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BharatNet Project: Tender invited for Public Private Partnership

Posted on by Business So Simple in Entrepreneurship, Public Affairs

Ministry of Communications

BharatNet Project: Tender invited for Public Private Partnership


New tender to cover 3.61 lakh Villages in 16 States

PPP for a concession period of 30 years

Government to provide Viability Gap Funding of Rs. 19,041 croresPosted Date:- Jul 20, 2021

Bharat Broadband Network Limited (BBNL), on behalf of Department of Telecommunication, (the “Authority”) has invited global tender for the Development (Creation, Upgradation, Operation & Maintenance and Utilisation) of BharatNet through Public Private Partnership model in 9 separate packages across 16 states for a concession period of 30 years. Under this project, the government will provide a maximum Grant of Rs. 19041 Crore as Viability Gap Funding. 

The Project shall cover an estimated 3.61 lakh Villages (including Gram Panchayats) across Kerala, Karnataka, Rajasthan, Himachal Pradesh, Punjab, Haryana, Uttar Pradesh, Madhya Pradesh, West Bengal, Assam, Meghalaya, Manipur, Mizoram, Tripura, Nagaland and Arunachal Pradesh.

The existing BharatNet was connecting all the Gram Panchayats (GPs) of the country by laying of OFC (primarily) between Block and GPs. The scope of BharatNet has now been enhanced to connect all the Inhabited Villages of the country, approx. 6.43 lakhs (inclusive of GPs).

The scope of work under BharatNet PPP Project includes:

  • Connecting the remaining unconnected GPs under BharatNet project (Phase 1 & Phase 2) and all the inhabited Villages beyond the GPs.
  • Upgradation of the existing BharatNet Network from Linear to Ring topology.
  • Operation and Maintenance (O&M) and Utilisation of the existing as well as the newly deployed network.

The existing BharatNet network across these 16 States will become part of this Project. Last Date of submission of Tender bid is 24/08/2021

The project will be executed through a Design, Build, Finance, Operate & Transfer (DBFOT) concession on PPP framework. The idea is to harness private sector’s capability, capacity, and efficiency for O&M, utilization and revenue generation to make BharatNet more effective and accessible. This would also serve the objective of BharatNet to have social inclusion, through effective delivery of Govt. schemes and citizen centric services using broadband, and also to strengthen e- Governance, e -Education, Tele medicine, e- Banking etc.

BBNL is carrying out an open, competitive bidding process with single stage, two-part bidding (‘Qualification bid’ and ‘Financial Bid’) for the selection of the Bidder for awarding the Project. The bids for each of the package need to be submitted separately.

Tender documents will be available for downloading from 20.7.2021, 15.00 Hrs. from CPP portal www.etenders.gov.in. The document can also be viewed from BBNL website http://www.bbnl.nic.in.

Once awarded, the selected Bidder shall create a Special Purpose Vehicle (SPV), sign the agreement, achieve Financial Closure and undertake creation, upgradation, operation & maintenance and utilisation of BharatNet across the concession period.

The BharatNet infrastructure is a middle mile network that is presently leased to service providers for providing affordable high-speed broadband to rural population – individuals, households and institutions. BharatNet is Govt. of India’s flagship project and is considered to be the backbone of ‘Digital India’ aiming to reduce the digital divide between urban and rural India.

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CBDT grants further relaxation in electronic filing of Income Tax Forms 15CA/15CB

Posted on by Business So Simple in Income Tax

As per the Income-tax Act, 1961, there is a requirement to furnish Form 15CA/15CB electronically. Presently, taxpayers upload the Form 15CA, along with the Chartered Accountant Certificate in Form 15CB, wherever applicable, on the e-filing portal, before submitting the copy to the authorized dealer for any foreign remittance.

In view of the difficulties reported by taxpayers in electronic filing of Income Tax Forms 15CA/15CB on the portal www.incometax.gov.in, it had earlier been decided by CBDT that taxpayers could submit Forms 15CA/15CB in manual format to the authorised dealer till 15th July, 2021.

