The Finance Ministry distributes Rs 13,386 crore to 25 states as an RLB award.

The Finance Ministry distributes Rs 13,386 crore to 25 states as an RLB award.

On Tuesday, the Finance Ministry said that it has allocated Rs 13,386 crore to 25 states for grants to rural local bodies (RLBs).

RLBs get tethered funding to improve two services: sanitation and maintaining open-defecation-free (ODF) status, as well as drinking water supply, rainfall harvesting, and water recycling.

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“The Ministry of Finance’s Department of Expenditure issued a sum of Rs 13,385.70 crore to 25 States on Monday for giving funds to Rural Local Bodies,” the ministry said in a statement.

This is the first instalment of Tied grants for the fiscal year 2021-22. The grants were distributed in accordance with the 15th Finance Commission’s recommendations.

FSDC meeting on September 3; to assess the economy and financial industry.

Tied grants are intended to ensure that rural local governments have access to additional money beyond the monies granted by the Centre and states for sanitation and drinking water under Centrally Sponsored Schemes.

The states are obligated to deliver the grants to rural local governments within 10 working days, and the grants must be released with interest.

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FSDC meeting on September 3; to assess the economy and financial industry.

FSDC meeting on September 3; to assess the economy and financial industry.

Finance Minister Nirmala Sitharaman convened a meeting of the Financial Stability and Development Council (FSDC) on September 3 to discuss the health of the financial sector and a strategy to aid the pandemic-affected economy’s embryonic recovery. This will be the FSDC’s 24th meeting and the first of the current fiscal year. The most recent meeting took place on December 15, 2020.

The meeting will take place soon after first-quarter GDP figures showed a growth of roughly 20%, compared to a fall of 24.4% in the previous financial year’s quarter.

Some macroeconomic indicators, including tax mobilisation, credit growth, manufacturing increase in specific sectors, and export growth, are showing signs of a nascent recovery.

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According to sources, the FSDC meeting will be placed through video conferencing on Friday.

According to sources, the finance minister may ask financial sector regulators to loosen and harmonise investment criteria for infrastructure investment trusts (InvITs), which are used to monetize public assets such as motorways, power lines, and railway tracks.

Sitharaman unveiled a Rs 6 lakh crore National Monetisation Pipeline (NMP) earlier this month, with the goal of unlocking value in infrastructure assets ranging from power to roads and railroads.

The Union Budget for the years 2021-22 identified the monetisation of running public infrastructure assets as a crucial source of long-term infrastructure funding.

The Budget included funding for the creation of a “National Monetisation Pipeline” of prospective brownfield infrastructure assets to help with this. The NMP study was created by NITI Aayog in collaboration with infrastructural ministries.

The asset pipeline under the NMP is estimated to be worth Rs 6 lakh crore over the next four years. The anticipated cost is equal to 14% of the Centre’s proposed outlay under the National Infrastructure Pipeline (Rs 43 lakh crore).

Anchorage Infrastructure Investment Holding’s FDI request of Rs 15,000 crore has been approved by the CCEA. 

The conference will also include senior officials from the Finance Ministry.

The FSDC is scheduled to examine several areas of the government’s stimulus initiatives, which were issued in response to the pandemic’s economic crisis.

Members of the FSDC include the Governor of the Reserve Bank of India, as well as the heads of the Securities and Exchange Board of India, the Insurance Regulatory and Development Authority of India, the Pension Fund Regulatory and Development Authority, and the International Financial Services Centres Authority.

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India’s exposure to US securities has increased by more than 10pc in the last 3 months

India’s exposure to US securities has increased by more than 10pc in the last 3 months

In the three months ending in June, India’s holdings of US government securities increased by more than USD 20 billion to USD 220.2 billion, owing to surging foreign exchange reserves. When compared to June of last year, when the coronavirus pandemic crippled most economic operations, India’s exposure to US Treasury securities increased by approximately USD 40 billion.

According to the most recent data from the US Treasury Department, India is the 11th largest holder of these assets, withholdings of USD 220.2 billion at the end of June this year, while Japan has the greatest exposure at just over USD 1.277 trillion.

Since March, when it was at USD 200 billion, India has steadily increased its government securities exposure. The stockpile increased to USD 208.7 billion in April, then to USD 215.8 billion by the end of May.

The country’s exposure in February was USD 204.4 billion, down from USD 211.6 billion in January. At the end of June 2020, the stake was valued at USD 182.7 billion.

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The rise in India’s exposure to US treasuries, according to Unmesh Kulkarni, Managing Director Senior Advisor at wealth management firm Julius Baer India, must be viewed in the context of the country’s continuing build-up of foreign reserves.

“US Treasury yields have been on the decline since May’21, after bottoming out in the middle of last year and rising steadily thereafter, while RBI has been gradually increasing its exposure since April’21,” he told PTI.

In the week ending August 13, India’s forex reserves were USD 619.365 billion, down from a record high of USD 621.464 billion the previous reporting week.

Domestic liquidity in the Indian money markets has been high, according to Kulkarni, and the RBI has been attempting to normalise the situation through variable-rate reverse repo auctions.

“Growing foreign exchange reserves boost to local rupee liquidity, thus it makes sense for RBI to buy foreign assets to drain some of the excess liquidity.”

 

“Among forex sovereign assets, the US dollar is generally the RBI’s preferred currency; contrary to market expectations, the US dollar has remained stable in the current calendar year so far, appreciating 4.1 per cent (Dollar Index) and 1.8 per cent against the INR,” he said, adding that Indian commercial banks have also begun deploying some.

India’s forex reserves have reached a new lifetime high of $621.5 billion.

Japan is the largest holder of US Treasury securities, followed by China, with a combined exposure of USD 1.061 trillion at the end of June.

According to the data, the UK came in third with USD 452.9 billion in holdings, followed by Ireland (USD 322.9 billion), Luxembourg (USD 301.8 billion), Switzerland (USD 270.1 billion), Brazil (USD 249 billion), Cayman Islands (USD 244.8 billion), Taiwan (USD 239.4 billion), and Belgium (USD 228.5 billion).

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