
free online services for consumers.
This is a reason that legislators are worried about platforms buying out the competition.
Facebook CEO Zuckerberg admitted in the hearing that he purchased social-networking
company Instagram in 2012 as a way to head off a potential competitor. There have been
allegations that the company has attempted or threatened to do the same with other young
social networks, telling them that if they didn’t accept an offer, Facebook would launch a
competing product and drive them out of existence.
Ultimately, that could raise prices for advertisers, if Facebook properties are the only way for
them to reach social-media users. Those sorts of buyouts and buyout threats could also have
a chilling effect on startup formation and economic dynamism because even the threat of
competition from a dominant company can deter new entrants. Columbia Law School
professor Timothy Wu has argued that such buyouts are illegal under current antitrust law.
So if there’s any case for antitrust action against Big Tech right now, it probably has to do
with the acquisition of upstart competitors. Unlike most of the issues surrounding Big Tech,
which are complicated and confusing because of the way online network effects change the
economics of size, concern over anti-competitive mergers that jack up prices is very old and
very common.
In any case, it’s a very good thing that Congress is beginning to pay more attention to the
problems of industrial concentration and oligopoly in the U.S. economy. Big Tech is
obviously the most well-known and popular case, but with concentration rising across most
industries, these hearings will hopefully be a jumping-off point for a broader re-examination
of the value of mega-mergers and huge, dominant companies.
SUMMARY: -
1. Four of the U.S’s biggest technology companies — Alphabet Inc., Apple Inc.
Facebook Inc. and Amazon.com Inc responded to criticism before Congress meeting
that they have too much market power.
2. It also raised the question on the Area related to Anti-trust policy.
3. Importance of Big Tech’s bulled during these days in U.S and U.S financial market.
During Pandemic, the market capitalization of these Big-5(Alphabet Inc., Apple Inc.
Facebook Inc., Amazon.com Inc and Microsoft Corp.) rises and capital more than one-
fifth of the Market.
4. The defence for that isn’t in monopolising. It truly depends on the market forces.
5. These Big-Companies should dominate in the Oligopolising market which also tends
to wield some degree of market power. According to theory, pro-player can jack-up
the consumer prices, under-paying Workers can Squeeze supplier.
6. Consumer prices are generally not the issue. Service provided by Google and
Facebook tend to be free, however Apple huge margin, that consumer willing to pay a
lot for the brand value of an iPhone. Wages are the biggest concern. Big tech
companies have already been caught and fined for colluding to hold down engineers
salaries, and there has been much attention paid to Amazon’s warehouse low pay and
unpleasant working conditions.
7. In the long run, as tech publisher Tim O’Reilly has argued, big tech companies would
probably ossify and ultimately lose out from cannibalizing their own third-party
ecosystems, but there’s always the danger that short-term profits will prove too
tantalizing. Big Tech is obviously the most well-known and popular case, but with
concentration rising across most industries, these hearings will hopefully be a
jumping-off point for a broader re-examination of the value of mega-mergers and
huge, dominant companies. Unlike most of the issues surrounding Big Tech, which are
complicated and confusing because of the way online network effects change the
economics of size, concern over anti-competitive mergers that jack up prices is very
old and very common. Platform companies depend on a network of third-party
companies -- merchants who sell on Amazon, websites that run Google ads, app
developers who sell on Apple’s App Store and so on. The platforms’ size potentially
allows them to extract a lot of value from these smaller companies, demanding a larger
share of their revenue or even creating and then favoring their own competing
offerings. Ultimately, this issue will probably have to be resolved with regulation
because breaking up platform companies would eventually cause new platforms to
emerge and become dominant. Those sorts of buyouts and buyout threats could also
have a chilling effect on startup formation and economic dynamism because even the
threat of competition from a dominant company can deter new entrants.
8. Another concern is the prices that online service companies charge advertisers. There
have been allegations that the company has attempted or threatened to do the same
with other young social networks, telling them that if they didn’t accept an offer,
Facebook would launch a competing product and drive them out of existence.
9. But Big Tech ultimately doesn’t employ very many people, and its proven anti-
competitive activities have largely involved highly paid workers.
OPINION:-
I think Big Tech is obviously the most well-known and popular case, but with
concentration rising across most industries, these hearings will hopefully be a
jumping-off point for a broader re-examination of the value of mega-mergers and
huge, dominant companies. In the long run, as tech publisher Tim O’Reilly has
argued, big tech companies would probably ossify and ultimately lose out from
cannibalizing their own third-party ecosystems, but there’s always the danger that
short-term profits will prove too tantalizing. Platform companies depend on a network
of third-party companies -- merchants who sell on Amazon, websites that run Google
ads, app developers who sell on Apple’s App Store and so on. Unlike most of the
issues surrounding Big Tech, which are complicated and confusing because of the way
online network effects change the economics of size, concern over anti-competitive
mergers that jack up prices is very old and very common. Big tech companies have
already been caught and fined for colluding to hold down engineers’ salaries, and
there has been much attention paid to Amazon’s warehouse low pay and unpleasant
working conditions.
And, When a few companies get this big and dominant, it makes sense to think about
how they might be using their size to unfairly control markets. The platforms’ size
potentially allows them to extract a lot of value from these smaller companies,
demanding a larger share of their revenue or even creating and then favoring their own
competing offerings. Ultimately, this issue will probably have to be resolved with
regulation because breaking up platform companies would eventually cause new
platforms to emerge and become dominant. Facebook Chief Executive Officer Mark
Zuckerberg argued that his company faces intense competition in many markets,
especially from the other top tech companies.
The heads of four of the U.S’s biggest technology companies — Alphabet Inc.,
Apple Inc. Facebook Inc. and Amazon.com Inc. — appeared before Congress earlier
this week to respond to criticism that they have too much market power.
One typical defense against such allegations is that tech companies are not
monopolies. The five biggest tech companies (the four that testified, plus Microsoft
Corp.) now represent more than one-fifth of the market capitalization of the S&P 500.
Oligopolies, where a few big companies dominate the market, also tend to wield some
degree of market power.
Then, another concern is the prices that online service companies charge advertisers.
But Big Tech ultimately doesn’t employ very many people, and its proven anti-
competitive activities have largely involved highly paid workers. Those sorts of
buyouts and buyout threats could also have a chilling effect on startup formation and
economic dynamism because even the threat of competition from a dominant company
can deter new entrants. So, while Big Tech wage suppression deserves to be monitored
closely, it’s probably not yet a major threat to U.S. labor markets. So if there’s any
case for antitrust action against Big Tech right now, it probably has to do with the
acquisition of upstart competitors.
EFFECT IN ECONOMY: -
In a monopoly, the firm will set a specific price for a good that is available to all
consumers. ... A monopoly is less efficient in total gains from trade than a competitive
market. Like- The five biggest tech companies (the four that testified, plus Microsoft
Corp.) now represent more than one-fifth of the market capitalization of the S&P 500.
Oligopolies, where a few big companies dominate the market, also tend to wield some
degree of market power.
How does monopoly affect the economy?
Monopolies can become inefficient and less innovative over time because they do not
have to compete with other producers in a marketplace.
Why monopoly is not good for the Market?
Monopolies are bad because they control the market in which they do business,
meaning that they don't have any competitors. When a company has no competitors,
consumers have no choice but to buy from the monopoly.
2. PAYROLL COMPLIANCE IN THE
HYBRID WORKPLACE
Payroll practices are governed by both federal and state regulations. Non-compliance
with any of these can lead to serious penalties.
As regulations vary by state, it is vital that HR managers are aware of the regulations
that apply to their workforce. In the absence of regulations, managers should ensure
that they have implemented their own standardized policies and procedures relating to
payroll practices.
Unicorn HRO's Timothy Diassi, in his article How to Avoid 6 Common Payroll

Compliance Mistakes, lists down the six common mistakes made in payroll practices
that HR managers should be familiar with.

In an exclusive interview, featured on the Cover this month, Jane Lock, Chief People
Officer, Connections Health Solutions touches upon how they are preparing
employees for the hybrid work culture, the new trends in pay and compensation, and
more.
Learn what is the best way to choose a payroll service in BambooHR's Rebekah
Cuevas' article, How To Choose The Best Payroll Service For Your Needs.
Also, read An Employer Of Record: The Future Of Global Business Expansion by
Rick Hammell and SaaS vs. On-Premise HR Systems: What To Choose? by Tushar
Bhatia.
That is not all! We have featured several other articles this month, and hope this
edition of HRIS & Payroll Excellence will help you achieve excellence in your HRIS
and payroll processes.
BY:
Debbie McGrath
Deepa Damodaran
SUMMARY
Unicorn HRO's Timothy Diassi, in his article How to Avoid 6 Common Payroll Compliance
Mistakes, lists down the six common mistakes made in payroll practices that HR managers
should be familiar with.
In the absence of regulations, managers should ensure that they have implemented their own
standardized policies and procedures relating to payroll practices. We have featured several
other articles this month, and hope this edition of HRIS & Payroll Excellence will help you
achieve excellence in your HRIS and payroll processes.
As regulations vary by state, it is vital that HR managers are aware of the regulations that
apply to their workforce.
Learn what is the best way to choose a payroll service in BambooHR's Rebekah Cuevas'
article, How To Choose The Best Payroll Service For Your Needs.
Payroll practices are governed by both federal and state regulations. In an exclusive
interview, featured on the Cover this month, Jane Lock, Chief People Officer, Connections
Health Solutions touches upon how they are preparing employees for the hybrid work
culture, the new trends in pay and compensation, and more.
Non-compliance with any of these can lead to serious penalties. The Future Of Global
Business Expansion by Rick Hammell and SaaS vs. On-Premise HR Systems: What To
Choose? by Tushar Bhatia.
OPINION:-
I think in this Topic which is completely relatable with current HR scenario around the
world.
should be familiar with. In the absence of regulations, managers should ensure that they have
implemented their own standardized policies and procedures relating to payroll practices.
We have featured several other articles this month, and hope this edition of HRIS & Payroll
Excellence will help you achieve excellence in your HRIS and payroll processes. As
regulations vary by state, it is vital that HR managers are aware of the regulations that apply
to their workforce.
EFFECT IN THE ECONOMY:

What factor affects the payroll?
- Frequency of the Payroll Period.

- Employee’s Marital Status.
- Size of the Wage Payment.
- Numbers of the Withholding Exemption the Employee Claims.
How can we Resolve that Problem?