It has now been decided to extend the aforesaid date to 15th August, 2021. In view thereof, taxpayers can now submit the said Forms in manual format to the authorized dealers till 15th August, 2021. Authorized dealers are advised to accept such Forms till 15th August, 2021 for the purpose of foreign remittances. A facility will be provided on the new e-filing portal to upload these forms at a later date for the purpose of generation of the Document Identification Number.

Ministry of Finance Press release dated 20th July 2021

Steps taken for revival of infrastructure sector on back of COVID-19 pandemic

Posted on by Business So Simple in Entrepreneurship, Public Affairs

The Government is taking various measures to ease out liquidity and steep increase in commodity prices and its impact on infrastructure on the back of COVID-19 pandemic. This was stated by Minister of State for Finance Shri Pankaj Chaudhary in a written reply to a question in the Rajya Sabha today.

The Minister stated that measures have also been announced in Aatma Nirbhar Bharat Package (ANBP) to provide support to sectors including infrastructure to mitigate the impact of COVID-19 pandemic. In the announcement made on 28th June, 2021 to give relief to the economy inter-alia Rs 1.1 lakh crore loan guarantee scheme for COVID-19 affected sectors and additional Rs 1.5 lakh crore for Emergency Credit Line Guarantee Scheme have been announced.

The Minister further said that the Government is periodically reviewing the capital expenditure (CAPEX) of Infrastructure projects in the country to strengthen economic growth. Ministries/Departments have been instructed to frontload the CAPEX spending of infra projects in order to provide boost to infrastructure sector.

The performance security requirement in Central Government contracts has been reduced from 10% to 3% for all tenders/contracts issued concluded till 31.12.2021 and requirement of bid security has been waived till the end of 2021, the Minister stated.

Ministry of Finance Press release dated 20 July 2021

Various measures taken by Ministry of Corporate Affairs (MCA) to fight COVID-19 pandemic (MCA Press release dated 20 July 2021)

Posted on by Business So Simple in Company Law

The Ministry of Corporate Affairs (MCA) primarily administers the provisions of the Companies Act, 2013 (the Act), the Limited Liability Partnership Act, 2008 and the Insolvency and Bankruptcy Code, 2016. This was stated by Minister of State for the Ministry of Corporate Affairs Shri Rao Inderjit Singh in a written reply to a question in the Rajya Sabha today.

The Minister enumerated various measures taken by the MCA to address the COVID-19 Pandemic are as under:

  1. The Companies Fresh Start Scheme, 2020 was launched to make a fresh start for companies to be a fully compliant company by allowing them to file belated documents in MCA 21 registry without any additional fees from 1st April to 31st December, 2020. The said scheme has also given immunity from prosecutions and proceedings for imposition of penalty which might arise on account of such delayed filing of documents. As per records, 4,73,131 number of Indian Companies and 1,065 number of Foreign Companies have been benefited by availing the CFSS, 2020 scheme for filing their pending documents.
  2. The MCA introduced an LLP Settlement Scheme, 2020 to provide one-time relaxation in additional fees to the defaulting Limited Liability Partnerships (‘LLPs’) to make good their defaults by filing pending documents with the Registrar of Companies (‘ROC’ or ‘Registrar’) to ease the hassle of business enterprises. The said scheme was initially rolled out from 16.03.2020 to 31.03.2020 for certain filings by LLPs. However, due to the COVID 19 pandemic the modified further expanded scheme to cover all eforms was rolled out from 01.04.2020 to 31.12.2020. Under the said scheme, the defaulting LLPs were permitted to file belated documents and the LLPs shall not be subjected to prosecution for such defaults. As per records 1,05,643 LLPs have been benefited by availing the LLP settlement scheme 2020 for filing their pending documents.
  3. Keeping in view the second COVID wave and considering the difficulties arisen due to resurgence of COVID-19 pandemic, the MCA has granted relaxation on levy of additional fees for companies / LLPs in filing certain forms (other than a CHG-1 Form, CHG-4 Form and CHG-9 Form, Charge Related Forms). Accordingly, no additional fees shall be levied upto 31st July, 2021 for the delayed filing of forms (other than charge related forms referred above) which were / would be due for filing during 1st April, 2021 to 31st May, 2021. For such delayed filings upto 31st July, 2021 only normal fees shall be payable. The said time limit has been further extended to 31st August, 2021 vide General Circular No.11/2021 dated 30.06.2021.
  4. In the wake of COVID 19 and to provide relief to law abiding companies a scheme was launched for relaxation of time for filing forms related to creation or modification of charges under the Companies Act, 2013 during the period from 1st March to 31st December, 2020.
  5. Considering the difficulties arisen due to resurgence of COVID-19 pandemic, the MCA vide General Circular no. 7/2021 dated 03.05.2021 has granted relaxation of timelines and condoned the delay in filing forms that are related to creation / modification of charges (CHG-1 Form and CHG-9 Form) by a company or charge holder and where the date of creation / modification of charge is (i) before 1.4.2021, but the time line for filing such form had not expired under section 77 of the Act as on 1.4.2021; or (ii) falls on any date between 1.4.2021 to 31.5.2021 (both dates inclusive). In the said circular, the detail of relaxation of time and applicable fees for filing the aforesaid forms was prescribed. The Ministry further extended the aforesaid relaxation in the time for filing forms related to creation or modification of charges under the Companies Act, 2013 by substituting the figures “31.05.2021” and “01.06.2021” wherever they appear in the General Circular No. 07/2021 dated 03.05.2021 with the figures “31.07.2021” and “01.08.2021” respectively.
  6. MCA has announced a Condonation of Delay Scheme for Companies restored by NCLT between 1st December, 2020 to 31st December, 2020 under section 252 of the Companies Act, 2013. The Scheme provides to condone delay in filing forms with the Registrar, and spares payment of additional fees. This Scheme was in operation from 1st February 2021 and was available for filing of any overdue e-forms by such companies till 31st March 2021.
  7. In order to provide relief to the companies in view of COVID-19 pandemic, the companies have been allowed to conduct Board Meetings through Video Conference (VC) or other audio-visual means for passing resolutions in respect of matters which were earlier required to be passed in meetings which required physical presence of directors by amending the Companies (Meetings of Board and its Powers) Rules 2014 from time to time during COVID-19 pandemic. Such facility to the companies was allowed till 30th June, 2021. (Initially it was till 30.06.2020, then extended to 30.09.2020 and 31.12.2020). Thereafter, considering the second COVID wave, Rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014 has been omitted vide notification dated 15.06.2021 to provide that all the matters can be deliberated & resolutions passed by Board of Directors through video conferencing or other audio visual means. The measure will provide increased flexibility to Boards of companies for conducting Business and further the Ease of Doing Business objective of the Government.
  8. The companies have been allowed to hold Extraordinary General Meetings (EGMs) through Video Conferencing (VC) or other audio-visual means (OAVM) complemented with e-Voting facility/simplified voting through registered emails till 30th June, 2021. Considering the second wave of COVID-19, the Ministry has extended the aforesaid time limit to 31st December, 2021.
