47.33 Lakh Houses Completed Per Year in 2018-19 Under Pradhan Mantri Awaas Yojana- Gramin over 11.95 Lakh Houses in 2014-15: Economic Survey

Jan 31, 2020 | Business

Provisioning of social assets, including housing for all, drinking water and sanitation measures, has been a major pillar of the Governments efforts at building social infrastructure. This is one of the key highlights of the Economic Survey 2019-20, which was tabled by Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman, in Parliament today.

Housing for All:

As per recent NSO survey on Drinking Water, Sanitation, Hygiene and Housing Condition in India 2018, about 76.7 per cent of the households in the rural and about 96.0 per cent in the urban areas had the house of pucca structures, states the Economic Survey.

The two Schemes, Pradhan Mantri Awaas Yojana- Gramin (PMAY-G) and Pradhan Mantri Awaas Yojana- Urban (PMAY-U), seek to achieve the target of housing for all by 2022. Under PMAY-G, the number of houses completed in a year increased by more than four times, from 11.95 lakh in 2014-15 to 47.33 lakh in 2018-19, states the Survey.

Drinking Water and Sanitation:

Since the launch of Swachh Bharat Mission- Gramin (SBM-G) in 2014, over 10 crore toilets have been built in rural areas, says the Economic Survey. Further, over 5.9 lakh villages, 699 districts, and 35 States/UTs have declared themselves Open Defecation Free (ODF). Swachh Survekshan Gramin 2019, Indias largest rural sanitation survey, covered 17,450 villages in 698 districts across India, including 87,250 public places.

A Novel Health Score Developed For NBFCS/HFCS Can Provide Early Warning Signals of Impending Liquidity Crisis in the Sector

Jan 31, 2020 | Business

A new diagnostic Health Score developed for the Non-Banking Financial Company (NBFC) and Housing Finance Company (HFC) sectors can help detect early warning signals of impending liquidity problems facing the companies in this sector. Using a novel scoring methodology, quantifiable Rollover risk is calculated for the HFCs and the retail NBFCs. The Economic Survey 2019-20 presented by Union Minister for Finance and Corporate Affairs, Smt Nirmala Sitharaman in Parliament today gives a detailed analysis of this new methodology including its reliability in predicting financial health of NBFC and HFC firms. The Health Score can be used as a valuable tool to introduce corrective measures to address unfavourablefinancial trends in a timely manner, says the Pre-Budget survey.

            Quoting the recent example of defaults on loan obligation by two subsidiaries of IL&FS and DHFL, the Economic Survey brings out the cascading adverse effect of NBFC defaults on the economy. The defaults by these two companies resulted in a chain reaction adversely affecting the market price of their Commercial Papers, panic sale by investors in debt mutual funds, steep decline in net asset value of these debt funds by 53% and a sharp decline in the equity prices of stressed NBFCs causing huge losses of Rs.4000 crores to NBFCs. This took a toll on the overall credit growth in the Indian Economy, and in turn, caused a decline in GDP growth.

HEALTH SCORE: Recent trends for NBFCs/HFCs

            The Health Score is based on the Rollover risk which includes Asset Liquidity Management risk, interconnectedness risk and Financial and Operating Resilience of an NBFC.

The Economic Survey analysis shows that the Health Score for the HFC sector exhibited a declining trend post 2014. By the end of FY2019, the health of the overall sector had worsened considerably. Similarly, the Health Score of the Retail-NBFC sector was consistently below par for the period 2014 till 2019.         Larger Retail-NBFCs had higher Health Scores but among medium and small Retail NBFCs, the medium size ones had a lower Health Score for the entire period from March 2014 till March 2019.

            The above findings suggest that the Health Score provides an early warning signal of impending liquidity problems.The analysis also finds significant evidence that equity markets react favourably to increase in Health Score of individual HFCs and Retail-NBFCs, thereby confirming the validity of Health Score as an early warning signal.

Uses of Health Score:

The Pre-Budget Survey observes that this novel Health Score can be of immense use to policy makers with respect to the shadow banking channel of growth.

Health Score can serve the critical role of predicting refinancing related stress faced by the financial firms in advance. It can serve as an important monitoring mechanism to prevent such problems in future. Furthermore, disaggregating the components and examining their trends can shed light on how to regulate NBFCs.

Other than its utility as a leading indicator of stress in the NBFC sector, the Health Score can also be used by policy makers to allocate scarce capital to stressed NBFCs in an optimal way to alleviate a liquidity crisis.

Government Committed to Support MSME Sector

Jan 31, 2020 | Business

The Government is committed to support the Micro, Small & Medium Enterprises (MSME) which is an important sector of the Indian economy that fosters entrepreneurship and generates employment opportunities at lower capital cost. 

The Union Minister for Finance & Corporate Affairs, Smt. Nirmala Sitharaman tabled the Economic Survey 2019-20 in Parliament today.  The Economic Survey gave a detailed analysis of all the measures undertaken to support the MSME sector in India to ensure better credit flow, technology up-gradation, ease of doing business and market access.

The Prime Minister of India, Shri Narendra Modi on 2nd November 2018, announced key reforms for faster growth of this sector.  The initiatives and the status of these initiatives are :

(i) In-principle approval for loans up to Rs.1 crore within 59 minutes through on-line portal.  1,59,422 number of loans have been sanctioned involving Rs.49,330 crore.  Of this, Rs.37,106 crore have been disbursed upto October 2019. 

(ii)  Interest subvention of 2 per cent for all GST registered MSMEs on incremental credit upto Rs.1 crore.   SIDBI has received and settled claim of Rs.18 crore from 43 banks/NBFCs for the period from November 2018 to March 2019.

(iii)  All companies with a turnover more than Rs.500 crore to be mandatorily on TReDS platform to enable entrepreneurs to access credit from banks.  So far 329 companies have registered themselves on the TReDS portal.

(iv) All Central Public Sector Undertakings (CPSUs) to compulsorily procure at least 25 per cent of their total purchases from MSMEs.  CPSUs have procured goods and services worth Rs. 15,936.39 crore from 59,903 MSMEs.

(v)  Out of the 25 per cent procurement mandated from MSMEs 3 per cent is reserved for women entrepreneurs.  During 2019-20, procurement has been done from 1,471 women owned MSMEs to the tune of Rs.242.12 crore.

(vi)  All CPSUs  must mandatorily procure through GeM portal. 258 CPSUs/CPSVs have been on boarded/registered on the GeM portal and a total of 57,351 MSME sellers and service providers have been registered on the portal.

(vii)  20 Technology Centres (TCs) and 100 Extension Centres (ECs) to be established at the cost of Rs.6,000 crore.  Rs.99.30 crore have been released for  setting up of these TCs and ECs.  Ten more ECs have been planned in FY 2019-20.

(viii) The Government to bear 70 per cent of the cost for establishing pharma cluster.  Four districts of Solan, Indore, Aurangabad and Pune have been selected for pharma clusters and developing of common facilities.

(ix)  Returns under eight labour laws and 10 Union Regulations to be filed once  a year.

(x)  Establishments to be visited by an Inspector will be decided through a computerized random allotment.  3,080 inspections have been conducted and all inspection reports have been uploaded on Shram Suvidha portal.