1. Clearly define payroll processes and policies.
2. Adopt privacy-enhancing salary computations.
3. Streamline accounting and administration.
4. Build a ‘secure’ system and align cybersecurity priorities.
5. Automate payroll communication.
6. Code in compliance checks
should be familiar with.
In the absence of regulations, managers should ensure that they have implemented their own
standardized policies and procedures relating to payroll practices.
We have featured several other articles this month, and hope this edition of HRIS & Payroll
Excellence will help you achieve excellence in your HRIS and payroll processes. As
regulations vary by state, it is vital that HR managers are aware of the regulations that apply
to their workforce.
Payroll practices are governed by both federal and state regulations. In an exclusive
interview, featured on the Cover this month, Jane Lock, Chief People Officer, Connections
Health Solutions touches upon how they are preparing employees for the hybrid work
culture, the new trends in pay and compensation, and more.
3. 77% of Indians want petrol and diesel
under GST: Local Circles survey
Almost four out of every five Indians want petrol and diesel to come under Goods and
Services Tax (GST), as they grapple with the rising cost, a Local Circles survey said.
About 77% of the respondents said that they would want petrol and diesel under GST.
“Majority of the Indian households want petrol and diesel to be moved under GST as it will
immediately have a huge positive impact on the cost of living. Even at 28% GST rates the
prices of petrol post such a move will slide to Rs 75 a litre and diesel to Rs70 a litre. This
could give a huge impetus to the economy and businesses via increased consumer spending,”
the Local Circles survey said.
Experts say that in the short term both the centre and states could see a loss of revenue.
Rising prices of petrol in India hovering between Rs 100-110 a litre in most cities and that of
diesel between Rs 90-100 a litre for almost 12 months now has had an adverse impact on
how citizens commute, how much essentials and other goods cost, and how people draw up
their personal finances, at a time when Indian households are recovering from the shock of a
brutal second Covid wave. In a Local Circles survey conducted in first half of 2021, 51%
households said that they have cut spending to cope with high petrol/diesel prices; 21% had
even cut essentials spending and were feeling the pinch strongly while 14% expressed they
were even dipping into savings to pay for it, the survey said.
The survey received more than 7500 responses from citizens located in 379 districts of India.
61% of the participants were men while 39% were women. 44% of respondents were from
tier 1 districts, 29% from tier 2 and 27% respondents were from tier 3, 4 and rural districts.
Given that the GST council is scheduled to meet today, Local Circles has conducted another
survey to understand citizens’ pulse on whether petrol and diesel should be brought under
the purview of GST.
SUMMARY
In a Local Circles survey conducted in first half of 2021, 51% households said that they have
cut spending to cope with high petrol/diesel prices; 21% had even cut essentials spending
and were feeling the pinch strongly while 14% expressed they were even dipping into
savings to pay for it, the survey said.
brutal second Covid wave.
immediately have a huge positive impact on the cost of living.
Services Tax (GST), as they grapple with the rising cost, a Local Circles survey said.
Given that the GST council is scheduled to meet today, Local Circles has conducted another
survey to understand citizens’ pulse on whether petrol and diesel should be brought under
the purview of GST.
About 77% of the respondents said that they would want petrol and diesel under GST. Even
at 28% GST rates the prices of petrol post such a move will slide to Rs 75 a litre and diesel
to Rs70 a litre. 44% of respondents were from tier 1 districts, 29% from tier 2 and 27%
respondents were from tier 3, 4 and rural districts.
This could give a huge impetus to the economy and businesses via increased consumer
spending,” the Local Circles survey said. The survey received more than 7500 responses
from citizens located in 379 districts of India.
Experts say that in the short term both the centre and states could see a loss of revenue.
OPINION
I think in a Local Circles survey conducted in first half of 2021, 51% households said that
they have cut spending to cope with high petrol/diesel prices; 21% had even cut essentials
spending and were feeling the pinch strongly while 14% expressed they were even dipping
into savings to pay for it, the survey said.
brutal second Covid wave.
immediately have a huge positive impact on the cost of living.
Services Tax (GST), as they grapple with the rising cost, a Local Circles survey said. Given
that the GST council is scheduled to meet today, Local Circles has conducted another survey
to understand citizens’ pulse on whether petrol and diesel should be brought under the
purview of GST.
About 77% of the respondents said that they would want petrol and diesel under GST. Even
at 28% GST rates the prices of petrol post such a move will slide to Rs 75 a litre and diesel
to Rs70 a litre.
EFFECT IN THE ECONOMY

CURRENT SITUATION IN INDIA
Since the first week of May there has been a steep rise in petrol and diesel prices that have
become a concern for the citizens. It has impacted their livelihood. According to research the
domestic fuel prices have increased 35 times becoming dearer by Rs 7 to 8 per litre. The
petrol price in Mumbai has reached Rs 106 per litre and in Delhi it has just crossed a
hundred rupees per litre. In Rajasthan's Sri Ganganagar, diesel prices have reached Rs100
per litre.
Reason behind rising fuel prices
Due to the acceleration in the global crude oil demand there has been a rise in fuel prices.
The Brent crude oil crossed $76 per barrel. The main reason behind the rise in oil prices in
countries like India is the global situation. Taxes have proved to be the other reason for the
surge in prices because India levies highest taxes on petrol and diesel in the world.
4. Auto debit rule: ICICI, Axis and HDFC
assure continuity of services
Three of India‘s largest non-public lenders – HDFC Bank, and Axis Bank – mentioned they
are going to meet the Reserve Bank of India’s mandate for recurring payments forward of
the October 1 deadline. The dedication was given by the respective financial institution
spokespersons and communications despatched by the lenders to prospects.
The growth comes at a time when India’s payments ecosystem, on-line retailers and
shoppers are anticipating large-scale disruption in recurring funds by debit and bank cards
owing to new central financial institution guidelines.
According to sources, these banks are working with fee aggregators Razorpay and BillDesk
to combine with a standard e-mandate platform that can guarantee compliance. Reserve
Bank of India’s (RBI) new guidelines mandate that banks can solely course of auto-debit
transactions in the event that they ship a pre-debit notification to prospects at the least 24
hours earlier than the fee. “‘We will probably be going stay within the subsequent 2-3 days,
complying with RBI tips,” mentioned Sanjeev Moghe, EVP & head – playing cards & funds,
Axis Bank. A spokesperson at ICICI Bank mentioned the financial institution will go stay
with a compliant system from October 1. HDFC Bank did not reply, however as per a buyer
communication reviewed by ET, the lender can be working towards compliance.
“A common industry-wide platform has been developed, and HDFC Bank has completed its
internal development and integration,” the communication by HDFC Bank acknowledged.
“We are now working jointly with merchants to make it live for customers at the earliest.”
Several banks had earlier expressed their lack of ability to adjust to this rule earlier this 12
months. The central financial institution has already postponed the implementation of this
rule in March 2021 in a sternly worded round which mentioned non-compliant banks
processing such transactions after September 2021 would face strict regulatory motion.
The new rule additionally states that auto-transactions above ₹5,000 would require a
separate stream that would want prospects to authenticate such funds manually with a One
Time Password (OTP). In reality, some of India’s largest web retailers – Google, Facebook,
YouTube – have over the previous few days communicated to the purchasers that the brand
new guidelines can result in massive scale disruptions in e-mandate based mostly recurring
funds. Others seemingly affected would come with monetary services suppliers, OTT
platforms, telecom operators and information media.
It couldn’t be instantly decided whether or not different mass market lenders together with
State Bank of India would guarantee compliance. SBI and RBI too did not reply.
However, regardless of these claims by banks, business sources expressed apprehensions in
regards to the timelines. According to government, many of the big banks may seemingly
miss the deadline owing to procedural delays and procurement associated points.
SUMMARY
owing to new central financial institution guidelines. In reality, some of India’s largest web
retailers – Google, Facebook, YouTube – have over the previous few days communicated to
the purchasers that the brand new guidelines can result in massive scale disruptions in e-
mandate based mostly recurring funds.
Reserve Bank of India’s (RBI) new guidelines mandate that banks can solely course of auto-
debit transactions in the event that they ship a pre-debit notification to prospects at the least
24 hours earlier than the fee. The central financial institution has already postponed the
implementation of this rule in March 2021 in a sternly worded round which mentioned non-
compliant banks processing such transactions after September 2021 would face strict
regulatory motion.
Three of India‘s largest non-public lenders – HDFC Bank, and Axis Bank – mentioned
they are going to meet the Reserve Bank of India’s mandate for recurring payments forward
of the October 1 deadline. “We will probably be going stay within the subsequent 2-3 days,
complying with RBI tips”, mentioned Sanjeev Moghe, EVP & head – playing cards & funds,
Axis Bank.
According to sources, these banks are working with fee aggregators Razorpay and Bill-Desk
to combine with a standard e-mandate platform that can guarantee compliance.
Time Password (OTP).
Several banks had earlier expressed their lack of ability to adjust to this rule earlier this 12
months.
However, regardless of these claims by banks, business sources expressed apprehensions in
regards to the timelines. A spokesperson at ICICI Bank mentioned the financial institution
will go stay with a compliant system from October 1.
It couldn’t be instantly decided whether or not different mass market lenders together with
State Bank of India would guarantee compliance. The dedication was given by the respective
financial institution spokespersons and communications despatched by the lenders to
prospects.
OPINION
owing to new central financial institution guidelines. In reality, some of India’s largest web
retailers – Google, Facebook, YouTube – have over the previous few days communicated to
the purchasers that the brand new guidelines can result in massive scale disruptions in e-
mandate based mostly recurring funds. Reserve Bank of India’s (RBI) new guidelines
mandate that banks can solely course of auto-debit transactions in the event that they ship a
pre-debit notification to prospects at the least 24 hours earlier than the fee. The central
financial institution has already postponed the implementation of this rule in March 2021 in
a sternly worded round which mentioned non-compliant banks processing such transactions
after September 2021 would face strict regulatory motion.
Three of India‘s largest non-public lenders – HDFC Bank, and Axis Bank – mentioned
they are going to meet the Reserve Bank of India’s mandate for recurring payments forward
of the October 1 deadline. “‘We will probably be going stay within the subsequent 2-3 days,
complying with RBI tips,” mentioned Sanjeev Moghe, EVP & head – playing cards & funds,
Axis Bank.
According to sources, these banks are working with fee aggregators Razorpay and BillDesk
to combine with a standard e-mandate platform that can guarantee compliance.
Time Password (OTP). Several banks had earlier expressed their lack of ability to adjust to
this rule earlier this 12 months.
EFFECT ON THE ECONOMY

How does credit and banking affect our economy?
Banks fulfil several key functions in the economy. They improve the allocation of scarce
capital by extending credit to where it is most productive, as well as allowing households to
plan their consumption over time through saving and borrowing (Allen and Gale 2000).
Credit leads to an increase in spending, thus increasing income levels in the economy. This,
in turn, leads to higher GDP (gross domestic product) and thereby faster productivity growth.
If credit is used to purchase productive resources, it helps in economic growth and adds to
income.
5. How digital cash can lift gross national
happiness
The tiny Himalayan kingdom of Bhutan, landlocked between the teeming multitudes of
China and India, shot to global fame in the 1970s with gross national happiness: a broad
measure of overall welfare it prefers over the more traditional metric of gross domestic
product, which only includes production of goods and services, even those that ultimately
leave us miserable.
More recently, the hydroelectric-powered nation decided to become not just carbon neutral
— but carbon negative, its pristine forests acting as a sink-hole to absorb the greenhouse
gases released by its coal-burning neighbours.
And now Bhutan wants a digital currency.

