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Policy & Politics

Covid-19 pushes the right to trigger corporate insolvency into hibernation

While the defaulting corporate debtors attain refuge from insolvency under Section 10A, it would not be out of place to expect policy decisions and amendments to put in place checks and balances on the possible misuse of Section 10A.

Ever since the ominous dark clouds of the COVID -19 pandemic spread across the world, the global economy has taken an unprecedented hit, the Indian economy being no exception. On March 24, 2020, the Central Government, declared a countrywide lockdown in the wake of the outbreak. A grinding halt in business operations and hence, revenue generation, led to a dwindling of corporate cashflows. The financial health of establishments at large, especially MSMEs, has been seriously imperiled, pushing them to the brink of insolvency. Acknowledging this, the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 (“Ordinance”) came to be promulgated by the President of India on June 5, 2020, given that the Parliament was not in session and the President was satisfied of the existence of circumstances rendering such promulgation necessary. This was in line with the recent announcements made by the Finance Minister informing that the government would consider a complete suspension of the “trigger provisions” for initiation of corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016 (“Code”) , in case the COVID-19 situation continues. Needless to state, the economic situation in the country and the grave financial stress faced by corporates, including MSMEs, has only worsened with the passage of time.

 The Ordinance:

In light of such circumstances, the Code has been amended by way of the Ordinance dated June 5, 2020, which came into force with immediate effect, suspending the initiation of fresh corporate insolvency proceedings against companies under Sections 7, 9 and 10 of the Code, by insertion of Section 10A into the Code. With this, a lot of speculation that had built up regarding the scope of such suspension ever since the announcements made by the Finance Minister has been laid to rest. The newly inserted Section 10A does not place a blanket ban on initiation of corporate insolvency proceedings, and only bars initiation in respect of defaults arising on or after March 25, 2020 till the expiry of a period of six months (i.e., till September 24, 2020) or such further period as may be notified, not exceeding one year (i.e., till March 24, 2021) (“exemption period”).

Pertinently, Sections 7 and 9 of the Code allow Financial Creditors and Operational Creditors, respectively, to make applications before the Adjudicating Authority for initiation of corporate insolvency resolution process against a defaulting Corporate Debtor. On the other hand, Section 10 of the Code provides for the initiation of corporate insolvency by the defaulting Corporate Applicant against itself. By way of the amendment, Section 10A suspends the rights of Operational Creditors, Financial Creditors as well as Corporate Applicants, to initiate insolvency under the Code, provided that the ‘default’ in question occurs during the exemption period. For the sake of complete clarity, the ‘Explanation’ to Section 10A expressly lays down that there would be no bar against such initiation of corporate insolvency proceedings against Corporate Debtors in respect of defaults that may have occurred before the exemption period, i.e., before March 25, 2020.

Lending permanency to the effect of the amendment, the Proviso to Section 10A goes on to provide that no Application shall ever be filed for initiation of corporate insolvency resolution process of a corporate debtor for a default occurring during the said exemption period.

Impact of the Ordinance:

There is no doubt that this is indeed a welcome move which would have the effect of salvaging companies from the brink of insolvency, many of whom may be facing dire financial situations owing to the COVID-19 pandemic. This provision will protect companies against having to give up the reins and handing over control of their assets and would also prevent them from being driven into liquidation. Protecting companies from going under would also in turn prevent a further increase in unemployment.

Interestingly, while the preamble of the Ordinance expressly refers to the impact of the COVID-19 pandemic on businesses, financial markets and the economy, and correlates it to the resultant need for such a provision to be inserted to the Code, the language used in Section 10A does not necessitate linkage of defaults occurring during the exemption period to the COVID-19 pandemic. This ensures that precious time will not be lost before the Adjudicating Authority by parties trying to prove or disprove that a particular default arose out of the economic impact of COVID-19, so long as the default occurs during the exemption period.

The amendment protects defaulting Corporate Debtors amidst this time of unprecedented economic crisis. In the absence of such a ban, firstly, an unprecedented number of solvent companies would have run the risk of being dragged into insolvency. Secondly the prospects of such companies reaching a successful resolution through a commercially viable resolution plan at the end of the corporate insolvency resolution process would also have been minute, given the dearth of potential investors. Expectedly, the potential investors would also be grappling to recover from the economic aftermath of the COVID-19 pandemic. The preamble to the amendment reasonably points out that in the given circumstances, it is difficult to find an adequate number of resolution applicants to rescue the corporate person who may default in discharge of their debt obligation.

