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Government readies next round of measures to boost economy

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The Prime Minister’s Office (PMO) and top officials of the finance ministry are working on administrative measures and incentive packages to boost the sluggish economy as the government is “deeply” concerned about the steep fall in key economic parameters besides dwindling revenue collections, three officials aware of the developments have said.

The PMO and the North Block have been conducting a series of meetings with central and state government officials to boost revenue generation, which is a necessary condition for prospective stimulus packages to create demand and induce consumption to boost the economy, they said.

One of the officials said that liquidity is no longer a major concern and the government has addressed investors’ sentiments by announcing unprecedented cuts in corporate tax rates by sacrificing Rs1.45 lakh crore. The government could now shift its focus to fuelling demand and stoking consumption, he said on condition of anonymity.

On the demand side, discussions are centred around reducing income tax rates sans exemptions, prodding banks to offer attractive EMIs for auto and housing loans, rejigging real estate laws and tax structure and reducing compliance cost for builders on the condition that the same could be passed on to consumers, the official said.

The government is also exploring some incentive to perk up automobile sales, the official added. It is, however, finding it difficult to cut Goods and Services Tax (GST) on automobiles because states are unwilling to take about Rs 60,000-crore revenue hit, he said. Other proposals being discussed include raising public investments in infrastructure, particularly in rural areas, and asking state-run firms to front-load their budgeted expenditure, he added.

The government is expecting demand to pick up because of some recent decisions. The cabinet on October 9 raised dearness allowance (DA) of five million central government employees and 6.5 million retired employees by 5 percentage points, hoping that the Rs 10,600 crore-package will boost consumption in the ongoing festive season. “More such measures are expected, depending on the availability of funds,” another official said, asking not to be named.

According to a third official, intensive meetings on these issues took place at the PMO on Saturday and some of the meetings were also attended by finance minister Nirmala Sitharaman. The PMO met senior officials of various states on Friday, prodding them to share the responsibility of Goods and Services Tax (GST) collection, which dropped alarmingly in September, they said. The GST collection in September was Rs 91,916 crore, lowest in 19 months and below Rs1 lakh crore consecutively for the second month.

The officials said the decline in GST collections also indicates a slowdown in the demand of goods and services, which has a direct bearing on the economic growth. India’s annual GDP growth in the quarter ending June 2019 was 5%, the lowest in 25 quarters. It also marked the fifth consecutive quarter of slowing growth in the Indian economy.

The government is concerned about the declining GDP growth, particularly after the Reserve Bank of India (RBI) cut the country’s growth projection by 80 basis points (one hundredth of a percentage point) to 6.1% for 2019-20 on October 4. As per the latest official data, India’s factory output contracted 1.1% in August, the worst performance in about seven years, signalling a deepening economic downturn. The auto sector, a weathervane of economic sentiment and also industrial health, has been hit hard, with passenger car sales in September falling 24% compared to a year ago. It was the eleventh straight month of decline in the segment.

On the issue of resource generation, the government is relying on efficiency in public expenditure, augmenting tax collection and maximising disinvestment proceeds. The government may also deviate marginally from the fiscal deficit roadmap and borrow resources to boost the economy and make up for it in subsequent financial years, the officials said.

In an interview with Karan Thapar for The Wire on Thursday, Bibek Debroy, the chairperson of the Prime Minister’s Economic Advisory Council, said that the government could miss the fiscal deficit target of 3.3% of GDP set in the budget.

“The government needs resources to offer more stimulus as it is committed to bring the economy again at the higher growth trajectory. A series of announcements in this regard is expected,” the first official said.

The finance minister has already announced five rounds of fiscal, administrative and policy measures to stimulate the economy since August 23 and the biggest one was on September 20, when corporate tax rates were slashed.

“More stimulus means more money, hence the government is making efforts to augment revenue collections,” the second official said, adding that the government may also reduce personal income tax rate to boost consumption. But the move will depend on its implication on the overall revenue, the official added. Hindustan Times had on October 1 reported about the possible move.

In the interview, Debroy said “it (a personal tax rate cut) is inevitable” with elimination of exemptions. “When it will happen, it is for the finance minister to announce,” he said. A similar view was expressed by NITI Aayog vice-chairman Rajiv Kumar, as reported by NDTV on October 4. “I have heard that there are demands of personal income tax rate cuts and I am fully confident that the government is holding consultations and discussions on this matter,” NDTV quoted Kumar as saying.