Will a new payment instrument make the 800,000-strong, mostly Buddhist society happier
than it already is? My answer: It might.
Cash is a relatively new construct in Bhutan. Up until the 1950s, the people were still
bartering in rice, butter, cheese, meat, wool, and hand-woven cloth. Even civil servants
accepted their pay in commodities. Seven decades later, the Royal Monetary Authority
has announced a pilot with San Francisco-based Ripple for a national currency running on
distributed electronic account-keeping.
The open-source XRP ledger claims to be carbon neutral and 120,000 times more
efficient than proof-of-work blockchains. Unlike El Salvador, which has chosen to use the
volatile and energy-guzzling Bitcoin as money alongside U.S. dollars, Bhutan wants to retain
the ngultrum, the national currency. The bet is that a paperless version of the central bank’s
liabilities would be a more attractive alternative to bank deposits for a sparse population
scattered across a rugged, mountainous terrain.
Big gains are expected from the monetary authority making its IOUs available to the public
directly, as electronic cash that can be spent or saved without requiring a commercial bank in
the middle. The goal of 85% financial inclusion by 2023 is a substantial jump over the 67%
of adult Bhutanese who have bank accounts. Only a fifth of the population has any credit
facility.
Bhutan is moving to test wholesale, retail and cross-border applications of its central bank’s
tokens, even as advanced nations are still debating their utility. The Federal Reserve is yet to
make up its mind; research that will reveal its assessments of the pros and the cons of a
digital dollar is eagerly awaited around the world. Among larger economies, China’s e-
CNY plans are the most advanced.
That creates a bit of a problem for the government in Thimphu, the Bhutanese capital. The
ngultrum is pegged 1:1 to the Indian rupee, which also circulates freely. Since India is the
main trading partner by far, the arrangement works fine. But already, 97% of the population
has access to the Internet, most of them via their mobile phones. Any sudden preference
among the people to use the e-CNY because it’s convenient to send and receive via
smartphones could be destabilizing. With the Reserve Bank of India in no hurry to start
offering a digital rupee, Bhutan is perhaps right to press ahead with its own plans.
In fact, the $2.5 billion economy would be doing its 1,000-times bigger neighbor a
favor. Bhutan’s pilots would be extremely valuable to the Reserve Bank in Mumbai. That’s
because the digital ngultrum will be an exact representation of the Indian currency — only
twice removed. Important questions about the future rupee tokens, such as whether they will
rob commercial banks of deposits, can be answered by looking at how the Bhutanese
people use them.
Digitizing the currency may only be the first step. A far more ambitious idea, which was
discussed in a conference late last year attended by the local financial industry as well
as United Nations officials, is to tokenize happiness.
A digital commodity in happiness could be like cap-and-trade carbon credits, with all 20
districts — or dzhongkhags — given quotas based on the gross national happiness index, an
aggregate of nine indicators including education, health, psychological well-
being, governance and culture. The laggards would have to obtain tokens from the
overachievers. The “price" of happiness could create an incentive for the strugglers to
perform better.
Far fetched? For now, perhaps. But Bhutan is a neat little laboratory. With just five banks,
there isn’t much by way of entrenched traditional finance. Only 6.5% of the population has
all three: a savings account, insurance and some credit. Bank of Bhutan Ltd., which had
roughly 300,000 deposit accounts in 2019, more than any other lender, had only 140,000
mobile banking customers. The central bank’s desire to take cash digital could create
opportunities for blockchain-based decentralized finance. Hopefully, it won’t use up too
much energy and will leave people happier than they are now. Especially in remote places
like the northernmost dzhongkhag of Gasa, which has all of two ATMs.
SUMMARY
aggregate of nine indicators including education, health, psychological well-being,
governance and culture.
leave us miserable.
the middle.
tokens, even as advanced nations are still debating their utility. The bet is that a paperless
version of the central bank’s liabilities would be a more attractive alternative to bank
deposits for a sparse population scattered across a rugged, mountainous terrain.
The open-source XRP ledger claims to be carbon neutral and 120,000 times more efficient
than proof-of-work blockchains. The central bank’s desire to take cash digital could create
opportunities for blockchain-based decentralized finance. Unlike El Salvador, which has
chosen to use the volatile and energy-guzzling Bitcoin as money alongside U.S. dollars,
Bhutan wants to retain the ngultrum, the national currency.
And now Bhutan wants a digital currency. Seven decades later, the Royal Monetary
Authority has announced a pilot with San Francisco-based Ripple for a national currency
running on distributed electronic account-keeping. Important questions about the future
rupee tokens, such as whether they will rob commercial banks of deposits, can be answered
by looking at how the Bhutanese people use them. With the Reserve Bank of India in no
hurry to start offering a digital rupee, Bhutan is perhaps right to press ahead with its own
plans. That’s because the digital ngultrum will be an exact representation of the Indian
currency — only twice removed.
In fact, the $2.5 billion economy would be doing its 1,000-times bigger neighbor a favor.
Will a new payment instrument make the 800,000-strong, mostly Buddhist society happier
than it already is? A far more ambitious idea, which was discussed in a conference late last
year attended by the local financial industry as well as United Nations officials, is to
tokenize happiness. The goal of 85% financial inclusion by 2023 is a substantial jump over
the 67% of adult Bhutanese who have bank accounts.
Cash is a relatively new construct in Bhutan.
Digitizing the currency may only be the first step. Bank of Bhutan Ltd., which had roughly
300,000 deposit accounts in 2019, more than any other lender, had only 140,000 mobile
banking customers.
OPINION
aggregate of nine indicators including education, health, psychological well-being,
governance and culture.
leave us miserable.
the middle.
tokens, even as advanced nations are still debating their utility. The bet is that a paperless
version of the central bank’s liabilities would be a more attractive alternative to bank
deposits for a sparse population scattered across a rugged, mountainous terrain.
The open-source XRP ledger claims to be carbon neutral and 120,000 times more efficient
than proof-of-work blockchains. The central bank’s desire to take cash digital could create
opportunities for blockchain-based decentralized finance. Unlike El Salvador, which has
chosen to use the volatile and energy-guzzling Bitcoin as money alongside U.S. dollars,
Bhutan wants to retain the ngultrum, the national currency.
And now Bhutan wants a digital currency. Seven decades later, the Royal Monetary
Authority has announced a pilot with San Francisco-based Ripple for a national currency
running on distributed electronic account-keeping. Important questions about the future
rupee tokens, such as whether they will rob commercial banks of deposits, can be answered
by looking at how the Bhutanese people use them.
6. FM Nirmala Sitharaman launches National
Monetisation Pipeline, Rs 6 lakh crore expected
till FY25
Finance minister Nirmala Sitharaman Monday launched the National Monetisation

Pipeline (NMP) which is expected to fetch the government an estimated revenue of Rs 6
lakh crore over four years till FY25.
The NMP, which will work in tandem with the National Investment Pipeline (NIP), will
bring in investment for underutilised or languishing brownfield units, generating greater
value for the government which will in turn help India’s economy.
“They are all de-risked assets, no doubt and the value of the consideration and the private
investment which will come into maintaining it, optimally utilising it, putting it for a larger
cause, all this will generate greater value, and it will unlock resources for the economy,
which is what we want,” Sitharaman said at the launch.
“The economy needs more resources, the economy wants that kind of liquidity that kind of
value unlocking with which we can move forward,” she added.
The finance minister clarified that NMP will comprise of brownfield assets alone belonging
to the Central government and public sector units, and no land will be part of the
monetisation process. Further, assets will not change hands and ownership will remain with
the government.
Assets put up for investment to the private sector and global investors will be mandatorily
handed back to the government after a defined period, of about 25-30 years. All contractual
partnerships that the government will enter into with private players will be executed with
full key-performance indicators and performance standards that will be specified before the
transition.
“I think it's important that India recognizes that the time has come from making the most out
of our assets and in this pipeline we have listed that out so that they can be better
monetized,” Sitharaman noted.
She added that monetisation thrust will be helped by consistency of policy, the regulatory
support - which has been periodically reviewed by Prime Minister Narendra Modi - and
system enabling frameworks, to ensure ease of doing business.
NMP roadmap
The aggregate asset pipeline under NMP includes more than 12 line ministries and more than
20 asset classes. The sectors included are roads, ports, airports, railways, warehousing, gas
and product pipeline, power generation and transmission, mining, telecom, stadium,
hospitality and housing.
“The philosophy of asset monetisation is creation of new assets through monetisation. The
aim is to unlock the value of government investments and public money in infrastructure and
take this country forward,” said Niti Aayog CEO Amitabh Kant.
The top five sectors by estimated value capture about 83% of the aggregate pipeline value,
which include roads with 27%, followed by railways with 25%, power with 15%, oil and gas
pipelines with 8% and telecom with 6%.
In terms of annual phasing by value, 15% of assets with an indicative value of Rs 88,000
crore are envisaged to be rolled out in FY22. The contribution is expected to remain upwards
of Rs 1.6 lakh crore for following financial years. The total NMP value is about 14% of the
Centre’s NIP outlay.
The government is also looking at the aviation, shipping, coal mining, mineral mining,
natural gas sectors, sports, urban real estate, petroleum products and pipelines and
warehousing assets.
“Our objective is to enhance capex spending, build multiplier impact on growth and
employment and reviving credit flow,” Kant said. The assets will be transferred after
transparent and competitive bidding which will also help the government realise the actual
value of the assets.
Budget Plan
In the Union Budget 2021-22 the government had identified monetising operating public
infrastructure assets as one of the key pillars for enhanced and sustainable infrastructure
financing in the country. The key principle was economic growth through private sector
participation.
“This is the next step in mobilizing private capital for the development of infrastructure, and
this does not in any case (mean) a handover of the ownership of these assets, neither does it
represent any form of fire sale, not at all,” said Niti Aayog chairman Rajiv Kumar.
“A fair value will be achieved by all the sort of necessity, transparent, accountable
mechanisms,” he said.
NMP is envisaged to serve as a medium-term roadmap for identifying potential

monetisation- ready projects, across various infrastructure sectors, by way of structured
contractual partnership as against privatization or slump sale of assets.
The NMP does not include monetization through disinvestment and monetization of non-
core assets. Further, currently, only assets of central government line ministries and CPSEs
in infrastructure sectors have been included.
As part of a multi-layer institutional mechanism for overall implementation and monitoring
of the Asset Monetization programme, an empowered Core Group of Secretaries on Asset
Monetization (CGAM) under the chairmanship of Cabinet Secretary has been constituted.
Models of monetisation
The government has identified a range of public private partnership models for monetisation
including Operate Maintain Transfer (OMT), Toll Operate Transfer (TOT) & variants,
Operations, Maintenance & Development (OMD) and Rehabilitate Operate Maintain
Transfer (ROMT).
OMT & TOT has been adopted in roads Sector and OMD model has been adopted in
airports. The NHAI has raised Rs 17,000 crores till now through TOT and the InvIT of
Powergrid has already been launched as the first public sector InvIT in May 2021 garnering
over Rs 7,000 crore.
Trust based investment vehicles that pool capital from various investor classes, typically
capital market based
The government has also opened up range of instruments such as InvITs (Infrastructure
Investment Trusts) and REITs (Real estate Investment Trusts) besides direct contractual
instruments such as public private partnership concessions for inviting investors.
“The choice of instrument will be determined by the sector, nature of asset, timing of
transactions (including market considerations), target investor profile and the level of
operational/investment control envisaged to be retained by the asset owner,” Niti Aayog said
in a statement.
SUMMARY
handed back to the government after a defined period, of about 25-30 years. The finance
minister clarified that NMP will comprise of brownfield assets alone belonging to the
Central government and public sector units, and no land will be part of the monetisation
process.
crore are envisaged to be rolled out in FY22.
NMP roadmap
20 asset classes.
“The choice of instrument will be determined by the sector, nature of asset, timing of
transactions (including market considerations), target investor profile and the level of
operational/investment control envisaged to be retained by the asset owner,” Niti Aayog said
in a statement.
of our assets and in this pipeline we have listed that out so that they can be better
“The philosophy of asset monetisation is creation of new assets through monetisation.
mechanisms,” he said. The government has also opened up range of instruments such as
InvITs (Infrastructure Investment Trusts) and REITs (Real estate Investment Trusts) besides
direct contractual instruments such as public private partnership concessions for inviting
investors. The assets will be transferred after transparent and competitive bidding which will
also help the government realise the actual value of the assets. In the Union Budget 2021-22
the government had identified monetising operating public infrastructure assets as one of the
key pillars for enhanced and sustainable infrastructure financing in the country. The aim is to
unlock the value of government investments and public money in infrastructure and take this
country forward,” said Niti Aayog CEO Amitabh Kant. The government is also looking at
the aviation, shipping, coal mining, mineral mining, natural gas sectors, sports, urban real
estate, petroleum products and pipelines and warehousing assets.
“Our objective is to enhance capex spending, build multiplier impact on growth and
employment and reviving credit flow,” Kant said.
NMP is envisaged to serve as a medium-term roadmap for identifying potential
monetisation- ready projects, across various infrastructure sectors, by way of structured
contractual partnership as against privatization or slump sale of assets.
Models of monetisation
Trust based investment vehicles that pool capital from various investor classes, typically
capital market based.
Finance minister Nirmala Sitharaman Monday launched the National Monetisation Pipeline
(NMP) which is expected to fetch the government an estimated revenue of Rs 6 lakh crore
over four years till FY25.
OPINION
handed back to the government after a defined period, of about 25-30 years.
The finance minister clarified that NMP will comprise of brownfield assets alone belonging
to the Central government and public sector units, and no land will be part of the
monetisation process.
crore are envisaged to be rolled out in FY22.
NMP roadmap
20 asset classes. “The choice of instrument will be determined by the sector, nature of asset,
timing of transactions (including market considerations), target investor profile and the level
of operational/investment control envisaged to be retained by the asset owner,” Niti Aayog
said in a statement.
of our assets and in this pipeline, we have listed that out so that they can be better
“The philosophy of asset monetisation is creation of new assets through monetisation.
mechanisms,” he said.

