ECONOMY UPDATES FEB2APRIL-2020 FOR BATCH CSP20

It’s presumed that you’ve finished my entire economy course, and know the terms that
are already explained in relative pillars (like LLP in Pillar#1C, Hotmoney in Pillar#3 etc)

1 PILLAR#1: MONEY BANKING FINANCE INSURANCE

1.1 💮🔗 MONEY’S EVOLUTION → CRYPTOCURRENCY

1.1.1 💮🔗🐯 Cryptocurrency & India → RBI ban revoked by SC
Since 2013, RBI had been warning Indians not to get involved in cryptocurrency due to
frauds, tax evasion and terror finance.

 2018: RBI directed all banks/NBFCs/PPI/mobile-wallet companies to stop relations

with any Cryptocurrency company.
 Then certain cryptocurrency exchange website companies like CoinDCX etc went to SC
alleging that
✓ Parliament has not made any law declaring this activity as illegal (unlike
possession cocaine / narcotics.)
✓ Even Japan, USA, Singapore etc has not completely banned investment in
cryptocurrency but imposed regulations to control its misuse/fraud.
✓ Anekantavada philosophy of Jainism: 4 blind men try to describe an elephant
but end up describing only one physical feature of the elephant.
✓ Similarly, without fully studying the nature/impact of cryptocurrency, a
blanket ban was placed, which has killed their business since no bank is opening
their bank accounts.
 2020-March: SC revoked the RBI ban because:
✓ Article: 19(1)(g): All citizens have the right to practise any profession (व्यवसाय
का हक)- including those companies dealing with cryptocurrency.
✓ Same objective (financial fraud protection) could be achieved by imposing a
less drastic ban.
✓ So, RBI ban did not pass the test of proportionality (अनपु ातिकिा की परीक्षा).
Proportionality test is a legal method used by courts in matters where State’s
decision (for public safety/welfare e.g. Aadhar card or Bitcoin ban) interferes
with fundamental rights of people (right to privacy, right to business)

What next? RBI may release a calibrated regulation on cryptocurrency e.g. PAN card
required, can’t invest more than ₹”x” lakh per month etc. topic is still developing.

1.2 🐯🤧📢RBI’S MONETARY POLICIES: CORONA MARCH-APRIL’20

2020-  RBI Monetary Policy Committee meetings are held at the interval of 2
March, months.
last week  So after the previous release in February 2020 → next release was
scheduled in 2020-April
 But, due to Corona outbreak, RBI held the meeting sooner in the last
week of March-2020, instead of April.

(Batch: CSP20) Mrunal’s Economy updates for all pillars Feb2Apr 2020 → Page 591
 2020-  RBI governor holds press conference announcing some additional
April, 17th measures to revive economy against Corona.
 As we learned, MPC Committee only has one task- decide repo rate. All
other measures like CRR cut, EMI moratorium, BASEL-III implementation
etc depend solely on RBI Governor’s discretion. These measures don’t
require MPC Voting or approval.
The gist of above March-April announcements are as following:

1.2.1 🐯🤧: Cash Reserve Ratio ⏬ to ⏫ loanable funds

 100 bps cut (meaning 1%) cut in CRR so 4%-1%=3% CRR for a period of 1 year (upto
2021-March).
 This will ⏫ the loanable funds available with the banks by about ₹1.37 lakh crores.
 Further, Banks are required to calculate CRR on a fortnightly (15 days) basis. They
have to maintain at least 90% of that amount in CRR on daily basis. RBI also ⏬
minimum daily CRR balance maintenance from 90% to 80% upto 2020-June. But this
part of information is not really important for the scope of civil service exam. So,
don’t lose sleep if some idiotic private Mocktest quiz master framing MCQs like this

1.2.2 🐯🤧:Repo Rate ⏬ to cheapen the loans & revive economy

 REPO Rate ⏬ by 75 basis points. So, 5.15-0.75= 4.40%.
 This is the largest ever REPO Cut in the history of RBI. (This was not a unanimous
decision, MPC voted with a 4-2 majority)
 Stance: Accommodative. Means in the next meeting they will either ⏬ repo or keep it
unchanged. But no chance of ⏫the repo rate in next meeting.
 Benefit? RBI expects that inflation will be under control because
o monsoon will be normal so food prices (& resultant inflation) will be under
control.
o Corona-led Economic slowdown → demand⏬ → inflation should⏬.
o Crude oil prices also under control due to Corona slowdown.
o Therefore, large reduction in repo rate is justified to boost economic growth,
because inflation is going to be remain under control.

