Cabinet Decisions: Bharat Bond ETF, Six Bills Approved

The Indian government is looking into the issue of unpaid GST compensation to certain states, said Finance Minister Nirmala Sitharaman. Just today she met with finance ministers and representatives of opposition-ruled states who expressed their concern over delay in release of GST compensation which has put them in an acute financial position.

The finance ministers of Delhi, Punjab, Puducherry and Madhya Pradesh and representatives Kerala, Rajasthan, Chattisgarh and West Bengal attended the meeting over delay in payment of compensation.

Speaking to reporters after the meeting, Punjab Finance Minister Manpreet Singh Badal said, August and September compensation has not been released to states.

"We discussed that issue with the Finance Minister. Even the compensation for next period (October-November) will be due now, so August-November. Government is under obligation to pay.

"The Finance Minister assured us that the compensation will be released as early as possible but she did not specify any timeline, " he had said.

So far state have not got compensation for the month of August and September and post Dec. 10, compensation for the period October-November will also be due.

Delhi Deputy Chief Minister Manish Sisodia said it is not that compensation fund does not have adequate money, around Rs 50,000 crore is there through cess collection.

"We thought we will make appeal to Union Finance Minister (Nirmala Sitharaman) saying that she must personally look into this and not violate the constitutional provisions as passed by Parliament of India," Sisodia said after half an hour long meeting.

With inputs from PTI

• Each ETF to have fixed maturity date
• ETF will track underlying index on risk replication basis
• For now, it will have two maturity series: 3 and 10 years

• Will be tradable on exchange
• Unit size Rs 1,000
• Transparent NAV (Periodic live NAV during the day)
• Transparent portfolio (Daily disclosure on website)
• Low cost (0.0005 percent)

The cabinet has given an approval for an umbrella bond exchange trade fund known as the Bharat Bond ETF, said Finance Minister Nirmala Sitharaman, in a bid to diversify the investor base and increase debt option.

India had launched the first equity-based ETF in 2014 and then one in 2017, she pointed out adding that they have both had good reception.

The government is trying to deepen India’s bond market, she said, hoping to make it a way in which public sector undertakings can raise debt.

“In doing this we are giving an option for retail investors. Int hat every retail purchase will give the purchaser - one, the satisfaction that he is participating in the developmental activities of the country, and two, invest his funds not just into banks through fixed deposits,” she said in today’s cabinet briefing.

Each unit will not be more than Rs 1,000 and AAA rated companies to be part of the ETFs, she said.

Investors can buy/sell units of bond ETF using three methods:

• Through exchanges during trading hours
• Route of market maker where market maker will buy/sell units. The market maker will keep an inventory of units worth Rs 1 crore.
• Through AMCs. Large investors can buy/sell through AMCs. Transaction value for such will be Rs 25 crore or more.

AMC will now file the product for approval from the Securities Exchange Board of India after which AMC will discuss borrowing needs of CPSUs, she said. After that the ETF issue will take place and the index will be created, she added.

• Total six bills have been approved by the cabinet
• Cabinet approves Citizenship (Amendment) Bill, extension of reservation for SC/STs.
• Cabinet approves Personal Data Protection Bill
• Bills will be introduced in the Parliament
• A labour bill has been approved where 44 labour legislations will be merged into 4 codes
• Social security code has been approved by cabinet