The Proviso to Section 10A also stands to reason, inasmuch as it lays down that the ban in respect of defaults occurring during the exemption period shall be permanent and not be limited only to the exemption period. Had this position not been clarified in the Ordinance, the purpose of the amendment would have been defeated. This is because availability of a remedy under the Code or not, defaults, operational as well as financial, will continue to occur as the financial burden of companies increases. Thus, the mere suspension of this right to initiate insolvency proceedings for a certain period would not have served the purpose of the amendment and the ban had to be made permanent in order to be effective in the long run. Otherwise, an aggrieved creditor would simply have awaited the expiry of the exemption period before approaching the Adjudicating Authority and initiating corporate insolvency proceedings in respect of defaults occurring during the exemption period. In fact, Corporate Debtors defaulting during the exemption period, under the threat of being dragged into insolvency once the exemption period expires, may possibly have even taken to unlawful and illegal measures such as misappropriation and siphoning off funds during this period, had it not been for the Proviso to Section 10A. Thus, the amendment essentially permanently excludes all defaults occurring during the exemption period from the purview of the term “default” for the purpose of the Code. Perhaps the use of the word “suspension” in the title of Section 10A can be misleading given the permanent nature of the amendment, insofar as defaults occurring during the exemption period are concerned.

On the flipside, however, the blanket suspension during the exemption period, as imposed under the Ordinance, may adversely impact both lending and borrowing activities in the country. In the absence of access to the remedy of initiating insolvency proceedings under the Code, lenders may feel constrained to restrict their lending activity which would also be severely detrimental to the financial health of companies.

Additionally, the lack of a deterrent of being driven into insolvency may lead borrowers to take undue advantage of Section 10A and commit defaults in their repayment obligations. This ban on initiation of insolvency proceedings may also discourage foreign creditors from investing in India.

While suspension of Sections 7 and 9 may lead to hibernation of insolvency actions between contending parties, the suspension of Section 10 leads to an odd situation wherein a defaulting company would be deprived of its opportunity to voluntarily seek resolution of its debt and consequent revival. In this regard, it is pertinent to note that as per the preamble of the Ordinance, the amendment suspending Sections 7, 9 and 10 has been brought about to prevent corporate persons experiencing distress, being pushed into insolvency proceedings. In our view, imposing a prohibition upon a Corporate Applicant from initiating voluntary insolvency proceedings under Section 10 of Code would be contrary to the preamble of the Ordinance itself, as it would cause such Corporate Applicants greater distress owing to further deterioration of its assets, and a diminishing chance of revival and resolution.

In addition to the foregoing, it would be interesting to see as to how the Adjudicating Authority and superior courts deal with the ever contentious and critical issue of determining the “date of default”. The determination of “date of default”, owing to the impact of Section 10A has become all the more critical since it directly impacts a creditor’s right to initiate insolvency proceedings, depending on whether the date of default occurs before, during or after the exemption period. Questions may arise as to whether a default in payment of a certain amount of debt occurring during the exemption period can be treated as a continuing default for the purpose of initiating insolvency proceedings under the Code after the expiry of the exemption period.

Apart from inserting Section 10A into the Code, the Ordinance has also brought about an amendment in Section 66 of the Code which deals with ‘Fraudulent trading or Wrongful trading’ by the Corporate Debtor. The Ordinance has inserted sub-section (3) inserted into Section 66, which seems to be ambiguous. It lays down that no application shall be filed by a resolution professional under sub-section (2) of Section 66, i.e., in respect of such default against which initiation of corporate insolvency resolution process is suspended as per section 10A. From the language employed in sub-section (3), it seems that it proposes to excuse lack of due diligence by a director or partner of a corporate debtor resulting in default by the Corporate Debtor during the exemption period. Such an exemption may result in directors/ partners of corporate debtors engaging in unlawful and illegal measures such as misappropriation and siphoning off funds without facing consequences under Section 66(2) of the Code and may adversely impact the realisable value for its creditors.

Conclusion:

The Insolvency and Bankruptcy Code, 2016, was considered as a panacea for all ills plaguing the Indian financial system, which, in January, 2019, led the Honourable Supreme Court of India to observe as follows, in the landmark judgement of Swiss Ribbons Pvt. Ltd. and Ors. vs. Union of India (UOI) and Ors. reVported at (AIR 2019 SC 739):