  9. The companies have been allowed to conduct their Annual General Meetings (AGMs) by Video Conferencing (VC) or other audio-visual means (OAVM) whose AGMs were due to be held in the year 2020 or become due in the year 2021 to conduct their AGMs on or before 31.12.2021. Owing to the difficulties in sending physical copies of the financial statements, the companies are also allowed to send the financial statements, along with Board’s reports, Auditor’s reports and other documents required to be attached therewith, only through email.
  10. The Registrar of Companies on the advice of MCA had given extension of time in holding of Annual General Meeting for the financial year ended on 31 March, 2020 till 31st December, 2020 (The maximum period which can be extended by the Registrar of Companies under section 96 of the Act).
  11. Quality of disclosures strengthened through amendments made in the formats of financial statements, Companies (Accounts) Rules, Companies (Audit and Auditor’s) Rules and the Companies (Auditor’s Report) Order, 2020. The Companies (Auditor’s Report) Order, 2020 has now been made applicable from the audit of financial statements for the financial year 2021-22 to ease the compliance requirement by auditors and the companies.
  12. The Companies (Indian Accounting Standards) Rules, 2015 have been amended vide notification dated 18.06.2021 inter-alia to extend the benefits of COVID-19 related rent concession, that were introduced last year, from 30th June, 2021 to 30th June, 2022.
  13. The mandatory requirement of holding meetings of the Board of the companies within the intervals provided in section 173 of the Companies Act, 2013 (CA-13) (120 days) were extended by a period of 60 days till next two quarters i.e., till 30th September, 2020. Considering the second COVID wave, the Ministry further extended the aforesaid relaxation for the year 2021-22 and accordingly the time gap between two consecutive meetings of the Board may extend to 180 days during the Quarter – April to June 2021 and Quarter – July to September, 2021, instead of 120 days as required in the Companies Act, 2013.
  14. Independent Directors (IDs) of a company have been given relaxation from holding atleast one mandatory meeting and accordingly for the financial year 2019-20, if the IDs of a company have not been able to hold such a meeting, the same has not been viewed as a violation.
  15. The Ministry enhanced the period to thirteen months from 1st December, 2019 within which existing Independent directors may apply online for inclusion of their names in the databank for Independent Directors vide amendments in the Companies (Appointment & Qualification of Directors) Rules, 2014 from time to time. Further, the Companies (Creation and Maintenance of databank of Independent Directors) Rules, 2019 have been amended vide notification dated 18.06.2021 to provide that in case an individual has delayed in applying to the Institute for inclusion of his name in the data bank of Independent Directors or in case of delay in renewal thereof, the Institute shall allow such inclusion or renewal, as the case may be, after charging a further fees of one thousand rupees on account of such delay. Through this amendment requests made by a large number of stakeholders to grant additional time for delayed applications in view of Covid-19 pandemic have been addressed.
  16. Timeline for creation of deposit repayment reserve of 20% under section 73(2)(c) of the Act,2013 and to invest or deposit 15% of amount of debentures under rule 18 of Companies (Share Capital and Debentures) Rules, 2014 was extended till 31st December, 2020.
  17. An additional period of 180 more days has been allowed to comply with the requirement of filing a declaration for Commencement of Business by newly incorporated companies.
  18. Non-compliance of minimum residency in India for a period of at least 182 days by at least one director of every company, under Section 149 of the Act shall not be treated as a non-compliance for the financial year 2019-20 and 2020-21.
  19. Till 31st December, 2020, the inability to dispatch the notice for Rights Issues by listed companies to their shareholders through registered post or speed post or courier would not be viewed as violation of section 62(2) of the Act provided these companies comply with the SEBI Circulars dated 6th May, 2020 and 24th July, 2020 which inter-alia provide the mode/manner of issuance of notice by electronic transmission by listed companies.
  20. Requirement for investing 15% of amount of debentures maturing in a particular year in specified instruments has been done away with for Listed companies & NBFCs when such debentures are issued on a private placement basis.
  21. Time allowed to Auditors and Audit Firms for filing NFRA-2 form with the NFRA has been extended till a total period of 270 days in view of the difficulties faced during COVID-19 related disruption.
  22. The expenditure incurred by companies on activities relating to Central Armed Police Forces (CAPF) and Central Para Military Forces (CPMF) Veterans, and their dependents including widows has been considered as CSR expenditure.
  23. Last date of submission of Cost Audit Report by the Cost Auditor to the management of the company has been extended till 31st December 2020 and additional fee has been relaxed for filing of CRA-4 (form for filing of cost audit report) for financial year 2019-2020.