1.2.3 🐯🤧:Targeted Long Term Repo Operations (TLTRO: लक्षित दीर्घकाललक रे पो)
 Tenure? upto 3 years
 Interest Rate? FLOATING RATE linked with REPO Rate. Its exact formula? NOTIMP
 Total quantity? round 1.0= ₹1 lakh crore, round 2.0=₹50,000 crore but figures NOTIMP.
 If a bank borrows ₹₹ from this window → then
o within “X” number of days,
o bank must invest Y% of this borrowed money
o in Debt market instruments/ debt securities (such as corporate bonds/non-
convertible debentures, commercial papers etc.) issued by “Z” borrower.
o “Z” could be a Corporates, Mutual Funds, Non-Banking Financial Companies
(NBFCs) and housing finance companies (HFCs).
 Benefit?
o Debt securities are primary source of funding for NBFCs and HFCs. This measure
will help them obtain funds to revive business.
o Similarly, Mutual Funds and Corporates who need funds, will benefit.

(Batch: CSP20) Mrunal’s Economy updates for all pillars Feb2Apr 2020 → Page 592
 Other motives behind the TLTRO involve “flight of foreign investors & its impact on
bond yield” etc. but that long-winded-cause-effect-PHD has poor-cost benefit for
MCQs. So, we’ll not waste time.

1.2.4 🐯🤧Reverse Repo Rate cut & Policy corridor Changed asymmetrically
MSF REPO Reverse Repo Total width
What? Banks borrow short All clients borrow short Clients park
term funds from RBI term funds by pledging surplus funds
by pledging G-Sec G-Sec. But, banks can’t in RBI to earn
from SLR-quota pledge SLR quota G-Sec interest
Before R+25 bps R% R-25 bps 25+25=50bps
2020- R+25 bps R% R-40bps*, so 25+40=65bps
March 4.40-0.40=4%
2020- R+25 bps R% R-65bps* 25+65=90bps
April
Present 4.65% 4.40% 3.75%
 Corona led economic slowdown → Loan demand ⏬ → banks parking their excess
funds in RBI to earn interest in the form of reverse repo rate.
 2020-March: banks parked ~3 lakh crores in RBI in Reverse Repo.
 So, RBI has drastically ⏬the reverse repo rate to discourage such laziness of banks.
 Benefit of reverse repo cut?
✓ IF SBI offers 5.9% Fixed deposit interest rate to depositors, and parks it in the
RBI reverse repo rate (3.75%) then SBI will actually make losses.
✓ So, RBI hopes SBI will now be ‘forced’ to give loans in a proactive manner
(through SMS-spam, email-spam and telemarketing)

1.2.5 🐯🤧🔪✋ Loan/EMI/NPA relief / Moratorium (रोक)

 IF a loan is outstanding as of 1/MAR/2020.
 Then RBI permitted a moratorium (suspension, रोक) of 3 months on loan repayment.
 This applies to: All commercial banks (including regional rural banks, small finance
banks and local area banks), co-operative banks, All-India Financial Institutions, and
loan giving NBFCs (such as housing finance companies and micro-finance institutions)

March Due date for monthly loan instalment but moratorium so borrower need not
pay
April Same as above
May Same as above
June Due date for monthly loan instalment AND borrower needs to Pay
July Same as above
Aug Same as above
Sept  IF borrower stopped paying loan instalments since June’s due date, then by
this time it’ll have crossed 90 days. And we know that NPA = if principal or
interest unpaid for more than 90 days from due date.
 So, this account will be classified as Non-Performing Asset (NPA).
 However, if we look from March to August= total 6 months or 180 days no
loan is classified as NPA.

(Batch: CSP20) Mrunal’s Economy updates for all pillars Feb2Apr 2020 → Page 593
1.2.6 🐯🤧🔪✋ Loan moratorium: Benefit of
To the  Benefit? If his income ⏬ due to Corona, he gets relief from equated
borrower? monthly instalments (EMIs) for 3 months. (It’s not compulsory to skip
EMI. Borrower can repay loan regularly, if his financial situation is
sound.)
 Challenge? If he doesn’t pay for 3 months, then Banks will continue to
charge interest (on those 3 months) and add it to the total outstanding
loan → compound interest rate system → his total burden may⏫
 How/WHY?REAL-Life-Bank-Administration-NOTIMP for exam
To the Unpaid loan doesn’t accumulate under the ‘NPA’ category for a bank.
lender? Otherwise, their responsibilities may increase unnecessarily in
 RBI Prompt Corrective Action (PCA) Framework
 BASEL-III Capital norms

1.2.7 🐯🤧🤑✋🏼 RBI orders bank to pause/halt the Dividend Distribution

 scheduled commercial banks and cooperative banks shall not make any further
dividend payouts from profits made during FY 2019-20 until further instructions.
 This will help the banks to conserve funds and absorb losses in an environment of
heightened uncertainty in CORONA.