“86. We are happy to note that in the working of the Code, the flow of financial resource to the commercial sector in India has increased exponentially as a result of financial debts being repaid. Approximately 3300 cases have been disposed of by the Adjudicating Authority based on out-of-court settlements between corporate debtors and creditors which themselves involved claims amounting to over INR 1,20,390 crores. Eighty cases have since been resolved by resolution plans being accepted. Of these eighty cases, the liquidation value of sixty-three such cases is INR 29,788.07 crores. However, the amount realized from the resolution process is in the region of INR 60,000 crores, which is over 202% of the liquidation value. As a result of this, the Reserve Bank of India has come out with figures which reflect these results. Thus, credit that has been given by banks and financial institutions to the commercial sector (other than food) has jumped up from INR 4952.24 crores in 2016-2017, to INR 9161.09 crores in 2017-2018, and to INR 13195.20 crores for the first six months of 2018-2019. Equally, credit flow from non-banks has gone up from INR 6819.93 crores in 2016-2017, to INR 4718 crores for the first six months of 2018-2019. Ultimately, the total flow of resources to the commercial sector in India, both bank and non-bank, and domestic and foreign (relatable to the non-food sector) has gone up from a total of INR 14530.47 crores in 2016- 2017, to INR 18469.25 crores in 2017-2018, and to INR 18798.20 crores in the first six months of 2018-2019.

These figures show that the experiment conducted in enacting the Code is proving to be largely successful. The defaulter‘s paradise is lost. In its place, the economy‘s rightful position has been regained.”

The Ordinance appears to have been promulgated with the intention of protecting companies and promoters from “no fault liability”. It is, however, necessary to ensure that Section 10A does not become a tool for regaining the defaulter’s paradise.

The insertion of Section 10A in the wake of COVID19 would most certainly provide a cushion to businesses that are facing a financial crisis or are heading for an inevitable crisis, and may also encourage creditors to adopt alternate remedies such as restructuring, negotiating settlements, etc., instead of rushing to the insolvency route. However, the impact and the longterm effects of this suspension on the financial health of the aggrieved creditors, will also need to be tended to. While the defaulting Corporate Debtors attain refuge from insolvency under Section 10A, it would not be out of place to expect policy decisions and amendments to put in place checks and balances on the possible misuse of Section 10A, and to safeguard the interests of creditors of such Corporate Debtors. The legislature and Adjudicating Authority under the Code may also need to be mindful of ironing out certain creases in the implementation of the Ordinance, which may arise on account of ban on voluntary insolvency for defaults during the exemption period, inability of lenders to file insolvency proceedings even for intentional defaults during this period, among others.

The authors are Advocates at Khaitan & Co, New Delhi. Ajay Bhargava (Partner) is part of the Dispute Resolution practice, Siddharth Srivastava (Partner) is part of the Banking & Finance/ Restructuring & Insolvency practice, Wamika Trehan (Senior Associate) and Maithili Moondra (Associate) are part of the Dispute Resolution practice at Khaitan & Co.

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Policy & Politics

Tax on ocean freight: A case of inequitable double taxation at its best

Supply of ocean freight service is not covered either by Section 7 (inter-state supply) or Section 8 (intra-state supply) of the IGST Act. The Act does not contemplate levy or collection of tax from a person who is neither the supplier nor the recipient of supply.

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HOW TAX ON OCEAN FREIGHT WORKS

 Ocean Freight is a method of transporting huge quantities of goods through the sea. The levy of taxes on Ocean Freight has been a matter of dispute in India for a while now. The GST law requires the importers to pay tax on ocean freight services under Section 9(3) of the CGST Act and Section 5(3) of the IGST Act, better known as the ‘Reverse Charge Mechanism’.

The location of the Service Provider (SP) and the Service Recipient (SR) must be considered. If the location of the SP and the SR is in India, Section 12(8) applies. But when the Location of SP or SR is outside India, the location of the SR is considered, unless the location of the SP is not known, then the SP’s location is considered but only for transportation [under Section 13(9)]. If the SP and SR are both outside India, the Importer is liable to pay IGST @ 5%. In addition to this, the importer also pays customs duty, freight on the CIF (Cost, Insurance and Freight) value and insurance even if the importer has paid IGST on the CIF value, he is still required to pay GST on ocean freight. This, is what any prudent person would term as “double taxation”.

When it comes to import on the CIF basis, the foreign supplier transports goods from a place outside India through a foreign shipping agency, to a port located in India. In CIF, the freight is paid by the foreign exporter to the shipping agency and the foreign supplier transports such shipment through the foreign shipping agency.

BEFORE GST

 From 01.06.2016, transportation of goods from a place outside India up to the customs clearance station in India became liable to service tax, through the Finance Act, 2016. But an exemption was given for services by way of transportation of goods by an aircraft from a place outside India up to the customs clearance station.

If the service provider was situated outside India, the liability to pay service tax would be on the service recipient. In Free on Board (FoB) imports, service tax would be payable by the shipping line, if the shipping line was based in India; and the service tax would be payable by the importer under reverse charge if the shipping line is not based in India.

In case of CIF imports, there was no service tax levy on freight, as the service provider as well as the service recipient are situated outside India.

There existed ambiguity in levy of service tax that was attracted on ocean freight component only in case of FOB imports, and not attracted for CIF imports.

