Daily News

Nirmala Sitharaman to launch National Monetization Pipeline on Aug 23

According to an official release, Finance Minister Nirmala Sitharaman will launch the National Monetization Pipeline (NMP) on Monday. The National Monetisation Pipeline will identify the government’s infrastructure assets for auction over the next four years.

finance minister- monetization pipeline

On Sunday, the Niti Aayog stated that the NMP is a four-year pipeline of brownfield infrastructure assets from the central government. In addition to offering clarity to investors, NMP will act as a medium-term roadmap for the government’s asset monetization initiative.

The Finance Minister made a number of key statements about asset monetization in the Union Budget for 2021-22. Moreover, she emphasized that the government is searching for innovative ways to raise funds.

monetisation pipeline

Why do we need National Monetization Pipeline (NMP)?

The NMP aims to attract more foreign investors and encourage alternate financing for infrastructure assets.

Sitharaman stated in her Budget speech that monetizing operating public infrastructure assets was a crucial financing option for new infrastructural development. The government will establish a National Monetisation Pipeline of potentially monetizable brownfield infrastructure assets. A dashboard for asset monetization will also be built to track progress and provide visibility to investors.

finance minister to launch national monetization pipeline

The government views asset monetization as a strategy for infrastructure enhancement and maintenance, instead of only a funding mechanism. According to Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey. The government is finalizing Rs 6 lakh crore worth of infrastructure assets for monetization. This includes national highways, mobile towers, stadia, railway stations, and electricity grid pipes.

“A national monetization plan of roughly Rs 6 trillion is in the process,” Pandey said. He also mentioned that it will include assets such as pipelines, electricity grid pipes, national highways, ToT (toll-operate-transfer), and so on. The launch of the NMP book will be in the presence of Niti Aayog Vice Chairman Rajiv Kumar and Niti Aayog CEO Amitabh Kant. As well as, the Secretaries of relevant ministries whose assets constitute the monetization pipeline.

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Daily News

Net tax revenues rise 5% in FY21: Finance Minister Nirmala Sitharaman

According to Finance Minister Nirmala Sitharaman, the government’s net tax revenues grew 5 percent in the fiscal year ended March 31, 2021. The net tax (i.e., the sum of direct and indirect taxes) revenue in 2020-21 was over Rs 14.24 lakh crore. Thus, a nearly 5 percent growth from Rs 13.56 lakh crore in the previous financial year.

Finance Minister on Net Tax

Sitharaman said in a written reply to the Lok Sabha, the government has taken many steps to boost both direct and indirect tax revenue collection. The government has taken many steps including curbing tax evasion, promoting voluntary compliance, reducing litigation, widening/deepening the tax base, and promoting digital transactions.
However, non-tax revenue collection observes a dip of 36 percent. Reportedly at Rs 2.08 lakh crore in 2020-21 from over Rs 3.27 lakh crore in 2019-20.
The government’s net revenue (tax+non-tax) collection in the last financial year declined 3.09 percent to Rs 16.32 lakh crore.

Cess and Surcharge (Net Tax) collection

net tax

While replying to a separate question, Minister of State for Finance Pankaj Chaudhary said, the total cess and surcharge collection under indirect taxes (GST+non-GST) increased. With an increment of 53 percent to over Rs 4.39 lakh crore in 2020-21 from the previous year.

The cess collection in 2018-19 under indirect taxes, was Rs 2.67 lakh crore. Moreover, in 2017-18 the cess collection under indirect taxes was Rs 2.17 lakh crore.

Shri Pankaj Chaudhary said that the States’ share of central taxes and duties are determined after deducting cesses and surcharges; apart from the cost of collection of the respective tax. The cesses form part of the Consolidated Fund of India. The funds are used for the purpose for which they are levied. In many cases, it involves grants given to states.

While giving an example he added, the entire GST compensation cess is levied to provide compensation to states for loss of revenue due to the introduction of GST. Similarly, 100 percent of Prarambhik Shiksha Kosh and a substantial portion of the Central Road are given to states as grants for respective purposes. Other such grants are; Infrastructure Fund, Pradhan Mantri Swasthya Suraksha Nidhi and Madhyamik, and Uchchtar Shiksha Kosh.