1.3 🐯🤧: BASEL NORMS DEFERRED IN CORONA

1.3.1 🐯🤧🗓 BASEL Norms: RBI deferred some norms
 Liquidity Coverage Ratio: norms deferred/postponed.
 Capital Conservation Buffer (CCB) norms deferred/postponed.
 We need not loose sleep over new deadlines, as they may again get extended. So,
dynamic information = dangers of answerkey becoming invalid, so, smart examiners
usually avoid it.

1.3.2 🌐🤧🗓 BASEL Norms: Switzerland’s body deferred some norms

 Some of the BASEL norms were to be effective from 1/1/2022 such as IRB approach for
credit risk, operational risk framework, CVA framework, market risk framework, Pillar
3 disclosure requirements. (what these words mean= NOTIMP)
 Basel Committee's oversight body (group of Central Bank Governors in BIS) have
deferred them to 1/1/2023.

1.3.3 💸🚿 BASEL-III Norms → Net Stable Funding Ratio (NSFR)

 Suppose Mr.A opened savings accounts with ₹1 crore balance and is likely to withdraw
₹25 lakhs out of it within next 6 months.
 After cutting the CRR & SLR, bank loans out the remaining deposits for a long tenure
loan of 8 years hoping that
o Mr.B and Mr.C and others will keep depositing money to run the game,
o ELSE bank will borrow from RBI or call money/notice money from other
institutes to repay ₹25 lakhs to Mr.A
 But eventually this chain may get destabilized IF new depositors are not coming.
 So, BASEL-III Net Stable Funding Ratio (NSFR) formula basically assigns weight to
various Sources of funding for banks (in decreasing order of stability): Shares & Bonds >
Fixed deposits > demand deposits > borrowing through call money, notice money etc.

(Batch: CSP20) Mrunal’s Economy updates for all pillars Feb2Apr 2020 → Page 594
 Accordingly, BASEL norms restrict the lending capacity of the bank. This ensures banks
fund their activities with more stable sources of funding on an ongoing basis.
What/How/Why?NOTIMP. Word association is sufficient.
 Originally, the system was to be operational from 1/APR/2020 but RBI has postponed it
due to CORONA.

1.4 🏦🙊😥 BANK/NBFC: SCAMS & NEGATIVE NEWS

1.4.1 🏦🙊😥 Scam in Bank/NBFC → Yes Bank and AT1 Bonds (2020)
 2004: Yes Bank, a Private Sector Scheduled Commercial Bank starts (HQ-Mumbai)
 Its founder Rana Kapoor allegedly took bribes to approve loans to companies without
capacity to repay loans, such HDIL (This HDIL company also borrowed from PMC bank,
causing another crisis there.). By 2020 Yes bank’s business became unstable.

Equity Capital + Liabilities + NET Profit = Assets

Table 1: Hypothetical figure only for illustration. B.Com/PHD NOT REQUIRED

+Equity Capital +Liabilities +NET =Assets

(Shares) Bonds Deposits Profit (Loans, CRR, SLR
etc)
Healthy bank +11 +3 +78 +1 =100
Loser bank * * +78 -10 =90 (assets⬇ due to
This is happening bad loans)
*How to revive? 11 → ⬆20 (get 3 → ⬇2 +78 (put deposit withdrawal -10 =90
(we must equity infusion (by writing limits to keep this stable.
balance the from SBI etc.) off AT1 besides, if loans given for 10-
Equation) bonds) 15 years project, bank can’t
return depositors’ money abhi
ke abhi)

2020-March: RBI is attempting following for Yes Bank’s revival (पुनर्जीवित करना)

 ⬆Equity Capital: Other banks to provide equity (share) capital worth >₹10,000cr into
Yes Bank → future shareholding maybe SBI (45%),ICICI(6%),HDFC(6%),Axis(3-4%)
 ⬇Bond Liability:
o A) Write down ~₹9000 crore worth AT1 Bonds liability from equation. (in other
words, those investors will not get a single paisaa. बॉन्ड की दे यिा को खाररज कर
दे ना). These bonds holders are unhappy & will go to court to stop this. OR
alternatively
B) Convert the AT1 bonds into (lower priced) shares e.g. ₹100 Face Value ka
o
Bond converted into ₹20 Face Value ka Share (so there is 80% loss /haircut for
the bond holder)
 Deposits Liability: (temporary) withdrawal limits of ₹50,000 on depositors
But daily ball by ball commentary / and changes in this plan so we need not lose sleep.