7. Government set floor price of sugar won’t
impact retail prices: Indian Sugar Mills
Association
Industry body Indian Sugar Mills Association (ISMA) thought welcomed the Cabinet’s
decisions of extending a package of Rs 8,500 crore to help the sugar mills and cane farmers,
it said that it may not impact retail prices significantly.
“The decision to fix a minimum ex-mill sale price of sugar at Rs.29 per kilo will improve ex-
mill prices from current levels of around Rs. 28 per kilo, but may not impact the retail prices
in any significant way,” stated a release from ISMA.
The industry Association has said that the proposed minimum price of Rs. 29 per kilo is not
enough to cover the cost of sugarcane at FRP of Rs.290 per quintal at the current all India
average recovery of 10.8%. “The ex-mill sugar price which supports the current FRP works
out to around Rs.35 per kilo and therefore the Rs.29 is inadequate,” it said.
ISMA said that it will be a challenge to expect the sugar industry to clear the huge cane price
arrears on this basis.
However, it welcomed other step of providing subsidised loans for ethanol production
capacity as an excellent move.
“ It will encourage setting up of more distilleries in the country over the next 3 years and will
help in diverting some of the surplus sugarcane into ethanol and reduce surplus sugar in the
long run. However the decision to impose stock holding limits on sugar mills tantamount to
controls on sugar sales which is not the right way to move into the future,” it said.
Industry expects creation of buffer stocks of 30 lakh tons will reduce some surplus sugar
from the market, though only for a year, and will improve market sentiments to support
domestic prices.
“What is concerning is that there is no idea or proposal on rationalisation of cane pricing

policy, which is actually the main reason for all the problems of the industry today,” stated
the ISMA release.
SUMMARY
mill prices from current levels of around Rs. “The ex-mill sugar price which supports the
current FRP works out to around Rs.35 per kilo and therefore the Rs.29 is inadequate,” it
said. However the decision to impose stock holding limits on sugar mills tantamount to
domestic prices.
“ It will encourage setting up of more distilleries in the country over the next 3 years and will
long run.
“What is concerning is that there is no idea or proposal on rationalisation of cane pricing

policy, which is actually the main reason for all the problems of the industry today,” stated
the ISMA release.
The industry Association has said that the proposed minimum price of Rs. 28 per kilo, but
may not impact the retail prices in any significant way 29 per kilo is not enough to cover the
cost of sugarcane at FRP of Rs.290 per quintal at the current all India average recovery of
10.8%. However, it welcomed other step of providing subsidised loans for ethanol
production capacity as an excellent move,” stated a release from ISMA.
OPINION
mill prices from current levels of around Rs. “The ex-mill sugar price which supports the
current FRP works out to around Rs.35 per kilo and therefore the Rs.29 is inadequate,” it
said. However the decision to impose stock holding limits on sugar mills tantamount to
domestic prices.
It will encourage setting up of more distilleries in the country over the next 3 years and will
long run.

Amid the anticipation of a hike in the minimum selling price (MSP) to Rs 33 a kg, the
market price of sugar is holding firm and commanding a premium of 3-6 per cent over the
prevailing MSP of Rs 31 a kg.
After the MSP was announced two years ago, such a premium over the floor price is seen for
the first time as sugar fundamentally has remained in surplus. The MSP helps mills to earn a
little around their cost of production to clear farmers dues without the government giving
subsidies.
In Uttar Pradesh, the country’s top sugar producer, the ex-mill price is at almost Rs 33/kg, a
premium of 6.5 per cent on the MSP. Similarly, the commodity commands a market price of
around Rs 32/kg or 3.25 per cent higher vis-à-vis the MSP in Maharashtra.
8. Gas price ceiling for Deepwater output slashed
by 33% for six months
The government has slashed price ceiling for gas produced from deepwater, ultra-deepwater
and high pressure-high temperature areas of Indian sedimentary basins by over 33% to $5.61
per unit for the first half of current financial year.
Price ceiling for natural gas produced from other domestic fields have also been reduced by
26% to $2.39 per unit for the first half of current financial year ending September 30, 2020,
according to two official notifications. The unit for gas pricing is million metric British
thermal unit (mmBtu).
The new gas price ceilings will be applicable for six months from April 1, 2020 to
September 30, 2020.
The previous price ceiling applicable from October 1, 2019 to March 31, 2020 for gas
produced from deepwater, ultra-deepwater and high pressure-high temperature areas was
$8.43 per unit. For rest of the fields it was $3.23 per unit.
While the government has freed gas prices from its control, it caps the maximum price any
energy producer can change from customers mainly because India’s gas market is yet to
mature.
The gas price ceiling is fixed for six months based on a formula linked with the international
energy markets. The formula is linked with the weighted average price of four global
benchmarks — the Henry Hub of USA, the Canada-based Alberta gas, the UK-based NBP
and the Russian gas.
Price caps have been revised downwardly on March 31 mainly because of a steep fall of
energy prices in international oil markets, an oil ministry official aware of the development
said.
SUMMARY
$8.43 per unit.
The government has slashed price ceiling for gas produced from deepwater, ultra-
deepwater and high pressure-high temperature areas of Indian sedimentary basins by over
33% to $5.61 per unit for the first half of current financial year.
according to two official notifications.
mature.
energy markets.
said. The formula is linked with the weighted average price of four global benchmarks — the
Henry Hub of USA, the Canada-based Alberta gas, the UK-based NBP and the Russian gas.
The new gas price ceilings will be applicable for six months from April 1, 2020 to
September 30, 2020. The unit for gas pricing is million metric British thermal unit (mmBtu).
OPINION
$8.43 per unit.
The government has slashed price ceiling for gas produced from deepwater, ultra-
deepwater and high pressure-high temperature areas of Indian sedimentary basins by over
33% to $5.61 per unit for the first half of current financial year.
according to two official notifications.
mature.
energy markets.
energy markets.
said. The formula is linked with the weighted average price of four global benchmarks — the
Henry Hub of USA, the Canada-based Alberta gas, the UK-based NBP and the Russian gas.

Price Ceilings
If a good faces inelastic demand, a price ceiling will lower the supplier's profits since the
decrease in price will cause a disproportionately smaller increase in demand. Thus, the lower
prices will offset the decrease in sales volume.
How does price ceiling affect government?
When a price ceiling is set below the equilibrium price, quantity demanded will exceed
quantity supplied, and excess demand or shortages will result. ... When government laws
regulate prices instead of letting market forces determine prices, it is known as price control.
What are the implications of price ceiling?
Image result for impact of price ceiling in country & Implications of a Price Ceiling
When an effective price ceiling is set, excess demand is created coupled with a supply
shortage – producers are unwilling to sell at a lower price and consumers are demanding
cheaper goods. Therefore, deadweight loss is created.
9. Prices of oxygen concentrators, oximeters,
nebulisers jump by up to 100% despite cap
Prices of oxygen concentrators, oximeters and nebulisers have surged 50-100% over the
past ten days, with a huge demand-supply mismatch amid the second wave of the
coronavirus pandemic. Ecommerce giant Amazon said it has started removing listings of
accounts selling these products above MRP, even as the organised medical devices
industry, legal entities and consumers called for enforcing pricing control over these
products.
Prices of oxygen concentrators, which generate oxygen from air, have almost doubled, while
those of oximeters have shot up by Rs 1,000-2,000 over the past seven days alone. Prices
have shot up across both offline stores and e-commerce platforms including Amazon and
Flipkart. The government had last year put a cap on the prices of these products, but it is not
being followed by some sellers, companies and importers. An Amazon India spokesperson
said the company is taking immediate steps to halt the surge pricing.
“We are disappointed that some sellers are attempting to raise prices beyond the MRP on
certain products amid the pandemic. There is no place for price gouging on Amazon and in
line with our policy, we continue to actively monitor our marketplace and take necessary
action including removal of listings and suspension of accounts against sellers who are
selling products above the MRP, which is in violation of Indian laws,” the spokesperson
said. An email seeking comment to Flipkart remained unanswered at press time on Tuesday.
Hundreds of tweets by consumers have gone viral, that they had to shell out more than Rs 1
lakh to buy oxygen concentrators, which would usually be available for Rs 45,000. Monthly
rentals for the device, too, have shot up from Rs 5,000 to Rs 10,000-20,000.
“A lot of traders and importers, even on online marketplaces like Amazon and Flipkart, have
increased prices of Covid-essential medical products by two-four times in just a week. The
problem is more with imported products by opportunistic traders who import these products
at low prices and then keep on increasing prices to take advantage of the situation and blame
it on their suppliers,” said Rajiv Nath, forum co-ordinator of the Association of Indian
Medical Device Industry. Oxygen concentrator seller BPL Medical chief executive Sunil
Khurana said the company has reached out to its distributors and dealers and asked them not
to sell beyond a certain price and maintain the margin at a reasonable level since several
players are selling the products at exorbitant prices.
SUMMARY
The problem is more with imported products by opportunistic traders who import these
products at low prices and then keep on increasing prices to take advantage of the situation
and blame it on their suppliers,” said Rajiv Nath, forum co-ordinator of the Association of
Indian Medical Device Industry. Oxygen concentrator seller BPL Medical chief executive
Sunil Khurana said the company has reached out to its distributors and dealers and asked
them not to sell beyond a certain price and maintain the margin at a reasonable level since
several players are selling the products at exorbitant prices.
Ecommerce giant Amazon said it has started removing listings of accounts selling these
products above MRP, even as the organised medical devices industry, legal entities and
consumers called for enforcing pricing control over these products.
There is no place for price gouging on Amazon and in line with our policy, we continue to
actively monitor our marketplace and take necessary action including removal of listings and
suspension of accounts against sellers who are selling products above the MRP, which is in
violation of Indian laws,” the spokesperson said.
coronavirus pandemic.
those of oximeters have shot up by Rs 1,000-2,000 over the past seven days alone.
increased prices of Covid-essential medical products by two-four times in just a week.
“We are disappointed that some sellers are attempting to raise prices beyond the MRP on
certain products amid the pandemic. The government had last year put a cap on the prices of
these products, but it is not being followed by some sellers, companies and importers.
Hundreds of tweets by consumers have gone viral, that they had to shell out more than Rs 1
lakh to buy oxygen concentrators, which would usually be available for Rs 45,000. Prices
have shot up across both offline stores and e-commerce platforms including Amazon and
Flipkart. An Amazon India spokesperson said the company is taking immediate steps to halt
the surge pricing. Monthly rentals for the device, too, have shot up from Rs 5,000 to Rs
10,000-20,000.
OPINION
The problem is more with imported products by opportunistic traders who import these
products at low prices and then keep on increasing prices to take advantage of the situation
and blame it on their suppliers,” said Rajiv Nath, forum co-ordinator of the Association of
Indian Medical Device Industry. Oxygen concentrator seller BPL Medical chief executive
Sunil Khurana said the company has reached out to its distributors and dealers and asked
them not to sell beyond a certain price and maintain the margin at a reasonable level since
several players are selling the products at exorbitant prices. Ecommerce giant Amazon said it
has started removing listings of accounts selling these products above MRP, even as the
organised medical devices industry, legal entities and consumers called for enforcing pricing
control over these products. There is no place for price gouging on Amazon and in line with
our policy, we continue to actively monitor our marketplace and take necessary action
including removal of listings and suspension of accounts against sellers who are selling
products above the MRP, which is in violation of Indian laws,” the spokesperson said.
coronavirus pandemic.
those of oximeters have shot up by Rs 1,000-2,000 over the past seven days alone.
increased prices of Covid-essential medical products by two-four times in just a week.
EFFECT IN THE ECONOMY:
A devastating second wave of coronavirus across India saw the daily demand for
supplemental medical oxygen rising to roughly 12 times what was needed pre-COVID-19
times, with a catastrophic impact during March, April, and early May, 2021. The health
sector, so long neglected with chronic under investment, was simply unable to speedily
ramp up critical care, to provide oxygenated hospital beds, ICUs, medicines, and
ventilators, much less back up supplies. Demand for oxygen far exceeded the immediate
availability, and existing hospitals and crematoriums were completely swamped and
overwhelmed. Some state governments, however, notably Kerala, had planned in advance,
and overall maintained a surplus of oxygen.
Additionally, there are problems of geography and logistics. Cryogenic liquid oxygen for
medical use is produced off-site, mostly concentrated in eastern India, at 4000MT per day.
The unprecedented numbers of preventable oxygen starvation deaths during the COVID-
19 pandemic have highlighted that the current model of obtaining medical oxygen is
unsound and dysfunctional.
10. Ford wakes up badly burnt from its India