News update-Entrepreneurship, Taxation, Personal Finance & Succession planning-20th July 2021

Posted on by Business So Simple in News Desk

All newspaper compilation from Economic times, Live mint & Financial express on Entrepreneurship, Taxation, Personal Finance & Succession planning. Refer link:

1. *Dividend earned by NRIs is taxable in India*

https://www.livemint.com/money/personal-finance/dividend-earned-by-nris-is-taxable-in-india-11626725227621.html

2. * Your Queries (Income Tax): Report mutual fund dividends as ‘income from other sources’ in ITR*

https://www.financialexpress.com/money/income-tax/your-queries-income-tax-report-mutual-fund-dividends-as-income-from-other-sources-in-itr/2293614/

3. *Income tax returns rise 8% in FY21 vs FY20*

https://economictimes.indiatimes.com/wealth/personal-finance-news/income-tax-returns-rise-8-in-fy21-vs-fy20/articleshow/84549320.cms

4. *1.32 lakh declarations involving Rs 99,765 cr disputed tax filed under Vivad se Vishwas scheme*

https://economictimes.indiatimes.com/wealth/personal-finance-news/1-32-lakh-declarations-involving-rs-99765-cr-disputed-tax-filed-under-vivad-se-vishwas-scheme/articleshow/84552620.cms

5. *Gold Funds: Advantages and risks of investing in gold funds*

https://www.financialexpress.com/money/gold-funds-advantages-and-risks-of-investing-in-gold-funds/2293365/

6. *Most common health insurance mistakes even smart people make*

https://www.financialexpress.com/money/insurance/most-common-health-insurance-mistakes-even-smart-people-make/2293264/

7. *High demand for homes on the outskirts is reshaping Gurugram*

https://www.financialexpress.com/money/high-demand-for-homes-on-the-outskirts-is-reshaping-gurugram/2293246/

8. *Four things to understand while availing of doorstep banking*

https://www.livemint.com/money/personal-finance/four-things-to-understand-while-availing-of-doorstep-banking-11626723846366.html

9. *Yes, money can buy you time and happiness*

https://www.livemint.com/money/personal-finance/yes-money-can-buy-you-time-and-happiness-11626724815534.html

10. *5 common doubts about writing a will resolved*

https://economictimes.indiatimes.com/wealth/legal/will/5-common-doubts-about-writing-a-will-resolved/slideshow/84549656.cms

11. *Returns on my investments*

https://www.livemint.com/money/personal-finance/returns-on-my-investments-11626725631020.html

12. *Time to stay invested in the markets or book some profits?

*https://www.livemint.com/money/personal-finance/time-to-stay-invested-in-the-markets-or-book-some-profits-11626724344777.html

Thought of the day-20 July 2021 -Karma in its effect on character (Part 8)

Posted on by Business So Simple in Thought of the day

“To work we have the right, but not to the fruits thereof.” Leave the fruits alone. Why care for results? If you wish to help a man, never think what that man’s attitude should be towards you. If you want to do a great or a good work, do not trouble to think what the result will be.

Even the lowest forms of work are not to be despised. Let the man, who knows no better, work for selfish ends, for name and fame; but everyone should always try to get towards higher and higher motives and to understand them. “To work we have the right, but not to the fruits thereof.” Leave the fruits alone. Why care for results? If you wish to help a man, never think what that man’s attitude should be towards you. If you want to do a great or a good work, do not trouble to think what the result will be.