The Prime Minister’s Office is constantly monitoring the country’s growth revival efforts and, on Friday, it cautioned states to share the responsibility of GST administration failing which they might face troubles after the compensation period is over in 2022, the third official said. It expressed concerns over falling GST revenue at a meeting with senior officials of states on Friday.

“It is also essential that GST revenues stabilise to ensure not only that states do not face fiscal stress when the compensation period is over in 2022, but also provide adequate revenues to finance development expenditure of states and centres,” an office memorandum of the GST Council Secretariat, issued on Thursday, said. Concerned about the fall in GST collection, the government on Thursday appointed a committee of central and state government officials to ascertain the reasons for the decline.

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Zepto, 10-minute grocery delivery app, raises $100 million

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Only five months subsequent to dispatching, 10-minute basic food item conveyance application Zepto on Tuesday reported it has raised $100 million driven by Y Combinator, taking its valuation to $570 million.

Other than the raise money, Zepto has been developing staggeringly rapidly and is significantly increasing its client base consistently.

In the course of recent months, Zepto has extended past Mumbai by dispatching in Bengaluru, Delhi, Gurgaon, Chennai, Hyderabad, and Pune (Kolkata to follow), the organization said in an assertion.

“Financial backers are reliably deciding to back Zepto due to our top tier execution. This is giving us extraordinary energy – we’re developing at an amazing rate, clients are adoring the item experience, our center unit financial matters are solid, and we have one of the most outstanding startup groups in India today,” said Aadit Palicha, Co-Founder and CEO.

The Series C raising money round saw support from new and existing financial backers, including Glade Brook, Nexus, Breyer Capital, Lachy Groom, Global Founders Capital, Contrary Capital, and that’s just the beginning.

The round came 45 days later the organization reported its $60 million raise money in November.

Conveying food in a short time is a game-changing encounter for clients in the nation, and a few players are presently joining the race.

“We are eager to twofold down and lead this round in Zepto. They initially dispatched with an alternate model, quickly turned to speedy trade in August 2021, and are presently adding 100,000 new clients consistently, 60% of the ladies,” said Anu Hariharan from Y Combinator.

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One stuck box of fertilizer shows the global supply chain crisis

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Somewhere in the world’s busiest port of Shanghai, a container of fertilizer sits among tens of thousands of boxes, waiting for a ride to the U.S. It’s been on the dock for months, trapped by typhoons and Covid outbreaks that have worsened major congestion in the global supply-chain network.

While the fertilizer has been stranded there since May, the port is just one stop on the long journey from central China to the U.S. Midwest. Delays have stretched a delivery that ordinarily would take weeks to more than half a year. And that time frame will keep expanding, as the goods have barely started the roughly 15,000 kilometer (9,300 mile) trek.

This is the tale of one humble shipment and its arduous journey across the world. While some of the barriers keeping it from its final destination may be specific to this particular case, the journey is emblematic of the inertia that has gripped global trade during the pandemic.

From the U.S. to Sudan to China, container boxes have been lying at ports, railyards and in warehouses as the pandemic rages on. In an industry with 25 million containers and some 6,000 ships hauling them, it’s easy to see disruptions as one big headache confined to the shipping world. But each container that’s delayed is economic activity that’s restrained, heaping costs one box at a time on consumers and making it more challenging to put corn on consumers’ tables or deliver presents for the holidays.

It’s also a lesson in the ripple effects across global supply chains, showing the limits of diversification as all networks are still closely connected with China.

“All roads lead back to China, and that has a major effect across the entire supply chain,” said Dawn Tiura, head of U.S.-based Sourcing Industry Group. “Congestion at one port or factory has far-reaching implications for neighboring facilities, which trickles out across the world.”

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Bharat Biotech’s BBV154 leads global race for intranasal COVID-19 vaccine

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Bharat Biotech’s nasal COVID-19 vaccine candidate BBV154 has become the front runner globally to likely commercialise an intranasal vaccine, following green signal from the government to conduct a combined Phase II and III final clinical trials in India. At present out of the 110 vaccines under clinical development globally, only eight are intranasal vaccines and three are oral vaccines. So far none of these vaccines have entered the final phase of trials and most are still in the first phase.