dream
When Ford Motor Co built its first factory in India in the mid-1990s, US carmakers
believed they were buying into a boom - the next China.
The economy had been liberalised in 1991, the government was welcoming investors,
and the middle class was expected to fuel a consumption frenzy. Rising disposable
income would help foreign carmakers to a market share of as much as 10 per cent,
forecasters said.
It never happened.
Last week, Ford took a $2 billion hit to stop making cars in India, following
compatriots General Motors Co and Harley-Davidson Inc in closing factories in the
country.
Among foreigners that remain, Japan's Nissan Motor Co Ltd and even Germany's
Volkswagen AG - the world's biggest automaker by sales - each hold less than 1 per
cent of a car market once forecast to be the third-largest by 2020, after China and the
United States, with annual sales of 5 million.
Instead, sales have stagnated at about 3 million cars. The growth rate has slowed to 3.6
per cent in the last decade versus 12 per cent a decade earlier.
Ford's retreat marks the end of an Indian dream for US carmakers. It also follows its
exit from Brazil announced in January, reflecting an industry pivot from emerging
markets to what is now widely seen as make-or-break investment in electric vehicles.
Analysts and executives said foreigners badly misjudged India's potential and
underestimated the complexities of operating in a vast country that rewards domestic
procurement.
Many failed to adapt to a preference for small, cheap, fuel-efficient cars that could
bump over uneven roads without needing expensive repairs. In India, 95 per cent of
cars are priced below $20,000.
Lower tax on small cars also made it harder for makers of larger cars for Western
markets to compete with small-car specialists such as Japan's Suzuki Motor Corp -
controlling shareholder of Maruti Suzuki India Ltd, India's biggest carmaker by sales.
Of foreign carmakers that invested alone in India over the past 25 years, analysts said
only South Korea's Hyundai Motor Co stands out as a success, mainly due to its wide
portfolio of small cars and a grasp of what Indian
buyers want.
"Companies invested on the fallacy that India would have great potential and the
purchasing power of buyers would go up, but the government failed to create that kind
of environment and infrastructure," said Ravi Bhatia, president for India at JATO
Dynamics, a provider of market data for the auto industry.
Some of Ford's missteps can be traced to when it drove into India in the mid-1990s
alongside Hyundai. Whereas Hyundai entered with the small, affordable "Santro", Ford
offered the "Escort" saloon, first launched in Europe in the 1960s.
The Escort's price shocked Indians used to Maruti Suzuki's more affordable prices,
said former Ford India executive Vinay Piparsania.
Ford's narrow product range also made it hard to capitalise on the appeal won by its
best-selling EcoSport and Endeavour sport utility vehicles (SUVs), said analyst
Ammar Master at LMC.
The carmaker said it had considered bringing more models to India but determined it
could not do so profitably.
"The struggle for many global brands has always been meeting India's price point
because they brought global products that were developed for mature markets at a
high-cost structure," said Master.
A peculiarity of the Indian market came in mid-2000 with a lower tax rate for cars
measuring less than 4 metres (13.12 ft) in length. That left Ford and rivals building
India-specific sub-4 metre saloons for which sales ultimately disappointed.
"US manufacturers with large truck DNAs struggled to create a good and profitable
small vehicle. Nobody got the product quite right and losses piled up," said JATO's
Bhatia.
Ford had excess capacity at its first India plant when it invested $1 billion on a second
in 2015. It had planned to make India an export base and raise its share of a market
projected to hit 7 million cars a year by 2020 and 9 million by 2025.
But the sales never followed a nd overall market growth stalled. Ford now utilises only
about 20 per cent of its combined annual capacity of 440,000 cars.
To use its excess capacity, Ford planned to build compact cars in India for emerging
markets but shelved plans in 2016 amid a global consumer preference shift to SUVs.
It changed its cost structure in 2018 and the following year started work on a joint
venture with local peer Mahindra & Mahindra Ltd designed to reduce costs. Three
years later, in December, the partners abandoned the idea.
SUMMARY
Of foreign carmakers that invested alone in India over the past 25 years, analysts said only
South Korea's Hyundai Motor Co stands out as a success, mainly due to its wide portfolio of
small cars and a grasp of what Indian
buyers want.
Lower tax on small cars also made it harder for makers of larger cars for Western markets to
compete with small-car specialists such as Japan's Suzuki Motor Corp - controlling
shareholder of Maruti Suzuki India Ltd, India's biggest carmaker by sales.
"Companies invested on the fallacy that India would have great potential and the purchasing
power of buyers would go up, but the government failed to create that kind of environment
and infrastructure," said Ravi Bhatia, president for India at JATO Dynamics, a provider of
market data for the auto industry.
To use its excess capacity, Ford planned to build compact cars in India for emerging markets
but shelved plans in 2016 amid a global consumer preference shift to SUVs.
"The struggle for many global brands has always been meeting India's price point because
they brought global products that were developed for mature markets at a high-cost
structure," said Master.
Many failed to adapt to a preference for small, cheap, fuel-efficient cars that could bump
over uneven roads without needing expensive repairs.
A peculiarity of the Indian market came in mid-2000 with a lower tax rate for cars measuring
less than 4 metres (13.12 ft) in length.
Last week, Ford took a $2 billion hit to stop making cars in India, following compatriots
General Motors Co and Harley-Davidson Inc in closing factories in the country.
procurement. Among foreigners that remain, Japan's Nissan Motor Co Ltd and even
Germany's Volkswagen AG - the world's biggest automaker by sales - each hold less than 1
per cent of a car market once forecast to be the third-largest by 2020, after China and the
Ford's narrow product range also made it hard to capitalise on the appeal won by its best-
selling EcoSport and Endeavour sport utility vehicles (SUVs), said analyst Ammar Master at
LMC.
Instead, sales have stagnated at about 3 million cars. It had planned to make India an export
base and raise its share of a market projected to hit 7 million cars a year by 2020 and 9
million by 2025.
It changed its cost structure in 2018 and the following year started work on a joint venture
with local peer Mahindra & Mahindra Ltd designed to reduce costs.
The Escort's price shocked Indians used to Maruti Suzuki's more affordable prices, said
former Ford India executive Vinay Piparsania.
The carmaker said it had considered bringing more models to India but determined it could
not do so profitably.
"US manufacturers with large truck DNAs struggled to create a good and profitable small
vehicle.
Ford had excess capacity at its first India plant when it invested $1 billion on a second in
2015.
The economy had been liberalised in 1991, the government was welcoming investors, and
the middle class was expected to fuel a consumption frenzy. Rising disposable income would
help foreign carmakers to a market share of as much as 10 per cent, forecasters said.
Ford's retreat marks the end of an Indian dream for US carmakers.
Some of Ford's missteps can be traced to when it drove into India in the mid-1990s alongside
Hyundai. Ford now utilises only about 20 per cent of its combined annual capacity of
440,000 cars. The growth rate has slowed to 3.6 per cent in the last decade versus 12 per cent
a decade earlier.
It never happened.
In India, 95 per cent of cars are priced below $20,000. It also follows its exit from Brazil
announced in January, reflecting an industry pivot from emerging markets to what is now
widely seen as make-or-break investment in electric vehicles. But the sales never followed a
nd overall market growth stalled. That left Ford and rivals building India-specific sub-4
metre saloons for which sales ultimately disappointed. Nobody got the product quite right
and losses piled up," said JATO's Bhatia.
OPINION
Of foreign carmakers that invested alone in India over the past 25 years, analysts said only
South Korea's Hyundai Motor Co stands out as a success, mainly due to its wide portfolio of
small cars and a grasp of what Indian
buyers want.
Lower tax on small cars also made it harder for makers of larger cars for Western markets to
compete with small-car specialists such as Japan's Suzuki Motor Corp - controlling
shareholder of Maruti Suzuki India Ltd, India's biggest carmaker by sales.
"Companies invested on the fallacy that India would have great potential and the purchasing
power of buyers would go up, but the government failed to create that kind of environment
and infrastructure," said Ravi Bhatia, president for India at JATO Dynamics, a provider of
market data for the auto industry.
To use its excess capacity, Ford planned to build compact cars in India for emerging markets
but shelved plans in 2016 amid a global consumer preference shift to SUVs.
"The struggle for many global brands has always been meeting India's price point because
they brought global products that were developed for mature markets at a high-cost
structure," said Master.
Many failed to adapt to a preference for small, cheap, fuel-efficient cars that could bump
over uneven roads without needing expensive repairs.
A peculiarity of the Indian market came in mid-2000 with a lower tax rate for cars measuring
less than 4 metres (13.12 ft) in length.
Last week, Ford took a $2 billion hit to stop making cars in India, following compatriots
General Motors Co and Harley-Davidson Inc in closing factories in the country.
procurement. Among foreigners that remain, Japan's Nissan Motor Co Ltd and even
Germany's Volkswagen AG - the world's biggest automaker by sales - each hold less than 1
per cent of a car market once forecast to be the third-largest by 2020, after China and the
Ford's narrow product range also made it hard to capitalise on the appeal won by its best-
selling EcoSport and Endeavour sport utility vehicles (SUVs), said analyst Ammar Master at
LMC.
Instead, sales have stagnated at about 3 million cars. It had planned to make India an export
base and raise its share of a market projected to hit 7 million cars a year by 2020 and 9
million by 2025.
It changed its cost structure in 2018 and the following year started work on a joint venture
with local peer Mahindra & Mahindra Ltd designed to reduce costs.