1.4.1.1 🌐🏦 🕵️‍♂‍ BASEL-III norms: Capital Tiers

BASEL-III norms require banks to keep capital against their risk weighted asset ratio. This
capital is subdivided into:

(Batch: CSP20) Mrunal’s Economy updates for all pillars Feb2Apr 2020 → Page 595
 Capital of a Bank Instruments / subtypes: List not exhaustive
Tier1 /  Common Equity Tier-1 (CET1) e.g. ordinary shares.
core capital →  Additional Tier1 (AT1) e.g. AT1 Bonds, Preferential
shares etc.
Tier2 →  Bonds/Debenture, Hybrid instruments
BASEL-III prescribed that banks must keep minimum x%, y% etc in each of these tiers,
depending on their Risk Weighted Asset (RWA).

1.4.1.2 🔪🗃💇🏼‍♂‍Additional Tier 1 (AT1) Bonds

They have no maturity date (i.e. bank has to pay interest for infinite time / perpetuity
and principal will not be returned). However, bank may ‘buyback’ them after certain
years. If / when a bank makes huge losses → AT1 Bonds’ liability may be

A. written off (खाररर्ज कर दे ना) OR

B. converted into shares (process called ‘Bail-In’).

Beyond this any what/why/how/PHD =poor cost benefit for MCQs.

1.4.2 🏦🙊😥 Scam in Bank/NBFC → Franklin Templeton Mutual Fund (2020)

 It’s an American MF company operating in India through subsidiary company- Franklin
Templeton Asset Management (India) Pvt. Ltd
 Long story cut short: they decided to stop / windup some MF schemes in India, because
they can’t generate good returns during the Corona crisis. (esp. in the schemes where
clients ₹₹ were invested in low-grade bonds.)
 So, Fund manager will liquidate (=sell off) the securities → return money to investors.
 Investors panicked because
o Fund manager did not give clear timelines about money refund.
o even if Fund manager tries to sell off its held bonds, it is difficult to find buyers
at the right price so MF-investors may lose money.
o Alleged financial scam angle.
 RBI reform? Special or flexible liquidity window to help Mutual Funds
o Basically banks borrow from RBI → use it to Either
▪ give loans to MF or
▪ Use the ₹₹ to buy debt-securities from MF
What is the total amount of funds in this special window? Do banks need to pledge G-Sec
to borrow? How much interest is charged? What’s the tenure? Ans. Low profile technical
reform to a crisis affecting a small segment of financial market. So such PHD = poor cost
benefit for exam.

1.4.3 1.4.4 🏦🙊😥 Scam in Bank/NBFC → Cox & Kings

 It’s a travel / tour operator company founded by Englishmen in mid 1700s.
 Scam? Took loans from Yes Bank etc and siphoned/diverted the loan ₹₹ to firms run by
top executives.

1.5 👬🤝🧔 1C: CORPORATE GOVERNANCE → LLP SETTLEMENT SCHEME 2020

 Limited Liability Partnership (LLP) companies are required to submit accounts and
ownership related documents to the Ministry of Corporate Affairs.

(Batch: CSP20) Mrunal’s Economy updates for all pillars Feb2Apr 2020 → Page 596
 But many of them did not submit the documents on the deadline, and the Government
ordered them to pay late fees/penalties, threatened them with prosecuting cases
under the LLP Act and cancelling their registration.
 LLP settlement Scheme, 2020: “If you submit the required documents between x to y
date → Then you will have to pay less penalty and we will give you immunity from
prosecution.”, said the Government.