BBV154 is an intranasal replication-deficient chimpanzee adenovirus SARS-CoV-2 vectored vaccine, in-licensed from the Washington University in St Louis, USA. Nasal and oral vaccines are expected to be a game-changer second-generation COVID-19 vaccine, as they stimulate a broad immune response and prevent both infection and transmission. The non-invasive, needle-free vaccines do not require trained health care workers to administer the vaccine, have no risks of injuries and infections and is suited for children and adults. Unlike Covaxin, which is difficult to make, manufacturing can be scaled up fast and easily.  Compared to injectable vaccines, nasal and oral vaccines are expected to provide long-lasting protection.

Bharat Biotech is yet to announce its plans and timeline for the nasal vaccine’s future development.

Serum Institute of India and Codagenix have done a 48-subject Phase I clinical trial in the UK for an intranasal COVID-19 vaccine, COVI-VAC. This live attenuated candidate vaccine is expected to have potential to provide a broader immune response, in comparison to most COVID-19 vaccines that target only a portion of the virus. Codagenix has recently completed dosing for its Phase I trials and data is expected to come out in the third quarter of the year.

Nasdaq listed US biopharmaceutical company Altimmune, which was developing a three-dose intranasal vaccine candidate  AdCOVID, discontinued the project on July 29, as its first phase trials did not stimulate an adequate immune response in healthy volunteers. “The top-line Phase 1 clinical data are disappointing given the encouraging preclinical data and our substantial efforts in advancing a differentiated, intranasal vaccine candidate in the fight against COVID-19,” said Vipin K Garg, Altimmune’s India born President and Chief Executive Officer.

The University of Hong Kong, Xiamen University and Beijing Wantai Biological Pharmacy in China are trying a Phase II clinical trial of a two-dose influenza virus vector COVID-19 vaccine as an intranasal spray (DelNS1-2019-nCoV-RBD-OPT1). Its one year long second phase trial among 240 volunteers is going on and will conclude only by mid-December 2021.

The University of Oxford is conducting a single dose Phase I study of AstraZeneca’s ChAdOx1 nCOV-19 (Covishield in India and manufactured by the Serum Institute) to be administered intranasal among 54 volunteers in three groups. According to the trial design, the study started in April is estimated to complete the first phase only by February 2022.

Cuban government’s Center for Genetic Engineering and Biotechnology, which developed Latin America’s first COVID-19 vaccine Abdala, is undertaking a Phase I/II study of an intra-nasal three dose protein subunit vaccine candidate Mambisa (CIGB-669). According to the research agency, Mambisa is based on the formulation of the RBD (Receptor Binding Domain) protein and an immuno enhancer, Hepatitis B nucleocapsid antigen.

Canadian biotech Symvivo Corporation has ‘bacTRL-Spike’, as an oral capsule DNA vaccine candidate for the prevention of COVID-19, is undergoing Phase I trials in Australia. The trial was started only in November, last year. The global drug major Merck, known as MSD outside the United States and Canada, has taken exclusive license of Symvivo’s bacTRL platform of oral vaccines.  Symvivo has funding of about $4.57 million from the National Research Council of Canada Industrial Research Assistance Program (NRC IRAP) to develop this vaccine.

US biotech Meissa Vaccines’s MV-014-212, a single dose intranasal recombinant live attenuated COVID-19 vaccine, is undergoing Phase I trials and its interim trial data will come out by the end of this year. Another small US biotech, Vaxform and the US Specialty Formulations LLC (USSF) are developing an oral COVID-19 vaccine, which is also in its first phase. Similarly, another US small biotech CyanVac LLC is also attempting an intranasal parainfluenza virus based COVID-19 vaccine (CVXGA1), now in the first phase and its results are also expected only by the end of the year.

Mexican veterinary pharmaceutical company Laboratorio Avi-Mex is testing a live influenza virus based vaccine, both as an intranasal spray as well as an injection. It is starting Phase I trials and is funded by Mexico’s foreign ministry and the National Council of Science and Technology (Conacyt). The Mexican authorities hope to commercialise this vaccine by the end of the year.

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