US automaker Ford Motor Co has infused more than Rs 5,000 crore in its Indian subsidiary,
just weeks into announcing its exit from this market.
The funds have been infused in two tranches — Rs 2,175 crore in September and Rs 2,900
crore this month, totalling Rs 5,075 crore, according to financial data sourced through
business intelligence platform Tofler.
The reason behind the fund infusion in the Indian subsidiary is not known, but it is likely to
be used for settling outstanding payments with dealers and vendors, and providing separation
packages to employees.
With close to $2 billion of accumulated loss and falling volumes in India, Ford Motor was
compelled to pull the shutters down on its subsidiary here. The decision has impacted more
than 4,000 employees across its manufacturing facilities and corporate offices.
Within a month of pulling the plug on the Indian operation, Ford India managing director
Anurag Mehrotra had exited the company and joined Tata Motors.
At the time of announcing its exit from India last month, Ford had said it was expected to
take a pre-tax special item charge of about $2 billion — about $0.6 billion in 2021, $1.2
billion in 2022 and the balance in subsequent years. Of this, the cash charges total about $1.7
billion and will be paid primarily in 2022 towards settlements and other payments, it had
said.
11. IMF sees global GDP in 2021 slightly below
prior forecast of 6%
WASHINGTON: The International Monetary Fund (IMF) expects global economic

growth in 2021 to fall slightly below its July forecast of 6%, IMF chief Kristalina Georgieva
said on Tuesday, citing risks associated with debt, inflation and divergent economic trends in
the wake of the Covid-19 pandemic.
Georgieva said the global economy was bouncing back but the pandemic continued to limit
the recovery, with the main obstacle posed by the "Great Vaccination Divide" that has left
too many countries with too little access to Covid vaccines.
In a virtual speech at Bocconi University in Italy, Georgieva said next week's updated World
Economic Outlook would forecast that advanced economies will return to pre-pandemic
levels of economic output by 2022 but most emerging and developing countries will need
"many more years" to recover.
SUMMARY
In a virtual speech at Bocconi University in Italy, Georgieva said next week's updated World
Economic Outlook would forecast that advanced economies will return to pre-pandemic
levels of economic output by 2022 but most emerging and developing countries will need
"many more years" to recover. The International Monetary Fund (IMF) expects global
economic growth in 2021 to fall slightly below its July forecast of 6%, IMF chief Kristalina
Georgieva said on Tuesday, citing risks associated with debt, inflation and divergent
economic trends in the wake of the Covid-19 pandemic.
Georgieva said the global economy was bouncing back but the pandemic continued to limit
the recovery, with the main obstacle posed by the "Great Vaccination Divide" that has left
too many countries with too little access to Covid vaccines.
OPINION
In a virtual speech at Bocconi University in Italy, Georgieva said next week's updated
World Economic Outlook would forecast that advanced economies will return to pre-
pandemic levels of economic output by 2022 but most emerging and developing countries
will need "many more years" to recover.
The International Monetary Fund (IMF) expects global economic growth in 2021 to fall
slightly below its July forecast of 6%, IMF chief Kristalina Georgieva said on Tuesday,
citing risks associated with debt, inflation and divergent economic trends in the wake of the
Covid-19 pandemic.

A Survey by the IMF staff usually published twice a year. It presents IMF staff economists'
analyses of global economic developments during the near and medium term.
Chapters give an overview as well as more detailed analysis of the world economy; consider
issues affecting industrial countries, developing countries, and economies in transition to
market; and address topics of pressing current interest. Annexes, boxes, charts, and an
extensive statistical appendix augment the text.
Prospects for emerging market and developing economies have been marked down for
2021, especially for Emerging Asia.
By contrast, the forecast for advanced economies is revised up. These revisions reflect
pandemic developments and changes in policy support. The 0.5 percentage-point upgrade for
2022 derives largely from the forecast upgrade for advanced economies, particularly the
United States, reflecting the anticipated legislation of additional fiscal support in the second
half of 2021 and improved health metrics more broadly across the group.
Global growth remains subdued. Global growth is forecast at 3.2 percent in 2019, picking up
to 3.5 percent in 2020 (0.1 percentage point lower than in the April WEO projections for
both years). GDP releases so far this year, together with generally softening inflation, point
to weaker-than-anticipated global activity.
12. Covid takes away at least 2 years of India's

growth, GDP Still below pre- pandemic levels
India’s Gross Domestic Product (GDP) in the quarter ending June 2021 grew by a whopping
20.1 per cent on-year, riding on a low base. Amid the business shutdown and strict
restrictions on movement, India’s economy had nosedived by 24.4 per cent in the first
quarter of last fiscal. Though the growth percentage looks large, India would need some
more time to recover from the devastation caused by the pandemic. That too, when the
country was already reeling under stress since 2018.
Despite a record jump, India’s Q1 FY22 real GDP was well below the pre-pandemic level of
Q1 FY20. India’s GDP in Q1 FY22 (Rs 32.38 lakh crore) is nearly nine per cent below the
Q1 FY20 level (Rs 35.67 lakh crore). This shows how the pandemic took away at least two
years of India’s economic growth.
Manufacturing and construction sectors had taken a massive blow and succumbed to the
strict nationwide lockdown, forcing agriculture to single-handedly carry the baton of the
Indian economy during the pandemic.
While manufacturing had fallen by 36 per cent, the construction sector had shrunk by nearly
half (49.5 per cent).
In the current fiscal’s first quarter, the damage has been repaired to an extent, but the pre-
pandemic level is still a distant dream for both areas that are also among the largest
employers. In Q1 FY22, manufacturing is 4.2 per cent while construction is 14.9 per cent
below the Q1 FY20 levels.
There will be a modest contraction over pre-Covid levels in the second quarter, as agriculture
and industries will be higher, but services will still be lower, she added.
Some experts point out a silver lining too.
“Though it was feared that the second wave would make a deeper dent on India’s economy,
it did not play out that way. The learnings from the first wave helped Indians cope with the
second,” Madhavi Arora, lead economist at Emkay Global, told DIU.
Going forward, exports and government investments could provide immediate support to the
economy, which is expected to reach pre-pandemic levels between September 2021 and
March 2022, she added.
SUMMARY
employers.
and industries will be higher, but services will still be lower, she added. Amid the business
shutdown and strict restrictions on movement, India’s economy had nosedived by 24.4 per
cent in the first quarter of last fiscal. In Q1 FY22, manufacturing is 4.2 per cent while
construction is 14.9 per cent below the Q1 FY20 levels.
20.1 per cent on-year, riding on a low base.
India’s GDP in Q1 FY22 (Rs 32.38 lakh crore) is nearly nine per cent below the Q1 FY20
level (Rs 35.67 lakh crore).
“Though it was feared that the second wave would make a deeper dent on India’s economy,
it did not play out that way. Despite a record jump, India’s Q1 FY22 real GDP was well
below the pre-pandemic level of Q1 FY20.
Though the growth percentage looks large, India would need some more time to recover
from the devastation caused by the pandemic. This shows how the pandemic took away at
least two years of India’s economic growth.
The learnings from the first wave helped Indians cope with the second,” Madhavi Arora,
lead economist at Emkay Global, told DIU.
Some experts point out a silver lining too.

OPINION
employers.
and industries will be higher, but services will still be lower, she added. Amid the business
shutdown and strict restrictions on movement, India’s economy had nosedived by 24.4 per
cent in the first quarter of last fiscal. In Q1 FY22, manufacturing is 4.2 per cent while
construction is 14.9 per cent below the Q1 FY20 levels.
20.1 per cent on-year, riding on a low base. India’s GDP in Q1 FY22 (Rs 32.38 lakh crore) is
nearly nine per cent below the Q1 FY20 level (Rs 35.67 lakh crore).

As per the official data released by the ministry of statistics and program implementation, the
Indian economy contracted by 7.3% in the April-June quarter of this fiscal year. This is the
worst decline ever observed since the ministry had started compiling GDP stats quarterly in
1996. In 2020, an estimated 10 million migrant workers returned to their native places after
the imposition of the lockdown.
The government extended their help to migrant workers who returned to their native places
during the second wave of the corona, apart from just setting up a digital-centralized
database system.
The second wave of Covid-19 has brutally exposed and worsened existing vulnerabilities in
the Indian economy. India’s $2.9 trillion economy remains shuttered during the lockdown
period, except for some essential services and activities. As shops, eateries, factories,
transport services, business establishments were shuttered, the lockdown had a devastating
impact on slowing down the economy.
India’s GDP contraction during April-June could well be above 8% if the informal sectors
are considered. Private consumption and investments are the two biggest engines of India’s
economic growth. All the major sectors of the economy were badly hit except agriculture.
The surveys conducted by the Centre For Monitoring Indian Economy shows a steep rise in
unemployment rates, in the range of 7.9% to 12% during the April-June quarter of 2021. The
economy is having a knock-on effect with MSMEs shutting their businesses.
Millions of jobs have been lost permanently and have dampened consumption. The
government should be ready to spend billions of dollars to fight the health crisis and fast-
track the economic recovery from the covid-19 instigated recession. The most effective way
out of this emergency is that the government should inject billions of dollars into the
economy.
The GDP growth had crashed 23.9% in response to the centre’s no notice lockdown. India’s
GDP shrank 7.3% in 2020-21. This was the worst performance of the Indian economy in any
year since independence. As of now, India’s GDP growth rate is likely to be below 10 per
cent.
What is the path to recovery?
If the outbreak worsens over time, or if the case numbers are very high, this would elevate
the risk to India’s economic and fiscal recovery.
The Indian economy should resume its recovery once the covid waves recede and the Indian
economy will continue to grow at a faster pace than its peers at similar levels of per capita
income around the world. On the downside, there will be less vigorous recoveries in the
government revenues and severe downside scenarios may entail additional fiscal spending.
Commodities and the automobile sector are severely affected by the initial stream of
infections and associated lockdown measures. It recovered strongly in the second half of
2021.
13. Government ask powerplant to blend 10%
imported coal to step up supply
The government has asked thermal power units to restart the discontinued practice of
blending 10% imported coal on concerns over depleting stock, while the coal and power
ministries will explore ways to further enhance supplies, sources told ET after high-profile
deliberations on Tuesday.
Secretaries of coal and power ministries at a review told the Prime Minister's Office (PMO)
that coal dispatches to power plants have exceeded daily consumption. Both the ministries
will also work on improving coal logistics, as Coal India has stocks of about 40 million
tonnes at its mines.
Sources said coal dispatches to thermal power plants rose to 1.95 million tonnes on October
11 against a consumption of 1.9 million tonnes. Dispatches are expected to increase to 2
million tonnes a day and the situation is expected to improve soon.
Outages Continued
"The Prime Minister's Office reviewed the coal stock position at thermal power plants and
the measures being taken by the coal and power ministries to contain the crisis as electricity
consumption is expected to remain high for a few more days," an official said.
This came after several states complained of low coal stocks, with some even resorting to
load-shedding over the last few days.
The power ministry earlier on Tuesday directed thermal power plants to blend 10% imported
coal, citing fast-depleting coal inventories at power stations.
All thermal power plants can accommodate nearly 20% imported coal, but the practice was
stopped around 4-5 years ago due to increased availability of domestic coal and less
generation capacity utilisation.
A senior government official told ET that the cost of imported coal can be passed on to
consumers, but electricity generating companies said importing coal at prevailing high prices
and at short notice was not possible.
Also, the power stations need approval from discoms to import coal for blending.
Coal imported from Indonesia is at a historic high of $160 per tonne, from about $50 a tonne
in March. This is nearly five times the price of domestic coal.
Outages continued in Punjab, Uttar Pradesh and Rajasthan, though the situation was better
than on Monday.
Sources in the Gujarat government told ET that the state was working to get three imported
coal-based plants to start generating power soon.
The state has three imported coal plants run by Tata Power (4,000 mw), Adani Power (4,620
mw) and Essar Power (1,200 mw) which are currently non-operational due to high fuel
prices.
"We are buying a substantial amount of power from the exchange at around Rs 13 per unit.
We expect to reach a consensus in 2-3 days. If this happens, prices on exchange will reduce
too," a source said.
The power ministry also issued guidelines to states asking them to not divert electricity
allocated by the Centre from its share of coal-based power stations of central Public Sector
Undertakings. The ministry asked states not to sell this electricity on power exchanges.
Normally, 15% of the capacity of central power generating stations is reserved as