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Daily News

Rajya Sabha clears Factoring law to draw 9,000 NBFCs, boost MSME cash flow

The Rajya Sabha gives its approval to the amendments to the factoring law, on Thursday. These amendments will enable as many as 9,000 non-banking financial companies (NBFCs) to participate in the factoring market, instead of just 7 now. The move will give a boost in cash flow to small businesses, said finance minister Nirmala Sitharaman.

Earlier, the Lok Sabha already cleared the Factoring Regulation (Amendment) Bill, 2020, on Monday. Speaking on the Bill in the Rajya Sabha, the finance minister said, “You can imagine the number of MSMEs that will directly benefit because of this.”

What does Factoring mean?

Essentially, factoring is a transaction where an entity (like MSME) sells its receivables (i.e., dues from a customer) to a third party (a ‘factor’ like a bank or NBFC) and collects immediate funds. It helps a firm to fulfill its working capital requirement. Many MSMEs, participate in the factoring business with receivables. It helps MSMEs whose payments against their supplies are stuck.

msme

However, due to certain restrictive provisions in the extant law, necessary amendments were brought in to widen the participation of entities, in the factoring business. These entities, especially NBFCs will help in expanding the avenues of working capital credit to even small businesses. The Bill also empowers the central bank to monitor and create norms for better oversight of the $6-billion factoring market.

According to a report of the parliamentary standing committee on finance, which endorsed the Bill. Despite the growth in recent years, the factoring market accounts for only 0.2% of India’s GDP. The numbers are way behind the comparable developing economies such as Brazil (4.1%) and China (3.2%). Moreover, the factoring market worldwide will see a projection and reach $ 9.2 trillion by 2025.

The report submitted by the House panel in February stressed the need for the RBI to build sufficient regulatory resources to ensure effective supervision of factoring activities. This becomes more important than ever before, with the implementation of the new norms. Because, a large number of players may take part in such businesses now, after the amendments.

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COVID-19 Daily News Finance

Finance Minister Nirmala Sitharaman Expands Scheme For Health and Tourism

Honorable Finance Minister Smt. Nirmala Sitharaman announces some Covid relief schemes for the health sector, especially for Covid affected areas. As we all know of the Covid challenges, last year also finance minister presented the package of 29 lakh crore under Atma Nirbhar Bharat scheme. Today also she presented funds for relief in Covid affected areas. She especially has put the focus now on the unreached towns and areas where Covid relief facilities were least. The motive is to expand the health sector facilities.

What is the announcement?

covid relief for health and tourism

There are about eight measures under the category of COVID relief. Four of which are absolutely new. There is one item related to health infrastructure. She explained that there are other eight items in addition to these items. They are related to growth in general, export and also related to employees and in this six are totally new items. There will be two divisions which include rupees 1.1 lakh crore guarantee. It is being given particularly for COVID affected sectors.

guarantee scheme for Covid affected sectors

Who will be benefitted?

The health sector with Fifty thousand crore cover receives for scaling up medical infrastructure. The main focus is on other than eight metropolitan cities. The health and medical infrastructure in all other areas, all other towns are now the priority. These covers will be provided to these tier 2 and tier 3. The coverage will be for projects which are totally new or expanded Scheme will provide up to 75% coverage for new projects and up to 50% coverage for expansions.

What is the amount and interest rate?

The loan will be of an amount of maximum of 100 crores. This guarantee will last for three years. The interest rate will be 7.95%. She also said,” If this is for the health sector and COVID relief, we are expanding this for other sectors also where sixty thousand crores will be dedicated for the cover. But the interest rate cap here will be 8.25%”.

Additional

She added that all other details will be provided in a short span of time. For other sectors, as we progress, we will evolve the needs depending on the needs which are coming out from the ground. She will consider the aspects and keep changing the description and coverage of schemes. There is another additional 1.5 lakh crore rupees scheme for emergency credit needs. It was launched last year under the Atma Nirbhar Bharat package.

The tourism and hospitality sector were demanding support from the government for since long. They complained that Covid has affected the travel sector worse. It has forced people to cut down the traveling. The Center offered the loan amount of up to 10 lakh rupees for travel agents and one lakh rupee to registered tourist guides.

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