Second Phase Of Budget Session Commences
The first phase of the Budget Session lasted from January 31st to February 11th (seven sitting days). The second phase of the Budget Session commenced on March 2, 2020 and will last until April 3, 2020 (24 sitting days).
The legislative agenda for the Budget Session included 14 Bills for consideration and passing and 28 Bills for introduction, consideration and passing. Of these, three Bills were introduced in Lok Sabha. These include:
- the Aircraft (Amendment) Bill, 2020,
- the Direct Tax Vivad se Vishwas Bill, 2020, and
- the Institute of Teaching and Research in Ayurveda Bill, 2020
Further, the Constitution (Scheduled Tribes) Order (Second Amendment) Bill, 2019 was passed by both Houses.
Union Budget 2020-21 Presented
- The Finance Minister, Ms. Nirmala Sitharaman presented the 2020-21 Union Budget.1 Key highlights from the Budget include:
- The government proposes to spend Rs 30,42,230 crore in 2020-21. This is 12.7% higher than revised estimates for 2019-20.
- Total receipts (other than net borrowings) are expected to increase by 16.3% to Rs 22,45,893 crore, owing to higher estimated revenue from disinvestments.
- The government has assumed a nominal GDP growth rate of 10% (i.e., real growth plus inflation) in 2020-21. The nominal growth estimate for 2019-20 was 12%.
- Revenue deficit is targeted at 2.7% of GDP, which is higher than the revised estimate of 2.4% in 2019-20.
- Fiscal deficit is targeted at 3.5% of GDP, lower than the revised estimate of 3.8% in 2019-20.
Besides the overall financial outlay, the budget also provides details of tax proposals in the Finance Bill. In this budget, a new option of lower income tax rates has been proposed. Other proposals include changes to the payment of the dividend distribution tax, introduction of a ceiling on deductions for social security contributions, and a change in the determination of residence within the country.
The Direct Tax Vivad se Vishwas Bill, 2020 introduced In Lok Sabha
The Direct Tax Vivad se Vishwas Bill, 2020 was introduced in Lok Sabha. The Bill provides a mechanism for resolution of pending tax disputes related to income tax and corporation tax.
Cabinet approves capital infusion for three public sector insurance companies. The Union Cabinet has approved capital infusion of Rs 2,500 crore for three public sector general insurance companies: (i) Oriental Insurance Company Limited, (ii) National Insurance Company Limited, and (iii) United India Insurance Company Limited.
This was done in light of the critical financial position and breach of regulatory solvency requirements by these companies. Note that the Insurance Regulatory and Development Authority prescribes a minimum solvency ratio of 150%.
RBI releases draft framework for authorisation of new umbrella entity for retail payment systems
The Reserve Bank of India (RBI) has released the draft framework for authorisation of a pan India New Umbrella Entity for retail payment systems.
This body will be authorised to operate payment systems, under the Payments and Settlements Act, 2007.
The body will be responsible for:
- setting up, managing and operating new payment systems in the retail space,
- identifying and managing risks such as settlement, credit, liquidity and operational risks,
- monitoring domestic and international developments related to retail payment systems, and
- enhancing awareness about payment systems.
The body will be setup with a minimum paid-up capital of Rs 500 crore. Any entity holding more than 25% of the paid-up capital will be considered as a promoter. No single promoter shall have more than 40% investment in the paidup capital.
Select Committee on the Surrogacy (Regulation) Bill, 2019 submits report
The Select Committee on the Surrogacy (Regulation) Bill, 2019 (Chair: Mr. Bhupender Yadav) submitted its report.
Surrogacy is the practice where one woman carries the child for another with the intention of handing over the child after birth. Key observations of the Committee are:
Commercial vs. altruistic surrogacy: The Bill prohibits commercial surrogacy and allows altruistic surrogacy. Altruistic surrogacy involves no compensation to the surrogate mother other than the medical and insurance expenses related to the pregnancy.
The Committee recommended a surrogacy model based on compensation rather than altruistic surrogacy.
The compensation must take care of the losses suffered by the surrogate mother in terms of health and wages. The Committee observed that surrogacy has been considered as an economic opportunity by the women from economically weak backgrounds. By banning commercial surrogacy, the Bill ignores the fact that altruistic surrogacy is also exploitative.
In this regard, the Committee recommended that surrogacy could be classified on the basis of the specific intention with which a woman agrees to be a surrogate mother. The intention could be to either:
- render a paid service and make money, or
- do it for altruistic reasons.
Implications of the surrogate being a ‘close relative’: Under the Bill, the surrogate can only be a ‘close relative’ of the intending couple. The Committee noted that the criteria of being a ‘close relative’ potentially restricts the availability of surrogate mothers and may affect persons in genuine need. Hence, it recommended deleting the definition of ‘close relative’ and allowing any willing woman to act as a surrogate mother.
Five year waiting period: Under the Bill, the intending couple can undertake a surrogacy arrangement following the inability to conceive after five years of unprotected coitus or other medical conditions preventing conception. The Committee observed that the requirement of a five year waiting period is too long particularly in conditions like absent uterus, removal of uterus due to cancer, and medical conditions where normal pregnancy is ruled out.
- The Committee recommended removing the definition of infertility from the Bill and the five-year waiting period.
- It recommended that any couple who have a medical condition (could be either or both members of the couple) which necessitates gestational surrogacy, should be allowed to undertake surrogacy.
- Gestational surrogacy is a practice where a surrogate mother carries a child for the intending couple through implantation of embryo in her womb and the child is not genetically related to the surrogate mother.