1.6 👨🏻‍🔧→👴🏻 1D: PENSION → EPFO

 EPFO’s Employee provident fund (EPF) = worker (and his employer*) contributes money
for his retirement. Worker may withdraw part of the money before retirement age,
subject to certain conditions like medical emergency, home buying, marriage of
children etc.
 2020-March: labour ministry allowed EPFO subscribers’ to withdraw upto “X%” of EPF
fund to help the workers during lockdown.
 Separately, Government will contribute some ₹₹ to lower-middleclass workers EPF
account under PM Garib Kalyan Covid relief package (Ref: Pillar#6)

1.7 🤧⚰️ 1D: INSURANCE → FOR HEALTH WORKERS FIGHTING CORONA

 ₹50 lakh accident insurance scheme cover for health workers involved in managing the
Coronavirus such as doctors, nurses, paramedical staff, ASHA workers etc.
o If corona illness death / corona duty related accidental death (like mob
lynching & stone pelting) = family gets ₹50 lakhs.
o If corona led illness but recovered AND NOT DIED = no ₹₹ given to anyone.
(because it’s presumed health worker will get free treatment in Government
hospital)
 Age limit? None.
 Company? New India Assurance, a public sector general insurance company.
 Who pays premium? Ministry of Health and Family welfare
 Duration? Period of 90 days, starting from March 30, 2020.

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(Batch: CSP20) Mrunal’s Economy updates for all pillars Feb2Apr 2020 → Page 597
2 🍋PILLAR#2: BUDGET, TAX, SUBSIDY, DISINVESTMENT & DEFICIT

2.1 🍋🤦‍♂‍REVENUE → TAXATION → EQUALISATION LEVY / GOOGLE TAX

 Budget-2016: 6% direct tax was levied on (foreign) digital advertising companies on
their sales from India
 Budget-2020: 2% equalization levy on overseas e-commerce transactions originating
from India e.g. Netflix, Airbnb etc. on their sales from India

2.2 🍋🛒🤦‍♂‍:⚖️🕵️‍♂‍GOODS AND SERVICES TAX APPELLATE TRIBUNAL (GSTAT)

वस्िु एवं सेवाकर अपीलीय न्यायाधिकरण

 2019: This quasi-judicial body was setup in Delhi, as per the provisions of CGST Act.
 Structure? 1) A chief labelled as ‘president’ 2) One Technical Member (Centre) 3) one
Technical Member (State).
GSTAT Tribunal has two functions:

 1) Dispute resolution between the Centre and States.

 2) Suppose a Superintendent / Assistant Commissioner / Deputy Commission passed
order/penalty against a businessman for GST violation → first appellate authority
i.e. Addl./Joint Commissioner → GSTAT tribunal → HC → SC. In other words,
GSTAT will hear appeals against the orders passed by Union and State level GST
appellate bodies.

2.3 🍋🕵️‍♂‍REVENUE INCOME → TAXATION → 15TH FC

 2020-March: 15th Finance Commission has created a panel to prescribe a fresh fiscal
consolidation (राजकोषीय एकत्रीकरण/ यातन की फिजूलखर्ची कम करो) roadmap for centre &
states for the next 5 years. Chairman? NK Singh
 2020-April: NK Singh says “States may use CORONA as trigger clause for escaping FRBM
Act”

2.4 🍋🤧✋⚖️REVENUE INCOME → TAXATION → TAX ORDINANCE 2020

Issued on 31/MAR/2020 to give relief during Corona lockdown (करािान अध्यादे श).

 Income Tax Act: 100% exemption if donations made to Prime Minister’s Citizen
Assistance and Relief in Emergency Situations Fund (PM CARES Fund)
 Upto 2020-June,30th:
o Taxpayers can make investments or payments in LIC, Public Provident Fund and
National Savings Certificates etc. & for claim its deductions for FY 2019-20
o Vivad se Vishwas Scheme extended
o Sabka Vishwas Legal Dispute Resolution extended
 Certain technical reliefs/deadline extension in depositing the TDS, TCS, GST etc to
Government
 + many other things but we are NOT HERE for CA Exam.

(Batch: CSP20) Mrunal’s Economy updates for all pillars Feb2Apr 2020 → Page 598
2.5 🍋🤧TAXATION → IRS REPORT: ‘PROJECT FORCE”
 2020-April: Team of 50 Indian Revenue Services (IRS) officers drafted a report 'Force'
[Fiscal Options & Response to COVID-19 Epidemic], suggesting Government to
o 1) ⏫income tax to 40% on super rich,
o 2) impose 4% Covid relief Cess.
o 3) other technical reforms.
 But, Government rejected it saying, “This suggestion (of ⏫ direct taxes) goes against
our present policies. We had not asked the IRS Association to prepare such a report or
release it in public. Such tax-hike suggestions create panic among investors and
amounts to criticism of the Government.“
 So, disciplinary action against 3 senior IRS officers for violation of Central Civil Services
Conduct Rules.