-Swami Vivekananda

Auction for Sale (Re-issue) of (i) ‘4.26% GS 2023’,(ii) ‘6.10% GS 2031’ and (iii) ‘6.76% GS 2061’

Posted on by Business So Simple in Financial Prudence

Ministry of Finance

Auction for Sale (Re-issue) of (i) ‘4.26% GS 2023’,(ii) ‘6.10% GS 2031’ and (iii) ‘6.76% GS 2061’

Posted Date:- Jul 19, 2021

The Government of India (GoI) has announced the Sale (re-issue) of
(i) ‘4.26% Government Security, 2023’ for a notified amount of Rs 3,000 crore (nominal) through price based auction using uniform price method (ii) ‘6.10% Government Security, 2031’ for a notified amount of Rs 14,000 crore (nominal) through price based auction using uniform price method; and (iii) ‘6.76% Government Security 2061’ for a notified amount of Rs 9,000 crore (nominal) through price based auction using multiple price method. GoI will have the option to retain additional subscription up to Rs 6,000 crore against above security/securities. The auctions will be conducted by the Reserve Bank of India, Mumbai Office, Fort, Mumbai on Friday i.e. July 23, 2021.

Up to 5% of the notified amount of the sale of the Securitieswill be allotted to eligible individuals and Institutions as per the Scheme for Non-Competitive Bidding Facility in the Auction of Government Securities.

Both competitive and non-competitive bids for the auction should be submitted in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system on July 23, 2021. The non-competitive bids should be submitted between 10.30 a.m. and 11.00 a.m. and the competitive bids should be submitted between 10.30 a.m. and 11.30 a.m.

The result of the auctions will be announced on July 23, 2021 (Friday) and payment by successful bidders will be on July 26, 2021 (Monday).

The Securities will be eligible for “When Issued” trading in accordance with the guidelines on ‘When Issued transactions in Central Government Securities’ issued by the Reserve Bank of India vide circular No. RBI/2018-19/25 dated July 24, 2018 as amended from time to time.

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GST Compensation dues paid to States

Posted on by Business So Simple in GST

The Government has paid all the GST Compensation dues to the States the financial years 2020-21 and 2021-22. This was stated by Minister of State for Finance Shri Pankaj Chaudhary in a written reply to a question in the Lok Sabha today.

The Minister stated that the GST compensation cess levied under Section 8 of the GST (Compensation to States) Act, 2017 is transferred into a non-lapsable Fund known as GST Compensation Fund which forms part of the Public Account of India as provided in Section 10(1) of the act. The States are being compensated for any loss of revenue arising on account of implementation of GST for five years out of the Compensation Fund as per Section 10(2) of the said Act. GST compensation for financial years 2017-18, 2018-19 and 2019-20 has already been paid to the states.

The Minister further stated that the economic impact of the pandemic has led to higher compensation requirement due to lower GST collection and at the same time lower collection of GST compensation cess. GST compensation of Rs. 91,000 crore has been released to all States/ UTs to partly meet the compensation payable for the period April’20 to March’21 as the amount in GST Compensation Fund was not adequate to meet the full compensation requirement. Details of GST compensation yet to be released to each State is as per Annexure.

Giving more details, the Minister said that few States have requested for payment of GST Compensation to States on account of loss of revenue due to implementation of GST as per GST (Compensation to States) Act, 2017 and in addition the general request from the States are like revision of FRBM limit, additional fund for procurement of medical equipment and increasing the devolution grant etc. Central Government has considered various such requests and is committed to provide all possible assistance to States.

The Minister stated that the issue of GST Compensation to States has been deliberated in the 41st and 42nd GST Council meetings and accordingly, FY 20-21, the Centre had borrowed Rs. 1.1 lakh crore under a special window and passed on to the States as back-to-back loan to help the States meet the resource gap due to short-release of compensation on account of inadequate balance in the Compensation Fund.

The Minister further said that subsequent to deliberations in the 43rd GST Council meeting, it has been decided that the Centre is borrowing Rs. 1.59 lakh crore from the market through special window in current FY and passing it on to the States/ UTs as a back to back loan in appropriate tranches as was done in last year. As per this decision Rs. 75,000 crore has been released to States/ UTs on 15.07.2021.