"unallocated" quota for the Centre, which is subsequently allocated to states as per a fixed
formula.
The coal and power ministries have both said that coal stocks are likely to rise as supply
stabilises and electricity demand wanes with favourable weather.
Average power prices on spot markets for delivery on Wednesday dropped by ₹2 per unit
but remains high at ₹13.13 per unit.
As of October 11, over 140 Gw of the 165 Gw monitored capacity had coal stock of fewer
than seven days. The average coal stock position remained low, at four days.
The Central Electricity Authority (CEA), which is the technical wing of the power ministry,
on Tuesday issued a communication asking power companies operating domestic coal-based
power plants to start blending 10% imported coal.
“During the period August to September, the share of coal-based generation has increased
from about 62% in 2019 to 66% in 2021. As a consequence, total consumption during Aug-
Sep has increased by about 18% in comparison to the corresponding period in 2019.
However, the supply of coal from CIL (Coal India) is not commensurate with the
requirement. Hence, the coal stock available with the power plants is depleting fast,”
according to the communication.
Domestic thermal coal-based power plants will use imported coal up to 10% for blending
with domestic coal, whenever feasible, to meet the increased power demand in the country, it
added.
All generation companies “shall expedite the process of importing coal for blending to meet
the requirement,” it added.
The power ministry also asked the states to utilise the Centre’s unallocated power for
supplying electricity to consumers within the state and any surplus power to be reallocated to
other needy states.
Sources said Coal India had 100 million tonnes of stock at the start of the financial year, but
states did not take delivery despite repeated reminders.
The company does not hold stocks over this limit. Subsequently, as international coal prices
rose, states started taking more while extended monsoon rainfall dampened production.
Additionally, nearly 10 states owe over Rs 19,000 crore to CIL, which has impacted
supplies. Maharashtra, West Bengal and Madhya Pradesh owe CIL about Rs 2,600 crore, Rs
2,000 crore and Rs 1,000 crore, respectively, sources said.
SUMMARY
The Central Electricity Authority (CEA), which is the technical wing of the power ministry,
on Tuesday issued a communication asking power companies operating domestic coal-based
power plants to start blending 10% imported coal. Domestic thermal coal-based power plants
will use imported coal up to 10% for blending with domestic coal, whenever feasible, to
meet the increased power demand in the country, it added.
Outages Continued
"The Prime Minister's Office reviewed the coal stock position at thermal power plants and
the measures being taken by the coal and power ministries to contain the crisis as electricity
consumption is expected to remain high for a few more days," an official said.
The power ministry earlier on Tuesday directed thermal power plants to blend 10% imported
coal, citing fast-depleting coal inventories at power stations.
The government has asked thermal power units to restart the discontinued practice of
blending 10% imported coal on concerns over depleting stock, while the coal and power
ministries will explore ways to further enhance supplies, sources told ET after high-profile
deliberations on Tuesday.
The state has three imported coal plants run by Tata Power (4,000 mw), Adani Power (4,620
mw) and Essar Power (1,200 mw) which are currently non-operational due to high fuel
prices.
Secretaries of coal and power ministries at a review told the Prime Minister's Office (PMO)
that coal dispatches to power plants have exceeded daily consumption. The power ministry
also issued guidelines to states asking them to not divert electricity allocated by the Centre
from its share of coal-based power stations of central Public Sector Undertakings.
All thermal power plants can accommodate nearly 20% imported coal, but the practice was
stopped around 4-5 years ago due to increased availability of domestic coal and less
generation capacity utilisation. The power ministry also asked the states to utilise the
Centre’s unallocated power for supplying electricity to consumers within the state and any
surplus power to be reallocated to other needy states.
The coal and power ministries have both said that coal stocks are likely to rise as supply
stabilises and electricity demand wanes with favourable weather.
OPINION
Sources in the Gujarat government told ET that the state was working to get three imported
coal-based plants to start generating power soon.
Sources said coal dispatches to thermal power plants rose to 1.95 million tonnes on October
11 against a consumption of 1.9 million tonnes.
Sources said Coal India had 100 million tonnes of stock at the start of the financial year, but
states did not take delivery despite repeated reminders. Also, the power stations need
approval from discorns to import coal for blending.
However, the supply of coal from CIL (Coal India) is not commensurate with the
requirement. Both the ministries will also work on improving coal logistics, as Coal India
has stocks of about 40 million tonnes at its mines. Hence, the coal stock available with the
power plants is depleting fast,” according to the communication.
All generation companies “shall expedite the process of importing coal for blending to meet
the requirement,” it added.
“During the period August to September, the share of coal-based generation has increased
from about 62% in 2019 to 66% in 2021.
Most of India’s coal-fired power plants have critically low levels of coal inventory at a time
when the economy is picking up and fueling electricity demand. Coal accounts for
around 70% of India’s electricity generation. A potential power crisis would likely have an
immediate impact on India’s nascent economic recovery which is being led by industrial
activity instead of services, according to Kunal Kundu, India economist at Society General.
Government data showed that as of Oct. 6, 80% of India’s 135 coal-powered plants had less
than 8 days of supplies left — more than half of those had stocks worth two days or fewer.
By comparison, over the last four years, the average coal inventory that power plants had
was around 18 days’ worth of supply, according to Hetal Gandhi, director of research at
ratings firm CRISIL, a subsidiary of S&P Global.
How did we get here?
A combination of supply factors and falling coal imports led to the current crisis,
commentators told CNBC.
India saw a spike in power demand between April and August. It came as the economy
regained momentum following a devastating second wave of Covid-19.
14. Higher tax buoyancy augurs well for