Vide Notifications dated. 12.01.2017 (Notification 3/2017) and 20.06.2012 (Notification 30/2012 ST), some efforts were made to clear the ambiguities. In addition to this, in respect of services provided or agreed to be provided by way of transportation of goods by a vessel from a place outside India up to the customs clearance station in India, the person liable for paying service tax other than the service provider would be the person in India who complies with sections 29, 30 or 38 read with section 148 of the Customs Act, 1962.

In addition to this a series of Notifications were issued pursuant to the problem at hand:

 1. Vide Notification dated. 13.04.2017 (Notification 2/2017 ST), the definition of “person liable for payment of service tax” under Rule 2 (1) (d) (i) was amended and a new sub rule (Rule 7CA) was introduced in the Service Tax Rules, 1994.

 2. Vide Notification dated. 13.04.2017 (Notification 14/2017 ST), a new rule, Rule 8B was introduced in Point of Taxation Rules, 2011, which spoke about the “Determination of point of taxation in case of services provided by a person located in non-taxable territory to a person in non-taxable territory.”

3. Vide Notification dated. 13.04.2017 (Notification 10/2017 CE NT), the definition of “input service” in the CENVAT Credit Rules, 2004, was amended to further facilitate proper implementation of the respective tax provisions.

The importer was thus made liable to pay service tax for the services of transportation of goods by vessel from a foreign port to Indian port in case of CIF imports.

 The above position continued up to 30.06.2017, i.e., until the introduction of GST.

UNDER GST

 And as per Section 14 of the Customs Act, 1962, the value of the imported goods shall be the transaction value of such goods for the purpose of levy of Customs duty and such transaction value in the case of imported goods shall include, in addition to price, any amount paid or payable for costs and services, including commissions and brokerage, royalties and licence fees, costs of transportation to the place of import, insurance, loading, unloading and handling charges to the extent as per Rule 10(2) of the Customs valuation (Determination of Value of Imported Goods) Rules, 2007.

Section 5(3) of the IGST Act, 2017 empowered the Centre to issue notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and the recipient of such goods or services or both is liable to pay tax under reverse charge in relation to the supply of such goods or services or both.

Where the value of taxable service provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India is not available with the person liable for paying integrated tax, the same shall be deemed to be 10 % of the CIF value of imported goods.

How ocean freight suffers double taxation

Ocean freight component suffers tax twice; first, it suffers IGST as component of Customs Duty on imported goods on CIF basis and second time IGST @ 5% in the form of Import of Services (Reverse Charge Mechanism) for payment by the importer. Therefore, IGST payment is levied twice on Ocean freight in the guise as part of transaction value of imported goods.

The impugned notifications are contrary to the provisions of Article 265 of the Indian Constitution which says that “no tax shall be levied or collected except by authority of law”. A delegated legislation (includes the notifications herein or rules) cannot provide levy or collection of tax which is not authorised by the parent statute.

 Supply of ocean freight service is not covered either by Section 7 (inter-state supply) or Section 8 (intra-state supply) of the IGST Act. The Act does not contemplate levy or collection of tax from a person who is neither the supplier nor the recipient of supply.

A person other than a recipient cannot determine the “time of supply” as per the provisions of Section 13 of the IGST Act. In addition to this, Input Tax Credit can only be availed by the recipient of the supply which are intended to be used in the course of furtherance of business, under the provisions of Section 16 of the Act.

 The Supreme Court in case of State of Rajasthan v. Basant Agrotech (India) Limited [2014 (302) E.L.T. 3 (SC)], held that the rule of construction of a charging section is that before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words used in the section. No one can be taxed by implication. A charging section has to be constructed strictly. If a person has not been brought within the ambit of the charging section by clear words, he cannot be taxed at all.

Commissioner of Central Excise v. Acer India Limited [2004 (172) E.L.T. 289 (S.C.)], the SC held – “The intention of the legislature in a taxation statute is to be gathered from the language of the provisions particularly where the language is plain and unambiguous. In a taxing Act it is not possible to assume any intention or governing purpose of the statute more than what is stated in the plain language. It is not the economic result sought to be obtained by making the provision which is relevant in interpreting a fiscal statute. Equally impermissible is an interpretation which does not follow from the plan, unambiguous language of the statute. Words cannot be added to or substituted so as to give a meaning to the statute which will serve the spirit and intention of the legislature. The statute should clearly and unambiguously convey the three components of the tax law i.e. the subject of the tax, the person who is liable to pay the tax and the rate at which the tax is to be paid. If there is any ambiguity regarding any of these ingredients in a taxation statute, then there is no tax in law.”