2.6 🤧🤑✋REVENUE EXPENDITURE → SALARIES → DA FROZEN

 Dearness allowance (मंहगाई भत्ता) is given to employee to protect against inflation.
 2020-April: Union Govt freezes the Dearness Allowance increases till July 2021 for its
Government employees.
 Benefit? Will help govt to save money for fighting Corona crisis.

2.7 🤧🤲DONATION FUNDS: PMNRF VS PM CARES (दान)

PMNRF by Nehru 1948 PM CARES Fund by Modi 2020
 PM National Relief Fund (PMNRF)  Prime Minister’s Citizen
Assistance and Relief in
Emergency Situations Fund
 Originally setup for helping refugees from  For dealing with any kind of
Pakistan. Nowadays for floods, cyclones, emergency or distress
earthquakes, accidents, heart surgeries, kidney situation, e.g. COVID-19
transplantation, cancer treatment, acid attack and pandemic
riots etc.
 Not setup by Parliament.  same
 No support given from the budget.
 Only runs from donations of ordinary people and
institutions & foreigners donations.
 Donors get Income tax exemption.  same
 If company donates money = counted under
Corporate Social Responsibility (CSR).
 PMO operates  same.
 PM is the ex-officio chairman. He’s assisted by  Prime Minister is the ex-
officers. officio Chairman.
 Ex-officio Trustees:
Ministers of Defence, Home
Affairs, Finance
 3 Nominated Trustees:
health, science, social
work, law etc. PM will
select them.

(Batch: CSP20) Mrunal’s Economy updates for all pillars Feb2Apr 2020 → Page 599
Sidenotes:
 1962: a separate ‘National Defence Fund (राष्ट्रीय रक्षा कोष/ तनधि)’ under PM to help
military & paramilitary forces’ families. Other features mostly similar to above funds.
 Usually, such Government donation funds are registered under Indian Trust Act, 1882.
But, some legal experts / critics suggest these donations should be brought under
Public Account / Consolidated Fund to bring accountability & transparency.

2.8 💼🤲🏻🔨 🗂 FRBM ACT: 3 DOCUMENTS (दस्तािेज़)

Typing correction in Page 226:

FRBM Act requires the Union Government to present 3 documents along with the budget:

1) Macroeconomic Framework Statement (व्यापक आधथिक ढााँर्चा वववरण): to show economic

data - GDP, growth rate, import-exports, and government’s receipts,expenditure etc.
2) Medium Term Fiscal Policy Cum Fiscal Policy Strategy Statement (राजकोषीय नीति
कायिनीति वववरण): To explain how Govt. is controlling the deficits, and whether there is
going to be any deviation from the target.
3) Medium-term Expenditure Framework (मध्यम अवधि व्यय ढााँर्चा वववरण): self-explanatory

(Batch: CSP20) Mrunal’s Economy updates for all pillars Feb2Apr 2020 → Page 600
3 💸⛽️💰PILLAR#3: BOP & INTERNATIONAL TRADE

3.1 ⛽️💰BOP: CURRENT → FALL OF CRUDE OIL PRICES IN NEGATIVE FIGURE

 USA’s crude oil prices are monitored through West Texas Intermediate (WTI) contracts.
 Long story cut short: Oil demand ⏬ due to Corona lockdown on vehicle/aviation
traffic. But, American oil drilling companies can’t stop production because it’s more
expensive to ‘restart’ the production after shutting it.
 And merchants/intermediaries can’t hold stock because their storage capacity is
limited.
 2020-April: sellers are (temporarily) paying $$ to buyer to take the stock of oil barrels.
Hence negative minus $40 per barrel price. (अमरीकी ववक्रेिाओ के पास िेल रखने की जगह
उपलब्ि नही, इसललए ग्राहक को सामने से पैसा दे कर माल उठवा रहे है ।)
 India may not benefit, since we mostly import from the middle-east and not the USA.
 Further, our Government will ⏫taxes on petrol diesel, so even if crude oil gets cheap
for oil refineries, the resultant petrol-diesel may remain costly for Indian families.