India's expansionary fiscal policy
Seldom we see government revenues running ahead of the budgeted targets in India. But this
year, it seems that rarity would strike. Despite the dreadful second Covid wave crippling
economic activities during April-May of the current fiscal, a remarkable jump in central
government revenues this year has left everyone astounded.
During the first four months of this fiscal, the central government gross tax revenues have
surged to Rs 7 trillion, nearly twice the gross tax revenues garnered during the same period
last year. It’s plausible to argue that the sharp jump in revenues might be exaggerated due to
the extremely low base of last year when Covid-19 first struck us, bringing the economy to a
screeching halt. But even if we compare it with the pre-Covid period, government revenues
are still up 29.1% against the first four months of 2019-20, which is no mean feat given the
fact that economic activities were marred by partial lockdowns this year as well.
A further analysis of data divulges that the sharp rise in government revenues is quite broad-
based and is not led by any one-off factors. For example, the personal income tax collections
rose to Rs 1.61 trillion during April-July 2021-22, the highest-ever during the first four
months of any fiscal year.
Similarly, the corporate tax collections surged to Rs 1.46 trillion, again the highest-ever in
the first four months of any fiscal year. The indirect tax collections have also surged to Rs
3.8 trillionn during the same period, up 19.5% against the same period last year.
Five factors are driving the revenues ahead of expectations. One, companies in the tech
sector (software development, artificial intelligence, robotics and data science etc.) have
offered enormous salary increments in a range of 20% to 60% this year in order to keep the
mounting attrition rate under check. Tech firms are vying with each other to entice IT
professionals who, out of the blue, are in huge demand due to the pandemic induced digital
boost. This has given a fillip to personal income tax collections.
Two, surge in Security Transaction Tax (STT) collection is also aiding personal income tax
collections led by surge in stock markets. Three, corporates have seen an upward revision in
their earnings led by pent up demand and cost saving measures embraced during the
pandemic, resulting in higher tax payment to the government. Four, the excise duty hikes
implemented when crude oil prices had fallen to around $30/bbl last year are also
contributing to higher excise duty collections as petroleum products consumption returns to
normalcy. Five, tax authorities tightening the screws on the compliance front is also one of
the reasons for buoyancy in government revenues.
In total, the central government could garner Rs 3.2 trillion surplus revenue over and above
the budgeted targets for 2021-22 on account of higher than budgeted collection from excise
duty collections by Rs 90,100 crore, GST by Rs 78,000 crore, dividend from RBI and PSUs
by Rs 70,100 crore, direct taxes by Rs 52,200 crore and custom duty collections by Rs
25,000 crore.
What would the government do with this windfall gain in revenue? From the Rs 3.2 trillion
likely surplus revenues, around Rs 79,600 crore would go to states as part of devolution,
which would help mend state government finances. Then the central government would have
a net Rs 2.4 trillion surplus revenue over and above the budgeted revenue target for the year.
To my mind, the government would have four options to spend this money. One, it can bump
up spending on public infrastructure (capex), which would create employment and
recuperate economic activities leading to lingering economic revival.
Two, the government can cut taxes, especially excise duties on oil or lower GST rates for
some categories in order to spur consumer demand. Three, the government might choose not
to spend it at all and utilize it to reduce the fiscal deficit to 6% of GDP vs. the budgeted 6.8%
of GDP in 2021-22, which would reduce market borrowings and would keep the bond yields
low.
Also, though the government sounds confident to achieve the magnanimous Rs. 1.75-trillion
disinvestment target, a part of the surplus revenues could be used as a revenue shock
absorber in case the LIC or BPCL divestment does not go through.
Buoyancy in government revenues is a welcome surprise and it would provide a fillip to
government confidence to decide future course of action in order to put the economy back on
track. In fact, it has started bearing fruits. The central government has sped up clearing all
pending devolution to states, which in turn, would improve the payment cycle in the
economy.
Comfort on the revenue front has also helped the government to take the decision to scrap
the retrospective taxation on the sale of assets in India by foreign entities executed before
May 2012, which would enhance the long-term growth perspective of the economy. Also,
the government jacked up Capex, which stood at Rs. 1.1tn during the first quarter of 2021-
22, a whopping 77% higher than the first quarter of 2019-20 (pre-Covid period).
To sum it up, the sun is indeed shining for the government finances. Higher than budgeted
revenues are surely going to mend government’s impaired finances in 2021-22.
Even though the naysayers are busy nit-picking, for the government, however, it’s time to
cash in on the surplus revenues and put it to use to expedite economic revival.
SUMMARY
25,000 crore.
last year.
track.
But even if we compare it with the pre-Covid period, government revenues are still up 29.1%
against the first four months of 2019-20, which is no mean feat given the fact that economic
activities were marred by partial lockdowns this year as well. Despite the dreadful second
Covid wave crippling economic activities during April-May of the current fiscal, a
remarkable jump in central government revenues this year has left everyone astounded. Then
the central government would have a net Rs 2.4 trillion surplus revenue over and above the
budgeted revenue target for the year.
cash in on the surplus revenues and put it to use to expedite economic revival. From the Rs
3.2 trillion likely surplus revenues, around Rs 79,600 crore would go to states as part of
devolution, which would help mend state government finances.
Higher than budgeted revenues are surely going to mend government’s impaired finances in
2021-22. For example, the personal income tax collections rose to Rs 1.61 trillion during
April-July 2021-22, the highest-ever during the first four months of any fiscal year.
A further analysis of data divulges that the sharp rise in government revenues is quite broad-
based and is not led by any one-off factors.
Similarly, the corporate tax collections surged to Rs 1.46 trillion, again the highest-ever in
the first four months of any fiscal year.
Comfort on the revenue front has also helped the government to take the decision to scrap
the retrospective taxation on the sale of assets in India by foreign entities executed before
May 2012, which would enhance the long-term growth perspective of the economy.
Three, the government might choose not to spend it at all and utilize it to reduce the fiscal
deficit to 6% of GDP vs. the budgeted 6.8% of GDP in 2021-22, which would reduce market
borrowings and would keep the bond yields low.
Two, the government can cut taxes, especially excise duties on oil or lower GST rates for
some categories in order to spur consumer demand. Two, surge in Security Transaction Tax
(STT) collection is also aiding personal income tax collections led by surge in stock markets.
Three, corporates have seen an upward revision in their earnings led by pent up demand and
cost saving measures embraced during the pandemic, resulting in higher tax payment to the
government.
Four, the excise duty hikes implemented when crude oil prices had fallen to around $30/bbl
last year are also contributing to higher excise duty collections as petroleum products
consumption returns to normalcy. Five, tax authorities tightening the screws on the
compliance front is also one of the reasons for buoyancy in government revenues.
OPINION
25,000 crore.
last year.
track. But even if we compare it with the pre-Covid period, government revenues are still up
29.1% against the first four months of 2019-20, which is no mean feat given the fact that
economic activities were marred by partial lockdowns this year as well.
Despite the dreadful second Covid wave crippling economic activities during April-May of
the current fiscal, a remarkable jump in central government revenues this year has left
everyone astounded.
Then the central government would have a net Rs 2.4 trillion surplus revenue over and above
the budgeted revenue target for the year.
cash in on the surplus revenues and put it to use to expedite economic revival. From the Rs
3.2 trillion likely surplus revenues, around Rs 79,600 crore would go to states as part of
devolution, which would help mend state government finances. Higher than budgeted
revenues are surely going to mend government’s impaired finances in 2021-22.

Some tax changes occur as a response to economic growth, and looking at a tax cut at a
certain point in time could lead to the mistaken conclusion that tax cuts are bad for growth,
since tax cuts are often enacted during economic downturns.
He finds positive impacts of tax cuts on economic growth following two years after the
change in policy but finds that tax cuts for low- and moderate-income taxpayers affect
growth more than tax cuts for high-income taxpayers.
Tax positive fiscal policies include tax increases to fund productive investment, decreases in
distortionary taxation combined with increases in non-distortionary taxation, or tax increases
to reduce the deficit.
The effects of consumption tax cuts are comparatively smaller and did not produce
statistically significant effects, but the paper finds that switching from an income to a
consumption tax base has positive effects on growth.
The authors disaggregate policy changes into three categories: tax negative fiscal policies,
tax positive fiscal policies, and tax ambiguous fiscal policies. For European industrialized
countries, the authors estimate a tax multiplier of -3.6 for two years after a tax change,
suggesting that tax cuts strongly stimulate economic activity in these countries. They find
that the effect of taxes on growth are highly non-linear:
At low rates with small changes, the effects are essentially zero, but the economic damage
grows with a higher initial tax rate and larger rate changes. Looking at labor supply effects in
particular, he finds that a 1 percent of state GDP tax decrease increases labor force
participation for the bottom 90 percent of earners by 3.5 percentage points and hours worked
by 2 percent.
However, this paper only looks at short-run impacts of tax changes on GDP and does not
consider the broader implication of tax policy on long-run growth, human capital, or
innovation.
Importantly, they find that changes in income following a tax change are responsive to the
marginal rate change regardless of the change in the average tax rate. Some tax changes in
particular may have stronger long-run impacts relative to the short run, such as corporate tax
changes, and a study with only a limited time series would miss this effect.
Using these classifications, the authors find a 10 percent decrease in taxes of a tax negative
fiscal package increases GDP growth by 0.2 percent. The same sized tax decrease for tax
positive fiscal policies reduces GDP growth by 0.2 percent.
15. Explained | What is a bad bank and why

you should care about it !
MUMBAI: Union Finance Minister Nirmala Sitharaman on Thursday announced that the
Cabinet has approved Rs 30,600 crore in security receipts to be issued by the National Asset
Reconstruction Company (NARC) towards resolution of bad loans.
The move is another step in the direction of making the NARC operational. The government
said banks have identified bad loans worth Rs 2 lakh crore, which will be shifted to the
NARC for resolution, and nearly Rs 90,000 crore of bad debt would be resolved in the first
phase.
The NARC is now awaiting a licence of operation from the Reserve Bank of India after
having filed an application with the central bank. The government indicated that the licence
is under process and could be issued soon.
What is NARC?
NARC is basically a bad bank created by the government in the mould of an asset
reconstruction company-cum-asset management company. The NARC will pick up bad
loans above a certain threshold from banks and would aim to sell them to prospective buyers
of distressed debt. The NARC will also be responsible for valuing the bad loans to determine
at what price they would be sold.
Is it a good idea?
The idea of a bad bank in whatever mould has been a hotly debated one in India. Its
supporters have argued its benefits in freeing capital on the balance sheet of PSBs, which can
then kickstart the credit cycle in the economy. Its detractors have argued that it only takes
care of the here and now, but does not fundamentally change the underlying problem of lax
credit standards and appraisal by banks.
Many have argued that governance reforms at state-owned lenders, which account for two-
thirds of the loans in the banking system, would provide a long-term solution to the bad loan
crisis that plagues India every few years.
How will banks benefit from NARC?

For banks, mainly state-owned banks, the NARC is a heaven-sent. It will allow banks to
transfer the bad loans from their balance sheets to NARC. The reduction of bad loans on
balance sheets will allow banks to free up capital that was locked up to cover for the bad
loans. Eventually, a successful resolution of the bad loan will also allow banks to reverse a
substantial chunk of the provisions made by them depending on the amount recovered,
which will boost their earnings.
How will NARC benefit the economy?

The majority of the bad loan pile in India is stuck with the state-owned lenders. The
pandemic has made the crisis worse, although relatively less than what was expected, but
RBI is projecting Indian banking sector GNPAs to rise in 2021-22.
Public sector banks account for the majority of loans generated in the Indian economy and
because their capital has been stuck in providing for the large amount of bad loans, their
ability to lend has been constrained.
Credit growth in India has been largely dormant in the past three years due to low appetite in
the corporate sector and households deleveraging their balance sheet following the IL&FS
crisis and the pandemic.
“Since the banks will remove these NPAs from their balance sheets, they can focus on
lending activities that can help trigger a fresh round of credit off take that the economy badly
needs,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services.
How will it benefit households?

With capital freed up and stress on the balance sheet eased, banks may be more willing to
ease credit standards and borrowing costs for borrowers. While the interest rate that a
borrower pays today is linked to her collateral, credit score and income stream, in times of
economic distress, banks automatically tighten credit standards or charge higher interest
rates to discourage bad actors from borrowing. This form of adverse selection imposes a cost
on the good borrower, who would have otherwise paid lower interest rate on loan due to his
high creditworthiness.
SUMMARY
The reduction of bad loans on balance sheets will allow banks to free up capital that was
locked up to cover for the bad loans.
The government said banks have identified bad loans worth Rs 2 lakh crore, which will be
shifted to the NARC for resolution, and nearly Rs 90,000 crore of bad debt would be
resolved in the first phase.
While the interest rate that a borrower pays today is linked to her collateral, credit score and
income stream, in times of economic distress, banks automatically tighten credit standards or
charge higher interest rates to discourage bad actors from borrowing.
With capital freed up and stress on the balance sheet eased, banks may be more willing to
ease credit standards and borrowing costs for borrowers. It will allow banks to transfer the
bad loans from their balance sheets to NARC.
The NARC will pick up bad loans above a certain threshold from banks and would aim to
sell them to prospective buyers of distressed debt.
Eventually, a successful resolution of the bad loan will also allow banks to reverse a
substantial chunk of the provisions made by them depending on the amount recovered,
which will boost their earnings.
OPINION
The reduction of bad loans on balance sheets will allow banks to free up capital that was
locked up to cover for the bad loans.
The government said banks have identified bad loans worth Rs 2 lakh crore, which will be
shifted to the NARC for resolution, and nearly Rs 90,000 crore of bad debt would be
resolved in the first phase.
While the interest rate that a borrower pays today is linked to her collateral, credit score and
income stream, in times of economic distress, banks automatically tighten credit standards or
charge higher interest rates to discourage bad actors from borrowing.

Broadly speaking, banks would:
-be able to focus on lending instead of loan recovery
-have availability of free capital that can be used more efficiently, since additional
provisioning in connection with the transferred bad loans would not be required to be made
-see an improvement in credit ratings
-potentially see an overall improvement in banking business as investors, depositors and
borrowers are more likely to engage with profitable banks.
Proposal to establish a bad bank:

The annual Budget envisages the setting up of a bad bank in the form of an asset
reconstruction company or an asset management company. The Indian economy has been
reeling under the stress of non-performing loans for quite some time now, and the
government and the Reserve Bank of India (RBI) have, over time, introduced several
measures to contain the rising growth of stressed assets.
In the process, the banks selling such stressed assets will be able to clear their balance sheets
and consequent adverse implications and use their capital more optimally.
Such entity will purchase stressed assets from banks, restructure them and sell them to
investors, seeking to resolve them over time.
In the present pandemic-affected market, the RBI has provided various relaxations to
borrowers (in the form of an option to avail a loan moratorium or loan restructuring).
The proposal to establish a bad bank may be a positive move to relieve banks of their stress
temporarily, given the present market situation particularly exacerbated by the pandemic.

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