The Hon’ble Gujarat High Court in the case of Mohit Minerals Pvt. Ltd. Vs. Union of India [Special Civil Application No. 726 of 2018], has set aside IGST on Ocean Freight and held that no tax is leviable under the IGST Act, 2017 on the ocean freight for the services provided by a person located in a non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India and the levy and collection of tax of such ocean freight under the impugned Notifications is not permissible in law and that taxing ocean freight is ultra vires and leads to double taxation.

Despite the attempts of the judiciary in defending the very concept of negating any occurrence of double taxation, the efforts made to amend the imprudent levy of IGST on ocean freight, or so to say, the lack thereof, is still very unsettling.

A person other than a recipient cannot determine the “time of supply” as per the provisions of Section 13 of the IGST Act. In addition to this, Input Tax Credit can only be availed by the recipient of the supply which are intended to be used in the course of furtherance of business, under the provisions of Section 16 of the Act.

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Policy & Politics

NCRTC SIGNS MOU WITH SECL FOR USING BLENDED RENEWABLE ENERGY FOR ITS DELHI-GHAZIABAD-MEERUT RRTS CORRIDOR

Tarun Nangia

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In line with its vision to improve the quality of life of people, National Capital Regional Transport Corporation (NCRTC) has signed MoU with SECI (Solar Energy Corporation of India) today to harness blended renewable energy for RRTS. MOU has provisions to explore possible opportunities in electric/ transformative mobility, Hydrogen based economy, and other alternative sources of fuels and energy.

MoU was signed in presence of Jatindra Nath Swain IAS, Secretary (Fisheries), GOI & CMD/SECI, Vinay Kumar Singh, Managing Director/NCRTC and Mahendra Kumar, Director(E&RS)/NCRTC alongwith other senior officials of NCRTC and SECI.

NCRTC, as part of its Energy Management Policy, intends to maximize the use of blended renewable energy such as solar power etc. for meeting full energy requirement of NCRTC. SECI, being an industry leader, will help in arranging blended renewable energy to NCRTC round the clock at affordable rates for Delhi-Ghaziabad-Meerut Corridor and cooperation to extend the same for other future corridors.

Use of clean energy, through this association will ensure reduction in expenditure on electricity and significantly lesser CO2 emissions, which is essential for sustainable development.

This cooperation is a part of NCRTC’s long term strategy to make RRTS and NCRTC financially as well as environmentally sustainable.

NCRTC is adopting following measures also for energy efficiency in India’s first RRTS corridor-

1. All elevated RRTS stations and depots will be provided with solar panels.

2. NCRTC is targeting to generate minimum 10 MW renewable energy.

3. 40% of the total energy requirement of Delhi Meerut RRTS corridor is targeted to be procured/generated from renewable energy.

4. RRTS rolling stock will be provided with state-of-the-art regenerative braking system which converts train’s kinetic energy into electrical energy..

5. Regenerative braking will result in reduced wear and tear of wheels, brake pads and other associated moving brake-gear parts of rolling stock resulting in significantly less consumption of these spare part/items during train maintenance life cycle which again will result in substantial reduction in CO2 emission which otherwise would have been generated in the manufacturing and supply chain process of these spare parts/items.

6. RRTS trains will have push buttons for selective opening of doors on need basis. This eliminates the requirement of opening all doors at every station, thus leading to energy saving. RRTS rolling stock will have lighting and temperature control systems to enhance the passenger experience with less energy consumption.

7. All RRTS station and their premises, depot, office spaces and trains will be equipped with energy-saving LED lights.

8. Platform Screen Doors will be installed at every RRTS stations that will help in saving significant energy consumption in underground stations.

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Policy & Politics

TARGETED POLICY SUPPORT TO ENGINEERING EXPORT SECTOR NEEDED, SAYS EEPC INDIA

Tarun Nangia

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The growth in outbound shipments has been robust in the last few months and the outlook remains positive for the current year but rising cost of key raw materials especially steel is an area of concern, said EEPC India Chairman Mr Mahesh Desai.

As expected, the value of engineering goods exports jumped 53% to US$ 8.64 billion in May, 2021 as against US$ 5.65 billion in the corresponding month last year primarily due to low base effect and increasing demand from key markets.

“Soaring prices of various metals is a big challenge for the engineering goods manufacturers which were badly affected by the Coronavirus outbreak and the subsequent lockdowns,” he said.

While hoping that the rates for the export promotion scheme RoDTEP would be announced shortly, the EEPC India Chairman expects the government to provide more targeted support as suggested by the RBI.

Announcing the decisions of the Monetary Policy Committee (MPC) on June 4, RBI Governor Mr Shaktikanta Das had said that conducive external conditions were forming for a durable recovery beyond pre-pandemic levels. He further said that the need of the hour is for enhanced and targeted policy support for exports.

EEPC India Chairman said that while the export outlook has been projected to be positive in the current fiscal, there were downside risks too given that public health experts have predicted a possible third wave of the pandemic.