3.2 🗃🈶💰 BOP: CAPITAL → CHINESE FDI NEED GOVT APPROVAL

Before From 2020-April
If any FDI proposal coming from Pakistan  If any FDI proposal from any country
and Bangladesh, it required approval from that shares border with India → Indian
Government of India. Govt approval required
 Means, Pakistan, Afghanistan, China,
Nepal, Bhutan, Bangladesh and
Myanmar
 Govt decided this because: Corona-led slowdown = Indian companies suffering from
losses. China may mis-use this opportunity to takeover such Indian companies @very
low share price → will harm our strategic & economic interests. (र्चीन भारिीय कंपतनयो
का अधिग्रहण कर लेगा िो हमारे रणनीतिक और आधथिक हहिों को नुकसान हो सकिा है )
 Criticism? China says this is violation of WTO norms related to foreign investment.
(Although Australia and Germany also announced similar restrictions with similar
reasons)

Correction:

 page 248: satellite operation 100% FDI through Government approval (and not
automatic route)

3.3 💸💰BOP: CAPITAL → IFSC AUTHORITY HQ @GANDHINAGAR, GUJARAT

 The IFSC Authority is a statutory body to regulate all financial services in international
financial services centres of India.
 2019’s Act gives following structure / composition to IFSC Authority:
o One Chairperson
o One member each nominated from RBI,SEBI, IRDAI, PFRDA
o + few other members from Finance ministry etc
o Tenure? 3 years. Re-appointment? Yes, possible.

(Batch: CSP20) Mrunal’s Economy updates for all pillars Feb2Apr 2020 → Page 601
 2020-April: Government announced its headquarter will be at Gandhinagar, Gujarat.
(Since Gandhinagar is the only place with an IFSC at present, i.e. GIFT City)
 Controversy? Maharashtra political outfits demanding HQ should be in Mumbai.

3.4 💸💰BOP: FOREX RESERVE OF RBI AS OF 2020, APRIL

~480 million USD. The Forex Reserve component(s) in decreasing order of size =
1) Foreign Currency Assets (which includes foreign currencies and G-Sec/bonds of foreign
Governments
2) Gold
3) Reserve Tranche Position (RTP) in the IMF
4) SDRs

3.5 💸💰CURRENCY EXCHANGE RATE → ATTRACTING DOLLARS: VRR AND FAR

To prevent weakening of ₹, we’ve to attract more $ (and other foreign currencies) in
India. So, RBI taken following notable measures:

Voluntary  Launched in 2019: If an FPI buys Indian Union/State

Retention Route Governments’ G-Sec and Indian Corporates’ Bonds through this
(VRR: स्िैच्छिक route → FPI will be given more freedom in certain technical
regulations of RBI & SEBI.
अिधारण मार्घ)
 But, with condition= FPI must remain invested in India for
minimum 3 years. (Hot-Money वाला गेम खेल के भाग नही सकिे)
 RBI decides quantitative limits to how much money can FPI
invest through this route.
Fully Accessible  Budget-2020 had announced allowing non-resident investors
Route (FAR: to invest in G-Sec, without any restrictions.
सम्पण ू त
घ : सर्
ु म्य  2020-March: RBI announced this window, non-resident individual
investors (who’re not FPI) can buy G-Sec.
मार्घ)
 No limits on amount of investment.
Benefit? Investors will convert $ & other foreign currency into ₹ currency to buy G-Sec=
more $$ coming towards India = helps keeping BoP and currency exchange rate stable
during crisis.

Side note: RBI frequently ⏫ / ⏬ in FPI investment quota/limits in G-sec, depending on

how RBI wants to shape bond-yield, flow of dollars & available quota of G-sec for local
investors to play its repo & OMO games. But that ball by ball chase is NOTIMP.

(Batch: CSP20) Mrunal’s Economy updates for all pillars Feb2Apr 2020 → Page 602
4 🌽🔧📞PILLAR#4: SECTORS OF ECONOMY
Correction: Page 321: PM Kisan Sampada Yojana -Boss? Food Processing Ministry.
Central Sector Scheme. 100% funded by Union.

4.1 🍭FALL OF GLOBAL SUGAR PRICES

 Corona lockdown → ⏬ sugar demand by ice cream factories, food processing
companies, restaurants and cake shops.
 ⏬Demand for petrol/diesel = ⏬demand of bioethanol-blending from sugarcane.
 So, Sugar industries in panic, they have ⏬ sugar prices to offload the stock.