In addition, depending on the amount available in the Compensation Fund, Centre has also been releasing the regular GST compensation to States to make up for GST revenue shortfall, the Minister stated.

The Minister tabled details of gross GST collection (SGST+CGST+IGST+GST Compensation Cess) pre- settlement since March 2020, month-wise, as under:

GST Compensation dues paid to States

https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1736891&RegID=3&LID=1

Ministry of Finance Press release dated 20 July 2021

Bad Bank launched for stressed assets as a measure to clean up bank books

Posted on by Business So Simple in Financial Prudence

Ministry of Finance

Bad Bank launched for stressed assets as a measure to clean up bank books

Posted Date:- Jul 19, 2021

The Government has launched a Bad Bank with all the regulatory approvals in place. This was stated by Minister of State for Finance Dr Bhagwat Kisanrao Karad in a written reply to a question in the Lok Sabha today.

The Finance Minister Smt. Nirmala Sitharaman, in her speech on the Budget for the financial year 2021-22, had made the following announcement:

“The high level of provisioning by public sector banks of their stressed assets calls for measures to clean up the bank books. An Asset Reconstruction Company Limited and Asset Management Company would be set up to consolidate and take over the existing stressed debt and then manage and dispose of the assets to Alternate Investment Funds and other potential investors for eventual value realization.”

The Minister stated that Indian Banks’ Association (IBA) has apprised with regard to incorporation of the National Asset Reconstruction Company Limited (NARCL) that NARCL has been registered with the Registrar of Companies on 7.7.2021.

The Reserve Bank of India, being the regulator of Asset Reconstruction Companies (ARCs), has already prescribed a regulatory framework for the functioning of ARCs and there are well-laid norms for transfer of stressed assets by banks and non-banking finance companies to ARCs. Identification of non-performing assets by an ARC is an ongoing process, the Minister stated.

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India emerges as 5th largest forex reserves holder in the world with $608.99 billion as on June 25, 2021

Posted on by Business So Simple in Financial Prudence

Ministry of Finance

India emerges as 5th largest forex reserves holder in the world with $608.99 billion as on June 25, 2021

Posted Date:- Jul 19, 2021

With India’s forex reserves at $608.99 billion as on June 25, 2021 stood, India has emerged as the fifth largest foreign exchange reserves holder in the world after China, Japan, Switzerland and Russia. This was stated by Minister of State for Finance Shri Pankaj Chaudhary in a written reply to a question in the Lok Sabha today.

The Minister stated that India’s foreign exchange reserves position is comfortable in terms of import cover of more than 18 months and provides cushion against unforeseen external shocks. Government and RBI are closely monitoring the emerging external position calibrating policies or regulations to support robust macroeconomic growth.

Giving more details, the Minister said that RBI takes regular steps for diversification of forex reserves by scaling up operations in forex swap and repo markets, acquisition of gold and exploring new markets/products, while adhering to safety and liquidity standards. Variation in India’s forex reserves is primarily the outcome of RBI’s intervention in the foreign exchange market to smoothen exchange rate volatility, valuation changes due to movement of US dollar against other international currencies in the reserve basket, movement in gold prices, interest earnings from deployment of foreign currency assets and inflow of aid receipts.

The Minister further stated that a current account deficit, accompanied by increasing foreign exchange reserves, reflects a surplus on the balance of payments i.e., the magnitude of the net capital inflows exceeds the volume of the current account deficit. In 2020-21, India’s balance of payments recorded surplus in both current account and capital account which contributed to the increase in foreign exchange reserves during the year.

Besides exports and imports of goods and services, the overall stability of the external sector depends on other components of balance of payments including remittances (transfers), income in the current account, the size of net capital flows and external debt. India is comfortable in most of these external sector vulnerability indicators, the Minister said.

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RM/MV/KMNRelease Id :-1736885