“The efforts must be made now to minimise the impact of pandemic on trade and business as protecting livelihood is no less important than lives. The plans should be in place to ensure goods movement, especially export consignments, are not affected by lockdowns, night curfews or any other restrictions imposed by states to prevent the spread of virus,” Mr Desai said.

Announcing the decisions of the Monetary Policy Committee (MPC) on 4 June, RBI Governor Shaktikanta Das said that conducive external conditions were forming for a durable recovery beyond pre-pandemic levels.

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Policy & Politics

India’s exports continue to perform impressively for third month in a row

FIEO president reiterated that though the government has announced a slew of measures to support exports, the need of the hour is to soon notify the RoDTEP rates to remove uncertainty from the minds of the trade and industry, thereby helping in further forging new contracts with the foreigner buyers.

Tarun Nangia

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Responding to the trade data for May, 2021, Sharad Kumar Saraf, President, FIEO said that the continuing impressive growth in exports by about 70% to USD 32.27 billion compared to a low base of USD 19.05 billion during May 2020, reiterate our assessment that order booking position of our exporters is not only extremely good but also the gradual opening up of major global markets and improvement of situation in the country is expected to push exports growth further. President FIEO said that growing by over 8% even on the base of May 2019 reflects a positive trend for the sector. Saraf particularly emphasised that the growth in labour-intensive sectors like Cereal preparations and miscellaneous processed item, Gems & Jewellery, Engineering goods, Leather and Leather Products, Ceramic products and glassware, Cotton yarn/fabrics/made-ups, handloom products, Marine products, Spices, Carpets and Man-made yarn/fabrics/made-ups etc. augurs well for the job scenario, which is most relevant in the current context.

FIEO Chief added that such a growth during the month has been mainly on account of growth in Petroleum products, Engineering goods, Organic & Inorganic Chemicals and Gems & Jewellery, the major contributors to the country’s export basket, which have shown impressive performance compared to May, 2020. He also said that 25 out of 30 major product groups of exports have either shown a very high growth or are in positive territory defying all the odds when there is still a bit of scepticism persisting in the global economy on the expectation of a third wave of Covid-19 pandemic.

Sharad Kumar Saraf further reiterated that continuing on with such a growth performance in exports during the second month of the new financial year not only shows signs of resilience of the exporting community facing squeezing profits but also the resolve of the government. FIEO Chief complimented the government for its continuous support during such challenging times. Increase in May 2021 imports by about 74 percent to USD 38.55 billion compared to the same period during the previous fiscal led to the increase in trade deficit of USD 6.28 billion, which is an increase of over 99.61 percent during the month and should be looked into.

FIEO President reiterated that though the government has announced a slew of measures to support exports, the need of the hour is to soon notify the RoDTEP rates to remove uncertainty from the minds of the trade and industry thereby helping in further forging new contracts with the foreigner buyers. Mr Saraf also reiterated that the government must address some of the key issues including priority status to exports sector, extension of Interest Equalisation Scheme beyond June 2021 till at least 31st March, 2024, release of the necessary funds for MEIS and clarity on SEIS benefits, resolving risky exporters’ issues and continuance of seamless refund of IGST and more importantly continuing with IGST option for exports to further give boost to the sector during these challenging times.

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Policy & Politics

Making it happen: Covid management in Sonipat

Imaginative planning, meticulous execution and untiring efforts by young IAS officer Shyam Lal Poonia and his team have helped the district sail through the second wave.

Anil Swarup

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Corona

Like many regions of the country, the second wave of the Covid hit the district of Sonipat (adjoining Delhi) really hard with the positivity rate reaching a high of 54.71% on 25 April 2021. With the second wave came different sorts of challenges of which oxygen supply was most critical, given the non-existent perennial supply system for the hospitals including the 500-bedded Medical College at Khanpur Kalan. 

The challenge of medical oxygen was altogether new for Sonipat like many other districts in the country. This, coupled with close to 60% patients coming from Delhi, led to quick saturation of bed capacity in Covid hospitals of the district by 25 April 2021. Consequently, a dual challenge of increasing oxygen beds on one hand and managing oxygen demand within the available quota on the other was faced. As on 24th April, the district was receiving a daily quota of 9 MT liquid oxygen. To add to the worries, the agency responsible for supplying around 4 MT daily oxygen to Medical College had pulled out. As the state allocated oxygen quota was being determined elsewhere, the focus was on mobilization of resources and managing within this quota for which the following line of action was undertaken: 

PSA Plant: A 200 LPM capacity PSA plant approved under PM Cares Fund was lying idle since February as the Agency didn’t install it and district health team didn’t realise its importance. With the help of one Prof. Jogendra from Pacific College, Sonipat, PSA oxygen plant was commissioned at Civil Hospital Sonipat on 30th April. This helped increase the number of oxygen beds at Civil hospital.  