4.2 📈EASE OF DOING BUSINESS : SOME MISCELLANEOUS INDICES

Index of Economic Freedom Heritage Foundation (USA) with support of Wall
Street Journal.
Global Economic Freedom Fraser Institute (Canada)
Index
But these are low profile obscure bodies, so need not lose sleep

5 🚅PILLAR#5: INFRASTRUCTURE
5.1 🚽SBM GRAMIN PHASE 2
 It’ll be implemented from 2020-2021 to 2024-2025
 To ensure villagers continue to use toilets
 + focus on plastic waste management, Animal waste and other bio-degradable solid
waste management (जैव अपघहिि ठोस अपलशष्ट्ि प्रबंिन,)
 Greywater management (It is the used water from domestic sources excluding toilet
wastewater) Fecal-sludge management (मल-कीर्च प्रबंिन।)
5.1.1 🚽SBM Protocols (कायघपद्धतत)
ODF+ protocol  Open Defection Free status (+) [खल ु े में शौर्च मक्
ु ि स्स्थति तथा]
 Operations and maintenance of community toilets and public
toilets। (साविजतनक शौर्चालयों का योग्य िरीके से संर्चालन और रखरखाव)
ODF++ protocol  Above things from ODF+ and additionally, focuses on safe
management of faecal sludge from toilets
 Untreated sludge should NOT be discharged into water bodies etc
(अनुपर्चाररि कुडा-कीर्चड़ को पानी मे नही छोड़ना)
Water + untreated wastewater should NOT be discharged in water bodies etc.
protocol
5.2 🌤 ENERGY → MNRE NOTABLE PORTALS
Ministry of New and Renewable Energy (MNRE) is running two web portals:
 1) India Renewable Idea Exchange (IRIX) Portal 2) Akshay Urja Portal (& magazine)

5.3 💸🚿NATIONAL INFRASTRUCTURE PIPELINE:

 Investment target has been ⏫ from ₹ 102 lakh cr to 111 lakh cr (as per Press
statement in 2020-April)

(Batch: CSP20) Mrunal’s Economy updates for all pillars Feb2Apr 2020 → Page 603
6 👼🏼 🤰🏼PILLAR#6: HRD
6.1 🧔📯🤧PM GARIB KALYAN: COVID RELIEF PACKAGE BY FINMIN
2020-March: ₹1.70 Lakh Crore relief package with notable features:
 Social Security / Financial Inclusion (सामाच्र्जक सुरिा / वित्तीय समोिेशन)
o ₹500 per month to 20 crore women Jan Dhan accounts for next three months
o ₹1,000 to 3 crore poor senior citizen, poor widows and poor disabled
o If worker earning <₹15,000 per month in a firm with <100 workers → Govt will
pay 24% of his monthly wages into his EPFO account for next 3 months.
o EPFO workers can withdraw xx% from their account for next 3 months.
o ₹50 lakh insurance cover for health workers involved in managing the
Coronavirus such as doctors, nurses, paramedical staff, ASHA workers etc. for
the next 90 days.
o Women Self Help Groups (SHGs) to be given ₹20 lakh collateral free loans.
 Farmers
o ₹2000 PM-KISAN instalment to be paid ahead of time (also known as
‘frontloading’)
 Workers
o MNREGA wage ⏫ from ₹182/day to ₹202
o Central Government’s Building and Other Construction Workers Act, 1996: →
workers contribute ₹₹ to a fund held by the State Government. State
Governments ordered to use this money for helping them during COVID-19
 Food/Cooking:
o PM Garib Kalyan Ann (अन्न) Yojana: 80 crore poor people will to get 5 kg
[wheat or rice] + 1 kg of pulses for free every month for the next three months
o Free monthly LPG cylinder to PM-Ujjwala beneficiaries for next 3 months.
 District Mineral Fund (DMF) ₹₹ → to be used for COVID-19 testing & related infra

6.2 💉📲HEALTH → AAROGYA SETU APP (2020-APRIL)

 Aarogya Setu app uses Bluetooth technology and GPS location data to track people
infected with Corona / those who came in close contact with infected patients.
 It’s developed by National Informatics Centre (NIC, under MEITY) with help of NITI
Aayog & private sector IT experts.

6.3 👩‍🦳📈 GENDER INDICES → GENDER SOCIAL NORMS INDEX (GSNI)

 United Nations Development Programme (UNDP) Started for the first time in 2020
 It measures how the public's own social beliefs obstruct gender equality in politics,
work, and education.
 90% of world people and 98% of Indians hold one bias against females e.g. men are
better political /business leaders than women etc.
 Consequently, women will suffer in 4 index:
o 1) political empowerment, 2) educational empowerment, 3) economic
empowerment 4) physical integrity
 NUMBER OF female heads of country have ⏬ (e.g. British PM Theresa May replaced by
a male, South Korea & Brazil’s female presidents impeached/removed on the charges
of corruption)

(Batch: CSP20) Mrunal’s Economy updates for all pillars Feb2Apr 2020 → Page 604