Oxygen Audit: Nodal officer was appointed for oxygen supply and officers were positioned at each of the bottling plants and hospitals. A multi-pronged approach was adopted to prevent wastage and siphoning off of medical oxygen at bottling plants and in hospitals.  A formula was put in placeabout average consumption on the basis of guidelines issued by MoFHW. Accordingly, average consumption in all hospitals was calculated. A committee was also constituted for oxygen consumption audit in all hospitals. Quota was now being allocated to hospitals based on their patient load. These steps helped save 2-3 MT of LMO per day.  This resulted in the increase of oxygen beds from 605 to 791 by 1st May. Moreover, the district quota was increased to 13 MT on 2nd May by the Government which helped further increasing the number of oxygen beds to 950 including 90 ventilators.

Augmenting Oxygen Storage: By end of April, 2021, the district had only one Bottling Plant with storage capacity of 20 MT which was catering to more than 25 hospitals. Through concerted efforts two more bottling plants licenses were facilitated for medical oxygen and a storage capacity of 50 MT was added within 15 days.

LMO Tank at BPS Government Medical College, Khanpur: With a daily oxygen demand of more than 450 D-Type cylinders, the Medical College was the major consumer for oxygen in the district. With every passing day and increase in patient load, it was becoming difficult to maintain regular supplies through cylinders. With the help of one of the Bottling Plants, an LMO storage tank with 12 MT capacity was installed within a week at BPSGMC. This gave a major boost to oxygen supply at the Medical College and the number of oxygen-supported beds increased from 150 to 350. This also resolved issues related to oxygen flow pressure and refilling and transportation of oxygen cylinders.

PSA Plant at BPSGMC: To further augment oxygen availability in the district and to tackle any unforeseen situation in days to come, a PSA oxygen generation plant under CSR has been installed at Govt Medical College, Khanpur with a capacity of 1000 LPM. Installation of one more PSA Plant with 1000 LPM capacity by DRDO is under progress.

At one point in time, the district had more than 7000 active cases and 90% of them were under home isolation spread across the geography of the district. To monitor them on a regular basis was a challenge given the inadequate manpower in the field. 

With the support from young MBBS/PG medical students from BPS Medical College, a motto  – Chase The Patient – was coined. Tele-consultation services were provided for all home isolated patients. 120 PG students of the Medical College were engaged to monitor all the home isolated patients of the district. The students were divided into 15 area-wise teams, each team connected with their respective Community Health Centre (CHCs) and Urban Health Centres (UHCs). 

A team of IMA doctors was roped in which constantly supported patients with their COVID treatment, psycho-social care and post COVID recovery issues. Timely tele-consultation meant that scores of patients were provided early medical care and prevented from being hospitalized.

Even as oxygen bed capacity was being increased across the district, it was observed that admission in COVID facilities was leading to disconnection of patients with their family members, due to restrictions. This was especially true for those not possessing smart phones. Covid treatment protocols couldn’t be violated. However, families were especially feeling anxious to talk to patients and know their health status. The District Administration accordingly initiated e-Samvaad wherein 6 tablets have been provided to Civil Hospital, Sonipat and BPS Govt Medical College to facilitate interaction of admitted patients with their family members. During a fixed time slot, the attendant/ family members can now interact with their patient on video call through WhatsApp/ Google Meet/ Zoom. The Nursing Staff dedicates themselves for this purpose in the given time slot. 

Given the exponential rise in cases across Sonipat, it was important to set up a central COVID Control Room to address all citizen queries and to manage the situation on-ground.  A team of 40 teachers and operators was trained to work round the clock in three shifts. Dedicated helpline catering to all citizen queries around vaccination, testing, bed availability, oxygen cylinders, movement passes and for lodging complaints against black marketing, overcharging, were made operational.

Imaginative planning, meticulous execution and untiring efforts by this young IAS officer, Shyam Lal Poonia and his team have helped the district sail through the second wave. Positivity rate is now below 2% and hospital bed occupancy is less than 20%. They made it happen amidst trying set of circumstances. 

Anil Swarup has served as the head of the Project Monitoring Group, which is currently under the Prime Minister’s Offic. He has also served as Secretary, Ministry of Coal and Secretary, Ministry of School Education.

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Policy & Politics

Politics on Central Vista project unreasonable

A modern building equipped with the latest digital technology replacing the 90-year-old Parliament House is the need of the hour. Do you know that 12 ministries of the Central government are functioning from rented buildings and the government spends about Rs 1,000 crore annually to pay the rent? Around Rs 20,000 crore would have been paid towards rent only during the period I was in Parliament. This project is the need of the hour keeping the future in mind. If all the ministries are brought together, it will help them function even more proficiently.

Vijay Darda

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If we just keep trying to prove Prime Minister Narendra Modi wrong on everything, it will weaken the very existence of the Opposition. The voice of the Opposition will carry weight only if the opposition or protest will be constructive, and not just for the sake of it. Today some people are protesting about the Central Vista project, but they should understand that the first initiative was taken by the then Lok Sabha speaker Meira Kumar during the Congress-led government in 2012 to build a new Parliament building. The leaders of other parties including Atal Bihari Vajpayee had supported it.

Under the Central Vista project, the offices of the Vice President, the Prime Minister as well as all the 51 ministries will be housed under one roof. MPs will have offices. All the buildings will be connected to each other. This will benefit from the security point of view and help get rid of the problems people face during the VIP movement too.

The project will cost about Rs 20,000 crore and Prime Minister Narendra Modi wants to complete most of the important work of this project before the end of his second term in 2024. The rest of the work will be done later.

A section of the society is questioning the need to spend such a huge amount on the project in the midst of this pandemic when the economy is badly hit. People are also questioning the purpose and benefits of this project.

Normally, this logic may sound right, but if you understand things with a deeper perspective, you will understand how important the completion of the Central Vista project is from the administrative point of view keeping in mind the future. I have been a part of the Parliament for 18 years so I have seen and understood the requirements closely. Many of these buildings are dilapidated. It is difficult to work sitting there. The legislative section of India sits in the Parliament House whereas the President, Vice President, Prime Minister and officials of 51 ministries sit at different places. Rashtrapati Bhavan, Parliament House, North Block and South Block, and National Museum building were built in 1931. After that Nirman Bhawan, Shastri Bhawan, Udyog Bhawan, Rail Bhawan and Krishi Bhawan were constructed between 1956 and 1968. Today, 39 ministries are housed in different buildings in the Central Vista area while 12 ministries are occupying rented premises outside.

You will be surprised to know that their annual rent is about Rs 1,000 crore and their distance from the PMO and other ministries is quite long too. Obviously, the administrative work gets hampered. So, is it justified to spend such a huge amount on rent? Just calculate how much rent the government would have paid till now. Around Rs 20,000 crore must have been paid only during the period I was in Parliament.

Another important point is that when the buildings were built in Central Vista and its surrounding areas, there was no digitalization like it is today. Now along with the security of Parliament House and ministries, there is always a big question for the security of digital files. Building a new complex will ensure better security for both.

India is a rising power in the world today. Priorities are changing, so it is very important that the entire Central government should be accommodated in a cluster of buildings equipped with modern technology so that ministers can easily reach out to each other, meet and interact. If 51 ministries located in the buildings being rebuilt in the Central Vista project are near each other, it will definitely benefit from the administrative point of view.

We also have to keep in mind that our population is growing, so surely the number of MPs will have to be increased too in future. Keeping this in mind, the new building of Parliament House will be built on about 65,400 square metres of land and have a large Constitution Hall, a lounge for MPs, a library, offices of several committees, etc. The Lok Sabha chamber will have a seating capacity for 888 members and the Rajya Sabha chamber will have the same for 384 members. Along with this, there will be ample space for the National Museum, National Archives and Indira Gandhi Art Museum and our heritage will also be displayed in a dignified manner.

Those who are critical of this project say that an amount of Rs 20,000 crore should be spent on helping the poor and providing healthcare facilities during the pandemic. But the question is whether the government is executing this project by diverting the funds meant for the poor or the needy? Of course not. The government is not rolling back any welfare scheme meant for the poor. All schemes are running as before. I believe that the poor must be helped and every government has been doing this. The point is we have to plan for the future too.

If we look at the post-independence history, be it Pandit Jawaharlal Nehru, Lal Bahadur Shastri, Indira Gandhi, Rajiv Gandhi, Atal Bihari Vajpayee or any other person who has been in power, everyone has worked on planning for the future and that is why India has occupied this prime position today. If Rajiv Gandhi would not have dreamt of a technology-rich India, had we been where we are today? We must worry about the present. Problems should also be solved, but we should also dream of a better future. The office of our Prime Minister should also be state-of-the-art, equipped and secure like the Parliament and Presidential buildings of America, Russia, Britain and other developed countries. That’s why I want to say that there should be no politics, at least in the case of the Central Vista project. There are several other subjects for politicking.

The author is the chairman, Editorial Board of Lokmat Media and former member of Rajya Sabha.

India is a rising power in the world today. Priorities are changing, so it is very important that the entire Central government should be accommodated in a cluster of buildings equipped with modern technology so that ministers can easily reach out to each other, meet and interact.

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